Yap v.
Tanada
Page 1 of 5
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-32917 July 18, 1988
JULIAN S. YAP, petitioner,
vs.
HON. SANTIAGO O. TAÑADA, etc., and GOULDS PUMPS INTERNATIONAL
(PHIL.), INC., respondents.
Paterno P. Natinga for private respondent.
NARVASA, J.:
The petition for review on certiorari at bar involves two (2) Orders of respondent
Judge Tañada 1 in Civil Case No. 10984. The first, dated September 16, 1970,
denied petitioner Yap's motion to set aside execution sale and to quash alias writ
of execution. The second, dated November 21, 1970, denied Yap's motion for
reconsideration. The issues concerned the propriety of execution of a judgment
claimed to be "incomplete, vague and non-final," and the denial of petitioner's
application to prove and recover damages resulting from alleged irregularities in
the process of execution.
The antecedents will take some time in the telling. The case began in the City
Court of Cebu with the filing by Goulds Pumps International (Phil.), Inc. of a
complaint 2 against Yap and his wife 3 seeking recovery of P1,459.30
representing the balance of the price and installation cost of a water pump in the
latter's premises. 4 The case resulted in a judgment by the City Court on
November 25, 1968, reading as follows:
When this case was called for trial today, Atty. Paterno Natinga appeared
for the plaintiff Goulds and informed the court that he is ready for trial.
However, none of the defendants appeared despite notices having been
served upon them.
Upon petition Atty. Natinga, the plaintiff is hereby allowed to present its
evidence ex-parte.
After considering the evidence of the plaintiff, the court hereby renders
judgment in favor of the plaintiff and against the defendant (Yap),
ordering the latter to pay to the former the sum of Pl,459.30 with interest
at the rate of 12% per annum until fully paid, computed from August 12,
1968, date of the filing of the complaint; to pay the sum of P364.80 as
reasonable attorney's fees, which is equivalent " to 25% of the unpaid
principal obligation; and to pay the costs, if any.
Yap appealed to the Court of First Instance. The appeal was assigned to the sala of
respondent Judge Tañada. For failure to appear for pre-trial on August 28, 1968,
this setting being intransferable since the pre-trial had already been once
postponed at his instance, 5 Yap was declared in default by Order of Judge Tañada
dated August 28, 1969, 6 reading as follows:
When this case was called for pre-trial this morning, the plaintiff and
counsel appeared, but neither the defendants nor his counsel appeared
despite the fact that they were duly notified of the pre-trial set this
morning. Instead he filed an Ex-Parte Motion for Postponement which
this Court received only this morning, and on petition of counsel for the
plaintiff that the Ex-Parte Motion for Postponement was not filed in
accordance with the Rules of Court he asked that the same be denied and
the defendants be declared in default; .. the motion for the plaintiff being
well- grounded, the defendants are hereby declared in default and the
Branch Clerk of Court ..is hereby authorized to receive evidence for the
plaintiff and .. submit his report within ten (10) days after reception of
evidence.
Goulds presented evidence ex parte and judgment by default was rendered the
following day by Judge Tañada requiring Yap to pay to Goulds (1) Pl,459.30
representing the unpaid balance of the pump purchased by him; (2) interest of
12% per annum thereon until fully paid; and (3) a sum equivalent to 25% of the
amount due as attorney's fees and costs and other expenses in prosecuting the
action. Notice of the judgment was served on Yap on September 1, 1969. 7
On September 16, 1969 Yap filed a motion for reconsideration. 8 In it he insisted
that his motion for postponement should have been granted since it expressed
his desire to explore the possibility of an amicable settlement; that the court
should give the parties time to arrive at an amicable settlement failing which, he
should be allowed to present evidence in support of his defenses (discrepancy as
to the price and breach of warranty). The motion was not verified or
accompanied by any separate affidavit. Goulds opposed the motion. Its
opposition 9 drew attention to the eleventh-hour motion for postponement of
Yap which had resulted in the cancellation of the prior hearing of June 30, 1969
despite Goulds' vehement objection, and the re-setting thereof on August 28,
1969 with intransferable character; it averred that Yap had again sought
postponement of this last hearing by another eleventh-hour motion on the plea
that an amicable settlement would be explored, yet he had never up to that time
ever broached the matter, 10 and that this pattern of seeking to obtain last-minute
postponements was discernible also in the proceedings before the City Court. In
its opposition, Goulds also adverted to the examination made by it of the pump,
on instructions of the City Court, with a view to remedying the defects claimed to
exist by Yap; but the examination had disclosed the pump's perfect condition.
Yap's motion for reconsideration was denied by Order dated October 10, 1969,
notice of which was received by Yap on October 4, 1969. 11
Yap v. Tanada
Page 2 of 5
On October 15, 1969 Judge Tañada issued an Order granting Goulds' Motion for
Issuance of Writ of Execution dated October 14, 1969, declaring the reasons
therein alleged to be meritorious. 12 Yap forthwith filed an "Urgent Motion for
Reconsideration of Order" dated October 17, 1969, 13 contending that the
judgment had not yet become final, since contrary to Goulds' view, his motion for
reconsideration was not pro forma for lack of an affidavit of merit, this not being
required under Section 1 (a) of Rule 37 of the Rules of Court upon which his
motion was grounded. Goulds presented an opposition dated October 22,
1969. 14 It pointed out that in his motion for reconsideration Yap had claimed to
have a valid defense to the action, i.e., ".. discrepancy as to price and breach of
seller's warranty," in effect, that there was fraud on Goulds' paint; Yap's motion
for reconsideration should therefore have been supported by an affidavit of merit
respecting said defenses; the absence thereof rendered the motion for
reconsideration fatally defective with the result that its filing did not interrupt
the running of the period of appeal. The opposition also drew attention to the
failure of the motion for reconsideration to specify the findings or conclusions in
the judgment claimed to be contrary to law or not supported by the evidence,
making it a pro forma motion also incapable of stopping the running of the appeal
period. On October 23, 1969, Judge Tañada denied Yap's motion for
reconsideration and authorized execution of the judgment.15 Yap sought
reconsideration of this order, by another motion dated October 29, 1969. 16 This
motion was denied by Order dated January 26, 1970. 17 Again Yap moved for
reconsideration, and again was rebuffed, by Order dated April 28, 1970. 18
In the meantime the Sheriff levied on the water pump in question, 19 and by notice
dated November 4, 1969, scheduled the execution sale thereof on November 14,
1969. 20 But in view of the pendency of Yap's motion for reconsideration of
October 29, 1969, suspension of the sale was directed by Judge Tañada in an
order dated November 6, 1969.21
Counsel for the plaintiff is hereby given 10 days time to answer the
Motion, dated October 29, 1969, from receipt of this Order and in the
meantime, the Order of October 23, 1969, insofar as it orders the sheriff
to enforce the writ of execution is hereby suspended.
It appears however that a copy of this Order was not transmitted to the Sheriff
"through oversight, inadvertence and pressure of work" of the Branch Clerk of
Court. 22 So the Deputy Provincial Sheriff went ahead with the scheduled auction
sale and sold the property levied on to Goulds as the highest bidder. 23 He later
submitted the requisite report to the Court dated November 17, 1969, 24 as well
as the "Sheriffs Return of Service" dated February 13, 1970, 25 in both of which it
was stated that execution had been "partially satisfied." It should be observed that
up to this time, February, 1970, Yap had not bestirred himself to take an appeal
from the judgment of August 29, 1969.
On May 9, 1970 Judge Tañada ordered the issuance of an alias writ of execution
on Gould's ex parte motion therefor. 26 Yap received notice of the Order on June
11. Twelve (1 2) days later, he filed a "Motion to Set Aside Execution Sale and to
Quash Alias Writ of Execution." 27 As regards the original, partial execution of the
judgment, he argued that —
1) "the issuance of the writ of execution on October 16, 1969 was contrary to law,
the judgment sought to be executed not being final and executory;" and
2) "the sale was made without the notice required by Sec. 18, Rule 39, of the New
Rules of Court," i.e., notice by publication in case of execution sale of real
property, the pump and its accessories being immovable because attached to the
ground with character of permanency (Art. 415, Civil Code).
And with respect to the alias writ, he argued that it should not have issued
because —
1) "the judgment sought to be executed is null and void" as "it deprived the
defendant of his day in court" and "of due process;"
2) "said judgment is incomplete and vague" because there is no starting point for
computation of the interest imposed, or a specification of the "other expenses
incurred in prosecuting this case" which Yap had also been ordered to pay;
3) "said judgment is defective because it contains no statement of facts but a mere
recital of the evidence; and
4) "there has been a change in the situation of the parties which makes execution
unjust and inequitable" because Yap suffered damages by reason of the illegal
execution.
Goulds filed an opposition on July 6, 1970. Yap's motion was thereafter denied by
Order dated September 16, 1970. Judge Tañada pointed out that the motion had
"become moot and academic" since the decision of August 29, 1969, "received by
the defendant on September 1, 1969 had long become final when the Order for
the Issuance of a Writ of Execution was promulgated on October 15, 1969." His
Honor also stressed that —
The defendant's Motion for Reconsideration of the Courts decision was
in reality one for new trial. Regarded as motion for new trial it should
allege the grounds for new trial, provided for in the Rules of Court, to be
supported by affidavit of merits; and this the defendant failed to do. If
the defendant sincerely desired for an opportunity to submit to an
amicable settlement, which he failed to do extra judicially despite the
ample time before him, he should have appeared in the pre- trial to
achieve the same purpose.
Judge Tañada thereafter promulgated another Order dated September 21, 1970
granting a motion of Goulds for completion of execution of the judgment of
August 29, 1969 to be undertaken by the City Sheriff of Cebu. Once more, Yap
sought reconsideration. He submitted a "Motion for Reconsideration of Two
Orders" dated October 13, 1970, 28 seeking the setting aside not only of this Order
Yap v. Tanada
Page 3 of 5
of September 21, 1970 but also that dated September 16, 1970, denying his
motion to set aside execution dated June 23, 1970. He contended that the Order
of September 21, 1970 (authorizing execution by the City Sheriff) was
premature, since the 30-day period to appeal from the earlier order of September
16, 1970 (denying his motion to set aside) had not yet expired. He also reiterated
his view that his motion for reconsideration dated September 15, 1969 did not
require that it be accompanied by an affidavit of merits. This last motion was also
denied for "lack of merits," by Order dated November 21, 1970. 29
On December 3, 1970, Yap filed a "Notice of Appeal" manifesting his intention to
appeal to the Supreme Court on certiorari only on questions of law, "from the
Order ... of September 16, 1970 ... and from the Order ... of November 21, 1970, ...
pursuant to sections 2 and 3 of Republic Act No. 5440." He filed his petition for
review with this Court on January 5, 1971, after obtaining an extension
therefor. 30
The errors of law he attributes to the Court a quo are the following: 31
1) refusing to invalidate the execution pursuant to its Order of October 16, 1969
although the judgment had not then become final and executory and despite its
being incomplete and vague;
2) ignoring the fact that the execution sale was carried out although it (the Court)
had itself ordered suspension of execution on November 6, 1969;
3) declining to annul the execution sale of the pump and accessories subject of
the action although made without the requisite notice prescribed for the sale of
immovables; and
4) refusing to allow the petitioner to prove irregularities in the process of
execution which had resulted in damages to him.
Notice of the Trial Court's judgment was served on Yap on September 1, 1969.
His motion for reconsideration thereof was filed 15 days thereafter, on
September 16, 1969. Notice of the Order denying the motion was received by him
on October 14, 1969. The question is whether or not the motion for
reconsideration — which was not verified, or accompanied by an affidavit of
merits (setting forth facts constituting his meritorious defenses to the suit) or
other sworn statement (stating facts excusing his failure to appear at the pre-trial
was pro forma and consequently had not interrupted the running of the period of
appeal. It is Yap's contention that his motion was not pro forma for lack of an
affidavit of merits, such a document not being required by Section 1 (a) of Rule
37 of the Rules of Court upon which his motion was based. This is incorrect.
Section 2, Rule 37 precisely requires that when the motion for new trial is
founded on Section 1 (a), it should be accompanied by an affidavit of merit.
xxx xxx xxx
When the motion is made for the causes mentioned in subdivisions (a)
and (b) of the preceding section, it shall be proved in the manner
provided for proof of motions. Affidavit or affidavits of merits shall also
be attached to a motion for the cause mentioned in subdivision (a) which
may be rebutted by counter-affidavits.
xxx xxx xxx 32
Since Yap himself asserts that his motion for reconsideration is grounded on
Section 1 (a) of Rule 37, 33 i.e., fraud, accident, mistake or excusable negligence
which ordinary prudence could not have guarded against and by reason of which
... (the) aggrieved party has probably been impaired in his rights" — this being in
any event clear from a perusal of the motion which theorizes that he had "been
impaired in his rights" because he was denied the right to present evidence of his
defenses (discrepancy as to price and breach of warranty) — it was a fatal
omission to fail to attach to his motion an affidavit of merits, i.e., an affidavit
"showing the facts (not conclusions) constituting the valid x x defense which the
movant may prove in case a new trial is granted." 34 The requirement of such an
affidavit is essential because obviously "a new trial would be a waste of the
court's time if the complaint turns out to be groundless or the defense
ineffective." 35
In his motion for reconsideration, Yap also contended that since he had expressed
a desire to explore the possibility of an amicable settlement, the Court should
have given him time to do so, instead of declaring him in default and thereafter
rendering judgment by default on Gould's ex parte evidence.
The bona fides of this desire to compromise is however put in doubt by the
attendant circumstances. It was manifested in an eleventh-hour motion for
postponement of the pre-trial which had been scheduled with intransferable
character since it had already been earlier postponed at Yap's instance; it had
never been mentioned at any prior time since commencement of the litigation;
such a possible compromise (at least in general or preliminary terms) was
certainly most appropriate for consideration at the pre-trial; in fact Yap was
aware that the matter was indeed a proper subject of a pre-trial agenda, yet he
sought to avoid appearance at said pre-trial which he knew to be intransferable
in character. These considerations and the dilatory tactics thus far attributable to
him-seeking postponements of hearings, or failing to appear therefor despite
notice, not only in the Court of First Instance but also in the City Court —
proscribe belief in the sincerity of his avowed desire to negotiate a compromise.
Moreover, the disregard by Yap of the general requirement that "(n)otice of a
motion shall be served by the applicant to all parties concerned at least three (3)
days before the hearing thereof, together with a copy of the motion, and of any
affidavits and other papers accompanying it," 36 for which no justification
whatever has been offered, also militates against the bona fides of Yap's
expressed wish for an amicable settlement. The relevant circumstances do not
therefore justify condemnation, as a grave abuse of discretion, or a serious
Yap v. Tanada
Page 4 of 5
mistake, of the refusal of the Trial Judge to grant postponement upon this
proferred ground.
The motion for reconsideration did not therefore interrupt the running of the
period of appeal. The time during which it was pending before the court — from
September 16, 1969 when it was filed with the respondent Court until October
14, 1969 when notice of the order denying the motion was received by the
movant — could not be deducted from the 30-day period of appeal. 37 This is the
inescapable conclusion from a consideration of Section 3 of Rule 41 which in part
declares that, "The "time during which a motion to set aside the judgment or
order or for a new trial has been pending shall be deducted, unless such motion
fails to satisfy the requirements of Rule 37. 38
Notice of the judgment having been received by Yap on September 1, 1969, and
the period of appeal therefrom not having been interrupted by his motion for
reconsideration filed on September 16, 1969, the reglementary period of appeal
expired thirty (30) days after September 1, 1969, or on October 1, 1969, without
an appeal being taken by Yap. The judgment then became final and executory;
Yap could no longer take an appeal therefrom or from any other subsequent
orders; and execution of judgment correctly issued on October 15, 1969, "as a
matter of right." 39
The next point discussed by Yap, that the judgment is incomplete and vague, is
not well taken. It is true that the decision does not fix the starting time of the
computation of interest on the judgment debt, but this is inconsequential since
that time is easily determinable from the opinion, i.e., from the day the buyer
(Yap) defaulted in the payment of his obligation, 40 on May 31, 1968. 41 The
absence of any disposition regarding his counterclaim is also immaterial and
does not render the judgment incomplete. Yap's failure to appear at the pre-trial
without justification and despite notice, which caused the declaration of his
default, was a waiver of his right to controvert the plaintiff s proofs and of his
right to prove the averments of his answer, inclusive of the counterclaim therein
pleaded. Moreover, the conclusion in the judgment of the merit of the plaintiff s
cause of action was necessarily and at the same time a determination of the
absence of merit of the defendant's claim of untenability of the complaint and of
malicious prosecution.
Yap's next argument that the water pump had become immovable property by its
being installed in his residence is also untenable. The Civil Code considers as
immovable property, among others, anything "attached to an immovable in a
fixed manner, in such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object." 42 The pump does not fit this
description. It could be, and was in fact separated from Yap's premises without
being broken or suffering deterioration. Obviously the separation or removal of
the pump involved nothing more complicated than the loosening of bolts or
dismantling of other fasteners.
Yap's last claim is that in the process of the removal of the pump from his house,
Goulds' men had trampled on the plants growing there, destroyed the shed over
the pump, plugged the exterior casings with rags and cut the electrical and
conduit pipes; that he had thereby suffered actual-damages in an amount of not
less than P 2,000.00, as well as moral damages in the sum of P 10,000.00 resulting
from his deprivation of the use of his water supply; but the Court had refused to
allow him to prove these acts and recover the damages rightfully due him. Now,
as to the loss of his water supply, since this arose from acts legitimately done, the
seizure on execution of the water pump in enforcement of a final and executory
judgment, Yap most certainly is not entitled to claim moral or any other form of
damages therefor.
WHEREFORE, the petition is DENIED and the appeal DISMISSED, and the Orders
of September 16, 1970 and November 21, 1970 subject thereof, AFFIRMED in
toto. Costs against petitioner.
Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
Footnotes
1 Then presiding Judge of Branch V of the Court of First Instance of Cebu City.
2 Annex E, petition, pp. 34-35, Rollo.
3 However Mrs. Minerva V. Yap was subsequently dropped from the
complaint.
4 Yap's answer (rollo, pp. 36 et seq put up the defense that the purchase
document did not reflect his real agreement with Goulds, and he had made
several complaints about the pump to no avail. Gould's claim is that the
examination of the pump showed it to be in good working order, but the Yaps
had refused to attest thereto despite being present during the examination
(rollo, pp. 72 et seq).
5 Infra: footnote No. 1, p. 3.
6 Rollo, p. 188.
7 Id., P. 10.
8 Id., pp. 41-42.
9 Id., pp. 43 et seq. An additional ground for postponement was that he would
be in Barili, Cebu, on the date of the pre-trial.
10 It appears that the pump was delivered and installed at the Yaps' premises
in December, 1967: Rollo, pp. 34 et seq.
11 Rollo, p. 10.
12 Id ,p. 114.
13 Id., p. 115.
Yap v. Tanada
Page 5 of 5

14 Id., P. 117. 38 Emphasis supplied; see Coombs v. Santos, 24 Phil. 446, 461, and Alfonso
v. Bustamante, 98 Phil. 158, cited in Feria, op. cit, pp. 514515; and Capinpin
15 Id., p. 11.
et al. v. Isip, L-14018, Aug. 31, 1959, cited in Moran, op. cit.
16 Id., p. 124 et seq. The motion reiterated prior arguments and in addition,
contained a "Specification of findings not supported by evidence" and a 39 Sec. 1, Rule 39; See Amor v. Jugo et al., 77 Phil. 703.
"Specification of conclusions contrary to law." An opposition thereto was 40 Rollo, p. 39.
filed under date of Nov. 27, 1969 (Rollo, p. 128)
41 Id., pp. 35, 193
17 Id., p. 133.
42 ART. 415, par. (3).42 ART. 415, par. (3).
18 Id., p. 135.
19 Id., pp. 52, 53.
20 Id., p. 54.
21 Id., p. 56, SEE paragraphs 18 and 19, petition.
22 Rollo, pp. 137, 134,
23 Id., p. 131. The Certificate of Sale is dated November 14,1969.
24 Id p. 123.
25 Id., p. 57.
26 Par. 21, petition, p. 12, Rollo.
27 Rollo, pp. 22, et seq.
28 Id., pp. 30 et seq.
29 Id., p. 142. Page 472
30 Granted by Resolution dated January 4, 1971, for 15 days from December
8 (Rollo, p. 5)
31 Rollo, pp. 5-6.
32 Emphasis supplied.
33 SEE footnote No. 14, supra.
34 SEE Coombs v. Santos, 24 Phil. 446, 451, cited in Feria, Civil Procedure.
1969 ed., p. 514; see, too, Moran, Comments on the Rules, 1979 ed., Vol. 2, pp.
214-215, citing numerous cases; parenthetical insertion supplied.
35 Moran, op. cit., p. 215, citing Vda. de Yulo v. Chua Chuco et al., 48 O.G. 5.54;
Baguieran v. Court of Appeals, L-14551 July 31, 1961, 2 SCRA 873.
36 SEE Sections 4, 5 and 6, Rule 15; Manila Surety & Fidelity Co. v. Batu
Construction Co., L-1 6636, June 24, 1965; Fulton Insurance Co. v. Manila
Railroad Co., L-24263, November 18, 1967, cited in Moran, op cit., p. 214.
37 BP No. 129 has since reduced the period of appeal to 15 days except in
special proceedings or cases where multiple appeals are allowed.
Tsai v. CA
Page 1 of 6

all the buildings and improvements now existing or which may hereafter
exist thereon, situated in . . .
"Annex A"
(Real and Chattel Mortgage executed by Ever Textile Mills in favor of
PBCommunications — continued)
LIST OF MACHINERIES & EQUIPMENT
A. Forty Eight (48) units of Vayrow Knitting Machines-Tompkins made
in Hongkong:
FIRST DIVISION
Serial Numbers Size of Machines
G.R. No. 120098 October 2, 2001
xxx xxx xxx
RUBY L. TSAI, petitioner,
vs. B. Sixteen (16) sets of Vayrow Knitting Machines made in Taiwan.
HON. COURT OF APPEALS, EVER TEXTILE MILLS, INC. and MAMERTO R xxx xxx xxx
VILLALUZ, respondents.
C. Two (2) Circular Knitting Machines made in West Germany.
x---------------------------------------------------------x
xxx xxx xxx
[G.R. No. 120109. October 2, 2001.]
D. Four (4) Winding Machines.
PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
xxx xxx xxx
vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS and MAMERTO R SCHEDULE "A"
VILLALUZ, respondents. I. TCT # 372097 - RIZAL
QUISUMBING, J.: xxx xxx xxx
These consolidated cases assail the decision1 of the Court of Appeals in CA-G.R. II. Any and all buildings and improvements now existing or hereafter to
CV No. 32986, affirming the decision2 of the Regional Trial Court of Manila, exist on the above-mentioned lot.
Branch 7, in Civil Case No. 89-48265. Also assailed is respondent court's
resolution denying petitioners' motion for reconsideration. III. MACHINERIES & EQUIPMENT situated, located and/or installed on
the above-mentioned lot located at . . .
On November 26, 1975, respondent Ever Textile Mills, Inc. (EVERTEX) obtained
a three million peso (P3,000,000.00) loan from petitioner Philippine Bank of (a) Forty eight sets (48) Vayrow Knitting Machines . . .
Communications (PBCom). As security for the loan, EVERTEX executed in favor (b) Sixteen sets (16) Vayrow Knitting Machines . . .
of PBCom, a deed of Real and Chattel Mortgage over the lot under TCT No.
372097, where its factory stands, and the chattels located therein as enumerated (c) Two (2) Circular Knitting Machines . . .
in a schedule attached to the mortgage contract. The pertinent portions of the (d) Two (2) Winding Machines . . .
Real and Chattel Mortgage are quoted below:
(e) Two (2) Winding Machines . . .
MORTGAGE
IV. Any and all replacements, substitutions, additions, increases and
(REAL AND CHATTEL) accretions to above properties.
xxx xxx xxx xxx xxx xxx3
The MORTGAGOR(S) hereby transfer(s) and convey(s), by way of First On April 23, 1979, PBCom granted a second loan of P3,356,000.00 to EVERTEX.
Mortgage, to the MORTGAGEE, . . . certain parcel(s) of land, together with The loan was secured by a Chattel Mortgage over personal properties
Tsai v. CA
Page 2 of 6
enumerated in a list attached thereto. These listed properties were similar to
those listed in Annex A of the first mortgage deed.
After April 23, 1979, the date of the execution of the second mortgage mentioned
above, EVERTEX purchased various machines and equipments.
On November 19, 1982, due to business reverses, EVERTEX filed insolvency
proceedings docketed as SP Proc. No. LP-3091-P before the defunct Court of First
Instance of Pasay City, Branch XXVIII. The CFI issued an order on November 24,
1982 declaring the corporation insolvent. All its assets were taken into the
custody of the Insolvency Court, including the collateral, real and personal,
securing the two mortgages as abovementioned.
In the meantime, upon EVERTEX's failure to meet its obligation to PBCom, the
latter commenced extrajudicial foreclosure proceedings against EVERTEX under
Act 3135, otherwise known as "An Act to Regulate the Sale of Property under
Special Powers Inserted in or Annexed to Real Estate Mortgages" and Act 1506
or "The Chattel Mortgage Law". A Notice of Sheriff's Sale was issued on December
1, 1982.
On December 15, 1982, the first public auction was held where petitioner PBCom
emerged as the highest bidder and a Certificate of Sale was issued in its favor on
the same date. On December 23, 1982, another public auction was held and again,
PBCom was the highest bidder. The sheriff issued a Certificate of Sale on the same
day.
On March 7, 1984, PBCom consolidated its ownership over the lot and all the
properties in it. In November 1986, it leased the entire factory premises to
petitioner Ruby L. Tsai for P50,000.00 a month. On May 3, 1988, PBCom sold the
factory, lock, stock and barrel to Tsai for P9,000,000.00, including the contested
machineries.
On March 16, 1989, EVERTEX filed a complaint for annulment of sale,
reconveyance, and damages with the Regional Trial Court against PBCom,
alleging inter alia that the extrajudicial foreclosure of subject mortgage was in
violation of the Insolvency Law. EVERTEX claimed that no rights having been
transmitted to PBCom over the assets of insolvent EVERTEX, therefore Tsai
acquired no rights over such assets sold to her, and should reconvey the assets.
Further, EVERTEX averred that PBCom, without any legal or factual basis,
appropriated the contested properties, which were not included in the Real and
Chattel Mortgage of November 26, 1975 nor in the Chattel Mortgage of April 23,
1979, and neither were those properties included in the Notice of Sheriff's Sale
dated December 1, 1982 and Certificate of Sale . . . dated December 15, 1982.
The disputed properties, which were valued at P4,000,000.00, are: 14 Interlock
Circular Knitting Machines, 1 Jet Drying Equipment, 1 Dryer Equipment, 1 Raisin
Equipment and 1 Heatset Equipment.
The RTC found that the lease and sale of said personal properties were irregular
and illegal because they were not duly foreclosed nor sold at the December 15,
1982 auction sale since these were not included in the schedules attached to the
mortgage contracts. The trial court decreed:
WHEREFORE, judgment is hereby rendered in favor of plaintiff
corporation and against the defendants:
1. Ordering the annulment of the sale executed by defendant Philippine
Bank of Communications in favor of defendant Ruby L. Tsai on May 3,
1988 insofar as it affects the personal properties listed in par. 9 of the
complaint, and their return to the plaintiff corporation through its
assignee, plaintiff Mamerto R. Villaluz, for disposition by the Insolvency
Court, to be done within ten (10) days from finality of this decision;
2. Ordering the defendants to pay jointly and severally the plaintiff
corporation the sum of P5,200,000.00 as compensation for the use and
possession of the properties in question from November 1986 to
February 1991 and P100,000.00 every month thereafter, with interest
thereon at the legal rate per annum until full payment;
3. Ordering the defendants to pay jointly and severally the plaintiff
corporation the sum of P50,000.00 as and for attorney's fees and
expenses of litigation;
4. Ordering the defendants to pay jointly and severally the plaintiff
corporation the sum of P200,000.00 by way of exemplary damages;
5. Ordering the dismissal of the counterclaim of the defendants; and
6. Ordering the defendants to proportionately pay the costs of suit.
SO ORDERED.4
Dissatisfied, both PBCom and Tsai appealed to the Court of Appeals, which issued
its decision dated August 31, 1994, the dispositive portion of which reads:
WHEREFORE, except for the deletion therefrom of the award; for exemplary
damages, and reduction of the actual damages, from P100,000.00 to P20,000.00
per month, from November 1986 until subject personal properties are restored
to appellees, the judgment appealed from is hereby AFFIRMED, in all other
respects. No pronouncement as to costs.5
Motion for reconsideration of the above decision having been denied in the
resolution of April 28, 1995, PBCom and Tsai filed their separate petitions for
review with this Court.
In G.R No. 120098, petitioner Tsai ascribed the following errors to the respondent
court:
Tsai v. CA
Page 3 of 6
I II.
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
EFFECT MAKING A CONTRACT FOR THE PARTIES BY TREATING THE
1981 ACQUIRED MACHINERIES AS CHATTELS INSTEAD OF REAL
PROPERTIES WITHIN THEIR EARLIER 1975 DEED OF REAL AND
CHATTEL MORTGAGE OR 1979 DEED OF CHATTEL MORTGAGE.
II
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
HOLDING THAT THE DISPUTED 1981 MACHINERIES ARE NOT REAL
PROPERTIES DEEMED PART OF THE MORTGAGE — DESPITE THE
CLEAR IMPORT OF THE EVIDENCE AND APPLICABLE RULINGS OF THE
SUPREME COURT.
III
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
DEEMING PETITIONER A PURCHASER IN BAD FAITH.
IV
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
ASSESSING PETITIONER ACTUAL DAMAGES, ATTORNEY'S FEES AND
EXPENSES OF LITIGATION — FOR WANT OF VALID FACTUAL AND
LEGAL BASIS.
V court's judgment decreeing that the pieces of machinery in dispute were not duly
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN
HOLDING AGAINST PETITIONER'S ARGUMENTS ON PRESCRIPTION
AND LACHES.6
In G.R. No. 120098, PBCom raised the following issues:
I. DID THE COURT OF APPEALS VALIDLY DECREE THE MACHINERIES
LISTED UNDER PARAGRAPH 9 OF THE COMPLAINT BELOW AS
PERSONAL PROPERTY OUTSIDE OF THE 1975 DEED OF REAL
ESTATE MORTGAGE AND EXCLUDED THEM FROM THE REAL
PROPERTY EXTRAJUDICIALLY FORECLOSED BY PBCOM DESPITE
THE PROVISION IN THE 1975 DEED THAT ALL AFTER-ACQUIRED
PROPERTIES DURING THE LIFETIME OF THE MORTGAGE SHALL
FORM PART THEREOF, AND DESPITE THE UNDISPUTED FACT
THAT SAID MACHINERIES ARE BIG AND HEAVY, BOLTED OR
CEMENTED ON THE REAL PROPERTY MORTGAGED BY EVER
TEXTILE MILLS TO PBCOM, AND WERE ASSESSED FOR REAL
ESTATE TAX PURPOSES?
CAN PBCOM, WHO TOOK POSSESSION OF THE MACHINERIES IN
QUESTION IN GOOD FAITH, EXTENDED CREDIT FACILITIES TO
EVER TEXTILE MILLS WHICH AS OF 1982 TOTALLED
P9,547,095.28, WHO HAD SPENT FOR MAINTENANCE AND
SECURITY ON THE DISPUTED MACHINERIES AND HAD TO PAY ALL
THE BACK TAXES OF EVER TEXTILE MILLS BE LEGALLY
COMPELLED TO RETURN TO EVER THE SAID MACHINERIES OR IN
LIEU THEREOF BE ASSESSED DAMAGES. IS THAT SITUATION
TANTAMOUNT TO A CASE OF UNJUST ENRICHMENT?7
The principal issue, in our view, is whether or not the inclusion of the questioned
properties in the foreclosed properties is proper. The secondary issue is whether
or not the sale of these properties to petitioner Ruby Tsai is valid.
For her part, Tsai avers that the Court of Appeals in effect made a contract for the
parties by treating the 1981 acquired units of machinery as chattels instead of
real properties within their earlier 1975 deed of Real and Chattel Mortgage or
1979 deed of Chattel Mortgage.8 Additionally, Tsai argues that respondent court
erred in holding that the disputed 1981 machineries are not real
properties.9 Finally, she contends that the Court of Appeals erred in holding
against petitioner's arguments on prescription and laches 10 and in assessing
petitioner actual damages, attorney's fees and expenses of litigation, for want of
valid factual and legal basis.11
Essentially, PBCom contends that respondent court erred in affirming the lower
foreclosed and could not be legally leased nor sold to Ruby Tsai. It further argued
that the Court of Appeals' pronouncement that the pieces of machinery in
question were personal properties have no factual and legal basis. Finally, it
asserts that the Court of Appeals erred in assessing damages and attorney's fees
against PBCom.
In opposition, private respondents argue that the controverted units of
machinery are not "real properties" but chattels, and, therefore, they were not
part of the foreclosed real properties, rendering the lease and the subsequent sale
thereof to Tsai a nullity.12
Considering the assigned errors and the arguments of the parties, we find the
petitions devoid of merit and ought to be denied.
Well settled is the rule that the jurisdiction of the Supreme Court in a petition for
review on certiorari under Rule 45 of the Revised Rules of Court is limited to
reviewing only errors of law, not of fact, unless the factual findings complained
of are devoid of support by the evidence on record or the assailed judgment is
based on misapprehension of facts.13 This rule is applied more stringently when
the findings of fact of the RTC is affirmed by the Court of Appeals. 14
Tsai v. CA
Page 4 of 6
The following are the facts as found by the RTC and affirmed by the Court of
Appeals that are decisive of the issues: (1) the "controverted machineries" are
not covered by, or included in, either of the two mortgages, the Real Estate and
Chattel Mortgage, and the pure Chattel Mortgage; (2) the said machineries were
not included in the list of properties appended to the Notice of Sale, and neither
were they included in the Sheriff's Notice of Sale of the foreclosed properties. 15
Petitioners contend that the nature of the disputed machineries, i.e., that they
were heavy, bolted or cemented on the real property mortgaged by EVERTEX to
PBCom, make them ipso facto immovable under Article 415 (3) and (5) of the
New Civil Code. This assertion, however, does not settle the issue. Mere nuts and
bolts do not foreclose the controversy. We have to look at the parties' intent.
While it is true that the controverted properties appear to be immobile, a perusal
of the contract of Real and Chattel Mortgage executed by the parties herein gives
us a contrary indication. In the case at bar, both the trial and the appellate courts
reached the same finding that the true intention of PBCOM and the owner,
EVERTEX, is to treat machinery and equipment as chattels. The pertinent portion
of respondent appellate court's ruling is quoted below:
As stressed upon by appellees, appellant bank treated the machineries
as chattels; never as real properties. Indeed, the 1975 mortgage contract,
which was actually real and chattel mortgage, militates against
appellants' posture. It should be noted that the printed form used by
appellant bank was mainly for real estate mortgages. But reflective of the
true intention of appellant PBCOM and appellee EVERTEX was the typing
in capital letters, immediately following the printed caption of mortgage,
of the phrase "real and chattel." So also, the "machineries and equipment"
in the printed form of the bank had to be inserted in the blank space of
the printed contract and connected with the word "building" by
typewritten slash marks. Now, then, if the machineries in question were
contemplated to be included in the real estate mortgage, there would
have been no necessity to ink a chattel mortgage specifically mentioning
as part III of Schedule A a listing of the machineries covered thereby. It
would have sufficed to list them as immovables in the Deed of Real Estate
Mortgage of the land and building involved.
As regards the 1979 contract, the intention of the parties is clear and
beyond question. It refers solely to chattels. The inventory list of the
mortgaged properties is an itemization of sixty-three (63) individually
described machineries while the schedule listed only machines and
2,996,880.50 worth of finished cotton fabrics and natural cotton
fabrics.16
In the absence of any showing that this conclusion is baseless, erroneous or
uncorroborated by the evidence on record, we find no compelling reason to
depart therefrom.
Too, assuming arguendo that the properties in question are immovable by
nature, nothing detracts the parties from treating it as chattels to secure an
obligation under the principle of estoppel. As far back as Navarro v. Pineda, 9
SCRA 631 (1963), an immovable may be considered a personal property if there
is a stipulation as when it is used as security in the payment of an obligation
where a chattel mortgage is executed over it, as in the case at bar.
In the instant case, the parties herein: (1) executed a contract styled as "Real
Estate Mortgage and Chattel Mortgage," instead of just "Real Estate Mortgage" if
indeed their intention is to treat all properties included therein as immovable,
and (2) attached to the said contract a separate "LIST OF MACHINERIES &
EQUIPMENT". These facts, taken together, evince the conclusion that the parties'
intention is to treat these units of machinery as chattels. A fortiori, the contested
after-acquired properties, which are of the same description as the units
enumerated under the title "LIST OF MACHINERIES & EQUIPMENT," must also
be treated as chattels.
Accordingly, we find no reversible error in the respondent appellate court's
ruling that inasmuch as the subject mortgages were intended by the parties to
involve chattels, insofar as equipment and machinery were concerned, the
Chattel Mortgage Law applies, which provides in Section 7 thereof that: "a chattel
mortgage shall be deemed to cover only the property described therein and not
like or substituted property thereafter acquired by the mortgagor and placed in the
same depository as the property originally mortgaged, anything in the mortgage
to the contrary notwithstanding."
And, since the disputed machineries were acquired in 1981 and could not have
been involved in the 1975 or 1979 chattel mortgages, it was consequently an
error on the part of the Sheriff to include subject machineries with the properties
enumerated in said chattel mortgages.
As the auction sale of the subject properties to PBCom is void, no valid title passed
in its favor. Consequently, the sale thereof to Tsai is also a nullity under the
elementary principle of nemo dat quod non habet, one cannot give what one does
not have.17
Petitioner Tsai also argued that assuming that PBCom's title over the contested
properties is a nullity, she is nevertheless a purchaser in good faith and for value
who now has a better right than EVERTEX.
To the contrary, however, are the factual findings and conclusions of the trial
court that she is not a purchaser in good faith. Well-settled is the rule that the
person who asserts the status of a purchaser in good faith and for value has the
burden of proving such assertion.18 Petitioner Tsai failed to discharge this burden
persuasively.
Moreover, a purchaser in good faith and for value is one who buys the property
of another without notice that some other person has a right to or interest in such
Tsai v. CA
Page 5 of 6
property and pays a full and fair price for the same, at the time of purchase, or
before he has notice of the claims or interest of some other person in the
property.19 Records reveal, however, that when Tsai purchased the controverted
properties, she knew of respondent's claim thereon. As borne out by the records,
she received the letter of respondent's counsel, apprising her of respondent's
claim, dated February 27, 1987.20 She replied thereto on March 9, 1987.21 Despite
her knowledge of respondent's claim, she proceeded to buy the contested units
of machinery on May 3, 1988. Thus, the RTC did not err in finding that she was
not a purchaser in good faith.
Petitioner Tsai's defense of indefeasibility of Torrens Title of the lot where the
disputed properties are located is equally unavailing. This defense refers to sale
of lands and not to sale of properties situated therein. Likewise, the mere fact that
the lot where the factory and the disputed properties stand is in PBCom's name
does not automatically make PBCom the owner of everything found therein,
especially in view of EVERTEX's letter to Tsai enunciating its claim.
Finally, petitioners' defense of prescription and laches is less than convincing. We
find no cogent reason to disturb the consistent findings of both courts below that
the case for the reconveyance of the disputed properties was filed within the
reglementary period. Here, in our view, the doctrine of laches does not apply.
Note that upon petitioners' adamant refusal to heed EVERTEX's claim,
respondent company immediately filed an action to recover possession and
ownership of the disputed properties. There is no evidence showing any failure
or neglect on its part, for an unreasonable and unexplained length of time, to do
that which, by exercising due diligence, could or should have been done earlier.
The doctrine of stale demands would apply only where by reason of the lapse of
time, it would be inequitable to allow a party to enforce his legal rights. Moreover,
except for very strong reasons, this Court is not disposed to apply the doctrine of
laches to prejudice or defeat the rights of an owner.22
As to the award of damages, the contested damages are the actual compensation,
representing rentals for the contested units of machinery, the exemplary
damages, and attorney's fees.
As regards said actual compensation, the RTC awarded P100,000.00
corresponding to the unpaid rentals of the contested properties based on the
testimony of John Chua, who testified that the P100,000.00 was based on the
accepted practice in banking and finance, business and investments that the
rental price must take into account the cost of money used to buy them. The Court
of Appeals did not give full credence to Chua's projection and reduced the award
to P20,000.00.
Basic is the rule that to recover actual damages, the amount of loss must not only
be capable of proof but must actually be proven with reasonable degree of
certainty, premised upon competent proof or best evidence obtainable of the
actual amount thereof.23 However, the allegations of respondent company as to
the amount of unrealized rentals due them as actual damages remain mere
assertions unsupported by documents and other competent evidence. In
determining actual damages, the court cannot rely on mere assertions,
speculations, conjectures or guesswork but must depend on competent proof and
on the best evidence obtainable regarding the actual amount of loss. 24 However,
we are not prepared to disregard the following dispositions of the respondent
appellate court:
. . . In the award of actual damages under scrutiny, there is nothing on
record warranting the said award of P5,200,000.00, representing
monthly rental income of P100,000.00 from November 1986 to February
1991, and the additional award of P100,000.00 per month thereafter.
As pointed out by appellants, the testimonial evidence, consisting of the
testimonies of Jonh (sic) Chua and Mamerto Villaluz, is shy of what is
necessary to substantiate the actual damages allegedly sustained by
appellees, by way of unrealized rental income of subject machineries and
equipments.
The testimony of John Cua (sic) is nothing but an opinion or projection
based on what is claimed to be a practice in business and industry. But
such a testimony cannot serve as the sole basis for assessing the actual
damages complained of. What is more, there is no showing that had
appellant Tsai not taken possession of the machineries and equipments
in question, somebody was willing and ready to rent the same for
P100,000.00 a month.
xxx xxx xxx
Then, too, even assuming arguendo that the said machineries and
equipments could have generated a rental income of P30,000.00 a
month, as projected by witness Mamerto Villaluz, the same would have
been a gross income. Therefrom should be deducted or removed,
expenses for maintenance and repairs . . . Therefore, in the
determination of the actual damages or unrealized rental income sued
upon, there is a good basis to calculate that at least four months in a year,
the machineries in dispute would have been idle due to absence of a
lessee or while being repaired. In the light of the foregoing
rationalization and computation, We believe that a net unrealized rental
income of P20,000.00 a month, since November 1986, is more realistic
and fair.25
As to exemplary damages, the RTC awarded P200,000.00 to EVERTEX which the
Court of Appeals deleted. But according to the CA, there was no clear showing
that petitioners acted malevolently, wantonly and oppressively. The evidence,
however, shows otherwise.It is a requisite to award exemplary damages that the
wrongful act must be accompanied by bad faith,26 and the guilty acted in a
wanton, fraudulent, oppressive, reckless or malevolent manner. 27 As previously
Tsai v. CA
Page 6 of 6

stressed, petitioner Tsai's act of purchasing the controverted properties despite 6 Rollo, G.R. No. 120098, pp. 23-25.
her knowledge of EVERTEX's claim was oppressive and subjected the already 7 Rollo, G.R. No. 120098, pp. 9-10.
insolvent respondent to gross disadvantage. Petitioner PBCom also received the
same letters of Atty. Villaluz, responding thereto on March 24, 1987. 28 Thus, 8 Rollo, G.R. No. 120098, p. 25.
PBCom's act of taking all the properties found in the factory of the financially 9 Id., at 33.
handicapped respondent, including those properties not covered by or included
in the mortgages, is equally oppressive and tainted with bad faith. Thus, we are
10 Id., at 49.
in agreement with the RTC that an award of exemplary damages is proper. 11 Id., at 44.
The amount of P200,000.00 for exemplary damages is, however, excessive. 12 Id., at 133.
Article 2216 of the Civil Code provides that no proof of pecuniary loss is 13Congregation of the Religious of the Virgin Mary v. Court of Appeals,
necessary for the adjudication of exemplary damages, their assessment being left
291 SCRA 385, 391-392 (1998).
to the discretion of the court in accordance with the circumstances of each
case.29 While the imposition of exemplary damages is justified in this case, equity 14 Manlapaz. Court of Appeals, 147 SCRA 236, 239 (1987).
calls for its reduction. In Inhelder Corporation v. Court of Appeals, G.R. No. L- 15 Rollo, G.R No. 120109, pp. 62-63.
52358, 122 SCRA 576, 585, (May 30, 1983), we laid down the rule that judicial
discretion granted to the courts in the assessment of damages must always be 16 Rollo, G.R. No. 120098, pp. 68-69.
exercised with balanced restraint and measured objectivity. Thus, here the award 17Segura vs. Segura, 165 SCRA 368,375 (1988); Noel vs. Court of Appeals,
of exemplary damages by way of example for the public good should be reduced G.R. No. 59550, 240 SCRA 78,88 (1995).
to P100,000.00.
18 Mathay v. Court of Appeals, 295 SCRA 556, 575 (1998).
By the same token, attorney's fees and other expenses of litigation may be
recovered when exemplary damages are awarded.30 In our view, RTC's award of
19 Diaz-Duarte vs. Ong, 298 SCRA 388, 397 (1998).
P50,000.00 as attorney's fees and expenses of litigation is reasonable, given the 20 Exhibit "U", Folder of Exhibits, p.64.
circumstances in these cases. 21 Exhibit "V", Id., at 66.
WHEREFORE, the petitions are DENIED. The assailed decision and resolution of 22 Noel vs. Court of Appeals, 240 SCRA 78,90 (1995).
the Court of Appeals in CA-G.R. CV No. 32986 are AFFIRMED WITH
MODIFICATIONS. Petitioners Philippine Bank of Communications and Ruby L. 23 Ace Hailers Corporation v. CA, et al., G.R No. 127934, August 23, 2000,
Tsai are hereby ordered to pay jointly and severally Ever Textile Mills, Inc. the p. 11.
following: (1) P20,000.00 per month, as compensation for the use and possession 24 Barzaga vs. Court of Appeals, 268 SCRA 105, 113-114 (1997).
of the properties in question from November 198631 until subject personal
properties are restored to respondent corporation; (2) P100,000.00 by way of 25 Rollo G.R. No. 120109, pp. 43-44.
exemplary damages, and (3) P50,000.00 as attorney's fees and litigation 26 "J" Marketing Corp. vs. Sia, Jr., 285 SCRA 580, 583-584 (1998).
expenses. Costs against petitioners.
27 Cervantes vs. Court of Appeals, 304 SCRA 25, 33 (1997).
SO ORDERED.
28 Exhibit "X", Folder of Exhibits, p. 69.
Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.
29Art. 2216. Civil Code. — No proof of pecuniary loss is necessary in
Footnotes order that moral, nominal, temperate liquidated or exemplary damages
1 Rollo, G.R. No. 120098, pp. 23-45. may be adjudicated. The assessment of such damages, except liquidated
ones, is left to the discretion of the court, according to the circumstances
2 Id. at 23-24. of each case.
3 Folder of Exhibits, pp. 5-12. 30 Vital-Gozon v. Court of Appeals, 292 SCRA 124, 147 (1998).
4 Rollo, G.R. No. 120098, pp. 23-24. 31The time when PBCom leased the disputed properties to Tsai. CA
5 Id. at 45. Rollo, p. 34.
Standard Oil Co. of New York vs. Jaramillo,
Page 1 of 2
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-20329 March 16, 1923
THE STANDARD OIL COMPANY OF NEW YORK, petitioner,
vs.
JOAQUIN JARAMILLO, as register of deeds of the City of Manila, respondent.
Ross, Lawrence and Selph for petitioner.
City Fiscal Revilla and Assistant City Fiscal Rodas for respondent.
STREET, J.:
This cause is before us upon demurrer interposed by the respondent, Joaquin
Jaramillo, register of deeds of the City of Manila, to an original petition of the
Standard Oil Company of New York, seeking a peremptory mandamus to compel
the respondent to record in the proper register a document purporting to be a
chattel mortgage executed in the City of Manila by Gervasia de la Rosa, Vda. de
Vera, in favor of the Standard Oil Company of New York.
It appears from the petition that on November 27, 1922, Gervasia de la Rosa, Vda.
de Vera, was the lessee of a parcel of land situated in the City of Manila and owner
of the house of strong materials built thereon, upon which date she executed a
document in the form of a chattel mortgage, purporting to convey to the
petitioner by way of mortgage both the leasehold interest in said lot and the
building which stands thereon.
The clauses in said document describing the property intended to be thus
mortgage are expressed in the following words:
Now, therefore, the mortgagor hereby conveys and transfer to the
mortgage, by way of mortgage, the following described personal
property, situated in the City of Manila, and now in possession of the
mortgagor, to wit:
(1) All of the right, title, and interest of the mortgagor in and to the
contract of lease hereinabove referred to, and in and to the premises the
subject of the said lease;
(2) The building, property of the mortgagor, situated on the aforesaid
leased premises.
After said document had been duly acknowledge and delivered, the petitioner
caused the same to be presented to the respondent, Joaquin Jaramillo, as register
of deeds of the City of Manila, for the purpose of having the same recorded in the
book of record of chattel mortgages. Upon examination of the instrument, the
respondent was of the opinion that it was not a chattel mortgage, for the reason
that the interest therein mortgaged did not appear to be personal property,
within the meaning of the Chattel Mortgage Law, and registration was refused on
this ground only.
We are of the opinion that the position taken by the respondent is untenable; and
it is his duty to accept the proper fee and place the instrument on record. The
duties of a register of deeds in respect to the registration of chattel mortgage are
of a purely ministerial character; and no provision of law can be cited which
confers upon him any judicial or quasi-judicial power to determine the nature of
any document of which registration is sought as a chattel mortgage.
The original provisions touching this matter are contained in section 15 of the
Chattel Mortgage Law (Act No. 1508), as amended by Act No. 2496; but these
have been transferred to section 198 of the Administrative Code, where they are
now found. There is nothing in any of these provisions conferring upon the
register of deeds any authority whatever in respect to the "qualification," as the
term is used in Spanish law, of chattel mortgage. His duties in respect to such
instruments are ministerial only. The efficacy of the act of recording a chattel
mortgage consists in the fact that it operates as constructive notice of the
existence of the contract, and the legal effects of the contract must be discovered
in the instrument itself in relation with the fact of notice. Registration adds
nothing to the instrument, considered as a source of title, and affects nobody's
rights except as a specifies of notice.
Articles 334 and 335 of the Civil Code supply no absolute criterion for
discriminating between real property and personal property for purpose of the
application of the Chattel Mortgage Law. Those articles state rules which,
considered as a general doctrine, are law in this jurisdiction; but it must not be
forgotten that under given conditions property may have character different
from that imputed to it in said articles. It is undeniable that the parties to a
contract may by agreement treat as personal property that which by nature
would be real property; and it is a familiar phenomenon to see things classed as
real property for purposes of taxation which on general principle might be
considered personal property. Other situations are constantly arising, and from
time to time are presented to this court, in which the proper classification of one
thing or another as real or personal property may be said to be doubtful.
The point submitted to us in this case was determined on September 8, 1914, in
an administrative ruling promulgated by the Honorable James A. Ostrand, now a
Justice of this Court, but acting at that time in the capacity of Judge of the fourth
branch of the Court of First Instance of the Ninth Judicial District, in the City of
Standard Oil Co. of New York vs. Jaramillo,
Page 2 of 2

Manila; and little of value can be here added to the observations contained in said
ruling. We accordingly quote therefrom as follows:
It is unnecessary here to determine whether or not the property
described in the document in question is real or personal; the discussion
may be confined to the point as to whether a register of deeds has
authority to deny the registration of a document purporting to be a
chattel mortgage and executed in the manner and form prescribed by the
Chattel Mortgage Law.
Then, after quoting section 5 of the Chattel Mortgage Law (Act No. 1508), his
Honor continued:
Based principally upon the provisions of section quoted the Attorney-
General of the Philippine Islands, in an opinion dated August 11, 1909,
held that a register of deeds has no authority to pass upon the capacity
of the parties to a chattel mortgage which is presented to him for
record. A fortiori a register of deeds can have no authority to pass upon
the character of the property sought to be encumbered by a chattel
mortgage. Of course, if the mortgaged property is real instead of personal
the chattel mortgage would no doubt be held ineffective as against third
parties, but this is a question to be determined by the courts of justice
and not by the register of deeds.
In Leung Yee vs. Frank L. Strong Machinery Co. and Williamson (37 Phil., 644), this
court held that where the interest conveyed is of the nature of real, property, the
placing of the document on record in the chattel mortgage register is a futile act;
but that decision is not decisive of the question now before us, which has
reference to the function of the register of deeds in placing the document on
record.
In the light of what has been said it becomes unnecessary for us to pass upon the
point whether the interests conveyed in the instrument now in question are real
or personal; and we declare it to be the duty of the register of deeds to accept the
estimate placed upon the document by the petitioner and to register it, upon
payment of the proper fee.
The demurrer is overruled; and unless within the period of five days from the
date of the notification hereof, the respondent shall interpose a sufficient answer
to the petition, the writ of mandamus will be issued, as prayed, but without costs.
So ordered.
Araullo, C.J., Malcolm, Avanceña, Ostrand, Johns, and Romualdez, JJ., concur.
Sibal v. Valdez
Page 1 of 7
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-26278 August 4, 1927
LEON SIBAL , plaintiff-appellant,
vs.
EMILIANO J. VALDEZ ET AL., defendants.
EMILIANO J. VALDEZ, appellee.
J. E. Blanco for appellant.
Felix B. Bautista and Santos and Benitez for appellee.
JOHNSON, J.:
The action was commenced in the Court of First Instance of the Province of Tarlac
on the 14th day of December 1924. The facts are about as conflicting as it is
possible for facts to be, in the trial causes.
As a first cause of action the plaintiff alleged that the defendant Vitaliano
Mamawal, deputy sheriff of the Province of Tarlac, by virtue of a writ of execution
issued by the Court of First Instance of Pampanga, attached and sold to the
defendant Emiliano J. Valdez the sugar cane planted by the plaintiff and his
tenants on seven parcels of land described in the complaint in the third paragraph
of the first cause of action; that within one year from the date of the attachment
and sale the plaintiff offered to redeem said sugar cane and tendered to the
defendant Valdez the amount sufficient to cover the price paid by the latter, the
interest thereon and any assessments or taxes which he may have paid thereon
after the purchase, and the interest corresponding thereto and that Valdez
refused to accept the money and to return the sugar cane to the plaintiff.
As a second cause of action, the plaintiff alleged that the defendant Emiliano J.
Valdez was attempting to harvest the palay planted in four of the seven parcels
mentioned in the first cause of action; that he had harvested and taken possession
of the palay in one of said seven parcels and in another parcel described in the
second cause of action, amounting to 300 cavans; and that all of said palay
belonged to the plaintiff.
Plaintiff prayed that a writ of preliminary injunction be issued against the
defendant Emiliano J. Valdez his attorneys and agents, restraining them (1) from
distributing him in the possession of the parcels of land described in the
complaint; (2) from taking possession of, or harvesting the sugar cane in
question; and (3) from taking possession, or harvesting the palay in said parcels
of land. Plaintiff also prayed that a judgment be rendered in his favor and against
the defendants ordering them to consent to the redemption of the sugar cane in
question, and that the defendant Valdez be condemned to pay to the plaintiff the
sum of P1,056 the value of palay harvested by him in the two parcels above-
mentioned ,with interest and costs.
On December 27, 1924, the court, after hearing both parties and upon approval
of the bond for P6,000 filed by the plaintiff, issued the writ of preliminary
injunction prayed for in the complaint.
The defendant Emiliano J. Valdez, in his amended answer, denied generally and
specifically each and every allegation of the complaint and step up the following
defenses:
(a) That the sugar cane in question had the nature of personal property
and was not, therefore, subject to redemption;
(b) That he was the owner of parcels 1, 2 and 7 described in the first
cause of action of the complaint;
(c) That he was the owner of the palay in parcels 1, 2 and 7; and
(d) That he never attempted to harvest the palay in parcels 4 and 5.
The defendant Emiliano J. Valdez by way of counterclaim, alleged that by reason
of the preliminary injunction he was unable to gather the sugar cane, sugar-cane
shoots (puntas de cana dulce) palay in said parcels of land, representing a loss to
him of P8,375.20 and that, in addition thereto, he suffered damages amounting to
P3,458.56. He prayed, for a judgment (1) absolving him from all liability under
the complaint; (2) declaring him to be the absolute owner of the sugar cane in
question and of the palay in parcels 1, 2 and 7; and (3) ordering the plaintiff to
pay to him the sum of P11,833.76, representing the value of the sugar cane and
palay in question, including damages.
Upon the issues thus presented by the pleadings the cause was brought on for
trial. After hearing the evidence, and on April 28, 1926, the Honorable Cayetano
Lukban, judge, rendered a judgment against the plaintiff and in favor of the
defendants —
(1) Holding that the sugar cane in question was personal property and,
as such, was not subject to redemption;
(2) Absolving the defendants from all liability under the complaint; and
(3) Condemning the plaintiff and his sureties Cenon de la Cruz, Juan
Sangalang and Marcos Sibal to jointly and severally pay to the defendant
Emiliano J. Valdez the sum of P9,439.08 as follows:
(a) P6,757.40, the value of the sugar cane;
(b) 1,435.68, the value of the sugar-cane shoots;
Sibal v. Valdez
Page 2 of 7
(c) 646.00, the value of palay harvested by plaintiff;
(d) 600.00, the value of 150 cavans of palay which the defendant
was not able to raise by reason of the injunction, at P4 cavan.
9,439.08 From that judgment the plaintiff appealed and in his
assignments of error contends that the lower court erred: (1) In
holding that the sugar cane in question was personal property
and, therefore, not subject to redemption;
(2) In holding that parcels 1 and 2 of the complaint belonged to Valdez,
as well as parcels 7 and 8, and that the palay therein was planted by
Valdez;
(3) In holding that Valdez, by reason of the preliminary injunction failed
to realized P6,757.40 from the sugar cane and P1,435.68 from sugar-
cane shoots (puntas de cana dulce);
(4) In holding that, for failure of plaintiff to gather the sugar cane on time,
the defendant was unable to raise palay on the land, which would have
netted him the sum of P600; and.
(5) In condemning the plaintiff and his sureties to pay to the defendant
the sum of P9,439.08.
It appears from the record:
(1) That on May 11, 1923, the deputy sheriff of the Province of Tarlac, by
virtue of writ of execution in civil case No. 20203 of the Court of First
Instance of Manila (Macondray & Co., Inc. vs. Leon Sibal),levied an
attachment on eight parcels of land belonging to said Leon Sibal, situated
in the Province of Tarlac, designated in the second of attachment as
parcels 1, 2, 3, 4, 5, 6, 7 and 8 (Exhibit B, Exhibit 2-A).
(2) That on July 30, 1923, Macondray & Co., Inc., bought said eight
parcels of land, at the auction held by the sheriff of the Province of Tarlac,
for the sum to P4,273.93, having paid for the said parcels separately as
follows (Exhibit C, and 2-A):
Parcel
1 .....................................................................
2 .....................................................................
3 ..................................................................... 120.93
4 ..................................................................... 1,000.00
5 ..................................................................... 1.00
6 ..................................................................... 1.00
7 with the house thereon .......................... 150.00
8 ..................................................................... 1,000.00
==========
4,273.93
(3) That within one year from the sale of said parcel of land, and on the
24th day of September, 1923, the judgment debtor, Leon Sibal, paid
P2,000 to Macondray & Co., Inc., for the account of the redemption price
of said parcels of land, without specifying the particular parcels to which
said amount was to applied. The redemption price said eight parcels was
reduced, by virtue of said transaction, to P2,579.97 including interest
(Exhibit C and 2).
The record further shows:
(1) That on April 29, 1924, the defendant Vitaliano Mamawal, deputy
sheriff of the Province of Tarlac, by virtue of a writ of execution in civil
case No. 1301 of the Province of Pampanga (Emiliano J. Valdez vs. Leon
Sibal 1.º — the same parties in the present case), attached the personal
property of said Leon Sibal located in Tarlac, among which was included
the sugar cane now in question in the seven parcels of land described in
the complaint (Exhibit A).
P1.00 (2) That on May 9 and 10, 1924, said deputy sheriff sold at public auction
said personal properties of Leon Sibal, including the sugar cane in
question to Emilio J. Valdez, who paid therefor the sum of P1,550, of
2,000.00 which P600 was for the sugar cane (Exhibit A).
Sibal v. Valdez
Page 3 of 7
(3) That on April 29,1924, said deputy sheriff, by virtue of said writ of
execution, also attached the real property of said Leon Sibal in Tarlac,
including all of his rights, interest and participation therein, which real
property consisted of eleven parcels of land and a house and camarin
situated in one of said parcels (Exhibit A).
(4) That on June 25, 1924, eight of said eleven parcels, including the
house and the camarin, were bought by Emilio J. Valdez at the auction
held by the sheriff for the sum of P12,200. Said eight parcels were
designated in the certificate of sale as parcels 1, 3, 4, 5, 6, 7, 10 and 11.
The house and camarin were situated on parcel 7 (Exhibit A).
(5) That the remaining three parcels, indicated in the certificate of the
sheriff as parcels 2, 12, and 13, were released from the attachment by
virtue of claims presented by Agustin Cuyugan and Domiciano Tizon
(Exhibit A).
(6) That on the same date, June 25, 1924, Macondray & Co. sold and
conveyed to Emilio J. Valdez for P2,579.97 all of its rights and interest in
the eight parcels of land acquired by it at public auction held by the
deputy sheriff of Tarlac in connection with civil case No. 20203 of the
Court of First Instance of Manila, as stated above. Said amount
represented the unpaid balance of the redemption price of said eight
parcels, after payment by Leon Sibal of P2,000 on September 24, 1923,
fro the account of the redemption price, as stated above. (Exhibit C and
2).
The foregoing statement of facts shows:
(1) The Emilio J. Valdez bought the sugar cane in question, located in the
seven parcels of land described in the first cause of action of the
complaint at public auction on May 9 and 10, 1924, for P600.
(2) That on July 30, 1923, Macondray & Co. became the owner of eight
parcels of land situated in the Province of Tarlac belonging to Leon Sibal
and that on September 24, 1923, Leon Sibal paid to Macondray & Co.
P2,000 for the account of the redemption price of said parcels.
(3) That on June 25, 1924, Emilio J. Valdez acquired from Macondray &
Co. all of its rights and interest in the said eight parcels of land.
(4) That on June 25, 1924, Emilio J. Valdez also acquired all of the rights
and interest which Leon Sibal had or might have had on said eight
parcels by virtue of the P2,000 paid by the latter to Macondray.
(5) That Emilio J. Valdez became the absolute owner of said eight parcels
of land.
The first question raised by the appeal is, whether the sugar cane in question is
personal or real property. It is contended that sugar cane comes under the
classification of real property as "ungathered products" in paragraph 2 of article
334 of the Civil Code. Said paragraph 2 of article 334 enumerates as real property
the following: Trees, plants, and ungathered products, while they are annexed to
the land or form an integral part of any immovable property." That article,
however, has received in recent years an interpretation by the Tribunal Supremo
de España, which holds that, under certain conditions, growing crops may be
considered as personal property. (Decision of March 18, 1904, vol. 97, Civil
Jurisprudence of Spain.)
Manresa, the eminent commentator of the Spanish Civil Code, in discussing
section 334 of the Civil Code, in view of the recent decisions of the supreme Court
of Spain, admits that growing crops are sometimes considered and treated as
personal property. He says:
No creemos, sin embargo, que esto excluya la excepcionque muchos
autores hacen tocante a la venta de toda cosecha o de parte de ella
cuando aun no esta cogida (cosa frecuente con la uvay y la naranja), y a
la de lenas, considerando ambas como muebles. El Tribunal Supremo, en
sentencia de 18 de marzo de 1904, al entender sobre un contrato de
arrendamiento de un predio rustico, resuelve que su terminacion por
desahucio no extingue los derechos del arrendario, para recolectar o
percibir los frutos correspondientes al año agricola, dentro del que
nacieron aquellos derechos, cuando el arrendor ha percibido a su vez el
importe de la renta integra correspondiente, aun cuando lo haya sido por
precepto legal durante el curso del juicio, fundandose para ello, no solo
en que de otra suerte se daria al desahucio un alcance que no tiene, sino
en que, y esto es lo interesante a nuestro proposito, la consideracion de
inmuebles que el articulo 334 del Codigo Civil atribuge a los frutos
pendientes, no les priva del caracter de productos pertenecientes, como
tales, a quienes a ellos tenga derecho, Ilegado el momento de su
recoleccion.
xxx xxx xxx
Mas actualmente y por virtud de la nueva edicion de la Ley Hipotecaria,
publicada en 16 de diciembre de 1909, con las reformas introducidas por
la de 21 de abril anterior, la hipoteca, salvo pacto expreso que disponga
lo contrario, y cualquiera que sea la naturaleza y forma de la obligacion
que garantice, no comprende los frutos cualquiera que sea la situacion en
que se encuentre. (3 Manresa, 5. edicion, pags. 22, 23.)
From the foregoing it appears (1) that, under Spanish authorities, pending fruits
and ungathered products may be sold and transferred as personal property; (2)
Sibal v. Valdez
Page 4 of 7
that the Supreme Court of Spain, in a case of ejectment of a lessee of an
agricultural land, held that the lessee was entitled to gather the products
corresponding to the agricultural year, because said fruits did not go with the
land but belonged separately to the lessee; and (3) that under the Spanish
Mortgage Law of 1909, as amended, the mortgage of a piece of land does not
include the fruits and products existing thereon, unless the contract expressly
provides otherwise.
An examination of the decisions of the Supreme Court of Louisiana may give us
some light on the question which we are discussing. Article 465 of the Civil Code
of Louisiana, which corresponds to paragraph 2 of article 334 of our Civil Code,
provides: "Standing crops and the fruits of trees not gathered, and trees before
they are cut down, are likewise immovable, and are considered as part of the land
to which they are attached."
The Supreme Court of Louisiana having occasion to interpret that provision, held
that in some cases "standing crops" may be considered and dealt with as personal
property. In the case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418) the
Supreme Court said: "True, by article 465 of the Civil Code it is provided that
'standing crops and the fruits of trees not gathered and trees before they are cut
down . . . are considered as part of the land to which they are attached, but the
immovability provided for is only one in abstracto and without reference to
rights on or to the crop acquired by others than the owners of the property to
which the crop is attached. . . . The existence of a right on the growing crop is a
mobilization by anticipation, a gathering as it were in advance, rendering the crop
movable quoad the right acquired therein. Our jurisprudence recognizes the
possible mobilization of the growing crop." (Citizens' Bank vs. Wiltz, 31 La. Ann.,
244; Porche vs. Bodin, 28 La., Ann., 761; Sandel vs. Douglass, 27 La. Ann., 629;
Lewis vs. Klotz, 39 La. Ann., 267.)
"It is true," as the Supreme Court of Louisiana said in the case of Porche vs.
Bodin (28 La. An., 761) that "article 465 of the Revised Code says that standing
crops are considered as immovable and as part of the land to which they are
attached, and article 466 declares that the fruits of an immovable gathered or
produced while it is under seizure are considered as making part thereof, and
incurred to the benefit of the person making the seizure. But the evident meaning
of these articles, is where the crops belong to the owner of the plantation they
form part of the immovable, and where it is seized, the fruits gathered or
produced inure to the benefit of the seizing creditor.
A crop raised on leased premises in no sense forms part of the
immovable. It belongs to the lessee, and may be sold by him, whether it
be gathered or not, and it may be sold by his judgment creditors. If it
necessarily forms part of the leased premises the result would be that it
could not be sold under execution separate and apart from the land. If a
lessee obtain supplies to make his crop, the factor's lien would not attach
to the crop as a separate thing belonging to his debtor, but the land
belonging to the lessor would be affected with the recorded privilege.
The law cannot be construed so as to result in such absurd consequences.
In the case of Citizen's Bank vs. Wiltz (31 La. Ann., 244)the court said:
If the crop quoad the pledge thereof under the act of 1874 was an
immovable, it would be destructive of the very objects of the act, it would
render the pledge of the crop objects of the act, it would render the
pledge of the crop impossible, for if the crop was an inseparable part of
the realty possession of the latter would be necessary to that of the
former; but such is not the case. True, by article 465 C. C. it is provided
that "standing crops and the fruits of trees not gathered and trees before
they are cut down are likewise immovable and are considered as part of
the land to which they are attached;" but the immovability provided for
is only one in abstracto and without reference to rights on or to the crop
acquired by other than the owners of the property to which the crop was
attached. The immovability of a growing crop is in the order of things
temporary, for the crop passes from the state of a growing to that of a
gathered one, from an immovable to a movable. The existence of a right
on the growing crop is a mobilization by anticipation, a gathering as it
were in advance, rendering the crop movable quoad the right acquired
thereon. The provision of our Code is identical with the Napoleon Code
520, and we may therefore obtain light by an examination of the
jurisprudence of France.
The rule above announced, not only by the Tribunal Supremo de España but by
the Supreme Court of Louisiana, is followed in practically every state of the Union.
From an examination of the reports and codes of the State of California and other
states we find that the settle doctrine followed in said states in connection with
the attachment of property and execution of judgment is, that growing crops
raised by yearly labor and cultivation are considered personal property. (6
Corpuz Juris, p. 197; 17 Corpus Juris, p. 379; 23 Corpus Juris, p. 329:
Raventas vs. Green, 57 Cal., 254; Norris vs. Watson, 55 Am. Dec., 161;
Whipple vs. Foot, 3 Am. Dec., 442; 1 Benjamin on Sales, sec. 126;
McKenzie vs. Lampley, 31 Ala., 526; Crine vs. Tifts and Co., 65 Ga., 644;
Gillitt vs. Truax, 27 Minn., 528; Preston vs. Ryan, 45 Mich., 174; Freeman on
Execution, vol. 1, p. 438; Drake on Attachment, sec. 249; Mechem on Sales, sec.
200 and 763.)
Mr. Mechem says that a valid sale may be made of a thing, which though not yet
actually in existence, is reasonably certain to come into existence as the natural
Sibal v. Valdez
Page 5 of 7
increment or usual incident of something already in existence, and then
belonging to the vendor, and then title will vest in the buyer the moment the thing
comes into existence. (Emerson vs. European Railway Co., 67 Me., 387;
Cutting vs. Packers Exchange, 21 Am. St. Rep., 63.) Things of this nature are said
to have a potential existence. A man may sell property of which he is potentially
and not actually possessed. He may make a valid sale of the wine that a vineyard
is expected to produce; or the gain a field may grow in a given time; or the milk a
cow may yield during the coming year; or the wool that shall thereafter grow
upon sheep; or what may be taken at the next cast of a fisherman's net; or fruits
to grow; or young animals not yet in existence; or the good will of a trade and the
like. The thing sold, however, must be specific and identified. They must be also
owned at the time by the vendor. (Hull vs. Hull, 48 Conn., 250 [40 Am. Rep., 165].)
It is contended on the part of the appellee that paragraph 2 of article 334 of the
Civil Code has been modified by section 450 of the Code of Civil Procedure as well
as by Act No. 1508, the Chattel Mortgage Law. Said section 450 enumerates the
property of a judgment debtor which may be subjected to execution. The
pertinent portion of said section reads as follows: "All goods, chattels, moneys,
and other property, both real and personal, * * * shall be liable to execution. Said
section 450 and most of the other sections of the Code of Civil Procedure relating
to the execution of judgment were taken from the Code of Civil Procedure of
California. The Supreme Court of California, under section 688 of the Code of Civil
Procedure of that state (Pomeroy, p. 424) has held, without variation, that
growing crops were personal property and subject to execution.
Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are
personal property. Section 2 of said Act provides: "All personal property shall be
subject to mortgage, agreeably to the provisions of this Act, and a mortgage
executed in pursuance thereof shall be termed a chattel mortgage." Section 7 in
part provides: "If growing crops be mortgaged the mortgage may contain an
agreement stipulating that the mortgagor binds himself properly to tend, care for
and protect the crop while growing.
It is clear from the foregoing provisions that Act No. 1508 was enacted on the
assumption that "growing crops" are personal property. This consideration tends
to support the conclusion hereinbefore stated, that paragraph 2 of article 334 of
the Civil Code has been modified by section 450 of Act No. 190 and by Act No.
1508 in the sense that "ungathered products" as mentioned in said article of the
Civil Code have the nature of personal property. In other words, the phrase
"personal property" should be understood to include "ungathered products."
At common law, and generally in the United States, all annual crops
which are raised by yearly manurance and labor, and essentially owe
their annual existence to cultivation by man, . may be levied on as
personal property." (23 C. J., p. 329.) On this question Freeman, in his
treatise on the Law of Executions, says: "Crops, whether growing or
standing in the field ready to be harvested, are, when produced by
annual cultivation, no part of the realty. They are, therefore, liable to
voluntary transfer as chattels. It is equally well settled that they may be
seized and sold under execution. (Freeman on Executions, vol. p. 438.)
We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has
been modified by section 450 of the Code of Civil Procedure and by Act No. 1508,
in the sense that, for the purpose of attachment and execution, and for the
purposes of the Chattel Mortgage Law, "ungathered products" have the nature of
personal property. The lower court, therefore, committed no error in holding that
the sugar cane in question was personal property and, as such, was not subject to
redemption.
All the other assignments of error made by the appellant, as above stated, relate
to questions of fact only. Before entering upon a discussion of said assignments
of error, we deem it opportune to take special notice of the failure of the plaintiff
to appear at the trial during the presentation of evidence by the defendant. His
absence from the trial and his failure to cross-examine the defendant have lent
considerable weight to the evidence then presented for the defense.
Coming not to the ownership of parcels 1 and 2 described in the first cause of
action of the complaint, the plaintiff made a futile attempt to show that said two
parcels belonged to Agustin Cuyugan and were the identical parcel 2 which was
excluded from the attachment and sale of real property of Sibal to Valdez on June
25, 1924, as stated above. A comparison of the description of parcel 2 in the
certificate of sale by the sheriff (Exhibit A) and the description of parcels 1 and 2
of the complaint will readily show that they are not the same.
The description of the parcels in the complaint is as follows:
1. La caña dulce sembrada por los inquilinos del ejecutado Leon Sibal 1.º
en una parcela de terreno de la pertenencia del citado ejecutado, situada
en Libutad, Culubasa, Bamban, Tarlac, de unas dos hectareas poco mas o
menos de superficie.
2. La caña dulce sembrada por el inquilino del ejecutado Leon Sibal 1.º,
Ilamado Alejandro Policarpio, en una parcela de terreno de la
pertenencia del ejecutado, situada en Dalayap, Culubasa, Bamban, Tarlac
de unas dos hectareas de superficie poco mas o menos." The description
of parcel 2 given in the certificate of sale (Exhibit A) is as follows:
2a. Terreno palayero situado en Culubasa, Bamban, Tarlac, de 177,090
metros cuadrados de superficie, linda al N. con Canuto Sibal, Esteban
Lazatin and Alejandro Dayrit; al E. con Francisco Dizon, Felipe Mañu and
Sibal v. Valdez
Page 6 of 7
others; al S. con Alejandro Dayrit, Isidro Santos and Melecio Mañu; y al
O. con Alejandro Dayrit and Paulino Vergara. Tax No. 2854, vador
amillarado P4,200 pesos.
On the other hand the evidence for the defendant purported to show that parcels
1 and 2 of the complaint were included among the parcels bought by Valdez from
Macondray on June 25, 1924, and corresponded to parcel 4 in the deed of sale
(Exhibit B and 2), and were also included among the parcels bought by Valdez at
the auction of the real property of Leon Sibal on June 25, 1924, and corresponded
to parcel 3 in the certificate of sale made by the sheriff (Exhibit A). The
description of parcel 4 (Exhibit 2) and parcel 3 (Exhibit A) is as follows:
Parcels No. 4. — Terreno palayero, ubicado en el barrio de
Culubasa,Bamban, Tarlac, I. F. de 145,000 metros cuadrados de
superficie, lindante al Norte con Road of the barrio of Culubasa that goes
to Concepcion; al Este con Juan Dizon; al Sur con Lucio Maño y Canuto
Sibal y al Oeste con Esteban Lazatin, su valor amillarado asciende a la
suma de P2,990. Tax No. 2856.
As will be noticed, there is hardly any relation between parcels 1 and 2 of the
complaint and parcel 4 (Exhibit 2 and B) and parcel 3 (Exhibit A). But, inasmuch
as the plaintiff did not care to appear at the trial when the defendant offered his
evidence, we are inclined to give more weight to the evidence adduced by him
that to the evidence adduced by the plaintiff, with respect to the ownership of
parcels 1 and 2 of the compliant. We, therefore, conclude that parcels 1 and 2 of
the complaint belong to the defendant, having acquired the same from
Macondray & Co. on June 25, 1924, and from the plaintiff Leon Sibal on the same
date.
It appears, however, that the plaintiff planted the palay in said parcels and
harvested therefrom 190 cavans. There being no evidence of bad faith on his part,
he is therefore entitled to one-half of the crop, or 95 cavans. He should therefore
be condemned to pay to the defendant for 95 cavans only, at P3.40 a cavan, or the
sum of P323, and not for the total of 190 cavans as held by the lower court.
As to the ownership of parcel 7 of the complaint, the evidence shows that said
parcel corresponds to parcel 1 of the deed of sale of Macondray & Co, to Valdez
(Exhibit B and 2), and to parcel 4 in the certificate of sale to Valdez of real
property belonging to Sibal, executed by the sheriff as above stated (Exhibit A).
Valdez is therefore the absolute owner of said parcel, having acquired the interest
of both Macondray and Sibal in said parcel.
With reference to the parcel of land in Pacalcal, Tarlac, described in paragraph 3
of the second cause of action, it appears from the testimony of the plaintiff himself
that said parcel corresponds to parcel 8 of the deed of sale of Macondray to Valdez
(Exhibit B and 2) and to parcel 10 in the deed of sale executed by the sheriff in
favor of Valdez (Exhibit A). Valdez is therefore the absolute owner of said parcel,
having acquired the interest of both Macondray and Sibal therein.
In this connection the following facts are worthy of mention:
Execution in favor of Macondray & Co., May 11, 1923. Eight parcels of land were
attached under said execution. Said parcels of land were sold to Macondray & Co.
on the 30th day of July, 1923. Rice paid P4,273.93. On September 24, 1923, Leon
Sibal paid to Macondray & Co. P2,000 on the redemption of said parcels of land.
(See Exhibits B and C ).
Attachment, April 29, 1924, in favor of Valdez. Personal property of Sibal was
attached, including the sugar cane in question. (Exhibit A) The said personal
property so attached, sold at public auction May 9 and 10, 1924. April 29, 1924,
the real property was attached under the execution in favor of Valdez (Exhibit A).
June 25, 1924, said real property was sold and purchased by Valdez (Exhibit A).
June 25, 1924, Macondray & Co. sold all of the land which they had purchased at
public auction on the 30th day of July, 1923, to Valdez.
As to the loss of the defendant in sugar cane by reason of the injunction, the
evidence shows that the sugar cane in question covered an area of 22 hectares
and 60 ares (Exhibits 8, 8-b and 8-c); that said area would have yielded an
average crop of 1039 picos and 60 cates; that one-half of the quantity, or 519
picos and 80 cates would have corresponded to the defendant, as owner; that
during the season the sugar was selling at P13 a pico (Exhibit 5 and 5-A).
Therefore, the defendant, as owner, would have netted P 6,757.40 from the sugar
cane in question. The evidence also shows that the defendant could have taken
from the sugar cane 1,017,000 sugar-cane shoots (puntas de cana) and not
1,170,000 as computed by the lower court. During the season the shoots were
selling at P1.20 a thousand (Exhibits 6 and 7). The defendant therefore would
have netted P1,220.40 from sugar-cane shoots and not P1,435.68 as allowed by
the lower court.
As to the palay harvested by the plaintiff in parcels 1 and 2 of the complaint,
amounting to 190 cavans, one-half of said quantity should belong to the plaintiff,
as stated above, and the other half to the defendant. The court erred in awarding
the whole crop to the defendant. The plaintiff should therefore pay the defendant
for 95 cavans only, at P3.40 a cavan, or P323 instead of P646 as allowed by the
lower court.
The evidence also shows that the defendant was prevented by the acts of the
plaintiff from cultivating about 10 hectares of the land involved in the litigation.
He expected to have raised about 600 cavans of palay, 300 cavans of which would
have corresponded to him as owner. The lower court has wisely reduced his
share to 150 cavans only. At P4 a cavan, the palay would have netted him P600.
Sibal v. Valdez
Page 7 of 7

In view of the foregoing, the judgment appealed from is hereby modified. The
plaintiff and his sureties Cenon de la Cruz, Juan Sangalang and Marcos Sibal are
hereby ordered to pay to the defendant jointly and severally the sum of
P8,900.80, instead of P9,439.08 allowed by the lower court, as follows:
to the petition, the writ of mandamus will be issued, as prayed, but without costs.
So ordered.
Araullo, C.J., Malcolm, Avanceña, Ostrand, Johns, and Romualdez, JJ., concur.

P6,757.40 for the sugar cane;

1,220.40 for the sugar cane shoots;

323.00 for the palay harvested by plaintiff in parcels 1 and 2;

600.00 for the palay which defendant could have raised.

8,900.80
============

In all other respects, the judgment appealed from is hereby affirmed, with costs.
So ordered.
Street, Malcolm, Villamor, Romualdez and Villa-Real., JJ., concur.
the chattel mortgage would no doubt be held ineffective as against third
parties, but this is a question to be determined by the courts of justice
and not by the register of deeds.
In Leung Yee vs. Frank L. Strong Machinery Co. and Williamson (37 Phil., 644), this
court held that where the interest conveyed is of the nature of real, property, the
placing of the document on record in the chattel mortgage register is a futile act;
but that decision is not decisive of the question now before us, which has
reference to the function of the register of deeds in placing the document on
record.
In the light of what has been said it becomes unnecessary for us to pass upon the
point whether the interests conveyed in the instrument now in question are real
or personal; and we declare it to be the duty of the register of deeds to accept the
estimate placed upon the document by the petitioner and to register it, upon
payment of the proper fee.
The demurrer is overruled; and unless within the period of five days from the
date of the notification hereof, the respondent shall interpose a sufficient answer
Punsalan, Jr. vs. Vda. De Lacsamana, 121 SCRA 331
Page 1 of 3
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-55729 March 28, 1983
ANTONIO PUNSALAN, JR., petitioner,
vs.
REMEDIOS VDA. DE LACSAMANA and THE HONORABLE JUDGE RODOLFO A.
ORTIZ, respondents.
Benjamin S. Benito & Associates for petitioner.
Expedito Yummul for private respondent.
MELENCIO-HERRERA, J.:
The sole issue presented by petitioner for resolution is whether or not
respondent Court erred in denying the Motion to Set Case for Pre-trial with
respect to respondent Remedios Vda. de Lacsamana as the case had been
dismissed on the ground of improper venue upon motion of co-respondent
Philippine National Bank (PNB).
It appears that petitioner, Antonio Punsalan, Jr., was the former registered owner
of a parcel of land consisting of 340 square meters situated in Bamban, Tarlac. In
1963, petitioner mortgaged said land to respondent PNB (Tarlac Branch) in the
amount of P10,000.00, but for failure to pay said amount, the property was
foreclosed on December 16, 1970. Respondent PNB (Tarlac Branch) was the
highest bidder in said foreclosure proceedings. However, the bank secured title
thereto only on December 14, 1977.
In the meantime, in 1974, while the properly was still in the alleged possession
of petitioner and with the alleged acquiescence of respondent PNB (Tarlac
Branch), and upon securing a permit from the Municipal Mayor, petitioner
constructed a warehouse on said property. Petitioner declared said warehouse
for tax purposes for which he was issued Tax Declaration No. 5619. Petitioner
then leased the warehouse to one Hermogenes Sibal for a period of 10 years
starting January 1975.
On July 26, 1978, a Deed of Sale was executed between respondent PNB (Tarlac
Branch) and respondent Lacsamana over the property. This contract was
amended on July 31, 1978, particularly to include in the sale, the building and
improvement thereon. By virtue of said instruments, respondent - Lacsamana
secured title over the property in her name (TCT No. 173744) as well as separate
tax declarations for the land and building. 1
On November 22, 1979, petitioner commenced suit for "Annulment of Deed of
Sale with Damages" against herein respondents PNB and Lacsamana before
respondent Court of First Instance of Rizal, Branch XXXI, Quezon City, essentially
impugning the validity of the sale of the building as embodied in the Amended
Deed of Sale. In this connection, petitioner alleged:
xxx xxx xxx
22. That defendant, Philippine National Bank, through its Branch
Manager ... by virtue of the request of defendant ... executed a document
dated July 31, 1978, entitled Amendment to Deed of Absolute Sale ...
wherein said defendant bank as Vendor sold to defendant Lacsamana the
building owned by the plaintiff under Tax Declaration No. 5619,
notwithstanding the fact that said building is not owned by the bank
either by virtue of the public auction sale conducted by the Sheriff and
sold to the Philippine National Bank or by virtue of the Deed of Sale
executed by the bank itself in its favor on September 21, 1977 ...;
23. That said defendant bank fraudulently mentioned ... that the sale in
its favor should likewise have included the building, notwithstanding no
legal basis for the same and despite full knowledge that the Certificate of
Sale executed by the sheriff in its favor ... only limited the sale to the land,
hence, by selling the building which never became the property of
defendant, they have violated the principle against 'pactum
commisorium'.
Petitioner prayed that the Deed of Sale of the building in favor of respondent
Lacsamana be declared null and void and that damages in the total sum of
P230,000.00, more or less, be awarded to him.2
In her Answer filed on March 4, 1980,-respondent Lacsamana averred the
affirmative defense of lack of cause of action in that she was a purchaser for value
and invoked the principle in Civil Law that the "accessory follows the principal".3
On March 14, 1980, respondent PNB filed a Motion to Dismiss on the ground that
venue was improperly laid considering that the building was real property under
article 415 (1) of the New Civil Code and therefore section 2(a) of Rule 4 should
apply. 4
Opposing said Motion to Dismiss, petitioner contended that the action for
annulment of deed of sale with damages is in the nature of a personal action,
which seeks to recover not the title nor possession of the property but to compel
payment of damages, which is not an action affecting title to real property.
On April 25, 1980, respondent Court granted respondent PNB's Motion to
Dismiss as follows:
Acting upon the 'Motion to Dismiss' of the defendant Philippine National
Bank dated March 13, 1980, considered against the plaintiff's opposition
thereto dated April 1, 1980, including the reply therewith of said
defendant, this Court resolves to DISMISS the plaintiff's complaint for
Punsalan, Jr. vs. Vda. De Lacsamana, 121 SCRA 331
Page 2 of 3
improper venue considering that the plaintiff's complaint which seeks
for the declaration as null and void, the amendment to Deed of Absolute
Sale executed by the defendant Philippine National Bank in favor of the
defendant Remedios T. Vda. de Lacsamana, on July 31, 1978, involves a
warehouse allegedly owned and constructed by the plaintiff on the land
of the defendant Philippine National Bank situated in the Municipality of
Bamban, Province of Tarlac, which warehouse is an immovable property
pursuant to Article 415, No. 1 of the New Civil Code; and, as such the
action of the plaintiff is a real action affecting title to real property which,
under Section 2, Rule 4 of the New Rules of Court, must be tried in the
province where the property or any part thereof lies.5
In his Motion for Reconsideration of the aforestated Order, petitioner reiterated
the argument that the action to annul does not involve ownership or title to
property but is limited to the validity of the deed of sale and emphasized that the
case should proceed with or without respondent PNB as respondent Lacsamana
had already filed her Answer to the Complaint and no issue on venue had been
raised by the latter.
On September 1, 1980,.respondent Court denied reconsideration for lack of
merit.
Petitioner then filed a Motion to Set Case for Pre-trial, in so far as respondent
Lacsamana was concerned, as the issues had already been joined with the filing
of respondent Lacsamana's Answer.
In the Order of November 10, 1980 respondent Court denied said Motion to Set
Case for Pre-trial as the case was already dismissed in the previous Orders of
April 25, 1980 and September 1, 1980.
Hence, this Petition for Certiorari, to which we gave due course.
We affirm respondent Court's Order denying the setting for pre-trial.
The warehouse claimed to be owned by petitioner is an immovable or real
property as provided in article 415(l) of the Civil Code. 6 Buildings are always
immovable under the Code. 7 A building treated separately from the land on
which it stood is immovable property and the mere fact that the parties to a
contract seem to have dealt with it separate and apart from the land on which it
stood in no wise changed its character as immovable property. 8
While it is true that petitioner does not directly seek the recovery of title or
possession of the property in question, his action for annulment of sale and his
claim for damages are closely intertwined with the issue of ownership of the
building which, under the law, is considered immovable property, the recovery
of which is petitioner's primary objective. The prevalent doctrine is that an action
for the annulment or rescission of a sale of real property does not operate to
efface the fundamental and prime objective and nature of the case, which is to
recover said real property. It is a real action. 9
Respondent Court, therefore, did not err in dismissing the case on the ground of
improper venue (Section 2, Rule 4) 10, which was timely raised (Section 1, Rule
16) 11.
Petitioner's other contention that the case should proceed in so far as respondent
Lacsamana is concerned as she had already filed an Answer, which did not allege
improper venue and, therefore, issues had already been joined, is likewise
untenable. Respondent PNB is an indispensable party as the validity of the
Amended Contract of Sale between the former and respondent Lacsamana is in
issue. It would, indeed, be futile to proceed with the case against respondent
Lacsamana alone.
WHEREFORE, the petition is hereby denied without prejudice to the refiling of
the case by petitioner Antonio Punsalan, Jr. in the proper forum.
Costs against petitioner.
SO ORDERED.
Teehankee (Chairman), Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.
Footnotes
1 Exhibits "R" and "U", Original Records.
2 pp. 17-21, Rollo.
3 pp, 22-25, Ibid.
4 pp. 26 -28, Ibid.
5 p. 35, Ibid.
6 ART. 415. The following are immovable property. (1) Land, buildings, roads
and constructions of all kinds adhered to the soil;
xxx
7 3 Manresa 20.
8 Leung Yee vs. Strong Machinery Co., 37 Phil. 644 (1918).
9 Gavieres vs. Sanchez, et a]. 94 Phil. 760, (1954); Torres vs. J.M. Tuason &
Co., 12 SCRA 174 (1964); De Jesus vs. Coloso, 1 SCRA 272 (1961)
10 Section 2. Venue in Courts of First Instance.—Actions affecting title, to or
for recovery of possession or for partition or condemnation of, or foreclosure
of mortgage on, real property, shall be commenced and tried in the province
where the property or any part thereof Lies (Rule 4, Rules of Court).
11 Section 1. Grounds.— Within the time for pleading a motion to dismiss the
action may be made on any of the following grounds:
xxx
Punsalan, Jr. vs. Vda. De Lacsamana, 121 SCRA 331
Page 3 of 3

c) That venue is improperly laid; (Rule 16)

Mindanao Bus Co. vs. City Assessor and Treasurer
Page 1 of 3
Manila
EN BANC
G.R. No. L-17870 September 29, 1962
MINDANAO BUS COMPANY, petitioner,
vs.
THE CITY ASSESSOR & TREASURER and the BOARD OF TAX APPEALS of
Cagayan de Oro City, respondents.
Binamira, Barria and Irabagon for petitioner.
Vicente E. Sabellina for respondents.
LABRADOR, J.:
This is a petition for the review of the decision of the Court of Tax Appeals in
C.T.A. Case No. 710 holding that the petitioner Mindanao Bus Company is liable
to the payment of the realty tax on its maintenance and repair equipment
hereunder referred to.
Respondent City Assessor of Cagayan de Oro City assessed at P4,400 petitioner's
above-mentioned equipment. Petitioner appealed the assessment to the
respondent Board of Tax Appeals on the ground that the same are not realty. The
Board of Tax Appeals of the City sustained the city assessor, so petitioner herein
filed with the Court of Tax Appeals a petition for the review of the assessment.
In the Court of Tax Appeals the parties submitted the following stipulation of
facts:
Petitioner and respondents, thru their respective counsels agreed to the
following stipulation of facts:
1. That petitioner is a public utility solely engaged in transporting
passengers and cargoes by motor trucks, over its authorized lines in the
Island of Mindanao, collecting rates approved by the Public Service
Commission;
2. That petitioner has its main office and shop at Cagayan de Oro City. It
maintains Branch Offices and/or stations at Iligan City, Lanao; Pagadian,
Zamboanga del Sur; Davao City and Kibawe, Bukidnon Province;
3. That the machineries sought to be assessed by the respondent as real
properties are the following:
(a) Hobart Electric Welder Machine, appearing in the attached
photograph, marked Annex "A";
(b) Storm Boring Machine, appearing in the attached
photograph, marked Annex "B";
(c) Lathe machine with motor, appearing in the attached
photograph, marked Annex "C";
(d) Black and Decker Grinder, appearing in the attached
photograph, marked Annex "D";
(e) PEMCO Hydraulic Press, appearing in the attached
photograph, marked Annex "E";
(f) Battery charger (Tungar charge machine) appearing in the
attached photograph, marked Annex "F"; and
(g) D-Engine Waukesha-M-Fuel, appearing in the attached
photograph, marked Annex "G".
4. That these machineries are sitting on cement or wooden platforms as
may be seen in the attached photographs which form part of this agreed
stipulation of facts;
5. That petitioner is the owner of the land where it maintains and
operates a garage for its TPU motor trucks; a repair shop; blacksmith and
carpentry shops, and with these machineries which are placed therein,
its TPU trucks are made; body constructed; and same are repaired in a
condition to be serviceable in the TPU land transportation business it
operates;
6. That these machineries have never been or were never used as
industrial equipments to produce finished products for sale, nor to
repair machineries, parts and the like offered to the general public
indiscriminately for business or commercial purposes for which
petitioner has never engaged in, to date.1awphîl.nèt
The Court of Tax Appeals having sustained the respondent city assessor's ruling,
and having denied a motion for reconsideration, petitioner brought the case to
this Court assigning the following errors:
1. The Honorable Court of Tax Appeals erred in upholding respondents'
contention that the questioned assessments are valid; and that said tools,
equipments or machineries are immovable taxable real properties.
2. The Tax Court erred in its interpretation of paragraph 5 of Article 415
of the New Civil Code, and holding that pursuant thereto the movable
equipments are taxable realties, by reason of their being intended or
destined for use in an industry.
3. The Court of Tax Appeals erred in denying petitioner's contention that
the respondent City Assessor's power to assess and levy real estate taxes
on machineries is further restricted by section 31, paragraph (c) of
Republic Act No. 521; and
Mindanao Bus Co. vs. City Assessor and Treasurer
Page 2 of 3
4. The Tax Court erred in denying petitioner's motion for
reconsideration.
Respondents contend that said equipments, tho movable, are immobilized by
destination, in accordance with paragraph 5 of Article 415 of the New Civil Code
which provides:
Art. 415. — The following are immovable properties:
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be carried
on in a building or on a piece of land, and which tend directly to meet the
needs of the said industry or works. (Emphasis ours.)
Note that the stipulation expressly states that the equipment are placed on
wooden or cement platforms. They can be moved around and about in
petitioner's repair shop. In the case of B. H. Berkenkotter vs. Cu Unjieng, 61 Phil.
663, the Supreme Court said:
Article 344 (Now Art. 415), paragraph (5) of the Civil Code, gives the
character of real property to "machinery, liquid containers, instruments
or implements intended by the owner of any building or land for use in
connection with any industry or trade being carried on therein and
which are expressly adapted to meet the requirements of such trade or
industry."
If the installation of the machinery and equipment in question in the
central of the Mabalacat Sugar Co., Inc., in lieu of the other of less capacity
existing therein, for its sugar and industry, converted them into real
property by reason of their purpose, it cannot be said that their
incorporation therewith was not permanent in character because, as
essential and principle elements of a sugar central, without them the sugar
central would be unable to function or carry on the industrial purpose for
which it was established. Inasmuch as the central is permanent in
character, the necessary machinery and equipment installed for carrying
on the sugar industry for which it has been established must necessarily
be permanent. (Emphasis ours.)
So that movable equipments to be immobilized in contemplation of the law must
first be "essential and principal elements" of an industry or works without which
such industry or works would be "unable to function or carry on the industrial
purpose for which it was established." We may here distinguish, therefore, those
movable which become immobilized by destination because they are essential
and principal elements in the industry for those which may not be so considered
immobilized because they are merely incidental, not essential and principal. Thus,
cash registers, typewriters, etc., usually found and used in hotels, restaurants,
theaters, etc. are merely incidentals and are not and should not be considered
immobilized by destination, for these businesses can continue or carry on their
functions without these equity comments. Airline companies use forklifts, jeep-
wagons, pressure pumps, IBM machines, etc. which are incidentals, not
essentials, and thus retain their movable nature. On the other hand, machineries
of breweries used in the manufacture of liquor and soft drinks, though movable
in nature, are immobilized because they are essential to said industries; but the
delivery trucks and adding machines which they usually own and use and are
found within their industrial compounds are merely incidental and retain their
movable nature.
Similarly, the tools and equipments in question in this instant case are, by their
nature, not essential and principle municipal elements of petitioner's business of
transporting passengers and cargoes by motor trucks. They are merely
incidentals — acquired as movables and used only for expediency to facilitate
and/or improve its service. Even without such tools and equipments, its business
may be carried on, as petitioner has carried on, without such equipments, before
the war. The transportation business could be carried on without the repair or
service shop if its rolling equipment is repaired or serviced in another shop
belonging to another.
The law that governs the determination of the question at issue is as follows:
Art. 415. The following are immovable property:
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be carried
on in a building or on a piece of land, and which tend directly to meet the
needs of the said industry or works; (Civil Code of the Phil.)
Aside from the element of essentiality the above-quoted provision also requires
that the industry or works be carried on in a building or on a piece of land. Thus
in the case of Berkenkotter vs. Cu Unjieng, supra, the "machinery, liquid
containers, and instruments or implements" are found in a building constructed
on the land. A sawmill would also be installed in a building on land more or less
permanently, and the sawing is conducted in the land or building.
But in the case at bar the equipments in question are destined only to repair or
service the transportation business, which is not carried on in a building or
permanently on a piece of land, as demanded by the law. Said equipments may
not, therefore, be deemed real property.
Resuming what we have set forth above, we hold that the equipments in question
are not absolutely essential to the petitioner's transportation business, and
petitioner's business is not carried on in a building, tenement or on a specified
land, so said equipment may not be considered real estate within the meaning of
Article 415 (c) of the Civil Code.
Mindanao Bus Co. vs. City Assessor and Treasurer
Page 3 of 3

WHEREFORE, the decision subject of the petition for review is hereby set aside
and the equipment in question declared not subject to assessment as real estate
for the purposes of the real estate tax. Without costs.
So ordered.
Bengzon, C.J., Padilla, Bautista Angelo, Reyes, J.B.L., Paredes, Dizon and Makalintal,
JJ., concur.
Regala, Concepcion and Barrera JJ., took no part.
Prudential Bank vs. Panis, 153 SCRA 390
Page 1 of 3
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-50008 August 31, 1987
PRUDENTIAL BANK, petitioner,
vs.
HONORABLE DOMINGO D. PANIS, Presiding Judge of Branch III, Court of
First Instance of Zambales and Olongapo City; FERNANDO MAGCALE &
TEODULA BALUYUT-MAGCALE, respondents.
PARAS, J.:
This is a petition for review on certiorari of the November 13, 1978 Decision * of
the then Court of First Instance of Zambales and Olongapo City in Civil Case No.
2443-0 entitled "Spouses Fernando A. Magcale and Teodula Baluyut-Magcale vs.
Hon. Ramon Y. Pardo and Prudential Bank" declaring that the deeds of real estate
mortgage executed by respondent spouses in favor of petitioner bank are null
and void.
The undisputed facts of this case by stipulation of the parties are as follows:
... on November 19, 1971, plaintiffs-spouses Fernando A. Magcale and
Teodula Baluyut Magcale secured a loan in the sum of P70,000.00 from
the defendant Prudential Bank. To secure payment of this loan, plaintiffs
executed in favor of defendant on the aforesaid date a deed of Real Estate
Mortgage over the following described properties:
l. A 2-STOREY, SEMI-CONCRETE, residential building with warehouse
spaces containing a total floor area of 263 sq. meters, more or less,
generally constructed of mixed hard wood and concrete materials, under
a roofing of cor. g. i. sheets; declared and assessed in the name of
FERNANDO MAGCALE under Tax Declaration No. 21109, issued by the
Assessor of Olongapo City with an assessed value of P35,290.00. This
building is the only improvement of the lot.
2. THE PROPERTY hereby conveyed by way of MORTGAGE includes the
right of occupancy on the lot where the above property is erected, and
more particularly described and bounded, as follows:
A first class residential land Identffied as Lot No. 720, (Ts-308,
Olongapo Townsite Subdivision) Ardoin Street, East Bajac-
Bajac, Olongapo City, containing an area of 465 sq. m. more or
less, declared and assessed in the name of FERNANDO
On April 24, 1973, the Secretary of Agriculture issued Miscellaneous
MAGCALE under Tax Duration No. 19595 issued by the Assessor
Sales Patent No. 4776 over the parcel of land, possessory rights over
of Olongapo City with an assessed value of P1,860.00; bounded
which were mortgaged to defendant Prudential Bank, in favor of
on the
NORTH: By No. 6, Ardoin Street
SOUTH: By No. 2, Ardoin Street
EAST: By 37 Canda Street, and
WEST: By Ardoin Street.
All corners of the lot marked by conc. cylindrical
monuments of the Bureau of Lands as visible limits. (
Exhibit "A, " also Exhibit "1" for defendant).
Apart from the stipulations in the printed portion of the
aforestated deed of mortgage, there appears a rider typed at the
bottom of the reverse side of the document under the lists of the
properties mortgaged which reads, as follows:
AND IT IS FURTHER AGREED that in the event the Sales
Patent on the lot applied for by the Mortgagors as
herein stated is released or issued by the Bureau of
Lands, the Mortgagors hereby authorize the Register of
Deeds to hold the Registration of same until this
Mortgage is cancelled, or to annotate this encumbrance
on the Title upon authority from the Secretary of
Agriculture and Natural Resources, which title with
annotation, shall be released in favor of the herein
Mortgage.
From the aforequoted stipulation, it is obvious that the
mortgagee (defendant Prudential Bank) was at the outset aware
of the fact that the mortgagors (plaintiffs) have already filed a
Miscellaneous Sales Application over the lot, possessory rights
over which, were mortgaged to it.
Exhibit "A" (Real Estate Mortgage) was registered under the
Provisions of Act 3344 with the Registry of Deeds of Zambales
on November 23, 1971.
On May 2, 1973, plaintiffs secured an additional loan from
defendant Prudential Bank in the sum of P20,000.00. To secure
payment of this additional loan, plaintiffs executed in favor of
the said defendant another deed of Real Estate Mortgage over
the same properties previously mortgaged in Exhibit "A."
(Exhibit "B;" also Exhibit "2" for defendant). This second deed of
Real Estate Mortgage was likewise registered with the Registry
of Deeds, this time in Olongapo City, on May 2,1973.
Prudential Bank vs. Panis, 153 SCRA 390
Page 2 of 3
plaintiffs. On the basis of the aforesaid Patent, and upon its transcription
in the Registration Book of the Province of Zambales, Original Certificate
of Title No. P-2554 was issued in the name of Plaintiff Fernando Magcale,
by the Ex-Oficio Register of Deeds of Zambales, on May 15, 1972.
For failure of plaintiffs to pay their obligation to defendant Bank after it
became due, and upon application of said defendant, the deeds of Real
Estate Mortgage (Exhibits "A" and "B") were extrajudicially foreclosed.
Consequent to the foreclosure was the sale of the properties therein
mortgaged to defendant as the highest bidder in a public auction sale
conducted by the defendant City Sheriff on April 12, 1978 (Exhibit "E").
The auction sale aforesaid was held despite written request from
plaintiffs through counsel dated March 29, 1978, for the defendant City
Sheriff to desist from going with the scheduled public auction sale
(Exhibit "D")." (Decision, Civil Case No. 2443-0, Rollo, pp. 29-31).
Respondent Court, in a Decision dated November 3, 1978 declared the deeds of
Real Estate Mortgage as null and void (Ibid., p. 35).
On December 14, 1978, petitioner filed a Motion for Reconsideration (Ibid., pp.
41-53), opposed by private respondents on January 5, 1979 (Ibid., pp. 54-62), and
in an Order dated January 10, 1979 (Ibid., p. 63), the Motion for Reconsideration
was denied for lack of merit. Hence, the instant petition (Ibid., pp. 5-28).
The first Division of this Court, in a Resolution dated March 9, 1979, resolved to
require the respondents to comment (Ibid., p. 65), which order was complied
with the Resolution dated May 18,1979, (Ibid., p. 100), petitioner filed its Reply
on June 2,1979 (Ibid., pp. 101-112).
Thereafter, in the Resolution dated June 13, 1979, the petition was given due
course and the parties were required to submit simultaneously their respective
memoranda. (Ibid., p. 114).
On July 18, 1979, petitioner filed its Memorandum (Ibid., pp. 116-144), while
private respondents filed their Memorandum on August 1, 1979 (Ibid., pp. 146-
155).
In a Resolution dated August 10, 1979, this case was considered submitted for
decision (Ibid., P. 158).
In its Memorandum, petitioner raised the following issues:
1. WHETHER OR NOT THE DEEDS OF REAL ESTATE MORTGAGE ARE VALID;
AND
2. WHETHER OR NOT THE SUPERVENING ISSUANCE IN FAVOR OF PRIVATE
RESPONDENTS OF MISCELLANEOUS SALES PATENT NO. 4776 ON APRIL 24,
1972 UNDER ACT NO. 730 AND THE COVERING ORIGINAL CERTIFICATE OF
TITLE NO. P-2554 ON MAY 15,1972 HAVE THE EFFECT OF INVALIDATING THE
DEEDS OF REAL ESTATE MORTGAGE. (Memorandum for Petitioner, Rollo, p.
122).
This petition is impressed with merit.
The pivotal issue in this case is whether or not a valid real estate mortgage can
be constituted on the building erected on the land belonging to another.
The answer is in the affirmative.
In the enumeration of properties under Article 415 of the Civil Code of the
Philippines, this Court ruled that, "it is obvious that the inclusion of "building"
separate and distinct from the land, in said provision of law can only mean that a
building is by itself an immovable property." (Lopez vs. Orosa, Jr., et al., L-10817-
18, Feb. 28, 1958; Associated Inc. and Surety Co., Inc. vs. Iya, et al., L-10837-38,
May 30,1958).
Thus, while it is true that a mortgage of land necessarily includes, in the absence
of stipulation of the improvements thereon, buildings, still a building by itself
may be mortgaged apart from the land on which it has been built. Such a
mortgage would be still a real estate mortgage for the building would still be
considered immovable property even if dealt with separately and apart from the
land (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). In the same manner, this
Court has also established that possessory rights over said properties before title
is vested on the grantee, may be validly transferred or conveyed as in a deed of
mortgage (Vda. de Bautista vs. Marcos, 3 SCRA 438 [1961]).
Coming back to the case at bar, the records show, as aforestated that the original
mortgage deed on the 2-storey semi-concrete residential building with
warehouse and on the right of occupancy on the lot where the building was
erected, was executed on November 19, 1971 and registered under the
provisions of Act 3344 with the Register of Deeds of Zambales on November 23,
1971. Miscellaneous Sales Patent No. 4776 on the land was issued on April 24,
1972, on the basis of which OCT No. 2554 was issued in the name of private
respondent Fernando Magcale on May 15, 1972. It is therefore without question
that the original mortgage was executed before the issuance of the final patent
and before the government was divested of its title to the land, an event which
takes effect only on the issuance of the sales patent and its subsequent
registration in the Office of the Register of Deeds (Visayan Realty Inc. vs. Meer, 96
Phil. 515; Director of Lands vs. De Leon, 110 Phil. 28; Director of Lands vs. Jurado,
L-14702, May 23, 1961; Pena "Law on Natural Resources", p. 49). Under the
foregoing considerations, it is evident that the mortgage executed by private
respondent on his own building which was erected on the land belonging to the
government is to all intents and purposes a valid mortgage.
As to restrictions expressly mentioned on the face of respondents' OCT No. P-
2554, it will be noted that Sections 121, 122 and 124 of the Public Land Act, refer
to land already acquired under the Public Land Act, or any improvement thereon
Prudential Bank vs. Panis, 153 SCRA 390
Page 3 of 3

and therefore have no application to the assailed mortgage in the case at bar Mortgage for P70,000.00 is valid but ruling that the Deed of Real Estate Mortgage
which was executed before such eventuality. Likewise, Section 2 of Republic Act for an additional loan of P20,000.00 is null and void, without prejudice to any
No. 730, also a restriction appearing on the face of private respondent's title has appropriate action the Government may take against private respondents.
likewise no application in the instant case, despite its reference to encumbrance
SO ORDERED.
or alienation before the patent is issued because it refers specifically to
encumbrance or alienation on the land itself and does not mention anything Teehankee, C.J., Narvasa, Cruz and Gancayco, JJ., concur.
regarding the improvements existing thereon. Footnotes
But it is a different matter, as regards the second mortgage executed over the * Penned by Judge Domingo D. Panis.
same properties on May 2, 1973 for an additional loan of P20,000.00 which was
registered with the Registry of Deeds of Olongapo City on the same date. Relative
thereto, it is evident that such mortgage executed after the issuance of the sales
patent and of the Original Certificate of Title, falls squarely under the prohibitions
stated in Sections 121, 122 and 124 of the Public Land Act and Section 2 of
Republic Act 730, and is therefore null and void.
Petitioner points out that private respondents, after physically possessing the
title for five years, voluntarily surrendered the same to the bank in 1977 in order
that the mortgaged may be annotated, without requiring the bank to get the prior
approval of the Ministry of Natural Resources beforehand, thereby implicitly
authorizing Prudential Bank to cause the annotation of said mortgage on their
title.
However, the Court, in recently ruling on violations of Section 124 which refers
to Sections 118, 120, 122 and 123 of Commonwealth Act 141, has held:
... Nonetheless, we apply our earlier rulings because we believe that as
in pari delicto may not be invoked to defeat the policy of the State neither
may the doctrine of estoppel give a validating effect to a void contract.
Indeed, it is generally considered that as between parties to a contract,
validity cannot be given to it by estoppel if it is prohibited by law or is
against public policy (19 Am. Jur. 802). It is not within the competence
of any citizen to barter away what public policy by law was to preserve
(Gonzalo Puyat & Sons, Inc. vs. De los Amas and Alino supra). ... (Arsenal
vs. IAC, 143 SCRA 54 [1986]).
This pronouncement covers only the previous transaction already alluded to and
does not pass upon any new contract between the parties (Ibid), as in the case at
bar. It should not preclude new contracts that may be entered into between
petitioner bank and private respondents that are in accordance with the
requirements of the law. After all, private respondents themselves declare that
they are not denying the legitimacy of their debts and appear to be open to new
negotiations under the law (Comment; Rollo, pp. 95-96). Any new transaction,
however, would be subject to whatever steps the Government may take for the
reversion of the land in its favor.
PREMISES CONSIDERED, the decision of the Court of First Instance of Zambales
& Olongapo City is hereby MODIFIED, declaring that the Deed of Real Estate
Makati Leasing and Financial Corporation vs. Wearever Textile Mills, Inc., G.R. No. L-58469
Page 1 of 2
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-58469 May 16, 1983
MAKATI LEASING and FINANCE CORPORATION, petitioner,
vs.
WEAREVER TEXTILE MILLS, INC., and HONORABLE COURT OF
APPEALS, respondents.
Loreto C. Baduan for petitioner.
Ramon D. Bagatsing & Assoc. (collaborating counsel) for petitioner.
Jose V. Mancella for respondent.
DE CASTRO, J.:
Petition for review on certiorari of the decision of the Court of Appeals (now
Intermediate Appellate Court) promulgated on August 27, 1981 in CA-G.R. No.
SP-12731, setting aside certain Orders later specified herein, of Judge Ricardo J.
Francisco, as Presiding Judge of the Court of First instance of Rizal Branch VI,
issued in Civil Case No. 36040, as wen as the resolution dated September 22, 1981
of the said appellate court, denying petitioner's motion for reconsideration.
It appears that in order to obtain financial accommodations from herein
petitioner Makati Leasing and Finance Corporation, the private respondent
Wearever Textile Mills, Inc., discounted and assigned several receivables with the
former under a Receivable Purchase Agreement. To secure the collection of the
receivables assigned, private respondent executed a Chattel Mortgage over
certain raw materials inventory as well as a machinery described as an Artos
Aero Dryer Stentering Range.
Upon private respondent's default, petitioner filed a petition for extrajudicial
foreclosure of the properties mortgage to it. However, the Deputy Sheriff
assigned to implement the foreclosure failed to gain entry into private
respondent's premises and was not able to effect the seizure of the
aforedescribed machinery. Petitioner thereafter filed a complaint for judicial
foreclosure with the Court of First Instance of Rizal, Branch VI, docketed as Civil
Case No. 36040, the case before the lower court.
Acting on petitioner's application for replevin, the lower court issued a writ of
seizure, the enforcement of which was however subsequently restrained upon
private respondent's filing of a motion for reconsideration. After several
incidents, the lower court finally issued on February 11, 1981, an order lifting the
restraining order for the enforcement of the writ of seizure and an order to break
open the premises of private respondent to enforce said writ. The lower court
reaffirmed its stand upon private respondent's filing of a further motion for
reconsideration.
On July 13, 1981, the sheriff enforcing the seizure order, repaired to the premises
of private respondent and removed the main drive motor of the subject
machinery.
The Court of Appeals, in certiorari and prohibition proceedings subsequently
filed by herein private respondent, set aside the Orders of the lower court and
ordered the return of the drive motor seized by the sheriff pursuant to said
Orders, after ruling that the machinery in suit cannot be the subject of replevin,
much less of a chattel mortgage, because it is a real property pursuant to Article
415 of the new Civil Code, the same being attached to the ground by means of
bolts and the only way to remove it from respondent's plant would be to drill out
or destroy the concrete floor, the reason why all that the sheriff could do to enfore
the writ was to take the main drive motor of said machinery. The appellate court
rejected petitioner's argument that private respondent is estopped from claiming
that the machine is real property by constituting a chattel mortgage thereon.
A motion for reconsideration of this decision of the Court of Appeals having been
denied, petitioner has brought the case to this Court for review by writ of
certiorari. It is contended by private respondent, however, that the instant
petition was rendered moot and academic by petitioner's act of returning the
subject motor drive of respondent's machinery after the Court of Appeals'
decision was promulgated.
The contention of private respondent is without merit. When petitioner returned
the subject motor drive, it made itself unequivocably clear that said action was
without prejudice to a motion for reconsideration of the Court of Appeals
decision, as shown by the receipt duly signed by respondent's
representative. 1 Considering that petitioner has reserved its right to question
the propriety of the Court of Appeals' decision, the contention of private
respondent that this petition has been mooted by such return may not be
sustained.
The next and the more crucial question to be resolved in this Petition is whether
the machinery in suit is real or personal property from the point of view of the
parties, with petitioner arguing that it is a personality, while the respondent
claiming the contrary, and was sustained by the appellate court, which
accordingly held that the chattel mortgage constituted thereon is null and void,
as contended by said respondent.
A similar, if not Identical issue was raised in Tumalad v. Vicencio, 41 SCRA 143
where this Court, speaking through Justice J.B.L. Reyes, ruled:
Although there is no specific statement referring to the subject house as
personal property, yet by ceding, selling or transferring a property by
way of chattel mortgage defendants-appellants could only have meant to
Makati Leasing and Financial Corporation vs. Wearever Textile Mills, Inc., G.R. No. L-58469
Page 2 of 2

convey the house as chattel, or at least, intended to treat the same as the Court of Appeals except in a supplemental memorandum in support of the
such, so that they should not now be allowed to make an inconsistent petition filed in the appellate court. Moreover, even granting that the charge is
stand by claiming otherwise. Moreover, the subject house stood on a true, such fact alone does not render a contract void ab initio, but can only be a
rented lot to which defendants-appellants merely had a temporary right ground for rendering said contract voidable, or annullable pursuant to Article
as lessee, and although this can not in itself alone determine the status 1390 of the new Civil Code, by a proper action in court. There is nothing on record
of the property, it does so when combined with other factors to sustain to show that the mortgage has been annulled. Neither is it disclosed that steps
the interpretation that the parties, particularly the mortgagors, intended were taken to nullify the same. On the other hand, as pointed out by petitioner
to treat the house as personality. Finally, unlike in the Iya cases, Lopez vs. and again not refuted by respondent, the latter has indubitably benefited from
Orosa, Jr. & Plaza Theatre, Inc. & Leung Yee vs. F.L. Strong Machinery & said contract. Equity dictates that one should not benefit at the expense of
Williamson, wherein third persons assailed the validity of the chattel another. Private respondent could not now therefore, be allowed to impugn the
mortgage, it is the defendants-appellants themselves, as debtors- efficacy of the chattel mortgage after it has benefited therefrom,
mortgagors, who are attacking the validity of the chattel mortgage in this From what has been said above, the error of the appellate court in ruling that the
case. The doctrine of estoppel therefore applies to the herein
questioned machinery is real, not personal property, becomes very apparent.
defendants-appellants, having treated the subject house as personality.
Moreover, the case of Machinery and Engineering Supplies, Inc. v. CA, 96 Phil. 70,
Examining the records of the instant case, We find no logical justification to heavily relied upon by said court is not applicable to the case at bar, the nature of
exclude the rule out, as the appellate court did, the present case from the the machinery and equipment involved therein as real properties never having
application of the abovequoted pronouncement. If a house of strong materials, been disputed nor in issue, and they were not the subject of a Chattel Mortgage.
like what was involved in the above Tumalad case, may be considered as personal Undoubtedly, the Tumalad case bears more nearly perfect parity with the instant
property for purposes of executing a chattel mortgage thereon as long as the case to be the more controlling jurisprudential authority.
parties to the contract so agree and no innocent third party will be prejudiced WHEREFORE, the questioned decision and resolution of the Court of Appeals are
thereby, there is absolutely no reason why a machinery, which is movable in its
hereby reversed and set aside, and the Orders of the lower court are hereby
nature and becomes immobilized only by destination or purpose, may not be
reinstated, with costs against the private respondent.
likewise treated as such. This is really because one who has so agreed is estopped
from denying the existence of the chattel mortgage. SO ORDERED.
In rejecting petitioner's assertion on the applicability of the Tumalad doctrine, Makasiar (Chairman), Aquino, Concepcion Jr., Guerrero and Escolin JJ., concur.
the Court of Appeals lays stress on the fact that the house involved therein was Abad Santos, J., concurs in the result.
built on a land that did not belong to the owner of such house. But the law makes
no distinction with respect to the ownership of the land on which the house is
built and We should not lay down distinctions not contemplated by law. Footnotes
It must be pointed out that the characterization of the subject machinery as 1 p. 52, Rollo.
chattel by the private respondent is indicative of intention and impresses upon
the property the character determined by the parties. As stated in Standard Oil
Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a
contract may by agreement treat as personal property that which by nature
would be real property, as long as no interest of third parties would be prejudiced
thereby.
Private respondent contends that estoppel cannot apply against it because it had
never represented nor agreed that the machinery in suit be considered as
personal property but was merely required and dictated on by herein petitioner
to sign a printed form of chattel mortgage which was in a blank form at the time
of signing. This contention lacks persuasiveness. As aptly pointed out by
petitioner and not denied by the respondent, the status of the subject machinery
as movable or immovable was never placed in issue before the lower court and
Machinery & Engineering Supplies, Inc. vs. CA, No. L-7057
Page 1 of 3
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-7057 October 29, 1954
MACHINERY & ENGINEERING SUPPLIES, INC., petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. POTENCIANO PECSON, JUDGE
OF THE COURT OF FIRST INSTANCE OF MANILA, IPO LIMESTONE CO., INC.,
and ANTONIO VILLARAMA, respondents.
Vicente J. Francisco for petitioner.
Capistrano and Capistrano for respondents.
CONCEPCION, J.:
This is an appeal by certiorari, taken by petitioner Machinery and Engineering
Supplies Inc., from a decision of the Court of Appeals denying an original petition
for certiorari filed by said petitioner against Hon. Potenciano Pecson, Ipo
Limestone Co., Inc., and Antonio Villarama, the respondents herein.
The pertinent facts are set forth in the decision of the Court of Appeals, from
which we quote:
On March 13, 1953, the herein petitioner filed a complaint for replevin
in the Court of First Instance of Manila, Civil Case No. 19067, entitled
"Machinery and Engineering Supplies, Inc., Plaintiff, vs. Ipo Limestone
Co., Inc., and Dr. Antonio Villarama, defendants", for the recovery of the
machinery and equipment sold and delivered to said defendants at their
factory in barrio Bigti, Norzagaray, Bulacan. Upon application ex-parte
of the petitioner company, and upon approval of petitioner's bond in the
sum of P15,769.00, on March 13,1953, respondent judge issued an order,
commanding the Provincial Sheriff of Bulacan to seize and take
immediate possession of the properties specified in the order (Appendix
I, Answer). On March 19, 1953, two deputy sheriffs of Bulacan, the said
Ramon S. Roco, and a crew of technical men and laborers proceeded to
Bigti, for the purpose of carrying the court's order into effect. Leonardo
Contreras, Manager of the respondent Company, and Pedro Torres, in
charge thereof, met the deputy sheriffs, and Contreras handed to them a
letter addressed to Atty. Leopoldo C. Palad, ex-oficio Provincial Sheriff of
Bulacan, signed by Atty. Adolfo Garcia of the defendants therein,
protesting against the seizure of the properties in question, on the
ground that they are not personal properties. Contending that the
Sheriff's duty is merely ministerial, the deputy sheriffs, Roco, the latter's
crew of technicians and laborers, Contreras and Torres, went to the
factory. Roco's attention was called to the fact that the equipment could
not possibly be dismantled without causing damages or injuries to the
wooden frames attached to them. As Roco insisted in dismantling the
equipment on his own responsibility, alleging that the bond was posted
for such eventuality, the deputy sheriffs directed that some of the
supports thereof be cut (Appendix 2). On March 20, 1953, the defendant
Company filed an urgent motion, with a counter-bond in the amount of
P15,769, for the return of the properties seized by the deputy sheriffs.
On the same day, the trial court issued an order, directing the Provincial
Sheriff of Bulacan to return the machinery and equipment to the place
where they were installed at the time of the seizure (Appendix 3). On
March 21, 1953, the deputy sheriffs returned the properties seized, by
depositing them along the road, near the quarry, of the defendant
Company, at Bigti, without the benefit of inventory and without re-
installing hem in their former position and replacing the destroyed
posts, which rendered their use impracticable. On March 23, 1953, the
defendants' counsel asked the provincial Sheriff if the machinery and
equipment, dumped on the road would be re-installed tom their former
position and condition (letter, Appendix 4). On March 24, 1953, the
Provincial Sheriff filed an urgent motion in court, manifesting that Roco
had been asked to furnish the Sheriff's office with the expenses, laborers,
technical men and equipment, to carry into effect the court's order, to
return the seized properties in the same way said Roco found them on
the day of seizure, but said Roco absolutely refused to do so, and asking
the court that the Plaintiff therein be ordered to provide the required aid
or relieve the said Sheriff of the duty of complying with the said order
dated March 20, 1953 (Appendix 5). On March 30, 1953, the trial court
ordered the Provincial Sheriff and the Plaintiff to reinstate the
machinery and equipment removed by them in their original condition
in which they were found before their removal at the expense of the
Plaintiff (Appendix 7). An urgent motion of the Provincial Sheriff dated
April 15, 1953, praying for an extension of 20 days within which to
comply with the order of the Court (appendix 10) was denied; and on
May 4, 1953, the trial court ordered the Plaintiff therein to furnish the
Provincial Sheriff within 5 days with the necessary funds, technical men,
laborers, equipment and materials to effect the repeatedly mentioned re-
installation (Appendix 13). (Petitioner's brief, Appendix A, pp. I-IV.)
Thereupon petitioner instituted in the Court of Appeals civil case G.R. No. 11248-
R, entitled "Machinery and Engineering Supplies, Inc. vs. Honorable Potenciano
Pecson, Provincial Sheriff of Bulacan, Ipo Limestone Co., Inc., and Antonio
Villarama." In the petition therein filed, it was alleged that, in ordering the
petitioner to furnish the provincial sheriff of Bulacan "with necessary funds,
technical men, laborers, equipment and materials, to effect the installation of the
machinery and equipment" in question, the Court of Firs Instance of Bulacan had
Machinery & Engineering Supplies, Inc. vs. CA, No. L-7057
Page 2 of 3
committed a grave abuse if discretion and acted in excess of its jurisdiction, for
which reason it was prayed that its order to this effect be nullified, and that,
meanwhile, a writ of preliminary injunction be issued to restrain the enforcement
o said order of may 4, 1953. Although the aforementioned writ was issued by the
Court of Appeals, the same subsequently dismissed by the case for lack of merit,
with costs against the petitioner, upon the following grounds:
While the seizure of the equipment and personal properties was ordered
by the respondent Court, it is, however, logical to presume that said court
did not authorize the petitioner or its agents to destroy, as they did, said
machinery and equipment, by dismantling and unbolting the same from
their concrete basements, and cutting and sawing their wooden
supports, thereby rendering them unserviceable and beyond repair,
unless those parts removed, cut and sawed be replaced, which the
petitioner, not withstanding the respondent Court's order, adamantly
refused to do. The Provincial Sheriff' s tortious act, in obedience to the
insistent proddings of the president of the Petitioner, Ramon S. Roco, had
no justification in law, notwithstanding the Sheriffs' claim that his duty
was ministerial. It was the bounden duty of the respondent Judge to give
redress to the respondent Company, for the unlawful and wrongful acts
committed by the petitioner and its agents. And as this was the true
object of the order of March 30, 1953, we cannot hold that same was
within its jurisdiction to issue. The ministerial duty of the Sheriff should
have its limitations. The Sheriff knew or must have known what is
inherently right and inherently wrong, more so when, as in this
particular case, the deputy sheriffs were shown a letter of respondent
Company's attorney, that the machinery were not personal properties
and, therefore, not subject to seizure by the terms of the order. While it
may be conceded that this was a question of law too technical to decide
on the spot, it would not have costs the Sheriff much time and difficulty
to bring the letter to the court's attention and have the equipment and
machinery guarded, so as not to frustrate the order of seizure issued by
the trial court. But acting upon the directives of the president of the
Petitioner, to seize the properties at any costs, in issuing the order
sought to be annulled, had not committed abuse of discretion at all or
acted in an arbitrary or despotic manner, by reason of passion or
personal hostility; on the contrary, it issued said order, guided by the
well known principle that of the property has to be returned, it should
be returned in as good a condition as when taken (Bachrach Motor Co.,
Inc., vs. Bona, 44 Phil., 378). If any one had gone beyond the scope of his
authority, it is the respondent Provincial Sheriff. But considering that
fact that he acted under the pressure of Ramon S. Roco, and that the
order impugned was issued not by him, but by the respondent Judge, We
simply declare that said Sheriff' act was most unusual and the result of a
poor judgment. Moreover, the Sheriff not being an officer exercising
judicial functions, the writ may not reach him, for certiorari lies only to
review judicial actions.
The Petitioner complains that the respondent Judge had completely
disregarded his manifestation that the machinery and equipment seized
were and still are the Petitioner's property until fully paid for and such
never became immovable. The question of ownership and the
applicability of Art. 415 of the new Civil Code are immaterial in the
determination of the only issue involved in this case. It is a matter of
evidence which should be decided in the hearing of the case on the
merits. The question as to whether the machinery or equipment in
litigation are immovable or not is likewise immaterial, because the only
issue raised before the trial court was whether the Provincial Sheriff of
Bulacan, at the Petitioner's instance, was justified in destroying the
machinery and in refusing to restore them to their original form , at the
expense of the Petitioner. Whatever might be the legal character of the
machinery and equipment, would not be in any way justify their justify
their destruction by the Sheriff's and the said Petitioner's. (Petitioner's
brief, Appendix A, pp. IV-VII.)
A motion for reconsideration of this decision of the Court of Appeals having been
denied , petitioner has brought the case to Us for review by writ of certiorari.
Upon examination of the record, We are satisfied, however that the Court of
Appeals was justified in dismissing the case.
The special civil action known as replevin, governed by Rule 62 of Court, is
applicable only to "personal property".
Ordinarily replevin may be brought to recover any specific personal
property unlawfully taken or detained from the owner thereof, provided
such property is capable of identification and delivery; but replevin will
not lie for the recovery of real property or incorporeal personal property.
(77 C. J. S. 17) (Emphasis supplied.)
When the sheriff repaired to the premises of respondent, Ipo Limestone Co., Inc.,
machinery and equipment in question appeared to be attached to the land,
particularly to the concrete foundation of said premises, in a fixed manner, in
such a way that the former could not be separated from the latter "without
breaking the material or deterioration of the object." Hence, in order to remove
said outfit, it became necessary, not only to unbolt the same, but , also, to cut some
of its wooden supports. Moreover, said machinery and equipment were
"intended by the owner of the tenement for an industry" carried on said
immovable and tended." For these reasons, they were already immovable
property pursuant to paragraphs 3 and 5 of Article 415 of Civil Code of the
Philippines, which are substantially identical to paragraphs 3 and 5 of Article 334
of the Civil Code of Spain. As such immovable property, they were not subject to
replevin.
Machinery & Engineering Supplies, Inc. vs. CA, No. L-7057
Page 3 of 3

In so far as an article, including a fixture annexed by a tenant, is regarded

as part of the realty, it is not the subject for personality; . . . .
. . . the action of replevin does not lie for articles so annexed to the realty
as to be part as to be part thereof, as, for example, a house or a turbine
pump constituting part of a building's cooling system; . . . (36 C. J. S. 1000
& 1001)
Moreover, as the provincial sheriff hesitated to remove the property in question,
petitioner's agent and president, Mr. Ramon Roco, insisted "on the dismantling
at his own responsibility," stating that., precisely, "that is the reason why plaintiff
posted a bond ." In this manner, petitioner clearly assumed the corresponding
risks.
Such assumption of risk becomes more apparent when we consider that,
pursuant to Section 5 of Rule 62 of the Rules of Court, the defendant in an action
for replevin is entitled to the return of the property in dispute upon the filing of
a counterbond, as provided therein. In other words, petitioner knew that the
restitution of said property to respondent company might be ordered under said
provision of the Rules of Court, and that, consequently, it may become necessary
for petitioner to meet the liabilities incident to such return.
Lastly, although the parties have not cited, and We have not found, any authority
squarely in point — obviously real property are not subject to replevin — it is
well settled that, when the restitution of what has been ordered, the goods in
question shall be returned in substantially the same condition as when taken (54
C.J., 590-600, 640-641). Inasmuch as the machinery and equipment involved in
this case were duly installed and affixed in the premises of respondent company
when petitioner's representative caused said property to be dismantled and then
removed, it follows that petitioner must also do everything necessary to the
reinstallation of said property in conformity with its original condition.
Wherefore, the decision of the Court of Appeals is hereby affirmed, with costs
against the petitioner. So ordered.
Pablo, Bengzon, Padilla, Montemayor, Reyes, A., Jugo, Bautista Angelo and Reyes,
J.B.L., JJ., concur.
Paras, C.J., concurs in the result.
Lopez v. Orosa
Page 1 of 3
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. Nos. L-10817-18 February 28, 1958
ENRIQUE LOPEZ, petitioner,
vs.
VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.
Nicolas Belmonte and Benjamin T. de Peralta for petitioner.
Tolentino & Garcia and D. R. Cruz for respondent Luzon Surety Co., Inc. Jose B.
Macatangay for respondent Plaza Theatre, Inc.
FELIX, J.:
Enrique Lopez is a resident of Balayan, Batangas, doing business under the trade
name of Lopez-Castelo Sawmill. Sometime in May, 1946, Vicente Orosa, Jr., also a
resident of the same province, dropped at Lopez' house and invited him to make
an investment in the theatre business. It was intimated that Orosa, his family and
close friends were organizing a corporation to be known as Plaza Theatre, Inc.,
that would engage in such venture. Although Lopez expressed his unwillingness
to invest of the same, he agreed to supply the lumber necessary for the
construction of the proposed theatre, and at Orosa's behest and assurance that
the latter would be personally liable for any account that the said construction
might incur, Lopez further agreed that payment therefor would be on demand
and not cash on delivery basis. Pursuant to said verbal agreement, Lopez
delivered the lumber which was used for the construction of the Plaza Theatre
on May 17, 1946, up to December 4 of the same year. But of the total cost of the
materials amounting to P62,255.85, Lopez was paid only P20,848.50, thus
leaving a balance of P41,771.35.
We may state at this juncture that the Plaza Theatre was erected on a piece of
land with an area of 679.17 square meters formerly owned by Vicente Orosa, Jr.,
and was acquired by the corporation on September 25, 1946, for P6,000. As
Lopez was pressing Orosa for payment of the remaining unpaid obligation, the
latter and Belarmino Rustia, the president of the corporation, promised to obtain
a bank loan by mortgaging the properties of the Plaza Theatre., out of which said
amount of P41,771.35 would be satisfied, to which assurance Lopez had to
accede. Unknown to him, however, as early as November, 1946, the corporation
already got a loan for P30,000 from the Philippine National Bank with the Luzon
Surety Company as surety, and the corporation in turn executed a mortgage on
the land and building in favor of said company as counter-security. As the land at
that time was not yet brought under the operation of the Torrens System, the
mortgage on the same was registered on November 16, 1946, under Act No. 3344.
Subsequently, when the corporation applied for the registration of the land under
Act 496, such mortgage was not revealed and thus Original Certificate of Title No.
O-391 was correspondingly issued on October 25, 1947, without any
encumbrance appearing thereon.
Persistent demand from Lopez for the payment of the amount due him caused
Vicente Orosa, Jr. to execute on March 17, 1947, an alleged "deed of assignment"
of his 420 shares of stock of the Plaza Theater, Inc., at P100 per share or with a
total value of P42,000 in favor of the creditor, and as the obligation still remained
unsettled, Lopez filed on November 12, 1947, a complaint with the Court of First
Instance of Batangas (Civil Case No. 4501 which later became R-57) against
Vicente Orosa, Jr. and Plaza Theater, Inc., praying that defendants be sentenced
to pay him jointly and severally the sum of P41,771.35, with legal interest from
the firing of the action; that in case defendants fail to pay the same, that the
building and the land covered by OCT No. O-391 owned by the corporation be
sold at public auction and the proceeds thereof be applied to said indebtedness;
or that the 420 shares of the capital stock of the Plaza Theatre, Inc., assigned by
Vicente Orosa, Jr., to said plaintiff be sold at public auction for the same purpose;
and for such other remedies as may be warranted by the circumstances. Plaintiff
also caused the annotation of a notice of lis pendens on said properties with the
Register of Deeds.
Defendants Vicente Orosa, Jr. and Plaza Theatre, Inc., filed separate answers, the
first denying that the materials were delivered to him as a promoter and later
treasurer of the corporation, because he had purchased and received the same
on his personal account; that the land on which the movie house was constructed
was not charged with a lien to secure the payment of the aforementioned unpaid
obligation; and that the 420 shares of stock of the Plaza Theatre, Inc., was not
assigned to plaintiff as collaterals but as direct security for the payment of his
indebtedness. As special defense, this defendant contended that as the 420 shares
of stock assigned and conveyed by the assignor and accepted by Lopez as direct
security for the payment of the amount of P41,771.35 were personal properties,
plaintiff was barred from recovering any deficiency if the proceeds of the sale
thereof at public auction would not be sufficient to cover and satisfy the
obligation. It was thus prayed that he be declared exempted from the payment of
any deficiency in case the proceeds from the sale of said personal properties
would not be enough to cover the amount sought to be collected.
Defendant Plaza Theatre, Inc., on the other hand, practically set up the same line
of defense by alleging that the building materials delivered to Orosa were on the
latter's personal account; and that there was no understanding that said
materials would be paid jointly and severally by Orosa and the corporation, nor
was a lien charged on the properties of the latter to secure payment of the same
obligation. As special defense, defendant corporation averred that while it was
true that the materials purchased by Orosa were sold by the latter to the
Lopez v. Orosa
Page 2 of 3
corporation, such transactions were in good faith and for valuable consideration
thus when plaintiff failed to claim said materials within 30 days from the time of
removal thereof from Orosa, lumber became a different and distinct specie and
plaintiff lost whatever rights he might have in the same and consequently had no
recourse against the Plaza Theatre, Inc., that the claim could not have been
refectionary credit, for such kind of obligation referred to an indebtedness
incurred in the repair or reconstruction of something already existing and this
concept did not include an entirely new work; and that the Plaza Theatre, Inc.,
having been incorporated on October 14, 1946, it could not have contracted any
obligation prior to said date. It was, therefore, prayed that the complaint be
dismissed; that said defendant be awarded the sum P 5,000 for damages, and
such other relief as may be just and proper in the premises.
The surety company, in the meantime, upon discovery that the land was already
registered under the Torrens System and that there was a notice of lis
pendens thereon, filed on August 17, 1948, or within the 1-year period after the
issuance of the certificate of title, a petition for review of the decree of the land
registration court dated October 18, 1947, which was made the basis of OCT No.
O-319, in order to annotate the rights and interests of the surety company over
said properties (Land Registration Case No. 17 GLRO Rec. No. 296). Opposition
thereto was offered by Enrique Lopez, asserting that the amount demanded by
him constituted a preferred lien over the properties of the obligors; that the
surety company was guilty of negligence when it failed to present an opposition
to the application for registration of the property; and that if any violation of the
rights and interest of said surety would ever be made, same must be subject to
the lien in his favor.
The two cases were heard jointly and in a decision dated October 30, 1952, the
lower Court, after making an exhaustive and detailed analysis of the respective
stands of the parties and the evidence adduced at the trial, held that defendants
Vicente Orosa, Jr., and the Plaza Theatre, Inc., were jointly liable for the unpaid
balance of the cost of lumber used in the construction of the building and the
plaintiff thus acquired the materialman's lien over the same. In making the
pronouncement that the lien was merely confined to the building and did not
extend to the land on which the construction was made, the trial judge took into
consideration the fact that when plaintiff started the delivery of lumber in May,
1946, the land was not yet owned by the corporation; that the mortgage in favor
of Luzon Surety Company was previously registered under Act No. 3344; that the
codal provision (Art. 1923 of the old Spanish Civil Code) specifying that refection
credits are preferred could refer only to buildings which are also classified as real
properties, upon which said refection was made. It was, however, declared that
plaintiff's lien on the building was superior to the right of the surety company.
And finding that the Plaza Theatre, Inc., had no objection to the review of the
decree issued in its favor by the land registration court and the inclusion in the
title of the encumbrance in favor of the surety company, the court a quo granted
the petition filed by the latter company. Defendants Orosa and the Plaza Theatre,
Inc., were thus required to pay jointly the amount of P41,771.35 with legal
interest and costs within 90 days from notice of said decision; that in case of
default, the 420 shares of stock assigned by Orosa to plaintiff be sold at public
auction and the proceeds thereof be applied to the payment of the amount due
the plaintiff, plus interest and costs; and that the encumbrance in favor of the
surety company be endorsed at the back of OCT No. O-391, with notation I that
with respect to the building, said mortgage was subject to the materialman's lien
in favor of Enrique Lopez.
Plaintiff tried to secure a modification of the decision in so far as it declared that
the obligation of therein defendants was joint instead of solidary, and that the
lien did not extend to the land, but same was denied by order the court of
December 23, 1952. The matter was thus appealed to the Court of appeals, which
affirmed the lower court's ruling, and then to this Tribunal. In this instance,
plaintiff-appellant raises 2 issues: (1) whether a materialman's lien for the value
of the materials used in the construction of a building attaches to said structure
alone and does not extend to the land on which the building is adhered to; and
(2) whether the lower court and the Court of Appeals erred in not providing that
the material mans liens is superior to the mortgage executed in favor surety
company not only on the building but also on the land.
It is to be noted in this appeal that Enrique Lopez has not raised any question
against the part of the decision sentencing defendants Orosa and Plaza Theatre,
Inc., to pay jointly the sum of P41,771.35, so We will not take up or consider
anything on that point. Appellant, however, contends that the lien created in
favor of the furnisher of the materials used for the construction, repair or
refection of a building, is also extended to the land which the construction was
made, and in support thereof he relies on Article 1923 of the Spanish Civil Code,
pertinent law on the matter, which reads as follows:
ART. 1923. With respect to determinate real property and real rights of
the debtor, the following are preferred:
xxx xxx xxx
5. Credits for refection, not entered or recorded, with respect to the estate
upon which the refection was made, and only with respect to other credits
different from those mentioned in four preceding paragraphs.
It is argued that in view of the employment of the phrase real estate, or
immovable property, and inasmuch as said provision does not contain any
specification delimiting the lien to the building, said article must be construed as
to embrace both the land and the building or structure adhering thereto. We
cannot subscribe to this view, for while it is true that generally, real estate
connotes the land and the building constructed thereon, it is obvious that the
inclusion of the building, separate and distinct from the land, in the enumeration
Lopez v. Orosa
Page 3 of 3

of what may constitute real properties1 could mean only one thing — that a
building is by itself an immovable property, a doctrine already pronounced by
this Court in the case of Leung Yee vs. Strong Machinery Co., 37 Phil., 644.
Moreover, and in view of the absence of any specific provision of law to the
contrary, a building is an immovable property, irrespective of whether or not said
structure and the land on which it is adhered to belong to the same owner.
A close examination of the provision of the Civil Code invoked by appellant
reveals that the law gives preference to unregistered refectionary credits only
with respect to the real estate upon which the refection or work was made. This
being so, the inevitable conclusion must be that the lien so created attaches
merely to the immovable property for the construction or repair of which the
obligation was incurred. Evidently, therefore, the lien in favor of appellant for the
unpaid value of the lumber used in the construction of the building attaches only
to said structure and to no other property of the obligors.
Considering the conclusion thus arrived at, i.e., that the materialman's lien could
be charged only to the building for which the credit was made or which received
the benefit of refection, the lower court was right in, holding at the interest of the
mortgagee over the land is superior and cannot be made subject to the said
materialman's lien.
Wherefore, and on the strength of the foregoing considerations, the decision
appealed from is hereby affirmed, with costs against appellant. It is so ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador,
Concepcion, Reyes, J.B.L. and Endencia, JJ., concur.
Fels Energy, Inc. vs. Province of Batangas, et.al.,
Page 1 of 8
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 168557 February 16, 2007
FELS ENERGY, INC., Petitioner,
vs.
THE PROVINCE OF BATANGAS and
THE OFFICE OF THE PROVINCIAL ASSESSOR OF BATANGAS, Respondents.
x----------------------------------------------------x
G.R. No. 170628 February 16, 2007
NATIONAL POWER CORPORATION, Petitioner,
vs.
LOCAL BOARD OF ASSESSMENT APPEALS OF BATANGAS, LAURO C.
ANDAYA, in his capacity as the Assessor of the Province of Batangas, and
the PROVINCE OF BATANGAS represented by its Provincial
Assessor, Respondents.
DECISION
CALLEJO, SR., J.:
Before us are two consolidated cases docketed as G.R. No. 168557 and G.R. No.
170628, which were filed by petitioners FELS Energy, Inc. (FELS) and National
Power Corporation (NPC), respectively. The first is a petition for review on
certiorari assailing the August 25, 2004 Decision1 of the Court of Appeals (CA) in
CA-G.R. SP No. 67490 and its Resolution2 dated June 20, 2005; the second, also a
petition for review on certiorari, challenges the February 9, 2005 Decision 3 and
November 23, 2005 Resolution4 of the CA in CA-G.R. SP No. 67491. Both petitions
were dismissed on the ground of prescription.
The pertinent facts are as follows:
On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc.
over 3x30 MW diesel engine power barges moored at Balayan Bay in Calaca,
Batangas. The contract, denominated as an Energy Conversion
Agreement5 (Agreement), was for a period of five years. Article 10 reads:
10.1 RESPONSIBILITY. NAPOCOR shall be responsible for the payment of (a) all
taxes, import duties, fees, charges and other levies imposed by the National
Government of the Republic of the Philippines or any agency or instrumentality
thereof to which POLAR may be or become subject to or in relation to the
performance of their obligations under this agreement (other than (i) taxes
imposed or calculated on the basis of the net income of POLAR and Personal
Income Taxes of its employees and (ii) construction permit fees, environmental
permit fees and other similar fees and charges) and (b) all real estate taxes and
assessments, rates and other charges in respect of the Power Barges.6
Subsequently, Polar Energy, Inc. assigned its rights under the Agreement to FELS.
The NPC initially opposed the assignment of rights, citing paragraph 17.2 of
Article 17 of the Agreement.
On August 7, 1995, FELS received an assessment of real property taxes on the
power barges from Provincial Assessor Lauro C. Andaya of Batangas City. The
assessed tax, which likewise covered those due for 1994, amounted to
₱56,184,088.40 per annum. FELS referred the matter to NPC, reminding it of its
obligation under the Agreement to pay all real estate taxes. It then gave NPC the
full power and authority to represent it in any conference regarding the real
property assessment of the Provincial Assessor.
In a letter7 dated September 7, 1995, NPC sought reconsideration of the
Provincial Assessor’s decision to assess real property taxes on the power barges.
However, the motion was denied on September 22, 1995, and the Provincial
Assessor advised NPC to pay the assessment.8 This prompted NPC to file a
petition with the Local Board of Assessment Appeals (LBAA) for the setting aside
of the assessment and the declaration of the barges as non-taxable items; it also
prayed that should LBAA find the barges to be taxable, the Provincial Assessor be
directed to make the necessary corrections.9
In its Answer to the petition, the Provincial Assessor averred that the barges were
real property for purposes of taxation under Section 199(c) of Republic Act (R.A.)
No. 7160.
Before the case was decided by the LBAA, NPC filed a Manifestation, informing
the LBAA that the Department of Finance (DOF) had rendered an opinion10 dated
May 20, 1996, where it is clearly stated that power barges are not real property
subject to real property assessment.
On August 26, 1996, the LBAA rendered a Resolution11 denying the petition. The
fallo reads:
WHEREFORE, the Petition is DENIED. FELS is hereby ordered to pay the real
estate tax in the amount of ₱56,184,088.40, for the year 1994.
SO ORDERED.12
The LBAA ruled that the power plant facilities, while they may be classified as
movable or personal property, are nevertheless considered real property for
taxation purposes because they are installed at a specific location with a
character of permanency. The LBAA also pointed out that the owner of the
barges–FELS, a private corporation–is the one being taxed, not NPC. A mere
agreement making NPC responsible for the payment of all real estate taxes and
assessments will not justify the exemption of FELS; such a privilege can only be
Fels Energy, Inc. vs. Province of Batangas, et.al.,
Page 2 of 8
granted to NPC and cannot be extended to FELS. Finally, the LBAA also ruled that
the petition was filed out of time.
Aggrieved, FELS appealed the LBAA’s ruling to the Central Board of Assessment
Appeals (CBAA).
On August 28, 1996, the Provincial Treasurer of Batangas City issued a Notice of
Levy and Warrant by Distraint13 over the power barges, seeking to collect real
property taxes amounting to ₱232,602,125.91 as of July 31, 1996. The notice and
warrant was officially served to FELS on November 8, 1996. It then filed a Motion
to Lift Levy dated November 14, 1996, praying that the Provincial Assessor be
further restrained by the CBAA from enforcing the disputed assessment during
the pendency of the appeal.
On November 15, 1996, the CBAA issued an Order14 lifting the levy and distraint
on the properties of FELS in order not to preempt and render ineffectual,
nugatory and illusory any resolution or judgment which the Board would issue.
Meantime, the NPC filed a Motion for Intervention15 dated August 7, 1998 in the
proceedings before the CBAA. This was approved by the CBAA in an
Order16 dated September 22, 1998.
During the pendency of the case, both FELS and NPC filed several motions to
admit bond to guarantee the payment of real property taxes assessed by the
Provincial Assessor (in the event that the judgment be unfavorable to them). The
bonds were duly approved by the CBAA.
On April 6, 2000, the CBAA rendered a Decision17
finding the power barges
exempt from real property tax. The dispositive portion reads:
WHEREFORE, the Resolution of the Local Board of Assessment Appeals of the
Province of Batangas is hereby reversed. Respondent-appellee Provincial
Assessor of the Province of Batangas is hereby ordered to drop subject property
under ARP/Tax Declaration No. 018-00958 from the List of Taxable Properties in
the Assessment Roll. The Provincial Treasurer of Batangas is hereby directed to
act accordingly.
SO ORDERED.18
Ruling in favor of FELS and NPC, the CBAA reasoned that the power barges belong
to NPC; since they are actually, directly and exclusively used by it, the power
barges are covered by the exemptions under Section 234(c) of R.A. No. 7160.19 As
to the other jurisdictional issue, the CBAA ruled that prescription did not
preclude the NPC from pursuing its claim for tax exemption in accordance with
Section 206 of R.A. No. 7160. The Provincial Assessor filed a motion for
reconsideration, which was opposed by FELS and NPC.
In a complete volte face, the CBAA issued a Resolution 20 on July 31, 2001
reversing its earlier decision. The fallo of the resolution reads:
WHEREFORE, premises considered, it is the resolution of this Board that:
(a) The decision of the Board dated 6 April 2000 is hereby reversed.
(b) The petition of FELS, as well as the intervention of NPC, is dismissed.
(c) The resolution of the Local Board of Assessment Appeals of Batangas
is hereby affirmed,
(d) The real property tax assessment on FELS by the Provincial Assessor
of Batangas is likewise hereby affirmed.
SO ORDERED.21
FELS and NPC filed separate motions for reconsideration, which were timely
opposed by the Provincial Assessor. The CBAA denied the said motions in a
Resolution22 dated October 19, 2001.
Dissatisfied, FELS filed a petition for review before the CA docketed as CA-G.R. SP
No. 67490. Meanwhile, NPC filed a separate petition, docketed as CA-G.R. SP No.
67491.
On January 17, 2002, NPC filed a Manifestation/Motion for Consolidation in CA-
G.R. SP No. 67490 praying for the consolidation of its petition with CA-G.R. SP No.
67491. In a Resolution23 dated February 12, 2002, the appellate court directed
NPC to re-file its motion for consolidation with CA-G.R. SP No. 67491, since it is
the ponente of the latter petition who should resolve the request for
reconsideration.
NPC failed to comply with the aforesaid resolution. On August 25, 2004, the
Twelfth Division of the appellate court rendered judgment in CA-G.R. SP No.
67490 denying the petition on the ground of prescription. The decretal portion
of the decision reads:
WHEREFORE, the petition for review is DENIED for lack of merit and the assailed
Resolutions dated July 31, 2001 and October 19, 2001 of the Central Board of
Assessment Appeals are AFFIRMED.
SO ORDERED.24
On September 20, 2004, FELS timely filed a motion for reconsideration seeking
the reversal of the appellate court’s decision in CA-G.R. SP No. 67490.
Thereafter, NPC filed a petition for review dated October 19, 2004 before this
Court, docketed as G.R. No. 165113, assailing the appellate court’s decision in CA-
G.R. SP No. 67490. The petition was, however, denied in this Court’s
Resolution25 of November 8, 2004, for NPC’s failure to sufficiently show that the
CA committed any reversible error in the challenged decision. NPC filed a motion
for reconsideration, which the Court denied with finality in a Resolution 26 dated
January 19, 2005.
Meantime, the appellate court dismissed the petition in CA-G.R. SP No. 67491. It
held that the right to question the assessment of the Provincial Assessor had
already prescribed upon the failure of FELS to appeal the disputed assessment to
Fels Energy, Inc. vs. Province of Batangas, et.al.,
Page 3 of 8
the LBAA within the period prescribed by law. Since FELS had lost the right to
question the assessment, the right of the Provincial Government to collect the tax
was already absolute.
NPC filed a motion for reconsideration dated March 8, 2005, seeking
reconsideration of the February 5, 2005 ruling of the CA in CA-G.R. SP No. 67491.
The motion was denied in a Resolution27 dated November 23, 2005.
The motion for reconsideration filed by FELS in CA-G.R. SP No. 67490 had been
earlier denied for lack of merit in a Resolution28 dated June 20, 2005.
On August 3, 2005, FELS filed the petition docketed as G.R. No. 168557 before this
Court, raising the following issues:
A.
Whether power barges, which are floating and movable, are personal properties
and therefore, not subject to real property tax.
B.
Assuming that the subject power barges are real properties, whether they are
exempt from real estate tax under Section 234 of the Local Government Code
("LGC").
C.
Assuming arguendo that the subject power barges are subject to real estate tax,
whether or not it should be NPC which should be made to pay the same under the
law.
D.
Assuming arguendo that the subject power barges are real properties, whether
or not the same is subject to depreciation just like any other personal properties.
E.
Whether the right of the petitioner to question the patently null and void real
property tax assessment on the petitioner’s personal properties is
imprescriptible.29
On January 13, 2006, NPC filed its own petition for review before this Court (G.R.
No. 170628), indicating the following errors committed by the CA:
I
THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT THE APPEAL TO
THE LBAA WAS FILED OUT OF TIME.
II
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE POWER
BARGES ARE NOT SUBJECT TO REAL PROPERTY TAXES.
III
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE
ASSESSMENT ON THE POWER BARGES WAS NOT MADE IN ACCORDANCE WITH
LAW.30
Considering that the factual antecedents of both cases are similar, the Court
ordered the consolidation of the two cases in a Resolution 31 dated March 8,
2006.1awphi1.net
In an earlier Resolution dated February 1, 2006, the Court had required the
parties to submit their respective Memoranda within 30 days from notice. Almost
a year passed but the parties had not submitted their respective memoranda.
Considering that taxes—the lifeblood of our economy—are involved in the
present controversy, the Court was prompted to dispense with the said
pleadings, with the end view of advancing the interests of justice and avoiding
further delay.
In both petitions, FELS and NPC maintain that the appeal before the LBAA was
not time-barred. FELS argues that when NPC moved to have the assessment
reconsidered on September 7, 1995, the running of the period to file an appeal
with the LBAA was tolled. For its part, NPC posits that the 60-day period for
appealing to the LBAA should be reckoned from its receipt of the denial of its
motion for reconsideration.
Petitioners’ contentions are bereft of merit.
Section 226 of R.A. No. 7160, otherwise known as the Local Government Code of
1991, provides:
SECTION 226. Local Board of Assessment Appeals. – Any owner or person having
legal interest in the property who is not satisfied with the action of the provincial,
city or municipal assessor in the assessment of his property may, within sixty
(60) days from the date of receipt of the written notice of assessment, appeal to
the Board of Assessment Appeals of the province or city by filing a petition under
oath in the form prescribed for the purpose, together with copies of the tax
declarations and such affidavits or documents submitted in support of the appeal.
We note that the notice of assessment which the Provincial Assessor sent to FELS
on August 7, 1995, contained the following statement:
If you are not satisfied with this assessment, you may, within sixty (60) days from
the date of receipt hereof, appeal to the Board of Assessment Appeals of the
province by filing a petition under oath on the form prescribed for the purpose,
together with copies of ARP/Tax Declaration and such affidavits or documents
submitted in support of the appeal.32
Instead of appealing to the Board of Assessment Appeals (as stated in the notice),
NPC opted to file a motion for reconsideration of the Provincial Assessor’s
decision, a remedy not sanctioned by law.
Fels Energy, Inc. vs. Province of Batangas, et.al.,
Page 4 of 8
The remedy of appeal to the LBAA is available from an adverse ruling or action of
the provincial, city or municipal assessor in the assessment of the property. It
follows then that the determination made by the respondent Provincial Assessor
with regard to the taxability of the subject real properties falls within its power
to assess properties for taxation purposes subject to appeal before the LBAA. 33
We fully agree with the rationalization of the CA in both CA-G.R. SP No. 67490 and
CA-G.R. SP No. 67491. The two divisions of the appellate court cited the case of
Callanta v. Office of the Ombudsman,34 where we ruled that under Section 226 of
R.A. No 7160,35 the last action of the local assessor on a particular assessment
shall be the notice of assessment; it is this last action which gives the owner of
the property the right to appeal to the LBAA. The procedure likewise does not
permit the property owner the remedy of filing a motion for reconsideration
before the local assessor. The pertinent holding of the Court in Callanta is as
follows:
x x x [T]he same Code is equally clear that the aggrieved owners should have
brought their appeals before the LBAA. Unfortunately, despite the advice to this
effect contained in their respective notices of assessment, the owners chose to
bring their requests for a review/readjustment before the city assessor, a remedy
not sanctioned by the law. To allow this procedure would indeed invite
corruption in the system of appraisal and assessment. It conveniently courts a
graft-prone situation where values of real property may be initially set
unreasonably high, and then subsequently reduced upon the request of a
property owner. In the latter instance, allusions of a possible covert, illicit trade-
off cannot be avoided, and in fact can conveniently take place. Such occasion for
mischief must be prevented and excised from our system.36
For its part, the appellate court declared in CA-G.R. SP No. 67491:
x x x. The Court announces: Henceforth, whenever the local assessor sends a
notice to the owner or lawful possessor of real property of its revised assessed
value, the former shall no longer have any jurisdiction to entertain any request
for a review or readjustment. The appropriate forum where the aggrieved party
may bring his appeal is the LBAA as provided by law. It follows ineluctably that
the 60-day period for making the appeal to the LBAA runs without interruption.
This is what We held in SP 67490 and reaffirm today in SP 67491.37
To reiterate, if the taxpayer fails to appeal in due course, the right of the local
government to collect the taxes due with respect to the taxpayer’s property
becomes absolute upon the expiration of the period to appeal. 38 It also bears
stressing that the taxpayer’s failure to question the assessment in the LBAA
renders the assessment of the local assessor final, executory and demandable,
thus, precluding the taxpayer from questioning the correctness of the
assessment, or from invoking any defense that would reopen the question of its
liability on the merits.39
In fine, the LBAA acted correctly when it dismissed the petitioners’ appeal for
having been filed out of time; the CBAA and the appellate court were likewise
correct in affirming the dismissal. Elementary is the rule that the perfection of an
appeal within the period therefor is both mandatory and jurisdictional, and
failure in this regard renders the decision final and executory.40
In the Comment filed by the Provincial Assessor, it is asserted that the instant
petition is barred by res judicata; that the final and executory judgment in G.R.
No. 165113 (where there was a final determination on the issue of prescription),
effectively precludes the claims herein; and that the filing of the instant petition
after an adverse judgment in G.R. No. 165113 constitutes forum shopping.
FELS maintains that the argument of the Provincial Assessor is completely
misplaced since it was not a party to the erroneous petition which the NPC filed
in G.R. No. 165113. It avers that it did not participate in the aforesaid proceeding,
and the Supreme Court never acquired jurisdiction over it. As to the issue of
forum shopping, petitioner claims that no forum shopping could have been
committed since the elements of litis pendentia or res judicata are not present.
We do not agree.
Res judicata pervades every organized system of jurisprudence and is founded
upon two grounds embodied in various maxims of common law, namely: (1)
public policy and necessity, which makes it to the interest of the
State that there should be an end to litigation – republicae ut sit litium; and (2)
the hardship on the individual of being vexed twice for the same cause – nemo
debet bis vexari et eadem causa. A conflicting doctrine would subject the public
peace and quiet to the will and dereliction of individuals and prefer the
regalement of the litigious disposition on the part of suitors to the preservation
of the public tranquility and happiness.41 As we ruled in Heirs of Trinidad De Leon
Vda. de Roxas v. Court of Appeals:42
x x x An existing final judgment or decree – rendered upon the merits, without
fraud or collusion, by a court of competent jurisdiction acting upon a matter
within its authority – is conclusive on the rights of the parties and their privies.
This ruling holds in all other actions or suits, in the same or any other judicial
tribunal of concurrent jurisdiction, touching on the points or matters in issue in
the first suit.
xxx
Courts will simply refuse to reopen what has been decided. They will not allow
the same parties or their privies to litigate anew a question once it has been
considered and decided with finality. Litigations must end and terminate
sometime and somewhere. The effective and efficient administration of justice
requires that once a judgment has become final, the prevailing party should not
be deprived of the fruits of the verdict by subsequent suits on the same issues
filed by the same parties.
Fels Energy, Inc. vs. Province of Batangas, et.al.,
Page 5 of 8
This is in accordance with the doctrine of res judicata which has the following
elements: (1) the former judgment must be final; (2) the court which rendered it
had jurisdiction over the subject matter and the parties; (3) the judgment must
be on the merits; and (4) there must be between the first and the second actions,
identity of parties, subject matter and causes of action. The application of the
doctrine of res judicata does not require absolute identity of parties but merely
substantial identity of parties. There is substantial identity of parties when there
is community of interest or privity of interest between a party in the first and a
party in the second case even if the first case did not implead the latter. 43
To recall, FELS gave NPC the full power and authority to represent it in any
proceeding regarding real property assessment. Therefore, when petitioner NPC
filed its petition for review docketed as G.R. No. 165113, it did so not only on its
behalf but also on behalf of FELS. Moreover, the assailed decision in the earlier
petition for review filed in this Court was the decision of the appellate court in
CA-G.R. SP No. 67490, in which FELS was the petitioner. Thus, the decision in G.R.
No. 165116 is binding on petitioner FELS under the principle of privity of
interest. In fine, FELS and NPC are substantially "identical parties" as to warrant
the application of res judicata. FELS’s argument that it is not bound by the
erroneous petition filed by NPC is thus unavailing.
On the issue of forum shopping, we rule for the Provincial Assessor. Forum
shopping exists when, as a result of an adverse judgment in one forum, a party
seeks another and possibly favorable judgment in another forum other than by
appeal or special civil action or certiorari. There is also forum shopping when a
party institutes two or more actions or proceedings grounded on the same cause,
on the gamble that one or the other court would make a favorable disposition. 44
Petitioner FELS alleges that there is no forum shopping since the elements of res
judicata are not present in the cases at bar; however, as already discussed, res
judicata may be properly applied herein. Petitioners engaged in forum shopping
when they filed G.R. Nos. 168557 and 170628 after the petition for review in G.R.
No. 165116. Indeed, petitioners went from one court to another trying to get a
favorable decision from one of the tribunals which allowed them to pursue their
cases.
It must be stressed that an important factor in determining the existence of forum
shopping is the vexation caused to the courts and the parties-litigants by the filing
of similar cases to claim substantially the same reliefs.45 The rationale against
forum shopping is that a party should not be allowed to pursue simultaneous
remedies in two different fora. Filing multiple petitions or complaints constitutes
abuse of court processes, which tends to degrade the administration of justice,
wreaks havoc upon orderly judicial procedure, and adds to the congestion of the
heavily burdened dockets of the courts.46
Thus, there is forum shopping when there exist: (a) identity of parties, or at least
such parties as represent the same interests in both actions, (b) identity of rights
asserted and relief prayed for, the relief being founded on the same facts, and (c)
the identity of the two preceding particulars is such that any judgment rendered
in the pending case, regardless of which party is successful, would amount to res
judicata in the other.47
Having found that the elements of res judicata and forum shopping are present
in the consolidated cases, a discussion of the other issues is no longer necessary.
Nevertheless, for the peace and contentment of petitioners, we shall shed light on
the merits of the case.
As found by the appellate court, the CBAA and LBAA power barges are real
property and are thus subject to real property tax. This is also the inevitable
conclusion, considering that G.R. No. 165113 was dismissed for failure to
sufficiently show any reversible error. Tax assessments by tax examiners are
presumed correct and made in good faith, with the taxpayer having the burden
of proving otherwise.48 Besides, factual findings of administrative bodies, which
have acquired expertise in their field, are generally binding and conclusive upon
the Court; we will not assume to interfere with the sensible exercise of the
judgment of men especially trained in appraising property. Where the judicial
mind is left in doubt, it is a sound policy to leave the assessment
undisturbed.49 We find no reason to depart from this rule in this case.
In Consolidated Edison Company of New York, Inc., et al. v. The City of New York,
et al.,50 a power company brought an action to review property tax assessment.
On the city’s motion to dismiss, the Supreme Court of New York held that the
barges on which were mounted gas turbine power plants designated to generate
electrical power, the fuel oil barges which supplied fuel oil to the power plant
barges, and the accessory equipment mounted on the barges were subject to real
property taxation.
Moreover, Article 415 (9) of the New Civil Code provides that "[d]ocks and
structures which, though floating, are intended by their nature and object to
remain at a fixed place on a river, lake, or coast" are considered immovable
property. Thus, power barges are categorized as immovable property by
destination, being in the nature of machinery and other implements intended by
the owner for an industry or work which may be carried on in a building or on a
piece of land and which tend directly to meet the needs of said industry or work.51
Petitioners maintain nevertheless that the power barges are exempt from real
estate tax under Section 234 (c) of R.A. No. 7160 because they are actually,
directly and exclusively used by petitioner NPC, a government- owned and
controlled corporation engaged in the supply, generation, and transmission of
electric power.
We affirm the findings of the LBAA and CBAA that the owner of the taxable
properties is petitioner FELS, which in fine, is the entity being taxed by the local
government. As stipulated under Section 2.11, Article 2 of the Agreement:
Fels Energy, Inc. vs. Province of Batangas, et.al.,
Page 6 of 8
OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the
fixtures, fittings, machinery and equipment on the Site used in connection with
the Power Barges which have been supplied by it at its own cost. POLAR shall
operate, manage and maintain the Power Barges for the purpose of converting
Fuel of NAPOCOR into electricity.52
It follows then that FELS cannot escape liability from the payment of realty taxes
by invoking its exemption in Section 234 (c) of R.A. No. 7160, which reads:
SECTION 234. Exemptions from Real Property Tax. – The following are exempted
from payment of the real property tax:
xxx
(c) All machineries and equipment that are actually, directly and exclusively used
by local water districts and government-owned or controlled corporations
engaged in the supply and distribution of water and/or generation and
transmission of electric power; x x x
Indeed, the law states that the machinery must be actually, directly and
exclusively used by the government owned or controlled corporation;
nevertheless, petitioner FELS still cannot find solace in this provision because
Section 5.5, Article 5 of the Agreement provides:
OPERATION. POLAR undertakes that until the end of the Lease Period, subject to
the supply of the necessary Fuel pursuant to Article 6 and to the other provisions
hereof, it will operate the Power Barges to convert such Fuel into electricity in
accordance with Part A of Article 7.53
It is a basic rule that obligations arising from a contract have the force of law
between the parties. Not being contrary to law, morals, good customs, public
order or public policy, the parties to the contract are bound by its terms and
conditions.54
Time and again, the Supreme Court has stated that taxation is the rule and
exemption is the exception.55 The law does not look with favor on tax exemptions
and the entity that would seek to be thus privileged must justify it by words too
plain to be mistaken and too categorical to be misinterpreted. 56 Thus, applying
the rule of strict construction of laws granting tax exemptions, and the rule that
doubts should be resolved in favor of provincial corporations, we hold that FELS
is considered a taxable entity.
The mere undertaking of petitioner NPC under Section 10.1 of the Agreement,
that it shall be responsible for the payment of all real estate taxes and
assessments, does not justify the exemption. The privilege granted to petitioner
NPC cannot be extended to FELS. The covenant is between FELS and NPC and
does not bind a third person not privy thereto, in this case, the Province of
Batangas.
It must be pointed out that the protracted and circuitous litigation has seriously
resulted in the local government’s deprivation of revenues. The power to tax is
an incident of sovereignty and is unlimited in its magnitude, acknowledging in its
very nature no perimeter so that security against its abuse is to be found only in
the responsibility of the legislature which imposes the tax on the constituency
who are to pay for it.57 The right of local government units to collect taxes due
must always be upheld to avoid severe tax erosion. This consideration is
consistent with the State policy to guarantee the autonomy of local
governments58 and the objective of the Local Government Code that they enjoy
genuine and meaningful local autonomy to empower them to achieve their fullest
development as self-reliant communities and make them effective partners in the
attainment of national goals.59
In conclusion, we reiterate that the power to tax is the most potent instrument to
raise the needed revenues to finance and support myriad activities of the local
government units for the delivery of basic services essential to the promotion of
the general welfare and the enhancement of peace, progress, and prosperity of
the people.60
WHEREFORE, the Petitions are DENIED and the assailed Decisions and
Resolutions AFFIRMED.
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice Asscociate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson’s Attestation, it is hereby certified that the conclusions in the above
Fels Energy, Inc. vs. Province of Batangas, et.al.,
Page 7 of 8

decision were reached in consultation before the case was assigned to the writer 22 Id. at 478.
of the opinion of the Court’s Division. 23 CA Rollo (CA-G.R. SP No. 67490), p. 422.
REYNATO S. PUNO 24 Rollo (G.R. No. 168557), pp. 49-50.
Chief Justice
25 Id. at 605.
Footnotes
26 Id. at 606.
1Penned by Associate Justice Marina L. Buzon, with Associate Justices
Mario L. Guariña III and Santiago Javier Ranada (retired), concurring; 27 Rollo (G.R. No. 170628), p. 65.
rollo (G.R. No. 168557), pp. 103-116. 28 Rollo (G.R. No. 168557), pp. 23-25.
2Penned by Associate Justice Marina L. Buzon, with Associate Justices 29 Id. at 61.
Mario L. Guariña III and Santiago Javier Ranada; concurring; id. at 118-
120.
30 Rollo (G.R. No. 170628), pp. 18-19.
3 Penned by Associate Justice Mario L. Guariña III, with Associate
31 Rollo (G.R. No. 168557), p. 637.
Justices Marina L. Buzon and Santiago Javier Ranada; concurring; rollo 32 Id. at 246 (Italics supplied).
(G.R. No. 170628), pp. 59-64. 33Systems Plus Computer College of Caloocan City v. Local Government
4 Penned by Associate Justice Mario L. Guariña III, with Associate of Caloocan City, 455 Phil. 956, 962-963 (2003).
Justices Marina L. Buzon and Santiago Javier Ranada; concurring; id. at 34 G.R. Nos. 115253-74, January 30, 1998, 285 SCRA 648.
65.
35 Formerly Section 30 of The Real Property Tax Code.
5 Rollo (G.R. No. 168557), pp. 121-245.
36 Callanta v. Office of the Ombudsman, supra note 33, at 661-662.
6 Id. at 155.
37 Rollo (G.R. No. 170628), pp. 62-63.
7 Id. at 249-250.
38Manila Electric Company v. Barlis, G. R. No. 114231, June 29, 2004,
8 Id. at 253-255.
433 SCRA 11, 32.
9 Rollo (G.R. No. 168557), pp. 256-267. 39 Id. at 32-33.
10 Id. at 286-288. 40See Borja Estate v. Ballad, G.R. No. 152550, June 8, 2005, 459 SCRA
11 Id. at 289-294. 657, 668, 670.
12 Id. at 294. 41Cruz v. Court of Appeals, G.R. No. 164797, February 13, 2006, 482
13 Rollo (G.R. No. 170628), pp. 122-124. SCRA 379, 395, citing Heirs of the Late Faustina Adalid v. Court of
Appeals, 459 SCRA 27, 41 (2005).
14 Id. at 129.
42 G.R. No. 138660, February 5, 2004, 422 SCRA 101.
15 Rollo (G.R. No. 168557), pp. 364-369.
43 Id. at 116.
16 Id. at 370-372.
44Municipality of Taguig v. Court of Appeals, G.R. No. 142619,
17 Id. at 383-394. September 13, 2005, 469 SCRA 588, 594-595.
18 Id. at 394. 45 Foronda v. Guerrero, Adm. Case No. 5469, August 10, 2004, 436 SCRA
19 Otherwise known as the "Local Government Code of 1991." 9, 23.
20 Rollo (G.R. No. 168557), pp. 425-431. 46Wee v. Galvez, G.R. No. 147394, August 11, 2004, 436 SCRA 96, 108-
109.
21 Id. at 430-431.
Fels Energy, Inc. vs. Province of Batangas, et.al.,
Page 8 of 8

Hongkong and Shanghai Banking Corporation Limited v. Catalan, G.R.

47

Nos. 159590 and 159591, October 18, 2004, 440 SCRA 498, 513-514.
Commissioner of Internal Revenue v. Hantex Trading Co., Inc., G.R.
48

No. 136975, March 31, 2005, 454 SCRA 301, 329.

49Cagayan Robina Sugar Milling Co. v. Court of Appeals, 396 Phil. 830,
840 (2000).
50 80 Misc.2d 1065 (1975).
J. Vitug, civil law volume ii, property, ownership, and its
51

modifications, 3-4 (2003).

52 Rollo (G.R. No. 168557), p. 135.
53 Id. at 142. (Emphasis supplied)
54L & L Lawrence Footwear, Inc. v. PCI Leasing and Finance
Corporation, G.R. No. 160531, August 30, 2005, 468 SCRA 393, 402.
55Commissioner of Internal Revenue v. Philippine Long Distance
Telephone Company, G.R. No. 140230, December 15, 2005, 478 SCRA
61, 74.
56Republic v. City of Kidapawan, G.R. No. 166651, December 9, 2005,
477 SCRA 324, 335, citing Sea-Land Service, Inc. v. Court of Appeals,
357 SCRA 441, 444 (2001).
57Mactan Cebu International Airport Authority v. Marcos, G.R. No.
120082, September 11, 1996, 261 SCRA 667, 679.
58 CONSTITUTION, Section 25, Article II, and Section 2, Article X.
59 Republic Act No. 7160, Section 2(a).
60Mactan Cebu International Airport Authority v. Marcos, supra note
56, at 690.
Leung Yee vs. Strong Machinery Co
Page 1 of 3
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-11658 February 15, 1918
LEUNG YEE, plaintiff-appellant,
vs.
FRANK L. STRONG MACHINERY COMPANY and J. G.
WILLIAMSON, defendants-appellees.
Booram and Mahoney for appellant.
Williams, Ferrier and SyCip for appellees.
CARSON, J.:
The "Compañia Agricola Filipina" bought a considerable quantity of rice-cleaning
machinery company from the defendant machinery company, and executed a
chattel mortgage thereon to secure payment of the purchase price. It included in
the mortgage deed the building of strong materials in which the machinery was
installed, without any reference to the land on which it stood. The indebtedness
secured by this instrument not having been paid when it fell due, the mortgaged
property was sold by the sheriff, in pursuance of the terms of the mortgage
instrument, and was bought in by the machinery company. The mortgage was
registered in the chattel mortgage registry, and the sale of the property to the
machinery company in satisfaction of the mortgage was annotated in the same
registry on December 29, 1913.
A few weeks thereafter, on or about the 14th of January, 1914, the "Compañia
Agricola Filipina" executed a deed of sale of the land upon which the building
stood to the machinery company, but this deed of sale, although executed in a
public document, was not registered. This deed makes no reference to the
building erected on the land and would appear to have been executed for the
purpose of curing any defects which might be found to exist in the machinery
company's title to the building under the sheriff's certificate of sale. The
machinery company went into possession of the building at or about the time
when this sale took place, that is to say, the month of December, 1913, and it has
continued in possession ever since.
At or about the time when the chattel mortgage was executed in favor of the
machinery company, the mortgagor, the "Compañia Agricola Filipina" executed
another mortgage to the plaintiff upon the building, separate and apart from the
land on which it stood, to secure payment of the balance of its indebtedness to
the plaintiff under a contract for the construction of the building. Upon the failure
of the mortgagor to pay the amount of the indebtedness secured by the mortgage,
the plaintiff secured judgment for that amount, levied execution upon the
building, bought it in at the sheriff's sale on or about the 18th of December, 1914,
and had the sheriff's certificate of the sale duly registered in the land registry of
the Province of Cavite.
At the time when the execution was levied upon the building, the defendant
machinery company, which was in possession, filed with the sheriff a sworn
statement setting up its claim of title and demanding the release of the property
from the levy. Thereafter, upon demand of the sheriff, the plaintiff executed an
indemnity bond in favor of the sheriff in the sum of P12,000, in reliance upon
which the sheriff sold the property at public auction to the plaintiff, who was the
highest bidder at the sheriff's sale.
This action was instituted by the plaintiff to recover possession of the building
from the machinery company.
The trial judge, relying upon the terms of article 1473 of the Civil Code, gave
judgment in favor of the machinery company, on the ground that the company
had its title to the building registered prior to the date of registry of the plaintiff's
certificate.
Article 1473 of the Civil Code is as follows:
If the same thing should have been sold to different vendees, the
ownership shall be transfer to the person who may have the first taken
possession thereof in good faith, if it should be personal property.
Should it be real property, it shall belong to the person acquiring it who
first recorded it in the registry.
Should there be no entry, the property shall belong to the person who
first took possession of it in good faith, and, in the absence thereof, to the
person who presents the oldest title, provided there is good faith.
The registry her referred to is of course the registry of real property, and it must
be apparent that the annotation or inscription of a deed of sale of real property
in a chattel mortgage registry cannot be given the legal effect of an inscription in
the registry of real property. By its express terms, the Chattel Mortgage Law
contemplates and makes provision for mortgages of personal property; and the
sole purpose and object of the chattel mortgage registry is to provide for the
registry of "Chattel mortgages," that is to say, mortgages of personal property
executed in the manner and form prescribed in the statute. The building of strong
materials in which the rice-cleaning machinery was installed by the "Compañia
Agricola Filipina" was real property, and the mere fact that the parties seem to
have dealt with it separate and apart from the land on which it stood in no wise
changed its character as real property. It follows that neither the original registry
in the chattel mortgage of the building and the machinery installed therein, not
the annotation in that registry of the sale of the mortgaged property, had any
effect whatever so far as the building was concerned.
Leung Yee vs. Strong Machinery Co
Page 2 of 3
We conclude that the ruling in favor of the machinery company cannot be
sustained on the ground assigned by the trial judge. We are of opinion, however,
that the judgment must be sustained on the ground that the agreed statement of
facts in the court below discloses that neither the purchase of the building by the
plaintiff nor his inscription of the sheriff's certificate of sale in his favor was made
in good faith, and that the machinery company must be held to be the owner of
the property under the third paragraph of the above cited article of the code, it
appearing that the company first took possession of the property; and further,
that the building and the land were sold to the machinery company long prior to
the date of the sheriff's sale to the plaintiff.
It has been suggested that since the provisions of article 1473 of the Civil Code
require "good faith," in express terms, in relation to "possession" and "title," but
contain no express requirement as to "good faith" in relation to the "inscription"
of the property on the registry, it must be presumed that good faith is not an
essential requisite of registration in order that it may have the effect
contemplated in this article. We cannot agree with this contention. It could not
have been the intention of the legislator to base the preferential right secured
under this article of the code upon an inscription of title in bad faith. Such an
interpretation placed upon the language of this section would open wide the door
to fraud and collusion. The public records cannot be converted into instruments
of fraud and oppression by one who secures an inscription therein in bad faith.
The force and effect given by law to an inscription in a public record presupposes
the good faith of him who enters such inscription; and rights created by statute,
which are predicated upon an inscription in a public registry, do not and cannot
accrue under an inscription "in bad faith," to the benefit of the person who thus
makes the inscription.
Construing the second paragraph of this article of the code, the supreme court of
Spain held in its sentencia of the 13th of May, 1908, that:
This rule is always to be understood on the basis of the good faith
mentioned in the first paragraph; therefore, it having been found that the
second purchasers who record their purchase had knowledge of the
previous sale, the question is to be decided in accordance with the
following paragraph. (Note 2, art. 1473, Civ. Code, Medina and Maranon
[1911] edition.)
Although article 1473, in its second paragraph, provides that the title of
conveyance of ownership of the real property that is first recorded in the
registry shall have preference, this provision must always be understood
on the basis of the good faith mentioned in the first paragraph; the
legislator could not have wished to strike it out and to sanction bad faith,
just to comply with a mere formality which, in given cases, does not
obtain even in real disputes between third persons. (Note 2, art. 1473,
Civ. Code, issued by the publishers of the La Revista de los Tribunales,
13th edition.)
The agreed statement of facts clearly discloses that the plaintiff, when he bought
the building at the sheriff's sale and inscribed his title in the land registry, was
duly notified that the machinery company had bought the building from
plaintiff's judgment debtor; that it had gone into possession long prior to the
sheriff's sale; and that it was in possession at the time when the sheriff executed
his levy. The execution of an indemnity bond by the plaintiff in favor of the sheriff,
after the machinery company had filed its sworn claim of ownership, leaves no
room for doubt in this regard. Having bought in the building at the sheriff's sale
with full knowledge that at the time of the levy and sale the building had already
been sold to the machinery company by the judgment debtor, the plaintiff cannot
be said to have been a purchaser in good faith; and of course, the subsequent
inscription of the sheriff's certificate of title must be held to have been tainted
with the same defect.
Perhaps we should make it clear that in holding that the inscription of the
sheriff's certificate of sale to the plaintiff was not made in good faith, we should
not be understood as questioning, in any way, the good faith and genuineness of
the plaintiff's claim against the "Compañia Agricola Filipina." The truth is that
both the plaintiff and the defendant company appear to have had just and
righteous claims against their common debtor. No criticism can properly be made
of the exercise of the utmost diligence by the plaintiff in asserting and exercising
his right to recover the amount of his claim from the estate of the common debtor.
We are strongly inclined to believe that in procuring the levy of execution upon
the factory building and in buying it at the sheriff's sale, he considered that he
was doing no more than he had a right to do under all the circumstances, and it
is highly possible and even probable that he thought at that time that he would
be able to maintain his position in a contest with the machinery company. There
was no collusion on his part with the common debtor, and no thought of the
perpetration of a fraud upon the rights of another, in the ordinary sense of the
word. He may have hoped, and doubtless he did hope, that the title of the
machinery company would not stand the test of an action in a court of law; and if
later developments had confirmed his unfounded hopes, no one could question
the legality of the propriety of the course he adopted.
But it appearing that he had full knowledge of the machinery company's claim of
ownership when he executed the indemnity bond and bought in the property at
the sheriff's sale, and it appearing further that the machinery company's claim of
ownership was well founded, he cannot be said to have been an innocent
purchaser for value. He took the risk and must stand by the consequences; and it
is in this sense that we find that he was not a purchaser in good faith.
One who purchases real estate with knowledge of a defect or lack of title in his
vendor cannot claim that he has acquired title thereto in good faith as against the
Leung Yee vs. Strong Machinery Co
Page 3 of 3

true owner of the land or of an interest therein; and the same rule must be applied
to one who has knowledge of facts which should have put him upon such inquiry
and investigation as might be necessary to acquaint him with the defects in the
title of his vendor. A purchaser cannot close his eyes to facts which should put a
reasonable man upon his guard, and then claim that he acted in good faith under
the belief that there was no defect in the title of the vendor. His mere refusal to
believe that such defect exists, or his willful closing of his eyes to the possibility
of the existence of a defect in his vendor's title, will not make him an innocent
purchaser for value, if afterwards develops that the title was in fact defective, and
it appears that he had such notice of the defects as would have led to its discovery
had he acted with that measure of precaution which may reasonably be acquired
of a prudent man in a like situation. Good faith, or lack of it, is in its analysis a
question of intention; but in ascertaining the intention by which one is actuated
on a given occasion, we are necessarily controlled by the evidence as to the
conduct and outward acts by which alone the inward motive may, with safety, be
determined. So it is that "the honesty of intention," "the honest lawful intent,"
which constitutes good faith implies a "freedom from knowledge and
circumstances which ought to put a person on inquiry," and so it is that proof of
such knowledge overcomes the presumption of good faith in which the courts
always indulge in the absence of proof to the contrary. "Good faith, or the want of
it, is not a visible, tangible fact that can be seen or touched, but rather a state or
condition of mind which can only be judged of by actual or fancied tokens or
signs." (Wilder vs. Gilman, 55 Vt., 504, 505; Cf. Cardenas Lumber Co. vs. Shadel, 52
La. Ann., 2094-2098; Pinkerton Bros. Co. vs. Bromley, 119 Mich., 8, 10, 17.)
We conclude that upon the grounds herein set forth the disposing part of the
decision and judgment entered in the court below should be affirmed with costs
of this instance against the appellant. So ordered.
Arellano, C.J., Johnson, Araullo, Street and Malcolm, JJ., concur.
Torres, Avanceña and Fisher, JJ., took no part.
Bacerra vs. Tereza
Page 1 of 1

Republic of the Philippines from, since there is no real property litigated, the house having ceased to exist,
SUPREME COURT and the amount of the demand does exceed P2,000.00 (Sec. 88, id.)1
Manila
The dismissal of the complaint was proper. A house is classified as immovable
EN BANC property by reason of its adherence to the soil on which it is built (Art. 415, par.
1, Civil Code). This classification holds true regardless of the fact that the house
G.R. No. L-16218 November 29, 1962 may be situated on land belonging to a different owner. But once the house is
demolished, as in this case, it ceases to exist as such and hence its character as an
ANTONIA BICERRA, DOMINGO BICERRA, BERNARDO BICERRA, CAYETANO immovable likewise ceases. It should be noted that the complaint here is for
BICERRA, LINDA BICERRA, PIO BICERRA and EUFRICINA BICERRA, recovery of damages. This is the only positive relief prayed for by appellants. To
plaintiffs-appellants, be sure, they also asked that they be declared owners of the dismantled house
vs. and/or of the materials. However, such declaration in no wise constitutes the
TOMASA TENEZA and BENJAMIN BARBOSA, defendants-appellees. relief itself which if granted by final judgment could be enforceable by execution,
but is only incidental to the real cause of action to recover damages.
Agripino Brillantes and Alberto B. Bravo for plaintiffs-appellants.
Ernesto Parol for defendants-appellees. The order appealed from is affirmed. The appeal having been admitted in forma
pauperis, no costs are adjudged.
MAKALINTAL, J.:
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera,
Paredes, Dizon and Regala, JJ., concur.
This case is before us on appeal from the order of the Court of First Instance of
Abra dismissing the complaint filed by appellants, upon motion of defendants-
appellate on the ground that the action was within the exclude (original)
jurisdiction of the Justice of the Peace Court of Lagangilang, of the same province.

The complaint alleges in substance that appellants were the owners of the house,
worth P200.00, built on and owned by them and situated in the said municipality
Lagangilang; that sometime in January 1957 appealed forcibly demolished the
house, claiming to be the owners thereof; that the materials of the house, after it
was dismantled, were placed in the custody of the barrio lieutenant of the place;
and that as a result of appellate's refusal to restore the house or to deliver the
material appellants the latter have suffered actual damages the amount of
P200.00, plus moral and consequential damages in the amount of P600.00. The
relief prayed for is that "the plaintiffs be declared the owners of the house in
question and/or the materials that resulted in (sic) its dismantling; (and) that the
defendants be orders pay the sum of P200.00, plus P600.00 as damages, the
costs."

The issue posed by the parties in this appeal is whether the action involves title
to real property, as appellants contend, and therefore is cognizable by the Court
of First Instance (Sec. 44, par. [b], R.A. 296, as amended), whether it pertains to
the jurisdiction of the Justice of the Peace Court, as stated in the order appealed
Davao Sawmill Co. vs. Castillo, G.R. No. 40411
Page 1 of 2
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-40411 August 7, 1935
DAVAO SAW MILL CO., INC., plaintiff-appellant,
vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO.,
INC., defendants-appellees.
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for
appellant.
J.W. Ferrier for appellees.
MALCOLM, J.:
The issue in this case, as announced in the opening sentence of the decision in the
trial court and as set forth by counsel for the parties on appeal, involves the
determination of the nature of the properties described in the complaint. The
trial judge found that those properties were personal in nature, and as a
consequence absolved the defendants from the complaint, with costs against the
plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the
Government of the Philippine Islands. It has operated a sawmill in the sitio of
Maa, barrio of Tigatu, municipality of Davao, Province of Davao. However, the
land upon which the business was conducted belonged to another person. On the
land the sawmill company erected a building which housed the machinery used
by it. Some of the implements thus used were clearly personal property, the
conflict concerning machines which were placed and mounted on foundations of
cement. In the contract of lease between the sawmill company and the owner of
the land there appeared the following provision:
That on the expiration of the period agreed upon, all the improvements
and buildings introduced and erected by the party of the second part
shall pass to the exclusive ownership of the party of the first part without
any obligation on its part to pay any amount for said improvements and
buildings; also, in the event the party of the second part should leave or
abandon the land leased before the time herein stipulated, the
improvements and buildings shall likewise pass to the ownership of the
party of the first part as though the time agreed upon had expired:
Provided, however, That the machineries and accessories are not
included in the improvements which will pass to the party of the first
part on the expiration or abandonment of the land leased.
In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and
the Davao, Saw, Mill Co., Inc., was the defendant, a judgment was rendered in
favor of the plaintiff in that action against the defendant in that action; a writ of
execution issued thereon, and the properties now in question were levied upon
as personalty by the sheriff. No third party claim was filed for such properties at
the time of the sales thereof as is borne out by the record made by the plaintiff
herein. Indeed the bidder, which was the plaintiff in that action, and the
defendant herein having consummated the sale, proceeded to take possession of
the machinery and other properties described in the corresponding certificates
of sale executed in its favor by the sheriff of Davao.
As connecting up with the facts, it should further be explained that the Davao Saw
Mill Co., Inc., has on a number of occasions treated the machinery as personal
property by executing chattel mortgages in favor of third persons. One of such
persons is the appellee by assignment from the original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the
Code, real property consists of —
1. Land, buildings, roads and constructions of all kinds adhering to the
soil;
xxx xxx xxx
5. Machinery, liquid containers, instruments or implements intended by
the owner of any building or land for use in connection with any industry
or trade being carried on therein and which are expressly adapted to
meet the requirements of such trade of industry.
Appellant emphasizes the first paragraph, and appellees the last mentioned
paragraph. We entertain no doubt that the trial judge and appellees are right in
their appreciation of the legal doctrines flowing from the facts.
In the first place, it must again be pointed out that the appellant should have
registered its protest before or at the time of the sale of this property. It must
further be pointed out that while not conclusive, the characterization of the
property as chattels by the appellant is indicative of intention and impresses
upon the property the character determined by the parties. In this connection the
decision of this court in the case of Standard Oil Co. of New York vs. Jaramillo (
[1923], 44 Phil., 630), whether obiter dicta or not, furnishes the key to such a
situation.
It is, however not necessary to spend overly must time in the resolution of this
appeal on side issues. It is machinery which is involved; moreover, machinery not
intended by the owner of any building or land for use in connection therewith,
but intended by a lessee for use in a building erected on the land by the latter to
be returned to the lessee on the expiration or abandonment of the lease.
Davao Sawmill Co. vs. Castillo, G.R. No. 40411
Page 2 of 2

A similar question arose in Puerto Rico, and on appeal being taken to the United under which the Altagracia held, since the lease in substance required
States Supreme Court, it was held that machinery which is movable in its nature the putting in of improved machinery, deprived the tenant of any right
only becomes immobilized when placed in a plant by the owner of the property to charge against the lessor the cost such machinery, and it was expressly
or plant, but not when so placed by a tenant, a usufructuary, or any person having stipulated that the machinery so put in should become a part of the plant
only a temporary right, unless such person acted as the agent of the owner. In the belonging to the owner without compensation to the lessee. Under such
opinion written by Chief Justice White, whose knowledge of the Civil Law is well conditions the tenant in putting in the machinery was acting but as the
known, it was in part said: agent of the owner in compliance with the obligations resting upon him,
To determine this question involves fixing the nature and character of and the immobilization of the machinery which resulted arose in legal
effect from the act of the owner in giving by contract a permanent
the property from the point of view of the rights of Valdes and its nature
destination to the machinery.
and character from the point of view of Nevers & Callaghan as a judgment
creditor of the Altagracia Company and the rights derived by them from xxx xxx xxx
the execution levied on the machinery placed by the corporation in the
The machinery levied upon by Nevers & Callaghan, that is, that which
plant. Following the Code Napoleon, the Porto Rican Code treats as
was placed in the plant by the Altagracia Company, being, as regards
immovable (real) property, not only land and buildings, but also Nevers & Callaghan, movable property, it follows that they had the right
attributes immovability in some cases to property of a movable nature,
to levy on it under the execution upon the judgment in their favor, and
that is, personal property, because of the destination to which it is
the exercise of that right did not in a legal sense conflict with the claim
applied. "Things," says section 334 of the Porto Rican Code, "may be of Valdes, since as to him the property was a part of the realty which, as
immovable either by their own nature or by their destination or the
the result of his obligations under the lease, he could not, for the purpose
object to which they are applicable." Numerous illustrations are given in
of collecting his debt, proceed separately against. (Valdes vs. Central
the fifth subdivision of section 335, which is as follows: "Machinery,
Altagracia [192], 225 U.S., 58.)
vessels, instruments or implements intended by the owner of the
tenements for the industrial or works that they may carry on in any Finding no reversible error in the record, the judgment appealed from will be
building or upon any land and which tend directly to meet the needs of affirmed, the costs of this instance to be paid by the appellant.
the said industry or works." (See also Code Nap., articles 516, 518 et seq. Villa-Real, Imperial, Butte, and Goddard, JJ., concur.
to and inclusive of article 534, recapitulating the things which, though in
themselves movable, may be immobilized.) So far as the subject-matter
with which we are dealing — machinery placed in the plant — it is plain,
both under the provisions of the Porto Rican Law and of the Code
Napoleon, that machinery which is movable in its nature only becomes
immobilized when placed in a plant by the owner of the property or
plant. Such result would not be accomplished, therefore, by the placing
of machinery in a plant by a tenant or a usufructuary or any person
having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry et
Rau, Tit. 2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions
quoted in Fuzier-Herman ed. Code Napoleon under articles 522 et seq.)
The distinction rests, as pointed out by Demolombe, upon the fact that
one only having a temporary right to the possession or enjoyment of
property is not presumed by the law to have applied movable property
belonging to him so as to deprive him of it by causing it by an act of
immobilization to become the property of another. It follows that
abstractly speaking the machinery put by the Altagracia Company in the
plant belonging to Sanchez did not lose its character of movable property
and become immovable by destination. But in the concrete
immobilization took place because of the express provisions of the lease
Evangelista vs. Alto Surety & Insurance Co., Inc.,
Page 1 of 4
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-11139 April 23, 1958
SANTOS EVANGELISTA, petitioner,
vs.
ALTO SURETY & INSURANCE CO., INC., respondent.
Gonzalo D. David for petitioner.
Raul A. Aristorenas and Benjamin Relova for respondent.
CONCEPCION, J.:
This is an appeal by certiorari from a decision of the Court of Appeals.
Briefly, the facts are: On June 4, 1949, petitioner herein, Santos
Evangelista, instituted Civil Case No. 8235 of the Court of First, Instance
of Manila entitled " Santos Evangelista vs. Ricardo Rivera," for a sum of
money. On the same date, he obtained a writ of attachment, which levied
upon a house, built by Rivera on a land situated in Manila and leased to
him, by filing copy of said writ and the corresponding notice of
attachment with the Office of the Register of Deeds of Manila, on June 8,
1949. In due course, judgment was rendered in favor of Evangelista, who,
on October 8, 1951, bought the house at public auction held in
compliance with the writ of execution issued in said case. The
corresponding definite deed of sale was issued to him on October 22,
1952, upon expiration of the period of redemption. When Evangelista
sought to take possession of the house, Rivera refused to surrender it,
upon the ground that he had leased the property from the Alto Surety &
Insurance Co., Inc. — respondent herein — and that the latter is now the
true owner of said property. It appears that on May 10, 1952, a definite
deed of sale of the same house had been issued to respondent, as the
highest bidder at an auction sale held, on September 29, 1950, in
compliance with a writ of execution issued in Civil Case No. 6268 of the
same court, entitled "Alto Surety & Insurance Co., Inc. vs. Maximo
Quiambao, Rosario Guevara and Ricardo Rivera," in which judgment, for
the sum of money, had been rendered in favor respondent herein, as
plaintiff therein. Hence, on June 13, 1953, Evangelista instituted the
present action against respondent and Ricardo Rivera, for the purpose
of establishing his (Evangelista) title over said house, securing
possession thereof, apart from recovering damages.
In its answer, respondent alleged, in substance, that it has a better right
to the house, because the sale made, and the definite deed of sale
executed, in its favor, on September 29, 1950 and May 10, 1952,
respectively, precede the sale to Evangelista (October 8, 1951) and the
definite deed of sale in his favor (October 22, 1952). It, also, made some
special defenses which are discussed hereafter. Rivera, in effect, joined
forces with respondent. After due trial, the Court of First Instance of
Manila rendered judgment for Evangelista, sentencing Rivera and
respondent to deliver the house in question to petitioner herein and to
pay him, jointly and severally, forty pesos (P40.00) a month from
October, 1952, until said delivery, plus costs.
On appeal taken by respondent, this decision was reversed by the Court
of Appeals, which absolved said respondent from the complaint, upon
the ground that, although the writ of attachment in favor of Evangelista
had been filed with the Register of Deeds of Manila prior to the sale in
favor of respondent, Evangelista did not acquire thereby a preferential
lien, the attachment having been levied as if the house in question were
immovable property, although in the opinion of the Court of Appeals, it
is "ostensibly a personal property." As such, the Court of Appeals held,
"the order of attachment . . . should have been served in the manner
provided in subsection (e) of section 7 of Rule 59," of the Rules of Court,
reading:
The property of the defendant shall be attached by the officer
executing the order in the following manner:
(e) Debts and credits, and other personal property not capable
of manual delivery, by leaving with the person owing such debts,
or having in his possession or under his control, such credits or
other personal property, or with, his agent, a copy of the order,
and a notice that the debts owing by him to the defendant, and the
credits and other personal property in his possession, or under
his control, belonging to the defendant, are attached in
pursuance of such order. (Emphasis ours.)
However, the Court of Appeals seems to have been of the opinion, also,
that the house of Rivera should have been attached in accordance with
subsection (c) of said section 7, as "personal property capable of manual
Evangelista vs. Alto Surety & Insurance Co., Inc.,
Page 2 of 4
delivery, by taking and safely keeping in his custody", for it declared that
"Evangelists could not have . . . validly purchased Ricardo Rivera's house
from the sheriff as the latter was not in possession thereof at the time he
sold it at a public auction."
Evangelista now seeks a review, by certiorari, of this decision of the
Court of Appeals. In this connection, it is not disputed that although the
sale to the respondent preceded that made to Evangelists, the latter
would have a better right if the writ of attachment, issued in his
favor before the sale to the respondent, had been properly executed or
enforced. This question, in turn, depends upon whether the house of
Ricardo Rivera is real property or not. In the affirmative case, the
applicable provision would be subsection (a) of section 7, Rule 59 of the
Rules of Court, pursuant to which the attachment should be made "by
filing with the registrar of deeds a copy of the order, together with a
description of the property attached, and a notice that it is attached, and
by leaving a copy of such order, description, and notice with the occupant
of the property, if any there be."
Respondent maintains, however, and the Court of Appeals held, that
Rivera's house is personal property, the levy upon which must be made
in conformity with subsections (c) and (e) of said section 7 of Rule 59.
Hence, the main issue before us is whether a house, constructed the
lessee of the land on which it is built, should be dealt with, for purpose,
of attachment, as immovable property, or as personal property.
It is, our considered opinion that said house is not personal property,
much less a debt, credit or other personal property not capable of
manual delivery, but immovable property. As explicitly held, in
Laddera vs. Hodges (48 Off. Gaz., 5374), "a true building (not merely
superimposed on the soil) is immovable or real property, whether it is
erected by the owner of the land or by usufructuary or lessee. This is the
doctrine of our Supreme Court in Leung Yee vs. Strong Machinery
Company, 37 Phil., 644. And it is amply supported by the rulings of the
French Court. . . ."
It is true that the parties to a deed of chattel mortgage may agree to
consider a house as personal property for purposes of said contract
(Luna vs. Encarnacion, * 48 Off. Gaz., 2664; Standard Oil Co. of New
York vs. Jaramillo, 44 Phil., 630; De Jesus vs. Juan Dee Co., Inc., 72 Phil.,
464). However, this view is good only insofar as the contracting
parties are concerned. It is based, partly, upon the principle of estoppel.
Neither this principle, nor said view, is applicable to strangers to said
contract. Much less is it in point where there has been no
contract whatsoever, with respect to the status of the house involved, as
in the case at bar. Apart from this, in Manarang vs. Ofilada (99 Phil., 108;
52 Off. Gaz., 3954), we held:
The question now before us, however, is: Does the fact that the
parties entering into a contract regarding a house gave said
property the consideration of personal property in their
contract, bind the sheriff in advertising the property's sale at
public auction as personal property? It is to be remembered that
in the case at bar the action was to collect a loan secured by a
chattel mortgage on the house. It is also to be remembered that
in practice it is the judgment creditor who points out to the
sheriff the properties that the sheriff is to levy upon in
execution, and the judgment creditor in the case at bar is the
party in whose favor the owner of the house had conveyed it by
way of chattel mortgage and, therefore, knew its consideration
as personal property.
These considerations notwithstanding, we hold that the rules on
execution do not allow, and, we should not interpret them in
such a way as to allow, the special consideration that parties to
a contract may have desired to impart to real estate, for
example, as personal property, when they are, not ordinarily
so. Sales on execution affect the public and third persons. The
regulation governing sales on execution are for public officials to
follow. The form of proceedings prescribed for each kind of
property is suited to its character, not to the character, which
the parties have given to it or desire to give it. When the rules
speak of personal property, property which is ordinarily so
considered is meant; and when real property is spoken of, it
means property which is generally known as real property. The
regulations were never intended to suit the consideration that
parties may have privately given to the property levied upon.
Enforcement of regulations would be difficult were the
convenience or agreement of private parties to determine or
govern the nature of the proceedings. We therefore hold that the
mere fact that a house was the subject of the chattel mortgage
and was considered as personal property by the parties does not
make said house personal property for purposes of the notice to
Evangelista vs. Alto Surety & Insurance Co., Inc.,
Page 3 of 4
be given for its sale of public auction. This ruling is demanded by
the need for a definite, orderly and well defined regulation for
official and public guidance and would prevent confusion and
misunderstanding.
We, therefore, declare that the house of mixed materials levied
upon on execution, although subject of a contract of chattel
mortgage between the owner and a third person, is real property
within the purview of Rule 39, section 16, of the Rules of Court as
it has become a permanent fixture of the land, which, is real
property. (42 Am. Jur. 199-200; Leung Yee vs. Strong Machinery
Co., 37 Phil., 644; Republic vs. Ceniza, et al., 90 Phil., 544;
Ladera,, et al. vs. Hodges, et al., [C.A.] Off. Gaz. 5374.)" (Emphasis
ours.)
The foregoing considerations apply, with equal force, to the conditions
for the levy of attachment, for it similarly affects the public and third
persons.
It is argued, however, that, even if the house in question were immovable
property, its attachment by Evangelista was void or ineffective, because,
in the language of the Court of Appeals, "after presenting a Copy of the
order of attachment in the Office of the Register of Deeds, the person who
might then be in possession of the house, the sheriff took no pains to serve
Ricardo Rivera, or other copies thereof." This finding of the Court of
Appeals is neither conclusive upon us, nor accurate.
The Record on Appeal, annexed to the petition for Certiorari, shows that
petitioner alleged, in paragraph 3 of the complaint, that he acquired the
house in question "as a consequence of the levy of an attachment and
execution of the judgment in Civil Case No. 8235" of the Court of First
Instance of Manila. In his answer (paragraph 2), Ricardo
Rivera admitted said attachment execution of judgment. He alleged,
however, by way a of special defense, that the title of respondent
"is superior to that of plaintiff because it is based on a public instrument,"
whereas Evangelista relied upon a "promissory note" which "is only a
private instrument"; that said Public instrument in favor of respondent
"is superior also to the judgment in Civil Case No. 8235"; and that
plaintiff's claim against Rivera amounted only to P866, "which is much
below the real value" of said house, for which reason it would be "grossly
unjust to acquire the property for such an inadequate consideration."
Thus, Rivera impliedly admitted that his house had been attached, that the
house had been sold to Evangelista in accordance with the requisite
formalities, and that said attachment was valid, although allegedly
inferior to the rights of respondent, and the consideration for the sale to
Evangelista was claimed to be inadequate.
Respondent, in turn, denied the allegation in said paragraph 3 of the
complaint, but only " for the reasons stated in its special defenses" namely:
(1) that by virtue of the sale at public auction, and the final deed executed
by the sheriff in favor of respondent, the same became the "legitimate
owner of the house" in question; (2) that respondent "is a buyer in good
faith and for value"; (3) that respondent "took possession and control of
said house"; (4) that "there was no valid attachment by the plaintiff
and/or the Sheriff of Manila of the property in question as neither took
actual or constructive possession or control of the property at any time";
and (5) "that the alleged registration of plaintiff's attachment, certificate
of sale and final deed in the Office of Register of Deeds, Manila, if there
was any, is likewise, not valid as there is no registry of transactions
covering houses erected on land belonging to or leased from another." In
this manner, respondent claimed a better right, merely under the theory
that, in case of double sale of immovable property, the purchaser who
first obtains possession in good faith, acquires title, if the sale has not
been "recorded . . . in the Registry of Property" (Art. 1544, Civil Code of
the Philippines), and that the writ of attachment and the notice of
attachment in favor of Evangelista should be considered unregistered,
"as there is no registry of transactions covering houses erected on land
belonging to or leased from another." In fact, said article 1544 of the Civil
Code of the Philippines, governing double sales, was quoted on page 15
of the brief for respondent in the Court of Appeals, in support of its fourth
assignment of error therein, to the effect that it "has preference or
priority over the sale of the same property" to Evangelista.
In other words, there was no issue on whether copy of the writ and notice
of attachment had been served on Rivera. No evidence whatsoever, to the
effect that Rivera had not been served with copies of said writ and notice,
was introduced in the Court of First Instance. In its brief in the Court of
Appeals, respondent did not aver, or even, intimate, that no such copies
were served by the sheriff upon Rivera. Service thereof on Rivera had been
impliedly admitted by the defendants, in their respective answers, and
by their behaviour throughout the proceedings in the Court of First
Instance, and, as regards respondent, in the Court of Appeals. In fact,
petitioner asserts in his brief herein (p. 26) that copies of said writ and
Evangelista vs. Alto Surety & Insurance Co., Inc.,
Page 4 of 4

notice were delivered to Rivera, simultaneously with copies of the

complaint, upon service of summons, prior to the filing of copies of said
writ and notice with the register deeds, and the truth of this assertion has
not been directly and positively challenged or denied in the brief filed
before us by respondent herein. The latter did not dare therein to go
beyond making a statement — for the first time in the course of these
proceedings, begun almost five (5) years ago (June 18, 1953) —
reproducing substantially the aforementioned finding of the Court of
Appeals and then quoting the same.
Considering, therefore, that neither the pleadings, nor the briefs in the
Court of Appeals, raised an issue on whether or not copies of the writ of
attachment and notice of attachment had been served upon Rivera; that
the defendants had impliedly admitted-in said pleadings and briefs, as well
as by their conduct during the entire proceedings, prior to the rendition of
the decision of the Court of Appeals — that Rivera had received copies of
said documents; and that, for this reason, evidently, no proof was
introduced thereon, we, are of the opinion, and so hold that the finding
of the Court of Appeals to the effect that said copies had not been served
upon Rivera is based upon a misapprehension of the specific issues
involved therein and goes beyond the range of such issues, apart from
being contrary to the aforementioned admission by the parties, and that,
accordingly, a grave abuse of discretion was committed in making said
finding, which is, furthermore, inaccurate.
Wherefore, the decision of the Court of Appeals is hereby reversed, and
another one shall be entered affirming that of the Court of First Instance
of Manila, with the costs of this instance against respondent, the Alto
Surety and Insurance Co., Inc. It is so ordered.
Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador,
Reyes, J.B.L., Endencia and Felix, JJ., concur.
Board of Assessment Appeals vs. MERALCO, 10 SCRA 68
Page 1 of 3

Republic of the Philippines cross metals to prevent mobility; there was no concrete foundation but
SUPREME COURT there was adobe stone underneath; as the bottom of the excavation was
covered with water about three inches high, it could not be determined
Manila
with certainty to whether said adobe stone was placed purposely or not,
EN BANC as the place abounds with this kind of stone; and the tower carried five
G.R. No. L-15334 January 31, 1964 high voltage wires without cover or any insulating materials.

BOARD OF ASSESSMENT APPEALS, CITY ASSESSOR and CITY TREASURER The second tower inspected was located in Kamuning Road, K-F, Quezon
OF QUEZON CITY, petitioners, City, on land owned by the petitioner approximate more than one
vs. kilometer from the first tower. As in the first tower, the ground around
MANILA ELECTRIC COMPANY, respondent. one of the four legs was excavate from seven to eight (8) feet deep and
one and a half (1-½) meters wide. There being very little water at the
Assistant City Attorney Jaime R. Agloro for petitioners. bottom, it was seen that there was no concrete foundation, but there soft
Ross, Selph and Carrascoso for respondent. adobe beneath. The leg was likewise provided with two parallel steel
PAREDES, J.: bars bolted to a square metal frame also bolted to each corner. Like the
first one, the second tower is made up of metal rods joined together by
From the stipulation of facts and evidence adduced during the hearing, the
means of bolts, so that by unscrewing the bolts, the tower could be
following appear:
dismantled and reassembled.
On October 20, 1902, the Philippine Commission enacted Act No. 484 which
The third tower examined is located along Kamias Road, Quezon City. As
authorized the Municipal Board of Manila to grant a franchise to construct,
in the first two towers given above, the ground around the two legs of
maintain and operate an electric street railway and electric light, heat and power
the third tower was excavated to a depth about two or three inches
system in the City of Manila and its suburbs to the person or persons making the
beyond the outside level of the steel bar foundation. It was found that
most favorable bid. Charles M. Swift was awarded the said franchise on March
there was no concrete foundation. Like the two previous ones, the
1903, the terms and conditions of which were embodied in Ordinance No. 44
bottom arrangement of the legs thereof were found to be resting on soft
approved on March 24, 1903. Respondent Manila Electric Co. (Meralco for short),
adobe, which, probably due to high humidity, looks like mud or clay. It
became the transferee and owner of the franchise.
was also found that the square metal frame supporting the legs were not
Meralco's electric power is generated by its hydro-electric plant located at attached to any material or foundation.
Botocan Falls, Laguna and is transmitted to the City of Manila by means of electric
On November 15, 1955, petitioner City Assessor of Quezon City declared the
transmission wires, running from the province of Laguna to the said City. These
aforesaid steel towers for real property tax under Tax declaration Nos. 31992 and
electric transmission wires which carry high voltage current, are fastened to
15549. After denying respondent's petition to cancel these declarations, an
insulators attached on steel towers constructed by respondent at intervals, from
appeal was taken by respondent to the Board of Assessment Appeals of Quezon
its hydro-electric plant in the province of Laguna to the City of Manila. The
City, which required respondent to pay the amount of P11,651.86 as real
respondent Meralco has constructed 40 of these steel towers within Quezon City,
property tax on the said steel towers for the years 1952 to 1956. Respondent paid
on land belonging to it. A photograph of one of these steel towers is attached to
the amount under protest, and filed a petition for review in the Court of Tax
the petition for review, marked Annex A. Three steel towers were inspected by
Appeals (CTA for short) which rendered a decision on December 29, 1958,
the lower court and parties and the following were the descriptions given there
ordering the cancellation of the said tax declarations and the petitioner City
of by said court:
Treasurer of Quezon City to refund to the respondent the sum of P11,651.86. The
The first steel tower is located in South Tatalon, España Extension, motion for reconsideration having been denied, on April 22, 1959, the instant
Quezon City. The findings were as follows: the ground around one of the petition for review was filed.
four posts was excavated to a depth of about eight (8) feet, with an
In upholding the cause of respondents, the CTA held that: (1) the steel towers
opening of about one (1) meter in diameter, decreased to about a quarter
come within the term "poles" which are declared exempt from taxes under part
of a meter as it we deeper until it reached the bottom of the post; at the
II paragraph 9 of respondent's franchise; (2) the steel towers are personal
bottom of the post were two parallel steel bars attached to the leg means
properties and are not subject to real property tax; and (3) the City Treasurer of
of bolts; the tower proper was attached to the leg three bolts; with two
Board of Assessment Appeals vs. MERALCO, 10 SCRA 68
Page 2 of 3
Quezon City is held responsible for the refund of the amount paid. These are
assigned as errors by the petitioner in the brief.
The tax exemption privilege of the petitioner is quoted hereunder:
PAR 9. The grantee shall be liable to pay the same taxes upon its real
estate, buildings, plant (not including poles, wires, transformers, and
insulators), machinery and personal property as other persons are or
may be hereafter required by law to pay ... Said percentage shall be due
and payable at the time stated in paragraph nineteen of Part One hereof,
... and shall be in lieu of all taxes and assessments of whatsoever nature and
by whatsoever authority upon the privileges, earnings, income, franchise,
and poles, wires, transformers, and insulators of the grantee from which
taxes and assessments the grantee is hereby expressly exempted. (Par. 9,
Part Two, Act No. 484 Respondent's Franchise; emphasis supplied.)
The word "pole" means "a long, comparatively slender usually cylindrical piece
of wood or timber, as typically the stem of a small tree stripped of its branches;
also by extension, a similar typically cylindrical piece or object of metal or the
like". The term also refers to "an upright standard to the top of which something is
affixed or by which something is supported; as a dovecote set on a pole; telegraph
poles; a tent pole; sometimes, specifically a vessel's master (Webster's New
International Dictionary 2nd Ed., p. 1907.) Along the streets, in the City of Manila,
may be seen cylindrical metal poles, cubical concrete poles, and poles of the PLDT
Co. which are made of two steel bars joined together by an interlacing metal rod.
They are called "poles" notwithstanding the fact that they are no made of wood.
It must be noted from paragraph 9, above quoted, that the concept of the "poles"
for which exemption is granted, is not determined by their place or location, nor
by the character of the electric current it carries, nor the material or form of
which it is made, but the use to which they are dedicated. In accordance with the
definitions, pole is not restricted to a long cylindrical piece of wood or metal, but
includes "upright standards to the top of which something is affixed or by which
something is supported. As heretofore described, respondent's steel supports
consists of a framework of four steel bars or strips which are bound by steel
cross-arms atop of which are cross-arms supporting five high voltage
transmission wires (See Annex A) and their sole function is to support or carry
such wires.
The conclusion of the CTA that the steel supports in question are embraced in the
term "poles" is not a novelty. Several courts of last resort in the United States have
called these steel supports "steel towers", and they denominated these supports
or towers, as electric poles. In their decisions the words "towers" and "poles"
were used interchangeably, and it is well understood in that jurisdiction that a
transmission tower or pole means the same thing.
In a proceeding to condemn land for the use of electric power wires, in which the
law provided that wires shall be constructed upon suitable poles, this term was
construed to mean either wood or metal poles and in view of the land being
subject to overflow, and the necessary carrying of numerous wires and the
distance between poles, the statute was interpreted to include towers or poles.
(Stemmons and Dallas Light Co. (Tex) 212 S.W. 222, 224; 32-A Words and
Phrases, p. 365.)
The term "poles" was also used to denominate the steel supports or towers used
by an association used to convey its electric power furnished to subscribers and
members, constructed for the purpose of fastening high voltage and dangerous
electric wires alongside public highways. The steel supports or towers were
made of iron or other metals consisting of two pieces running from the ground
up some thirty feet high, being wider at the bottom than at the top, the said two
metal pieces being connected with criss-cross iron running from the bottom to
the top, constructed like ladders and loaded with high voltage electricity. In form
and structure, they are like the steel towers in question. (Salt River Valley Users'
Ass'n v. Compton, 8 P. 2nd, 249-250.)
The term "poles" was used to denote the steel towers of an electric company
engaged in the generation of hydro-electric power generated from its plant to the
Tower of Oxford and City of Waterbury. These steel towers are about 15 feet
square at the base and extended to a height of about 35 feet to a point, and are
embedded in the cement foundations sunk in the earth, the top of which extends
above the surface of the soil in the tower of Oxford, and to the towers are attached
insulators, arms, and other equipment capable of carrying wires for the
transmission of electric power (Connecticut Light and Power Co. v. Oxford, 101
Conn. 383, 126 Atl. p. 1).
In a case, the defendant admitted that the structure on which a certain person
met his death was built for the purpose of supporting a transmission wire used
for carrying high-tension electric power, but claimed that the steel towers on
which it is carried were so large that their wire took their structure out of the
definition of a pole line. It was held that in defining the word pole, one should not
be governed by the wire or material of the support used, but was considering the
danger from any elevated wire carrying electric current, and that regardless of
the size or material wire of its individual members, any continuous series of
structures intended and used solely or primarily for the purpose of supporting
wires carrying electric currents is a pole line (Inspiration Consolidation Cooper
Co. v. Bryan 252 P. 1016).
It is evident, therefore, that the word "poles", as used in Act No. 484 and
incorporated in the petitioner's franchise, should not be given a restrictive and
narrow interpretation, as to defeat the very object for which the franchise was
granted. The poles as contemplated thereon, should be understood and taken as
a part of the electric power system of the respondent Meralco, for the conveyance
of electric current from the source thereof to its consumers. If the respondent
would be required to employ "wooden poles", or "rounded poles" as it used to do
fifty years back, then one should admit that the Philippines is one century behind
Board of Assessment Appeals vs. MERALCO, 10 SCRA 68
Page 3 of 3

the age of space. It should also be conceded by now that steel towers, like the ones
in question, for obvious reasons, can better effectuate the purpose for which the
respondent's franchise was granted.
Granting for the purpose of argument that the steel supports or towers in
question are not embraced within the term poles, the logical question posited is
whether they constitute real properties, so that they can be subject to a real
property tax. The tax law does not provide for a definition of real property; but
Article 415 of the Civil Code does, by stating the following are immovable
property:
interest, but Quezon City, which was not a party to the suit, notwithstanding its
capacity to sue and be sued, he should not be ordered to effect the refund. This
question has not been raised in the court below, and, therefore, it cannot be
properly raised for the first time on appeal. The herein petitioner is indulging in
legal technicalities and niceties which do not help him any; for factually, it was he
(City Treasurer) whom had insisted that respondent herein pay the real estate
taxes, which respondent paid under protest. Having acted in his official capacity
as City Treasurer of Quezon City, he would surely know what to do, under the
circumstances.

(1) Land, buildings, roads, and constructions of all kinds adhered to the IN VIEW HEREOF, the decision appealed from is hereby affirmed, with costs
soil; against the petitioners.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera
xxx xxx xxx
and Regala, JJ., concur.
(3) Everything attached to an immovable in a fixed manner, in such a way Makalintal, J., concurs in the result.
that it cannot be separated therefrom without breaking the material or Dizon, J., took no part.
deterioration of the object;
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements intended by the
owner of the tenement for an industry or works which may be carried in
a building or on a piece of land, and which tends directly to meet the
needs of the said industry or works;
xxx xxx xxx
The steel towers or supports in question, do not come within the objects
mentioned in paragraph 1, because they do not constitute buildings or
constructions adhered to the soil. They are not construction analogous to
buildings nor adhering to the soil. As per description, given by the lower court,
they are removable and merely attached to a square metal frame by means of
bolts, which when unscrewed could easily be dismantled and moved from place
to place. They can not be included under paragraph 3, as they are not attached to
an immovable in a fixed manner, and they can be separated without breaking the
material or causing deterioration upon the object to which they are attached.
Each of these steel towers or supports consists of steel bars or metal strips, joined
together by means of bolts, which can be disassembled by unscrewing the bolts
and reassembled by screwing the same. These steel towers or supports do not
also fall under paragraph 5, for they are not machineries, receptacles,
instruments or implements, and even if they were, they are not intended for
industry or works on the land. Petitioner is not engaged in an industry or works
in the land in which the steel supports or towers are constructed.
It is finally contended that the CTA erred in ordering the City Treasurer of Quezon
City to refund the sum of P11,651.86, despite the fact that Quezon City is not a
party to the case. It is argued that as the City Treasurer is not the real party in
Associated Insurance and Surety Company v. Iya
Page 1 of 3
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. Nos. L-10837-38 May 30, 1958
ASSOCIATED INSURANCE and SURETY COMPANY, INC., plaintiff,
vs.
ISABEL IYA, ADRIANO VALINO and LUCIA VALINO, defendants.
ISABEL IYA, plaintiff,
vs.
ADRIANO VALINO, LUCIA VALINO and ASSOCIATED INSURANCE and
SURETY COMPANY. INC., defendants.
Jovita L. de Dios for defendant Isabel Iya.
M. Perez Cardenas and Apolonio Abola for defendant Associated Insurance and
Surety Co., Inc.
FELIX, J.:
Adriano Valino and Lucia A. Valino, husband and wife, were the owners and
possessors of a house of strong materials constructed on Lot No. 3, Block No. 80
of the Grace Park Subdivision in Caloocan, Rizal, which they purchased on
installment basis from the Philippine Realty Corporation. On November 6, 1951,
to enable her to purchase on credit rice from the NARIC, Lucia A. Valino filed a
bond in the sum of P11,000.00 (AISCO Bond No. G-971) subscribed by the
Associated Insurance and Surety Co., Inc., and as counter-guaranty therefor, the
spouses Valino executed an alleged chattel mortgage on the aforementioned
house in favor of the surety company, which encumbrance was duly registered
with the Chattel Mortgage Register of Rizal on December 6, 1951. It is admitted
that at the time said undertaking took place, the parcel of land on which the house
is erected was still registered in the name of the Philippine Realty Corporation.
Having completed payment on the purchase price of the lot, the Valinos were able
to secure on October 18, 1958, a certificate of title in their name (T.C.T. No.
27884). Subsequently, however, or on October 24, 1952, the Valinos, to secure
payment of an indebtedness in the amount of P12,000.00, executed a real estate
mortgage over the lot and the house in favor of Isabel Iya, which was duly
registered and annotated at the back of the certificate of title.
On the other hand, as Lucia A. Valino, failed to satisfy her obligation to the NARIC,
the surety company was compelled to pay the same pursuant to the undertaking
of the bond. In turn, the surety company demanded reimbursement from the
spouses Valino, and as the latter likewise failed to do so, the company foreclosed
the chattel mortgage over the house. As a result thereof, a public sale was
conducted by the Provincial Sheriff of Rizal on December 26, 1952, wherein the
property was awarded to the surety company for P8,000.00, the highest bid
received therefor. The surety company then caused the said house to be declared
in its name for tax purposes (Tax Declaration No. 25128).
Sometime in July, 1953, the surety company learned of the existence of the real
estate mortgage over the lot covered by T.C.T. No. 26884 together with the
improvements thereon; thus, said surety company instituted Civil Case No. 2162
of the Court of First Instance of Manila naming Adriano and Lucia Valino and
Isabel Iya, the mortgagee, as defendants. The complaint prayed for the exclusion
of the residential house from the real estate mortgage in favor of defendant Iya
and the declaration and recognition of plaintiff's right to ownership over the
same in virtue of the award given by the Provincial Sheriff of Rizal during the
public auction held on December 26, 1952. Plaintiff likewise asked the Court to
sentence the spouses Valino to pay said surety moral and exemplary damages,
attorney's fees and costs. Defendant Isabel Iya filed her answer to the complaint
alleging among other things, that in virtue of the real estate mortgage executed
by her co-defendants, she acquired a real right over the lot and the house
constructed thereon; that the auction sale allegedly conducted by the Provincial
Sheriff of Rizal as a result of the foreclosure of the chattel mortgage on the house
was null and void for non-compliance with the form required by law. She,
therefore, prayed for the dismissal of the complaint and anullment of the sale
made by the Provincial Sheriff. She also demanded the amount of P5,000.00 from
plaintiff as counterclaim, the sum of P5,000.00 from her co-defendants as
crossclaim, for attorney's fees and costs.
Defendants spouses in their answer admitted some of the averments of the
complaint and denied the others. They, however, prayed for the dismissal of the
action for lack of cause of action, it being alleged that plaintiff was already the
owner of the house in question, and as said defendants admitted this fact, the
claim of the former was already satisfied.
On October 29, 1953, Isabel Iya filed another civil action against the Valinos and
the surety company (Civil Case No. 2504 of the Court of First Instance of Manila)
stating that pursuant to the contract of mortgage executed by the spouses Valino
on October 24, 1952, the latter undertook to pay a loan of P12,000.00 with
interest at 12% per annum or P120.00 a month, which indebtedness was payable
in 4 years, extendible for only one year; that to secure payment thereof, said
Associated Insurance and Surety Company v. Iya
Page 2 of 3
defendants mortgaged the house and lot covered by T.C.T. No. 27884 located at
No. 67 Baltazar St., Grace Park Subdivision, Caloocan, Rizal; that the Associated
Insurance and Surety Co., Inc., was included as a party defendant because it
claimed to have an interest on the residential house also covered by said
mortgage; that it was stipulated in the aforesaid real estate mortgage that default
in the payment of the interest agreed upon would entitle the mortgagee to
foreclose the same even before the lapse of the 4-year period; and as defendant
spouses had allegedly failed to pay the interest for more than 6 months, plaintiff
prayed the Court to order said defendants to pay the sum of P12,000.00 with
interest thereon at 12% per annum from March 25, 1953, until fully paid; for an
additional sum equivalent to 20% of the total obligation as damages, and for
costs. As an alternative in case such demand may not be met and satisfied plaintiff
prayed for a decree of foreclosure of the land, building and other improvements
thereon to be sold at public auction and the proceeds thereof applied to satisfy
the demands of plaintiff; that the Valinos, the surety company and any other
person claiming interest on the mortgaged properties be barred and foreclosed
of all rights, claims or equity of redemption in said properties; and for deficiency
judgment in case the proceeds of the sale of the mortgaged property would be
insufficient to satisfy the claim of plaintiff.
Defendant surety company, in answer to this complaint insisted on its right over
the building, arguing that as the lot on which the house was constructed did not
belong to the spouses at the time the chattel mortgage was executed, the house
might be considered only as a personal property and that the encumbrance
thereof and the subsequent foreclosure proceedings made pursuant to the
provisions of the Chattel Mortgage Law were proper and legal. Defendant
therefore prayed that said building be excluded from the real estate mortgage
and its right over the same be declared superior to that of plaintiff, for damages,
attorney's fees and costs.
Taking side with the surety company, defendant spouses admitted the due
execution of the mortgage upon the land but assailed the allegation that the
building was included thereon, it being contended that it was already
encumbered in favor of the surety company before the real estate mortgage was
executed, a fact made known to plaintiff during the preparation of said contract
and to which the latter offered no objection. As a special defense, it was asserted
that the action was premature because the contract was for a period of 4 years,
which had not yet elapsed.
The two cases were jointly heard upon agreement of the parties, who submitted
the same on a stipulation of facts, after which the Court rendered judgment dated
March 8, 1956, holding that the chattel mortgage in favor of the Associated
Insurance and Surety Co., Inc., was preferred and superior over the real estate
mortgage subsequently executed in favor of Isabel Iya. It was ruled that as the
Valinos were not yet the registered owner of the land on which the building in
question was constructed at the time the first encumbrance was made, the
building then was still a personality and a chattel mortgage over the same was
proper. However, as the mortgagors were already the owner of the land at the
time the contract with Isabel Iya was entered into, the building was transformed
into a real property and the real estate mortgage created thereon was likewise
adjudged as proper. It is to be noted in this connection that there is no evidence
on record to sustain the allegation of the spouses Valino that at the time they
mortgaged their house and lot to Isabel Iya, the latter was told or knew that part
of the mortgaged property, i.e., the house, had previously been mortgaged to the
surety company.
The residential building was, therefore, ordered excluded from the foreclosure
prayed for by Isabel Iya, although the latter could exercise the right of a junior
encumbrance. So the spouses Valino were ordered to pay the amount demanded
by said mortgagee or in their default to have the parcel of land subject of the
mortgage sold at public auction for the satisfaction of Iya's claim.
There is no question as to appellant's right over the land covered by the real
estate mortgage; however, as the building constructed thereon has been the
subject of 2 mortgages; controversy arise as to which of these encumbrances
should receive preference over the other. The decisive factor in resolving the
issue presented by this appeal is the determination of the nature of the structure
litigated upon, for where it be considered a personality, the foreclosure of the
chattel mortgage and the subsequent sale thereof at public auction, made in
accordance with the Chattel Mortgage Law would be valid and the right acquired
by the surety company therefrom would certainly deserve prior recognition;
otherwise, appellant's claim for preference must be granted. The lower Court,
deciding in favor of the surety company, based its ruling on the premise that as
the mortgagors were not the owners of the land on which the building is erected
at the time the first encumbrance was made, said structure partook of the nature
of a personal property and could properly be the subject of a chattel mortgage.
We find reason to hold otherwise, for as this Court, defining the nature or
character of a building, has said:
. . . while it is true that generally, real estate connotes the land and the
building constructed thereon, it is obvious that the inclusion of the
building, separate and distinct from the land, in the enumeration of what
may constitute real properties (Art. 415, new Civil Code) could only
mean one thing — that a building is by itself an immovable property . . .
Moreover, and in view of the absence of any specific provision to the
contrary, a building is an immovable property irrespective of whether or
Associated Insurance and Surety Company v. Iya
Page 3 of 3

not said structure and the land on which it is adhered to belong to the same
owner. (Lopez vs. Orosa, G.R. Nos. supra, p. 98).

A building certainly cannot be divested of its character of a realty by the fact that
the land on which it is constructed belongs to another. To hold it the other way,
the possibility is not remote that it would result in confusion, for to cloak the
building with an uncertain status made dependent on the ownership of the land,
would create a situation where a permanent fixture changes its nature or
character as the ownership of the land changes hands. In the case at bar, as
personal properties could only be the subject of a chattel mortgage (Section 1,
Act 3952) and as obviously the structure in question is not one, the execution of
the chattel mortgage covering said building is clearly invalid and a nullity. While
it is true that said document was correspondingly registered in the Chattel
Mortgage Register of Rizal, this act produced no effect whatsoever for where the
interest conveyed is in the nature of a real property, the registration of the
document in the registry of chattels is merely a futile act. Thus, the registration
of the chattel mortgage of a building of strong materials produce no effect as far
as the building is concerned (Leung Yee vs. Strong Machinery Co., 37 Phil., 644).
Nor can we give any consideration to the contention of the surety that it has
acquired ownership over the property in question by reason of the sale
conducted by the Provincial Sheriff of Rizal, for as this Court has aptly
pronounced:

A mortgage creditor who purchases real properties at an extrajudicial

foreclosure sale thereof by virtue of a chattel mortgage constituted in his
favor, which mortgage has been declared null and void with respect to
said real properties, acquires no right thereto by virtue of said sale (De
la Riva vs. Ah Keo, 60 Phil., 899).

Wherefore the portion of the decision of the lower Court in these two cases
appealed from holding the rights of the surety company, over the building
superior to that of Isabel Iya and excluding the building from the foreclosure
prayed for by the latter is reversed and appellant Isabel Iya's right to foreclose
not only the land but also the building erected thereon is hereby recognized, and
the proceeds of the sale thereof at public auction (if the land has not yet been
sold), shall be applied to the unsatisfied judgment in favor of Isabel Iya. This
decision however is without prejudice to any right that the Associated Insurance
and Surety Co., Inc., may have against the spouses Adriano and Lucia Valino on
account of the mortgage of said building they executed in favor of said surety
company. Without pronouncement as to costs. It is so ordered.

Paras, C.J., Bengzon, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion,
Reyes, J.B.L., and Endencia, JJ., concur.
U.S. vs. Carlos, 21 Phil. 553
Page 1 of 22
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 6295 September 1, 1911
THE UNITED STATES, plaintiff-appellee,
vs.
IGNACIO CARLOS, defendant-appellant.
A. D. Gibbs for appellant.
Acting Attorney-General Harvey for appellee.
PER CURIAM:
The information filed in this case is as follows:
The undersigned accuses Ignacio Carlos of the crime of theft, committed
as follows:
That on, during, and between the 13th day of February, 1909, and the 3d
day of March, 1910, in the city of Manila, Philippine Islands, the said
Ignacio Carlos, with intent of gain and without violence or intimidation
against the person or force against the thing, did then and there, willfully,
unlawfully, and feloniously, take, steal , and carry away two thousand
two hundred and seventy-three (2,273) kilowatts of electric current, of
the value of nine hundred and nine (909) pesos and twenty (20) cents
Philippine currency, the property of the Manila Electric Railroad and
Light Company, a corporation doing business in the Philippine Islands,
without the consent of the owner thereof; to the damage and prejudice
of the said Manila Electric Railroad and Light Company in the said sum
of nine hundred and nine (909) pesos and twenty (20) cents Philippine
currency, equal to and equivalent of 4,546 pesetas Philippine currency.
All contrary to law.
(Sgd.) L. M. SOUTWORTH,
Prosecuting Attorney.
Subscribed and sworn to before me this 4th day of March, 1910, in the
city of Manila, Philippine Islands, by L. M. Southworth, prosecuting
attorney for the city of Manila.
(Sgd.) CHARLES S. LOBINGIER,
Judge, First Instance.
A preliminary investigation has heretofore been conducted in this case,
under my direction, having examined the witness under oath, in
accordance with the provisions of section 39 of Act No. 183 of the
Philippine Commission, as amended by section 2 of Act No. 612 of the
Philippine Commission.
(Sgd) L. M. SOUTHWORTH,
Prosecuting Attorney.
Subscribed and sworn to before me this 4th day of March, 1910, in the
city of Manila, Philippine Islands, by L. M. Southworth, prosecuting
attorney for the city of Manila.
(Sgd.) CHARLES LOBINGIER,
Judge, First Instance.
A warrant for the arrest of the defendant was issued by the Honorable J. C. Jenkins
on the 4th of March and placed in the hands of the sheriff. The sheriff's return
shows that the defendant gave bond for his appearance. On the 14th of the same
month counsel for the defendant demurrer to the complaint on the following
grounds:
1 That the court has no jurisdiction over the person of the accused nor
of the offense charged because the accused has not been accorded a
preliminary investigation or examination as required by law and no
court, magistrate, or other competent authority has determined from a
sworn complaint or evidence adduced that there is probable cause to
believe that a crime has been committed, or that this defendant has
committed any crime.
2 That the facts charged do not constitute a public offense.
The demurrer was overruled on the same day and the defendant having refused
to plead, a plea of not guilty was entered by direction of the court for him and the
trial proceeded.
After due consideration of all the proofs presented and the arguments of counsel
the trial court found the defendant guilty of the crime charged and sentenced him
to one year eight months and twenty-one days' presidio correccional, to
indemnify the offended party, The Manila Electric Railroad and Light Company,
in the sum of P865.26, to the corresponding subsidiary imprisonment in case of
insolvency and to the payment of the costs. From this judgment the defendant
appealed and makes the following assignments of error:
I.
The court erred in overruling the objection of the accused to the
jurisdiction of the court, because he was not given a preliminary
investigation as required by law, and in overruling his demurrer for the
same reason.
U.S. vs. Carlos, 21 Phil. 553
Page 2 of 22
II.
The court erred in declaring the accused to be guilty, in view of the
evidence submitted.
III.
The court erred in declaring that electrical energy may be stolen.
IV.
The court erred in not declaring that the plaintiff consented to the taking
of the current.
V.
The court erred in finding the accused guilty of more than one offense.
VI.
The court erred in condemning the accused to pay P865.26 to the electric
company as damages.
Exactly the same question as that raised in the first assignment of error, was after
a through examination and due consideration, decided adversely to appellant's
contention in the case of U. S. vs. Grant and Kennedy (18 Phil. Rep., 122). No
sufficient reason is presented why we should not follow the doctrine enunciated
in that case.
The question raised in the second assignment of error is purely one fact. Upon
this point the trial court said:
For considerably more than a year previous to the filing of this complaint
the accused had been a consumer of electricity furnished by the Manila
Electric Railroad and Light Company for a building containing the
residence of the accused and three other residences, and which was
equipped, according to the defendant's testimony, with thirty electric
lights. On March 15, 1909, the representatives of the company, believing
that more light was being used than their meter showed, installed an
additional meter (Exhibit A) on a pole outside of defendant's house, and
both it and the meter (Exhibit B) which had been previously installed in
the house were read on said date. Exhibit A read 218 kilowatt hours;
Exhibit B, 745 kilowatt hours. On March 3, 1910 each was read again,
Exhibit A showing 2,718 kilowatt hours and Exhibit B, 968. It is
undisputed that the current which supplied the house passed through
both meters and the city electrician testifies that each meter was tested
on the date of the last reading and was "in good condition." The result of
this registration therefore is that while the outsider meter (Exhibit A)
showed a consumption in defendant's building of 2,500 kilowatt hours
of electricity, this inside meter (Exhibit B) showed but 223 kilowatt
hours. In other words the actual consumption, according to the outside
meter, was more than ten times as great as that registered by the one
inside. Obviously this difference could not be due to normal causes, for
while the electrician called by the defense (Lanusa) testifies to the
possibility of a difference between two such meters, he places the
extreme limit of such difference between them 5 per cent. Here, as we
have seen, the difference is more than 900 per cent. Besides, according
to the defendant's electrician, the outside meter should normally run
faster, while according to the test made in this case the inside meter
(Exhibit B) ran the faster. The city electrician also testifies that the
electric current could have been deflected from the inside meter by
placing thereon a device known as a "jumper" connecting the two
outside wires, and there is other testimony that there were marks on the
insulation of the meter Exhibit B which showed the use of such a device.
There is a further evidence that the consumption of 223 kilowatt hours,
registered by the inside meter would not be a reasonable amount for the
number of lights installed in defendant's building during the period in
question, and the accused fails to explain why he should have had thirty
lights installed if he needed but four or five.
On the strength of this showing a search warrant was issued for the
examination of defendant's premises and was duly served by a police
officer (Hartpence). He was accompanied at the time by three employees
of the Manila Electric Railroad and Light Company, and he found there
the accused, his wife and son, and perhaps one or two others. There is a
sharp conflict between the several spectators on some points but on one
there is no dispute. All agree that the "jumper" (Exhibit C) was found in
a drawer of a small cabinet in the room of defendant's house where the
meter was installed and not more than 20 feet therefrom. In the absence
of a satisfactory explanation this constituted possession on defendant's
part, and such possession, under the Code of Civil Procedure, section 334
(10), raises the presumption that the accused was the owner of a device
whose only use was to deflect the current from the meter.
Is there any other "satisfactory explanation" of the "jumper's" presence?
The only one sought to be offered is the statement by the son of the
accused, a boy of twelve years, that he saw the "jumper" placed there by
the witness Porter, an employee of the Light Company. The boy is the
only witness who so testifies and Porter himself squarely denies it. We
can not agree with counsel for the defense that the boy's interest in the
outcome of this case is less than that of the witness for the prosecution.
It seems to us that his natural desire to shield his father would far
outweight any interest such an employee like Porter would have and
which, at most, would be merely pecuniary.
There is, however, one witness whom so far as appears, has no interest
in the matter whatsoever. This is officer Hartpence, who executed the
U.S. vs. Carlos, 21 Phil. 553
Page 3 of 22
search warrant. He testifies that after inspecting other articles and places
in the building as he and the other spectators, including the accused,
approached the cabinet in which the "jumper" was found, the officer's
attention was called to the defendant's appearance and the former
noticed that the latter was becoming nervous. Where the only two
witnesses who are supposed to know anything of the matter thus
contradict each other this item of testimony by the officer is of more than
ordinary significance; for if, as the accused claims, the "jumper" was
placed in the cabinet for the first time by Porter there would be no
occasion for any change of demeanor on the part of the accused. We do
not think that the officer's declination to wait until defendant should
secure a notary public shows bias. The presence of such an official was
neither required nor authorized by law and the very efficacy of a search
depends upon its swiftness.
We must also agree with the prosecuting attorney that the attending
circumstances do not strengthen the story told by the boy; that the latter
would have been likely to call out at the time he saw the "jumper" being
placed in the drawer, or at least directed his father's attention to it
immediately instead of waiting, as he says, until the latter was called by
the officer. Finally, to accept the boy's story we must believe that this
company or its representatives deliberately conspired not merely to lure
the defendant into the commission of a crime but to fasten upon him a
crime which he did not commit and thus convict an innocent man by
perjured evidence. This is a much more serious charge than that
contained in the complaint and should be supported by very strong
corroborating circumstances which we do not find here. We are,
accordingly, unable to consider as satisfactory defendant's explanation
of the "jumper's" presence.
The only alternative is the conclusion that the "jumper" was placed there
by the accused or by some one acting for him and that it was the
instrument by which the current was deflected from the matter Exhibit
B and the Light Company deprived of its lawful compensation.
After a careful examination of the entire record we are satisfied beyond
peradventure of a doubt that the proofs presented fully support the facts as set
forth in the foregoing finding.
Counsel for the appellant insists that the only corporeal property can be the
subject of the crime of larceny, and in the support of this proposition cites several
authorities for the purpose of showing that the only subjects of larceny are
tangible, movable, chattels, something which could be taken in possession and
carried away, and which had some, although trifling, intrinsic value, and also to
show that electricity is an unknown force and can not be a subject of larceny.
In the U. S. vs. Genato (15 Phi. Rep., 170) the defendant, the owner of the store
situated at No. 154 Escolta, Manila, was using a contrivance known as a "jumper"
on the electric meter installed by the Manila Electric Railroad and the Light
Company. As a result of the use of this "jumper" the meter, instead of making one
revolution in every four seconds, registered one in seventy-seven seconds,
thereby reducing the current approximately 95 per cent. Genato was charged in
the municipal court with a violation of a certain ordinance of the city of Manila,
and was sentenced to pay a fine of P200. He appealed to the Court of First
Instance, was again tried and sentenced to pay the same fine. An appeal was taken
from the judgment of the Court of First Instance to the Supreme Court on the
ground that the ordinance in question was null and void. It is true that the only
question directly presented was of the validity of the city ordinance. The court,
after holding that said ordinance was valid, said:
Even without them (ordinances), the right of ownership of electric
current is secured by articles 517 and 518 of the Penal Code; the
application of these articles in case of subtraction of gas, a fluid used for
lighting, and in some respects resembling electricity, is confirmed by the
rule laid down in the decisions of the supreme court of Spain January 20,
1887, and April 1, 1897, construing and enforcing the provisions of
articles 530 and 531 of the penal code of that country, articles identical
with articles 517 and 518 of the code in force in these Islands.
Article 517 of the Penal Code above referred to reads as follows:
The following are guilty of larceny:
(1) Those who with intent of gain and without violence or intimidation
against the person, or force against things, shall take another's personal
property without the owner's consent.
And article 518 fixes the penalty for larceny in proportion to the value of the
personal property stolen.
It is true that electricity is no longer, as formerly, regarded by electricians as a
fluid, but its manifestation and effects, like those of gas, may be seen and felt. The
true test of what is a proper subject of larceny seems to be not whether the
subject is corporeal, but whether it is capable of appropriation by another than
the owner.
It is well-settled that illuminating gas may be the subject of larceny, even in the
absence of a statute so providing. (Decisions of supreme court of Spain, January
20, 1887, and April 1, 1897, supra; also (England) Queen vs. Firth, L. R. 1 C. C., 172,
11 Cox C. C., 234; Queen vs. White, 3 C. & K., 363, 6 Cox C. C., 213;
Woods vs. People, 222 III., 293, 7 L. R. A., 520; Commonwealth vs. Shaw, 4 Allen
(Mass), 308; State vs. Wellman, 34 Minn., 221, N. W. Rep., 385, and 25 Cyc., p. 12,
note 10.)
U.S. vs. Carlos, 21 Phil. 553
Page 4 of 22
In the case of Commonwealth vs. Shaw, supra, the court, speaking through Chief
Justice Bigelow, said:
There is nothing in the nature of gas used for illuminating purposes
which renders it incapable of being feloniously taken and carried away.
It is a valuable article of merchandise, bought and sold like other
personal property, susceptible of being severed from a mass or larger
quantity, and of being transported from place to place. In the present
case it appears that it was the property of the Boston Gas Light Company;
that it was in their possession by being confined in conduits and tubes
which belonged to them, and that the defendant severed a portion of that
which was in the pipes of the company by taking it into her house and
there consuming it. All this being proved to have been done by her
secretly and with intent to deprive the company of their property and to
appropriate it to her own use, clearly constitutes the crime of larceny.
Electricity, the same as gas, is a valuable article of merchandise, bought and sold
like other personal property and is capable of appropriation by another. So no
error was committed by the trial court in holding that electricity is a subject of
larceny.
It is urged in support of the fourth assignment of error that if it be true that the
appellant did appropriate to his own use the electricity as charged he can not be
held guilty of larceny for any part of the electricity thus appropriated, after the
first month, for the reason that the complaining party, the Manila Electric Road
and Light Company, knew of this misappropriation and consented thereto.
The outside meter was installed on March 15, 1909, and read 218 kilowatt hours.
On the same day the inside meter was read and showed 745 kilowatt hours. Both
meters were again read on March 3, 1910, and the outside one showed 2,718
kilowatt hours while the one on the inside only showed 968, the difference in
consumption during this time being 2,277 kilowatt hours. The taking of this
current continued over a period of one year, less twelve days. Assuming that the
company read both meters at the end of each month; that it knew the defendant
was misappropriating the current to that extent; and that t continued to furnish
the current, thereby giving the defendant an opportunity to continue the
misppropriation, still, we think, that the defendant is criminally responsible for
the taking of the whole amount, 2,277 kilowatt hours. The company had a
contract with the defendant to furnish him with current for lighting purposes. It
could not stop the misappropriation without cutting off the current entirely. It
could not reduce the current so as to just furnish sufficient for the lighting of two,
three, or five lights, as claimed by the defendant that he used during the most of
this time, but the current must always be sufficiently strong to furnish current for
the thirty lights, at any time the defendant desired to use them.
There is no pretense that the accused was solicited by the company or any one
else to commit the acts charged. At most there was a mere passive submission on
the part of the company that the current should be taken and no indication that
it wished it to be taken, and no knowledge by the defendant that the company
wished him to take the current, and no mutual understanding between the
company and the defendant, and no measures of inducement of any kind were
employed by the company for the purpose of leading the defendant into
temptation, and no preconcert whatever between him and company. The original
design to misappropriate this current was formed by the defendant absolutely
independent of any acts on the part of the company or its agents. It is true, no
doubt, as a general proposition, that larceny is not committed when the property
is taken with the consent of its owner. It may be difficult in some instances to
determine whether certain acts constitute, in law, such "consent." But under the
facts in the case at bar it is not difficult to reach a conclusion that the acts
performed by the plaintiff company did not constitute a consent on its part the
defendant take its property. We have been unable to find a well considered case
holding contrary opinion under similar facts, but, there are numerous cases
holding that such acts do not constitute such consent as would relieve the taker
of criminal responsibility. The fourth assignment of error is, therefore, not well
founded.
It is also contended that since the "jumper" was not used continuously, the
defendant committed not a single offense but a series of offenses. It is, no doubt,
true that the defendant did not allow the "jumper" to remain in place
continuously for any number of days as the company inspected monthly the
inside meter. So the "jumper" was put on and taken off at least monthly, if not
daily, in order to avoid detection, and while the "jumper" was off the defendant
was not misappropriating the current. The complaint alleged that the defendant
did on, during, and between the 13th day of February, 1909, and the 3d of March,
1910. willfully, unlawfully, and feloniously take, steal, and carry away 2,277
kilowatts of electric current of the value of P909. No demurrer was presented
against this complaint on the ground that more than one crime was charged. The
Government had no opportunity to amend or correct this error, if error at all. In
the case of U. S. vs. Macaspac (12 Phil. Rep., 26), the defendant received from one
Joquina Punu the sum of P31.50, with the request to deliver it to Marcelina Dy-
Oco. The defendant called upon Marcelina, but instead of delivering the said
amount she asked Marcelina for P30 in the name of Joaquina who had in no way
authorized her to do so. Marcelina gave her P30, believing that Joaquina had sent
for it. Counsel for the defendant insisted that the complaint charged his client
with two different crimes of estafa in violation of section 11 of General Orders,
No. 58. In disposing of this question this court said:
The said defect constitutes one of the dilatory pleas indicated by section
21, and the accused ought to have raised the point before the trial began.
Had this been done, the complaint might have been amended in time,
because it is merely a defect of form easily remedied. . . . Inasmuch as in
the first instance the accused did not make the corresponding dilatory
U.S. vs. Carlos, 21 Phil. 553
Page 5 of 22
plea to the irregularity of the complaint, it must be understood that has
waived such objection, and is not now entitled to raise for the first time
any question in reference thereto when submitting to this court her
assignment of errors. Apart from the fact that the defense does not
pretend that any of the essential rights of the accused have been injured,
the allegation of the defect above alluded to, which in any case would
only affect form of the complaint, can not justify a reversal of the
judgment appealed from, according to the provisions of section 10 of
General Orders, No. 58.
In the case at bar it is not pointed out wherein any of the essential rights of the
defendant have been prejudiced by reason of the fact that the complaint covered
the entire period. If twelve distinct and separate complaints had been filed
against the defendant, one for each month, the sum total of the penalties imposed
might have been very much greater than that imposed by the court in this case.
The covering of the entire period by one charge has been beneficial, if anything,
and not prejudicial to the rights of the defendant. The prosecuting attorney
elected to cover the entire period with one charge and the accused having been
convicted for this offense, he can not again be prosecuted for the stealing of the
current at any time within that period. Then, again, we are of the opinion that the
charge was properly laid. The electricity was stolen from the same person, in the
same manner, and in the same place. It was substantially one continuous act,
although the "jumper" might have been removed and replaced daily or monthly.
The defendant was moved by one impulse to appropriate to his own use the
current, and the means adopted by him for the taking of the current were in the
execution of a general fraudulent plan.
A person stole gas for the use of a manufactory by means of pipe, which
drew off the gas from the main without allowing it to pass through the
meter. The gas from this pipe was burnt every day, and turned off at
night. The pipe was never closed at this junction with the main, and
consequently always remained full of gas. It was held, that if the pipe
always remained full, there was, in fact, a continuous taking of the gas
and not a series of separate talkings. It was held also that even if the pipe
had not been kept full, the taking would have been continuous, as it was
substantially all one transaction. (Regina vs. Firth, L. R., 1 C. C., 172; 11
Cox C. C., 234. Cited on p. 758 of Wharton's Criminal Law, vol. 1, 10th ed.)
The value of the electricity taken by the defendant was found by the trial court to
be P865.26. This finding is fully in accordance with the evidence presented. So no
error was committed in sentencing the defendant to indemnify the company in
this amount, or to suffer the corresponding subsidiary imprisonment in case of
insolvency.
The judgment being strictly in accordance with the law and the merits of the case,
same is hereby affirmed, with costs against the appellant.
Arellano, C.J., Torres, Mapa and Carson, JJ.
Separate Opinions
MORELAND, J., dissenting:
I feel myself compelled to dissent because, in my judgment, there is no evidence
before this court, and there was none before the court below, establishing the
most essential element of the crime of larceny, namely, the taking without the
consent of the owner. As I read the record, there is no evidence showing that the
electricity alleged to have been stolen was taken without the consent of the
complaining company. The fact is that there was not a witness who testified for
the prosecution who was authorized in law, or who claimed to be authorized in
fact, to testify as to whether or not the alleged taking of the electricity was
without the consent of the company or, even that said company had not been paid
for all electricity taken. Not one of them was, as a matter of law, competent to
either of those facts. Not one of them was an officer of the company. The leading
witness for the people, Kay, was only an inspector of electric lights. Another,
McGeachim was an electrical engineer in the employ of the company. Another,
Garcia, was an electrician of the company. These witness all confined their
testimony to technical descriptions of meters, their nature and function, of
electric light wires, the writing of defendant's house, the placing of a meter
therein, the placing of the meter outside of the house in order to detect, by
comparing the readings of the two, whether the accused was actually using more
electricity than the house meter registered, the discovery that more electricity
was being used than said meter registered, and of the finding of a "jumper" in
defendant's possession. One of these witnesses testified also that he had
suspected for a long time that the accused was "stealing" electricity and that later
he was "positive of it."
In order to sustain a charge of larceny under section 517 of Penal Code, it is
necessary to prove that there was a taking without the consent of the owner. This
is unquestioned. The question is: Has the prosecution proved that fact? Has it
proved that the electricity alleged to have been stolen was used without the
consent of the company? Has it proved that the accused did not have a right to
use electricity whether it went through the meter or not? Has it proved, even, that
the accused did not have a right to use a "jumper?" Has it been proved that the
company has not been fully paid for all the electricity which defendant used,
however obtained? Not one of these facts has been proved. The only way to
determine those questions was to ascertain the relations which existed between
the accused and the company at the time the electricity alleged to have been
stolen was used by the accused. There was certainly some relation, some
contract, either express or implied, between the company and the accused or the
company would not have been supplying him the electric current. What was that
U.S. vs. Carlos, 21 Phil. 553
Page 6 of 22
relation, that contract? No one can possibly tell by reading the record. There is
not a single word in all the evidence even referring to it. Not one of the people's
witnesses mentioned it. Not one of them, very likely, knew what it really was. The
relation which a corporation bears to private persons for whom they are
rendering service is determined by the corporation itself through the acts of
its officials, and not by its employees. While an employee might, as the act of a
servant, have caused the contract between the company and the accused to be
signed by the accused, it was nevertheless a contract determined and prepared
by the company through its officers and not one made by the employee; and
unless the employee actually knew the terms of the contract signed by the
accused, either by having read it, if in writing, or by having heard it agreed upon,
if verbal, he would not be competent to testify to its terms except rendered so by
admission of the party to be charged by it. It nowhere appears that any of the
witnesses for the prosecution had any knowledge whatever of the terms of the
contract between the company and the accused. It does not appear that any of
them had ever seen it or heard it talked about by either party thereto. The
company has offered no testimony whatever on the matter. The record is
absolutely silent on that point.
This being true, how can we say that the accused committed a crime? How can
we say that a given act is criminal unless we know the relation of the parties to
whom the act refers? Are we to presume an act wrong when it may be right? Are
we to say that the accused committed a wrong when we do not know whether he
did or not? If we do not know the arrangements under which the company
undertook to furnish electricity to the defendant, how do we know that the
accused has not lived up to them? If we do not know their contract, how do we
know that the accused violated it?
It may be urged that the very fact that a meter was put in by the company is
evidence that it was for the company's protection. This may be true. But is it not
just as proper to presume that it was put in for defendant's protection also?
Besides, it does not appear that the company really put in the matter, nor does
not appear that the company really put in the meter, nor does it even appear to
whom it belonged. No more does it appear on whose application it was put in.
The witness who installed the meter in defendant's house did not say to whom it
belonged and was unable to identify the one presented by the prosecution on the
trial as the one he installed. But however these things may be, courts are not
justified in "assuming" men into state prison. The only inferences that courts are
justified in drawing are those springing from facts which are not only proved but
which are of themselves sufficient to warrant the inference. The mere fact, it is a
fact, that the company placed a meter in defendant's house is not sufficient to
sustain the conclusion in a criminal case that the defendant did not have the right
to use electricity which did not have the right to use electricity which did not pass
through the meter. Much less would it warrant the inference that, in so using
electricity, the defendant feloniously and criminally took, sole, and carried it
away without the consent of the company. An accused is presumed innocent until
contrary is proved. His guilt must be established beyond a reasonable doubt. It is
incumbent on the state to prove every fact which is essential to the guilt of the
accused, and to prove every such fact as though the whole issue rested on it. The
evidence of the prosecution must exclude every reasonable hypothesis of
innocence as with his guilt, he can not be convicted.
But what was the necessity of all this uncertainty? What was the force which
prevented the company from proving clearly and explicitly the contract between
itself and the accused? What prevented it from proving clearly, explicitly, and
beyond all cavil that the electricity was taken (used) without its consent? Why
did not some competent official testify? Why did the company stand by wholly
silent? Why did it leave its case to be proved by servants who were competent to
testify, and who did actually testify, so far as legal evidence goes, only in relation
to technical matters relating to meters and electric currents? Why did the
prosecution place upon this court the necessity of deducing and inferring and
concluding relative to the lack of consent of the company when a single word
from the company itself would have avoided that necessity? We have only one
answer to all these questions: We do not know.
In the case of Bubster vs. Nebraska (33 Neb., 663), the accused was charged with
the larceny of buggy of the value of $75. He was found guilty. On appeal the
judgment of conviction was reversed, the court saying:
There are two serious objections to this verdict. First, the owner of the
buggy, although apparently within reach of the process of the court, was
not called as a witness. Her son-in-law, who resided with her, testifies
that he did not give his consent, and very freely testifies that his mother-
in-law did not. She was within reach of the process of the court and
should have been called as a witness to prove her nonconsent.
The rule is very clearly stated in note 183, volume 1, Philips on Evidence
(4th Am. ed.). A conviction of larceny ought not to be permitted or
sustained unless it appears that the property was taken without the
consent of the owner, and the owner himself should be called,
particularly in a case like that under consideration, when the acts
complained of may be consistent with the utmost goodfaith. There is a
failure of proof therefore on this point.
In the case of State vs. Moon (41 Wis., 684), the accused was charged with the
larceny of a mare. He was convicted. On appeal the court reversed the judgment
of conviction, saying:
In State vs. Morey (2 Wis., 494) it was held that in prosecutions of
lacerny, if the owner of the property alleged to have been stolen is
known, and his attendance as a witness can be procured, his testimony
that the property was taken from him without his consent is
indispensable to a conviction. This is upon the principle that his
U.S. vs. Carlos, 21 Phil. 553
Page 7 of 22
testimony is the primary and the best evidence that the property was
taken without his consent, and hence, that secondary evidence of the fact
cannot be resorted to, until the prosecution shows it inability, after due
diligence, to procure the attendance of the owner.
In volume 1, Phillips on Evidence (5th Am., ed., note 183 sec. 635), the author
says:
In all cases, and especially in this, the lacerny itself must be proved by
the evidence the nature of the case admits. . . . This should be by the
testimony of the owner himself if the property was taken from his
immediate possession, or if from the actual possession of another,
though a mere servant or child of the owner, that the immediate
possession was violated, and this, too, without the consent of the person
holding it. Where nonconsent is an essential ingredient in the offense, as
it is here, direct proof alone, from the person whose nonconsent is
necessary, can satisfy the rule. You are to prove a negative, and the very
person who can swear directly to the necessary negative must, if
possible, always be produced. (Citing English authorities.) Other and
inferior proof cannot be resorted to till it be impossible to procure this
best evidence. If one person be dead who can swear directly to the
negative, and another be alive who can yet swear to the same thing, he
must be produced. In such cases, mere presumption, prima facie or
circumstantial evidence is secondary in degree, and cannot be used until
all the sources of direct evidence are exhausted.
I quote these authorities not because I agree with the doctrine as therein set forth.
I quote them because there is a principle inherent in the doctrine laid down which
is recognized by all courts as having value and effect. It is this: Failure to call an
available witness possessing peculiar knowledge concerning facts essential to a
party's case, direct or rebutting, or to examine such witness as to facts covered
by his special knowledge, especially if the witness be naturally favorable to the
party's contention, relying instead upon the evidence of witnesses less familiar
with the matter, gives rise to an inference, sometimes denominated a strong
presumption of law, that the testimony of such uninterrogated witness would not
sustain the contention of the party. Where the party himself is the one who fails
to appear or testify, the inference is still stronger. The nonappearance of a litigant
or his failure to testify as to facts material to his case and as to which he has
especially full knowledge creates an inference that he refrains from appearing or
testifying because the truth, if made to appear, would not aid his contention; and,
in connection with an equivocal statement on the other side, which if untrue
could be disapproved by his testimony, often furnishes strong evidence of the
facts asserted. As to this proposition the authorities are substantially uniform.
They differ only in the cases to which the principles are applied. A substantially
full list of the authorities is given in 16 Cyclopedia of Law and Procedure (pp.
1062 to 1064, inclusive) from which the rules as stated above are taken.
This court has recognized the value of this principle and has permitted it strongly
to influence its view of the evidence in certain cases. In the case of United
States vs. Magsipoc (20 Phil. Rep., 604) one of the vital facts which the
prosecution was required to establish in order to convict the accused was that a
certain letter which the accused alleged he mailed to his daughter, who was
attending a boarding school in Iloilo, and which the daughter testified she had
received, had not really been sent by the accused and received by the daughter
but, instead, had been purloined by him from the post-office after he had duly
placed it therein and after it had been taken into custody and control of the postal
authorities. It was conceded that the directress of the boarding school which the
daughter was at the time attending knew positively whether the daughter was at
the time attending knew positively whether the daughter had received the letter
in question or not. This court held that, in weighing the evidence, it would take
into consideration the failure of the prosecution to produce the directress of the
school as a witness in the case, she being the only person, apart from the daughter
herself, who really knew the fact.
Another those cases was that of U. S. vs. Casipong (20 Phil. Rep., 178) charged
with maintaining a concubine outside his home with public scandal. To prove the
scandalous conduct charged and its publicity, the prosecution introduced
testimony, not of witnesses in the vicinity where the accused resided and where
the scandal was alleged to have occurred, but those from another barrio. No
Witness living in the locality where the public scandal was alleged to have
occurred was produced. This court, in the decision of that case on appeal, allowed
itself, in weighing the evidence of the prosecution, to be strongly influenced by
the failure to produce as witnesses persons who, if there had really been public
scandal, would have been the first, if not the only ones, to know it. The court said:
In this case it would have been easy to have submitted abundant
evidence that Juan Casipong forsook his lawful wife and lived in
concubinage in the village of Bolocboc with his paramour Gregoria
Hongoy, for there would have been an excess of witnesses to testify
regarding the actions performed by the defendants, actions not of
isolated occurrence but carried on for many days in slight of numerous
residents scandalized by their bad example. But it is impossible to
conclude from the result of the trial that the concubinage with scandal
charged against the defendants has been proved, and therefore
conviction of the alleged concubine Gregoria Hongoy is not according to
law.
In the case at bar the question of the consent of the company to the us of the
electricity was the essence of the charge. The defendant denied that he had taken
the electricity without the consent of the company. The prosecution did not
present any officer of the corporation to offset this denial and the company itself,
although represented on the trial by its own private counsel, did not produce a
single witness upon that subject.
U.S. vs. Carlos, 21 Phil. 553
Page 8 of 22
In the case of Standard Oil Co. vs. State (117 Tenn., 618), the court (p.672) said:
But the best evidence of what his instructions to Holt were and the
information he had of the transaction at the time was made were the
letters which he wrote to Holt directing him to go to Gallatin, and the
daily and semi-weekly reports made to him by Holt and Rutherford of
what was done there, which were not produced, although admitted to be
then in his possession. He was aware of the value of such evidence, as he
produced a copy of his letter to Holt, condemning the transaction, as
evidence in behalf of the plaintiffs in error. The presumption always is
that competent and pertinent evidence within the knowledge or control
of a party which he withholds is against his interest and insistence.
(Dunlap vs. Haynes, 4 Heisk., 476; Kirby vs. Tallmadge, 160 U. S., 379, 16
Sup. Ct., 349, 40 L. ed., 463; Pacific Constr. Co. vs. B. W. Co., 94 Fed,, 180,
36 C. C. A., 153)
In the case of Succession of Drysdale (127 La., 890), the court held:
When a will presented for probate is attacked on the ground that it is a
forgery, and there are pertinent facts relating to the will in the
possession of the proponent, and he repeatedly fails to testify when his
testimony could clear up many clouded and doubtful things, his failure
to testify casts suspicion upon the will, especially when the one asking
for the probate of the will is a principal legatee.
In the case of Belknap vs. Sleeth (77 Kan., 164), the court (p. 172) said:
What effect should such conduct have in the consideration of a case,
where the successful party thus living beyond the jurisdiction of the
court has refused to testify in a material matter in behalf of the opposing
party? It must be conceded that the benefit of all reasonable
presumptions arising from his refusal should be given to the other party.
The conduct of a party in omitting to produce evidence peculiarly within
his knowledge frequently affords occasion for presumptions against him.
(Kirby vs. Tallmadge, 160 U. S., 379, 16 Sup. Ct., 349, 14 L. Ed., 463.) This
rule has been often applied where a party withholds evidence within his
exclusive possession and the circumstances are such as to impel an
honest man to produce the testimony. In this case the witness not only
failed but refused to testify concerning material matters that must have
been within his knowledge.
In the case of Heath vs. Waters (40 Mich., 457), it was held that:
It is to be presumed that when a witness refuses to explain what he can
explain, the explanation would be to his prejudice.
In case of Frick vs. Barbour (64 Pa. St., 120, 121), the court said:
It has been more than once said that testimony in a case often consists in
what is not proved as well as in what is proved. Where withholding
testimony raises a violent presumption that a fact not clearly proved or
disproved exists, it is not error to allude to the fact of withholding, as a
circumstance strengthening the proof. That was all that was done here.
In the case of Funda vs. St. Paul City Railway Co. (71 Minn., 438), the court held:
The defendant having omitted to call its motorman as a witness,
although within reach and available, the court was, under the
circumstances, justified in instructing the jury that, in weighing the effect
of the evidence actually introduced, they were at liberty to presume that
the testimony of the motorman, if introduced, would not have been
favorable to the cause of defendant.
In the case of Gulf, C. & S. F. Ry. Co. vs. Ellis (54 Fed. Rep., 481), the circuit court of
appeals held that:
Failure to produce the engineer as a witness to rebut the inferences
raised by the circumstancial evidence would justify the jury in assuming
that his evidence, instead of rebutting such inference, would support
them.
In Wigmore on Evidence (vol. 1, sec. 285), it is said:
The consciousness indicated by the conduct may be, not an indefinite
one affecting the weakness of the cause at large, but a specific one
concerning the defects of a particular element in the cause. The failure to
bring before the tribunal some circumstances, document, or witness,
when either the party himself or his opponent claims that the facts would
thereby be elucidated, serves to indicate, as the most natural inference,
that the party fears to do so, and this fear is some evidence that
circumstances or document or witness, if brought, would have exposed
facts unfavorable to the party. These inferences, to be sure, cannot fairly
be made except upon certain conditions; and they are also open always
to explanation by circumstances which make some other hypothesis a
more natural one than the party's fear of exposure. But the propriety of
such an inference in general is not doubted. The nonproduction of
evidence that would naturally have been produced by an honest and
therefore fearless claimant permits the inference that its tenor is
unfavorable to the party's cause. . . .
Continuing this same subject the same author says:
At common law the party-opponent in a civil case was ordinarily
privileged from taking the stand (post, sec. 2217); but he was also
disqualified; and hence the question could rarely arise whether his
failure to testify could justify any inference against him. But since the
general abolition of both of the privilege and the disqualification (post,
U.S. vs. Carlos, 21 Phil. 553
Page 9 of 22
secs. 2218, 577), the party has become both competent and compellable
like other witnesses; and the question plainly arises whether his conduct
is to be judged by the same standards of inference. This question
naturally be answered in the affirmative. . . . (See Aragon Coffee
Co., vs. Rogers, 105 Va., 51.)
As I stated at the outset, I have been unable to find in the record of this case any
proof of legal value showing or tending to show that the electricity alleged to have
been stolen was taken or used without the consent of the company. The
defendant, therefore, should be acquitted.
There are other reasons why I cannot agree to the conviction of the accused. Even
though the accused to be found to have committed the acts charged against him,
it stands conceded in this case that there is a special law passed particularly and
especially to meet cases of this very kind, in which the offense is mentioned by
name and described in detail and is therein made a misdemeanor and punished
as such. It is undisputed and admitted that heretofore and ever since said act was
passed cases such as the one at bar have uniformly and invariably been cognized
and punished under said act; and that this is the first attempt ever made in these
Islands to disregard utterly the plain provisions of this act, and to punish this
class of offenses under the provisions of Penal Code relating to larceny. The
applicability of those provisions is, to say the very least, extremely doubtful, even
admitting that they are still in force. Even though originally applicable, these
provisions must now be held to be repealed by implication, at least so far as the
city of Manila is concerned, by the passage of the subsequent act defining the
offense in question and punishing it altogether differently.
Moreover, I do not believe that electricity, in the for in which it was delivered to
the accused, is susceptible of being stolen under the definition given by the law
of these Islands to the crime of larceny.
Concisely, then, I dissent because (a) this court, by its decision in this case, has, in
my judgment, disregarded the purpose of the Legislature, clearly expressed;
because (b) it has applied a general law, of at least very doubtful application, to a
situation completely dealt with, and admittedly so by a later statute conceived
and enacted solely and expressly to cover that very situation; because (c) the court
makes such application in spite of the fact that, under the general law, if it is
applicable, the crime in hand is a felony while under the later statute it is only a
misdemeanor; because (d), in my judgment, the court modifies the definition
given by the Legislature to the crime of lacerny, which has been the same and has
received the same interpretation in this country and in Spain for more than two
centuries; because (e) the decision disregards, giving no importance to a positive
statute which is not only the last expression of the legislative will on the
particular subject in hand, but was admittedly passed for the express purpose of
covering the very situation to which the court refuses to apply it. While the
statute referred to is an act of the Municipal Board of the city of Manila, this court
has held in a recent case that said board was authorized by the legislature to pass
it. Therefore it is an Act of the Legislature of the Philippine Islands.
In this dissent I shall assert, and, I think, demonstrate three propositions, to wit:
First. That an electric current is not a tangible thing, a chattel, but is a condition,
a state in which a thing or chattel finds itself; and that a condition or state can not
be stolen independently of the thing or chattel of which it is a condition or state.
That it is chattels which are subjects of lacerny and not conditions.
Second. That, even if an electric current is a tangible thing, a chattel, and capable
of being stolen, in the case at bar no electric current was taken by the defendant,
and therefore none was stolen. The defendant simply made use of the electric
current, returning to the company exactly the same amount that he received.
Third. That, even if an electric current is a tangible thing, a chattel, and capable of
being stolen, the contract between the company and the defendant was one
for use and not for consumption; and all the defendant is shown to have done,
which is all he could possibly have done, was to make use of a current of electricity
and not to take or consume electricity itself .
I shall therefore maintain that there is no lacerny even though the defendant
committed all the acts charged against him.
In discussing the question whether, under the law of the Philippine Islands, an
electric current is the subject of larceny, I shall proceed upon the theory,
universally accepted to-day, that electricity is nothing more or less than energy.
As Mr. Meadowcroft says in his A B C of Electricity, indorsed by Mr. Edison,
"electricity is a form of energy, or force, and is obtained by transforming some
other form of energy into electrical energy."
In this I do not forget the theory of the "Electron" which is now being quietly
investigated and studied, which seems to tend to the conclusion that there is no
difference between energy and matter, and that all matter is simply a
manifestation of energy. This theory is not established, has not been announced
by any scientist as proved, and would probably have no effect on the present
discussion if it were.
Based on this accepted theory I draw the conclusion in the following pages that
electricity is not the subject of larceny under the law of the Philippine Islands.
Partida 3, title 29, law 4, thus defines "cosas muebles:"
The term muebles is applied to all the things that men can move from one
place to another, and all those that can naturally move themselves: those
that men can move from one place to another are such as cloths, books,
provisions, wine or oil, and all other things like them; and those that can
naturally move themselves are such as horses, mules, and the other
beast, and cattle, fowls and other similar things.
Partida 5 title 5, law 29, contains the following:
U.S. vs. Carlos, 21 Phil. 553
Page 10 of 22
But all the other things which are muebles and are not annexed to the
house or do not appeartain thereto belong to the vendor and he can take
them away and do what he likes with them: such are the wardrobes,
casks and the jars not fixed in the ground, and other similar things.
Article 517 of the Penal Code, in that portion defining larceny, as charged against
the accused in the case at bar, reads:
ART. 517. The following are guilty of theft:
1. Those who, with intent of gain and without violence or intimidation
against the person or force against things, shall take another's personal
property (cosas muebles) without the owner's consent.
This article of the Penal Code, as is seen, employs precisely the words defined in
the Partidas. The definition of the word is clear in the law as written. It is also
clear in the law as interpreted. I have not been able to find a writer on Spanish or
Roman criminal law who does not say clearly and positively that the only
property subject to lacerny is tangible movable chattels, those which occupy
space, have three dimensions, have a separate and independent existence of their
own apart from everything else, and can be manually seized and carried from one
place to another. This was the unquestioned theory of the Roman criminal law
and it is the undoubted and unquestioned theory of the Spanish criminal law. Nor
do I find a writer or commentator on the Spanish or Roman Civil Law who does
not define a cosa mueble in the same way.
One of the leading commentators of Spain on criminal law writes thus concerning
the property subject to robbery and lacerny:
Personal property belonging to another. — If robbery consists in the
taking of a thing for the purpose and by the means indicated in the article
in question, it follows from the very nature of this class of crimes, that
only personal or movable property can be the subject thereof, because
none but such property can be the subject of the correctatio of the
Romans; "Furtum since contrectatione non fiat," says Ulpian. The
abstraction, the rapine, the taking, and all the analogous terms and
expressions used in the codes, imply the necessity that the things
abstracted or taken can be carried from one place to another. Hence the
legal maxim: Real property "non contractantur, sed invaduntur." (6
Groizard, p. 47)
The act of taking is what constitutes the contrectatio and the invito
domino which all the great ancient and modern jurists consider as the
common ingredient (in addition to the fraudulent intention of gain), of
the crimes of robbery and theft. From what has been said it follows that
the taking, the act of taking without violence or intimidation to the
persons, or force upon the things, for the purpose of gain and against the
will of the owner, is what determines the nature of the crime of theft as
defined in paragraph 1 of this section. (6 Groizard, pp. 261, 262.)
The material act of taking is, therefore, an element of the crime which
cannot be replaced by any other equivalent element. From this principle
important consequences follow which we need not now stop to consider
for the reason that in speaking of the crime of robbery we have already
discussed the subject at great length. Immovable and incorporeal things
cannot be the subject of the theft for the reason that in neither the one
or the other is it possible to effect the contrectatio, that is to say,
the material act of laying hands on them for the purpose of removing the
same, taxing the same or abstracting the same. Hence the legal maxims:
"Furtum non committitur in rebus immobilibus and Res incorporales nec
tradi possideri possunt, ita contectavit nec aufferri." (6 Groizard, p. 266.)
Criticising an opinion of the supreme court of Spain which held that illuminating
gas was a subject of lacerny, the same writer says:
The owner of a certain store who had entered into a contract with a gas
company whereby he substantially agreed to pay for the consumption of
the amount of gas which passed through a meter, surreptitiously placed
a pipe which he connected with the branch from the main pipe before it
reached the meter and used the same for burning more lights than those
for which he actually paid. The supreme court of Madrid convicted the
defendant of the crime of estafa but the supreme court of Spain reversed
the judgment, holding that he should be convicted of theft. The only
reason which the supreme court had for so deciding was that the owner
of the store had taken personal property belonging to another without
the latter's consent, thereby committing the crime not of estafa but of
consummated theft. But in our judgment, considering the sense and
import of the section under consideration, it cannot be properly said that
the owner of the store took the gas because in order to do this it would
have been necessary that the said fluid were capable of being taken or
transported, in other words, that the contrectatio, the meaning of which
we have already sufficiently explained, should have taken place.
Gas is not only intangible and therefore impossible of being the subject
of contrectatio, of being seized, removed, or transported from one place
to another by the exercise of the means purely natural which man
employs in taking possession of property belonging to another, but, by
reason of its nature, it is necessary that it be kept in tank, or that it be
transmitted through tubes or pipes which by reason of their
construction, or by reason of the building to which the same may be
attached, partake of the nature of immovable property. There is no
means, therefore, of abstracting gas from a tank, from a tunnel or from a
pipe which conveys the fluid to a building, for the purpose of being
consumed therein, unless the receptacle containing the same is broken,
U.S. vs. Carlos, 21 Phil. 553
Page 11 of 22
or the tank or pipe bored, and other tubes or pipes are connected
therewith at the point of the opening or fracture by means of which the
gas can conveyed to a place different from that for which it was originally
intended.
This exposition, interpretation, if you choose to call it such, has a further
foundation in our old laws which have not been changed but rather
preserved in the definition of movable an immovable property given by
the Civil Code. According to Law, I Title XVII, Partida II, personal
property means those things which live and move naturally by
themselves, and those which are neither living nor can naturally move,
but which may be removed; and Law IV, Title XXIX, Partida III, defines
personal property as that which man can move or take from one place to
another, and those things which naturally by themselves can move.
Finally, corporeal things, according to Law I, Title III, Partida III, are
those which may be the subject of possession with the assistance of the
body, and incorporeal those which cannot be physically seized, and cannot
be properly possessed. From these definitions it follows that unless we
do violence to the plain language of these definitions, it would be
impossible to admit that gas is a corporeal thing, and much less that it is
movable property. (6 Groizard, pp. 268, 269.)
If the holding that gas, which is unquestionably a physical entity having a separate
and independent existence and occupying space, has approached the verge of
unstealable property so closely that the ablest of Spain commentators believes
that there is grave danger of the complete destruction of the ancient legislative
definition of stealable property by judicial interpretation, what would be said in
regard to a decision holding that an electric current is a subject of lacerny?
It may be well to add just here, although it may be somewhat out of its regular
order, what the author above quoted regards was the crime actually committed
in the case he was discussing. He says:
For us, for the reasons hereinbefore set out, it would be more in harmony
with the principles and legal texts which determine the nature of the
crimes of theft and estafa, to assign the latter designation to the
fraudulent act which he have heretofore examined and which
substantially consists in the alteration, by means of a fraudulent method,
of the system established by an agreement to supply a store with
illuminating gas and to determine the amount consumed for lighting and
heating and pay its just value. We respect, however, the reasons to the
contrary advanced in the hope that the supreme court in subsequent
judgments will definitely fix the jurisprudence on the subject.
Nor can the abusive use of a thing determine the existence of the crime
under consideration. A bailee or pledgee who disposes of the thing, bail
or pledge entrusted to his custody for his own benefit is not guilty of
lacerny for the reason that both contracts necessarily imply the
voluntary delivery of the thing by the owner thereof and a lawful
possession of the same prior to the abusive use of it.
Not even a denial of the existence of the bailment or contract of pledge
with of gain constitutes the crime of lacerny for the reason that the
material act of taking possession of the property without the consent of
the owner is lacking. (6 Groizard, p. 269.)
That under the Roman and Spanish law property to be the subject of lacerny must
be a tangible chattel which has a separate independent existence of its own apart
from everything else, which has three dimensions an occupies space so that it
may of itself be bodily seized and carried away, is not an open question. That that
was also the doctrine of the common law is equally beyond question.
In the consideration of this case the great difficulty lies in confusing
the appearance with the thing, in confounding the analogy with
the things analogous. It is said that the analogy between electricity and real
liquids or gas is absolutely complete; that liquids and gases pass through pipes
from the place of manufacture to the place of use; and the electric current, in
apparently the same manner, passes through a wire from the plant to the lamp;
that it is measured by a meter like liquids and gas; that it can be diverted or drawn
from the wire in which the manufacturer has placed it, to the light in the
possession of another; that a designing and unscrupulous person may, by means
of a wire surreptiously and criminally transfer from a wire owned by another all
the electricity which it contains precisely as he might draw molasses from a
barrel for his personal use. And the question is triumphantly put, "how can you
escape the inevitable results of this analogy?" The answer is that
it is an analogy and nothing more. It is an appearance. The wire from which the
electricity was drawn has lost nothing. It is exactly the same entity. It weighs the
same, has just as many atoms, arranged in exactly the same way, is just as hard
and just as durable. It exactly the same thing as it was before it received the
electricity, at the time it had it, and after it was withdrawn from it. The difference
between a wire before and after the removal of the electricity is simply a
difference of condition. Being charged with electricity it had
a quality or condition which was capable of being transferred to some other body
and, in the course of that transfer, of doing work or performing service. A body in
an elevated position is in a condition different from a body at sea level or at the
center of the earth. It has the quality of being able to do something, to perform
some service by the mere change of location. It has potential energy, measured by
the amount of work required to elevated it. The weight or monkey of a pile driver
is the same weight when elevated 50 feet in air as it is when it lies on top of the
pile 50 feet below, but it has altogether a different quality. When elevated it is
capable of working for man by driving a pile. When lying on top of the pile, or at
sea level, it has no such quality. The question is, "can you steal that quality?"
U.S. vs. Carlos, 21 Phil. 553
Page 12 of 22
Two pile drivers, owned by different persons, are located near each other. The
one owner has, by means of his engine and machinery, raised his weight to its
highest elevation, ready to deliver a blow. While this owner is absent over night
the owner of the other pile driver, surreptiously and with evil design and intent,
unlocks the weight and, by means of some mechanical contrivance, takes
advantage of its fall in such a way that the energy thus produced raised the weight
of his own pile driver to an elevation of forty feet, where it remains ready, when
released, to perform service for him. What has happened? Exactly the same thing,
essentially, as happened when the electric charge of one battery is transferred to
another. The condition which was inherent in the elevated weight was
transferred to the weight which was not elevated; that is, the potential energy
which was a condition or quality of the elevated weight was by a wrongful act
transferred to another. But was that condition or quality stolen in the sense that
it was a subject of lacerny as that crime is defined the world over? Would the one
who stole the battery after it had been elevated to the ceiling, or the weight of the
pile driver after it had been elevated 50 feet in the air, be guilty of a different
offense than if he stole those chattels before such elevation? Not at all. The weight
elevated had more value, in a sense, than one not elevated; and the quality of
elevation is considered only in fixing value. It has nothing whatever to do with
the nature of the crime committed. It is impossible to steal
a quality or condition apart from the thing or chattel of which it
a quality or condition of a thing affects the value of the thing. It is impossible to
steal value. The thing, the chattel is that which is stolen. Its quality or condition is
that which, with other circumstances, goes to make the value.
A mill owner has collected a large amount of water in a dam at such an elevation
as to be capable of running his mill for a given time. A neighboring mill owner
secretly introduces a pipe in the dam and conveys the water to his own mill, using
it for his own benefit. He may have stolen the water, but did he steal the head,
the elevation of the water above the wheel? The fact that the water had a head
made it more valuable and that fact would be taken into consideration in fixing
the penalty which ought to be imposed for the offense; but it has nothing
whatever to do with determining the nature of the offense of which the man
would be charged.
Larceny cannot be committed against qualities or conditions. It is committed
solely against chattels, tangible things. A given chattel is a compromise result of
all its properties, qualities, or conditions. None of the qualities which go make up
the complete thing is the subject of larceny. One cannot steal from a roof the
quality of shedding rain, although he may bore it full of holes and thus spoil that
quality; and this, no matter how much he might be benefit thereby himself. If, in
a country where black horses were very dear and white horses very cheap, one,
by a subtle process, took from a black horse the quality of being black and
transferred that quality to his own horse, which formerly was white, thereby
greatly increasing its value and correspondingly decreasing the value of the other
horse which by the process was made white, would he be guilty of larceny? Would
he be guilty of larceny who, with intent to gain, secretly and furtively and with
the purpose of depriving the true owner of his property, took from a bar of steal
belonging to another the quality of being hard, stiff and unyielding and
transferred that quality to a willow wand belonging to himself? Is he guilty of
larceny who, with intent to defraud and to benefit himself correspondingly, takes
from a copper wire belonging to another the quality of being electrified and
transfers that quality to an electric light? An electric current is either a
tangible thing, a chattel of and by itself, with a perfect, separate and independent
existence, or else it is a mere quality, property or condition of some tangible
thing or chattel which does have such an existence. The accepted theory to-day
is, and it is that which must control, that electricity is not a tangible thing or
chattel, that it has no qualities of its own, that it has no dimensions, that it is
imponderable, impalpable, intangible, invisible, unweighable, weightless,
colorless, tasteless, odorless, has no form, no mass, cannot be measured, does not
occupy space, and has no separate existence. It is, must be, therefore, simply
a quality, a condition, a property of some tangible thing or chattel which has all or
most of those qualities which electricity has not. Being merely the quality of a
thing and not the thing itself , it cannot be the subject of larceny.
To repeat" As we know it, electricity is nothing more or less than a condition of
is matter. It has no existence apart from the thing of which it is condition. In other
words, it has no separate, independent existence. It is immaterial, imponderable,
impalpable, intangible, invisible, weightless and immeasurable, is tasteless,
odorless, and colorless. It has no dimensions and occupies no space. It is the
energy latent in a live herself is the power potential in the arm of a laborer. It is
the force stored in the wound-up spring. It is an agency, not a "cosa mueble." It is
a movement and not a chattel. It is energy and not a body. It is what the
laborer expends and not what he produces. It is strength striped by an unknown
process from arms of men and atoms of coal, collected and marshalled at a given
place under the mysterious leash of metal, ready to spring like a living servant to
the work of its master. It is not a chattel, it is life. It is as incapable of being stolen,
by itself, as the energy latent in a live horse. It is as impossible to steal an electric
current as it is to steal the energy hidden in a wound-up watch spring. One may
steal the horse and with it the energy which is a quality of the horse. One may
steal a watch and with it the energy which is a property of the wound-up. But can
we say that one can steal the energy in the watch spring separate from the spring
itself, or electricity apart from the wire of which it is a quality or condition?
A laborer was stored up in his muscles the capacity to do a day's work. He has
potential energy packed away in little cells or batteries all through his body. With
the proper mechanism he can enter a room which it is desired to light with
electricity and, by using the stored-up energy of his body on the mechanism, light
the room by transforming the energy of his muscles into the electricity which
illuminates the room. We have, then, a laborer who, by moving his hands and
U.S. vs. Carlos, 21 Phil. 553
Page 13 of 22
arms in connection with the appropriate machinery, is able to light the room in
which he is at the time. What causes the light? The energy in the laborer's muscles
is transformed into light by means of the intermediate phenomenon known as
electricity. As a concrete result, we have the energy in the laborer's muscles
transmuted into light. Now, is the energy passing through the wire, more capable
of being stolen than the energy in the muscles of the laborer? Or is the light or
heat any more or less a subject of larceny than the electric current of which they
are a manifestation? Could the energy which performed the day's work be stolen?
Could the electric current which lighted the room be stolen apart from the wire
of which it was a quality? One might kidnap the laborer and with him the energy
which constitutes his life; but can we say that the energy, of itself, is the subject
of separate larceny? But, it the laborer's energy cannot be stolen while it resides
in and is a quality of his arm, can the same energy any more be stolen when it
resides in and is a quality of a wire in the form of electricity? If so, just where is
the dividing line, where is the point at which this kinetic energy ceases to be
incapable of being separately stolen and becomes a subject to theft? Is it at the
crank by which the laborer turns the machine? Is it at the armature, the
conductor, the fields coils, the field magnet, the commutator, the brushes, the
driving pulley, or the belt tightener? Is it where the current enters what is called
the electric-light wire, or is it where it enters the bulb or arc and produces the
light? In other words, at what point does the untealable laborer's energy become
stealable electric energy?
An electric-light wire placed in a house for the purpose of furnishing light for the
same has its precise counterpart in a laborer placed therein for the same purpose.
Like the laborer, it is filled with energy which will, when released, perform the
service intended. The wire is simply a means of transmitting the energy of the
laborer's muscles, and that stored in tons of coal which he handles, from the
electric plant or factory to the house where the light is produced. The wire simply
avoids the necessity of the laborer being in the very house where he produces the
light. Instead of being there, he, by means of the so-called electric-light wire, is
located at a distance, but produces the light in exactly the same way, transmitting
his energy for that purpose. The wire stands in exactly the same relation to the
person in whose house it is put as would a laborer who had been sent to that
house to render services. The energy may be diverted from the purpose for which
it was intended, or a wrong account given of the amount of work performed by
that energy; but it is impossible to steal, take and carry the energy away. One
cannot steal days' works; and that is all an electric current is. One may use those
days' works in hoeing corn when it has been agreed that they shall be used in
picking cotton; but that is not larceny of the days' works, as larceny has been
defined by the jurisprudence of every country, Or, one may report to the owner
of those days' works that he had used three of them when in reality he used thirty
and pay him accordingly, but that is not larceny of the twenty-seven.
But, it is argued, the illustration is not a fair one; energy in a laborer's arm or in
the muscles of a horse or in a wound-up spring is, so far as its capability of being
stolen is concerned, quite different from energy which has been separated from
the arms of the laborer or the muscles of the horse and driven through a wire;
from such wire electricity may be drawn like water from a barrel; and while it is
impossible to steal the energy of a man or a horse because it would destroy the
life of the animal, an entirely different question is presented when the energy has
actually been separated from those animals and confined in a wire.
This argument has several fundamental defects. In the first place, it assumes the
whole question at issue. By asserting that electricity is separable from the object
of which it is a quality or state is to assume that electricity is a material thing,
which the real question to be resolved. In the second place, if electricity is in the
real sense of that term, separable from the object to which it belongs, then it must
be admitted that it is capable of separate and independent existence apart from
any other object. This is not so. It is not only admitted but contended by every
scientist who has touched this subject that electricity is incapable of an
independent existence apart from some given material object. In the third place,
this argument overlooks the fact, even if we assume that it can be separated, that
the thing when separated is not the same thing that it was before separation; in
other words, when the so-called separation occurs there is not only a
transference of energy from the horse to the battery but there is also
a transformation. In the horse it is muscular energy. In the wire it is electrical
energy. In the horse it is potential. In the wire kinetic. It is not the same thing in
the wire that it was in the horse. In the fourth place, the argument makes the
stealability of a thing depend not on its nature but on where it is located. This is
an assumption wholly unwarranted and impossible under the law. To say that
whether or not a thing is stealable depends not on its nature but on where it is
located is absurd. A diamond ring in a burglar-proof safe is as much a subject of
larceny, under the definition of the law, as if it lay in an open showcase. If energy
is stealable at all, and it must be remembered that I am proceeding, as we must
necessarily proceed upon the accepted theory that electricity is nothing more or
less than energy, it is so by reason of its nature and by reason of its residing in a
battery rather than in a horse; and if it is stealable by virtue of its nature it can be
stolen from the horse as well as from the battery or wire. A thing is subject to
larceny because, and only because, it is a cosa mueble, not because it is inside a
horse, a wire or a safe. If it is a cosa mueble it is the subject of larceny although it
be located on the moon; and if it is not a cosa mueble it is not subject to lacerny
although it be placed in a den of thieves. The difficulty or ease of getting at a thing
has nothing whatever to do with its stealability. In the fifth place, this argument
overlooks the very important fact, to be dealt with more at length later, that the
electric current used by the accused was returned to the company, after use,
absolutely undiminished in quantity.
U.S. vs. Carlos, 21 Phil. 553
Page 14 of 22
What, then, is the difference between corn, for example, and an electric current?
It is this. One is a cosa mueble while the other is not; one is produced by a wholly
different process from the other and from wholly different materials, if we may
call materials those changes which result in the immaterial thing called an
electric current; in the case of corn we deal not with the quality or energy of
corn, but with corn as a composite and concrete result of all its qualities and uses;
we deal with a tangible thing, a chattel, and not with a condition or quality of a
tangible thing; we deal with things instead of ideas, — with things which
exist separate and independent and which do not depend, as does electricity,
wholly upon some body not only for the capability of manifesting its
existence, but also for very existence itself ; because we deal with something which
changes its form but never its nature as a physical entity. It is always a chattel,
a tangible thing, a cosa mueble.
On the other hand, in the case of the electric current we deal not with a thing, a
chattel a cosa mueble, but with a condition or quality, a property of a cosa mueble;
with an idea which always, before it has any significance of meaning whatever,
associates itself with an entity, a body or chattel, as a characteristic or quality of
such body or chattel; with lines of force which are merely and solely a quality,
a property, a characteristic of the magnet, instead of which grains of corn which
are absolute entities, independent of and apart from everything else, and not
mere characteristic or qualities of some entity of body which does not exist as an
absolute physical entity in itself; with the horse and the violet and not
their perfume; with the lily and not its beauty; with the clouds and not their color;
with entities and not accidents; with realities and not the imponderable,
impalpable ideas and qualities which make up the reality.
As he already been said, the difficulty in the elucidation of the question comes
from the confusion of qualities with things, of appearances with realities.
Apparently an electric current does things. It produces phenomena. It,
therefore, appears to be something. But it must not be forgotten that many times
appearances are deceitful. They do not always insure realities. It is not judicial to
say that, because a thing looks so, it is so. It is not judicial to say that, simply
because it looks as if one committed larceny, therefore he is guilty of larceny.
Before we may legally convict one of larceny, we must know exactly what he did.
Justice is not founded on guess work nor on appearances. Men's right are
preserved by definitions, and definitions are founded on facts, not fancies, on
realities, not appearances. Because, when one taps an electrically charged wire
belonging to another and, by means of a contrivance, transfers the charge to his
own uses, it looks as if he was stealing something, is not sufficient to convict him
of larceny. We must first know what larceny is, as well as what an electric current
is, and what is meant by its use in producing light. To know what larceny is we
must know what legislators and judges during the development of jurisprudence
have always said and agreed it is. In other words, we must know its definition. It
approaches tyranny to convict one of murder when is actually guilty of homicide
only. Yet the only thing which separates the two crimes is a definition. It is wrong
to convict one of robbery who is guilty only of larceny. Yet these two crimes are
distinguished only by a definition. If, as in the case at bar, whether or not one is
declared a felon and is sent to prison for one year eight months and twenty-one
days, is forever disqualified from holding public office and of exercising the right
of suffrage, or whether, instead, he is declared guilty of a misdemeanor simply
and punished lightly with no accompanying disqualifications, depends upon
whether he has committed larceny as defined by the Penal Code or whether he
has merely violated a city ordinance, the question whether he actually committed
larceny or not begins to assume importance. It assumes importance not only to
him but to society as well. If a court to-day palpably modifies a definition in order
to convict an offender of larceny, how can society be assured that tomorrow the
same court will not modify some other definition to convict a citizen of treason?
When definitions are destroyed no man is secure in his person or his property.
When men act on appearances instead of realities justice will be shortlived. A
whale looks like a fish, acts like a fish, swims like a fish and lives all its life in the
water like a fish. But it is not a fish. It is an animal. It is air-breathing, warm-
blooded, and viviparous, and suckles its young. Now, if whether or not a whale is
a fish or an animal is the potent factor determining whether a man goes to state
prison as a felon with all the deplorable consequences resulting, or whether he is
lightly sentenced as a mere misdemeanant, is it not of the supremest importance
to determine whether a whale is a fish or an animal? I am informed that it used
to be a common sight in The New York Zoological Gardens to see Mr. Crowley, the
large and extremely intelligent chimpanzee, dressed in faultless attire, sit at the
table and take his food and wine like a gentleman. Children believed him to be a
man; and many intelligent grown people honestly believed that he was as much
man as chimpanzee. But if the officials of the city of New York had been indicted
for kidnapping, based upon the seizure and forcible detention of Mr. Crowley,
would it not have been of the most solemn importance to them to throw away
appearances and determine accurately what Mr. Crowley really was? And in case
of doubt as to what he was, could they not justly have demanded the benefit of
that doubt?
So, where one who diverted an electric current has been accused by reason
thereof of the crime of larceny, which crime, it being admitted, can be committed
only against tangible things, chattels, is it not of the very greatest importance to
determine what an electric current is, that is, whether it is a tangible thing,
a chattel, or not and what is the nature and meaning of the process by which it
transforms itself into electric light? And in case of doubt as what it is, cannot the
accused justly demand the benefit of that doubt? To convict one of larceny it is
not sufficient to show merely that a wrongful act has been done; but it must
appear that a wrongful act of a particular kind has been committed. To constitute
larceny it must be proved that the wrongful act was committed against chattels,
against tangible things, which were seized upon and asported by the one accused.
In the case at bar it has not been shown that the accused laid unlawful hands upon
U.S. vs. Carlos, 21 Phil. 553
Page 15 of 22
and asported a tangible thing, a chattel, una cosa mueble. The very least that the
prosecution must necessarily admit is that no one knows what electricity really is.
That being so, it seems to me to be a contradiction of terms to say that larceny,
which must admittedly be committed against a known thing, can be committed
against a thing absolutely unknown. At least it would seem that there is a grave
doubt about the definition of larceny covering wrongful acts relative to an electric
current; and by reason of that doubt the conviction ought not to be sustained. And
if it is true, as I have herein attempted to show, that, under the prevailing and
generally accepted theory, electricity is nothing more or less than a condition, a
quality, a property of some tangible thing, some chattel or body, then, certainly,
the charge of larceny must fall, as that crime can be committed only against
the thing and not against a quality of the thing.
Although the only question in this case is whether electricity is such a tangible
thing, as can, under the definition of lacerny contained in the Penal Code, be the
subject of lacerny, nevertheless the court dismissed that question substantially
without discussion, the only reference thereto being the following:
I is true that electricity is no longer, as formerly, regarded by electricians
as a fluid, but its manifestations and effects, like those of gas, may be seen
and felt. The true test of what is a proper subject of lacerny seems to be
not whether the subject is incorporeal, but whether it is capable of
appropriation by another than the owner.
xxx xxx xxx
Electricity, the same as gas, is a valuable article of merchandise, bought
and sold like other personal property and is capable of appropriation by
another. So no error was committed by the trial court in holding that
electricity is a subject of lacerny.
The statement fail to touch the essential question involved and is wholly beside
the point for the following reasons, lying aside for the moment the nature of the
act which the accused actually committed, assuming that he committed the act
described by the witnesses for the prosecution:
In the first place, as I understand the law , the statement is not quite correct that,
in the Philippine Islands, "the true test of what is a proper subject of lacerny
seems to be not whether the subject is corporeal or incorporeal, but whether it is
capable of appropriation," unless the word "appropriation" has the same meaning
as the word "taking" used in the article of the Penal Code defining larceny. If the
court intended to use the word "appropriation" in the sense of "taking," then its
use was unnecessary and may be misleading. If it did not so intend, then the rule
of law laid down by the court is not as I understand the law to be.
An appropriation in addition to or different from the taking is not an essential of
lacerny anywhere. Wharton says that "lacerny id is the fraudulent taking
and carrying away of a thing without claim of right, with the intention of
converting it to a use other than that of the owner and without his consent."
Article 517 of the Penal Code provides that they shall be guilty of lacerny "who . .
. take (toman) (not appropriate) another's cosas muebles (movable chattels)
without the owner's consent." Unless, therefore, the word "appropriation" is used
in the same sense as "taking," the paragraph in the court's decision above quoted
does not contain a correct statement of the law. If it means the same thing then
the use of the word in no way enlightens the situation; for it is just as difficult to
determine whether a cosa mueble can be appropriated as it is to determine
whether it can be taken. The question before us is whether or not electricity is
such a cosa mueble that it can be taken under the law of lacerny. To substitute in
that problem the word "appropriation" for the word "taking" does not laid in its
solution in the slightest degree when it is admitted that the word substituted
means exactly the same thing as the word in the place of which it was substituted.
An illustration will serve further to show the fallacy inherent in the statement
quoted: Let us suppose that the Penal Code defined larceny thus: "Any person
who, with intent to gain, takes from another his cake without his consent shall be
guilty of lacerny." Let us suppose that some one should then defined the subject
of lacerny as anything, corporeal or incorporeal, which can be "appropriated." It
would be obvious that such definition would be erroneous, for the reason that,
while pie is as capable of being "appropriated" as cake, still, under the terms of
the law, lacerny cannot be committed against pie. So that where the statute
prescribes that the only thing subject to larceny is a cosa mueble and the
definition of the subject of larceny is claimed to be anything that can be
"appropriated," the answer at once is that such definition is inaccurate under the
law as it may be too broad. There may be some things which can be
"appropriated" that are not cosas muebles.
In the second place, the quoted paragraph from the court's decision contains
another error in the statement of the law. I am of the opinion that, under the
common law, and I am sure under the Spanish law, the statement that "the true
test of what is a proper subject of larceny seems to be not whether the subject is
corporeal or incorporeal . . ." is not accurate. Professor Beale, of Harvard, says in
his article on larceny that —
At common law the only subjects of larceny were tangible, movable
chattels; something which could be taken in possession and carried
away, and which had some, although trifling, intrinsic value. Any
substance which has length, breadth, and thickness may be the subject of
larceny. . . . A chose in action being in its essence intangible could not be
the subject of larceny at common law and the paper evidence of the
chose in action was considered merged with it.
Wharton says:
Choses in action, including bonds and notes of all classes according to the
common law are not the subject of larceny, being mere rights of action,
having no corporeal existence; . . . .
U.S. vs. Carlos, 21 Phil. 553
Page 16 of 22
I have already quoted at length from writers on the Spanish and Roman law to
show that only tangible, corporeal chattels can be the subject of larceny.
In the third place, by entirely begging the question, it leaves the whole
proposition of whether electricity is a subject of larceny not only unsolved but
wholly untouched. As we have already seen, the word "appropriation" nowhere
appears in subdivision 1 of the Penal Code in connection with larceny. But if it
were there used in connection with such crime, it would necessarily refer entirely
to a cosa mueble as that is the only thing under that article which is the subject of
larceny and, therefore of "appropriation." So that, before we can possibly know
whether a thing is capable of appropriation or not under the Penal Code, we must
know whether that thing is or is not a cosa mueble, as that, as we have said, is the
only thing that can be taken or appropriated in committing the crime of larceny.
But, as is readily seen, that brings us right back to the question we started with,
What is a cosa mueble? It is more than apparent, therefore, that the quoted
paragraph adds nothing whatever to the discussion.
In the fourth place, the word "appropriation" in the paragraph quoted is there
used with a complete misapprehension of its meaning as found in the article of
the Civil Code from which it is taken. Articles 334 and 335 of the Civil Code seek
to divide all property capable of appropriation into classes. They read:
ART. 334. Son bienes immuebles:
1.º Las tierras, edificios, caminos y construcciones de todo genero
adheridas al suelo.
xxx xxx xxx
This article has ten subdivision dealing with all kinds of real property. It is not
necessary to quote it all at this time.
The English of the part quoted is as follows:
ART. 334. Real property consists of
1. Lands, buildings, roads, and constructions of all kinds adherent to the
soil.
xxx xxx xxx
ART. 335. Se reputan bienes muebles los susceptibles de apropiacion no
comprendidos en el capitulo anterior, y en general todos los que se
pueden transportar de un punto a otro sin menoscabo de la cosa
immueble a que estuvieron unidos.
This article in English is as follows:
ART. 335. Personal property is considered anything susceptible of
appropriation and not included in the foregoing chapter, and, in general,
all that which can be carried from one place to another without damage
to the real estate to which it may be attached.
As is seen from the terms of the articles, two expressions are used in defining
"bienes muebles," one of elimination and other of description. The clause of
elimination provides that all property subject to appropriation shall be personal
property except that property described in article 334. But this description was
found to be too broad. It included too much; and it was, therefore, necessary to
make use of a limiting or restricting clause in connection with the exclusion
clause. To that the article further provided that appropriable property shall be,
"in general, all property which can be carried from one place to another." Under
this restricting clause, then, property to be personal property must be not only
property not included in article 334 but also property which can be transported
from one place to another. It must fulfill two requirements instead of one. Besides,
under the Spanish law, real property is as much subject to appropriation as
personal property. The word in Spanish seems to be broader than its legal use in
English.
From the foregoing it is plain that property to be personal property must not only
be susceptible of appropriation, which the court in the quoted paragraph claims
is the only requirement, but it must also be capable of being of itself manually
seized and transported from one place to another.
This presents the fourth reason why I say that the proposition laid down by the
court in the quoted paragraph is laid down under a complete misapprehension
of the definition of una cosa mueble.
And finally, the word "appropriate" which the court has used is found in
subdivision 2 of article 517 of the Penal Code. It provides that those are guilty of
larceny, "who, finding a thing (una cosa mueble) lost and knowing its
owner, appropriate it with intent to gain." The signification which the word here
has is quite different from that of the word "take" (toman) used in the first
subdivision, being considerably limited in its reach. As used here it is very like
"convert." There is no removal from the possession of the owner, as in the first
paragraph. In the Penal Code the word "taking" means something more than
"appropriation." It means a removal from the possession of the owner — a
transportation or asportation of the thing from one place to another — from the
possession of the owner to the possession of the theft; while "appropriation"
means, rather, the making use of the converting of the property after the taking
is complete, or without any "taking" at all. Under the Spanish law, while real
estate is not, of course, subject to asportation, to "taking," and, therefore, not the
subject of larceny, it is subject to "appropriation." In the same way while
electricity is, under the Spanish and Roman laws, wholly incapable of seizure and
asportation, of the manual "taking" the trespass essential to larceny,
it may possibly, in one or another sense of the word, be subject to appropriation."
If at one extreme of the scale of things, namely, real estate, the thing
is too tangible to be stolen, is it not logical to expect that at the opposite extreme
the thing, electricity, for example, may be found too intangible to be stolen?
U.S. vs. Carlos, 21 Phil. 553
Page 17 of 22
We have seen that, in all the history of Roman and Spanish jurisprudence, the
crime of larceny has been confined to tangible things, to chattels, which have an
independent existence of their own; which have three dimensions; which occupy
space; which are capable of having a trespass committed against themselves;
which can be, of themselves and alone, taken physically into possession and
carried away (asported).
We have that the fact that electricity is not such a thing is admitted by all.
And we have asked the question, "How, then, can the charge of larceny be
sustained?"
But let as assume, for the sake of argument, that electricity is a tangible thing, like
water, for instance. Still the crime committed, if any, is not lacerny. Let us modify
the illustration already given of the surreptitious removal by A of water stored in
a dam by B for milling purposes. Let us suppose that B has built a reservoir on an
elevated portion of his farm for the storage of water for irrigating purposes. He
has built ditches or conduits from the reservoir to every part of his farm to carry
the water to the places needed. During the dry season while B is engaged in
irrigating his lands A surreptitiously and with intent to gain, constructs a small
mill upon one of the conduits and utilizes the rapid fall and swift flow of the water
to operate his mill. For many months A thus takes advantages of B's conduit and
water and enriches himself by reason thereof. Did A commit the crime larceny?
The water, every drop of it, after being used by A, went to its work of irrigating
the lands of B, pausing only long enough to turn the water wheel of A's mill.
Certainly then, no water was stolen. A simply made use of the "head," the fall of
the water. If anything was stolen it was the "head," the elevation of the water,
the energy developed by its passage from high to low ground. This is precisely
what happens when an electric current passes through an electric bulb or arc and
produces light. Whether the current operates one light of one hundred,
the volume, the amperage, of the current, that is, the quantity of it, if we may use
the term (and it must be remembered that I am assuming electricity to be a
tangible thing and will speak accordingly) remains exactly the same. The volume
or quantity of the electricity is just the same when it comes out of the hundredth
light as it was when it entered the first. While there is a difference between the
current as it comes from the last light and as it entered the first, it is simply one
of condition, or state. All of the electricity is still there. Like the water; it has
simply lost its "head," its energy. It has been deprived of its pressure, of its electro-
motive force; but it is the same old electricity, in the same old quantity. So that,
when the accused in the case at bar, by means of a "jumper," burned thirty lights,
instead of the three for which he paid the company, he was not stealing electricity.
Exactly as much electricity went back into the company's wire after serving the
twenty-seven lights for which he did not pay as came out of that wire in the first
place. The defendant took nothing; he used something. In larceny there must be
a taking. Here there is only a use. Electricity is a utility, not a thing. The company,
in the cease at bar, lost no more than did the owner of the irrigation system in the
example heretofore given. As no water was taken, so no electricity was taken. The
same amount of water remained to the owner after its use by A. The same amount
of electricity remained to the company after its use by the defendant.
The well-known Italian author, Avv. Umberto Pipia, in his very able work entitled
"L' Electricita nel Diritto" puts the question thus (translation of Mr. Percy R.
Angell, Manila, 1911):
From the point of view of the jurist can electricity be stolen? A person
connects a deflecting wire to the main conduit of electricity; he thus
makes a secondary circuit in which he introduces a resistance and profits
by the electro-motive power which is developed, to supply his lamps or
put his motor in movement. In such case can we apply article 402 of the
Penal Code, which provides that whoever takes possession of movable
property of another in order to derive profit thereby, taking it from the
place where he finds it without the consent of the owner, is punished
with reclusion up to three years?
The author then refers to the decisions of certain course of Europe which hold
that electricity is stealable, and continues:
The Roman court of cassation has lost sight of that fundamental principle
of interpretation of law (a principle which it ought to have had well in
mind before applying to a new manifestations of force legislative
provisions enacted in view of totally different cases) by which penal laws
do not extend beyond the cases and the times in them expressed. Nulla
poena sine lege, is the rule in terms of penal law, unless we wish to bring
about a deplorable confusion of powers, and the judiciary desires
to usurp the authority of the legislator. If in the written laws gaps or
breaks are encountered, it is the duty of the court to point them out to
the legislator, to the end that he take the necessary measures; but it is
not lawful for him by analogous interpretation to apply a penal provision
where such has not been explicitly enacted.
In the unanimous opinion of jurist, two elements are necessary to
constitute the crime of theft, legally speaking; the first is the taking
possession of the personal (movable) property of another, contrectatio,
and the taking away of the thing from the place where it is found without
the consent of the person to whom it belongs, ablatio.
Now we have conclusively shown that electric current is not a thing, but
a state, a vibration following certain converging waves. It can not
therefore be taken possession of as the personal property of another. A
person who unlawfully uses electric current for his personal enjoyment
places himself in a state of unlawful enjoyment of a utility, but he does
not take possession of personal property. It was a grave error, that of the
court of cassation, in holding electric current to be a thing imprisoned in
wires, and composed of particles that can be subtracted. In connecting a
U.S. vs. Carlos, 21 Phil. 553
Page 18 of 22
second circuit one does not subtract electric current; not a particle of
electric energy enters into the possession of the so-called thief ; the same
amount in amperes that was found and derived on connecting the second
circuit, is found at the end of this circuit. The current has only suffered a
diminution of potential; while continuing to be of the same volume, it
becomes less adapted for the use intended, because having overcome a
resistance, it has lost in potential, its electro-motive power.
. . . It leaves the circuit in the same amount in which it entered. Only its
power for work has diminished. Not a single particle or molecule of
electric current is taken by such abusive use, only the state of undulation.
The movement that first follows the principal, and then the second
circuit, and by these undulations the so-called thief illegally derives
benefit. But the extraordinary provisions of crime are not applicable to
all illegal actions.
Another powerful argument in favor of my position is this: That in no
case of usurpation, the using of things protected by law (diritto) that are
not material things , do we speak of theft. To repress abuses the legislator
has been obliged to establish special provisions of law, but has explicitly
recognized those relating to theft to be inapplicable. A trade-mark, trade-
name, modello de fabrica, a scientific or artistic work, undoubtedly
constitute objects of law similar to things; form the contents of various
juridical relations; have more or less economic value; pertain to the
patrimony of the person who has produced them or brought them into
being. If a third person makes use of the trade-mark or trade-name, the
scientific work or artistic production of another, nobody denies that he
takes possession of a utility that does not belong to him; that by the very
illegal act he derives profit, and at the same time diminishes the
patrimony of the person having legitimate rights herein. But with all that,
it has never occurred to anyone to bring an action for theft against the
usurper of the firm name, the counterfeit of the trade-mark or the
plagiarist. The legislator, desiring to protect this new species of property,
has provided special repressive measures; but in their absence, the
courts can not apply the actio furti, because it is not applicable to cases
and conditions other than those provided for.
If this be so, why different conceptions on the score of electricity? Here
likewise, there is no subtraction of personal property, but the illegal use
of an advantage, of the right pertaining to another, which remain however
unchanged. Hence the legal solution should be the same.
The second and not less essential condition of theft is that of the ablatio,
the necessity of taking the thing from the place where it is found. But
here we have nothing of that; the current is deviated from its course,
true, but it returns to the place where it was undiminished. The
statement in the foregoing decision that there are particles transportable
from place to place is exact; the undulation is in itself, it has its own
efficiency, but it is neither taken away nor subtracted. It has been justly
said that all that is done is to erect a bridge over which the undulations
of the particles are transported in the wire attached, but nothing
corporeal passes from one wire to another, since not one of the vibrating
particles moves with the current which flows through the connected
wire.
Consequently, in whatever aspect the question is considered the
presumption of theft grows less. In fine, although there be a usurpation
of a utility to the prejudice of another, it should not be held to constitute
theft, because that is the vulgar, not the legal conception. That in civil and
commercial law we may resort to analogous interpretation, and that, in
the absence of special provisions we should apply the rules which govern
similar matters and analogous cases, there is no doubt. The courts can
not refuse to say what the law is (dire ie diritto) nor dismiss the litigants
on the pretext that the law had made no provision for their case; and it
is from this concept that electricity, as a rule, in the various relations
where it constitutes the object, is considered to be a thing, with all the
attributes of such. But the penal law is restrictive; under certain aspects
it is exceptional. Here we have to do with limitations and restrictions on
the most sacred rights of persons, the right to liberty, the right to honor.
And these rights can not be abridged without definite and explicit
provisions of the law. Where these are lacking we can pray, as I do, that
they be supplied, but a decision in such case is an arbitrary act (arbitro),
not justice: nulla poena sine lege.
xxx xxx xxx
So on the wrongful use of electric current; profit is derived from its high
potential which is produced by the work and expenditure of money on
the part of the furnishing company; the current is returned exactly as it
was delivered except it has lost a certain amount of electromotive power
that was illegally (antigiuridicamente) employed to overcome the
resistance introduced by the third party.
xxx xxx xxx
. . . Penal law must be strictly construed (e di interpretazione restrittiva).
It punishes the contractatio of a movable thing which is taken from the
place where it is found without the consent of the owner. In the
proposition under discussion, we have not to do with movable things,
there is no true transporting to another place; therefore the figura
giuridica of theft is wanting.
It can not be doubted that by movable things is meant even liquids and
fluids, because these are material, concrete, and corporeal things, but
their physical external manifestations can not affect the juridical relation
U.S. vs. Carlos, 21 Phil. 553
Page 19 of 22
. But in our case there is not a thing, fluid or liquid; there is a state of
undulation, of movement, which one uses illegally, assuming however
the obligation to indemnify for all the damages resulting from his illicit
action, but there is no theft, any more than there would be where a
person applied a pulley to the shaft of an engine in order to put his own
machinery in motion, so far as there would be no appropriation. The
current which injuriously traverse the lamp or electric motor is not
appropriated or destroyed by the person who uses it; it flows out from
the lights and continues its course in the circuit undiminished in
intensity; it has only lost part of its power, because, having encountered
a resistance, it has developed certain energy to overcome it, energy
which has produced light, traction, or mechanical work.
Nor may it be said that electricity would then be deprived of any legal
protection. Do we not have articles 1511 et seq. of the Civil Code that
provide for fraud? Is there not the civil crime and quasi crime? To protect
electric energy is it necessary to imprison one who uses
it antigiuridicamente, while the letter of the law does not consent? In any
case it is known that adducere inconveniens non est solvere argumentum.
As in the laws of our country provision is made for the illegal use of a
firm name, trade-mark and works of genius (l' ingegno); in England,
where provision has been made for the matter we are discussing they
have enacted a law imposing severe penalties upon persons who illegally
use electric energy, and I am of the first to applaud them. But let there be
laws, not merely judicial opinion (arbitria di interpretati).
Nor does it avail to urge that when we have to do with benefits that are
useful to man, which serve his ends, that he can appropriate, these
benefits are considered as things in the eyes of the law. But it is necessary
to make a distinction. From the standpoint of the civil law, they are,
because a wide and analogous construction is permissible and
permitted; but from that of the penal law, they are not, because such
construction is expressly forbidden by article 4 of the preliminary
provisions of the Civil Code.
If a trade-mark is not a benefit to man, in what does it serve him? Is not
a literary or artistic production such? Does not the counterfeiter illegally
appropriate such benefits? But if it is required to inflict criminal
penalties upon him, a special law must be enacted; the provisions
relative to theft can be applied in his case.
xxx xxx xxx
Nor is it a conclusive argument to say that the manufacturer spends large
sums of money and erects costly machinery to generate the electricity,
and when others steal it from him, such action, according to juridical
conscience and social morals, constitutes theft.
Let us suppose an individual acquires a ticket of admission, and enters a
hall where there is being produced a play of some sort. He, on the
strength of the legal negotiation with the impresario and the acquisition
of the ticket has a right to the most ample enjoyment that his optical and
acoustic senses are able to realize. But he arranges a phonograph and a
cinematograph, and surreptitiously fixes and appropriates part of the
acoustic and visual enjoyment that does not belong to him, takes it
outside of the theater and later avails himself thereof to his benefit by
reproducing the harmony of the sounds and the optical illusion of the
scene. Is he liable for theft?
From the standpoint of the doctrine I am combating, he is. The
impresario has sacrificed money or work to produce the spectacle. Our
friend has the right to enjoy it to the limit of the capacity of his organs of
vision and hearing, but beyond that. By means of suitable instruments he
has caught up the sounds, movements, and colors for the purpose of gain,
and he commits a theft because there enter the correctatio and
the ablatio.
From the point of view of the law he is not. He would be held to
reimburse the impresario for all damages, but he can not be called a
thieft, nor be punished as such. The sounds and forms of light are states,
not things; therefore they can not form subjects of theft.
And if this is so, the same conclusion must be reached with respect to
electricity.
The supreme court of the German Empire, sitting at Leipsic, October 20, 1896, in
a decision holding that electricity was not a subject of larceny, said:
The court below found that the act did not constitute theft or unlawful
appropriation, because electricity is not to be considered a thing within
the meaning of paragraph 242 of the Penal Code, and because by things
the law means portions of material nature; that corporeal existence is an
essential ingredient of the thing. Even the Penal Code starts from this
principle. Incorporeal things, as for example rights, intellectual products
and machine power are not subjects of theft. The same must be said of
electricity. Experts say that the science is not yet determined. We well
know what must be done to produce electric energy, but we do not
comprehend these vital operations, any more than we understand what
is that makes the muscles of the human arm capable of exerting force. In
the conclusions of the Court of First Instance there is no error of law.
That court starts from the principle that the corporal existence of the
thing must be the essential element to come within the meaning of article
242. This assumption is not based upon the precepts of the Civil Code,
but, rather, upon the idea which is at the bottom of the Penal Code,
namely, the movable and independent thing, which presupposes the
U.S. vs. Carlos, 21 Phil. 553
Page 20 of 22
corporeality of the object. If then, under articles 242 and 245, the
condition precedent to the commission of larceny is that the object of
theft or unlawful appropriation be a piece or portion of material
substance in either a solid or liquid state, or in form of gas, the Court of
First Instance committed no error in finding there was neither theft nor
illegal appropriation. Whether or not the notation of a thing, in the sense
of the penal laws, requires something corporeal, is a question of law; but
the question whether electricity is a substance, a corporeal thing, or a
force, a movement of a minute particles, is a question of fact that can not
be decided by the rules of law, but by physical research alone. The
consideration of the great importance of electricity in commercial life
and the place awaiting it among the vital conveniences and the fact of its
having commercial value, is not an argument to prove that electricity is
a corporeal thing, because the quality of being a vital convenience and
having commercial value does not constitute a necessary standard of
corporelity, since force, operations, intellectual products are vital
conveniences (beni) and have commercial value. When, in the
jurisprudence of the day the need for penal laws for punishment of
unjust appropriation of electric current becomes apparent, the legislator
should provide them. The courts can not be called upon to supply the
lack of legal provisions by analogous applications of rules not made to fit
the circumstance. In penal law the principle nulla poena sine is supreme.
These authorities fully support my contention that electricity is not stealable
under the provisions of the Spanish Penal Code. They also support the
proposition that even if electricity is a tangible thing, like water, and therefore
stealable, the crime, if any, committed by the defendant in this case is not
larceny, because the company had just as much electricity after the illegal act as it
had before. In other words, it has lost no electricity. Having lost no electricity it
can not charge anyone with stealing it. If a thousand lights were burned, no
more electricity would be consumed than if one light were burned, just as, no
more water is consumed in running a thousand water wheels placed one below
another than in running one. Just as much water flows over the thousandth wheel
as flowed over the first. In the same manner there is just as much electricity
flowing out of the thousandth light as flowed into the first. Just as in using the
water, nothing is consumed but the head, the quantity of water remaining the
same, so, in using electricity, nothing is consumed but the head (the pressure,
the potential, the electro-motive force), the electricity itself remaining
undiminished. No electricity was taken. It was used and then returned to its owner.
For a clear understanding of this problem, and a logical and philosophical, as well
as legal, solution thereof, we must never, for a moment, forget the fact that the
real contract between the company and the defendant was one to furnish labor
and services; a lease, if you please, of an agency, a contract of precisely the same
nature as one by which the company lets to the defendant the use of one of the
company's workmen to turn by hand, in the defendant's own house, an electrical
machine and thereby produce light for defendant's use. This is the crux of the
whole question. While no contract was proved we know of necessity, from the
principles which underlie and govern electric lighting, that the contract must
have been as above stated. If the defendant should require the laborer thus placed
in his house to work overtime and should not pay the company therefor, thus
taking advantage of the situation, there would be no larceny. To be sure, the
defendant would return the workman to the company fatigued and reduced in
strength by reason of the overtime he had required him to put in, but it would be
the same workman which he had received. It is this which shows the absurdity of
the claim that the defendant in this case is guilty of larceny. The company never
intended to sell the workman to the defendant and the defendant never expected
to buy him. It was the use that was the basis of the contract. In exactly the same
manner the company never intended to sell electricity to the defendant and the
defendant never intended to buy electricity. The basis of the contract was
the use of electricity. Just as the laborer was returned by defendant to the
company fatigued and reduced in strength by reason of the overtime which the
defendant had wrongfully and illegally required him to put in, so the current of
electricity was returned by the defendant to the company fatigued and reduced
in strength by reason of the lights which the defendant had wrongfully and
illegally caused it to supply; and just as, notwithstanding the reduction in
strength, it was the same identical workman returned that was sent out, so the
electric current returned to the company after the illegal use by defendant was the
same identical current which the company had furnished him. Where then, is the
foundation for the charge of larceny?
Let us now see what are the results of the holding of the court that electricity is
subject to larceny.
The Spanish Law of the Philippine Islands has not been changed by any legislative
enactment. A cosa mueble is the same now as it was in the days of the Partidas.
No legislature has changed the law of larceny as it came from the jurisprudence
of Rome and Spain. Nor has any legislature touched the law of the personal chattel
to give it a new definition or one which changes its ancient signification. Its
present definition is the same as that given by Sanchez Roman, Pacheco, Scaevola,
Manresa, and Groizard as drawn form the decrees of kings and acts of
legislatures. That definition having been framed by the lawmaking power of
Spain, from the Partidas down to the Penal Code, it ought not to be changed by
any agency short of the lawmaking power of the United States. The substance and
nature of crime ought not to be changed by courts in a country where crimes are
purely statutory. It has the appearance of a usurpation of the functions of the
lawmaking body, an unwarrantable assumption of the legislative attributes.
The holding of the court in this case is, in effect, an amendment to the Penal Code.
It has changed materially the definition of a cosa mueble and, therefore, of the
crime of larceny, as made by the lawmaking bodies of Spain and the United States.
U.S. vs. Carlos, 21 Phil. 553
Page 21 of 22
I do not assert that the courts have not the right to determine whether a given set
of facts do or do not fulfill the definition of a given crime. What I do say is that the
very greatest care should be exercised in cases which may involved as a
consequence of their decision the changing of the scope of the substantive law of
crime. The fact, admitted by all, that whether the phenomenon which we call
electricity really is a "cosa mueble," under the accepted definition of that word, is
open to doubt, should give us pause. Before holding that electricity is a cosa
mueble, the fact whether it is or not ought to be substantially free from doubt,
This is particularly true in a country where crimes are purely statutory, and in
which, therefore, the legislature is presumed to have had in mind in framing its
definition of "cosas muebles" only such chattels, or those of the same nature, as
were known to the legislature at the time it acted. At the time the Penal Code
became operative substantially nothing was known by those who created if of the
phenomenon, electricity. It is more than clear that at the time of the enactment of
the laws relating to larceny, of which article 517 of the Penal Code is a
reproduction, nothing whatever was known of that phenomenon. We have,
therefore, no means of knowing what would have been the legislative action in
relation thereto. The legislative authorities of those times might have treated it
as substantially every other legislative body has treated it that has touched the
question; namely, as a thing separate and distinct from chattels, and unlawful acts
affecting it and its use as crimes distinct from the crimes against tangible
property, such as robbery and larceny. In this jurisdiction the legislature is the
only authority for the definition of the crime. Where a new situation arises by
virtue of discoveries which reveal agencies never known before, and whose real
nature is unknown even to the discoverers the legislature is the body to take the
initiative in determining the position of such agencies among the affairs of men,
unless they clearly fall within a class already established and defined; and it
appears that some legislative bodies have done that very thing and have passed
special laws touching the place which should be given electricity in the civil and
criminal law. This was done here by the passage of the ordinance of the city of
Manila. The fact that legislatures in many jurisdictions have enacted special laws
relative to electricity is the very clearest proof that there was the gravest doubt
among learned men of the applicability of existing laws to acts committed against
the rights of producers of electricity. The legislature of the Islands having acted
through the council of the city of Manila and by such action made illegal acts
against the producers of electricity a special crime wholly distinct from larceny,
such act should be conclusive on this court as to the legislative intent.
Section 649 of the Revised Ordinance of the city of Manila provides in part:
No person shall, for any purpose whatsoever, use or enjoy the benefits
of any device by means of which he may fraudulently obtain any current
of electricity or any telephone or telegraph service; and the existence in
any building or premises of any such device shall, in the absence of
satisfactory explanation, be deemed sufficient evidence of such use by
the person benefiting thereby.
This section was enacted under the authority of the Legislature of the Philippine
Islands, as was section 930 of said ordinances, by the terms of which one was
violates the provisions of section 649 "shall be punished by a fine of not more
than two hundred pesos or by imprisonment for not more than six months, or
both such fine and imprisonment, in the discretion of the court, for each offense."
Articles 517 and 518 of the Penal Code read in part as follows:
ART. 517. The following are guilty of theft:
1. Those who, with intent of gain and without violence or intimidation
against the person or force against the things, shall take another's
personal property (cosa mueble) without the owner's consent.
xxx xxx xxx
ART. 518. Those guilty of theft shall be punished:
1. With the penalty of presidio correccional in its medium and maximum
degrees if the value of the stolen property should exceed 6,250 pesetas.
2. With the penalty of presidio correccional in its minimum and medium
degrees should it not exceed 6,250, pesetas and be more than
1,250 pesetas.
3. With arresto mayor in its medium degree to presidio correccional in its
minimum degree should it not exceed 1,250 pesetas and be more than
250 pesetas.
4. With arresto mayor to its fullest extent should it be more than 25 but
not exceed 250 pesetas.
5. With arresto mayor in its minimum and medium degrees if it should
not exceed 25 pesetas; if exceeding 25 and not more than 65 pesetas, a
theft of nutritious grains, fruits, or wood shall be punished with a fine of
room 325 to 500 pesetas.
Under subdivision 2 of the article last quoted, which is the paragraph under
which the accused is punished in the case at bar, the penalty prescribed is from
six months and one day to four years and two months. The accused in this case
was actually sentenced to one year eight months and twenty-one days of presidio
correccional, to indemnify the company in the sum of P865.26, to the
corresponding subsidiary imprisonment in case of failure to pay said sum, and to
the accessory penalties provided by law.
Having before us these two laws, we may now see to what untoward and
unfortunate results the majority opinion leads us in holding that a person who
commits a crime against an electric current can be punished under either, or both,
of two different statutes. As we have seen already there is, relatively speaking, an
U.S. vs. Carlos, 21 Phil. 553
Page 22 of 22

enormous difference in the penalties prescribed by said law. That imposed by the
ordinance of the city of Manila can not in any event exceed six months'
imprisonment and a fine of P200; while that provided in the Penal Code may be
as severe as four years and two months imprisonment, with indemnity equal to
the value of the property stolen, with corresponding subsidiary imprisonment in
case of nonpayment. To this must be added all those accessory penalties
prescribed by the code, such as suspension from any public office, profession or
trade, and from the right the suffrage. To me it is wholly unbelievable that, under
the circumstances of this case and the nature of the offense itself, it was the
intention of the legislative authority to permit the concurrent existence of two
laws, both in force, punishing the same crime with penalties which bear no
relation to each other and which are widely different in severity. Note what
results from such a holding. Prosecution under the ordinance must be in the
municipal court. Prosecution under the Penal Code may be in the municipal court
or it may be and generally must be, as in this case, in the Court of First Instance.
But it is certain that, under the ordinance, every case may be prosecuted in the
municipal court, whatever the value of the electricity taken; or, if the value is
sufficient, the prosecution may be brought in the Court of First Instance. The
selection of the court is left to the complaint. This means that the complaint is able
to say within certain limits what punishment shall be inflicted; for, if he desires that
the accused shall be lightly punished he will bring the action in the municipal
court, which he always can do if he wish, and if he desires to punish him very
severely he will bring it in the Court of First Instance, which he can generally do
if he cares to. It is incoceivable that the legislature intended that such a condition
should exist. It is in violation of every sense of fairness, is against every rule of
statutory construction, and is clearly inimical to public policy. To assert that the
complaining in which he shall prosecute the accused but also, in effect, the crime
of which he shall be charged, as the decision in this case holds in effect, is to assert
a proposition, the bare statement of which is its own completest refutation.
For these reasons the judgment of conviction should be reversed.
Manarang and Manarang vs. Ofilada and Esteban, 99 SCRA 108
Page 1 of 2
EN BANC
[G.R. No. L-8133. May 18, 1956.]
MANUEL C. MANARANG and LUCIA D. MANARANG, Petitioners-Appellants,
vs. MACARIO M. OFILADA, Sheriff of the City of Manila and ERNESTO
ESTEBAN, Respondents-Appellees.
DECISION
LABRADOR, J.:
On September 8, 1951, Petitioner Lucia D. Manarang obtained a loan of P200 from
Ernesto Esteban, and to secure its payment she executed a chattel mortgage over
a house of mixed materials erected on a lot on Alvarado Street, Manila. As
Manarang did not pay the loan as agreed upon, Esteban brought an action against
her in the municipal court of Manila for its recovery, alleging that the loan was
secured by a chattel mortgage on her property. Judgment having been entered
in Plaintiff’s favor, execution was issued against the same property mortgaged.
Before the property could be sold Manarang offered to pay the sum of P277,
which represented the amount of the judgment of P250, the interest thereon, the
costs, and the sheriff’s fees, but the sheriff refused the tender unless the
additional amount of P260 representing the publication of the notice of sale in
two newspapers be paid also. So Defendants therein brought this suit to compel
the sheriff to accept the amount of P277 as full payment of the judgment and to
annul the published notice of sale.
It is to be noted that in the complaint filed in the municipal court, a copy of the
chattel mortgage is attached and mention made of its registration, and in the
prayer request is made that the house mortgaged be sold at public auction to
satisfy the debt. It is also important to note that the house mortgaged was levied
upon at Plaintiff’s request (Exhibit “E”).
On the basis of the above facts counsel for Manarang contended in the court
below that the house in question should be considered as personal property and
the publication of the notice of its sale at public auction in execution considered
unnecessary. The Court of First Instance held that although real property may
sometimes be considered as personal property, the sheriff was in duty bound to
cause the publication of the notice of its sale in order to make the sale valid or to
prevent its being declared void or voidable, and he did not, therefore, err in
causing such publication of the notice. So it denied the petition.
There cannot be any question that a building of mixed materials may be the
subject of a chattel mortgage, in which case it is considered as between the
parties as personal property. We held so expressly in the cases of Luna vs.
Encarnacion, et al., * 48 Off. Gaz., No. 7, p. 2664; Standard Oil Co. of New York vs.
Jaranillo, 44 Phil., 630 and De Jesus vs. Guan Dee Co., Inc., 72 Phil., 464. The matter
depends on the circumstances and the intention of the parties.
“The general principle of law is that a building permanently fixed to the freehold
becomes a part of it, that prima facie a house is real estate, belonging to the owner
of the land on which it stands, even though it was erected against the will of the
landowner, or without his consent . The general rule is otherwise, however,
where the improvement is made with the consent of the landowner, and pursuant
to an understanding either expressed or implied that it shall remain personal
property. Nor does the general rule apply to a building which is wrongfully
removed from the land and placed on the land of the person removing it.” (42 Am.
Jur. 199-200.)
“Among the principal criteria for determining whether property remains
personally or becomes realty are annexation to the soil, either actual or
construction, and the intention of the parties.
“Personal property may retain its character as such where it is so agreed by the
parties interested even though annexed to the realty, or where it is affixed in the
soil to be used for a particular purpose for a short period and then removed as
soon as it has served its purpose .” (Ibid., 209-210.)
The question now before us, however, is: Does the fact that the parties entering
into a contract regarding a house gave said property the consideration of
personal property in their contract, bind the sheriff in advertising the property’s
sale at public auction as personal property? It is to be remembered that in the
case at bar the action was to collect a loan secured by a chattel mortgage on the
house. It is also to be remembered that in practice it is the judgment creditor who
points out to the sheriff the properties that the sheriff is to levy upon in execution,
and the judgment creditor in the case at bar is the party in whose favor the owner
of the house and conveyed it by way of chattel mortgage and, therefore, knew its
consideration as personal property.
These considerations notwithstanding, we hold that the rules on execution do not
allow, and we should not interpret them in such a way as to allow, the special
consideration that parties to a contract may have desired to impart to real estate,
for example, as personal property, when they are not ordinarily so. Sales on
execution affect the public and third persons. The regulation governing sales on
execution are for public officials to follow. The form of proceedings prescribed
for each kind of property is suited to its character, not to the character which the
parties have given to it or desire to give it. When the rules speak of personal
property, property which is ordinarily so considered is meant; and when real
property is spoken of, it means property which is generally known as real
property. The regulations were never intended to suit the consideration that
parties, may have privately given to the property levied upon. Enforcement of
regulations would be difficult were the convenience or agreement of private
parties to determine or govern the nature of the proceedings. We, therefore, hold
Manarang and Manarang vs. Ofilada and Esteban, 99 SCRA 108
Page 2 of 2

that the mere fact that a house was the subject of a chattel mortgage and was
considered as personal property by the parties does not make said house
personal property for purposes of the notice to be given for its sale at public
auction. This ruling is demanded by the need for a definite, orderly and well-
defined regulation for official and public guidance and which would prevent
confusion and misunderstanding.
We, therefore, declare that the house of mixed materials levied upon on
execution, although subject of a contract of chattel mortgage between the owner
and a third person, is real property within the purview of Rule 39, section 16, of
the Rules of Court as it has become a permanent fixture on the land, which is real
property. (42 Am. Jur. 199-200 Leung Yee vs. Strong Machinery Co., 37 Phil., 644;
Republic vs. Ceniza, et al., 90 Phil., 544;Ladera, et al. vs. Hodges, et al., [C. A], 48
Off. Gaz., 5374.).
The judgment appealed from is hereby affirmed, with costs. SO ORDERED.
Paras, C.J., Bengzon, Padilla., Montemayor, Reyes, A., Jugo, Bautista Angelo,
Concepcion, Reyes, J.B.L. and Endencia, JJ., concur.
Endnotes:
* 91 Phil., 531.
Laurel vs. Abrogar, G.R. No. 155076
Page 1 of 11
FIRST DIVISION
G.R. No. 155076 February 27, 2006
LUIS MARCOS P. LAUREL, Petitioner,
vs.
HON. ZEUS C. ABROGAR, Presiding Judge of the Regional Trial Court,
Makati City, Branch 150, PEOPLE OF THE PHILIPPINES& PHILIPPINE LONG
DISTANCE TELEPHONE COMPANY, Respondents.
DECISION
CALLEJO, SR., J.:
Before us is a Petition for Review on Certiorari of the Decision 1 of the Court of
Appeals (CA) in CA-G.R. SP No. 68841 affirming the Order issued by Judge Zeus C.
Abrogar, Regional Trial Court (RTC), Makati City, Branch 150, which denied the
"Motion to Quash (With Motion to Defer Arraignment)" in Criminal Case No. 99-
2425 for theft.
Philippine Long Distance Telephone Company (PLDT) is the holder of a
legislative franchise to render local and international telecommunication
services under Republic Act No. 7082.2 Under said law, PLDT is authorized to
establish, operate, manage, lease, maintain and purchase telecommunication
systems, including transmitting, receiving and switching stations, for both
domestic and international calls. For this purpose, it has installed an estimated
1.7 million telephone lines nationwide. PLDT also offers other services as
authorized by Certificates of Public Convenience and Necessity (CPCN) duly
issued by the National Telecommunications Commission (NTC), and operates
and maintains an International Gateway Facility (IGF). The PLDT network is thus
principally composed of the Public Switch Telephone Network (PSTN), telephone
handsets and/or telecommunications equipment used by its subscribers, the
wires and cables linking said telephone handsets and/or telecommunications
equipment, antenna, the IGF, and other telecommunications equipment which
provide interconnections.3 1avvphil.net
PLDT alleges that one of the alternative calling patterns that constitute network
fraud and violate its network integrity is that which is known as International
Simple Resale (ISR). ISR is a method of routing and completing international long
distance calls using International Private Leased Lines (IPL), cables, antenna or
air wave or frequency, which connect directly to the local or domestic exchange
facilities of the terminating country (the country where the call is destined). The
IPL is linked to switching equipment which is connected to a PLDT telephone
line/number. In the process, the calls bypass the IGF found at the terminating
country, or in some instances, even those from the originating country.4
One such alternative calling service is that offered by Baynet Co., Ltd. (Baynet)
which sells "Bay Super Orient Card" phone cards to people who call their friends
and relatives in the Philippines. With said card, one is entitled to a 27-minute call
to the Philippines for about ¥37.03 per minute. After dialing the ISR access
number indicated in the phone card, the ISR operator requests the subscriber to
give the PIN number also indicated in the phone card. Once the caller’s identity
(as purchaser of the phone card) is confirmed, the ISR operator will then provide
a Philippine local line to the requesting caller via the IPL. According to PLDT, calls
made through the IPL never pass the toll center of IGF operators in the
Philippines. Using the local line, the Baynet card user is able to place a call to any
point in the Philippines, provided the local line is National Direct Dial (NDD)
capable.5
PLDT asserts that Baynet conducts its ISR activities by utilizing an IPL to course
its incoming international long distance calls from Japan. The IPL is linked to
switching equipment, which is then connected to PLDT telephone lines/numbers
and equipment, with Baynet as subscriber. Through the use of the telephone lines
and other auxiliary equipment, Baynet is able to connect an international long
distance call from Japan to any part of the Philippines, and make it appear as a
call originating from Metro Manila. Consequently, the operator of an ISR is able
to evade payment of access, termination or bypass charges and accounting rates,
as well as compliance with the regulatory requirements of the NTC. Thus, the ISR
operator offers international telecommunication services at a lower rate, to the
damage and prejudice of legitimate operators like PLDT.6
PLDT pointed out that Baynet utilized the following equipment for its ISR
activities: lines, cables, and antennas or equipment or device capable of
transmitting air waves or frequency, such as an IPL and telephone lines and
equipment; computers or any equipment or device capable of accepting
information applying the prescribed process of the information and supplying
the result of this process; modems or any equipment or device that enables a data
terminal equipment such as computers to communicate with other data terminal
equipment via a telephone line; multiplexers or any equipment or device that
enables two or more signals from different sources to pass through a common
cable or transmission line; switching equipment, or equipment or device capable
of connecting telephone lines; and software, diskettes, tapes or equipment or
device used for recording and storing information.7
PLDT also discovered that Baynet subscribed to a total of 123 PLDT telephone
lines/numbers.8 Based on the Traffic Study conducted on the volume of calls
passing through Baynet’s ISR network which bypass the IGF toll center, PLDT
incurred an estimated monthly loss of P10,185,325.96.9 Records at the Securities
and Exchange Commission (SEC) also revealed that Baynet was not authorized to
Laurel vs. Abrogar, G.R. No. 155076
Page 2 of 11
provide international or domestic long distance telephone service in the country.
The following are its officers: Yuji Hijioka, a Japanese national (chairman of the
board of directors); Gina C. Mukaida, a Filipina (board member and president);
Luis Marcos P. Laurel, a Filipino (board member and corporate secretary); Ricky
Chan Pe, a Filipino (board member and treasurer); and Yasushi Ueshima, also a
Japanese national (board member).
Upon complaint of PLDT against Baynet for network fraud, and on the strength
of two search warrants10 issued by the RTC of Makati, Branch 147, National
Bureau of Investigation (NBI) agents searched its office at the 7th Floor, SJG
Building, Kalayaan Avenue, Makati City on November 8, 1999. Atsushi Matsuura,
Nobuyoshi Miyake, Edourd D. Lacson and Rolando J. Villegas were arrested by
NBI agents while in the act of manning the operations of Baynet. Seized in the
premises during the search were numerous equipment and devices used in its
ISR activities, such as multiplexers, modems, computer monitors, CPUs, antenna,
assorted computer peripheral cords and microprocessors, cables/wires,
assorted PLDT statement of accounts, parabolic antennae and voltage regulators.
State Prosecutor Ofelia L. Calo conducted an inquest investigation and issued a
Resolution11 on January 28, 2000, finding probable cause for theft under Article
308 of the Revised Penal Code and Presidential Decree No. 401 12 against the
respondents therein, including Laurel.
On February 8, 2000, State Prosecutor Calo filed an Information with the RTC of
Makati City charging Matsuura, Miyake, Lacson and Villegas with theft under
Article 308 of the Revised Penal Code. After conducting the requisite preliminary
investigation, the State Prosecutor filed an Amended Information impleading
Laurel (a partner in the law firm of Ingles, Laurel, Salinas, and, until November
19, 1999, a member of the board of directors and corporate secretary of Baynet),
and the other members of the board of directors of said corporation, namely, Yuji
Hijioka, Yasushi Ueshima, Mukaida, Lacson and Villegas, as accused for theft
under Article 308 of the Revised Penal Code. The inculpatory portion of the
Amended Information reads:
On or about September 10-19, 1999, or prior thereto, in Makati City, and within
the jurisdiction of this Honorable Court, the accused, conspiring and
confederating together and all of them mutually helping and aiding one another,
with intent to gain and without the knowledge and consent of the Philippine Long
Distance Telephone (PLDT), did then and there willfully, unlawfully and
feloniously take, steal and use the international long distance calls belonging to
PLDT by conducting International Simple Resale (ISR), which is a method of
routing and completing international long distance calls using lines, cables,
antennae, and/or air wave frequency which connect directly to the local or
domestic exchange facilities of the country where the call is destined, effectively
stealing this business from PLDT while using its facilities in the estimated amount
of P20,370,651.92 to the damage and prejudice of PLDT, in the said amount.
CONTRARY TO LAW.13
Accused Laurel filed a "Motion to Quash (with Motion to Defer Arraignment)" on
the ground that the factual allegations in the Amended Information do not
constitute the felony of theft under Article 308 of the Revised Penal Code. He
averred that the Revised Penal Code, or any other special penal law for that
matter, does not prohibit ISR operations. He claimed that telephone calls with the
use of PLDT telephone lines, whether domestic or international, belong to the
persons making the call, not to PLDT. He argued that the caller merely uses the
facilities of PLDT, and what the latter owns are the telecommunication
infrastructures or facilities through which the call is made. He also asserted that
PLDT is compensated for the caller’s use of its facilities by way of rental; for an
outgoing overseas call, PLDT charges the caller per minute, based on the duration
of the call. Thus, no personal property was stolen from PLDT. According to Laurel,
the P20,370,651.92 stated in the Information, if anything, represents the rental
for the use of PLDT facilities, and not the value of anything owned by it. Finally,
he averred that the allegations in the Amended Information are already
subsumed under the Information for violation of Presidential Decree (P.D.) No.
401 filed and pending in the Metropolitan Trial Court of Makati City, docketed as
Criminal Case No. 276766.
The prosecution, through private complainant PLDT, opposed the
motion,14 contending that the movant unlawfully took personal property
belonging to it, as follows: 1) intangible telephone services that are being offered
by PLDT and other telecommunication companies, i.e., the connection and
interconnection to their telephone lines/facilities; 2) the use of those facilities
over a period of time; and 3) the revenues derived in connection with the
rendition of such services and the use of such facilities.15
The prosecution asserted that the use of PLDT’s intangible telephone
services/facilities allows electronic voice signals to pass through the same, and
ultimately to the called party’s number. It averred that such service/facility is
akin to electricity which, although an intangible property, may, nevertheless, be
appropriated and be the subject of theft. Such service over a period of time for a
consideration is the business that PLDT provides to its customers, which enables
the latter to send various messages to installed recipients. The service rendered
by PLDT is akin to merchandise which has specific value, and therefore, capable
of appropriation by another, as in this case, through the ISR operations conducted
by the movant and his co-accused.
The prosecution further alleged that "international business calls and revenues
constitute personal property envisaged in Article 308 of the Revised Penal Code."
Moreover, the intangible telephone services/facilities belong to PLDT and not to
the movant and the other accused, because they have no telephone services and
facilities of their own duly authorized by the NTC; thus, the taking by the movant
and his co-accused of PLDT services was with intent to gain and without the
latter’s consent.
Laurel vs. Abrogar, G.R. No. 155076
Page 3 of 11
The prosecution pointed out that the accused, as well as the movant, were paid
in exchange for their illegal appropriation and use of PLDT’s telephone services
and facilities; on the other hand, the accused did not pay a single centavo for their
illegal ISR operations. Thus, the acts of the accused were akin to the use of a
"jumper" by a consumer to deflect the current from the house electric meter,
thereby enabling one to steal electricity. The prosecution emphasized that its
position is fortified by the Resolutions of the Department of Justice in PLDT v.
Tiongson, et al. (I.S. No. 97-0925) and in PAOCTF-PLDT v. Elton John Tuason, et
al. (I.S. No. 2000-370) which were issued on August 14, 2000 finding probable
cause for theft against the respondents therein.
On September 14, 2001, the RTC issued an Order16 denying the Motion to Quash
the Amended Information. The court declared that, although there is no law that
expressly prohibits the use of ISR, the facts alleged in the Amended Information
"will show how the alleged crime was committed by conducting ISR," to the
damage and prejudice of PLDT.
Laurel filed a Motion for Reconsideration17 of the Order, alleging that
international long distance calls are not personal property, and are not capable
of appropriation. He maintained that business or revenue is not considered
personal property, and that the prosecution failed to adduce proof of its existence
and the subsequent loss of personal property belonging to another. Citing the
ruling of the Court in United States v. De Guzman, 18 Laurel averred that the case
is not one with telephone calls which originate with a particular caller and
terminates with the called party. He insisted that telephone calls are considered
privileged communications under the Constitution and cannot be considered as
"the property of PLDT." He further argued that there is no kinship between
telephone calls and electricity or gas, as the latter are forms of energy which are
generated and consumable, and may be considered as personal property because
of such characteristic. On the other hand, the movant argued, the telephone
business is not a form of energy but is an activity.
In its Order19 dated December 11, 2001, the RTC denied the movant’s Motion for
Reconsideration. This time, it ruled that what was stolen from PLDT was its
"business" because, as alleged in the Amended Information, the international
long distance calls made through the facilities of PLDT formed part of its business.
The RTC noted that the movant was charged with stealing the business of PLDT.
To support its ruling, it cited Strochecker v. Ramirez,20 where the Court ruled that
interest in business is personal property capable of appropriation. It further
declared that, through their ISR operations, the movant and his co-accused
deprived PLDT of fees for international long distance calls, and that the ISR used
by the movant and his co-accused was no different from the "jumper" used for
stealing electricity.
Laurel then filed a Petition for Certiorari with the CA, assailing the Order of the
RTC. He alleged that the respondent judge gravely abused his discretion in
denying his Motion to Quash the Amended Information.21 As gleaned from the
material averments of the amended information, he was charged with stealing
the international long distance calls belonging to PLDT, not its business.
Moreover, the RTC failed to distinguish between the business of PLDT (providing
services for international long distance calls) and the revenues derived
therefrom. He opined that a "business" or its revenues cannot be considered as
personal property under Article 308 of the Revised Penal Code, since a "business"
is "(1) a commercial or mercantile activity customarily engaged in as a means of
livelihood and typically involving some independence of judgment and power of
decision; (2) a commercial or industrial enterprise; and (3) refers to transactions,
dealings or intercourse of any nature." On the other hand, the term "revenue" is
defined as "the income that comes back from an investment (as in real or
personal property); the annual or periodical rents, profits, interests, or issues of
any species of real or personal property."22
Laurel further posited that an electric company’s business is the production and
distribution of electricity; a gas company’s business is the production and/or
distribution of gas (as fuel); while a water company’s business is the production
and distribution of potable water. He argued that the "business" in all these cases
is the commercial activity, while the goods and merchandise are the products of
such activity. Thus, in prosecutions for theft of certain forms of energy, it is the
electricity or gas which is alleged to be stolen and not the "business" of providing
electricity or gas. However, since a telephone company does not produce any
energy, goods or merchandise and merely renders a service or, in the words of
PLDT, "the connection and interconnection to their telephone lines/facilities,"
such service cannot be the subject of theft as defined in Article 308 of the Revised
Penal Code.23
He further declared that to categorize "business" as personal property under
Article 308 of the Revised Penal Code would lead to absurd consequences; in
prosecutions for theft of gas, electricity or water, it would then be permissible to
allege in the Information that it is the gas business, the electric business or the
water business which has been stolen, and no longer the merchandise produced
by such enterprise.24
Laurel further cited the Resolution of the Secretary of Justice in Piltel v.
Mendoza,25 where it was ruled that the Revised Penal Code, legislated as it was
before present technological advances were even conceived, is not adequate to
address the novel means of "stealing" airwaves or airtime. In said resolution, it
was noted that the inadequacy prompted the filing of Senate Bill 2379 (sic)
entitled "The Anti-Telecommunications Fraud of 1997" to deter cloning of
cellular phones and other forms of communications fraud. The said bill "aims to
protect in number (ESN) (sic) or Capcode, mobile identification number (MIN),
electronic-international mobile equipment identity (EMEI/IMEI), or subscriber
identity module" and "any attempt to duplicate the data on another cellular
phone without the consent of a public telecommunications entity would be
Laurel vs. Abrogar, G.R. No. 155076
Page 4 of 11
punishable by law."26 Thus, Laurel concluded, "there is no crime if there is no law
punishing the crime."
On August 30, 2002, the CA rendered judgment dismissing the petition. 27 The
appellate court ruled that a petition for certiorari under Rule 65 of the Rules of
Court was not the proper remedy of the petitioner. On the merits of the petition,
it held that while business is generally an activity
which is abstract and intangible in form, it is nevertheless considered "property"
under Article 308 of the Revised Penal Code. The CA opined that PLDT’s business
of providing international calls is personal property which may be the object of
theft, and cited United States v. Carlos28 to support such conclusion. The tribunal
also cited Strochecker v. Ramirez,29 where this Court ruled that one-half interest
in a day’s business is personal property under Section 2 of Act No. 3952,
otherwise known as the Bulk Sales Law. The appellate court held that the
operations of the ISR are not subsumed in the charge for violation of P.D. No. 401.
Laurel, now the petitioner, assails the decision of the CA, contending that -
THE COURT OF APPEALS ERRED IN RULING THAT THE PERSONAL
PROPERTY ALLEGEDLY STOLEN PER THE INFORMATION IS NOT THE
"INTERNATIONAL LONG DISTANCE CALLS" BUT THE "BUSINESS OF
PLDT."
THE COURT OF APPEALS ERRED IN RULING THAT THE TERM
"BUSINESS" IS PERSONAL PROPERTY WITHIN THE MEANING OF ART.
308 OF THE REVISED PENAL CODE.30
Petitioner avers that the petition for a writ of certiorari may be filed to nullify an
interlocutory order of the trial court which was issued with grave abuse of
discretion amounting to excess or lack of jurisdiction. In support of his petition
before the Court, he reiterates the arguments in his pleadings filed before the CA.
He further claims that while the right to carry on a business or an interest or
participation in business is considered property under the New Civil Code, the
term "business," however, is not. He asserts that the Philippine Legislature, which
approved the Revised Penal Code way back in January 1, 1932, could not have
contemplated to include international long distance calls and "business" as
personal property under Article 308 thereof.
In its comment on the petition, the Office of the Solicitor General (OSG) maintains
that the amended information clearly states all the essential elements of the
crime of theft. Petitioner’s interpretation as to whether an "international long
distance call" is personal property under the law is inconsequential, as a reading
of the amended information readily reveals that specific acts and circumstances
were alleged charging Baynet, through its officers, including petitioner, of
feloniously taking, stealing and illegally using international long distance calls
belonging to respondent PLDT by conducting ISR operations, thus, "routing and
completing international long distance calls using lines, cables, antenna and/or
airwave frequency which connect directly to the local or domestic exchange
facilities of the country where the call is destined." The OSG maintains that the
international long distance calls alleged in the amended information should be
construed to mean "business" of PLDT, which, while abstract and intangible in
form, is personal property susceptible of appropriation.31 The OSG avers that
what was stolen by petitioner and his co-accused is the business of PLDT
providing international long distance calls which, though intangible, is personal
property of the PLDT.32
For its part, respondent PLDT asserts that personal property under Article 308
of the Revised Penal Code comprehends intangible property such as electricity
and gas which are valuable articles for merchandise, brought and sold like other
personal property, and are capable of appropriation. It insists that the business
of international calls and revenues constitute personal property because the
same are valuable articles of merchandise. The respondent reiterates that
international calls involve (a) the intangible telephone services that are being
offered by it, that is, the connection and interconnection to the telephone
network, lines or facilities; (b) the use of its telephone network, lines or facilities
over a period of time; and (c) the income derived in connection therewith.33
PLDT further posits that business revenues or the income derived in connection
with the rendition of such services and the use of its telephone network, lines or
facilities are personal properties under Article 308 of the Revised Penal Code; so
is the use of said telephone services/telephone network, lines or facilities which
allow electronic voice signals to pass through the same and ultimately to the
called party’s number. It is akin to electricity which, though intangible property,
may nevertheless be appropriated and can be the object of theft. The use of
respondent PLDT’s telephone network, lines, or facilities over a period of time for
consideration is the business that it provides to its customers, which enables the
latter to send various messages to intended recipients. Such use over a period of
time is akin to merchandise which has value and, therefore, can be appropriated
by another. According to respondent PLDT, this is what actually happened when
petitioner Laurel and the other accused below conducted illegal ISR operations. 34
The petition is meritorious.
The issues for resolution are as follows: (a) whether or not the petition for
certiorari is the proper remedy of the petitioner in the Court of Appeals; (b)
whether or not international telephone calls using Bay Super Orient Cards
through the telecommunication services provided by PLDT for such calls, or, in
short, PLDT’s business of providing said telecommunication services, are proper
subjects of theft under Article 308 of the Revised Penal Code; and (c) whether or
not the trial court committed grave abuse of discretion amounting to excess or
lack of jurisdiction in denying the motion of the petitioner to quash the amended
information.
Laurel vs. Abrogar, G.R. No. 155076
Page 5 of 11
On the issue of whether or not the petition for certiorari instituted by the
petitioner in the CA is proper, the general rule is that a petition for certiorari
under Rule 65 of the Rules of Court, as amended, to nullify an order denying a
motion to quash the Information is inappropriate because the aggrieved party
has a remedy of appeal in the ordinary course of law. Appeal and certiorari are
mutually exclusive of each other. The remedy of the aggrieved party is to continue
with the case in due course and, when an unfavorable judgment is rendered,
assail the order and the decision on appeal. However, if the trial court issues the
order denying the motion to quash the Amended Information with grave abuse
of discretion amounting to excess or lack of jurisdiction, or if such order is
patently erroneous, or null and void for being contrary to the Constitution, and
the remedy of appeal would not afford adequate and expeditious relief, the
accused may resort to the extraordinary remedy of certiorari.35 A special civil
action for certiorari is also available where there are special circumstances
clearly demonstrating the inadequacy of an appeal. As this Court held in Bristol
Myers Squibb (Phils.), Inc. v. Viloria:36
Nonetheless, the settled rule is that a writ of certiorari may be granted in cases
where, despite availability of appeal after trial, there is at least a prima facie
showing on the face of the petition and its annexes that: (a) the trial court issued
the order with grave abuse of discretion amounting to lack of or in excess of
jurisdiction; (b) appeal would not prove to be a speedy and adequate remedy; (c)
where the order is a patent nullity; (d) the decision in the present case will arrest
future litigations; and (e) for certain considerations such as public welfare and
public policy.37
In his petition for certiorari in the CA, petitioner averred that the trial court
committed grave abuse of its discretion amounting to excess or lack of
jurisdiction when it denied his motion to quash the Amended Information despite
his claim that the material allegations in the Amended Information do not charge
theft under Article 308 of the Revised Penal Code, or any offense for that matter.
By so doing, the trial court deprived him of his constitutional right to be informed
of the nature of the charge against him. He further averred that the order of the
trial court is contrary to the constitution and is, thus, null and void. He insists that
he should not be compelled to undergo the rigors and tribulations of a protracted
trial and incur expenses to defend himself against a non-existent charge.
Petitioner is correct.
An information or complaint must state explicitly and directly every act or
omission constituting an offense38 and must allege facts establishing conduct that
a penal statute makes criminal;39 and describes the property which is the subject
of theft to advise the accused with reasonable certainty of the accusation he is
called upon to meet at the trial and to enable him to rely on the judgment
thereunder of a subsequent prosecution for the same offense. 40 It must show, on
its face, that if the alleged facts are true, an offense has been committed. The rule
is rooted on the constitutional right of the accused to be informed of the nature
of the crime or cause of the accusation against him. He cannot be convicted of an
offense even if proven unless it is alleged or necessarily included in the
Information filed against him.
As a general prerequisite, a motion to quash on the ground that the Information
does not constitute the offense charged, or any offense for that matter, should be
resolved on the basis of said allegations whose truth and veracity are
hypothetically committed;41 and on additional facts admitted or not denied by
the prosecution.42 If the facts alleged in the Information do not constitute an
offense, the complaint or information should be quashed by the court.43
We have reviewed the Amended Information and find that, as mentioned by the
petitioner, it does not contain material allegations charging the petitioner of theft
of personal property under Article 308 of the Revised Penal Code. It, thus,
behooved the trial court to quash the Amended Information. The Order of the
trial court denying the motion of the petitioner to quash the Amended
Information is a patent nullity.
On the second issue, we find and so hold that the international telephone calls
placed by Bay Super Orient Card holders, the telecommunication services
provided by PLDT and its business of providing said services are not personal
properties under Article 308 of the Revised Penal Code. The construction by the
respondents of Article 308 of the said Code to include, within its coverage, the
aforesaid international telephone calls, telecommunication services and business
is contrary to the letter and intent of the law.
The rule is that, penal laws are to be construed strictly. Such rule is founded on
the tenderness of the law for the rights of individuals and on the plain principle
that the power of punishment is vested in Congress, not in the judicial
department. It is Congress, not the Court, which is to define a crime, and ordain
its punishment.44 Due respect for the prerogative of Congress in defining
crimes/felonies constrains the Court to refrain from a broad interpretation of
penal laws where a "narrow interpretation" is appropriate. The Court must take
heed to language, legislative history and purpose, in order to strictly determine
the wrath and breath of the conduct the law forbids.45 However, when the
congressional purpose is unclear, the court must apply the rule of lenity, that is,
ambiguity concerning the ambit of criminal statutes should be resolved in favor
of lenity.46
Penal statutes may not be enlarged by implication or intent beyond the fair
meaning of the language used; and may not be held to include offenses other than
those which are clearly described, notwithstanding that the Court may think that
Congress should have made them more comprehensive.47 Words and phrases in
a statute are to be construed according to their common meaning and accepted
usage.
As Chief Justice John Marshall declared, "it would be dangerous, indeed, to carry
the principle that a case which is within the reason or
Laurel vs. Abrogar, G.R. No. 155076
Page 6 of 11
mischief of a statute is within its provision, so far as to punish a crime not
enumerated in the statute because it is of equal atrocity, or of kindred character
with those which are enumerated.48 When interpreting a criminal statute that
does not explicitly reach the conduct in question, the Court should not base an
expansive reading on inferences from subjective and variable understanding. 49
Article 308 of the Revised Penal Code defines theft as follows:
Art. 308. Who are liable for theft.– Theft is committed by any person who, with
intent to gain but without violence, against or intimidation of persons nor force
upon things, shall take personal property of another without the latter’s consent.
The provision was taken from Article 530 of the Spanish Penal Code which reads:
1. Los que con ánimo de lucrarse, y sin violencia o intimidación en las personas
ni fuerza en las cosas, toman las cosas muebles ajenas sin la voluntad de su
dueño.50
For one to be guilty of theft, the accused must have an intent to steal (animus
furandi) personal property, meaning the intent to deprive another of his
ownership/lawful possession of personal property which intent is apart from
and concurrently with the general criminal intent which is an essential element
of a felony of dolo (dolus malus).
An information or complaint for simple theft must allege the following elements:
(a) the taking of personal property; (b) the said property belongs to another; (c)
the taking be done with intent to gain; and (d) the taking be accomplished
without the use of violence or intimidation of person/s or force upon things.51
One is apt to conclude that "personal property" standing alone, covers both
tangible and intangible properties and are subject of theft under the Revised
Penal Code. But the words "Personal property" under the Revised Penal Code
must be considered in tandem with the word "take" in the law. The statutory
definition of "taking" and movable property indicates that, clearly, not all
personal properties may be the proper subjects of theft. The general rule is that,
only movable properties which have physical or material existence and
susceptible of occupation by another are proper objects of theft. 52 As explained
by Cuelo Callon: "Cosa juridicamente es toda sustancia corporal, material,
susceptible de ser aprehendida que tenga un valor cualquiera." 53
According to Cuello Callon, in the context of the Penal Code, only those movable
properties which can be taken and carried from the place they are found are
proper subjects of theft. Intangible properties such as rights and ideas are not
subject of theft because the same cannot be "taken" from the place it is found and
is occupied or appropriated.
Solamente las cosas muebles y corporales pueden ser objeto de hurto. La
sustracción de cosas inmuebles y la cosas incorporales (v. gr., los derechos, las
ideas) no puede integrar este delito, pues no es posible asirlas, tomarlas, para
conseguir su apropiación. El Codigo emplea la expresión "cosas mueble" en el
sentido de cosa que es susceptible de ser llevada del lugar donde se encuentra,
como dinero, joyas, ropas, etcétera, asi que su concepto no coincide por completo
con el formulado por el Codigo civil (arts. 335 y 336).54
Thus, movable properties under Article 308 of the Revised Penal Code should be
distinguished from the rights or interests to which they relate. A naked right
existing merely in contemplation of law, although it may be very valuable to the
person who is entitled to exercise it, is not the subject of theft or larceny. 55 Such
rights or interests are intangible and cannot be "taken" by another. Thus, right to
produce oil, good will or an interest in business, or the right to engage in business,
credit or franchise are properties. So is the credit line represented by a credit
card. However, they are not proper subjects of theft or larceny because they are
without form or substance, the mere "breath" of the Congress. On the other hand,
goods, wares and merchandise of businessmen and credit cards issued to them
are movable properties with physical and material existence and may be taken
by another; hence, proper subjects of theft.
There is "taking" of personal property, and theft is consummated when the
offender unlawfully acquires possession of personal property even if for a short
time; or if such property is under the dominion and control of the thief. The taker,
at some particular amount, must have obtained complete and absolute
possession and control of the property adverse to the rights of the owner or the
lawful possessor thereof.56 It is not necessary that the property be actually
carried away out of the physical possession of the lawful possessor or that he
should have made his escape with it.57 Neither asportation nor actual manual
possession of property is required. Constructive possession of the thief of the
property is enough.58
The essence of the element is the taking of a thing out of the possession of the
owner without his privity and consent and without animus revertendi.59
Taking may be by the offender’s own hands, by his use of innocent persons
without any felonious intent, as well as any mechanical device, such as an access
device or card, or any agency, animate or inanimate, with intent to gain. Intent to
gain includes the unlawful taking of personal property for the purpose of deriving
utility, satisfaction, enjoyment and pleasure.60
We agree with the contention of the respondents that intangible properties such
as electrical energy and gas are proper subjects of theft. The reason for this is
that, as explained by this Court in United States v. Carlos 61 and United States v.
Tambunting,62 based on decisions of the Supreme Court of Spain and of the courts
in England and the United States of America, gas or electricity are capable of
appropriation by another other than the owner. Gas and electrical energy may be
taken, carried away and appropriated. In People v. Menagas, 63 the Illinois State
Supreme Court declared that electricity, like gas, may be seen and felt. Electricity,
the same as gas, is a valuable article of merchandise, bought and sold like other
Laurel vs. Abrogar, G.R. No. 155076
Page 7 of 11
personal property and is capable of appropriation by another. It is a valuable
article of merchandise, bought and sold like other personal property, susceptible
of being severed from a mass or larger quantity and of being transported from
place to place. Electrical energy may, likewise, be taken and carried away. It is a
valuable commodity, bought and sold like other personal property. It may be
transported from place to place. There is nothing in the nature of gas used for
illuminating purposes which renders it incapable of being feloniously taken and
carried away.
In People ex rel Brush Electric Illuminating Co. v. Wemple,64 the Court of Appeals
of New York held that electric energy is manufactured and sold in determinate
quantities at a fixed price, precisely as are coal, kerosene oil, and gas. It may be
conveyed to the premises of the consumer, stored in cells of different capacity
known as an accumulator; or it may be sent through a wire, just as gas or oil may
be transported either in a close tank or forced through a pipe. Having reached the
premises of the consumer, it may be used in any way he may desire, being, like
illuminating gas, capable of being transformed either into heat, light, or power, at
the option of the purchaser. In Woods v. People,65 the Supreme Court of Illinois
declared that there is nothing in the nature of gas used for illuminating purposes
which renders it incapable of being feloniously taken and carried away. It is a
valuable article of merchandise, bought and sold like other personal property,
susceptible of being severed from a mass or larger quantity and of being
transported from place to place.
Gas and electrical energy should not be equated with business or services
provided by business entrepreneurs to the public. Business does not have an
exact definition. Business is referred as that which occupies the time, attention
and labor of men for the purpose of livelihood or profit. It embraces everything
that which a person can be employed.66 Business may also mean employment,
occupation or profession. Business is also defined as a commercial activity for
gain benefit or advantage.67 Business, like services in business, although are
properties, are not proper subjects of theft under the Revised Penal Code because
the same cannot be "taken" or "occupied." If it were otherwise, as claimed by the
respondents, there would be no juridical difference between the taking of the
business of a person or the services provided by him for gain, vis-à-vis, the taking
of goods, wares or merchandise, or equipment comprising his business.68 If it was
its intention to include "business" as personal property under Article 308 of the
Revised Penal Code, the Philippine Legislature should have spoken in language
that is clear and definite: that business is personal property under Article 308 of
the Revised Penal Code.69
We agree with the contention of the petitioner that, as gleaned from the material
averments of the Amended Information, he is charged of "stealing the
international long distance calls belonging to PLDT" and the use thereof, through
the ISR. Contrary to the claims of the OSG and respondent PLDT, the petitioner is
not charged of stealing P20,370,651.95 from said respondent. Said amount of
P20,370,651.95 alleged in the Amended Information is the aggregate amount of
access, transmission or termination charges which the PLDT expected from the
international long distance calls of the callers with the use of Baynet Super Orient
Cards sold by Baynet Co. Ltd.
In defining theft, under Article 308 of the Revised Penal Code, as the taking of
personal property without the consent of the owner thereof, the Philippine
legislature could not have contemplated the human voice which is converted into
electronic impulses or electrical current which are transmitted to the party called
through the PSTN of respondent PLDT and the ISR of Baynet Card Ltd. within its
coverage. When the Revised Penal Code was approved, on December 8, 1930,
international telephone calls and the transmission and routing of electronic voice
signals or impulses emanating from said calls, through the PSTN, IPL and ISR,
were still non-existent. Case law is that, where a legislative history fails to
evidence congressional awareness of the scope of the statute claimed by the
respondents, a narrow interpretation of the law is more consistent with the usual
approach to the construction of the statute. Penal responsibility cannot be
extended beyond the fair scope of the statutory mandate.70
Respondent PLDT does not acquire possession, much less, ownership of the
voices of the telephone callers or of the electronic voice signals or current
emanating from said calls. The human voice and the electronic voice signals or
current caused thereby are intangible and not susceptible of possession,
occupation or appropriation by the respondent PLDT or even the petitioner, for
that matter. PLDT merely transmits the electronic voice signals through its
facilities and equipment. Baynet Card Ltd., through its operator, merely
intercepts, reroutes the calls and passes them to its toll center. Indeed, the parties
called receive the telephone calls from Japan.
In this modern age of technology, telecommunications systems have become so
tightly merged with computer systems that it is difficult to know where one starts
and the other finishes. The telephone set is highly computerized and allows
computers to communicate across long distances.71 The instrumentality at issue
in this case is not merely a telephone but a telephone inexplicably linked to a
computerized communications system with the use of Baynet Cards sold by the
Baynet Card Ltd. The corporation uses computers, modems and software, among
others, for its ISR.72
The conduct complained of by respondent PLDT is reminiscent of "phreaking" (a
slang term for the action of making a telephone system to do something that it
normally should not allow by "making the phone company bend over and grab
its ankles"). A "phreaker" is one who engages in the act of manipulating phones
and illegally markets telephone services.73 Unless the phone company replaces
all its hardware, phreaking would be impossible to stop. The phone companies in
North America were impelled to replace all their hardware and adopted full
digital switching system known as the Common Channel Inter Office Signaling.
Laurel vs. Abrogar, G.R. No. 155076
Page 8 of 11
Phreaking occurred only during the 1960’s and 1970’s, decades after the Revised
Penal Code took effect.
The petitioner is not charged, under the Amended Information, for theft of
telecommunication or telephone services offered by PLDT. Even if he is, the term
"personal property" under Article 308 of the Revised Penal Code cannot be
interpreted beyond its seams so as to include "telecommunication or telephone
services" or computer services for that matter. The word "service" has a variety
of meanings dependent upon the context, or the sense in which it is used; and, in
some instances, it may include a sale. For instance, the sale of food by restaurants
is usually referred to as "service," although an actual sale is involved.74 It may also
mean the duty or labor to be rendered by one person to another; performance of
labor for the benefit of another.75 In the case of PLDT, it is to render local and
international telecommunications services and such other services as authorized
by the CPCA issued by the NTC. Even at common law, neither time nor services
may be taken and occupied or appropriated.76 A service is generally not
considered property and a theft of service would not, therefore, constitute theft
since there can be no caption or asportation.77 Neither is the unauthorized use of
the equipment and facilities of PLDT by the petitioner theft under the
aforequoted provision of the Revised Penal Code.78
If it was the intent of the Philippine Legislature, in 1930, to include services to be
the subject of theft, it should have incorporated the same in Article 308 of the
Revised Penal Code. The Legislature did not. In fact, the Revised Penal Code does
not even contain a definition of services.
If taking of telecommunication services or the business of a person, is to be
proscribed, it must be by special statute79 or an amendment of the Revised Penal
Code. Several states in the United States, such as New York, New Jersey, California
and Virginia, realized that their criminal statutes did not contain any provisions
penalizing the theft of services and passed laws defining and penalizing theft of
telephone and computer services. The Pennsylvania Criminal Statute now
penalizes theft of services, thus:
(a) Acquisition of services. --
(1) A person is guilty of theft if he intentionally obtains services for himself or for
another which he knows are available only for compensation, by deception or
threat, by altering or tampering with the public utility meter or measuring device
by which such services are delivered or by causing or permitting such altering or
tampering, by making or maintaining any unauthorized connection, whether
physically, electrically or inductively, to a distribution or transmission line, by
attaching or maintaining the attachment of any unauthorized device to any cable,
wire or other component of an electric, telephone or cable television system or
to a television receiving set connected to a cable television system, by making or
maintaining any unauthorized modification or alteration to any device installed
by a cable television system, or by false token or other trick or artifice to avoid
payment for the service.
In the State of Illinois in the United States of America, theft of labor or services or
use of property is penalized:
(a) A person commits theft when he obtains the temporary use of property, labor
or services of another which are available only for hire, by means of threat or
deception or knowing that such use is without the consent of the person
providing the property, labor or services.
In 1980, the drafters of the Model Penal Code in the United States of America
arrived at the conclusion that labor and services, including professional services,
have not been included within the traditional scope of the term "property" in
ordinary theft statutes. Hence, they decided to incorporate in the Code Section
223.7, which defines and penalizes theft of services, thus:
(1) A person is guilty of theft if he purposely obtains services which he knows are
available only for compensation, by deception or threat, or by false token or other
means to avoid payment for the service. "Services" include labor, professional
service, transportation, telephone or other public service, accommodation in
hotels, restaurants or elsewhere, admission to exhibitions, use of vehicles or
other movable property. Where compensation for service is ordinarily paid
immediately upon the rendering of such service, as in the case of hotels and
restaurants, refusal to pay or absconding without payment or offer to pay gives
rise to a presumption that the service was obtained by deception as to intention
to pay; (2) A person commits theft if, having control over the disposition of
services of others, to which he is not entitled, he knowingly diverts such services
to his own benefit or to the benefit of another not entitled thereto.
Interestingly, after the State Supreme Court of Virginia promulgated its decision
in Lund v. Commonwealth,80 declaring that neither time nor services may be
taken and carried away and are not proper subjects of larceny, the General
Assembly of Virginia enacted Code No. 18-2-98 which reads:
Computer time or services or data processing services or information or data
stored in connection therewith is hereby defined to be property which may be
the subject of larceny under § § 18.2-95 or 18.2-96, or embezzlement under §
18.2-111, or false pretenses under § 18.2-178.
In the State of Alabama, Section 13A-8-10(a)(1) of the Penal Code of Alabama of
1975 penalizes theft of services:
"A person commits the crime of theft of services if: (a) He intentionally obtains
services known by him to be available only for compensation by deception,
threat, false token or other means to avoid payment for the services …"
In the Philippines, Congress has not amended the Revised Penal Code to include
theft of services or theft of business as felonies. Instead, it approved a law,
Laurel vs. Abrogar, G.R. No. 155076
Page 9 of 11

Republic Act No. 8484, otherwise known as the Access Devices Regulation Act of ROMEO J. CALLEJO, SR.
1998, on February 11, 1998. Under the law, an access device means any card, Associate Justice
plate, code, account number, electronic serial number, personal identification
WE CONCUR:
number and other telecommunication services, equipment or instrumentalities-
identifier or other means of account access that can be used to obtain money, (No part)
goods, services or any other thing of value or to initiate a transfer of funds other ARTEMIO V. PANGANIBAN
than a transfer originated solely by paper instrument. Among the prohibited acts Chief Justice
enumerated in Section 9 of the law are the acts of obtaining money or anything Chairperson
of value through the use of an access device, with intent to defraud or intent to
gain and fleeing thereafter; and of effecting transactions with one or more access CONSUELO YNARES-SANTIAGO, MA. ALICIA AUSTRIA-MARTINEZ
devices issued to another person or persons to receive payment or any other Associate Justice Associate Justice
thing of value. Under Section 11 of the law, conspiracy to commit access devices
fraud is a crime. However, the petitioner is not charged of violation of R.A. 8484. (On leave)
MINITA V. CHICO-NAZARIO*
Significantly, a prosecution under the law shall be without prejudice to any
Associate Justice
liability for violation of any provisions of the Revised Penal Code inclusive of theft
under Rule 308 of the Revised Penal Code and estafa under Article 315 of the CERTIFICATION
Revised Penal Code. Thus, if an individual steals a credit card and uses the same Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
to obtain services, he is liable of the following: theft of the credit card under the conclusions in the above decision were reached in consultation before the
Article 308 of the Revised Penal Code; violation of Republic Act No. 8484; and case was assigned to the writer of the opinion of the Court’s Division.
estafa under Article 315(2)(a) of the Revised Penal Code with the service
provider as the private complainant. The petitioner is not charged of estafa ARTEMIO V. PANGANIBAN
before the RTC in the Amended Information. Chief Justice
Section 33 of Republic Act No. 8792, Electronic Commerce Act of 2000 provides: Footnotes
Sec. 33. Penalties.— The following Acts shall be penalized by fine and/or * On leave.
imprisonment, as follows: 1 Penned by Associate Justice Bienvenido L. Reyes, with Associate
a) Hacking or cracking which refers to unauthorized access into or interference Justices Roberto A. Barrios and Edgardo F. Sundiam, concurring.
in a computer system/server or information and communication system; or any 2an act further amending act no. 3436, as amended, "xxx consolidating
access in order to corrupt, alter, steal, or destroy using a computer or other the terms and conditions of the franchise granted to [pldt], and
similar information and communication devices, without the knowledge and extending the said franchise by twenty-five (25) years from the
consent of the owner of the computer or information and communications expiration thereof xxx."
system, including the introduction of computer viruses and the like, resulting on
the corruption, destruction, alteration, theft or loss of electronic data messages
3 Rollo, pp. 129-130.
or electronic documents shall be punished by a minimum fine of One hundred 4 Id. at 131.
thousand pesos (P100,000.00) and a maximum commensurate to the damage 5 Id. at 131, 137.
incurred and a mandatory imprisonment of six (6) months to three (3) years.
6 Id.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Orders
of the Regional Trial Court and the Decision of the Court of Appeals are 7 Id. at 138.
REVERSED and SET ASIDE. The Regional Trial Court is directed to issue an order 8 Id. at 134.
granting the motion of the petitioner to quash the Amended Information.
9 Id. at 140.
SO ORDERED.
10 Id. at 142-146.
11 Rollo, pp. 243-246.
Laurel vs. Abrogar, G.R. No. 155076
Page 10 of 11

12NOW, THEREFORE, I FERDINAND E. MARCOS, President of the 26 Id.

Philippines, by virtue of the powers vested in me by the Constitution a 27 Id. at 32-47.
Commander-in-Chief of all the Armed Forces of the Philippines, and
pursuant to Proclamation No. 1081 dated September 21, 1972, and 28 21 Phil. 553 (1911).
General Order No. 1 dated September 22, 1972, as amended, do hereby 29 Supra note 20, at 935.
order and decree that any person who installs any water, electrical or
telephone connection without previous authority from the Metropolitan
30 Rollo, pp. 18-19.
Waterworks and Sewerage System, the Manila Electric Company or the 31 Id. at 689.
Philippine Long Distance Telephone Company, as the case may be; 32 Id. at 691.
tampers and/or uses tampered water or electrical meters or jumpers or
other devices whereby water or electricity is stolen; steals or pilfers 33 Id. at 669-670.
water and/or electric meters or water, electric and/or telephone wires; 34 Rollo, p. 670.
knowingly possesses stolen or pilfered water and/or electrical meters as
well as stolen or pilfered water, electrical and/or telephone wires, shall, 35Madarang v. Court of Appeals, G.R. No. 143044, July 14, 2005, 463
upon conviction, be punished by prision correccional in its minimum SCRA 318, 327 (2005).
period or a fine ranging from two thousand to six thousand pesos, or 36 G.R. No. 148156, September 27, 2004, 439 SCRA 202 (2000).
both. If the violation is committed with the connivance or permission of
an employee or officer of the Metropolitan Waterworks and Sewerage
37 Id. at 211.
System, or the Manila Electric Company, or the Philippine Long Distance 38 Section 9, Rule 110 of the Revised Rules of Criminal Procedure.
Telephone Company, such employee or officer shall, upon conviction, be 39 People v. Weg, 450 N.Y.S.2d 957 (1982).
punished by a penalty one degree lower than prision correccional in its
minimum period and forthwith be dismissed and perpetually 40 Clines v. Commonwealth, 298 S.W. 1107 (1927).
disqualified from employment in any public or private utility or service 41Santiago v. Garchitorena, G.R. No. 109266, December 2, 1993, 228
company. SCRA 214.
13 Rollo, pp. 57-58. (Underscoring supplied) 42Garcia v. Court of Appeals, 334 Phil. 621, 634 (1997); People v.
14 Id. at 67-76. Navarro, 75 Phil. 516, 518 (1945).
15 Id. at 69. (Emphasis supplied) 43 Section 3(a), Rule 117 of the 2000 Rules of Criminal Procedure.
16 Id. at 77-80. 44 United States v. Wiltberger, 18 U.S. 76 (1820).
17 Id. at 81-86. 45 Dowling v. United States, 473 U.S. 207 (1985).
18 31 Phil. 494 (1915). 46 Liparota v. United States, 105 S. Ct. 2084 (1985).
19 Rollo, pp. 87-94. 47Kelley v. State, 119 N.E.2d 322 (1954); State v. McGraw, 480 N.E.2d
552 (1985).
20 44 Phil. 933, 935 (1922).
48 United States v. Wiltberger, supra note 44.
21 CA rollo, p. 6.
49 Dowling v. United States, supra note 45.
22 Id. at 9-11.
50Viada, codigo penal reformado de 1870, concordado y comentado,
23 Id.
219.
24 Id.
The felony has the following elements:
25Resolution No. 149, Series of 1999 dated April 16, 1999 (I.S. No. 96-
(1) Apoderamiento de una cosa mueble; (2) Que la cosa mueble
3884), rollo, pp. 95-97.
sea ajena; (3) Que el apoderamiento se verifique con intención
Laurel vs. Abrogar, G.R. No. 155076
Page 11 of 11

de lucro; (4) Que se tome la cosa sin la voluntad de su dueño; (5) 76Lund v. Commonwealth, 232 S.E.2d 745 (1977); 50 Am. Jur. 2d
Que se realice el apoderamiento de la cosa sin violencia Larceny, p. 83.
intimidación en las personas ni fuerza en las cosas (Viada, 220-
Imbau, Thomson, Moenssens, Criminal Law, Second Edition, p. 6247, 2
77
221).
Wharton Criminal Law, Prodded , § 604:369.
51People v. Sison, 379 Phil. 363, 384 (2000); People v. Bustinera, G.R. No. 78 Id. at 746; Commonwealth v. Rivera, 583 N.E.2d 867 (1991).
148233, June 8, 2004, 431 SCRA 284, 291.
79 People v. Tansey, supra note 69.
52 Cuello Callon, Derecho Penal, Tomo II, p. 724.
80 See note 76.
53 Id.
54 See note 52, p. 725. (Underscoring supplied)
55 36 C.J.S. 737.
56 People v. Ashworth, 222 N.Y.S. 24 (1927).
57People v. Salvilla, G.R. No. 86163, April 26, 1990, 184 SCRA 671, 677
(1990).
58 Harris v. State, 14 S.W. 390 (1890).
59 Woods v. People, 78 N.E. 607 (1906).
60Villacorta v. Insurance Commission, G.R. No. 54171, October 28, 1980,
100 SCRA 467.
61 Supra note 28.
62 41 Phil. 364 (1921).
63 11 N.E.2d 403 (1937).
64 29 N.E. 808 (1892). (Emphasis supplied)
65 Supra note 59 (Emphasis supplied)
66 Doggett v. Burnet, 65 F.2d 191 (1933).
67Black’s Law Dictionary, 5th ed., p. 179; Union League Club v. Johnson,
108 P.2d 487, 490 (1940).
68 United States v. McCraken, 19 C.M.R. 876 (1955).
69 People v. Tansey, 593 N.Y.S. 2d 426 (1992).
70 People v. Case, 42 N.Y.S. 2d 101.
71 Commonwealth v. Gerulis, 616 A.2d 686 (1992).
72 Rollo, p. 138.
73 Commonwealth v. Gerulis, supra note 71.
74 Central Power and Light Co. v. State, 165 S.W. 2d 920 (1942).
75 Black’s Law Dictionary, p. 1227.
Valdez vs. Central Altagracia, 225 U.S. 58
Page 1 of 7
United States Supreme Court
VALDES v. CENTRAL ALTAGRACIA(1912)
No. 193
Argued: Decided: May 27, 1912
[225 U.S. 58, 59] Messrs. F. Kingsbury Curtis, Hugo Kohlmann, and Martin
Travieso, Jr., for Valdes.
Messrs. N. B. K. Pettingill and Frederick L. Cornwell for Central Altagracia.
Mr. Francis H. Dexter for Nevers & Callaghan.
Mr. Chief Justice White delivered the opinion of the court:
These cases were consolidated below, tried together, a like statement of facts was
made applicable to both, and the court disposed of them in one opinion. We shall
do likewise. Stating only things deemed to be essential as shown by the pleadings
and documents annexed to them and the finding of facts made below, the case is
this: Joaquin Sanchez owned in Porto Rico a tract of land of about 22 acres
(cuerdas) on which was a sugar house containing a mill for crushing cane and an
evaporating apparatus for manufacturing the juice of the cane into sugar. All of
the machinery was antiquated and of a limited capacity. The establishment was
known as the Central Altagracia, and Sanchez, while not a cane grower, carried
on the business of a central,-that is, of acquiring cane grown by others and
manufacturing it into sugar at his factory. On the 18th day of January, 1905,
Sanchez leased his land and plant to Salvador Castello for a period of ten years.
The lease gave to the tenant (Castello), the right to install in the plant 'such
machinery as he may deem convenient, which said machinery, at the end [225
U.S. 58, 60] of the years mentioned (the term of the lease) shall become the
exclusive property' of the lessor, Sanchez. The tenant was given one year in which
to begin the work of repairing and improving the plant, and it was provided that
'upon the expiration of this term, if the necessary improvements shall not have
been begun by him (Castello), then this contract shall be null and void, and no
cause of action shall accrue to any of the contracting parties by reason thereof.'
Further agreeing on the subject of the improved machinery which was to be
placed in the plant, the contract provided: 'Upon the expiration of the term agreed
on under this contract, any improvement or machinery installed in the said
central shall remain for the benefit of Don Joaquin Sanchez, and Don Salvador
Castello shall have no right to claim anything for the improvements made.' The
rental was thus provided for: 'After each crop such profits as may be produced
by the Central Altagracia shall be distributed and twenty-five per cent (25%)
thereof shall be immediately paid to Don Joaquin Sanchez as equivalent for the
rental of said central and of the twenty-two (22) cuerdas of land surrounding the
same. The remaining seventy-five per cent ( 75%) shall belong to Don Salvador
Castello, who may interest therein whomsoever he may wish, either for the whole
or part thereof.' It was stipulated, however, that in fixing the profits no charge
should be made for repairs of the existing machinery or for new machinery put
in, as the entire cost of these matters was to be borne by the lessee, Castello. The
lease provided, moreover, that in case of the death of Sanchez the obligations of
the contract should be binding on his heirs, and in the case of the death of Castello,
his brother, Gerardo Castello, should take his place 'and be a contracting party if
he so desired. Otherwise the plantation, in such a condition at it may be at his
death, shall immediately pass into the possession of its owner, Don Joaquin
Sanchez.' In June, [225 U.S. 58, 61] 1905, by a supplementary contract, the lease
was extended without change of its terms and conditions for an additional period
of ten years, making the total term twenty years. Although executed under
private signature, this lease, conformably to the laws of Porto Rico, was produced
before, a notary and made authentic, and in such form was duly registered on the
public records, as required by the Porte Rican laws.
On the 1st day of July, 1905, Salvador and Gerardo Castello transferred all their
rights acquired under the lease, as above stated, to Frederick L. Cornwell for 'the
corporation to be organized under the name of Central Altagracia, of which he is
the trustee.' This transfer bound the corporation to all the obligations in favor of
the original lessor, Sanchez, provided that the corporation should issue to
Castello a certain number of paid-up shares of its capital stock and a further
number of shares as the output of sugar from the plant increased as the result of
its enlarged capacity consequent upon the improvement of the machinery by the
corporation. The lease further provided for the employment of Castello as
superintendent at a salary, for a substitution of Gerardo Castello, in the event of
the absence or death of his brother Salvador, and, for this reason, it is to be
assumed Gerardo made himself a party to the transfer of the lease. This transfer
of the lease to the corporation was never put upon the public records. The
corporation was organized under the laws of the state of Maine, and under the
transfer took charge of the plant. The season for grinding cane and the
manufacture of sugar in Porto Rico usually commences 'about the month of
December of each year, and terminates in the months of May, June, or July of the
year following, according to the amount of cane to be ground.' Central factories
in Porto Rico usually 'make contracts with the people (colonos) growing cane, so
that growers of cane will deliver the same to be ground, and such contracts [225
U.S. 58, 62] are usually made and entered into in the months of June, July, and
August.' In other words, on the termination of one grinding season, in the months
of June or July, it is usual in the ensuing August to make new contracts for the
cane to be delivered in the following grinding season, which, as we have said,
commences in December. The contract transferring the lease to the Central
Altagracia, Incorporated, was made in July, 1905, at the end, therefore, of the
grinding season of that year. To what extent the corporation contracted for cane
to be delivered to it for grinding during the season of 1905-06, which began in
December, 1905, does not appear. It is inferable, however, that the corporation
began the work of installing new machinery to give the plant a larger capacity
Valdez vs. Central Altagracia, 225 U.S. 58
Page 2 of 7
within the year stipulated in the lease from Sanchez to Castello. We say this
because it is certain that in the fall of 1906 (October) the corporation borrowed
from the commercial firm of Nevers & Callaghan in New York city, the sum of
twenty-five thousand dollars ($25,000) to enable the corporation to pay for new
and enlarged machinery which it had ordered, and which was placed in the
factory in time to be used in the grinding season of 1906-07, which began in
December, 1906. While such grinding season was progressing, on April 11, 1907,
the corporation, through its president, under the authority of its board of
directors, sold to one Ramon Valdes all its rights acquired under the lease
transferred by Castello. This transfer expressly included all the machinery
previously placed by the corporation in the sugar house, as well as machinery
which might be thereafter installed during the term of redemption hereafter to
be referred to, and which, it was declared, conformably to the original lease, 'shall
be a part of said factory for the manufacture of sugar.' The consideration for the
sale was stated in the contract to be 'thirty-five thousand dollars ($ 35,000)
received by the corporation, twenty-five thousand four hundred dol- [225 U.S. 58,
63] lars ($25,400) whereof had been paid prior to this act (of sale), and to its
entire satisfaction, and the balance of nine thousand six hundred dollars ($9,600)
shall be turned over to the vendor corporation by Senor Valdes immediately upon
being required to do so by the former.' This sale was made subject to a right to
redeem the property within a year on paying Valdes the entire amount of his debt.
There was a stipulation that Valdes assumed all the obligations of the lease
transferred by Castello to the company.
The undoubted purpose was not to interfere with the operation of the plant by
the corporation, since there was a provision in the contract binding Valdes to
lease the property to the corporation pending the period of redemption. This sale
was passed in Porto Rico before a notary public, but was never put upon the
public records. At the time it was made there was a very considerable sum unpaid
on the debt of Nevers & Callaghan. This fact, joined with the period when the sale
with the right to redeem was made, that is, the approaching end of the sugar-
making season of 1906 and 1907, coupled with other facts to which we shall
hereafter make reference, all tend to establish that at that time, either because
insufficient capital had been put into the venture, or because the business had
been carried on at a loss, the affairs of the corporation were embarrassed, if it
was not insolvent. A short while before the commencement of the grinding
season of 1907-1908, in October, 1907, in the city of New York, the corporation,
through its president, declaring himself to be authorized by the board of
directors, sanctioned by a vote of the stockholders, apparently made an absolute
sale of all the rights of the corporation under the lease, and all its title to the
machinery which the corporation had put into the plant. This sale was declared
to be for a consideration of sixty-five thousand ($65,000) dollars which the
company acknowledged to have received from Valdes, first, by the payment of
the thirty- [225 U.S. 58, 64] five ($35,000) dollars cash, as stated in the previous
sale made subject to the equity of redemption, and thirty thousand ($30,000)
dollars which 'the company has received afterwards in cash from Valdes.' There
was a provision in the contract to the effect that as the purpose of the previous
contract of sale, which had been made subject to the equity of redemption, was
accomplished by the new sale, the previous sale was declared to be no longer
operative.
A few days afterwards, likewise in the city of New York (on November 2, 1907),
Valdes sold to the company all the rights which he had acquired from it by the
previous sale, the price being sixty-five thousand ($65,000) dollars, payable in
instalments falling due in the years 1908, 1909, 1910, and 1911, respectively.
This transfer was put in the form of a conditional sale which reserved the title in
Valdes until the payment of the deferred price, and upon the stipulation that any
default by the corporation entitled Valdes ipso facto to take possession of the
property. Neither this act of sale from Valdes to the corporation nor the one made
by the corporation to Valdes were ever put upon the public records.
Prior to the making of the sales just stated, or about that time, the corporation
defaulted in the payment of a note held by Nevers & Callaghan for a portion of the
money which they had loaned the corporation under the circumstances which we
have previously stated, and that firm sued in the court below the corporation to
recover the debt.
The grinding season of 1907-1908 commenced in December, 1907, and was
obviously not a successful one, for the debt of Nevers & Callaghan was not paid,
and in May, 1908, a judgment was recovered by them against the corporation for
about $17,000, with interest, and in the same month execution was issued and
levied upon the machinery in the sugar house. Previous to, or not long
subsequent to, the time Nevers & Cal- [225 U.S. 58, 65] laghan commenced their
suit, the precise date not being stated in the record, the heirs of Sanchez, the
original lessor, brought a suit in the court below against the corporation. The
nature of the suit and the relief sought is not disclosed, but it is inferable from the
facts stated that the suit either sought to recover the property on the ground that
there was no power in Castello to transfer the lease, or upon the ground of default
in the conditions as to payment of profits as rental which the lease stipulated. It
would seem also at about the same time either one or both of the Castellos
brought a suit against the company, presumably upon the theory that there had
been a default in the obligations assumed in their favor by the corporation at the
time it took the transfer of the lease. In the meanwhile also, probably as the result
of the want of success of the corporation, discord arose between its stockholders,
and a suit growing out of that state of things was brought in the lower court.
This litigation was commenced in June, 1908, by the bringing by Valdes of an
action at law in the court below to recover the plant on the ground that, by the
default in paying one of the instalments of the price stated in the conditional sale,
the right to the relief prayed had arisen. On the same day Valdes commenced a
suit in equity against the corporation in aid of the suit at law. The bill alleged the
default of the corporation, the bringing of the suit at law, the confusion in the
Valdez vs. Central Altagracia, 225 U.S. 58
Page 3 of 7
affairs of the corporation, the judgment and levy of the execution by Nevers and
Callaghan, and the threat to sell the machinery under such execution; the refusal
of the corporation to deliver possession of the property, the waste and
destruction of the value of the property which would result if there was no one
representing the corporation having power to contract for cane to be delivered
during the next grinding season, etc., etc. The prayer was for the appointment of
a receiver to take charge of the property, with au- [225 U.S. 58, 66] thority to
carry on the same, make the necessary contracts for cane for the future, it being
prayed that the receiver should be empowered to issue receiver's certificates to
the extent necessary to the accomplishment of the purposes which the bill had in
view.
On the same day a bill was filed on behalf of the corporation against Valdes. This
bill atacked the sale made to Valdes and by him to the corporation. It was charged
that the price stated to have been paid by Valdes as a consideration of the
conditional sale was fictitious, and that the only sum he had advanced at that time
was the $35,000 which it was the purpose to secure by means of the sale with the
equity of redemption. That at that time Valdes exacted as a consideration for his
loan that he be made a director and vice president of the company. The bill then
stated that, it having become evident in the following autumn that the
corporation would require more money to increase its plant, to pay off the sum
due Nevers & Callaghan, and for the operation of the plant, Valdes agreed to
advance the money if he were made president of the company at a stipulated
salary, given a bonus in the stock of the company, and upon the condition that the
papers be executed embodying the socalled sale of the company to Valdes and
the practically simultaneous conditional sale by Valdes to the company. The bill
then alleged that Valdes, having thus become the president of the company, failed
to carry out his agreement to advance the money, failed to provide for the debt of
Nevers & Callaghan, mismanaged the affairs of the property in many alleged
particulars, and did various acts to the prejudice of the company and to his own
wrongful enrichment, which it is unnecessary to recapitulate. The necessity of
contracting for cane during the contract season, in order that the plant might
continue during the next operating season to be a going concern, and the waste
and loss which would otherwise [225 U.S. 58, 67] be occasioned, were fully
alleged. Valdes and the firm of Nevers & Callaghan and the individual members
of that firm were made defendants. The prayer was for the appointment of a
receiver and with power to carry on the business of the central, with power, for
that purpose, to contract for cane for the coming season, with authority to issue
receiver's certificates for the purpose of borrowing the money which might be
required.
The judge, being about to leave Porto Rico for a brief period, declined to appoint
a permanent receiver, but named a temporary one to keep the property together
until a further hearing could be had, interference in the meanwhile with the
custodian being enjoined. Shortly thereafter creditors of the corporation
intervened and joined in the prayer made by both of the complainants for the
appointment of a receiver. In July the two suits were by order consolidated, and
after a hearing a receiver was appointed and authority given him to continue the
property as a going concern and to borrow a limited amount of money on
receiver's certificates, if necessary, to secure contracts for cane for the coming
crop season. The execution of the Nevers & Callaghan judgment was stayed
pending an appeal which had been taken to this court. The only difference which
seems to have arisen concerning the appointment of the receiver grew out of the
fact that a prayer of the Central Altagracia, asking the court to appoint as receiver
Mr. Pettingill, a member of the bar and one of the counsel of the corporation, and
who was also its treasurer, was denied. Despite this, the fair inference is that the
ultimate action of the court was not objected to by anyone, because of the hope
that the result of a successful operation of the plant during the coming crop
season might ameliorate the affairs of the corporation, and thus prevent further
controversies. We say this, not only because of the conduct of the parties prior to
the order appointing the receiver, but because, [225 U.S. 58, 68] after that order,
the solicitors of the Altagracia Company and Valdes put a stipulation of record
that until the following October no steps whatever should be taken in the
proceedings, and not even then unless the attorneys for both parties should be in
Porto Rico.
The hope of a beneficial result from the operation of the plant by the receiver
proved delusive. As a result of such operation there was a considerable loss
represented by outstanding receiver's certificates, with no means of paying
except out of the property. Obviously, for this reason, the record contains a
statement that on July 12, 1909, a conference was had between the court and all
parties concerned, to determine what steps should be taken to meet the situation.
It appears that at that conference the counsel representing the heirs of Sanchez
and of Nevers & Callaghan stated their opposition to a continuance of the
receivership.
On July 17, 1909, the court placed a memorandum on the files, indicating its
purpose to bring the litigation, receivership, etc., to an end, and to cause
'immediate issue to be raised on the pleadings for that purpose.' This
memorandum was entitled in all the pending causes concerning the property. It
directed that demurrers which had been filed in the consolidated cause of Valdes
against the corporation and of the corporation against Valdes be overruled, and
the defendants were required to answer on or before Monday, July 26, in order
that upon the following day, the 27th of July, the issues raised might be tried
before the court without the intervention of a master. It was provided in the
order, however, that nothing in this direction should prevent the parties from
filing such additional pleadings as it is deemed necessary for the protection of
their rights by way of cross bill or amendment, etc. To make the order efficacious
it was declared that nothing would be done in the suit of the heirs of Sanchez
against Castello and the Altagracia, [225 U.S. 58, 69] which was pending on
Valdez vs. Central Altagracia, 225 U.S. 58
Page 4 of 7
appeal, and that a demurrer filed to the suit of Castello against the central would
be overruled; that the demurrer in the suit at law of Valdes would remain in
abeyance to await the final action of the court on the trial of all the issues in the
equity causes, and that a stay of the Nevers & Callaghan execution would be also
disposed of when the equity cases came to be decided. This order was followed
by a memorandum opinion filed on July the 21st, stating very fully the position of
the respective suits, the necessity for action in order to preserve the property
from waste, and reiterating the view that whatever might be the rights of the
Central Altagracia or of Valdes under the lease, those rights would be subordinate
to the ultimate determination of the suit brought by the heirs of Sanchez. To the
action of the court, as above stated, no objection appears to have been made. On
the contrary, between the time of that order and the perior fixed for the
commencement of a hearing, the Central Altagracia, Valdes, and Nevers &
Callaghan modified their pleadings to the extent deemed by them necessary to
present for trial the issues upon which they relied. In the case of the Central
Altagracia this was done by filing, on July 22, an amended bill of complaint in its
suit against Valdes, and on July 26 its answer in the suit of Valdes. The acceptance
by Valdes of the terms of the order was shown by an answer filed to the bill in the
suit of the company and the cross bill in the same cause; and Nevers & Callaghan
manifested their acquiescence by obtaining leave to make themselves parties,
and asserting their rights by cross bill and answers, which it is unnecessary to
detail.
When the consolidated cause was called for trial on the morning of July 27, the
counsel for the Central Altagracia moved a continuance in order to take the
testimony of certain witnesses in Philadelphia and New York for the purpose of
proving some of the allegations of the complaint [225 U.S. 58, 70] as to the
wrongdoing of Valdes in administering the affairs of the corporation. This
application was supported by the affidavit of Mr. Pettingill, the counsel of the
corporation. The record states that the request for continuance was opposed by
all the other counsel, and the application was denied. In doing so the court stated:
'That the matter has been pending for more than a year, and that counsel had full
notice of the court's intention to press the matters to issue and trial, and that it is
not disposed to delay matters at this time, when the admissions of the pleadings
are so broad that the proofs available here in Porto Rico are probably sufficient,
and the amended complaint already on file in suit No. 565,-Valdes v. Central
Altagracia,-and the answer thereto and the answer recently filed in suit No. 564,-
Central Altagracia v. Valdes [5 Porto Rico Fed. Rep. 155],-as well as the cross bill
also recently filed in suit No. 465, make so many allegations and admissions as
that the real issue between the parties can be plainly seen, and that, in the opinion
of the court, enough proof is available here in Porto Rico.' The court thereupon
declared that the Altagracia Company might by the next day, if it so desired, file
exceptions to the answer in suit 565 and an answer to the cross complaint;
indeed, that the corporation might, if it wished, treat them as filed, and proceed
with the cause and file them at any convenient time thereafter. Thereupon the
record states: 'Said counsel for the Central Altagracia stated that he desired time
to file exceptions to the answer and an answer to the cross bill in suit No. 565;
and the court granted until the morning of July 28 for such purpose. Later in the
day of July 27, one of the counsel for Valdes having requested the court to
postpone the hearing of the cause until the morning of the 29th, because of an
unexpected professional engagement elsewhere, the request was communicated
by the court to the other counsel in the cause.' Thereupon the record again
recites: 'Messrs. Pettingill & [225 U.S. 58, 71] Cornwell, attorneys for the Central
Altagracia, stated that they withdrew any statement they have hitherto made in
the cause in that regard, and desired to be understood that they would not except
to the answer in suit No. 565, or plead or answer to the cross bill therein, save
and except within the time which they contended the rules governing this court
of equity gave them, and would stand upon what they considered their rights in
that regard.' When the court assembled the next day, on the morning of the 28th,
a statement concerning the occurrence of the previous day as to the continuance,
etc., just reviewed, was read by the court in the presence of all the counsel,
whereupon the record recites: 'N. B. Pettingill, counsel for the Central Altagracia,
in response to the same, stated that he objected to proceeding to take any
evidence in any of the causes at that time, or the testimony of any witnesses,
because the same was not at issue or in condition for the taking of evidence, and
objected to the taking of such evidence until the issues of said causes are made
up in accordance with the rules of practice applicable to equity causes.' The
record further recites: 'Which objection was overruled by the court on the ground
that the action called for thereby is not necessary. That the bill was amended
within three days; an answer was immediately filed to it and a cross bill also filed,
the said cross bill making only the same claims as were made in suit No. 563 at
law, and that any way the issue could be tried on the bill and answer in both suits.'
. . . This ruling of the court having been excepted to, the trial proceeded from day
to day, the counsel for the Central Altagracia taking no part in the same, and
virtually treating the proceedings as though they did not concern that
corporation.
In substance, the court decided: First, that as the result of the contracts between
Valdes and the Central Altagracia, he was not the owner of the rights of that
corporation under the lease, or of the machinery which [225 U.S. 58, 72] had
been placed in the sugar house by the Altagracia Company, or of the other assets
of the corporation, but that he was merely a secured creditor. The sum of the
secured debt was fixed after making allowances for some not very material
credits which the corporation was held to be entitled to. Second, that the
judgment in favor of Nevers & Callaghan was valid, and that that firm, by virtue
of its execution and levy upon the machinery, had a prior right to Valdes. Third,
the sums due to various creditors of the corporation were fixed and the equities
or priorities were classified as follows: (a) Taxes due by the corporation and the
sum of the receiver's certificates and certain costs; (b) the judgment of Nevers &
Callaghan; and (c) the debt of Valdes; (d) debts due the other creditors. Without
Valdez vs. Central Altagracia, 225 U.S. 58
Page 5 of 7
going into details it suffices to say that for the purpose of enforcing these
conclusions the decree directed a sale of all the rights of the Central Altagracia in
and to the lease, machinery, contract, etc., and imposed the duty upon Valdes, if
he became the purchaser, to pay enough cash to discharge the costs, taxes,
receiver's certificates, and the claim of Nevers & Callaghan.
These appeals were then prosecuted, the one by the Central Altagracia and the
other by Valdes. We shall endeavor as briefly as may be to dispose of the
contentions relied upon to secure a reversal.
1. The Central Altagracia appeal.-The alleged errors insisted on in behalf of that
company relate to the asserted arbitrary action of the court in forcing the cause
to trial without affording the time which it is insisted the corporation was entitled
to under the equity rules applicable to the subject; and, second, the refusal of the
court to grant a continuance upon the affidavit as to the absence of material
witnesses.
We think all the contentions on this subject are demonstrated to be devoid of
merit by the statement of the case which we have made. In the first place, it is
mani- [225 U.S. 58, 73] fest from that statement that the proceeding leading up
to the appointment of a receiver and the power given to administer the property
was largely the result of the assent of the corporation. In the second place, when
the unsuccessful financial issue of the receivership had become manifest, we
think the statement makes it perfectly clear that the steps taken by the court for
the purpose of bringing the case to a speedy conclusion, and thus avoiding the
further loss which would result to all interests concerned, were also acquiesced
in by all the parties in interest who complied with the terms of that order and
took advantage of the rights which it conferred. We think also the statement
makes it apparent that the refusal on the part of the corporation to proceed with
the trial, upon the theory that the time to plead allowed by the equity rules had
not elapsed, was the result of a change of view because of the action of the court
in refusing the continuance on account of the absent witnesses,-a change of front
which was inconsistent with the rights which the corporation had exercised in
accord with the order setting the cause for trial, and with the rights of all the other
parties to the cause which had arisen from that order and from the virtual
approval of it, or at least acquiescence in it, by all concerned.
Considering the assignments of error in so far as they relate alone to overruling
of the application for continuance, based upon the absence of witnesses, it
suffices to say that the elementary rule is that the granting of a continuance of the
cause was peculiarly within the sound discretion of the court below,-a discretion
not subject to be reviewed on appeal except in case of such clear error as to
amount to a plain abuse springing from an arbitrary exercise of power. Instead
of coming within this latter category, we think the facts as to the refusal to
continue and the conduct of the parties make it clear that there was not only no
abuse but a just exercise of discretion. [225 U.S. 58, 74] 2. As to the Appeal of
Valdes.-Two propositions are relied upon: First, that error was committed in
treating Valdes merely as a secured creditor, and in not holding him to be the
absolute owner of the rights and property alleged to have been transferred by the
so-called conditional sale. Second, that in any event error was committed in
awarding to Nevers & Callaghan priority over Valdes.
The first proposition is supported by a reference to the Porto Rican Code and
decisions of the Supreme Court of Spain and the opinions of Spanish law writers.
But the contention is not relevant, and the authorities cited to sustain it are
inapposite to the case to be here decided, because the argument rests upon an
imaginary premise; that is, that the ruling of the court below denied that right
under the Spanish law to make a conditional sale, or held that such a sale if made
would not have the effect which the argument insists it was entitled to. This is
true because the action of the court was solely based upon a premise of fact; viz.,
that under the circumstances of the case, and in view of the prior sale with the
equity of redemption, the cancelation of that sale, and the transfer made by the
corporation to Valdes, and the immediate transfer of the same rights by him to
the corporation in the form of a conditional sale, the failure to register any of the
contracts, and the relation of Valdes to the corporation at the time the contracts
were made, it resulted that whatever might be the mere form, in substance and
effect no conditional sale was made, but a mere contract was entered into which
the parties intended to be a mere security to Valdes for money advanced and to
be advanced by him. This being the case, it is manifest that it is wholly irrelevant
to argue that error was committed in not applying the assumed principles of the
Porto Rican and Spanish law governing in the case of a conditional sale, when the
ruling which the court made proceeded upon the conclusion that there was no
conditional sale. [225 U.S. 58, 75] The contention that, under the Porto Rican
law, the form was controlling because proof of the substance was not admissible,
seems not to have been raised below, but, if it had been, is obviously without
merit, as the case as presented involved not a controversy alone between the
parties to the contract, but the effect and operation of the contract upon third
parties, the creditors of the corporation. The contention is additionally without
merit, since it assumes that the mere form of the contract excluded the power of
creditors to inquire into its reality and substance, even although the contract was
never inscribed upon the public records so as to bind third parties. That its
character was such as to require inscription we shall in a few moments
demonstrate in coming to consider the second proposition; that is, upon the
hypothesis that Valdes was but a secured creditor, was error committed in
subordinating his claim to the prior claim of Nevers & Callaghan under their
judgment and execution?
To determine this question involves fixing the nature and character of the
property from the point of view of the rights of Valdes, and its nature and
character from the point of view of Nevers & Callaghan as a judgment creditor of
the Altagracia Company, and the rights derived by them from the execution levied
on the machinery placed by the corporation in the plant. Following the Code
Valdez vs. Central Altagracia, 225 U.S. 58
Page 6 of 7
Napoleon, the Porto Rican Code treats as immovable (real) property, not only
land and buildings, but also attributes immovability in some cases to property of
a movable nature; that is, personal property, because of the destination to which
it is applied. 'Things,' says 334 of the Porto Rican Code, 'may be immovable either
by their own nature or by their destination, or the object to which they are
applicable.' Numerous illustrations are given in the 5th subdivision of article 335,
which is as follows: 'Machinery, vessels, instruments, or [225 U.S. 58,
76] implements intended by the owner of the tenements for the industry or
works that they may carry on in any building or upon any land, and which tend
directly to meet the needs of the said industry or works.' See also Code Napoleon,
articles 516, 518, et seq., to and inclusive of article 534, recapitulating the things
which, though in themselves movable, may be immobilized. So far as the subject-
matter with which we are dealing,- machinery placed in the plant,-it is plain, both
under the provisions of the Porto Rican law and of the Code Napoleon, that
machinery which is movable in its nature only becomes immobilized when placed
in a plant by the owner of the property or plant. Such result would not be
accomplished, therefore, by the placing of machinery in a plant by a tenant or a
usufructuary or any person having only a temporary right. Demolombe, Tit. 9, No.
203; Aubry et Rau, Tit. 2, p. 12, 164; Laurent, Tit. 5, No. 447; and decisions quoted
in Fuzier-Herman ed. Code Napoleon, under article 522 et seq. The distinction
rests, as pointed out by Demolombe, upon the fact that one only having a
temporary right to the possession or enjoyment of property is not presumed by
the law to have applied movable property belonging to him so as to deprive him
of it by causing it, by an act of immobilization, to become the property of another.
It follows that, abstractly speaking, the machinery put by the Altagracia Company
in the plant belonging to Sanchez did not lose its character of movable property
and become immovable by destination. But, in the concrete, immobilization took
place because of the express provisions of the lease under which the Altagracia
held, since the lease in substance required the putting in of improved machinery,
deprived the tenant of any right to charge against the lessor the cost of such
machinery, and it was expressly stipulated that the machinery so put in should
become a part of the plant belonging to the owner without compensation to the
lessee. [225 U.S. 58, 77] Under such conditions the tenant, in putting in the
machinery, was acting but as the agent of the owner, in compliance with the
obligations resting upon him, and the immobilization of the machinery which
resulted arose in legal effect from the act of the owner in giving by contract a
permanent destination to the machinery. It is true, says Aubry and Rau, vol. 2,
164, 2, p. 12, that 'the immobilization with which the article is concerned can only
arise from an act of the owner himself or his representative. Hence the objects
which are dedicated to the use of a piece of land or a building by a lessee cannot
be considered as having become immovable by destination except in the case
where they have been applied for account of the proprietor, or in execution of an
obligation imposed by the lease.' It follows that the machinery placed by the
corporation in the plant, by the fact of its being so placed, lost its character as a
movable, and became united with and a part of the plant as an immovable by
destination. It also follows that as to Valdes, who claimed under the lease, and
who had expressly assumed the obligations of the lease, the machinery, for all the
purposes of the exercise of his rights, was but a part of the real estate,-a
conclusion which cannot be avoided without saying that Valdes could at one and
the same time assert the existence in himself of rights, and yet repudiate the
obligations resulting from the rights thus asserted.
Nevers & Callaghan were creditors of the corporation. They were not parties to
nor had they legal notice of the lease and its conditions from which alone it arose
that machinery put in the premises by the Altagracia became immovable
property. The want of notice arose from the failure to record the transfer from
Castello to the Altagracia, or from the Altagracia to Valdes, and from Valdes
apparently conditionally back to the corporation,-a clear result of 613 of the Civil
Code of Porto Rico, providing, 'The titles of ownership or of other real rights
relating [225 U.S. 58, 78] to immovables which are not properly inscribed or
annotated in the registry of property shall not be prejudicial to third parties.' It is
not disputable that the duty to inscribe the lease by necessary implication
resulted from the general provisions of article 2 of the mortgage law of Porto
Rico, as stated in paragraphs 1, 2, and 3 thereof, and explicitly also arose from the
express requirement of paragraph 6, relating to the registry of 'contracts for the
lease of real property for a period exceeding six years. . . .' It is true that, in a strict
sense, the contracts between Castello and the Altagracia Company and with
Valdes were not contracts of lease, but for the transfer of a contract of that
character. But such a transfer was clearly a contract concerning real rights to
immovable property within the purview of article 613 of the Civil Code, just
previously quoted. Especially is this the case in view of the stipulations of the
lease as to the immobilization of movable property placed in the plant, and the
other obligations imposed upon the lessee. 'The sale which a lessee makes to a
third person to whom he transfers his right of lease is the sale of an immovable
right, and not simply a sale of a movable one.' See numerous decisions of the
courts of France, beginning with the decision on February 2, 1842, of the court of
cassation (Journal du Palais [225 U.S. 58, 1842] vol. 1, 171). See also numerous
authorities collected under the heading above stated in paragraph 21, under
articles 516, 517, and 518 of the Code Napoleon. Fuzier-Herman ed. of that Code,
p. 643.
The machinery levied upon by Nevers & Callaghan, that is, that which was placed
in the plant by the Altagracia Company, being, as regards Nevers & Callaghan,
movable property, it follows that they had the right to levy on it under the
execution upon the judgment in their favor, and the exercise of that right did not
in a legal sense conflict with the claim of Valdes, since as to him the property was
a part of the realty, which, as the result [225 U.S. 58, 79] of his obligations under
the lease, he could not, for the purpose of collecting his debt, proceed separately
against.
Valdez vs. Central Altagracia, 225 U.S. 58
Page 7 of 7

As a matter of precaution we say that nothing we have said affects the rights,
whatever they may be, of the heirs of Sanchez, the original lessor.
Affirmed.
Navarro vs. Pineda
Page 1 of 2
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18456 November 30, 1963
CONRADO P. NAVARRO, plaintiff-appellee,
vs.
RUFINO G. PINEDA, RAMONA REYES, ET AL., defendants-appellants.
Deogracias Tañedo, Jr. for plaintiff-appellee.
Renato A. Santos for defendants-appellants.
PAREDES, J.:
On December 14, 1959, defendants Rufino G. Pineda and his mother Juana
Gonzales (married to Gregorio Pineda), borrowed from plaintiff Conrado P.
Navarro, the sum of P2,500.00, payable 6 months after said date or on June 14,
1959. To secure the indebtedness, Rufino executed a document captioned "DEED
OF REAL ESTATE and CHATTEL MORTGAGES", whereby Juana Gonzales, by way
of Real Estate Mortgage hypothecated a parcel of land, belonging to her,
registered with the Register of Deeds of Tarlac, under Transfer Certificate of Title
No. 25776, and Rufino G. Pineda, by way of Chattel Mortgage, mortgaged his two-
story residential house, having a floor area of 912 square meters, erected on a lot
belonging to Atty. Vicente Castro, located at Bo. San Roque, Tarlac, Tarlac; and
one motor truck, registered in his name, under Motor Vehicle Registration
Certificate No. A-171806. Both mortgages were contained in one instrument,
which was registered in both the Office of the Register of Deeds and the Motor
Vehicles Office of Tarlac.
When the mortgage debt became due and payable, the defendants, after demands
made on them, failed to pay. They, however, asked and were granted extension
up to June 30, 1960, within which to pay. Came June 30, defendants again failed
to pay and, for the second time, asked for another extension, which was given, up
to July 30, 1960. In the second extension, defendant Pineda in a document
entitled "Promise", categorically stated that in the remote event he should fail to
make good the obligation on such date (July 30, 1960), the defendant would no
longer ask for further extension and there would be no need for any formal
demand, and plaintiff could proceed to take whatever action he might desire to
enforce his rights, under the said mortgage contract. In spite of said promise,
defendants, failed and refused to pay the obligation.
On August 10, 1960, plaintiff filed a complaint for foreclosure of the mortgage
and for damages, which consisted of liquidated damages in the sum of P500.00
and 12% per annum interest on the principal, effective on the date of maturity,
until fully paid.
Defendants, answering the complaint, among others, stated —
Defendants admit that the loan is overdue but deny that portion of
paragraph 4 of the First Cause of Action which states that the defendants
unreasonably failed and refuse to pay their obligation to the plaintiff the
truth being the defendants are hard up these days and pleaded to the
plaintiff to grant them more time within which to pay their obligation
and the plaintiff refused;
WHEREFORE, in view of the foregoing it is most respectfully prayed that
this Honorable Court render judgment granting the defendants until
January 31, 1961, within which to pay their obligation to the plaintiff.
On September 30, 1960, plaintiff presented a Motion for summary Judgment,
claiming that the Answer failed to tender any genuine and material issue. The
motion was set for hearing, but the record is not clear what ruling the lower court
made on the said motion. On November 11, 1960, however, the parties submitted
a Stipulation of Facts, wherein the defendants admitted the indebtedness, the
authenticity and due execution of the Real Estate and Chattel Mortgages; that the
indebtedness has been due and unpaid since June 14, 1960; that a liability of 12%
per annum as interest was agreed, upon failure to pay the principal when due and
P500.00 as liquidated damages; that the instrument had been registered in the
Registry of Property and Motor Vehicles Office, both of the province of Tarlac;
that the only issue in the case is whether or not the residential house, subject of
the mortgage therein, can be considered a Chattel and the propriety of the
attorney's fees.
On February 24, 1961, the lower court held —
... WHEREFORE, this Court renders decision in this Case:
(a) Dismissing the complaint with regard to defendant Gregorio Pineda;
(b) Ordering defendants Juana Gonzales and the spouses Rufino Pineda
and Ramon Reyes, to pay jointly and severally and within ninety (90)
days from the receipt of the copy of this decision to the plaintiff Conrado
P. Navarro the principal sum of P2,550.00 with 12% compounded
interest per annum from June 14, 1960, until said principal sum and
interests are fully paid, plus P500.00 as liquidated damages and the costs
of this suit, with the warning that in default of said payment of the
properties mentioned in the deed of real estate mortgage and chattel
mortgage (Annex "A" to the complaint) be sold to realize said mortgage
debt, interests, liquidated damages and costs, in accordance with the
pertinent provisions of Act 3135, as amended by Act 4118, and Art. 14 of
the Chattel Mortgage Law, Act 1508; and
(c) Ordering the defendants Rufino Pineda and Ramona Reyes, to deliver
immediately to the Provincial Sheriff of Tarlac the personal properties
Navarro vs. Pineda
Page 2 of 2
mentioned in said Annex "A", immediately after the lapse of the ninety
(90) days above-mentioned, in default of such payment.
The above judgment was directly appealed to this Court, the defendants therein
assigning only a single error, allegedly committed by the lower court, to wit —
In holding that the deed of real estate and chattel mortgages appended
to the complaint is valid, notwithstanding the fact that the house of the
defendant Rufino G. Pineda was made the subject of the chattel
mortgage, for the reason that it is erected on a land that belongs to a third
person.
Appellants contend that article 415 of the New Civil Code, in classifying a house
as immovable property, makes no distinction whether the owner of the land is or
not the owner of the building; the fact that the land belongs to another is
immaterial, it is enough that the house adheres to the land; that in case of
immovables by incorporation, such as houses, trees, plants, etc; the Code does not
require that the attachment or incorporation be made by the owner of the land,
the only criterion being the union or incorporation with the soil. In other words,
it is claimed that "a building is an immovable property, irrespective of whether
or not said structure and the land on which it is adhered to, belong to the same
owner" (Lopez v. Orosa, G.R. Nos. L-10817-8, Feb. 28, 1958). (See also the case of
Leung Yee v. Strong Machinery Co., 37 Phil. 644). Appellants argue that since only
movables can be the subject of a chattel mortgage (sec. 1, Act No. 3952) then the
mortgage in question which is the basis of the present action, cannot give rise to
an action for foreclosure, because it is nullity. (Citing Associated Ins. Co., et al. v.
Isabel Iya v. Adriano Valino, et al., L-10838, May 30, 1958.)
The trial court did not predicate its decision declaring the deed of chattel
mortgage valid solely on the ground that the house mortgaged was erected on the
land which belonged to a third person, but also and principally on the doctrine of
estoppel, in that "the parties have so expressly agreed" in the mortgage to
consider the house as chattel "for its smallness and mixed materials of sawali and
wood". In construing arts. 334 and 335 of the Spanish Civil Code (corresponding
to arts. 415 and 416, N.C.C.), for purposes of the application of the Chattel
Mortgage Law, it was held that under certain conditions, "a property may have a
character different from that imputed to it in said articles. It is undeniable that
the parties to a contract may by agreement, treat as personal property that
which by nature would be real property" (Standard Oil Co. of N.Y. v. Jaranillo, 44
Phil. 632-633)."There can not be any question that a building of mixed materials
may be the subject of a chattel mortgage, in which case, it is considered as
between the parties as personal property. ... The matter depends on the
circumstances and the intention of the parties". "Personal property may retain its
character as such where it is so agreed by the parties interested even though
annexed to the realty ...". (42 Am. Jur. 209-210, cited in Manarang, et al. v. Ofilada,
et al., G.R. No. L-8133, May 18, 1956; 52 O.G. No. 8, p. 3954.) The view that parties
to a deed of chattel mortgagee may agree to consider a house as personal
property for the purposes of said contract, "is good only insofar as the contracting
parties are concerned. It is based partly, upon the principles of estoppel ..."
(Evangelista v. Alto Surety, No. L-11139, Apr. 23, 1958). In a case, a mortgage
house built on a rented land, was held to be a personal property, not only because
the deed of mortgage considered it as such, but also because it did not form part
of the land (Evangelista v. Abad [CA];36 O.G. 2913), for it is now well settled that
an object placed on land by one who has only a temporary right to the same, such
as a lessee or usufructuary, does not become immobilized by attachment (Valdez
v. Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co., Inc. v. Castillo, et al.,
61 Phil. 709). Hence, if a house belonging to a person stands on a rented land
belonging to another person, it may be mortgaged as a personal property is so
stipulated in the document of mortgage. (Evangelista v. Abad, supra.) It should be
noted, however, that the principle is predicated on statements by the owner
declaring his house to be a chattel, a conduct that may conceivably estop him
from subsequently claiming otherwise (Ladera, et al.. v. C. N. Hodges, et al., [CA];
48 O.G. 5374). The doctrine, therefore, gathered from these cases is that although
in some instances, a house of mixed materials has been considered as a chattel
between them, has been recognized, it has been a constant criterion nevertheless
that, with respect to third persons, who are not parties to the contract, and
specially in execution proceedings, the house is considered as an immovable
property (Art. 1431, New Civil Code).
In the case at bar, the house in question was treated as personal or movable
property, by the parties to the contract themselves. In the deed of chattel
mortgage, appellant Rufino G. Pineda conveyed by way of "Chattel Mortgage" "my
personal properties", a residential house and a truck. The mortgagor himself
grouped the house with the truck, which is, inherently a movable property. The
house which was not even declared for taxation purposes was small and made of
light construction materials: G.I. sheets roofing, sawali and wooden walls and
wooden posts; built on land belonging to another.
The cases cited by appellants are not applicable to the present case. The Iya cases
(L-10837-38, supra), refer to a building or a house of strong materials,
permanently adhered to the land, belonging to the owner of the house himself. In
the case of Lopez v. Orosa, (L-10817-18), the subject building was a theatre, built
of materials worth more than P62,000, attached permanently to the soil. In these
cases and in the Leung Yee case, supra, third persons assailed the validity of the
deed of chattel mortgages; in the present case, it was one of the parties to the
contract of mortgages who assailed its validity.
CONFORMABLY WITH ALL THE FOREGOING, the decision appealed from, should
be, as it is hereby affirmed, with costs against appellants.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Barrera, Dizon, Regala, and
Makalintal, JJ., concur.
Manila Electric Co., vs. Central Board Assessment Appeals, 114 SCRA 273
Page 1 of 2
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-47943 May 31, 1982
MANILA ELECTRIC COMPANY, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT
APPEALS OF BATANGAS and PROVINCIAL ASSESSOR OF
BATANGAS, respondents.
AQUINO, J.:
This case is about the imposition of the realty tax on two oil storage tanks
installed in 1969 by Manila Electric Company on a lot in San Pascual, Batangas
which it leased in 1968 from Caltex (Phil.), Inc. The tanks are within the Caltex
refinery compound. They have a total capacity of 566,000 barrels. They are used
for storing fuel oil for Meralco's power plants.
According to Meralco, the storage tanks are made of steel plates welded and
assembled on the spot. Their bottoms rest on a foundation consisting of
compacted earth as the outermost layer, a sand pad as the intermediate layer and
a two-inch thick bituminous asphalt stratum as the top layer. The bottom of each
tank is in contact with the asphalt layer,
The steel sides of the tank are directly supported underneath by a circular wall
made of concrete, eighteen inches thick, to prevent the tank from sliding. Hence,
according to Meralco, the tank is not attached to its foundation. It is not anchored
or welded to the concrete circular wall. Its bottom plate is not attached to any
part of the foundation by bolts, screws or similar devices. The tank merely sits on
its foundation. Each empty tank can be floated by flooding its dike-inclosed
location with water four feet deep. (pp. 29-30, Rollo.)
On the other hand, according to the hearing commissioners of the Central Board
of Assessment Appeals, the area where the two tanks are located is enclosed with
earthen dikes with electric steel poles on top thereof and is divided into two parts
as the site of each tank. The foundation of the tanks is elevated from the
remaining area. On both sides of the earthen dikes are two separate concrete
steps leading to the foundation of each tank.
Tank No. 2 is supported by a concrete foundation with an asphalt lining about an
inch thick. Pipelines were installed on the sides of each tank and are connected
to the pipelines of the Manila Enterprises Industrial Corporation whose buildings
and pumping station are near Tank No. 2.
The Board concludes that while the tanks rest or sit on their foundation, the
foundation itself and the walls, dikes and steps, which are integral parts of the
tanks, are affixed to the land while the pipelines are attached to the tanks. (pp.
60-61, Rollo.) In 1970, the municipal treasurer of Bauan, Batangas, on the basis
of an assessment made by the provincial assessor, required Meralco to pay realty
taxes on the two tanks. For the five-year period from 1970 to 1974, the tax and
penalties amounted to P431,703.96 (p. 27, Rollo). The Board required Meralco to
pay the tax and penalties as a condition for entertaining its appeal from the
adverse decision of the Batangas board of assessment appeals.
The Central Board of Assessment Appeals (composed of Acting Secretary of
Finance Pedro M. Almanzor as chairman and Secretary of Justice Vicente Abad
Santos and Secretary of Local Government and Community Development Jose
Roño as members) in its decision dated November 5, 1976 ruled that the tanks
together with the foundation, walls, dikes, steps, pipelines and other
appurtenances constitute taxable improvements.
Meralco received a copy of that decision on February 28, 1977. On the fifteenth
day, it filed a motion for reconsideration which the Board denied in its resolution
of November 25, 1977, a copy of which was received by Meralco on February 28,
1978.
On March 15, 1978, Meralco filed this special civil action of certiorari to annul the
Board's decision and resolution. It contends that the Board acted without
jurisdiction and committed a grave error of law in holding that its storage tanks
are taxable real property.
Meralco contends that the said oil storage tanks do not fall within any of the kinds
of real property enumerated in article 415 of the Civil Code and, therefore, they
cannot be categorized as realty by nature, by incorporation, by destination nor
by analogy. Stress is laid on the fact that the tanks are not attached to the land
and that they were placed on leased land, not on the land owned by Meralco.
This is one of those highly controversial, borderline or penumbral cases on the
classification of property where strong divergent opinions are inevitable. The
issue raised by Meralco has to be resolved in the light of the provisions of the
Assessment Law, Commonwealth Act No. 470, and the Real Property Tax Code,
Presidential Decree No. 464 which took effect on June 1, 1974.
Section 2 of the Assessment Law provides that the realty tax is due "on real
property, including land, buildings, machinery, and other improvements" not
specifically exempted in section 3 thereof. This provision is reproduced with
some modification in the Real Property Tax Code which provides:
Sec. 38. Incidence of Real Property Tax. — They shall be levied, assessed
and collected in all provinces, cities and municipalities an annual ad
valorem tax on real property, such as land, buildings, machinery and
other improvements affixed or attached to real property not hereinafter
specifically exempted.
The Code contains the following definition in its section 3:
Manila Electric Co., vs. Central Board Assessment Appeals, 114 SCRA 273
Page 2 of 2

k) Improvements — is a valuable addition made to property or an

amelioration in its condition, amounting to more than mere repairs or
replacement of waste, costing labor or capital and intended to enhance
its value, beauty or utility or to adapt it for new or further purposes.
We hold that while the two storage tanks are not embedded in the land, they may,
nevertheless, be considered as improvements on the land, enhancing its utility
and rendering it useful to the oil industry. It is undeniable that the two tanks have
been installed with some degree of permanence as receptacles for the
considerable quantities of oil needed by Meralco for its operations.
Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey
vs. Atlantic City, 15 Atl. 2nd 271.
For purposes of taxation, the term "real property" may include things which
should generally be regarded as personal property(84 C.J.S. 171, Note 8). It is a
familiar phenomenon to see things classed as real property for purposes of
taxation which on general principle might be considered personal property
(Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil.
328, wherein Meralco's steel towers were held not to be subject to realty tax, is
not in point because in that case the steel towers were regarded as poles and
under its franchise Meralco's poles are exempt from taxation. Moreover, the steel
towers were not attached to any land or building. They were removable from
their metal frames.
Nor is there any parallelism between this case and Mindanao Bus Co. vs. City
Assessor, 116 Phil. 501, where the tools and equipment in the repair, carpentry
and blacksmith shops of a transportation company were held not subject to realty
tax because they were personal property.
WHEREFORE, the petition is dismissed. The Board's questioned decision and
resolution are affirmed. No costs.
SO ORDERED.
Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur.
Concepcion, Jr., J., is on leave.
Justice Abad Santos, J., took no part.
Piansay vs. David, 12 SCRA 227
Page 1 of 3
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19468 October 30, 1964
SALVADOR PIANSAY and CLAUDIA V. VDA. DE UY KIM, plaintiffs-appellants,
vs.
CONRADO S. DAVID and MARCOS MANGUBAT, defendants-appellees.
Santiago F. Alidio for plaintiffs-appellants.
Marcos Mangubat in his own behalf and for co-defendant-appellee Conrado S.
David.
CONCEPCION, J.:
This is an appeal from an order of the Court of First Instance of Manila in Civil
Case No. 47664 thereof. The pertinent facts are set forth in said order from which
we quote:
It appears from the complaint that on December 11, 1948, defendant
herein Conrado S. David received a loan of P3,000 with interest at 12%
per annum from Claudia B. Vda. de Uy Kim, one of the plaintiffs, and to
secure the payment of the same, Conrado S. David executed a chattel
mortgage on a house situated at 1259 Sande Street, Tondo, Manila; that
the chattel mortgage was registered with the Register of Deeds of Manila
on December 19, 1948; that on February 10, 1953, the mortgaged house
was sold at public auction to satisfy the indebtedness to Claudia B. Vda.
de Uy Kim, and the house was sold to Claudia B. Vda. de Uy Kim in the
said foreclosure proceedings; that on March 22, 1954, Claudia B. Vda. de
Uy Kim sold the said house to Marcos Mangubat, and on March 1, 1956.
Marcos Mangubat filed a complaint against Conrado S. David, Civil Case
No. 29078, in the Court of First Instance of Manila, for the collection of
the loan of P2,000; that on March 24, 1956, the complaint was amended
to include the plaintiffs herein Salvador Piansay and Claudia B. Vda. de
Uy Kim as party defendants and praying that auction sale executed by
the Sheriff on February 10, 1953, and the deed of absolute sale executed
by Claudia B. Vda. de Uy Kim in favor of Salvador Piansay be annulled;
that decision was rendered in Civil Case No. 29078 ordering Conrado S.
David to pay the plaintiff the sum of P2,000, damages and attorney's fees,
and dismissing the complaint with respect to Claudia B. Vda. de Uy Kim,
Leonardo Uy Kim and Salvador Piansay; that upon appeal, the Court of
Appeals affirmed the decision but setting aside the award of damages in
favor of Claudia B. Vda. de Uy Kim; that in the execution of Civil Case No.
29078, which was affirmed by the Court of Appeals in CA-G.R. No. 21797-
R, the house, which had been bought by Uy Kim at the foreclosure
proceedings and sold by her to Salvador Piansay, was levied upon at the
instance of the defendant Marcos Mangubat; that to prevent the sale at
public auction of the house here in question, the plaintiffs herein filed a
petition for certiorari and mandamus with preliminary injunction in the
Court of Appeals, CA-G.R. No. 28974-R, entitled Claudia B. Vda. de Uy Kim
and Salvador Piansay versus Hon. Judge Jesus Y. Perez, et al.; that acting
upon the said petition, the Court of Appeals in its order of April 28, 1961,
denied the petition to lift or discharge the writ of execution.
Thereupon, or on July 31, 1961, Piansay and Mrs. Uy Kim, hereinafter referred to
as the plaintiffs, instituted the present action which was docketed as Civil Case
No. 47664 of the Court of First Instance of Manila, against David and Mangubat,
hereinafter referred to as the defendants. In their complaint, plaintiffs, after
averring the foregoing facts, allege that, in the proceedings for the execution of
the decision in Civil Case No. 29078. David demanded from Piansay the payment
of rentals for the use and occupation of the house aforementioned, which, Piansay
claims, is his property, and that the defendants are threatening to cause said
house to be levied upon and sold at public auction in violation of the alleged rights
of the plaintiffs. Accordingly plaintiffs prayed that a writ of preliminary
injunction to restrain said levy and sale at public auction be issued and that, after
appropriate proceedings, judgment be rendered declaring that Piansay is the true
and lawful owner of said house sentencing the defendants to pay damages and
making the preliminary injunction permanent.
Mangubat moved to dismiss said complaint, upon the theory that the same is
barred by the principle of res adjudicata and that plaintiffs have no personality to
bring this action or to question the levy upon the house in question, because they
have no interest therein. After due hearing the lower court issued the order
appealed from, granting said motion and dismissing the complaint, with costs
against the plaintiffs. A reconsideration of said order having been denied,
plaintiffs interposed the present appeal directly to this Court only questions of
law being raised in the appeal, namely: (1) applicability of the principle of res
adjudicata; and (2) validity of the chattel mortgage constituted in favor of Mrs.
Uy Kim.
With reference to the first question, it should be noted that in case CA-G.R. No.
21797-R, the Court of Appeals affirmed the decision in Case No. 29078 of the
Court of First Instance of Manila stating:
In the case of Ladera, et al., vs. Hodges, et al. (CA-G.R. No. 8027-R,
promulgated Sept. 23, 1952) this Court, thru Justice J. B. L. Reyes, said,
among others:
Since it is a rule in our law that buildings and constructions are
regarded as mere accesories to the land (following the Roman
maxim omne quod solo inaedificatur solo credit) it is logical that
said accessories should partaked of the nature of the principal
Piansay vs. David, 12 SCRA 227
Page 2 of 3
thing, which is the land forming, as they do, but a single object
(res) with it in contemplation of law.
... While it is true that said document was correspondingly
registered in the Chattel Mortgage Register of Rizal, this Act
produced no effect whatsoever for where the interest conveyed
is in the nature of real property, the registration of the
document in the registry of chattels is merely a futile act. Thus
the registration of the chattel mortgage of a building of strong
materials produced no effect as far as the building is concerned
(Leung Yee vs. Strong Machinery Co., 37 Phil. 644). Nor can we
give any consideration to that contention of the surety that it has
acquired ownership over the property in question by reason of
the sale conducted by the Provincial Sheriff of Rizal for as this
court has aptly pronounced:
A mortgage creditor who purchases real properties at
an extra-judicial foreclosure sale thereof by virtue of a
chattel mortgage constituted in his favor, which
mortgage has been declared null and void with respect
to said real properties acquires no right thereto by
virtue of said sale. (De la Riva vs. Ah Kee, 60 Phil. 899).
Thus, Mrs. Uy Kim had no right to foreclose the alleged chattel
mortgage constituted in her favor, because it was in reality a mere
contract of an unsecured loan. It follows that the Sheriff was not
authorized to sell the house as a result of the foreclosure of such chattel
mortgage. And as Mrs. Uy Kim could not have acquired the house when the
Sheriff sold it at public auction, she could not, in the same token, it validly
to Salvador Piansay. Conceding that the contract of sale between Mrs. Uy
Kim and Salvador Piansay was of no effect, we cannot nevertheless set it
aside upon instance of Mangubat because, as the court below opined, he
is not a party thereto nor has he any interest in the subject matter
therein, as it was never sold or mortgaged to him (Emphasis supplied);
that, thereafter, the records of the case were remanded to the Court of First
Instance of Manila, which caused the corresponding writ of execution to be
issued; that upon the request of Mangubat, the house in question was levied
upon; that Piansay filed with the trial court, presided over by Hon. Jesus Y. Perez,
Judge, a motion to set aside said levy; that this motion was denied by said court,
in an order dated February 4, 1961, upon the following ground:
Considering that the decision rendered by the Court of Appeals in this
case when the same was elevated to said Court recognizes that defendant
Claudia B. de Uy Kim did not acquire the house of defendant Conrado S.
David and can therefore be executed by the plaintiff to satisfy the
judgment rendered against said defendant David in favor of the plaintiff.
The mere fact that the dispositive part of the decision states that the
complaint is dismissed with respect to defendants Claudia B. de Uy Kim,
Leonardo Uy Kim and Salvador Piansay is of no moment because the
chattel mortgage executed by David in favor of Claudia B. de Uy Kim might
not be annulled but it did not transmit any right from defendant David to
Claudia B. de Uy Kim. The house in question can therefore be levied upon
because it had remained the property of defendant David (Emphasis
supplied);
that a reconsideration of this order of February 4, 1961 having been denied by
Judge Perez, on February 25, 1961, plaintiffs instituted case CA-G.R. No. 28974-R
of the Court of Appeals, for a writ of certiorari and mandamus to annul said
orders of Judge Perez and to compel him to release said house from the
aforementioned levy; and that on March 3, 1961, the Court of Appeals denied said
petition for certiorari and mandamus "insofar as it prays that the order of
respondent Judge denying the lifting and discharge of the writ of execution be set
aside and revoked."
In other words, in Civil Case No. 29078 of the Court of First Instance of Manila,
Piansay assailed the right of Mangubat to levy execution upon the house in
question alleging that the same belongs to him, he having bought it from Mrs. Uy
Kim, who had acquired it at the auction sale held in connection with the
extrajudicial foreclosure of the chattel mortgage constituted in her favor by
David. This pretense was, however, overruled by Judge Perez, who presided at
said court, in its order of February 4, 1961, upon the theory that the chattel
mortgage and sale in favor of Mrs. Uy Kim had been annulled in the original
decision in said case, as affirmed by the Court of Appeals in CA-G.R. No. 21797-R.
Regardless of whether this theory is accurate or not, the fact is that said order
became final and executory upon the denial of the petition for certiorari and
mandamus, to annul the same in CA-G.R. No. 28974-R of the Court of Appeals.
Hence, plaintiffs are now barred from asserting that the aforementioned chattel
mortgage and sale are valid.
At any rate, regardless of the validity of a contract constituting a chattel mortgage
on a house, as between the parties to said contract (Standard Oil Co. of N. Y. vs.
Jaramillo, 44 Phil. 632-633), the same cannot and does not bind third persons,
who are not parties to the aforementioned contract or their privies (Leung Yee
vs. Strong Machinery Co., 37 Phil. 644; Evangelista vs. Alto Surety, G.R. No. L-
11139, April 23, 1958; Navarro vs. Pineda, G.R. No. L-18456, November 30, 1963).
As a consequence, the sale of the house in question in the proceedings for the
extrajudicial foreclosure of said chattel mortgage, is null and void insofar as
defendant Mangubat is concerned, and did not confer upon Mrs. Uy Kim, as buyer
in said sale, any dominical right in and to said house (De la Riva vs. Ah Yee, 60
Phil. 800), so that she could not have transmitted to her assignee, plaintiff Piansay
any such right as against defendant Mangubat. In short plaintiffs have no cause
of action against the defendants herein.
Piansay vs. David, 12 SCRA 227
Page 3 of 3

WHEREFORE, the others appealed from are hereby affirmed, with costs against
plaintiffs Salvador Piansay and Claudia B. Vda. de Uy Kim. It is so ordered.
Bengzon, C.J., Bautista Angelo, Reyes, J.B.L. Barrera, Paredes, Dizon Regala,
Makalintal, Bengzon, J.P. and Zaldivar, JJ., concur.
U.S. vs. Tambunting, 41 Phil. 364
Page 1 of 2
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-16513 January 18, 1921
THE UNITED STATES, plaintiff-appellee,
vs.
MANUEL TAMBUNTING, defendant-appellant.
Manuel Garcia Goyena for appellant.
Acting Attorney-General Feria for appellee.
STREET, J.:
This appeal was instituted for the purpose of reversing a judgment of the Court
of First Instance of the city of Manila, finding the accused, Manuel Tambunting,
guilty of stealing a quantity of gas belonging to the Manila Gas Corporation, and
sentencing him to undergo imprisonment for two months and one day, of arresto
mayor, with the accessories prescribed by law; to indemnify the said corporation
in the sum of P2, with subsidiary imprisonment in case of insolvency; and to pay
the costs.
The evidence submitted in behalf of the prosecution shows that in January of the
year 1918, the accused and his wife became occupants of the upper floor of the
house situated at No. 443, Calle Evangelista, in the city of Manila. In this house the
Manila Gas Corporation had previously installed apparatus for the delivery of gas
on both the upper and lower floors, consisting of the necessary piping and a gas
meter, which last mentioned apparatus was installed below. When the occupants
at whose request this installation had been made vacated the premises, the gas
company disconnected the gas pipe and removed the meter, thus cutting off the
supply of gas from said premises.
Upon June 2, 1919, one of the inspectors of the gas company visited the house in
question and found that gas was being used, without the knowledge and consent
of the gas company, for cooking in the quarters occupied by the defendant and
his wife: to effect which a short piece of iron pipe had been inserted in the gap
where the gas meter had formerly been placed, and piece of rubber tubing had
been used to connect the gas pipe of rubber tubing had been used to connect the
gas pipe in kitchen with the gas stove, or plate, used for cooking.
At the time this discovery was made, the accused, Manuel Tambunting, was not
at home, but he presently arrived and admitted to the agent to the gas company
that he had made the connection with the rubber tubing between the gas pipe
and the stove, though he denied making the connection below. He also admitted
that he knew he was using gas without the knowledge of the company and that
he had been so using it for probably two or three months.
The clandestine use of gas by the accused in the manner stated is thus established
in our opinion beyond a doubt; and inasmuch as the animo lucrandi is obvious, it
only remains to consider, first, whether gas can be the subject to larceny and,
secondly, whether the quantity of gas appropriated in the two months, during
which the accused admitted having used the same, has been established with
sufficient certainty to enable the court to fix an appropriate penalty.
Some legal minds, perhaps more academic than practical, have entertained doubt
upon the question whether gas can be the subject of larceny; but no judicial
decision has been called to our attention wherein any respectable court has
refused to treat it as such. In U.S. vs. Genato (15 Phil., 170, 175), this court,
speaking through Mr. Justice Torres, said ". . . the right of the ownership of electric
current is secured by article 517 and 518 of the Penal Code; the application of
these articles in cases of subtraction of gas, a fluid used for lighting, and in some
respects resembling electricity, is confirmed by the rule laid down in the
decisions of the supreme court of Spain of January 20, 1887, and April 1, 1897,
construing and enforcing the provisions of articles 530 and 531 of the Penal Code
of that country, articles identical with articles 517 and 518 of the code in force in
these Islands." These expressions were used in a case which involved the
subtraction and appropriation of electrical energy and the court held, in
accordance with the analogy of the case involving the theft of gas, that electrical
energy could also be the subject of theft. The same conclusion was reached in
U.S. vs. Carlos (21 Phil., 553), which was also a case of prosecution for stealing
electricity.
The precise point whether the taking of gas may constitute larceny has never
before, so far as the present writer is aware, been the subject of adjudication in
this court, but the decisions of Spanish, English, and American courts all answer
the question in the affirmative. (See U.S. vs. Carlos, 21 Phil., 553, 560.)
In this connection it will suffice to quote the following from the topic "Larceny,"
at page 34, Vol. 17, of Ruling Case Law:
There is nothing in the nature of gas used for illuminating purposes which
renders it incapable of being feloniously taken and carried away. It is a valuable
article of merchandise, bought and sold like other personal property, susceptible
of being severed from a mass or larger quantity and of being transported from
place to place. Likewise water which is confined in pipes and electricity which is
conveyed by wires are subjects of larceny."
As to the amount and value of the gas appropriated by the accused in the period
during which he admits having used it, the proof is not entirely satisfactory.
Nevertheless we think the trial court was justified in fixing the value of the gas at
P2 per month, which is the minimum charge for gas made by the gas company,
however small the amount consumed. That is to say, no person desiring to use
gas at all for domestic purposes can purchase the commodity at a lower rate per
month than P2. There was evidence before the court showing that the general
U.S. vs. Tambunting, 41 Phil. 364
Page 2 of 2

average of the monthly bills paid by consumers throughout the city for the use of
gas in a kitchen equipped like that used by the accused is from P18 to 20, while
the average minimum is about P8 per month. We think that the facts above stated
are competent evidence; and the conclusion is inevitable that the accused is at
least liable to the extent of the minimum charge of P2 per month. The market
value of the property at the time and place of the theft is of court the proper value
to be proven (17 R.C.L., p. 66); and when it is found that the least amount that a
consumer can take costs P2 per months, this affords proof that the amount which
the accused took was certainly worth that much. Absolute certainty as to the full
amount taken is of course impossible, because no meter wad used; but absolute
certainty upon this point is not necessary, when it is certain that the minimum
that could have been taken was worth a determinable amount.
It appears that before the present prosecution was instituted, the accused had
been unsuccessfully prosecuted for an infraction of section 504 of the Revised
Ordinances of the city of Manila, under a complaint charging that the accused, not
being a registered installer of gas equipment had placed a gas installation in the
house at No. 443, Calle Evangelista. Upon this it is argued for the accused that,
having been acquitted of that charge, he is not now subject to prosecution for the
offense of theft, having been acquitted of the former charge. The contention is
evidently not well-founded, since the two offenses are of totally distinct nature.
Furthermore, a prosecution for violation of a city ordinance is not ordinarily a
bar to a subsequent prosecution for the same offense under the general law of
the land. (U.S. vs. Garcia Gavieres, 10 Phil., 694.)
The conclusion is that the accused is properly subject to punishment, under No.
5 of article 518 of the Penal Code, for the gas taken in the course of two months a
the rate of P2 per month. There being no aggravating or attenuating circumstance
to be estimated, it results that the proper penalty is two months and one day
of arresto mayor, as fixed by the trial court. The judgment will therefore be
affirmed, with costs against the appellant, it being understood that the amount of
the indemnity which the accused shall pay to the gas company is P4, instead of
P2, with subsidiary imprisonment for one day in case of insolvency. So ordered.
Mapa, C.J., Araullo, Malcolm and Villamor, JJ., concur.
Caltex Philippines vs. Central Board Assessment Appeals, 114 SCRA 296
Page 1 of 3
G.R. No. L-50466 May 31, 1982
CALTEX (PHILIPPINES) INC., petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS and CITY ASSESSOR OF
PASAY, respondents.
AQUINO, J.:
This case is about the realty tax on machinery and equipment installed by Caltex
(Philippines) Inc. in its gas stations located on leased land.
The machines and equipment consists of underground tanks, elevated tank,
elevated water tanks, water tanks, gasoline pumps, computing pumps, water
pumps, car washer, car hoists, truck hoists, air compressors and tireflators. The
city assessor described the said equipment and machinery in this manner:
A gasoline service station is a piece of lot where a building or shed is erected,
a water tank if there is any is placed in one corner of the lot, car hoists are
placed in an adjacent shed, an air compressor is attached in the wall of the
shed or at the concrete wall fence.
The controversial underground tank, depository of gasoline or crude oil, is
dug deep about six feet more or less, a few meters away from the shed. This
is done to prevent conflagration because gasoline and other combustible oil
are very inflammable.
This underground tank is connected with a steel pipe to the gasoline pump
and the gasoline pump is commonly placed or constructed under the shed.
The footing of the pump is a cement pad and this cement pad is imbedded in
the pavement under the shed, and evidence that the gasoline underground
tank is attached and connected to the shed or building through the pipe to
the pump and the pump is attached and affixed to the cement pad and
pavement covered by the roof of the building or shed.
The building or shed, the elevated water tank, the car hoist under a separate
shed, the air compressor, the underground gasoline tank, neon lights
signboard, concrete fence and pavement and the lot where they are all
placed or erected, all of them used in the pursuance of the gasoline service
station business formed the entire gasoline service-station.
As to whether the subject properties are attached and affixed to the
tenement, it is clear they are, for the tenement we consider in this particular
case are (is) the pavement covering the entire lot which was constructed by
the owner of the gasoline station and the improvement which holds all the
properties under question, they are attached and affixed to the pavement
and to the improvement.
The pavement covering the entire lot of the gasoline service station, as well
as all the improvements, machines, equipments and apparatus are allowed
by Caltex (Philippines) Inc. ...
The underground gasoline tank is attached to the shed by the steel pipe to
the pump, so with the water tank it is connected also by a steel pipe to the
pavement, then to the electric motor which electric motor is placed under
the shed. So to say that the gasoline pumps, water pumps and underground
tanks are outside of the service station, and to consider only the building as
the service station is grossly erroneous. (pp. 58-60, Rollo).
The said machines and equipment are loaned by Caltex to gas station operators
under an appropriate lease agreement or receipt. It is stipulated in the lease
contract that the operators, upon demand, shall return to Caltex the machines
and equipment in good condition as when received, ordinary wear and tear
excepted.
The lessor of the land, where the gas station is located, does not become the
owner of the machines and equipment installed therein. Caltex retains the
ownership thereof during the term of the lease.
The city assessor of Pasay City characterized the said items of gas station
equipment and machinery as taxable realty. The realty tax on said equipment
amounts to P4,541.10 annually (p. 52, Rollo). The city board of tax appeals ruled
that they are personalty. The assessor appealed to the Central Board of
Assessment Appeals.
The Board, which was composed of Secretary of Finance Cesar Virata as
chairman, Acting Secretary of Justice Catalino Macaraig, Jr. and Secretary of Local
Government and Community Development Jose Roño, held in its decision of June
3, 1977 that the said machines and equipment are real property within the
meaning of sections 3(k) & (m) and 38 of the Real Property Tax Code, Presidential
Decree No. 464, which took effect on June 1, 1974, and that the definitions of real
property and personal property in articles 415 and 416 of the Civil Code are not
applicable to this case.
The decision was reiterated by the Board (Minister Vicente Abad Santos took
Macaraig's place) in its resolution of January 12, 1978, denying Caltex's motion
for reconsideration, a copy of which was received by its lawyer on April 2, 1979.
On May 2, 1979 Caltex filed this certiorari petition wherein it prayed for the
setting aside of the Board's decision and for a declaration that t he said machines
and equipment are personal property not subject to realty tax (p. 16, Rollo).
The Solicitor General's contention that the Court of Tax Appeals has exclusive
appellate jurisdiction over this case is not correct. When Republic act No. 1125
created the Tax Court in 1954, there was as yet no Central Board of Assessment
Appeals. Section 7(3) of that law in providing that the Tax Court had jurisdiction
to review by appeal decisions of provincial or city boards of assessment appeals
Caltex Philippines vs. Central Board Assessment Appeals, 114 SCRA 296
Page 2 of 3
had in mind the local boards of assessment appeals but not the Central Board of
Assessment Appeals which under the Real Property Tax Code has appellate
jurisdiction over decisions of the said local boards of assessment appeals and is,
therefore, in the same category as the Tax Court.
Section 36 of the Real Property Tax Code provides that the decision of the Central
Board of Assessment Appeals shall become final and executory after the lapse of
fifteen days from the receipt of its decision by the appellant. Within that fifteen-
day period, a petition for reconsideration may be filed. The Code does not provide
for the review of the Board's decision by this Court.
Consequently, the only remedy available for seeking a review by this Court of the
decision of the Central Board of Assessment Appeals is the special civil action of
certiorari, the recourse resorted to herein by Caltex (Philippines), Inc.
The issue is whether the pieces of gas station equipment and machinery already
enumerated are subject to realty tax. This issue has to be resolved primarily
under the provisions of the Assessment Law and the Real Property Tax Code.
Section 2 of the Assessment Law provides that the realty tax is due "on real
property, including land, buildings, machinery, and other improvements" not
specifically exempted in section 3 thereof. This provision is reproduced with
some modification in the Real Property Tax Code which provides:
SEC. 38. Incidence of Real Property Tax.— There shall be levied, assessed and
collected in all provinces, cities and municipalities an annual ad valorem
tax on real property, such as land, buildings, machinery and other
improvements affixed or attached to real property not hereinafter
specifically exempted.
The Code contains the following definitions in its section 3:
k) Improvements — is a valuable addition made to property or an
amelioration in its condition, amounting to more than mere repairs or
replacement of waste, costing labor or capital and intended to enhance its
value, beauty or utility or to adapt it for new or further purposes.
m) Machinery — shall embrace machines, mechanical contrivances,
instruments, appliances and apparatus attached to the real estate. It
includes the physical facilities available for production, as well as the
installations and appurtenant service facilities, together with all other
equipment designed for or essential to its manufacturing, industrial or
agricultural purposes (See sec. 3[f], Assessment Law).
We hold that the said equipment and machinery, as appurtenances to the gas
station building or shed owned by Caltex (as to which it is subject to realty tax)
and which fixtures are necessary to the operation of the gas station, for without
them the gas station would be useless, and which have been attached or affixed
permanently to the gas station site or embedded therein, are taxable
improvements and machinery within the meaning of the Assessment Law and the
Real Property Tax Code.
Caltex invokes the rule that machinery which is movable in its nature only
becomes immobilized when placed in a plant by the owner of the property or
plant but not when so placed by a tenant, a usufructuary, or any person having
only a temporary right, unless such person acted as the agent of the owner (Davao
Saw Mill Co. vs. Castillo, 61 Phil 709).
That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code
regarding machinery that becomes real property by destination. In the Davao
Saw Mills case the question was whether the machinery mounted on foundations
of cement and installed by the lessee on leased land should be regarded as real
property for purposes of execution of a judgment against the lessee. The sheriff
treated the machinery as personal property. This Court sustained the sheriff's
action. (Compare with Machinery & Engineering Supplies, Inc. vs. Court of
Appeals, 96 Phil. 70, where in a replevin case machinery was treated as realty).
Here, the question is whether the gas station equipment and machinery
permanently affixed by Caltex to its gas station and pavement (which are
indubitably taxable realty) should be subject to the realty tax. This question is
different from the issue raised in the Davao Saw Mill case.
Improvements on land are commonly taxed as realty even though for some
purposes they might be considered personalty (84 C.J.S. 181-2, Notes 40 and 41).
"It is a familiar phenomenon to see things classed as real property for purposes
of taxation which on general principle might be considered personal property"
(Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
This case is also easily distinguishable from Board of Assessment Appeals vs.
Manila Electric Co., 119 Phil. 328, where Meralco's steel towers were considered
poles within the meaning of paragraph 9 of its franchise which exempts its poles
from taxation. The steel towers were considered personalty because they were
attached to square metal frames by means of bolts and could be moved from place
to place when unscrewed and dismantled.
Nor are Caltex's gas station equipment and machinery the same as tools and
equipment in the repair shop of a bus company which were held to be personal
property not subject to realty tax (Mindanao Bus Co. vs. City Assessor, 116 Phil.
501).
The Central Board of Assessment Appeals did not commit a grave abuse of
discretion in upholding the city assessor's is imposition of the realty tax on
Caltex's gas station and equipment.
WHEREFORE, the questioned decision and resolution of the Central Board of
Assessment Appeals are affirmed. The petition for certiorari is dismissed for lack
of merit. No costs.
Caltex Philippines vs. Central Board Assessment Appeals, 114 SCRA 296
Page 3 of 3

SO ORDERED.
Barredo (Chairman), Guerrero, De Castro and Escolin, JJ., concur.
Concepcion, Jr. and Abad Santos, JJ., took no part.
Tumalad vs. Vicencio, 41 SCRA 143
Page 1 of 6
EN BANC
[G.R. No. L-30173. September 30, 1971.]
GAVINO A. TUMALAD and GENEROSA R. TUMALAD, Plaintiffs-Appellees, v.
ALBERTA VICENCIO and EMILIANO SIMEON, Defendants-Appellants.
Castelo & Suck for Plaintiffs-Appellees.
Jose Q. Calingo, for Defendants-Appellants.
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTION; UNLAWFUL DETAINER; CLAIM OF
OWNERSHIP IS A MATTER OF DEFENSE THEREIN. — In detainer cases the claim
of ownership "is a matter of defense and raises an issue of fact which should be
determined from the evidence at the trial."
2. CIVIL LAW; CONTRACTS; FRAUD OR DECEIT RENDERS CONTRACT VOIDABLE,
NOT VOID AB INITIO. — Fraud or deceit does not render a contract void ab initio,
and can only be a ground for rendering the contract voidable or annullable
pursuant to Article 1390 of the New Civil Code, by a proper action in court.
3. ID.; ID.; PARTIES THERETO MAY TREAT AS PERSONAL PROPERTY THAT
WHICH IS REAL PROPERTY. — In the case of Manarang and Manarang v. Ofilada
(99 Phil. 109), this Court stated that "it is undeniable that the parties to a contract
may by agreement treat as personal property that which by nature would be real
property," citing Standard Oil Company of New York v. Jaramillo (44 Phil. 632).
4. ID.; ID.; ID.; CASE AT BAR. — In the contract now before Us, the house on rented
land is not only expressly designated as Chattel Mortgage; it specifically provides
that "the mortgagor. . . voluntarily CEDES, SELLS and TRANSFERS by way of
Chattel Mortgage the property together with its leasehold rights over the lot on
which it is constructed and participation . . ." Although there is no specific
statement referring to the subject house as personal property, yet by ceding,
selling or transferring a property by way of chattel mortgage defendants-
appellants could only have meant to convey the house as chattel, or at least,
intended to treat the same as such, so that they should not now be allowed to
make an inconsistent stand by claiming otherwise. Moreover, the subject house
stood on a rented lot to which defendants-appellants merely had a temporary
right as lessee, and although this can not in itself alone determine the status of
the property, it does so when combined with other factors to sustain the
interpretation that the parties, particularly the mortgagors, intended to treat the
house as personality.
5. ID.; ID.; PARTIES ESTOPPED TO ASSAIL VALIDITY THEREOF. — It is the
defendants-appellants themselves, as debtors-mortgagors, who are attacking the
validity of the chattel mortgage in this case. The doctrine of estoppel therefore
applies to the herein defendants-appellants, having treated the subject house as
personality.
6. ID.; ID.; MORTGAGE; FORECLOSURE; MORTGAGOR MAY BE ALLOWED
POSSESSION DURING THE ONE-YEAR PERIOD OF REDEMPTION. — Section 6 of
the Act referred to (Act No. 3135) provides that the debtor-mortgagor
(defendants-appellants herein) may, at any time within one year from and after
the date of the auction sale, redeem the property sold at the extra judicial
foreclosure sale. Section 7 of the same Act allows the purchaser of the property
to obtain from the court the possession during the period of redemption: but the
same provision expressly requires the filing of a petition with the proper Court
of First Instance and the furnishing of a bond. It is only upon filing of the proper
motion and the approval of the corresponding bond that the order for a writ of
possession issues as a matter of course. No discretion is left to the court. In the
absence of such a compliance, as in the instant case, the purchaser can not claim
possession during the period of redemption as a matter of right.
7. ID.; ID.; ID.; ID.; PURCHASER RECEIVING RENTALS DURING REDEMPTION
PERIOD IS ACCOUNTABLE TO MORTGAGOR; RATIONALE. — "In other words,
before the expiration of the 1-year period within which the judgment-debtor or
mortgagor may redeem the property, the purchaser thereof is not entitled, as a
matter of right, to possession of the same. Thus, while it is true that the Rules of
Court allow the purchaser to receive the rentals if the purchased property is
occupied by tenants, he is, nevertheless, accountable to the judgment-debtor or
mortgagor as the case may be, for the amount so received and the same will be
duly credited against the redemption price when the said debtor or mortgagor
effects the redemption. Differently stated, the rentals receivable from tenants,
although they may be collected by the purchaser during the redemption period,
do not belong to the latter but still pertain to the debtor or mortgagor. The
rationale for the Rule, it seems, is to secure for the benefit of the debtor or
mortgagor, the payment of the redemption amount and the consequent return to
him of his properties sold at public auction." (Italics supplied)
DECISION
REYES, J.B.L., J.:
Case certified to this Court by the Court of Appeals (CA-G.R. No. 27824-R) for the
reason that only questions of law are involved.
This case was originally commenced by defendants-appellants in the municipal
court of Manila in Civil Case No. 43073, for ejectment. Having lost therein,
defendants-appellants appealed to the court a quo (Civil Case No. 30993) which
also rendered a decision against them, the dispositive portion of which follows:
"WHEREFORE, the court hereby renders judgment in favor of the plaintiffs and
against the defendants, ordering the latter to pay jointly and severally the former
Tumalad vs. Vicencio, 41 SCRA 143
Page 2 of 6
a monthly rent of P200.00 on the house, subject-matter of this action, from March
27, 1956, to January 14, 1967, with interest at the legal rate from April 18, 1956,
the filing of the complaint, until fully paid, plus attorney’s fees in the sum of
P300.00 and to pay the costs."
It appears on the records that on 1 September 1955 defendants-appellants
executed a chattel mortgage 1 in favor of plaintiffs-appellees over their house of
strong materials located at No. 550 Int. 3, Quezon Boulevard, Quiapo, Manila, over
Lot No. 6-B and 7-B, Block No. 2554, which were being rented from Madrigal &
Company, Inc. The mortgage was registered in the Registry of Deeds of Manila on
2 September 1955. The herein mortgage was executed to guarantee a loan of
P4,800.00 received from plaintiffs-appellees, payable within one year at 12% per
annum. The mode of payment was P150.00 monthly, starting September, 1955,
up to July 1956, and the lump sum of P3,150 was payable on or before August,
1956. It was also agreed that default in the payment of any of the amortizations
would cause the remaining unpaid balance to become immediately due and
payable and — "the Chattel Mortgage will be enforceable in accordance with the
provisions of Special Act No. 3135, and for this purpose, the Sheriff of the City of
Manila or any of his deputies is hereby empowered and authorized to sell all the
Mortgagor’s property after the necessary publication in order to settle the
financial debts of P4,500.00, plus 12% yearly interest, and attorney’s fees. . ." 2
When defendants-appellants defaulted in paying, the mortgage was
extrajudicially foreclosed, and on 27 March 1956, the house was sold at public
auction pursuant to the said contract. As highest bidder, plaintiffs-appellees were
issued the corresponding certificate of sale. 3 Thereafter, on 18 April 1956,
plaintiffs-appellees commenced Civil Case No. 43073 in the municipal court of
Manila, praying, among other things, that the house be vacated and its possession
surrendered to them, and for defendants-appellants to pay rent of P200.00
monthly from 27 March 1956 up to the time the possession is surrendered. 4 On
21 September 1956, the municipal court rendered its decision — ". . . ordering
the defendants to vacate the premises described in the complaint; ordering
further to pay monthly the amount of P200.00 from March 27, 1956, until such
(time that) the premises is (sic) completely vacated; plus attorney’s fees of
P100.00 and the costs of the suit." 5
Defendants-appellants, in their answers in both the municipal court and court a
quo impugned the legality of the chattel mortgage, claiming that they are still the
owners of the house; but they waived the right to introduce evidence, oral or
documentary. Instead, they relied on their memoranda in support of their motion
to dismiss, predicated mainly on the grounds that: (a) the municipal court did not
have jurisdiction to try and decide the case because (1) the issue involved is
ownership, and (2) there was no allegation of prior possession; and (b) failure to
prove prior demand pursuant to Section 2, Rule 72, of the Rules of Courts. 6
During the pendency of the appeal to the Court of First Instance, defendants-
appellants failed to deposit the rent for November, 1956 within the first 10 days
of December, 1956 as ordered in the decision of the municipal court. As a result,
the court granted plaintiffs-appellees’ motion for execution, and it was actually
issued on 24 January 1957. However, the judgment regarding the surrender of
possession to plaintiffs-appellees could not be executed because the subject
house had been already demolished on 14 January 1957 pursuant to the order of
the court in a separate civil case (No. 25816) for ejectment against the present
defendants for non-payment of rentals on the land on which the house was
constructed.
The motion of plaintiffs for dismissal of the appeal, execution of the supersedeas
bond and withdrawal of deposited rentals was denied for the reason that the
liability therefor was disclaimed and was still being litigated, and under Section
8, Rule 72, rentals deposited had to be held until final disposition of the appeal. 7
On 7 October 1957, the appellate court of First Instance rendered its decision, the
dispositive portion of which is quoted earlier. The said decision was appealed by
defendants to the Court of Appeals which, in turn, certified the appeal to this
Court. Plaintiffs-appellees failed to file a brief and this appeal was submitted for
decision without it.
Defendants-appellants submitted numerous assignments of error which can be
condensed into two questions, namely:chanrob1es virtual 1aw library
(a) Whether the municipal court from which the case originated had jurisdiction
to adjudicate the same;
(b) Whether the defendants are, under the law, legally bound to pay rentals to the
plaintiffs during the period of one (1) year provided by law for the redemption of
the extrajudicially foreclosed house.
We will consider these questions seriatim.
(a) Defendants-appellants mortgagors question the jurisdiction of the
municipal court from which the case originated, and consequently, the
appellate jurisdiction of the Court of First Instance a quo, on the theory that
the chattel mortgage is void ab initio; whence it would follow that the
extrajudicial foreclosure, and necessarily the consequent auction sale, are
also void. Thus, the ownership of the house still remained with defendants-
appellants who are entitled to possession and not plaintiffs-appellees.
Therefore, it is argued by defendants-appellants, the issue of ownership will
have to be adjudicated first in order to determine possession. It is
contended further that ownership being in issue, it is the Court of First
Instance which has jurisdiction and not the municipal court.
Defendants-appellants predicate their theory of nullity of the chattel mortgage
on two grounds, which are: (a) that their signatures on the chattel mortgage
were obtained through fraud, deceit, or trickery; and (b) that the subject matter
of the mortgage is a house of strong materials, and, being an immovable, it can
only be the subject of a real estate mortgage and not a chattel mortgage.
Tumalad vs. Vicencio, 41 SCRA 143
Page 3 of 6
On the charge of fraud, deceit or trickery, the Court of First Instance found
defendants-appellants’ contentions as not supported by evidence and
accordingly dismissed the charge, 8 confirming the earlier finding of the
municipal court that "the defense of ownership as well as the allegations of fraud
and deceit . . . are mere allegations." 9
It has been held in Supia and Batiaco v. Quintero and Ayala 10 that "the answer
is a mere statement of the facts which the party filing it expects to prove, but it is
not evidence; 11 and further, that when the question to be determined is one of
title, the Court is given the authority to proceed with the hearing of the cause until
this fact is clearly established. In the case of Sy v. Dalman, 12 wherein the
defendant was also a successful bidder in an auction sale, it was likewise held by
this Court that in detainer cases the claim of ownership "is a matter of defense
and raises an issue of fact which should be determined from the evidence at the
trial." What determines jurisdiction are the allegations or averments in the
complaint and the relief asked for. 13
Moreover, even granting that the charge is true, fraud or deceit does not render
a contract void ab initio, and can only be a ground for rendering the contract
voidable or annullable pursuant to Article 1390 of the New Civil Code, by a proper
action in court. 14 There is nothing on record to show that the mortgage has been
annulled. Neither is it disclosed that steps were taken to nullify the same. Hence,
defendants-appellants’ claim of ownership on the basis of a voidable contract
which has not been voided fails.
It is claimed in the alternative by defendants-appellants that even if there was no
fraud, deceit or trickery, the chattel mortgage was still null and void ab initio
because only personal properties can be subject of a chattel mortgage. The rule
about the status of buildings as immovable property is stated in Lopez v. Orosa,
Jr. and Plaza Theatre, Inc., 15 cited in Associated Insurance Surety Co., Inc. v. Iya,
Et. Al. 16 to the effect that —
". . . it is obvious that the inclusion of the building, separate and distinct
from the land, in the enumeration of what may constitute real properties
(art. 415, New Civil Code) could only mean one thing — that a building
is by itself an immovable property irrespective of whether or not said
structure and the land on which it is adhered to belong to the same
owner."
Certain deviations, however, have been allowed for various reasons. In the case
of Manarang and Manarang v. Ofilada, 17 is Court stated that "it is undeniable that
the parties to a contract may by agreement treat as personal property that which
by ,nature would be real property", citing Standard Oil Company of New York v.
Jaramillo. 18 In the latter case, the mortgagor conveyed and transferred to the
mortgagee by way of mortgage "the following described personal property." 19
The "personal property" consisted of leasehold rights and a building. Again, in the
case of Luna v. Encarnacion, 20 the subject of the contract designated as Chattel
Mortgage was a house of mixed materials, and this Court held therein that it was
a valid Chattel mortgage because it was so expressly designated and specifically
that the property given as security "is a house of mixed materials, which by its
very nature is considered personal property." In the later case of Navarro v.
Pineda, 21 this Court stated that —
"The view that parties to a deed of chattel mortgage may agree to consider a
house as personal property for the purposes of said contract, ‘is good only insofar
as the contracting parties are concerned. It is based, partly, upon the principle of
estoppel’ (Evangelista v. Alto Surety, No. L-11139, 23 April 1958). In a case, a
mortgaged house built on a rented land was held to be a personal property, not
only because the deed of mortgage considered it as such, but also because it did
not form part of the land (Evangelista v. Abad, [CA]; 36 O.G. 2913), for it is now
settled that an object placed on land by one who had only a temporary right to
the same, such as the lessee or usufructuary, does not become immobilized by
attachment (Valdez v. Central Altagracia, 222 U.S. 58, cited in Davao Sawmill Co.,
Inc. v. Castillo, Et Al., 61 Phil. 709). Hence, if a house belonging to a person stands
on a rented land belonging to another person, it may be mortgaged as a personal
property as so stipulated in the document of mortgage. (Evangelista v. Abad,
supra.) It should be noted, however that the principle is predicated on statements
by the owner declaring his house to be a chattel, a conduct that may conceivably
estop him from subsequently claiming otherwise." (Ladera v. C.N. Hodges, [CA]
48 O.G. 5374). 22
In the contract now before Us, the house on rented land is not only expressly
designated as Chattel Mortgage; it specifically provides that "the mortgagor . . .
voluntarily CEDES, SELLS and TRANSFERS by way of Chattel Mortgage 23 the
property together with its leasehold rights over the lot on which it is constructed
and participation . . ." 24 Although there is no specific statement referring to the
subject house as personal property, yet by ceding, selling or transferring a
property by way of chattel mortgage defendants-appellants could only have
meant to convey the house as chattel, or at least, intended to treat the same as
such, so that they should not now be allowed to make an inconsistent stand by
claiming otherwise. Moreover, the subject house stood on a rented lot to which
defendants-appellants merely had a temporary right as lessee, and although this
can not in itself alone determine the status of the property, it does so when
combined with other factors to sustain the interpretation that the parties,
particularly the mortgagors, intended to treat the house as personality. Finally,
unlike in the Iya cases, Lopez v. Orosa, Jr. and Plaza Theatre, Inc. 25 and Leung
Yee v. F. L. Strong Machinery and Williamson, 26 wherein third persons assailed
the validity of the chattel mortgage, 27 it is the defendants-appellants themselves,
as debtors-mortgagors, who are attacking the validity of the chattel mortgage in
this case. The doctrine of estoppel therefore applies to the herein defendants-
appellants, having treated the subject house as personality.
Tumalad vs. Vicencio, 41 SCRA 143
Page 4 of 6
(b) Turning now to the question of possession and rentals of the premises in
question. The Court of First Instance noted in its decision that nearly a
year after the foreclosure sale the mortgaged house had been
demolished on 14 and 15 January 1957 by virtue of a decision obtained
by the lessor of the land on which the house stood. For this reason, the
said court limited itself to sentencing the erstwhile mortgagors to pay
plaintiffs a monthly rent of P200.00 from 27 March 1956 (when the
chattel mortgage was foreclosed and the house sold) until 14 January
1957 (when it was torn down by the Sheriff), plus P300.00 attorney’s
fees.
Appellants mortgagors question this award, claiming that they were entitled
to remain in possession without any obligation to pay rent during the one
year redemption period after the foreclosure sale, i.e., until 27 March 1957.
On this issue, We must rule for the appellants.97
Chattel mortgages are covered and regulated by the Chattel Mortgage Law,
Act No. 1508. 28 Section 14 of this Act allows the mortgagee to have the
property mortgaged sold at public auction through a public officer in almost
the same manner as that allowed by Act No. 3135, as amended by Act No.
4118, provided that the requirements of the law relative to notice and
registration are complied with. 29 In the instant case, the parties specifically
stipulated that "the chattel mortgage will be enforceable in accordance with
the provisions of Special Act No. 3135 . . ." 30 (Emphasis supplied).
Section 6 of the Act referred to 31 provides that the debtor-mortgagor
(defendants-appellants herein) may, at any time within one year from and
after the date of the auction sale, redeem the property sold at the extra
judicial foreclosure sale. Section 7 of the same Act 32 allows the purchaser of
the property to obtain from the court the possession during the period of
redemption: but the same provision expressly requires the filing of a petition
with the proper Court of First Instance and the furnishing of a bond. It is only
upon filing of the proper motion and the approval of the corresponding bond
that the order for a writ of possession issues as a matter of course. No
discretion is left to the court. 33 In the absence of such a compliance, as in
the instant case, the purchaser can not claim possession during the period of
redemption as a matter of right. In such a case, the governing provision is
Section 34, Rule 39, of the Revised Rules of Court 34 which also applies to
properties purchased in extrajudicial foreclosure proceedings. 35
Construing the said section, this Court stated in the aforestated case of Reyes
v. Hamada,
"In other words, before the expiration of the 1-year period within which the
judgment-debtor or mortgagor may redeem the property, the purchaser
thereof is not entitled, as a matter of right, to possession of the same. Thus,
while it is true that the Rules of Court allow the purchaser to receive the
rentals if the purchased property is occupied by tenants, he is, nevertheless,
accountable to the judgment-debtor or mortgagor as the case may be, for the
amount so received and the same will be duly credited against the
redemption price when the said debtor or mortgagor effects the redemption.
Differently stated, the rentals receivable from tenants, although they may be
collected by the purchaser during the redemption period, do not belong to
the latter but still pertain to the debtor of mortgagor. The rationale for the
Rule, it seems, is to secure for the benefit of the debtor or mortgagor, the
payment of the redemption amount and the consequent return to him of his
properties sold at public auction." (Emphasis supplied)
The Hamada case reiterates the previous ruling in Chan v. Espe. 36
Since the defendants-appellants were occupying the house at the time of the
auction sale, they are entitled to remain in possession during the period of
redemption or within one year from and after 27 March 1956, the date of the
auction sale, and to collect the rents or profits during the said period.
It will be noted further that in the case at bar the period of redemption had
not yet expired when action was instituted in the court of origin, and that
plaintiffs-appellees did not choose to take possession under Section 7, Act
No. 3135, as amended, which is the law selected by the parties to govern the
extrajudicial foreclosure of the chattel mortgage. Neither was there an
allegation to that effect. Since plaintiffs-appellees’ right to possess was not
yet born at the filing of the complaint, there could be no violation or breach
thereof. Wherefore, the original complaint stated no cause of action and was
prematurely filed. For this reason, the same should be ordered dismissed,
even if there was no assignment of error to that effect. The Supreme Court is
clothed with ample authority to review palpable errors not assigned as such
if it finds that their consideration is necessary in arriving at a just decision of
the case. 37
It follows that the court below erred in requiring the mortgagors to pay rents
for the year following the foreclosure sale, as well as attorney’s fees.
FOR THE FOREGOING REASONS, the decision appealed from is reversed and
another one entered, dismissing the complaint. With costs against Plaintiffs-
Appellees.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee,
Barredo, Villamor and Makasiar, JJ., concur.
Endnotes:
1. Exhibit "A," page 1, Folder of Exhibits.
2. See paragraph "G," Exhibit "4" supra.
3. Exhibit "B," page 4, Folder of Exhibits.
4. Page 2, Defendants’ Record on appeal, page 97, Rollo.
Tumalad vs. Vicencio, 41 SCRA 143
Page 5 of 6
5. Page 20, Id., page 115, Rollo.
6. Now Section 2, Rule 70, Revised Rules of Court, which reads that —
"SEC. 2. Landlord, to proceed against tenant only after demand. — No landlord,
or his legal representative or assign, shall bring such action against a tenant for
failure to pay rent due or to comply with the conditions of his lease, unless the
tenant shall have failed to pay such rent or comply with such conditions for a
period of .. five (5) days in the case of building, after demand therefor, made
upon him personally, or by serving written notice of such demand upon the
person found on the premises, or by posting such notice on the premises if no
persons be found thereon."
7. See CFI order of 20 February 1957, pages 21-25, Defendants’ Record on
Appeal.
8. Page 31, Defendants’ Record on Appeal, page 213, Rollo.
9. See Municipal court decision, pages 17-18, Defendants’ Record on Appeal,
pages 199-200, Rollo.
10. 59 Phil. 320-321.
11. Italics supplied.
12. L-19200, 27 February 1958, 22 SCRA 834; See also Aquino v. Deala, 63 Phil.
582 and De los Reyes v. Elepaño, Et Al., G.R. No. L-3466, 13 October 1950.
13. See Canaynay v. Sarmiento, L-1246, 27 August 1947, 79 Phil. 36.
14. Last paragraph, Article 1290, N.C.C., supra.
15. No, L-10817-18, 28 February 1958, 103 Phil. 98.
16. No. L-10827-38, 30 May 1958, 103 Phil. 972.
17. No. L-8133, 18 May 1956, 99 Phil. 109.
18. No. L-20329, 16 March 1923, 44 Phil. 632.
19. Italics supplied.
20. No. L-4637, 30 June 1952, 91 Phil. 531.
21. No. L-18456, 30 November 1963, 9 SCRA 631.
22. Italics supplied.
23. Italics supplied.
24. See paragraph 2 of Exhibit "A," page 1, Folder of Exhibits.
25. Supra.
26. Supra.
27. See Navarro v. Pineda, supra.
28. Effective 1 August 1906.
29. See Luna v. Encarnacion, Et Al., No. L-4637, 30 June 1962, 91 Phil. 531.
30. See paragraph "G," Exhibit "A," supra.
31. Section 6, Act No. 3135, as amended, provides:
"In all cases in which an extrajudicial sale is made under the special
power hereinbefore referred to, the debtor, his successor in interest or
any judicial creditor or judgment creditor of said debtor, or any person
having a lien on the property subsequent to the mortgage or deed of trust
under which the property is sold, may redeem the same at any time
within the term of one year from and after the date of the sale; and such
redemption shall be governed by the provisions of sections four hundred
and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil
Procedure, in so far as these are not inconsistent with the provisions of
this Act." (Emphasis supplied)
32. Section 7, Act No. 3135, as amended, states:
"In any sale made under the provisions of this Act, the purchaser
may petition the Court of First Instance of the province or place
where the property or any part thereof is situated, to give him
possession thereof during the redemption period, furnishing
bond in an amount equivalent to the use of the property for a
period of twelve months, to indemnify the debtor in case it be
shown that the sale was made without violating the mortgage or
without complying with the requirements of this Act . . ." (Italics
supplied)
33. See De Gracia v. San Jose, Et Al., No. L-6493, 25 March 1954.
34. "SEC. 34. Rents and profits pending redemption. Statement thereof and credit
therefor on redemption. — The purchaser, from the time of the sale until a
redemption, and a redemptioner, from the time of his redemption until another
redemption, is entitled to receive the rents of the property sold or the value of
the use and occupation thereof when such property is in possession of a tenant.
Put when any such rents and profits have been received by the judgment creditor
or purchaser, or by a redemptioner, or by the assignee or either of them, from
property thus sold preceding such redemption, the amounts of such rents and
profits shall be a credit upon the redemption money to be paid; . . ."cralaw
virtua1aw library
Tumalad vs. Vicencio, 41 SCRA 143
Page 6 of 6

35. See Reyes v. Hamada, No. L-19967, 31 May 1965, 14 SCRA 215; Italics
supplied.
36. No. L-16777, 20 April 1961, 1 SCRA 1004.
37. Saura Import & Export Co. v. Philippine international Surety Co., Et Al., No. L-
15184, 31 May 1963, 8 SCRA 143, 148; Hernandez v. Andal, 78 Phil. 198, See also
Sec. 7, Rule 51, of the Revised Rules of Court. Cf. Santaella v. Otto Lange Co., 155
Fed. 719; Mast v. Superior Drill Co., 154 Fed., 45, Francisco, Rules of Court (1965
Ed), Vol. 3, page 765.
Serg’s Products and Goquiola vs. PCI Leasing and Finance, 338 SCRA 499
Page 1 of 4
THIRD DIVISION
G.R. No. 137705 August 22, 2000
SERG'S PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners,
vs.
PCI LEASING AND FINANCE, INC., respondent.
DECISION
PANGANIBAN, J.:
After agreeing to a contract stipulating that a real or immovable property be
considered as personal or movable, a party is estopped from subsequently
claiming otherwise. Hence, such property is a proper subject of a writ of replevin
obtained by the other contracting party.
The Case
Before us is a Petition for Review on Certiorari assailing the January 6, 1999
Decision1 of the Court of Appeals (CA)2 in CA-GR SP No. 47332 and its February
26, 1999 Resolution3 denying reconsideration. The decretal portion of the CA
Decision reads as follows:
"WHEREFORE, premises considered, the assailed Order dated February 18, 1998
and Resolution dated March 31, 1998 in Civil Case No. Q-98-33500 are
hereby AFFIRMED. The writ of preliminary injunction issued on June 15, 1998 is
hereby LIFTED."4
In its February 18, 1998 Order,5 the Regional Trial Court (RTC) of Quezon City
(Branch 218)6 issued a Writ of Seizure.7 The March 18, 1998 Resolution8 denied
petitioners’ Motion for Special Protective Order, praying that the deputy sheriff
be enjoined "from seizing immobilized or other real properties in (petitioners’)
factory in Cainta, Rizal and to return to their original place whatever immobilized
machineries or equipments he may have removed."9
The Facts
The undisputed facts are summarized by the Court of Appeals as follows: 10
"On February 13, 1998, respondent PCI Leasing and Finance, Inc. ("PCI Leasing"
for short) filed with the RTC-QC a complaint for [a] sum of money (Annex ‘E’),
with an application for a writ of replevin docketed as Civil Case No. Q-98-33500.
"On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge
issued a writ of replevin (Annex ‘B’) directing its sheriff to seize and deliver the
machineries and equipment to PCI Leasing after 5 days and upon the payment of
the necessary expenses.
"On March 24, 1998, in implementation of said writ, the sheriff proceeded to
petitioner’s factory, seized one machinery with [the] word that he [would] return
for the other machineries.
"On March 25, 1998, petitioners filed a motion for special protective order
(Annex ‘C’), invoking the power of the court to control the conduct of its officers
and amend and control its processes, praying for a directive for the sheriff to
defer enforcement of the writ of replevin.
"This motion was opposed by PCI Leasing (Annex ‘F’), on the ground that the
properties [were] still personal and therefore still subject to seizure and a writ of
replevin.
"In their Reply, petitioners asserted that the properties sought to be seized
[were] immovable as defined in Article 415 of the Civil Code, the parties’
agreement to the contrary notwithstanding. They argued that to give effect to the
agreement would be prejudicial to innocent third parties. They further stated
that PCI Leasing [was] estopped from treating these machineries as personal
because the contracts in which the alleged agreement [were] embodied [were]
totally sham and farcical.
"On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take
possession of the remaining properties. He was able to take two more, but was
prevented by the workers from taking the rest.
"On April 7, 1998, they went to [the CA] via an original action for certiorari."
Ruling of the Court of Appeals
Citing the Agreement of the parties, the appellate court held that the subject
machines were personal property, and that they had only been leased, not owned,
by petitioners. It also ruled that the "words of the contract are clear and leave no
doubt upon the true intention of the contracting parties." Observing that
Petitioner Goquiolay was an experienced businessman who was "not unfamiliar
with the ways of the trade," it ruled that he "should have realized the import of
the document he signed." The CA further held:
"Furthermore, to accord merit to this petition would be to preempt the trial court
in ruling upon the case below, since the merits of the whole matter are laid down
before us via a petition whose sole purpose is to inquire upon the existence of a
grave abuse of discretion on the part of the [RTC] in issuing the assailed Order
Serg’s Products and Goquiola vs. PCI Leasing and Finance, 338 SCRA 499
Page 2 of 4
and Resolution. The issues raised herein are proper subjects of a full-blown trial,
necessitating presentation of evidence by both parties. The contract is being
enforced by one, and [its] validity is attacked by the other – a matter x x x which
respondent court is in the best position to determine."
Hence, this Petition.11
The Issues
In their Memorandum, petitioners submit the following issues for our
consideration:
"A. Whether or not the machineries purchased and imported by SERG’S became
real property by virtue of immobilization.
B. Whether or not the contract between the parties is a loan or a lease. "12
In the main, the Court will resolve whether the said machines are personal, not
immovable, property which may be a proper subject of a writ of replevin. As a
preliminary matter, the Court will also address briefly the procedural points
raised by respondent.
The Court’s Ruling
The Petition is not meritorious.
Preliminary Matter:Procedural Questions
Respondent contends that the Petition failed to indicate expressly whether it was
being filed under Rule 45 or Rule 65 of the Rules of Court. It further alleges that
the Petition erroneously impleaded Judge Hilario Laqui as respondent.
There is no question that the present recourse is under Rule 45. This conclusion
finds support in the very title of the Petition, which is "Petition for Review on
Certiorari."13
While Judge Laqui should not have been impleaded as a respondent,14 substantial
justice requires that such lapse by itself should not warrant the dismissal of the
present Petition. In this light, the Court deems it proper to remove, motu proprio,
the name of Judge Laqui from the caption of the present case.
Main Issue: Nature of the Subject Machinery
Petitioners contend that the subject machines used in their factory were not
proper subjects of the Writ issued by the RTC, because they were in fact real
property. Serious policy considerations, they argue, militate against a contrary
characterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for the
recovery of personal property only.15 Section 3 thereof reads:
"SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the
court shall issue an order and the corresponding writ of replevin describing the
personal property alleged to be wrongfully detained and requiring the sheriff
forthwith to take such property into his custody."
On the other hand, Article 415 of the Civil Code enumerates immovable or real
property as follows:
"ART. 415. The following are immovable property:
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements intended by the owner of
the tenement for an industry or works which may be carried on in a building or
on a piece of land, and which tend directly to meet the needs of the said industry
or works;
xxx xxx x x x"
In the present case, the machines that were the subjects of the Writ of Seizure
were placed by petitioners in the factory built on their own land. Indisputably,
they were essential and principal elements of their chocolate-making industry.
Hence, although each of them was movable or personal property on its own, all
of them have become "immobilized by destination because they are essential and
principal elements in the industry."16 In that sense, petitioners are correct in
arguing that the said machines are real, not personal, property pursuant to
Article 415 (5) of the Civil Code.17
Be that as it may, we disagree with the submission of the petitioners that the said
machines are not proper subjects of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real
property be considered as personal.18 After agreeing to such stipulation, they are
consequently estopped from claiming otherwise. Under the principle of estoppel,
a party to a contract is ordinarily precluded from denying the truth of any
material fact found therein.
Hence, in Tumalad v. Vicencio,19 the Court upheld the intention of the parties to
treat a house as a personal property because it had been made the subject of a
chattel mortgage. The Court ruled:
"x x x. Although there is no specific statement referring to the subject house as
personal property, yet by ceding, selling or transferring a property by way of
chattel mortgage defendants-appellants could only have meant to convey the
house as chattel, or at least, intended to treat the same as such, so that they should
not now be allowed to make an inconsistent stand by claiming otherwise."
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever
Textile Mills20 also held that the machinery used in a factory and essential to the
industry, as in the present case, was a proper subject of a writ of replevin because
it was treated as personal property in a contract. Pertinent portions of the Court’s
ruling are reproduced hereunder:
Serg’s Products and Goquiola vs. PCI Leasing and Finance, 338 SCRA 499
Page 3 of 4
"x x x. If a house of strong materials, like what was involved in the above Tumalad
case, may be considered as personal property for purposes of executing a chattel
mortgage thereon as long as the parties to the contract so agree and no innocent
third party will be prejudiced thereby, there is absolutely no reason why a
machinery, which is movable in its nature and becomes immobilized only by
destination or purpose, may not be likewise treated as such. This is really because
one who has so agreed is estopped from denying the existence of the chattel
mortgage."
In the present case, the Lease Agreement clearly provides that the machines in
question are to be considered as personal property. Specifically, Section 12.1 of
the Agreement reads as follows:21
"12.1 The PROPERTY is, and shall at all times be and remain, personal property
notwithstanding that the PROPERTY or any part thereof may now be, or hereafter
become, in any manner affixed or attached to or embedded in, or permanently
resting upon, real property or any building thereon, or attached in any manner to
what is permanent."
Clearly then, petitioners are estopped from denying the characterization of the
subject machines as personal property. Under the circumstances, they are proper
subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that the machines should be
deemed personal property pursuant to the Lease Agreement – is good only
insofar as the contracting parties are concerned.22 Hence, while the parties are
bound by the Agreement, third persons acting in good faith are not affected by its
stipulation characterizing the subject machinery as personal. 23 In any event,
there is no showing that any specific third party would be adversely affected.
Validity of the Lease Agreement
In their Memorandum, petitioners contend that the Agreement is a loan and not
a lease.24 Submitting documents supposedly showing that they own the subject
machines, petitioners also argue in their Petition that the Agreement suffers from
"intrinsic ambiguity which places in serious doubt the intention of the parties and
the validity of the lease agreement itself."25 In their Reply to respondent’s
Comment, they further allege that the Agreement is invalid.26
These arguments are unconvincing. The validity and the nature of the contract
are the lis mota of the civil action pending before the RTC. A resolution of these
questions, therefore, is effectively a resolution of the merits of the case. Hence,
they should be threshed out in the trial, not in the proceedings involving the
issuance of the Writ of Seizure.
Indeed, in La Tondeña Distillers v. CA,27 the Court explained that the policy under
Rule 60 was that questions involving title to the subject property – questions
which petitioners are now raising -- should be determined in the trial. In that
case, the Court noted that the remedy of defendants under Rule 60 was either to
post a counter-bond or to question the sufficiency of the plaintiff’s bond. They
were not allowed, however, to invoke the title to the subject property. The Court
ruled:
"In other words, the law does not allow the defendant to file a motion to dissolve
or discharge the writ of seizure (or delivery) on ground of insufficiency of the
complaint or of the grounds relied upon therefor, as in proceedings on
preliminary attachment or injunction, and thereby put at issue the matter of the
title or right of possession over the specific chattel being replevied, the policy
apparently being that said matter should be ventilated and determined only at
the trial on the merits."28
Besides, these questions require a determination of facts and a presentation of
evidence, both of which have no place in a petition for certiorari in the CA under
Rule 65 or in a petition for review in this Court under Rule 45.29
Reliance on the Lease Agreement
It should be pointed out that the Court in this case may rely on the Lease
Agreement, for nothing on record shows that it has been nullified or annulled. In
fact, petitioners assailed it first only in the RTC proceedings, which had ironically
been instituted by respondent. Accordingly, it must be presumed valid and
binding as the law between the parties.
Makati Leasing and Finance Corporation30 is also instructive on this point. In that
case, the Deed of Chattel Mortgage, which characterized the subject machinery as
personal property, was also assailed because respondent had allegedly been
required "to sign a printed form of chattel mortgage which was in a blank form at
the time of signing." The Court rejected the argument and relied on the Deed,
ruling as follows:
"x x x. Moreover, even granting that the charge is true, such fact alone does not
render a contract void ab initio, but can only be a ground for rendering said
contract voidable, or annullable pursuant to Article 1390 of the new Civil Code,
by a proper action in court. There is nothing on record to show that the mortgage
has been annulled. Neither is it disclosed that steps were taken to nullify the
same. x x x"
Alleged Injustice Committed on the Part of Petitioners
Petitioners contend that "if the Court allows these machineries to be seized, then
its workers would be out of work and thrown into the streets." 31 They also allege
that the seizure would nullify all efforts to rehabilitate the corporation.
Petitioners’ arguments do not preclude the implementation of the Writ. As earlier
discussed, law and jurisprudence support its propriety. Verily, the above-
mentioned consequences, if they come true, should not be blamed on this Court,
but on the petitioners for failing to avail themselves of the remedy under Section
5 of Rule 60, which allows the filing of a counter-bond. The provision states:
Serg’s Products and Goquiola vs. PCI Leasing and Finance, 338 SCRA 499
Page 4 of 4

"SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the 15 BAFinance v. CA, 258 SCRA 102, July 5, 1996; Filinvest Credit v. CA,
applicant’s bond, or of the surety or sureties thereon, he cannot immediately 248 SCRA 549, September 27, 1995; Machinery Engineering
require the return of the property, but if he does not so object, he may, at any time Supply v. CA, 96 Phil. 70, October 29, 1954.
before the delivery of the property to the applicant, require the return thereof, by 16 Mindanao Bus Co. v. City Assessor and Treasurer, 6 SCRA 197,
filing with the court where the action is pending a bond executed to the applicant, September 29, 1962, per Labrador, J. See also Vitug, Compendium of Civil
in double the value of the property as stated in the applicant’s affidavit for the
Law and Jurisprudence, 1986 ed., pp. 99-100.
delivery thereof to the applicant, if such delivery be adjudged, and for the
17 People’s
Bank & Trust Co. v. Dahican Lumber, 20 SCRA 84, May 16,
payment of such sum to him as may be recovered against the adverse party, and
by serving a copy bond on the applicant." 1967; Burgos v. Chief of Staff, 133 SCRA 800, December 26, 1984; Davao
Sawmill Co. v. Castillo, 61 Phil. 709, August 7, 1935.
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of
18 Chua Peng Hian v. CA, 133 SCRA 572, December 19, 1984; Standard Oil
Appeals AFFIRMED. Costs against petitioners.
Co. v. Jaranillo, 44 Phil. 630, March 16, 1923; Luna v. Encarnacion, 91
SO ORDERED.
Phil. 531, June 30, 1952; Manarang v. Ofilada, 99 Phil. 109, May 18, 1956;
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur. People’s Bank & Trust Co. v. Dahican Lumber, supra.
Footnotes 19 41 SCRA 143, 153, September 30, 1971, per Reyes, JBL, J.
1 Rollo, pp. 177-180. 20 122 SCRA 296, 300, May 16, 1983, per De Castro, J.
2 Penned by Justice Romeo A. Brawner (Division acting chairman), with 21 Rollo, p. 262.
the concurrence of Justices Eloy R. Bello Jr. and Martin S. Villarama Jr. 22 Evangelista
v. Alto Surety and Insurance Co., 103 Phil. 401, April 23,
3 Rollo, p. 189. 1958; Navarro v. Pineda, 9 SCRA 631, November 30, 1963.
4 CA Decision, p. 3; rollo, p. 179. 23 Vitug, supra, pp. 100-101.
5 Rollo, p. 356. 24 Petitioners’ Memorandum, p. 8; rollo, p. 381.
6 Presided by Judge Hilario L. Laqui. 25 Petition, p. 10; rollo, p. 12.
7 Rollo, pp. 23-24. 26 Reply, p. 7; rollo, p. 301.
8 Rollo, pp. 78-79. 27 209 SCRA 553, 567, June 8, 1992, per Narvasa, CJ.
9 Motion for Special Protective Order, pp. 3-4; rollo, pp. 76-77. 28 Ibid.

10 CA Decision, pp. 1-2; rollo, pp. 177-178. 29 See Fuentes v. Court of Appeals, 268 SCRA 703, February 26, 1997.
11 Thecase was deemed submitted for resolution on October 21, 1999, 30 Supra, p. 301.
upon receipt by this Court of the petitioners’ Memorandum signed by 31 Petition, p. 16; rollo, p. 18.
Atty. Victor Basilio N. De Leon of Antonio R. Bautista & Partners.
Respondent’s Memorandum, which was signed by Atty. Amador F.
Brioso Jr. of Perez & Calima Law Offices, had been filed earlier on
September 29, 1999.
12 Petitioners’ Memorandum, p. 3; rollo, p. 376.
13 Section 1, Rule 45 of the Rules of Court.
14 Section 4 (a) of Rule 45 provides that the petition shall state the full
name of the parties, "without impleading the lower courts or judges
thereof either as petitioners or respondents."
Rubiso vs. Rivera, 37 Phil. 72
Page 1 of 2
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-15260 August 18, 1920
FAUSTO RUBISO, plaintiff-appellant,
vs.
FLORENTINO RIVERA, ET AL., defendants-appellees.
Canillas and Cardenas for appellant.
M. P. Leuterio for appellees.
VILLAMOR, J.:
About April, 1915, Fausto Rubiso and Florentino Rivera had a litigation
concerning the ownership of the pilot boat Valentina. Rivera acquired it on
January 4, 1915, from its original owner the Chinaman Sy Qui, but did not inscribe
his title in the mercantile registry according to article 573 of the Code of
Commerce in relation to article 2 of Act No. 1900. Subsequently Rubiso bought
said pilot boat in a sale at public auction for the sum of P55.45 on January 23,
1915, and inscribed his title in the mercantile registry on March 4th of the same
year. The suit was decided by the Court of First Instance of Manila in favor of the
plaintiff Rubiso on September 6, 1915. On the 11th day of said month the court
issued a writ of execution, upon the petition of the plaintiff, in order to proceed,
as said plaintiff alleged, to the salvage of the pilot boat which at that time was
stranded in the sitio of Tingloy, Batangas. The order of execution was stayed upon
the filing of a bond for P1,800 by the defendant Rivera who alleged in support of
his objection, that the pilot boat was already salvaged and had been taken to
Maricaban, Batangas. The judgment having been brought to this court by appeal
it was affirmed in a judgment rendered on October 30, 1917 (R.G. N. 11407).1 The
cause having been sent to the Court of First Instance for the execution of
judgment the sheriff of Batangas who undertook to enforce the writ of execution
was able to deliver to the plaintiff Rubiso nothing but the pilot boat itself in a
seriously damaged condition and two useless sails.
Such are the facts which gave rise to the present action for the recovery of the
damages in the sum of P1,200 which the plaintiff and appellant Fausto Rubiso
alleges he has suffered by the destruction and loss of the pilot boat Valentina and
its equipment which were caused, according to the complaint, by the fault and
negligence of the defendants Florentino Rivera and others.
The answer having been filed and the trial having taken place, the court rendered
judgment in favor of the defendants without any special pronouncement as to
costs. From this judgment the plaintiff appealed. The motion for new trial having
been overruled, the appellant presented the corresponding bill of exceptions
assigning in his brief the following a errors: (a) The finding that there was not
sufficient evidence to establish the amount of the expenses sought to be
recovered; (b) the finding that the pilot boat Valentina had no legal value in
August, 1915; (c) in rendering judgment absolving the defendants in this case;
and (d) in overruling the motion for new trial presented by the plaintiff on the
ground that the judgment is against the weight of the evidence.
In a series of uninterrupted decision before and after the promulgation of the
Civil Code, the doctrine has been established that all judgment for damages
whether arising from a breach of contract or resulting from some provision of
law, must be based upon satisfactory evidence of the real existence of the
damages alleged to have been suffered. (Sanz vs. Lavin and Bros., 6 Phil., 299.)
Has the existence of the damages sought to be recovered in this case been
satisfactorily established? The court below decided this question of fact
adversely to the plaintiff and we are of the opinion that this findings is sustained
by the evidence. Plaintiff declares that in February, 1915, he visited and examined
the pilot boat Valentina in the barrio of Tingloy and that on said day he found it
in good condition, and that he saw all of its tackle and rigging; but on cross-
examination by the attorney for the defendants he admitted that on said date he
was unable to take possession of the vessel because the person in charge of it
would not permit him even to approach. Estanislao Jili who accompanied Fausto
Rubiso in order to see the pilot boat Valentina in February, 1915, affirms that
they did not go on board the vessel because the person in charge of it would not
permit them to do so. This same witness and Jose Soriano as a witness of the
plaintiff state that at that time the boat was not in a seaworthy condition, because
its bottom was damaged and it had no equipments.
If what has been said is not yet sufficient to find that the pretense of the appellant
as to his first assignment of error is unsustainable, we still have the
uncontradicted testimony of Juan Velino, Irineo Martinez and Mariano Villas,
witnesses for the defendants, who declared on the seriously damaged condition
of the pilot boat long before its acquisition by the appellant.
Juan Velino declared that in August, 1914, the boat was aground in Dayhagan,
Mindoro; it was somewhat repaired and about November of the same year it
sailed from that place and suffered on the way such damages and troubles that it
had to be taken to Tingloy for new repair, some vessels' tools and equipments
having been borrowed from another boat because those of the Valentina had
been destroyed; and the storm destroyed the vessel so much that it could not be
taken to the Island of Maricaban except by means of rafts. To the same effect is
the testimony of Irineo Martinez. Mariano Villas testified that in December, 1914,
the Valentina anchored in Tingloy alongside his vessel and as he was interested
in the purchase of this pilot boat, the sale of which was advertised in Manila, he
examined it and then saw that he would not buy it even for P400, because it was
completely destroyed. There can be no doubt as to the competency of this witness
to testify on the question of the price of the pilot boat Valentina because
Rubiso vs. Rivera, 37 Phil. 72
Page 2 of 2
according to him he had ordered the construction of boats of the same size and
condition during that period. The lower court declares in its judgment that this
witness appears to it as sufficiently trustworthy, and we find no basis whatever
on the record to doubt the correctness of the finding of the trial judge who saw
and observed him while he was testifying.
We, therefore, are of the opinion that the finding of the court that there was not
sufficient proof to establish the amount of the defendants' claim is in accordance
with the merits of the case.
As to the second error assigned by the appellant it should be noted that, as
appears in the record the pilot boat Valentina was stranded in Tingloy since the
month of November, 1914, that is, two months before it had been acquired by the
plaintiff at public auction and ten months before the judgment declaring him to
be the owner thereof, was rendered. The appellant, in his first complaint of April
10, 1915, for the recovery of the pilot boat Valentina, affirms that the boat was
then in the same worthless condition in which it was in 1914, and the evidence
we have examined in this case show that in fact in August or September, 1915, it
was in the worse of conditions and was utterly worthless. Without attempting to
determine the durability of a boat made of wood stranded for a period of ten
months, as is the case with the boat in question, we are of the opinion, and so
declare, that according to the proofs adduced in this case, the court did not err in
declaring in its judgment that the pilot boat Valentina did not have any legal value
in August, 1915.
The defendant in his brief interposes the defense of res judicata based upon the
judgment of this court in the action between Fausto Rubiso et al. and Florentino
Rivera who are the parties in the present case.
In that case it was held:
With respect to the indemnification for damages claimed by the plaintiff,
besides the fact [that according to the proceedings taken subsequently
to the date on which the judgment appealed from was rendered, it
appears that the pilot boat has already left in good condition the place
where it had been stranded and is at present found anchored in the port
of Maricaban,] the truth is that the record does not offer positive proof
of the amount of the damages caused, and on the other hand it cannot be
declared that the defendant had acted in bad faith for he acquired the
vessel previous to its acquisition at public auction by the plaintiff Rubiso
who, for the reason already given, is the true and sole owner of said pilot
boat. (Decision of October 30, 1917, R. G. No. 11407 [Rubiso and
Gelito vs. Rivera, 37 Phil., 72].)
It having been declared in a previous action that the defendant Rivera did not act
in bad faith and that therefore he was not liable for damages, it would be
necessary to show in the present case that the destruction of the boat and the loss
of its equipments took place after the final judgment was rendered in that case
and by reason of the fault and negligence of the defendants, which is not the case
here. What appears from the evidence presented by the defendant and
uncontradicted by that presented by the adverse parties, is that from September,
1915, to March 7, 1918, which was the date of the execution of the judgment of
this court affirming that of the lower court, the boat continued aground in the
Island of Maricaban awaiting the final judgment in the action with respect to
ownership and naturally exposed to the action of sea water and the inclemencies
of the weather, things which were beyond the control of the defendant Rivera.
It thus now appears that the damages claimed by the plaintiff are the same
damages that he claimed in the first action. To speak more accurately, the
appellant first sued for the recovery of the vessel and damages in the sum of
P1,750. Judgment was rendered as to the first in his favor but against him as to
the second. And now he comes back again claiming damages.
The case now under consideration is analogous to that of Palanca Tanguinlay vs.
Quiros (10 Phil., 360). In that case the question was extensively discussed
whether a previous judgment constitutes an adjudication of the subject-matter of
a new suit between the same parties to such extent that it can not again be tried
anew. It was held that according to articles 306 and 307 of the Code of Civil
Procedure, a judgment rendered in an action for the recovery damages for
property lost is a bar to any other action between the same parties for the
recovery of the same property or its value. In the course of the decision the court
held:
The American books are full of similar cases, an instance being Hatch vs.
Coddington (32 Minn., 92), in which it was held that a former action
between the same parties to recover damages for a wrongful conversion
of personal property was a bar to a subsequent suit to recover
possession of the specific property itself, notwithstanding the difference
of form and that the relief sought and the subject-matter of the cause of
action were regarded as the same. Nor is it altogether clear that the law
of Spain was different. Señor Manresa, in his commentary on article 1252
of the Civil Code, cites a decision of the supreme court of 25th of April,
1900 (vol. 8, p. 555), holding that in a real action a judgment in a former
personal suit between the same parties for indemnity for the use of the
same property operated as cosa juzgada.
From what has been said the judgment appealed from should be, and is hereby,
affirmed, with costs against the appellant. So ordered.
Mapa, C.J., Johnson, Carson, Araullo, Malcolm, Avanceña and Moir, JJ., concur.
Footnotes
1See Rubiso and Gelito vs. Rivera, 37 Phil., 72.
People’s Bank & Trust Company and Antlantic Gulf & Pacific Company vs. Dahican Lumber, G.R. No. L-17500, May 16, 1967, 20 SCRA 84
Page 1 of 6
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-17500 May 16, 1967
PEOPLE'S BANK AND TRUST CO. and ATLANTIC GULF AND PACIFIC CO. OF
MANILA, plaintiffs-appellants,
vs.
DAHICAN LUMBER COMPANY, DAHICAN AMERICAN LUMBER
CORPORATION and CONNELL BROS. CO. (PHIL.), defendants-appellants.
Angel S. Gamboa for defendants-appellants.
Laurel Law Offices for plaintiffs-appellants.
DIZON, J.:
On September 8, 1948, Atlantic Gulf & Pacific Company of Manila, a West Virginia
corporation licensed to do business in the Philippines — hereinafter referred to
as ATLANTIC — sold and assigned all its rights in the Dahican Lumber concession
to Dahican Lumber Company — hereinafter referred to as DALCO — for the total
sum of $500,000.00, of which only the amount of $50,000.00 was paid.
Thereafter, to develop the concession, DALCO obtained various loans from the
People's Bank & Trust Company — hereinafter referred to as the BANK —
amounting, as of July 13, 1950, to P200,000.00. In addition, DALCO obtained,
through the BANK, a loan of $250,000.00 from the Export-Import Bank of
Washington D.C., evidenced by five promissory notes of $50,000.00 each,
maturing on different dates, executed by both DALCO and the Dahican America
Lumber Corporation, a foreign corporation and a stockholder of DALCO, —
hereinafter referred to as DAMCO, all payable to the BANK or its order.
As security for the payment of the abovementioned loans, on July 13, 1950 DALCO
executed in favor of the BANK — the latter acting for itself and as trustee for the
Export-Import Bank of Washington D.C. — a deed of mortgage covering five
parcels of land situated in the province of Camarines Norte together with all the
buildings and other improvements existing thereon and all the personal
properties of the mortgagor located in its place of business in the municipalities
of Mambulao and Capalonga, Camarines Norte (Exhibit D). On the same date,
DALCO executed a second mortgage on the same properties in favor of ATLANTIC
to secure payment of the unpaid balance of the sale price of the lumber
concession amounting to the sum of $450,000.00 (Exhibit G). Both deeds
contained the following provision extending the mortgage lien to properties to
be subsequently acquired — referred to hereafter as "after acquired properties"
— by the mortgagor:
All property of every nature and description taken in exchange or
replacement, and all buildings, machinery, fixtures, tools equipment and
other property which the Mortgagor may hereafter acquire, construct,
install, attach, or use in, to, upon, or in connection with the premises,
shall immediately be and become subject to the lien of this mortgage in
the same manner and to the same extent as if now included therein, and
the Mortgagor shall from time to time during the existence of this
mortgage furnish the Mortgagee with an accurate inventory of such
substituted and subsequently acquired property.
Both mortgages were registered in the Office of the Register of Deeds of
Camarines Norte. In addition thereto DALCO and DAMCO pledged to the BANK
7,296 shares of stock of DALCO and 9,286 shares of DAMCO to secure the same
obligations.
Upon DALCO's and DAMCO's failure to pay the fifth promissory note upon its
maturity, the BANK paid the same to the Export-Import Bank of Washington D.C.,
and the latter assigned to the former its credit and the first mortgage securing it.
Subsequently, the BANK gave DALCO and DAMCO up to April 1, 1953 to pay the
overdue promissory note.
After July 13, 1950 — the date of execution of the mortgages mentioned above —
DALCO purchased various machineries, equipment, spare parts and supplies in
addition to, or in replacement of some of those already owned and used by it on
the date aforesaid. Pursuant to the provision of the mortgage deeds quoted
theretofore regarding "after acquired properties," the BANK requested DALCO to
submit complete lists of said properties but the latter failed to do so. In
connection with these purchases, there appeared in the books of DALCO as due
to Connell Bros. Company (Philippines) — a domestic corporation who was
acting as the general purchasing agent of DALCO — thereinafter called CONNELL
— the sum of P452,860.55 and to DAMCO, the sum of P2,151,678.34.
On December 16, 1952, the Board of Directors of DALCO, in a special meeting
called for the purpose, passed a resolution agreeing to rescind the alleged sales
of equipment, spare parts and supplies by CONNELL and DAMCO to it. Thereafter,
the corresponding agreements of rescission of sale were executed between
DALCO and DAMCO, on the one hand and between DALCO and CONNELL, on the
other.
On January 13, 1953, the BANK, in its own behalf and that of ATLANTIC,
demanded that said agreements be cancelled but CONNELL and DAMCO refused
to do so. As a result, on February 12, 1953; ATLANTIC and the BANK, commenced
foreclosure proceedings in the Court of First Instance of Camarines Norte against
DALCO and DAMCO. On the same date they filed an ex-parte application for the
appointment of a Receiver and/or for the issuance of a writ of preliminary
injunction to restrain DALCO from removing its properties. The court granted
both remedies and appointed George H. Evans as Receiver. Upon defendants'
People’s Bank & Trust Company and Antlantic Gulf & Pacific Company vs. Dahican Lumber, G.R. No. L-17500, May 16, 1967, 20 SCRA 84
Page 2 of 6
motion, however, the court, in its order of February 21, 1953, discharged the
Receiver.
On March 2, 1953, defendants filed their answer denying the material allegations
of the complaint and alleging several affirmative defenses and a counterclaim.
On March 4 of the same year, CONNELL, filed a motion for intervention alleging
that it was the owner and possessor of some of the equipments, spare parts and
supplies which DALCO had acquired subsequent to the execution of the
mortgages sought to be foreclosed and which plaintiffs claimed were covered by
the lien. In its order of March 18,1953 the Court granted the motion, as well as
plaintiffs' motion to set aside the order discharging the Receiver. Consequently,
Evans was reinstated.
On April 1, 1953, CONNELL filed its answer denying the material averment of the
complaint, and asserting affirmative defenses and a counterclaim.
Upon motion of the parties the Court, on September 30, 1953, issued an order
transferring the venue of the action to the Court of First Instance of Manila where
it was docketed as Civil Case No. 20987.
On August 30, 1958, upon motion of all the parties, the Court ordered the sale of
all the machineries, equipment and supplies of DALCO, and the same were
subsequently sold for a total consideration of P175,000.00 which was deposited
in court pending final determination of the action. By a similar agreement one-
half (P87,500.00) of this amount was considered as representing the proceeds
obtained from the sale of the "undebated properties" (those not claimed by
DAMCO and CONNELL), and the other half as representing those obtained from
the sale of the "after acquired properties".
After due trial, the Court, on July 15, 1960, rendered judgment as follows:
IN VIEW WHEREFORE, the Court:
1. Condemns Dahican Lumber Co. to pay unto People's Bank the sum of
P200,000,00 with 7% interest per annum from July 13, 1950, Plus
another sum of P100,000.00 with 5% interest per annum from July 13,
1950; plus 10% on both principal sums as attorney's fees;
2. Condemns Dahican Lumber Co. to pay unto Atlantic Gulf the sum of
P900,000.00 with 4% interest per annum from July 3, 1950, plus 10% on
both principal as attorney's fees;
3. Condemns Dahican Lumber Co. to pay unto Connell Bros, the sum of
P425,860.55, and to pay unto Dahican American Lumber Co. the sum of
P2,151,678.24 both with legal interest from the date of the filing of the
respective answers of those parties, 10% of the principals as attorney's
fees;
4. Orders that of the sum realized from the sale of the properties of
P175,000.00, after deducting the recognized expenses, one-half thereof
be adjudicated unto plaintiffs, the court no longer specifying the share of
each because of that announced intention under the stipulation of facts
to "pool their resources"; as to the other one-half, the same should be
adjudicated unto both plaintiffs, and defendant Dahican American and
Connell Bros. in the proportion already set forth on page 9, lines 21, 22
and 23 of the body of this decision; but with the understanding that
whatever plaintiffs and Dahican American and Connell Bros. should
receive from the P175,000.00 deposited in the Court shall be applied to
the judgments particularly rendered in favor of each;
5. No other pronouncement as to costs; but the costs of the receivership
as to the debated properties shall be borne by People's Bank, Atlantic
Gulf, Connell Bros., and Dahican American Lumber Co., pro-rata.
On the following day, the Court issued the following supplementary decision:
IN VIEW WHEREOF, the dispositive part of the decision is hereby
amended in order to add the following paragraph 6:
6. If the sums mentioned in paragraphs 1 and 2 are not paid within ninety
(90) days, the Court orders the sale at public auction of the lands object
of the mortgages to satisfy the said mortgages and costs of foreclosure.
From the above-quoted decision, all the parties appealed.
Main contentions of plaintiffs as appellants are the following: that the "after
acquired properties" were subject to the deeds of mortgage mentioned
heretofore; that said properties were acquired from suppliers other than DAMCO
and CONNELL; that even granting that DAMCO and CONNELL were the real
suppliers, the rescission of the sales to DALCO could not prejudice the mortgage
lien in favor of plaintiffs; that considering the foregoing, the proceeds obtained
from the sale of the "after acquired properties" as well as those obtained from the
sale of the "undebated properties" in the total sum of P175,000.00 should have
been awarded exclusively to plaintiffs by reason of the mortgage lien they had
thereon; that damages should have been awarded to plaintiffs against
defendants, all of them being guilty of an attempt to defraud the former when
they sought to rescind the sales already mentioned for the purpose of defeating
their mortgage lien, and finally, that defendants should have been made to bear
all the expenses of the receivership, costs and attorney's fees.
On the other hand, defendants-appellants contend that the trial court erred:
firstly, in not holding that plaintiffs had no cause of action against them because
the promissory note sued upon was not yet due when the action to foreclose the
mortgages was commenced; secondly, in not holding that the mortgages
aforesaid were null and void as regards the "after acquired properties" of DALCO
because they were not registered in accordance with the Chattel Mortgage Law,
the court erring, as a consequence, in holding that said properties were subject
to the mortgage lien in favor of plaintiffs; thirdly, in not holding that the provision
People’s Bank & Trust Company and Antlantic Gulf & Pacific Company vs. Dahican Lumber, G.R. No. L-17500, May 16, 1967, 20 SCRA 84
Page 3 of 6
of the fourth paragraph of each of said mortgages did not automatically make
subject to such mortgages the "after acquired properties", the only meaning
thereof being that the mortgagor was willing to constitute a lien over such
properties; fourthly, in not ruling that said stipulation was void as against DAMCO
and CONNELL and in not awarding the proceeds obtained from the sale of the
"after acquired properties" to the latter exclusively; fifthly, in appointing a
Receiver and in holding that the damages suffered by DAMCO and CONNELL by
reason of the depreciation or loss in value of the "after acquired properties"
placed under receivership was damnum absque injuria and, consequently, in not
awarding, to said parties the corresponding damages claimed in their
counterclaim; lastly, in sentencing DALCO and DAMCO to pay attorney's fees and
in requiring DAMCO and CONNELL to pay the costs of the Receivership, instead
of sentencing plaintiffs to pay attorney's fees.
Plaintiffs' brief as appellants submit six assignments of error, while that of
defendants also as appellants submit a total of seventeen. However, the
multifarious issues thus before Us may be resolved, directly or indirectly, by
deciding the following issues:
Firstly, are the so-called "after acquired properties" covered by and subject to the
deeds of mortgage subject of foreclosure?; secondly, assuming that they are
subject thereto, are the mortgages valid and binding on the properties aforesaid
inspite of the fact that they were not registered in accordance with the provisions
of the Chattel Mortgage Law?; thirdly, assuming again that the mortgages are
valid and binding upon the "after acquired properties", what is the effect thereon,
if any, of the rescission of sales entered into, on the one hand, between DAMCO
and DALCO, and between DALCO and CONNELL, on the other?; and lastly, was the
action to foreclose the mortgages premature?
A. Under the fourth paragraph of both deeds of mortgage, it is crystal clear that
all property of every nature and description taken in exchange or replacement,
as well as all buildings, machineries, fixtures, tools, equipments, and other
property that the mortgagor may acquire, construct, install, attach; or use in, to
upon, or in connection with the premises — that is, its lumber concession —
"shall immediately be and become subject to the lien" of both mortgages in the
same manner and to the same extent as if already included therein at the time of
their execution. As the language thus used leaves no room for doubt as to the
intention of the parties, We see no useful purpose in discussing the matter
extensively. Suffice it to say that the stipulation referred to is common, and We
might say logical, in all cases where the properties given as collateral are
perishable or subject to inevitable wear and tear or were intended to be sold, or
to be used — thus becoming subject to the inevitable wear and tear — but with
the understanding — express or implied — that they shall be replaced with
others to be thereafter acquired by the mortgagor. Such stipulation is neither
unlawful nor immoral, its obvious purpose being to maintain, to the extent
allowed by circumstances, the original value of the properties given as security.
Indeed, if such properties were of the nature already referred to, it would be poor
judgment on the part of the creditor who does not see to it that a similar provision
is included in the contract.
B. But defendants contend that, granting without admitting, that the deeds of
mortgage in question cover the "after acquired properties" of DALCO, the same
are void and ineffectual because they were not registered in accordance with the
Chattel Mortgage Law. In support of this and of the proposition that, even if said
mortgages were valid, they should not prejudice them, the defendants argue (1)
that the deeds do not describe the mortgaged chattels specifically, nor were they
registered in accordance with the Chattel Mortgage Law; (2) that the stipulation
contained in the fourth paragraph thereof constitutes "mere executory
agreements to give a lien" over the "after acquired properties" upon their
acquisition; and (3) that any mortgage stipulation concerning "after acquired
properties" should not prejudice creditors and other third persons such as
DAMCO and CONNELL.
The stipulation under consideration strongly belies defendants contention. As
adverted to hereinbefore, it states that all property of every nature, building,
machinery etc. taken in exchange or replacement by the mortgagor "shall
immediately be and become subject to the lien of this mortgage in the same
manner and to the same extent as if now included therein". No clearer language
could have been chosen.
Conceding, on the other hand, that it is the law in this jurisdiction that, to affect
third persons, a chattel mortgage must be registered and must describe the
mortgaged chattels or personal properties sufficiently to enable the parties and
any other person to identify them, We say that such law does not apply to this
case.
As the mortgages in question were executed on July 13, 1950 with the old Civil
Code still in force, there can be no doubt that the provisions of said code must
govern their interpretation and the question of their validity. It happens
however, that Articles 334 and 1877 of the old Civil Code are substantially
reproduced in Articles 415 and 2127, respectively, of the new Civil Code. It is,
therefore, immaterial in this case whether we take the former or the latter as
guide in deciding the point under consideration.
Article 415 does not define real property but enumerates what are considered as
such, among them being machinery, receptacles, instruments or replacements
intended by owner of the tenement for an industry or works which may be
carried on in a building or on a piece of land, and shall tend directly to meet the
needs of the said industry or works.
On the strength of the above-quoted legal provisions, the lower court held that
inasmuch as "the chattels were placed in the real properties mortgaged to
plaintiffs, they came within the operation of Art. 415, paragraph 5 and Art. 2127
of the New Civil Code".
People’s Bank & Trust Company and Antlantic Gulf & Pacific Company vs. Dahican Lumber, G.R. No. L-17500, May 16, 1967, 20 SCRA 84
Page 4 of 6
We find the above ruling in agreement with our decisions on the subject:
(1) In Berkenkotter vs. Cu Unjieng, 61 Phil. 663, We held that Article 334,
paragraph 5 of the Civil Code (old) gives the character of real property to
machinery, liquid containers, instruments or replacements intended by the
owner of any building or land for use in connection with any industry or trade
being carried on therein and which are expressly adapted to meet the
requirements of such trade or industry.
(2) In Cu Unjieng e Hijos vs. Mabalacat Sugar Co., 58 Phil. 439, We held that a
mortgage constituted on a sugar central includes not only the land on which it is
built but also the buildings, machinery and accessories installed at the time the
mortgage was constituted as well as the buildings, machinery and
accessories belonging to the mortgagor, installed after the constitution thereof .
It is not disputed in the case at bar that the "after acquired properties" were
purchased by DALCO in connection with, and for use in the development of its
lumber concession and that they were purchased in addition to, or in
replacement of those already existing in the premises on July 13, 1950. In Law,
therefore, they must be deemed to have been immobilized, with the result that
the real estate mortgages involved herein — which were registered as such —
did not have to be registered a second time as chattel mortgages in order to bind
the "after acquired properties" and affect third parties.
But defendants, invoking the case of Davao Sawmill Company vs. Castillo, 61 Phil.
709, claim that the "after acquired properties" did not
become immobilized because DALCO did not own the whole area of its lumber
concession all over which said properties were scattered.
The facts in the Davao Sawmill case, however, are not on all fours with the ones
obtaining in the present. In the former, the Davao Sawmill Company, Inc., had
repeatedly treated the machinery therein involved as personal property by
executing chattel mortgages thereon in favor of third parties, while in the present
case the parties had treated the "after acquired properties" as real properties by
expressly and unequivocally agreeing that they shall automatically become
subject to the lien of the real estate mortgages executed by them. In the Davao
Sawmill decision it was, in fact, stated that "the characterization of the property
as chattels by the appellant is indicative of intention and impresses upon the
property the character determined by the parties" (61 Phil. 112, emphasis
supplied). In the present case, the characterization of the "after acquired
properties" as real property was made not only by one but by both interested
parties. There is, therefore, more reason to hold that such consensus impresses
upon the properties the character determined by the parties who must now be
held in estoppel to question it.
Moreover, quoted in the Davao Sawmill case was that of Valdez vs. Central
Altagracia, Inc. (225 U.S. 58) where it was held that while under the general law
of Puerto Rico, machinery placed on property by a tenant does not become
immobilized, yet, when the tenant places it there pursuant to contract that it shall
belong to the owner, it then becomes immobilized as to that tenant and even as
against his assignees and creditors who had sufficient notice of such stipulation.
In the case at bar it is not disputed that DALCO purchased the "after acquired
properties" to be placed on, and be used in the development of its lumber
concession, and agreed further that the same shall become immediately subject
to the lien constituted by the questioned mortgages. There is also abundant
evidence in the record that DAMCO and CONNELL had full notice of such
stipulation and had never thought of disputed validity until the present case was
filed. Consequently all of them must be deemed barred from denying that the
properties in question had become immobilized.
What We have said heretofore sufficiently disposes all the arguments adduced by
defendants in support their contention that the mortgages under foreclosure are
void, and, that, even if valid, are ineffectual as against DAMCO and CONNELL.
Now to the question of whether or not DAMCO CONNELL have rights over the
"after acquired properties" superior to the mortgage lien constituted thereon in
favor of plaintiffs. It is defendants' contention that in relation to said properties
they are "unpaid sellers"; that as such they had not only a superior lien on the
"after acquired properties" but also the right to rescind the sales thereof to
DALCO.
This contention — it is obvious — would have validity only if it were true that
DAMCO and CONNELL were the suppliers or vendors of the "after acquired
properties". According to the record, plaintiffs did not know their exact identity
and description prior to the filing of the case bar because DALCO, in violation of
its obligation under the mortgages, had failed and refused theretofore to submit
a complete list thereof. In the course of the proceedings, however, when
defendants moved to dissolve the order of receivership and the writ of
preliminary injunction issued by the lower court, they attached to their motion
the lists marked as Exhibits 1, 2 and 3 describing the properties aforesaid. Later
on, the parties agreed to consider said lists as identifying and describing the
"after acquire properties," and engaged the services of auditors to examine the
books of DALCO so as to bring out the details thereof. The report of the auditors
and its annexes (Exhibits V, V-1 — V4) show that neither DAMCO nor CONNELL
had supplied any of the goods of which they respective claimed to be the unpaid
seller; that all items were supplied by different parties, neither of whom
appeared to be DAMCO or CONNELL that, in fact, CONNELL collected a 5% service
charge on the net value of all items it claims to have sold to DALCO and which, in
truth, it had purchased for DALCO as the latter's general agent; that CONNELL
had to issue its own invoices in addition to those o f the real suppliers in order to
collect and justify such service charge.
Taking into account the above circumstances together with the fact that DAMCO
was a stockholder and CONNELL was not only a stockholder but the general agent
of DALCO, their claim to be the suppliers of the "after acquired required
People’s Bank & Trust Company and Antlantic Gulf & Pacific Company vs. Dahican Lumber, G.R. No. L-17500, May 16, 1967, 20 SCRA 84
Page 5 of 6
properties" would seem to be preposterous. The most that can be claimed on the
basis of the evidence is that DAMCO and CONNELL probably financed some of the
purchases. But if DALCO still owes them any amount in this connection, it is clear
that, as financiers, they can not claim any right over the "after acquired
properties" superior to the lien constituted thereon by virtue of the deeds of
mortgage under foreclosure. Indeed, the execution of the rescission of sales
mentioned heretofore appears to be but a desperate attempt to better or improve
DAMCO and CONNELL's position by enabling them to assume the role of "unpaid
suppliers" and thus claim a vendor's lien over the "after acquired properties". The
attempt, of course, is utterly ineffectual, not only because they are not the "unpaid
sellers" they claim to be but also because there is abundant evidence in the record
showing that both DAMCO and CONNELL had known and admitted from the
beginning that the "after acquired properties" of DALCO were meant to be
included in the first and second mortgages under foreclosure.
The claim that Belden, of ATLANTIC, had given his consent to the rescission,
expressly or otherwise, is of no consequence and does not make the rescission
valid and legally effective. It must be stated clearly, however, in justice to Belden,
that, as a member of the Board of Directors of DALCO, he opposed the resolution
of December 15, 1952 passed by said Board and the subsequent rescission of the
sales.
Finally, defendants claim that the action to foreclose the mortgages filed on
February 12, 1953 was premature because the promissory note sued upon did
not fall due until April 1 of the same year, concluding from this that, when the
action was commenced, the plaintiffs had no cause of action. Upon this question
the lower court says the following in the appealed judgment;
The other is the defense of prematurity of the causes of action in that
plaintiffs, as a matter of grace, conceded an extension of time to pay up
to 1 April, 1953 while the action was filed on 12 February, 1953, but, as
to this, the Court taking it that there is absolutely no debate that Dahican
Lumber Co., was insolvent as of the date of the filing of the complaint, it
should follow that the debtor thereby lost the benefit to the period.
x x x unless he gives a guaranty or security for the debt . . . (Art. 1198,
New Civil Code);
and as the guaranty was plainly inadequate since the claim of plaintiffs
reached in the aggregate, P1,200,000 excluding interest while the
aggregate price of the "after-acquired" chattels claimed by Connell under
the rescission contracts was P1,614,675.94, Exh. 1, Exh. V, report of
auditors, and as a matter of fact, almost all the properties were sold
afterwards for only P175,000.00, page 47, Vol. IV, and the Court
understanding that when the law permits the debtor to enjoy the
benefits of the period notwithstanding that he is insolvent by his giving
a guaranty for the debt, that must mean a new and efficient guaranty,
must concede that the causes of action for collection of the notes were
not premature.
Very little need be added to the above. Defendants, however, contend that the
lower court had no basis for finding that, when the action was commenced,
DALCO was insolvent for purposes related to Article 1198, paragraph 1 of the
Civil Code. We find, however, that the finding of the trial court is sufficiently
supported by the evidence particularly the resolution marked as Exhibit K, which
shows that on December 16, 1952 — in the words of the Chairman of the Board
— DALCO was "without funds, neither does it expect to have any funds in the
foreseeable future." (p. 64, record on appeal).
The remaining issues, namely, whether or not the proceeds obtained from the
sale of the "after acquired properties" should have been awarded exclusively to
the plaintiffs or to DAMCO and CONNELL, and if in law they should be distributed
among said parties, whether or not the distribution should be pro-rata or
otherwise; whether or not plaintiffs are entitled to damages; and, lastly, whether
or not the expenses incidental to the Receivership should be borne by all the
parties on a pro-rata basis or exclusively by one or some of them are of a
secondary nature as they are already impliedly resolved by what has been said
heretofore.
As regard the proceeds obtained from the sale of the of after acquired properties"
and the "undebated properties", it is clear, in view of our opinion sustaining the
validity of the mortgages in relation thereto, that said proceeds should be
awarded exclusively to the plaintiffs in payment of the money obligations secured
by the mortgages under foreclosure.
On the question of plaintiffs' right to recover damages from the defendants, the
law (Articles 1313 and 1314 of the New Civil Code) provides that creditors are
protected in cases of contracts intended to defraud them; and that any third
person who induces another to violate his contract shall be liable for damages to
the other contracting party. Similar liability is demandable under Arts. 20 and 21
— which may be given retroactive effect (Arts. 225253) — or under Arts. 1902
and 2176 of the Old Civil Code.
The facts of this case, as stated heretofore, clearly show that DALCO and DAMCO,
after failing to pay the fifth promissory note upon its maturity, conspired jointly
with CONNELL to violate the provisions of the fourth paragraph of the mortgages
under foreclosure by attempting to defeat plaintiffs' mortgage lien on the "after
acquired properties". As a result, the plaintiffs had to go to court to protect their
rights thus jeopardized. Defendants' liability for damages is therefore clear.
However, the measure of the damages suffered by the plaintiffs is not what the
latter claim, namely, the difference between the alleged total obligation secured
by the mortgages amounting to around P1,200,000.00, plus the stipulated
interest and attorney's fees, on the one hand, and the proceeds obtained from the
sale of "after acquired properties", and of those that were not claimed neither by
People’s Bank & Trust Company and Antlantic Gulf & Pacific Company vs. Dahican Lumber, G.R. No. L-17500, May 16, 1967, 20 SCRA 84
Page 6 of 6

DAMCO nor CONNELL, on the other. Considering that the sale of the real
properties subject to the mortgages under foreclosure has not been effected, and
considering further the lack of evidence showing that the true value of all the
properties already sold was not realized because their sale was under stress, We
feel that We do not have before Us the true elements or factors that should
determine the amount of damages that plaintiffs are entitled recover from
defendants. It is, however, our considered opinion that, upon the facts
established, all the expenses of the Receivership, which was deemed necessary to
safeguard the rights of the plaintiffs, should be borne by the defendants, jointly
and severally, in the same manner that all of them should pay to the plaintiffs,
jointly a severally, attorney's fees awarded in the appealed judgment.
In consonance with the portion of this decision concerning the damages that the
plaintiffs are entitled to recover from the defendants, the record of this case shall
be remanded below for the corresponding proceedings.
Modified as above indicated, the appealed judgment is affirmed in all other
respects. With costs.
Concepcion, C.J., Reyes, J.B.L., Regala, Makalintal, Bengzon, J.P., Zaldivar, Sanchez
and Castro, JJ., concur.
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Law and Ecology: Environmental Law and Policy in the Philippines
Volume One – Legal Framework for Addressing Environmental Problems
Antonio G.M.La Viña, JSD

Law and Ecology:

Environmental Law and Policy

in the Philippines

Prof. Antonio G.M. La Viña, JSD

DRAFT: PLEASE DO NOT CITE OR DISTRIBUTE. Draft: July 2019
Law and Ecology: Environmental Law and Policy in the Philippines
Volume One – Legal Framework for Addressing Environmental Problems
Antonio G.M.La Viña, JSD

Author’s Profile

Dr. Tony La Viña is a leader, teacher, thinker, lawyer, and social entrepreneur. He is currently Energy
Collaboratory Director, and Senior Fellow on climate change of Manila Observatory. He is a professor of
law, philosophy, political science, and governance in several universities in Metro Manila and Mindanao,
including at the University of the Philippines College of Law where he is a professorial lecturer. He was
Dean of the Ateneo School of Government for 10 years from 2006-2016 and before that an Undersecretary
of the Department Environment and Natural Resources, an international environmental law and policy
expert based as Bilogiocal Resources Program Director and Senior Fellow in the World Resources Institute
in Washington DC, and the research and policy director and co-founder of the Legal Rights and Natural
Resources Center (known as LRC). Tony obtained his Masters and Doctorate in Law from Yale University
and his first degrees in philosophy and law from Ateneo de Manila University.

Tony has also been a human rights and environmental justice lawyer for more than thirty years, starting
his law career as an advocate for indigenous peoples and local communities fighting development
aggression by logging and mining companies and in some cases by the government pursuing
environmentally destructive projects. He has been a lead negotiator of the Philippines on climate change
for more than 20 years and is recognized as a global leader in this area.

Tony is a Mindanawon, born and raised in Cagayan de Oro, He is married to Titay Bonto Viña, pastoral
counsellor and psychotheraphist, and is father to three sons Emanuel, Enrico, and Rafael.

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Volume One – Legal Framework for Addressing Environmental Problems
Antonio G.M.La Viña, JSD

Acknowledgments

This book would not have been possible if my family – my wife Titay and my children Eman, Rico and Rafa
– did not allow me to do my environmental work, which required me to live the life of a homo viator, travelling
all over the country and the world to protect nature and serve communities.

I am of course indebted to Deans (now Supreme Court Justice) Marvic Leonen and (now UP President)
Danilo Concepcion for their support. Without the U.P. Law Centennial Textbook Writing Project, I probably
would not have embarked on writing the original textbook and this update.

Likewise, this book would not have been written without the assistance of my students from the U.P. College
of Law and the Ateneo School of Law. In particular, specific sections of both volumes were written with the
research assistance of Daniella Mavarro, Marianne Sibulo, Carlo Marcaida, Jian Boller, Carl Edison
Balagtas, Natasha Cayco, Cristina Mundin, Blesscille Guerra, Yasmin Sanchez, and Joyce Ann Wong.

The Eagle Eyes columns reproduced in this book were a product of collaboration with Christian Laluna.
Likewise, the text on the Environmental Rul of Procedure in Volume 2 benefited from work Josef Leroi
Garcia and I did in drafting the sections on environmental law for the Benchbook.

I am grateful to Elirozz Carlie Labaria, Margarita Rocas and Arvin Jo for their assistance in the editing of
this book, and to Cecilia There Guiao, Alaya de Leon and Edgar Bonto for their editing and research
assistance. For this update, Joy Reyes and Erika Lareza have also helped in the editing and researching.

I also thank Professors Eduardo Labitag and Myrna Feliciano, who were kind enough to review drafts and
valuable comments, and Mario dela Cruz for preparing my book for publication.

Above all, I thank my long-time intellectual partner and friend James Kho, who was indispensable in this
effprt to memorialize a lifetime of environmental advocacy and lawyering into analysis and text.

Finally, I thank all my students in all my environmental law classes, as well as my colleagues in the
environmental law community (particularly those who worked/work with me or whom I mentored/mentor in
the Legal Rights and Natural Resources Center, the Department of Environment and Natural Resources,
and the Ateneo School of Government), for teaching me everything I know about law and ecology. It it so
them, as well as to my future students and colleagues, that I dedicate this work.

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Law and Ecology: Environmental Law and Policy in the Philippines
Volume One – Legal Framework for Addressing Environmental Problems
Antonio G.M.La Viña, JSD

Preface

Astrology, while myth rather than science, was nonetheless based on observations of the world by the
philosophers and alchemists of antiquity. One of their observations was that it is possible for our world to
be broken down into component elements, or the classical elements. In classical Western philosophies and
astrology, these elements are: Fire, Earth, Air, and Water. Chinese thought, on the other hand, held the
elements to be Wood, Fire, Earth, Metal, and Water (wu xing).

People then believed that our material world, its natural phenomena, dynamic interaction, and even the
inherent or fundamental “powers” of anything and anyone are constructed out of the interaction of the
classical elements. The wu xing, for example, held that wood, fire, earth, metal, and water generated each
other in turn, while they could also interact by “overcoming”—water dousing fire, for example. In Western
astrology, each element imparts its qualities to its associated zodiac sign (e.g., Aries is a Fire sign), and
also had constructive and destructive relationships with other elements. The classical Greek concept of the
humors (fluids) of the body also associated each fluid with the elements. To master one’s knowledge and
command of these elements, they believed back then, was to find the key to health, wealth, harmony, and
happiness.

Of course, modern science has overtaken the classical worldviews, both East and West, leaving the old
ways to personal belief (not that it has stopped adherents from believing otherwise). Health, wealth,
harmony, and happiness are more the province of medicine, economics, politics, psychology, and ethics
today than they are of astrology and Feng Shui – and with good reason. Still, there is some wisdom in the
old ways that the modern world should understand, for the sake of our environment. It is not in their scientific
value, which is obviously lacking, but the way the classical Greeks, Chinese, and others have viewed the
world, compared to modern-day humanity. The people of antiquity saw the world in terms of the balance of
its constituent elements, and sought to maintain it. Today, that balance in our world and in our environment
is sorely lacking.

The world celebrates Earth Day and Earth Hour regularly, global rituals to remind us of the importance of
caring for our environment. Beyond the ritual of turning off our lights off for one hour, though, is the need
for a sustainable effort for the world, including the Philippines, to properly manage its natural resources and
its ecology. Environmental degradation threatens our country through loss of forest cover and fertile
agricultural lands, depleted fish stocks, contaminated water supplies and breathing air, increased
vulnerability to natural disasters, and energy insecurity, leading to catastrophic economic and social
dislocations. It is not an exaggeration to say that our people will lose income, livelihood, health, and
sustenance because of a failure of environmental management. Every country, rich or poor, is vulnerable
to calamity (as Japan’s recent sufferings have shown), though poverty and poor governance exacerbate
the situation.

The philosopher Martin Heidegger explained the difference between how man viewed nature then, almost
with a view towards art and philosophy; and how we view nature—or natural resources—now, as
instrumental, exploitable, and often without consideration for sustainability or ecological preservation. We
do not need to fear nature, as though it were a vengeful force, and neither can we continue to view Mother
Earth in purely utilitarian terms. We need to combine the old and new ways of looking at the environment,
learning to understand and respect nature. We need to, as the astrologer might suggest, understand the
balance of the elements of nature, and master this balance, as the key to the health, wealth, harmony, and
happiness of families, communities, and nations alike.

This is not just a philosophical exercise. At the family level, we need to acquire habits of ecological respect
when it comes to things like waste management and recycling, or water and energy conservation. We must
find ways to harness communities as environmental managers in their own right, protecting vulnerable
natural resources like our dwindling forests. At the national level, we must engage in innovation and reform
to provide a bureaucratic infrastructure that can successfully manage all aspects of environmental and
natural resource management, protection, and utilization.

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Volume One – Legal Framework for Addressing Environmental Problems
Antonio G.M.La Viña, JSD

The ancient world has passed to superstition and myth, yet some of their mindsets remain relevant even
up to today. Celebrating Earth Day is not just about a yearly ritual or environmentally-sensitive habits, but
about understanding what it means to live with our environment, and not just off of it. It should mean
recovering this appreciation for the earth, and all therein, that the philosophers of old had, even while we
use the environment to better our lives. I hope, through this set of books, we come to know what it means
to be a better manager of the ecological balance, to understand what it means to master the balance of
Creation’s elements.

Rainier Maria Rilke, the great German poet, says it very well: "Everything is far and long gone by. I think
that the star glittering above me has been dead for a million years. I would like to step out of my heart and
go walking beneath the enormous sky. I would like to pray. And surely of all the stars that perished long
ago, one still exists. I think that I know which one it is." It is my hope, that because we cared and took
action, centuries from now, our descendants too would come out and walk beneath the sky and say: our
planet still exists.

As you will see in the introductory essay in Chapter 1, I write about the elements of the world. I find it is
only fitting to begin with Earth, with land and soil from which so much of life springs forth. The Western
zodiac recognizes people influenced by the Earth signs as practical and dependable, while the Chinese
also add that, because of their grounded discipline, these souls are masters of their future. We view the
Earth as our foundation, as our sustenance; in many cultures, "Mother Earth" is a common phrase. We
build our homes on solid ground and plant our food on fertile soil. From the Earth we harvest the lumber
and mine the metals that build our civilization; from the Earth comes life, which sustains humanity.

Imperiling that future is the consequence of poor land use and development. Good ecological management
must be a critical component of good use of land. Social justice too – the fair allocation of land and its
resources – is essential. We need not look further than Ondoy in 2009 to see the consequences of poor
land use and development. Majority of the typhoon’s victims lived along the Pasig riverbanks, or built their
homes in low-lying areas. Some of these homes were built by property developers despite (or even willfully
ignoring) warnings about flood risk. Other homes were built by informal settlers who had no place to go and
settled instead on lands claimed by no one—precisely because those lands were at risk of flood or other
natural calamities. The result was therefore a tragedy, which we must now make sure should not be
repeated.

Agriculture faces a different threat: its sustainability as an economic and household enterprise is in
question. Climate change, ecological degradation, and bad macroeconomic policies have made farming
economically challenging. As urban and rural lands go fallow and become unproductive, economic and
social pressures invariably begin encroaching on ecology. Natural forests are cleared for pasture or
subdivisions; industries expand towards riverbanks, lakeshores, wetlands, and coastlines, thereby
threatening natural habitats of flora and fauna important to Philippine biodiversity and ecology. What is sad
is that, all over the world, loss of diversity of life is threatening the very diversity of humanity, as the latter
depends on the former.

After decades of environmental advocacy, I have come to conclude that the most important policy that
government can adopt and implement to ensure a good and sound environment is a land use policy that is
sustainable, environmentally friendly, and socially just. Good land use and development benefits both rural
and urban development, including food security, by protecting fertile lands and ecologically-sensitive places
while identifying those areas appropriate for housing, commercial, and industrial zones. The real solution
is good land use policy implemented by the relevant units of government, the private sector, and
communities.

This cooperative effort should be driven down to the ground as much as possible, devolving from national
to local government units (LGUs). LGUs must take the lead in an integrated land use and environmental
management plan, because it is their constituents—farmers, workers, and residents alike—who are directly
affected by socio-economic and environmental policy. Land use planning, for example, can become a town

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Volume One – Legal Framework for Addressing Environmental Problems
Antonio G.M.La Viña, JSD

hall exercise as much as an expert’s exercise, soliciting input from affected residents (especially informal
settlers in the case of resettlement), land use experts, and ecologists and other environmentalists, in
establishing zoning and housing development plans which are socially equitable and environmentally
sensitive.

There is a Chinese proverb that goes, “The miracle is not to fly in the air, or to walk on the water, but to
walk on the earth.” With respect to the Earth as our Mother, we owe her as her children to mature as her
stewards, and walk by her side, instead of being in her cradle forever.

Philippine Environmental Law

Philippine environmental law is rapidly changing, with new national policies, laws, regulations and local
ordinances added to the legal landscape every year. There are clear trends in the evolution of the legal
framework, from pre-1970s laws that encouraged resource exploitation to the shift in focus to conservation
beginning in the 1980s. There was a significant surge in environmental legislation and jurisprudence after
the regime change in 1986 that emphasized stakeholders’ participation and the basic right to a clean
environment. It is inevitable that there are gaps, overlaps and conflicts among these instruments as they
evolved over time and overlapped in subject matter. Aside from the legal instruments that deal directly with
natural resources and environment, there are numerous sectoral laws and policies on agriculture, tourism,
economic incentives and taxes, infrastructure development, transportation, international trade, urban and
land-use planning, housing development, etc., that have significant impacts on the protection of the
environment and use of natural resources.

For the law practitioner, policymaker, student, stakeholder or general public, keeping up with the changes
in the legal framework is a challenge, given the number of sources, frequency of changes and accessibility
of the materials. It is an even more difficult challenge to understand and apply the various instruments
separately or together to address a particular environmental problem or case.

In 1991, this author published Law and Ecology: a compilation of Philippine laws and international
documents pertaining to ecology,1 to help law practitioners and students navigate through this relatively
new field. There have been several textbooks published since then, combining learned commentaries with
compilations of laws and regulations. In 2003, Prof. Atty. Antonio A. Oposa, Jr. published A Legal Arsenal
for the Philippine Environment, which has served as the ‘weapon’ of choice of advocates in the battle to
protect the environment. The Philippine Judicial Academy has also supported a number of compilations of
laws and cases together with partners, including the Haribon Foundation.

Approach

There are two major challenges to writing an environmental law textbook in the Philippines: First, to keep
it up to date with the almost daily changes in new national and local legal instruments; and second, to
present the materials in an interesting and realistic manner that captures the interplay of the laws as they
apply to particular cases. Because of the first challenge, no textbook can be complete in recording every
legal instrument. The second challenge also necessarily limits the focus of discussions to particular
problems, which call for the application of select provisions of the relevant laws and cases.

The approach to this textbook in Volume One, from Chapter Four to Eleven, is to present independent
modules, beginning with an Environmental Situationer as environmental issues occur in the real world
(based on one or a composite of actual cases or field experiences). The reader is expected to feel
immediately engaged by the environmental challenges presented, and the interaction of interests of the
parties involved. This is followed a section on Legal analysis, which is a quick survey of applicable
provisions of laws and relevant jurisprudence. The reader is invited to analyze, interpret and apply these

1
Law and Ecology: A Compilation of Philippine Laws and International Documents Pertaining to Ecology, in Legal Rights and
Natural Resources Center (Antonio G.M. La Viña, ed., 1991).

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Antonio G.M.La Viña, JSD

legal frameworks together to the problem presented. It is the interplay of these laws and decisions that is
critical to learning, more than a detailed discussion of each law separately in its entirety.

A discussion of the legal framework is not enough. In the end, the reader needs to ask: did the law address
the environmental problem and/or give justice to the parties? The Policy analysis part will make the reader
reflect on the policy-making aspect. Thinking like a policy-maker, s/he has to understand and consider the
underlying physical and social science that help enlighten how the actors make decisions that affect the
physical environment, as well as how policies, laws and regulations can be crafted to influence how these
actors should work in order to achieve desired environmental and social objectives. Finally, there is a
Further discussion section in every chapter that invites the reader to look at related issues and helpful
concepts.

Volume Two is composed of two parts: application of international law, and application of the new Rules of
Procedure for Environmental Cases. In the past quarter century, Philippine environmental law and policy
has closely followed developments in international law dealing with environmental issues. Many of the
country’s environmental laws were passed in direct response to or in compliance with the country’s
commitments under international agreements or cooperation. Even the Rules of Procedure on
Environmental Cases promulgated by the Supreme Court in 2010 had partly been a result of the Court’s
exposure to developments in environmental justice in other countries and under international law.

This textbook is designed as a law school textbook to guide classroom discussion, but it can also be useful
for law practitioners, policymakers and the general public. The two-volume approach gives the option to
teach the second volume as separate special topics on international environmental law and on the new
Rules of Procedure for Environmental Cases, or as an advanced environmental law course. Volume One
can be expanded in future updates with additional ‘modules’ tackling new environmental problems or
issues.

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Volume One – Legal Framework for Addressing Environmental Problems
Antonio G.M.La Viña, JSD

Volume One:

Legal Framework for Addressing Environmental Problems

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Volume One – Legal Framework for Addressing Environmental Problems
Antonio G.M.La Viña, JSD

Table of Contents

Author’s Profile i
Acknowledgements ii
Preface iii

Chapter One – Overview of the Natural, Socio-economic and Political Landscape 10

1.1 Land, sea, and the forces of nature
1.2 Socio-economic context
1.3 Legal framework related to environment and Natural Resources
1.3.1 Constitution
1.3.2 National Legislation
1.3.3 International Agreements
1.4 Further Discussion

Chapter Two – Institutional Framework for Environment and Natural Resources Management 78
2.1 Institutional framework for managing the environment and natural resources
2.1.1 Executive Branch
2.1.2 Congress and Local Legislatures
2.1.3 Judiciary
2.1.4 Quasi-judicial Agencies
2.1.5 Non-government Institutions

Chapter Three – Environmental Impact Assessment and Development Planning 89

3.1 Rationale
3.2 Legal Framework
3.2.1 Local Development Planning
3.3 Policy Analysis
3.3.1 Philippine Development Plan (2017-2022)

Chapter Four – Forests and Forestland Management 118

4.1 Environmental situationer
4.2 Legal analysis (application of existing laws)
4.2.1 Land classification
4.2.2 Land use in forest land
4.3 Policy analysis (effectiveness of laws in addressing environmental problem)
4.3.1 Evolution of Forest Policies
4.3.2 Logging moratorium
4.4 Further discussions
4.4.1 Illegal logging or subsistence livelihood

Chapter Five – Wildlife and Biodiversity Conservation 154

5.1 Environmental situationer
5.2 Legal analysis (application of existing laws)
5.2.1 What is wildlife?
5.3 Policy Analysis
5.4 Further discussion
5.4.1 Biosafety and Alien Invasive Species
5.4.2 Bioprospecting

Chapter Six – Protected Areas and Watershed Management 170

6.1 Environmental situationer
6.2 Legal analysis (application of existing laws)
6.3 Policy analysis (effectiveness of laws in addressing environmental problem)

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Antonio G.M.La Viña, JSD

6.3.1 Governance

Chapter Seven – Fisheries and Marine Resources 190

7.1 Environmental situationer
7.2 Legal analysis (application of existing laws)
7.3 Policy analysis (effectiveness of laws in addressing environmental problem)
7.4 Further discussion

Chapter Eight – Mineral Resources Extraction 212

8.1 Environmental situationer
8.2 Legal analysis (application of existing laws)
8.3 Policy analysis (effectiveness of laws in addressing environmental problem)
8.3.1 Contribution of the mining industry to the economy
8.3.2 Environmental and social costs
8.4 Further discussion
8.4.1 Is responsible mining possible in the Philippines?
8.4.2 What operational conditions must be met to conduct responsible mining in
the Philippines?
8.4.3 What actions must the government take towards management of
responsible mining?

Chapter Nine – Waste Management and Sanitation 267

9.1 Environmental situationer
9.2 Legal analysis (application of existing laws)
9.3 Policy analysis (effectiveness of laws in addressing environmental problem)

Chapter Ten – Industrial Pollution 288

10.1 Environmental situationer
10.2 Legal analysis (application of existing laws)
10.3 Policy analysis (effectiveness of laws in addressing environmental problem)
10.4 Further discussion

Chapter Eleven – Climate Change and Disaster Risk Reduction and Management 312
11.1 Environmental situationer
11.2 Further discussion

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Volume One – Legal Framework for Addressing Environmental Problems
Antonio G.M.La Viña, JSD

Chapter One

Overview of the Natural, Socio-economic and Political Landscape

1.1 Land, sea, and the forces of nature

The Philippines is an archipelago of more than 7,100 islands, with one of the longest coastlines
(36,289 km) of any country. The total land area is almost 300,000 square kilometers, but this pales
in comparison to the size of the marine territory of about 2.2 million square kilometers, which includes
the exclusive economic zone.2 The islands are mostly mountainous, with the larger islands having
narrow to extensive plains highly suited for agriculture.

The Philippines is one of 17 countries with the most diverse biological resources.3 The Philippine
Endemic Species Conservation Project4 has found several new species and new distribution records
of known species in the past five years. The international community has taken notice: In 2009,
Birdlife International chose as its flagship species the Cebu Flowerpecker (Dicaeum quadricolor),
long thought to be extinct and rediscovered in 1992. The International Institute for Species
Exploration5 chose newly discovered Philippine species among its top 10 new discoveries, namely
the Attenborough’s Pitcher (Nepenthes attenboroughii) in 2010 and the Sierra Madre Spotted Monitor
(Varanus bitatawa) in 2011. The California Academy of Sciences has undertaken its largest
expedition in the Philippines in the summer of 2011. The 2011 Philippine Biodiversity Expedition was
the first expedition to make a comprehensive survey of both terrestrial and marine diversity in the
country. The expedition, composed of American and Filipino scientists, reported more than a hundred
new species after only three weeks of surveys6.

There are some 6.84 million hectares (76,700 sq. km.) of forests left 7 from a high of 20 million
hectares in the 1900s. Up until the 1970s, the country was a major exporter of logs. Beginning in the
late 1970s, commercial harvesting of natural timber became more and more regulated, until the early
1990s when timber license agreements were either cancelled or allowed to expire, with no new
licenses granted. However, illegal logging in both small and large scale continues to this day. In
2009 alone, over a million board feet of lumber (about 100 ten-wheeler trucks) was confiscated by
combined units of the Armed Forces and the Isabela Provincial Government after raiding three
lumber yards and log ponds in the Northern Sierra Madre Natural Park (NSMNP), the last remaining
major natural forest area in the country.

The Philippines stands among the richest countries in terms of mineral wealth. According to the US
Department of State 8 , the country’s mineral reserves (gold, copper, nickel, iron, chromium and
aluminum) are estimated to be worth PhP 47 trillion (US$840 billion). Significant oil and gas reserves
have also been discovered in recent years.

Perhaps the most valuable resources are in the seas. The Philippines is internationally recognized
as the center of marine biodiversity because of its unique habitats that host a rich variety of species.
The country is located at the apex of the Coral Triangle, which is often referred to as the “Amazon of
the seas.” Despite escalating problems of overfishing, fisheries productivity still increased over the

2
Mary Ann Palma, The Philippines as an Archipelagic and Maritime Nation: Interests, Challenges and Perspectives
(Rajartanam School of International Studies, Working Paper No. 182, 2009).
3
Ian A. Bowles, R. E. Rice, R. A. Mittermeier, and G. A. B. da Fonseca, Logging and Tropical Forest Conservation (1998).
4
Panay Eco-social Conservation Project, in Philippine Initiative for Conservation of the Environment and the people (2010).
http://www.panaycon.org/Pages/New_species.html (last visited July 24, 2012)
5
The International Institute for Species Exploration (2010, 2011).
6
California Academy of Sciences (2011), https://www.calacademy.org/2011-philippine-biodiversity-expedition (last visited
August 2018)
7
Forest Management Bureau (2010).
8
US Department of State (2009), http://business.inquirer.net/47013
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Antonio G.M.La Viña, JSD

years, because of the expansion of seaweed farming and aquaculture. The natural beauty of corals
and reef organisms attract thousands of tourists, as well as unscrupulous collectors. Despite broad
regulations that ban the collection of marine wildlife, illegal harvesting is rampant, driven largely by
the demands of international trade. In May 2011, the Department of Agriculture-Bureau of Fisheries
and Aquatic Resources (DA-BFAR) reported the seizure of 161 dead sea turtles and over 21,000
seashells and black corals in warehouses in Zamboanga City. Experts estimate that about 7,000
hectares of a “reef complex” were destroyed based on the harvest.9 Based on news reports, more
than a thousand foreign poachers have been arrested for illegally catching marine turtles and other
species off Palawan from 1995 to 2008. At least one report of poaching by foreign fishermen was
recorded in 2010, and two incidents in the first quarter of 2011.10 In recent years, the number of
reports of poaching by foreign fishermen has increased in number, particularly through the extraction
of clams in the Scarborough Shoal in the West Philippine Sea.11 This incidents can threaten food
security in coastal areas.

The rich bounty from nature, however, is also regularly dampened by natural calamities. The
Philippines ranks 3rd among the most vulnerable countries to climate change, based on a study by
the United Nations University Institute for Environment and Human Security12. About 20 typhoons
affect the country each year, with half making landfall that causes tremendous damage to life,
livelihoods and the natural ecosystem. The country is also along the Pacific ring of fire, which means
that volcanic eruptions and earthquakes are normal occurrences, sometimes with devastating
consequences. Climate change and the effects of weather cycles, such as the El Nino and La Nina
phenomena, have brought billions of pesos in damages from floods, droughts, and increase in sea
surface temperature. From 1990 to 2009, value of damages due to weather and climate-related
disasters totaled $4,813 million or an average of $240.7 million per year. In the 2000s, total damages
were $2,121, million, which were lower than the total damages of $2,602 million in the 1990s13

In an ecosystem profiling conducted by the Critical Ecosystem Partnership Fund (CEPF), a joint
initiative of Conservation International (CI), Global Environment Facility (GEF), Government of
Japan, MacArthur Foundation and World Bank, Philippines has been identified as a biodiversity
hotspot – an area with the most biologically rich, yet threatened, biogeographic region.

As of 2018, there are 541 recorded endemic species in the Philippines, 152 of which are endangered
species. Overall, there are 785 threatened species (plants and animals) in the Philippines that are
included in the International Union for Conservation of Nature and Natural Resources (IUCN)’s Red
List.

There are five (5) main factors that threatens Philippine biodiversity14:

Habitat destruction. It is the leading cause of biodiversity loss in the Philippines. Its main driver is
deforestation caused by logging and conversion of land for other purposes such as agriculture, land
development and mining.

9
Jocelyn Uy, More Black Corals Seized, in Philippine Daily Inquirer (2011), http://newsinfo.inquirer.net/9209/more-black-
corals-seized.
10
Adraneda(2007).Mar D. Meruenas, Stronger Law Enforcement Pushed for Palawan, Tawi-Tawi Seas, GMA News TV
(June 8, 2010), http://www.ecologyasia.com/news-archives/2010/jun-10/gma_100608_1.htm (last visited June 2012).
GMA New TV, Philippine Authorities Nab 6 Chinese Poachers Off Palawan (March 25, 2011),
http://www.gmanews.tv/story/216153/regions/phl-authorities-nab-6-chinese-poachers-off-palawan (last visited June 2012).
Redempto Anda, 34 Endangered Turtles Rescued in South Palawan, Inquirer.net (February 6, 2011),
http://services.inquirer.net/print/print.php?article_id=20110206-318835 (last visited June 2012).
11
Chinese clam poachers making ‘thousands of dollars’ while destroying entire reef – expert, in Philstar.com (2019),
https://www.philstar.com/headlines/2019/04/20/1911106/chinese-clam-poachers-making-thousands-dollars-while-
destroying-entire-reef-expert
12
United Nations University Institute for Environment and Human Security, World Risk Report (2011)
http://www.ehs.unu.edu/article/read/worldriskreport-201.
13
Danilo Israel, Weather and climate-related disasters:the cost of inaction (Philippine Institute for Development Studies,
Policy Note No. 2010-12, 2010).
14 Biodiversity Management Bureau – Protected Areas and Wildlife Bureau, “Threats to Philippine Biodiversity” (2011),
New Conservation Areas in the Philippine Project.
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The second driver of habitat destruction is mining. Mining entails clearing out rainforests and
agricultural lands for open-pit mines, creating deep excavation to extract minerals, and using heavy
metals, chemicals and large volume of water for processing ores. The alteration of lands for mining,
not only disturbs the local flora and fauna, it also affects the physical and chemical properties of its
soil through its chemical by-products. This physio-chemical changes renders the area unsuitable to
support life and in extreme cases can drive endemic species, who often requires specific
environmental conditions, into extinction. These chemical by-products will then leach or run-off to
underground water systems and other bodies of water.

Deforestation, mining and other poor land use practices have also been cited as causes for the
degradation of marine ecosystems. These activities lead to improperly disposed wastes, chemical
leaches and run-offs, which have been identified as contributors to the destruction of habitats for
aquatic life. In 2004, an update status of Philippine coral reefs assessment was initiated and reports
showed that only 5% were in excellent category. As of 2017, none of these excellent category-coral
reefs were found and 90% of the assessed reefs were in poor and fair categories.

Overexploitation. As the Philippine population rise, with it is the increasing resource demand to
support day-to-day living needs against its rapidly decreasing supply. To meet the demands, more
efficient and often illegal methods are utilized in the fishing industry. These illegal, unreported and
unregulated (IUU) fishing often undermines any efforts in managing aquatic resources and fish
stocks for marine biodiversity conservation. It often collects resources, sometimes to the point of
exhaustion, which leaves the local ecosystem unable to recover and drives fish species into
extinction. Another form of overexploitation is illegal hunting and wildlife trading. In the Philippines,
these are the main threats to its bird population while plants and other animals are also overharvested
for medicinal and ornamental purposes.

Pollution. Primary sources of water pollutants in the Philippines comes from agricultural, domestic
and industrial sectors. While almost half of these pollutants come from domestic (48%), more than
the remaining half comes from the agricultural sector. Excessive use of agrochemicals pollutes and
lowers the quality of the soil – affecting its infiltration and water holding capacities. These leads to
leaching of unabsorbed agrochemicals into bodies of water – creating eutrophication problems and
is an additional factor to the degradation of water ecosystems.

Climate Change. According to a climate change vulnerability mapping conducted in 2009,

Philippines is one of the most vulnerable countries in Southeast Asia. The whole country is a climate
hazard hotspot that is highly exposed to cyclones, landslides, floods and drought, and have below
average adaptive capacity to changes brought by climate change. In addition, ocean acidification,
sea level rise, extreme weather conditions, and elevated sea surface temperature are just some of
the impacts of climate change that are dramatically felt in the Philippines. These changes can affect
terrestrial and marine ecosystems that can alter biodiversity or change factors that can lower the
survivability of various species.

Invasive Alien Species is another factor that can hasten the extinction of various threatened
species, specifically indigenous and endemic species. These invasive species preys, competes and
displaces native species in an ecosystem. They are often resilient, adaptable and do not have
predators to prey and control their population. This disrupts the local ecosystem food chain and their
population will continuously grow until the native inhabitants and resources are exhausted and the
diversity is reduced.

Aside from the five major pressures discussed, there are other factors identified that affects Philippine
biodiversity:

- Lack of awareness on environmental conservation

- Lack of enforcement and political will to enforce environmental policies and regulations
- Research and knowledge gaps about biodiversity
- Lack of effective policies
- Lack of financial resources
- Other socio-economic factors
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1.2 Socio-economic Context

According to the 2015 Census of Population, the country’s population stood at 100.98 million. About
half of the population lives in urban areas (46.9%) and the rate of urbanization is estimated at around
1.99% until 2020.15 The City of Manila is ranked densest city in the world with population density of
71,263 persons per square kilometer, 60 times higher than the national population density. 16
Following the current rates, the projected population of the Philippines by 204517 is 142 million and
is expected to reach 163 million by 2070. These projections are essential and should be accounted
for the country’s development planning, specifically in urban planning, infrastructure, education,
transportation and other environmental programs.

In 2007, Goldman Sachs Global Economic Group ranked the Philippines among the Next-11
emerging global economic powerhouse after the BRIC countries (Brazil, Russia, India and
China). Despite the recent and continuing global economic slowdown, and the frequent domestic
political troubles, the prospect for economic growth for the Philippines is positive. In the 2nd quarter
of 2018, the gross domestic product grew by 6.0%, broken down by sector as follows: Agriculture,
Hunting, Forestry and Fishing (0.01%), industry (2.2%) and services (3.8%). The Philippine economy
has traditionally been based on agriculture and natural resources, but in the past decade this has
shifted to light industry and services, as exemplified by the business process outsourcing (BPO)
sector where the country ranks 3rd of the total BPO market, with 15% share. In the ENR sector,
there has been a marked shift from utilization of natural resources to providing the foundation for
services (such as tourism) and industry (by providing the needed water, power, etc.).

However, despite the positive outlook, the unemployment rate is estimated at 5.6%, and less than a
quarter of the population (21.6%) lives in poverty.22 The disparity in income between the rich and
poor is significant, as measured by the Gini coefficient (44.39%, as of 2015 estimate).

Former NEDA Director-General Cielito Habito23 characterized the country’s economic growth in the
past two decades as “slow and erratic,” and “narrow, shallow and hollow,” where capital formation is
concentrated in a few industries and regions, export growth is based mostly (>70%) in garments and
electronics, and output growth does not generate jobs or reduce poverty. He counseled that the
country is faced with the twin challenge of accelerating and maintaining economic growth, and
making sure that growth involves and benefits a broad spectrum of sectors throughout the country,
because past economic growth has marginally benefited the poor.

Economic growth and poverty are two cross-cutting themes that will be referred to in the succeeding
chapters because they are central to the issues of natural resources utilization and equitable access
to natural resources. Development planning is touched upon again in Chapter Three.

LAUDATO SI’
POPE FRANCIS

Years from now, the release of the “Encyclical Letter Laudato Si’ of the Holy Father
Francis on care for
our common home” will be remembered as a turning point for the planet and for people, especially the
poor.

Cry of the Earth and the Poor

15
Central Intelligence Agency, The World Factboook - Philippines (2018), https://www.cia.gov/library/publications/the-world-
factbook/geos/rp.html (last visited August 2018)
16
National Statistics Coordination Board (2016)
17
National Statistical Coordination Board, http://psa.gov.ph/content/highlights-2010-census-based-population-projections
(last visited August 2018).
22
National Statistical Coordination Board (2015).
23
Cielito Habito, Can we grow twice as fast?, in Inquirer.net (2010), http://opinion.inquirer.net/22135/can-we-grow-twice-as-
fast.
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Antonio G.M.La Viña, JSD

In topic after topic, Pope Francis always make sure that the poor is ubiquitous; raising always the
question of the impact of an issue on poor people, emphasizing all the time fairness and justice as a
guide in how the world must respond. He does this in discussing climate change, water poverty and
pollution, genetically modified organisms and its impact on poor farmers, depletion of fisheries that
small fisher folk relies on, and on slums in urban areas.

More positively, Pope Francis also gives examples of a commendable human ecology practiced by the
poor despite the challenges they face. He gives us an example indigenous peoples who see “land is
not a commodity but rather a gift from God and from their ancestors who rest there, a sacred space
with which they need to interact if they are to maintain their identity and values”. According to Laudato
Si’: “When they remain on their land, they themselves care for it best. Nevertheless, in various parts of
the world, pressure is being put on them to abandon their homelands to make room for agricultural or
mining projects which are undertaken without regard for the degradation of nature and culture.”

On climate change, Pope Francis does not mince words in describing its impact the poor, citing
particularly the scandalous way the world is dealing with environmental refugees: “Many of the poor live
in areas particularly affected by phenomena related to warming, and their means of subsistence are
largely dependent on natural reserves and ecosystemic services such as agriculture, fishing and
forestry. They have no other financial activities or resources which can enable them to adapt to climate
change or to face natural disasters, and their access to social services and protection is very limited.
For example, changes in climate, to which animals and plants cannot adapt, lead them to migrate; this
in turn affects the livelihood of the poor, who are then forced to leave their homes, with great uncertainty
for their future and that of their children. There has been a tragic rise in the number of migrants seeking
to flee from the growing poverty caused by environmental degradation. They are not recognized by
international conventions as refugees; they bear the loss of the lives they have left behind, without
enjoying any legal protection whatsoever. Sadly, there is widespread indifference to such suffering,
which is even now taking place throughout our world. Our lack of response to these tragedies involving
our brothers and sisters points to the loss of that sense of responsibility for our fellow men and women
upon which all civil society is founded.”

Pope Francis explains why we must not separate the state of our planet from what is happening to
many of its people: “The human environment and the natural environment deteriorate together; we
cannot adequately combat environmental degradation unless we attend to causes related to human
and social degradation. In fact, the deterioration of the environment and of society affects the most
vulnerable people on the planet.” He quotes from a statement of the bishops of Germany: “Both
everyday experience and scientific research show that the gravest effects of all attacks on the
environment are suffered by the poorest number of other problems which are insufficiently represented
on global agendas.”

A critique of technology

The encyclical presents a powerful critique of technology. It points out: “The specialization which
belongs to technology makes it difficult to see the larger picture. The fragmentation of knowledge proves
helpful for concrete applications, and yet it often leads to a loss of appreciation for the whole, for the
relationships between things, and for the broader horizon, which then becomes irrelevant. This very
fact makes it hard to find adequate ways of solving the more complex problems of today’s world,
particularly those regarding the environment and the poor; these problems cannot be dealt with from a
single perspective or from a single set of interests.”

From this insight of the need for a more holistic approach, Pope Francis advocates “a science which
would offer solutions to the great issues would necessarily have to take into account the data generated
by other fields of knowledge, including philosophy and social ethics. He acknowledged that, in this age
of fragmented knowledge, this not easy. He also points to the lack of “genuine ethical horizons to which
one can appeal”. According to Pope Francis: “Life gradually becomes a surrender to situations
conditioned by technology, itself viewed as the principal key to the meaning of existence. In the concrete
situation confronting us, there are a number of symptoms which point to what is wrong, such as
environmental degradation, anxiety, a loss of the purpose of life and of community living.”

Renewing our cities

Pope Francis mentions cities many times in Laudato Si'. In the earlier sections of the papal encyclical
he takes notes of the "disproportionate and unruly growth of many cities, which have become unhealthy
to live in, not only because of pollution caused by toxic emissions but also as a result of urban chaos,
poor transportation, and visual pollution and noise". He also observes that: "Many cities are huge,
inefficient structures, excessively wasteful of energy and water. Neighborhoods, even those recently
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built, are congested, chaotic and lacking in sufficient green space." Pope Francis then asserts: "We
were not meant to be inundated by cement, asphalt, glass and metal, and deprived of physical contact
with nature."

Pope Francis encourages designers of buildings, neighborhoods, public spaces and cities, “to draw on
the various disciplines which help us to understand people’s thought processes, symbolic language and
ways of acting”. According to Laudato Si’: “It is not enough to seek the beauty of design. More precious
still is the service we offer to another kind of beauty: people’s quality of life, their adaptation to the
environment, encounter and mutual assistance. Here too, we see how important it is that urban planning
always take into consideration the views of those who will live in these areas.”

Laudato Si’ points at lack of housing as a serious problem in many parts of the world. Pope Francis
considers this a major issue for human ecology. After all, “having a home has much to do with a sense
of personal dignity and the growth of families”. To solve this issue, the Pope sides with those who
advocate on-site development, pointing out how slums and shanty towns must be redeveloped rather
than razed, ensuring that no displacement happen. At the same time, Laudato Si’ emphasizes the
importance of creativity and innovation in integrating rundown neighborhoods into a welcoming city:
“How beautiful those cities which overcome paralyzing mistrust, integrate those who are different and
make this very integration a new factor of development! How attractive are those cities which, even in
their architectural design, are full of spaces which connect, relate and favour the recognition of others!”

Intergenerational equity

Finally, Pope Francis highlights the importance of the principle of intergenerational equity. In the
clearest of language, he says solidarity with future generations is not optional, but rather a basic
question of justice. This is because the world we have received also belongs to those who will follow
us. Indeed, the idea of the common good extends to future generations.

The truth is that there is no sustainable development without intergenerational solidarity: “Once we
start to think about the kind of world we are leaving to future generations, we look at things differently;
we realize that the world is a gift which we have freely received and must share with others. Since the
world has been given to us, we can no longer view reality in a purely utilitarian way, in which efficiency
and productivity are entirely geared to our individual benefit. Intergenerational solidarity is not optional,
but rather a basic question of justice, since the world we have received also belongs to those who will
follow us.”

To elaborate further the principle of intergenerational equity, the Pope asks: “What kind of world do we
want to leave to those who come after us, to children who are now growing up?” For Pope Francis, this
is not just an environmental question that can be addressed in isolation or approached piecemeal.
According to him: “When we ask ourselves what kind of world we want to leave behind, we think in the
first place of its general direction, its meaning and its values. Unless we struggle with these deeper
issues, I do not believe that our concern for ecology will produce significant results. But if these issues
are courageously faced, we are led inexorably to ask other pointed questions: What is the purpose of
our life in this world? Why are we here? What is the goal of our work and all our efforts? What need
does the earth have of us? “

Laudato Si’ warns that we cannot underestimate the harm we have done with the world and on future
generations to whom we are leaving “debris, desolation and filth”. The encyclical points out how
rampant and unbridled consumption and waste is stretching our planet’s capacity; that today’s lifestyle
can only result in environmental catastrophes. Thus, Pope Francis calls for decisive action here and
now and encourages us to reflect on our accountability to future generations who will have to endure
the consequences of our actions.

I echo the words of Pope Francis in Laudato Si’: “Once we start to think about the kind of world we are
leaving to future generations, we look at things differently; we realize that the world is a gift which we
have freely received and must share with others . . . Intergenerational solidarity is not optional, but
rather a basic question of justice, since the world we have received also belongs to those who will follow
us.”

---

Note: Note: Summary of Laudato Si was written by Antonio G. M. La Vina. The full text can be
downloaded at http://w2.vatican.va/content/francesco/en/encyclicals/documents/papa-
francesco_20150524_enciclica-laudato-si.html.
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1.3 Legal framework related to environment and natural resources

The current Constitution, adopted in 1987, is the highest law in the country. There are three branches
of government: a bicameral Congress which enacts national laws form the Legislative Branch; the
President, as head of the Executive Branch, implements these laws directly or through implementing
regulations that must be consistent with legislation; and the Judicial Branch is led by the Supreme
Court, which is the final arbiter of legal conflicts and interpreter of the Constitution. Chapter Two
discusses the institutional framework in greater detail.

In the hierarchy of laws, all national laws and executive implementing regulations must be consistent
with the Constitution, and implementing regulations must be consistent with the laws being
implemented, and implementation must be within the delegated powers given to the President and
government agencies by the Constitution and the specific laws.

1.3.1 Constitution
The Constitution defines the national territory, which “comprises the Philippine archipelago, with all
the islands and waters embraced therein… including its territorial sea, the seabed, the subsoil, the
insular shelves, and other submarine areas. The waters around between, the connecting the islands
of the archipelago, regardless of their breadth and dimensions, from part of the internal waters of the
Philippines.”24 In 2009, Republic Act No. 9522 established the archipelagic baselines of the country,
declaring a ‘regime of islands’ in the Kalayaan Group of Islands and Scarborough Shoal25 in the
South China Sea, which the Philippines refers to as West Philippine Sea. In 2016, the Permanent
Court of Arbitration ruled that China’s “historical maritime rights” over the contested areas in the
South China Sea based on the nine-dash line map have no basis in international maritime law,
deciding in favor of the Philippines. The Philippines is a party to the UN Convention on the Law of
the Sea (UNCLOS) and has generally moved to interpreting the Constitution to be consistent with
UNCLOS.26

The national territory and its relation to UNCLOS is further discussed in Volume Two. The relevant
provisions in the Constitution are presented in Table 1, noting important relevant laws and cases that
are elaborated further in the rest of the book as they relate to specific environmental issues.

Table 1: Constitutional provisions relevant to ENR management

Constitution Relevant laws and cases

Article I. The national territory comprises the Philippine archipelago, Law:

National with all the islands and waters embraced therein, and all Baselines of Territorial Sea
Territory other territories over which the Philippines has sovereignty Act, R.A. No. 9522 (2009)
or jurisdiction, consisting of its terrestrial, fluvial and aerial
domains, including its territorial sea, the seabed, the Cases:
subsoil, the insular shelves, and other submarine areas. The Republic of the
The waters around, between, and connecting the islands of Philippines vs. The People’s
the archipelago, regardless of their breadth and dimensions, Republic of China, PCA
form part of the internal waters of the Philippines. Case No 2013-19

Magallona, et al. vs.

Executive Secretary

24
Const. (1987), art. 1 (Phil.).
25
Rep. Act 9522, § 2 (Phil.).
26
Rodolfo C. Severino, Where in the World is the Philippines: Debating its national territory, Institute of Southeast Asian
Studies, Singapore (2011).
Mary Ann Palma, The Philippines as an Archipelagic and Maritime Nation: Interests, Challenges and Perspectives
(Rajartanam School of International Studies, Working Paper No. 182, 2009).
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Ermita,et al., G.R. No.

187167, July 16, 2011

Article II. Section 15. The State shall protect and promote the right to Laws: (See Table 2)
Declaration health of the people and instill health consciousness among
of State them. Case:
Principles Hilarion M. Henares, Jr. vs.
and Policies LTFRB and DOTC, G.R.
No. 158290, October 23,
2006.

Section 16. The State shall protect and advance the right of Laws: (See Table 2)
the people to a balanced and healthful ecology in accord
with the rhythm and harmony of nature Cases:
Segovia, et al. vs. The
Climate Change
Commission, G.R. No.
211010, March 7, 2017

Minors Oposa, et al. vs.

DENR Secretary Factoran,
et al., G.R. No. 101083,
July 30, 1993, discussed in
this section

Felipe Ysmael, Jr vs.

Secretary of Environment
and Natural Resources,
G.R. No. 79538 October
18, 1990

Section 22. The State recognizes and promotes the rights Laws:
of indigenous cultural communities within the framework of Indigenous People’s Rights
national unity and development. Act, R.A. No. 8371 (1997)

Cases:
Province of North Cotabato
vs. Government of the
Republic of the Philippines,
GR Nos. 183591, 183752,
183893, 183951 & 183962,
October 14, 2008

Cruz vs. NCIP, G.R. No.

135385, December 6, 2000

Cariño vs. Insular

Government, 212 US 449,
February 23, 1909
Section 25. The State shall ensure the autonomy of local Law:
governments. Organic Law for the
Bangsamoro Autonomous
Region in. Muslim
Mindanao, R.A. No. 11054
(2018)

Local Government Code,

R.A. No. 7160 (1991)
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Case:
SJS vs. Atienza, G.R. No.
156052, March 7, 2007

Article III. Section 7. The right of the people to information on matters Cases:
Bill of of public concern shall be recognized. Access to official
Rights records, and to documents and papers pertaining to official Province of North Cotabato
acts, transactions, or decisions, as well as to government vs. Government of the
research data used as basis for policy development, shall Republic of the Philippines,
be afforded the citizen, subject to such limitations as may GR Nos. 183591, 183752,
be provided by law. 183893, 183951 & 183962,
October 14, 2008.

Chavez vs. Public Estates

Authority and Amari Coastal
Bay Development Corp.,
GR No. 133250, July 9,
2002.

Valmonte vs. Belmonte,

G.R. No. 74930, February
13, 1989

Legaspi vs. CSC, G.R. No.

L-72119, May 29, 1987

Article X. Section 4. The President of the Philippines shall exercise Laws:

Local general supervision over local governments. Provinces with Organic Law for the
Government respect to component cities and municipalities, and cities Bangsamoro Autonomous
and municipalities with respect to component barangays Region in. Muslim
shall ensure that the acts of their component units are within Mindanao, R.A. No. 11054
the scope of their prescribed powers and functions. (2018)

Local Government Code,

R.A. No. 7160 (1991)

Cases:
Villafuerte vs. Robredo,
G.R. No. 185390,
December 10, 2014

Tano vs. Socrates, G.R. No.

110249, August 21, 1997

Section 5. Each local government unit shall have the power Laws:
to create its own sources of revenues and to levy taxes, Organic Law for the
fees and charges subject to such guidelines and limitations Bangsamoro Autonomous
as the Congress may provide, consistent with the basic Region in. Muslim
policy of local autonomy. Such taxes, fees, and charges Mindanao, R.A. No. 11054
shall accrue exclusively to the local governments. (2018), sec. 6, Art. XII

Local Government Code,

R.A. No. 7160 (1991), Sec.
18

Section 7. Local governments shall be entitled to an Laws:

equitable share in the proceeds of the utilization and Laws:
development of the national wealth within their respective Organic Law for the
Bangsamoro Autonomous
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areas, in the manner provided by law, including sharing the Region in. Muslim
same with the inhabitants by way of direct benefits. Mindanao, R.A. No. 11054
(2018), sec. 6(d), Art. XII

Electric Power Industry

Reform Act of 2001, R.A.
9136 (2001), Section 66

Mining Act of 1995, R.A.

7942 (1995), Section 82

Department of Energy Act

of 1992, R.A. 7638 (1992),
Section 5(i)

Local Government Code,

R.A. 7160 (1991), Sections
289 to 294

Case:
IDEALS, INC. vs. PSALM,
G.R. No. 192088, October
9, 2012

Section 15. There shall be created autonomous regions in Laws:

Muslim Mindanao and in the Cordilleras consisting of Organic Law for the
provinces, cities, municipalities, and geographical areas Bangsamoro Autonomous
sharing common and distinctive historical and cultural Region in. Muslim
heritage, economic and social structures, and other relevant Mindanao, R.A. No. 11054
characteristics within the framework of this Constitution and (2018)
the national sovereignty as well as territorial integrity of the
Republic of the Philippines. Mindanao Development
Authority (MinDA) Act of
2010, RA No. 9996,
February 17, 2010

Revised Organic Act of

ARMM, R.A. 9054(2001).

Cases:
James L. Chiongbian et al v
Oscar M. Orbos et al. G.R.
No. 96754 June 22, 1995

Sultan Mohamad Ali B.

Dimaporo v COMELEC,
G.R. No. 93201-04 June
26, 1990

Article XII. Section 1. The goals of the national economy are a more Law:
National equitable distribution of opportunities, income, and wealth; a Reorganizing the National
Economy sustained increase in the amount of goods and services Economic and
and produced by the nation for the benefit of the people; and an Development Authority, EO
Patrimony expanding productivity as the key to raising the quality of life 230, approved July 22,
for all, especially the underprivileged. 1997.
xxx
Cases:
Chavez vs. Public Estates
Authority and Amari Coastal
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Bay Development Corp.,

GR No. 133250, July 9,
2002.

Manila Prince Hotel v

GSIS, G.R. No. 122156
February 3, 1997

Section 2. All lands of the public domain, waters, minerals, coal, Cases:
petroleum, and other mineral oils, all forces of potential Aranda vs. Republic. GR
energy, fisheries, forests or timber, wildlife, flora and fauna, No. 172331, August 24,
and other natural resources are owned by the State. With 2011
the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, Heherson Alvarez vs.
development, and utilization of natural resources shall be PICOP Resources, G.R.
under the full control and supervision of the State. The State Nos. 162243, 164516 &
may directly undertake such activities, or it may enter into 171875, December 3, 2009
co-production, joint venture, or production-sharing
Republic v. Pagadian City
agreements with Filipino citizens, or corporations or
Timber, G.R. No. 159308,
associations at least sixty per centum of whose capital is
September 16, 2008
owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not LA BUGAL-B'LAAN
more than twenty-five years, and under such terms and TRIBAL ASSOCIATION,
conditions as may be provided by law. In cases of water INC., vs. Ramos, G.R. No.
rights for irrigation, water supply fisheries, or industrial uses 127882. December 1,
other than the development of water power, beneficial use 2004
may be the measure and limit of the grant.
Cruz v. Secretary of
Environment and Natural
Resources, G.R. No.
135385, December 6, 2000

Miners Association of the

Philippines, Inc. vs.
Factoran, Jr., G.R. No.
98332, January 16, 1995

Republic v. Quasha, G.R.

No.
L-30299, Aug. 17, 1972

The State shall protect the nation's marine wealth in its Law:
archipelagic waters, territorial sea, and exclusive economic The Philippine Fisheries
zone, and reserve its use and enjoyment exclusively to Code, R. A. No. 8550 (1998)
Filipino citizens. particularly Chapter II Sec. 5
10, & 11 and Chapter VI:
Prohibitions and Penalties,
Sec. 86-107

Case:
Arigo vs. Swift, G.R. No.
206510, September 16,
2014

The Congress may, by law, allow small-scale utilization of Laws:

natural resources by Filipino citizens, as well as cooperative
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fish farming, with priority to subsistence fishermen and fish- The Philippine Fisheries
workers in rivers, lakes, bays, and lagoons. Code, R.A. No. 8550
(1998), Sec. 17 &18

Agriculture and Fisheries

Modernization Act of 1997,
R.A. No. 8435, Sec. 13 & 14
The President may enter into agreements with foreign- Law:
owned corporations involving either technical or financial Mining Act of 1995, R.A.
assistance for large-scale exploration, development, and 7942 (1995), Section 18.
utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by Cases:
law, based on real contributions to the economic growth and Resident Marine Mammals
general welfare of the country. In such agreements, the of the Protected Seascape
State shall promote the development and use of local Tańon Strait vs. Secretary
scientific and technical resources. Angeo Reyes, G.R. No.
180771, April 21, 2015
The President shall notify the Congress of every contract
Apex Mining Co. Inc. v
entered into in accordance with this provision, within thirty
Southeast Mindanao
days from its execution. Mining Corp. G.R. No.
152613 & No. 152628,
June 23, 2006

Didipio Earth-Savers’
Multipurpose Association et
al. v Secretary of DENR,
G.R. No. 157882, March
30, 2006

LA BUGAL-B'LAAN
TRIBAL ASSOCIATION,
INC., vs. Ramos, G.R. No.
127882, December 1, 2004

Miners Association of the

Philippines, Inc. vs.
Factoran, G.R. No. 98332
January 16, 1995

Section 3. Lands of the public domain are classified into Law:

agricultural, forest or timber, mineral lands and national Indigenous People’s Rights
parks. Agricultural lands of the public domain may be further Act, R.A. No. 8371 (1997)
classified by law according to the uses to which they may
be devoted. Alienable lands of the public domain shall be Cases:
limited to agricultural lands. Private corporations or Cruz v NCIP, G.R. No.
associations may not hold such alienable lands of the public 135385, December 6, 2000
domain except by lease, for a period not exceeding twenty-
five years, renewable for not more than twenty-five years, Republic of the Philippines v
Naguiat, G.R. No. 134209,
and not to exceed one thousand hectares in area. Citizens
January 24, 2006
of the Philippines may lease not more than five hundred
hectares, or acquire not more than twelve hectares thereof
by purchase, homestead, or grant.

Taking into account the requirements of conservation,

ecology, and development, and subject to the requirements
of agrarian reform, the Congress shall determine, by law,
the size of lands of the public domain which may be
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acquired, developed, held, or leased and the conditions

therefor.

Section 4. The Congress shall, as soon as possible, Laws:The National

determine by law the specific limits of forest lands and Integrated Protected Areas
national parks, marking clearly their boundaries on the System Act, R.A. No. 7586
ground. Thereafter, such forest lands and national parks (1992), as amended by
shall be conserved and may not be increased nor R.A. No. 11038 (2018)
diminished, except by law. The Congress shall provide, for
such period as it may determine, measures to prohibit DENR Administrative Order
logging in endangered forests and watershed areas. No. 2008-24 - Guidelines
for the Assessment and
Delineation of Boundaries
between Forestlands,
National Parks and
Agricultural Lands

DENR Administrative Order

No. 1995-15- Revised
General Guidelines in the
Implementation of the Sub-
classification of Forestlands
and Other Inalienable
Lands of the Public Domain

Revised Forestry Code of

the Philippines, P.D. 705
(1975) as amended by R.A.
7161 (1991)

Cases:
PICOP Resources vs. Base
Metals Mineral Resources
Corporation G.R. No.
163509, December 6, 2006

Apex Mining vs. Southeast

Mindanao Gold Mining G.R.
No. 152613, 152628,
152619-152620, 152870-
152871, June 23, 2006

Province of Rizal v Exec

Sec G.R. No. 129546,
December 13, 2005

Section 5. The State, subject to the provisions of this Laws:

Constitution and national development policies and Organic Law for the
programs, shall protect the rights of indigenous cultural Bangsamoro Autonomous
communities to their ancestral lands to ensure their Region in. Muslim
economic, social, and cultural well-being. Mindanao, R.A. No. 11054
(2018)

The Indigenous Peoples

Rights Act of 1997, RA No.
8371, Sections 2,-5, 7-8, 12
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Mining Act of 1995, R.A.

7942 (1995), Section 4 and
16

Cases:
Mariano Tanenglean vs.
Silvestre Lorenzo et al.,
G.R. No. 173415, March
28, 2008

Nicasio I. Alcantara vs.

Commission on the
Settlement of Land
Problems, et al., G.R. No.
145838, July 20, 2001

Patricio Cutaran et al. vs.

DENR, G.R. No. 134958,
January 31, 2001.

Section 7. Save in cases of hereditary succession, no Cases:

private lands shall be transferred or conveyed except to Cheesman vs. IAC, G.R.
individuals, corporations, or associations qualified to acquire No. 74833, January 21,
or hold lands of the public domain. 1991

Palacios vs. Vda. De

Ramirez, G.R. No. L-27952,
February 15, 1982

Article XIII. Section 6. The State shall apply the principles of agrarian Law:
Social reform or stewardship, whenever applicable in accordance Comprehensive Agrarian
Justice and with law, in the disposition or utilization of other natural Reform Law of 1988,
Human resources, including lands of the public domain under lease “CARP”, R.A. No. 6657, as
Rights or concession suitable to agriculture, subject to prior rights, amended by R.A. 9700
homestead rights of small settlers, and the rights of Sec. 2, 4, 9, 10 & 22
indigenous communities to their ancestral lands.
xxx Case:
Gavino Corpuz vs. Sps.
Grospe, G.R. No. 135297,
June 8, 2000.

Section 7. The State shall protect the rights of subsistence Laws:

fishermen, especially of local communities, to the The Philippine Fisheries
preferential use of the communal marine and fishing Code, R.A. No. 8550
resources, both inland and offshore. It shall provide support (1998), Sec. 17 & 18, as
to such fishermen through appropriate technology and amended by R.A. No. 10654
research, adequate financial, production, and marketing (2014)
assistance, and other services. The State shall also protect,
develop, and conserve such resources. The protection shall Agriculture and Fisheries
extend to offshore fishing grounds of subsistence fishermen Modernization Act of 1997,
R.A. No. 8435, Sec. 13 & 14
against foreign intrusion. Fishworkers shall receive a just
share from their labor in the utilization of marine and fishing
Comprehensive Agrarian
resources.
Reform Law of 1988,
“CARP”, R.A. No. 6657, as
amended by R.A. 9700,
Sec. 2 (2009)

Case:
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People vs. Maximo

Maceren et al., G.R. No. L-
32166 October 18, 1977.

Section 16. The right of the people and their organizations Laws:
to effective and reasonable participation at all levels of Organic Law for the
social, political, and economic decision-making shall not be Bangsamoro Autonomous
abridged. The State shall, by law, facilitate the Region in. Muslim
establishment of adequate consultation mechanisms. Mindanao, R.A. No. 11054
(2018)

Local Government Code,

R.A. No. 7160 (1991)

Clean Water Act, R.A. No.

9275, (2004)

Ecological Solid Waste

Management Act, R.A.
9003 (2000)

Clean Air Act, R.A. No. 8749

(1999)

There are two related constitutional and legal frameworks that are used in the discussion of
environmental law. The first is the right to a balanced and healthful ecology as mentioned in Section
16, Article II of the 1987 Constitution, and the second is the Regalian Doctrine, and other related
doctrines under Article XII of the Constitution.

1.3.1.1 Right to a balanced and healthful ecology

The Constitution guarantees the right of the people to health and a “balanced and healthful ecology
consistent with the rhythm and harmony of nature.” In the landmark case of Minors Oposa, et al. vs
Factoran et al., the Supreme Court declared that this right is paramount and immediately
enforceable, such that government agencies can be compelled to perform their mandated functions
to protect the environment.

Minors Oposa, et al. vs Factoran, et al.

GR No. 101083, July 30, 1993

Davide, Jr., J. ponente

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

The controversy has its genesis in Civil Case No. 90-777 which was filed before
Branch 66 (Makati, Metro Manila) of the Regional Trial Court (RTC), National Capital
Judicial Region. The principal plaintiffs therein, now the principal petitioners, are all
minors duly represented and joined by their respective parents. Impleaded as an
additional plaintiff is the Philippine Ecological Network, Inc. (PENI), a domestic, non-
stock and non-profit corporation organized for the purpose of, inter alia, engaging in
concerted action geared for the protection of our environment and natural resources.
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The original defendant was the Honorable Fulgencio S. Factoran, Jr., then Secretary
of the Department of Environment and Natural Resources (DENR). His substitution
in this petition by the new Secretary, the Honorable Angel C. Alcala, was
subsequently ordered upon proper motion by the petitioners. The complaint was
instituted as a taxpayers' class suit and alleges that the plaintiffs "are all citizens of
the Republic of the Philippines, taxpayers, and entitled to the full benefit, use and
enjoyment of the natural resource treasure that is the country's virgin tropical
rainforests." The same was filed for themselves and others who are equally
concerned about the preservation of said resource but are "so numerous that it is
impracticable to bring them all before the Court." The minors further asseverate that
they "represent their generation as well as generations yet unborn." Consequently,
it is prayed for that judgment be rendered: ". . . ordering defendant, his agents,
representatives and other persons acting in his behalf to —
(1) Cancel all existing timber license agreements in the country;
(2) Cease and desist from receiving, accepting, processing, renewing or
approving new timber license agreements." and granting the plaintiffs
". . . such other reliefs just and equitable under the premises."
xxx

The complaint focuses on one specific fundamental legal right — the right to a
balanced and healthful ecology which, for the first time in our nation's constitutional
history, is solemnly incorporated in the fundamental law. Section 16, Article II of the
1987 Constitution explicitly provides:
"SEC. 16. The State shall protect and advance the right of the people
to a balanced and healthful ecology in accord with the rhythm and
harmony of nature."

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

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

The right to a balanced and healthful ecology carries with it the correlative duty to
refrain from impairing the environment.
xxx

Conformably with the enunciated right to a balanced and healthful ecology and the
right to health, as well as the other related provisions of the Constitution concerning
the conservation, development and utilization of the country's natural resources, then
President Corazon C. Aquino promulgated on 10 June 1987 E.O. No. 192, Section
4 of which expressly mandates that the Department of Environment and Natural
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Resources "shall be the primary government agency responsible for the

conservation, management, development and proper use of the country's
environment and natural resources, specifically forest and grazing lands, mineral
resources, including those in reservation and watershed areas, and lands of the
public domain, as well as the licensing and regulation of all natural resources as may
be provided for by law in order to ensure equitable sharing of the benefits derived
therefrom for the welfare of the present and future generations of Filipinos." Section
3 thereof makes the following statement of policy:
xxx

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

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

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

A denial or violation of that right by the other who has the correlative duty or obligation
to respect or protect the same gives rise to a cause of action. Petitioners maintain
that the granting of the TLAs, which they claim was done with grave abuse of
discretion, violated their right to a balanced and healthful ecology; hence, the full
protection thereof requires that no further TLAs should be renewed or granted.
xxx
After a careful examination of the petitioners' complaint, We find the statements
under the introductory affirmative allegations, as well as the specific averments under
the subheading CAUSE OF ACTION, to be adequate enough to show, prima facie,
the claimed violation of their rights. On the basis thereof, they may thus be granted,
wholly or partly, the reliefs prayed for. xxx

The Oposa case is also famous internationally because the Court recognized the right of the
Petitioners, who were minors, to sue as a class, on their own and as representatives of ”generations
yet unborn” based on the concept of intergenerational responsibility:

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

Other landmark cases under this doctrine are MMDA vs Concerned Residents of Manila
Bay, International Service for the Acquisition of Agri-Biotech Applications, Inc. vs.
Greenpeace Southeast Asia or the Bt talong case, and Resident Marine Mammals of the
Protected Seascape Tañon Strait vs. Secretary Reyes.

MMDA vs. Concerned Residents of Manila Bay

G.R. Nos. 171947-46, December 18, 2008

Velasco, Jr., J., ponente

xxx

This case started when, on January 29, 1999, respondents Concerned Residents of
Manila Bay filed a complaint before the Regional Trial Court (RTC) in Imus, Cavite
against several government agencies, among them the petitioners, for the cleanup,
rehabilitation, and protection of the Manila Bay. Raffled to Branch 20 and docketed as
Civil Case No. 1851-99 of the RTC, the complaint alleged that the water quality of the
Manila Bay had fallen way below the allowable standards set by law, specifically
Presidential Decree No. (PD) 1152 or the Philippine Environment Cod. xxx

In their individual causes of action, respondents alleged that the continued neglect of
petitioners in abating the pollution of the Manila Bay constitutes a violation of, among
others:

(1) Respondents’ constitutional right to life, health, and a balanced ecology;

(2) The Environment Code (PD 1152);

(3) The Pollution Control Law (PD 984);

(4) The Water Code (PD 1067);

(5) The Sanitation Code (PD 856);

(6) The Illegal Disposal of Wastes Decree (PD 825);

(7) The Marine Pollution Law (PD 979);

(8) Executive Order No. 192;

(9) The Toxic and Hazardous Wastes Law (Republic Act No. 6969);

(10) Civil Code provisions on nuisance and human relations;

(11) The Trust Doctrine and the Principle of Guardianship; and

(12) International Law

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Inter alia, respondents, as plaintiffs a quo, prayed that petitioners be ordered to clean
the Manila Bay and submit to the RTC a concerted concrete plan of action for the
purpose.

xxx

The RTC Ordered Petitioners to Clean Up and Rehabilitate Manila Bay

On September 13, 2002, the RTC rendered a Decision in favor of respondents. xxx

The CA Sustained the RTC

By a Decision of September 28, 2005, the CA denied petitioners’ appeal and affirmed
the Decision of the RTC in toto, stressing that the trial court’s decision did not require
petitioners to do tasks outside of their usual basic functions under existing laws.

xxx

The issues before us are two-fold. First, do Sections 17 and 20 of PD 1152 under the
headings, Upgrading of Water Quality and Clean-up Operations, envisage a cleanup in
general or are they limited only to the cleanup of specific pollution incidents?
And second, can petitioners be compelled by mandamus to clean up and rehabilitate the
Manila Bay?

On August 12, 2008, the Court conducted and heard the parties on oral arguments.

Our Ruling

We shall first dwell on the propriety of the issuance of mandamus under the premises.

The Cleaning or Rehabilitation of Manila Bay

Can be Compelled by Mandamus

Generally, the writ of mandamus lies to require the execution of a ministerial duty. A
ministerial duty is one that "requires neither the exercise of official discretion nor
judgment." It connotes an act in which nothing is left to the discretion of the person
executing it. It is a "simple, definite duty arising under conditions admitted or proved to
exist and imposed by law." Mandamus is available to compel action, when refused, on
matters involving discretion, but not to direct the exercise of judgment or discretion one
way or the other.

xxx

First off, we wish to state that petitioners’ obligation to perform their duties as defined by
law, on one hand, and how they are to carry out such duties, on the other, are two
different concepts. While the implementation of the MMDA’s mandated tasks may entail
a decision-making process, the enforcement of the law or the very act of doing what the
law exacts to be done is ministerial in nature and may be compelled by mandamus. We
said so in Social Justice Society v. Atienza in which the Court directed the City of Manila
to enforce, as a matter of ministerial duty, its Ordinance No. 8027 directing the three big
local oil players to cease and desist from operating their business in the so-called
"Pandacan Terminals" within six months from the effectivity of the ordinance. But to
illustrate with respect to the instant case, the MMDA’s duty to put up an adequate and
appropriate sanitary landfill and solid waste and liquid disposal as well as other
alternative garbage disposal systems is ministerial, its duty being a statutory imposition.
The MMDA’s duty in this regard is spelled out in Sec. 3(c) of Republic Act No. (RA) 7924
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creating the MMDA. This section defines and delineates the scope of the MMDA’s waste
disposal services to include:

Solid waste disposal and management which include formulation and implementation of
policies, standards, programs and projects for proper and sanitary waste disposal. It
shall likewise include the establishment and operation of sanitary land fill and
related facilities and the implementation of other alternative programs intended to
reduce, reuse and recycle solid waste. (Emphasis added.)

The MMDA is duty-bound to comply with Sec. 41 of the Ecological Solid Waste
Management Act (RA 9003) which prescribes the minimum criteria for the establishment
of sanitary landfills and Sec. 42 which provides the minimum operating requirements that
each site operator shall maintain in the operation of a sanitary landfill. Complementing
Sec. 41 are Secs. 36 and 37 of RA 9003, enjoining the MMDA and local government
units, among others, after the effectivity of the law on February 15, 2001, from using and
operating open dumps for solid waste and disallowing, five years after such effectivity,
the use of controlled dumps.

The MMDA’s duty in the area of solid waste disposal, as may be noted, is set forth not
only in the Environment Code (PD 1152) and RA 9003, but in its charter as well. This
duty of putting up a proper waste disposal system cannot be characterized as
discretionary, for, as earlier stated, discretion presupposes the power or right given by
law to public functionaries to act officially according to their judgment or conscience. A
discretionary duty is one that "allows a person to exercise judgment and choose to
perform or not to perform." Any suggestion that the MMDA has the option whether or not
to perform its solid waste disposal-related duties ought to be dismissed for want of legal
basis.

A perusal of other petitioners’ respective charters or like enabling statutes and pertinent
laws would yield this conclusion: these government agencies are enjoined, as a matter
of statutory obligation, to perform certain functions relating directly or indirectly to the
cleanup, rehabilitation, protection, and preservation of the Manila Bay. They are
precluded from choosing not to perform these duties. xxx

All told, the aforementioned enabling laws and issuances are in themselves clear,
categorical, and complete as to what are the obligations and mandate of each
agency/petitioner under the law. We need not belabor the issue that their tasks include
the cleanup of the Manila Bay.

Now, as to the crux of the petition. Do Secs. 17 and 20 of the Environment Code
encompass the cleanup of water pollution in general, not just specific pollution incidents?

Secs. 17 and 20 of the Environment Code

Include Cleaning in General

xxx

When the Clean Water Act (RA 9275) took effect, its Sec. 16 on the subject, o, amended
the counterpart provision (Sec. 20) of the Environment Code (PD 1152). Sec. 17 of PD
1152 continues, however, to be operational.

The amendatory Sec. 16 of RA 9275 reads:

SEC. 16. Cleanup Operations.––Notwithstanding the provisions of Sections 15 and 26

hereof, any person who causes pollution in or pollutes water bodies in excess of the
applicable and prevailing standards shall be responsible to contain, remove and clean
up any pollution incident at his own expense to the extent that the same water bodies
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have been rendered unfit for utilization and beneficial use: Provided, That in the event
emergency cleanup operations are necessary and the polluter fails to immediately
undertake the same, the [DENR] in coordination with other government agencies
concerned, shall undertake containment, removal and cleanup operations. Expenses
incurred in said operations shall be reimbursed by the persons found to have caused
such pollution under proper administrative determination x x x. Reimbursements of the
cost incurred shall be made to the Water Quality Management Fund or to such other
funds where said disbursements were sourced.

As may be noted, the amendment to Sec. 20 of the Environment Code is more apparent
than real since the amendment, insofar as it is relevant to this case, merely consists in
the designation of the DENR as lead agency in the cleanup operations.

Petitioners contend at every turn that Secs. 17 and 20 of the Environment Code concern
themselves only with the matter of cleaning up in specific pollution incidents, as opposed
to cleanup in general. They aver that the twin provisions would have to be read alongside
the succeeding Sec. 62(g) and (h), which defines the terms "cleanup operations" and
"accidental spills," as follows:

g. Clean-up Operations [refer] to activities conducted in removing the pollutants

discharged or spilled in water to restore it to pre-spill condition.

h. Accidental Spills [refer] to spills of oil or other hazardous substances in water that
result from accidents such as collisions and groundings.

xxx For one thing, said Sec. 17 does not in any way state that the government agencies
concerned ought to confine themselves to the containment, removal, and cleaning
operations when a specific pollution incident occurs. On the contrary, Sec. 17 requires
them to act even in the absence of a specific pollution incident, as long as water quality
"has deteriorated to a degree where its state will adversely affect its best usage." This
section, to stress, commands concerned government agencies, when appropriate, "to
take such measures as may be necessary to meet the prescribed water quality
standards." In fine, the underlying duty to upgrade the quality of water is not conditional
on the occurrence of any pollution incident.

For another, a perusal of Sec. 20 of the Environment Code, as couched, indicates that
it is properly applicable to a specific situation in which the pollution is caused by polluters
who fail to clean up the mess they left behind. In such instance, the concerned
government agencies shall undertake the cleanup work for the polluters’ account.
Petitioners’ assertion, that they have to perform cleanup operations in the Manila Bay
only when there is a water pollution incident and the erring polluters do not undertake
the containment, removal, and cleanup operations, is quite off mark. As earlier
discussed, the complementary Sec. 17 of the Environment Code comes into play and
the specific duties of the agencies to clean up come in even if there are no pollution
incidents staring at them. Petitioners, thus, cannot plausibly invoke and hide behind Sec.
20 of PD 1152 or Sec. 16 of RA 9275 on the pretext that their cleanup mandate depends
on the happening of a specific pollution incident. In this regard, what the CA said with
respect to the impasse over Secs. 17 and 20 of PD 1152 is at once valid as it is practical.
The appellate court wrote: "PD 1152 aims to introduce a comprehensive program of
environmental protection and management. This is better served by making Secs. 17 &
20 of general application rather than limiting them to specific pollution incidents."

Granting arguendo that petitioners’ position thus described vis-à-vis the implementation
of Sec. 20 is correct, they seem to have overlooked the fact that the pollution of the
Manila Bay is of such magnitude and scope that it is well-nigh impossible to draw the
line between a specific and a general pollution incident. And such impossibility extends
to pinpointing with reasonable certainty who the polluters are. We note that Sec. 20 of
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PD 1152 mentions "water pollution incidents" which may be caused by polluters in the
waters of the Manila Bay itself or by polluters in adjoining lands and in water bodies or
waterways that empty into the bay. Sec. 16 of RA 9275, on the other hand, specifically
adverts to "any person who causes pollution in or pollutes water bodies," which may refer
to an individual or an establishment that pollutes the land mass near the Manila Bay or
the waterways, such that the contaminants eventually end up in the bay. In this situation,
the water pollution incidents are so numerous and involve nameless and faceless
polluters that they can validly be categorized as beyond the specific pollution incident
level.

Not to be ignored of course is the reality that the government agencies concerned are
so undermanned that it would be almost impossible to apprehend the numerous polluters
of the Manila Bay. It may perhaps not be amiss to say that the apprehension, if any, of
the Manila Bay polluters has been few and far between. Hence, practically nobody has
been required to contain, remove, or clean up a given water pollution incident. In this
kind of setting, it behooves the Government to step in and undertake cleanup operations.
Thus, Sec. 16 of RA 9275, previously Sec. 20 of PD 1152, covers for all intents and
purposes a general cleanup situation.

The cleanup and/or restoration of the Manila Bay is only an aspect and the initial stage
of the long-term solution. The preservation of the water quality of the bay after the
rehabilitation process is as important as the cleaning phase. It is imperative then that the
wastes and contaminants found in the rivers, inland bays, and other bodies of water be
stopped from reaching the Manila Bay. Otherwise, any cleanup effort would just be a
futile, cosmetic exercise, for, in no time at all, the Manila Bay water quality would again
deteriorate below the ideal minimum standards set by PD 1152, RA 9275, and other
relevant laws. It thus behooves the Court to put the heads of the petitioner-department-
agencies and the bureaus and offices under them on continuing notice about, and to
enjoin them to perform, their mandates and duties towards cleaning up the Manila Bay
and preserving the quality of its water to the ideal level. Under what other judicial
discipline describes as "continuing mandamus," the Court may, under extraordinary
circumstances, issue directives with the end in view of ensuring that its decision would
not be set to naught by administrative inaction or indifference. In India, the doctrine of
continuing mandamus was used to enforce directives of the court to clean up the length
of the Ganges River from industrial and municipal pollution.

xxx

At this juncture, and if only to dramatize the urgency of the need for petitioners-agencies
to comply with their statutory tasks, we cite the Asian Development Bank-commissioned
study on the garbage problem in Metro Manila, the results of which are embodied in
the The Garbage Book. As there reported, the garbage crisis in the metropolitan area is
as alarming as it is shocking. Some highlights of the report:

1. As early as 2003, three land-filled dumpsites in Metro Manila - the Payatas, Catmon
and Rodriquez dumpsites - generate an alarming quantity of lead and leachate or liquid
run-off. Leachate are toxic liquids that flow along the surface and seep into the earth and
poison the surface and groundwater that are used for drinking, aquatic life, and the
environment.

2. The high level of fecal coliform confirms the presence of a large amount of human
waste in the dump sites and surrounding areas, which is presumably generated by
households that lack alternatives to sanitation. To say that Manila Bay needs
rehabilitation is an understatement.
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3. Most of the deadly leachate, lead and other dangerous contaminants and possibly
strains of pathogens seeps untreated into ground water and runs into the Marikina and
Pasig River systems and Manila Bay.

xxx

In the light of the ongoing environmental degradation, the Court wishes to emphasize
the extreme necessity for all concerned executive departments and agencies to
immediately act and discharge their respective official duties and obligations. Indeed,
time is of the essence; hence, there is a need to set timetables for the performance and
completion of the tasks, some of them as defined for them by law and the nature of their
respective offices and mandates.

The importance of the Manila Bay as a sea resource, playground, and as a historical
landmark cannot be over-emphasized. It is not yet too late in the day to restore the Manila
Bay to its former splendor and bring back the plants and sea life that once thrived in its
blue waters. But the tasks ahead, daunting as they may be, could only be accomplished
if those mandated, with the help and cooperation of all civic-minded individuals, would
put their minds to these tasks and take responsibility. This means that the State, through
petitioners, has to take the lead in the preservation and protection of the Manila Bay.

The era of delays, procrastination, and ad hoc measures is over. Petitioners must
transcend their limitations, real or imaginary, and buckle down to work before the
problem at hand becomes unmanageable. Thus, we must reiterate that different
government agencies and instrumentalities cannot shirk from their mandates; they must
perform their basic functions in cleaning up and rehabilitating the Manila Bay. We are
disturbed by petitioners’ hiding behind two untenable claims: (1) that there ought to be a
specific pollution incident before they are required to act; and (2) that the cleanup of the
bay is a discretionary duty.

RA 9003 is a sweeping piece of legislation enacted to radically transform and improve

waste management. It implements Sec. 16, Art. II of the 1987 Constitution, which
explicitly provides that the State shall protect and advance the right of the people to a
balanced and healthful ecology in accord with the rhythm and harmony of nature.

So it was that in Oposa v. Factoran, Jr. the Court stated that the right to a balanced and
healthful ecology need not even be written in the Constitution for it is assumed, like other
civil and political rights guaranteed in the Bill of Rights, to exist from the inception of
mankind and it is an issue of transcendental importance with intergenerational
implications. Even assuming the absence of a categorical legal provision specifically
prodding petitioners to clean up the bay, they and the men and women representing
them cannot escape their obligation to future generations of Filipinos to keep the waters
of the Manila Bay clean and clear as humanly as possible. Anything less would be a
betrayal of the trust reposed in them.

WHEREFORE, the petition is DENIED.

In light of the Order of the Supreme Court for the responsible government agencies to clean up
Manila Bay, and recognizing that compliance will take years, the Court created the Manila Bay
Advisory Committee to assist the Court in determining compliance. Justice Presbitero J. Velasco, Jr.,
who penned the decision, heads the Advisory Committee, which is composed of the chair, a vice-
chair and three members. All of the three Committee members, whose job is to assist in evaluating
compliance by the concerned government agencies, are environmental experts in their own fields of
governance, law and natural sciences.

Early in 2019, the Supreme Court announced the commencement of the seven-year plan to
rehabilitate Manila Bay. Administrative Order No. 16 issued by President Duterte was passed which
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directed national government agencies and the local government units to expedite the restoration of
the ecosystem of Manila Bay and created the Manila Bay Task Force. The task force has the duty to
perform their functions in accordance with their respective mandates and as prescribed in the Writ
of Continuing Mandamus. According to the AO, the task force is necessary because the convergence
of national government agencies and LGUs, and the active participation of private and public
stakeholders are integral to the facilitation of a robust and integrated implementation of restoration
efforts in the Manila Bay. The task force is chaired by the secretary of the Department of Environment
and Natural Resources, with the secretaries of the Departments of Interior and Local Government
and Tourism as vice chairpersons. Its members include the Department of Public Works and
Highways, Department of Health, Department of Agriculture, and Housing and Urban Development
Coordinating Council, among others.

International Service for the Acquisition of Agri-Biotech Applications, Inc. vs.

Greenpeace Southeast Asia
G.R. No. 209271, July 26, 2016

Perlas-Bernabe, J., ponente

The instant case arose from the conduct of field trials for "bioengineered eggplants,"
known as Bacillus thuringiensis (Bt) eggplant (Bt talong), administered pursuant to the
Memorandum of Undertaking (MOU) entered into by herein petitioners University of the
Philippines Los Baños Foundation, Inc. (UPLBFI) and International Service for the
Acquisition of Agri-Biotech Applications, Inc. (ISAAA), and the University of the
Philippines Mindanao Foundation, Inc. (UPMFI), among others. Bt talong contains the
crystal toxin genes from the soil bacterium Bt, which produces the CrylAc protein that is
toxic to target insect pests. The Cry1Ac protein is said to be highly specific
to lepidopteran larvae such as the fruit and shoot borer, the most destructive insect pest
to eggplants.

From 2007 to 2009, petitioner University of the Philippines Los Banos (UPLB), the
implementing institution of the field trials, conducted a contained experiment on Bt
talong under the supervision of the National Committee on Biosafety of the Philippines
(NCBP). The NCBP, created under Executive Order No. (EO) 430, is the regulatory body
tasked to: (a) "identify and evaluate potential hazards involved in initiating genetic
engineering experiments or the introduction of new species and genetically engineered
organisms and recommend measures to minimize risks"; and (b) ''formulate and review
national policies and guidelines on biosafety, such as the safe conduct of work on genetic
engineering, pests and their genetic materials for the protection of public health,
environment[,] and personnel[,] and supervise the implementation thereof." Upon the
completion of the contained experiment, the NCBP issued a Certificate therefor stating
that all biosafety measures were complied with, and no untoward incident had occurred.

On March 16, 2010 and June 28, 2010, the Bureau of Plant Industries (BPI) issued two
(2)-year Biosafety Permits for field testing of Bt talong after UPLB's field test proposal
satisfactorily completed biosafety risk assessment for field testing pursuant to the
Department of Agriculture's (DA) Administrative Order No. 8, series of 2002 (DAO 08-
2002), which provides for the rules and regulations for the importation and release into
the environment of plants and plant products derived from the use of modern
biotechnology. Consequently, field testing proceeded in approved trial sites in North
Cotabato, Pangasinan, Camarines Sur, Davao City, and Laguna.

On April 26, 2012, respondents Greenpeace Southeast Asia (Philippines)

(Greenpeace), Magsasaka at Siyentipiko sa Pagpapaunlad ng Agrikultura
(MASIPAG), and others (respondents) filed before the Court a Petition for Writ of
Continuing Mandamus and Writ of Kalikasan with Prayer for the Issuance of a
Temporary Environmental Protection Order (TEPO) (petition for Writ
of Kalikasan) against herein petitioners the Environmental Management Bureau (EMB)
of the Department of Environment and Natural Resources (DENR), the BPI and the
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Fertilizer and Pesticide Authority (FPA) of the DA, UPLBFI, and ISAAA, and UPMFI,
alleging that the Bt talong field trials violated their constitutional right to health and a
balanced ecology considering, among others, that: (a) the Environmental Compliance
Certificate (ECC), as required by Presidential Decree No. (PD) 1151, was not secured
prior to the field trials; (b) the required public consultations under the Local Government
Code (LGC) were not complied with; and (c) as a regulated article under DAO 08-
2002, Bt talong is presumed harmful to human health and the environment, and that
there is no independent, peer-reviewed study showing its safety for human consumption
and the environment. Further, they contended that since the scientific evidence as to the
safety of Bt talong remained insufficient or uncertain, and that preliminary scientific
evaluation shows reasonable grounds for concern, the precautionary principle should be
applied and, thereby, the field trials be enjoined.

In a Decision, the CA ruled in favor of respondents and directed petitioners to

permanently cease and desist from conducting the Bt talong field trials

Aggrieved, petitioners separately moved for reconsideration. However, the CA denied

the same and remarked that introducing genetically modified plant into the ecosystem is
an ecologically imbalancing act. Anent UPLB 's argument that the Writ
of Kalikasan violated its right to academic freedom, the CA emphasized that the writ did
not stop the research on Bt talong but only the procedure employed in conducting the
field trials, and only at this time when there is yet no law ensuring its safety when
introduced to the environment.

Dissatisfied, petitioners filed their respective petitions for review on certiorari before this
Court.

xxx

The Proceedings Before the Court

In a Decision, the Court denied the petitions and accordingly, affirmed with modification
the ruling of the CA. Agreeing with the CA, the Court held that the precautionar; principle
applies in this case since the risk of harm from the field trials of Bt talong remains
uncertain and there exists a possibility of serious and irreversible harm. The Court
observed that eggplants are a staple vegetable in the country that is mostly grown by
small-scale farmers who are poor and marginalized; thus, given the country's rich
biodiversity, the consequences of contamination and genetic pollution would be
disastrous and irreversible.

The Court likewise agreed with the CA in not dismissing the case for being moot and
academic despite the completion and termination of the Bt talong field trials, on account
of the following exceptions to the mootness principle: (a) the exceptional character of the
situation and the paramount public interest is involved; and (b) the case is capable of
repetition yet evading review.

Thus, the Court permanently enjoined the field testing of Bt talong. In addition, it declared
DAO 08-2002 null and void for failure to consider the provisions of the NBF. The Court
also temporarily enjoined any application for contained use, field testing, propagation,
commercialization, and importation of genetically modified organisms until a new
administrative order is promulgated in accordance with law.

The Issues Presented in the Motions for Reconsideration

Undaunted, petitioners moved for reconsideration, arguing, among others, that: (a) the
case should have been dismissed for mootness in view of the completion and termination
of the Bt talong field trials and the expiration of the Biosafety Permits; (b) the Court
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should not have ruled on the validity of DAO 08-2002 as it was not raised as an issue;
and (c) the Court erred in relying on the studies cited in the December 8, 2015 Decision
which were not offered in evidence and involved Bt corn, not Bt talong.

In their Consolidated Comments, respondents maintain, in essence, that: (a) the case is
not mooted by the completion of the field trials since field testing is part of the process
of commercialization and will eventually lead to propagation, commercialization, and
consumption of Bt talong as a consumer product; (b) the validity of DAO 08-2002 was
raised by respondents when they argued in their petition for Writ of Kalikasan that such
administrative issuance is not enough to adequately protect the Constitutional right of
the people to a balanced and healthful ecology; and (c) the Court correctly took judicial
notice of the scientific studies showing the negative effects of Bt technology and applied
the precautionary principle.

The Court's Ruling

The Court grants the motions for reconsideration on the ground of mootness.

As a rule, the Court may only adjudicate actual, ongoing controversies. The requirement
of the existence of a "case" or an "actual controversy" for the proper exercise of the
power of judicial review proceeds from Section 1, Article VIII of the 1987 Constitution.

Nevertheless, case law states that the Court will decide cases, otherwise moot,
if: first, there is a grave violation of the Constitution; second, the exceptional character
of the situation and the paramount public interest are involved; third, when the
constitutional issue raised requires formulation of controlling principles to guide the
bench, the bar, and the public; and fourth, the case is capable of repetition yet evading
review.

I. On the paramount public interest exception.

Jurisprudence in this jurisdiction has set no hard-and-fast rule in determining whether a

case involves paramount public interest in relation to the mootness principle. However,
a survey of cases would show that, as a common guidepost for application, there should
be some perceivable benefit to the public which demands the Court to proceed with the
resolution of otherwise moot questions.

No perceivable benefit to the public - whether rational or practical - may be gained by

resolving respondents' petition for Writ of Kalikasan on the merits.

To recount, these cases, which stemmed from herein respondents petition for Writ
of Kalikasan, were mooted by the undisputed expiration of the Biosafety Permits issued
by the BPI and the completion and termination of the Bt talong field trials subject of the
same. These incidents effectively negated the necessity for the reliefs sought by
respondents in their petition for Writ of Kalikasan as there was no longer any field test to
enjoin. Hence, at the time the CA rendered its Decision dated May 17, 2013, the reliefs
petitioner sought and granted by the CA were no longer capable of execution.

At this juncture, it is important to understand that the completion and termination of the
field tests do not mean that herein petitioners may inevitably proceed to commercially
propagate Bt talong. There are three (3) stages before genetically-modified organisms
(GMOs) may become commercially available under DAO 08-2002 and each stage is
distinct, such that "[s]ubsequent stages can only proceed if the prior stage/s [is/]are
completed and clearance is given to engage in the next regulatory stage." Specifically,
before a genetically modified organism is allowed to be propagated under DAO 08-
2002: (a) a permit for propagation must be secured from the BPI; (b) it can be shown
that based on the field testing conducted in the Philippines, the regulated article will not
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pose any significant risks to the environment; (c) food and/or feed safety studies show
that the regulated article will not pose any significant risks to human and animal health;
and (d) if the regulated article is a pest-protected plant, its transformation event has been
duly registered with the FPA.

As the matter never went beyond the field testing phase, none of the foregoing tasks
related to propagation were pursued or the requirements therefor complied with. Thus,
there are no guaranteed after-effects to the already concluded Bt talong field trials that
demand an adjudication from which the public may perceivably benefit. Any future threat
to the right ,of herein respondents or the public in general to a healthful and balanced
ecology is therefore more imagined than real.

II. The case is not one capable of repetition vet evading review.

Likewise, contrary to the Court's earlier ruling, these cases do not fall under the "capable
of repetition yet evading review" exception.

xxx

Based on the foregoing, it is apparent that the regulatory framework now applicable in
conducting risk assessment in matters involving the research, development, handling,
movement, and release into the environment of genetically modified plant and plant
products derived from the use of modem biotechnology is substantially different from
that which was applied to the subject field trials. In this regard, it cannot be said that the
present case is one capable of repetition yet evading review.

Here, respondents cannot claim that the duration of the subject field tests was too short
to be fully litigated. It must be emphasized that the Biosafety Permits for the subject field
tests were issued on March 16, 2010 and June 28, 2010, and were valid for two (2)
years. However, as aptly pointed out by Justice Leonen, respondents filed their petition
for Writ of Kalikasan only on April 26, 2012 - just a few months before the Biosafety
Permits expired and when the field testing activities were already over. Obviously,
therefore, the cessation of the subject field tests before the case could be resolved was
due to respondents' own inaction.

Moreover, the situation respondents complain of is not susceptible' to repetition. As

discussed above, DAO 08-2002 has already been superseded by JDC 01-2016. Hence,
future applications for field testing will be governed by JDC 01-2016 which, as illustrated,
adopts a regulatory framework that is substantially different from that of DAO 08-2002.

Therefore, it was improper for the Court to resolve the merits of the case which had
become moot in view of the absence of any valid exceptions to the rule on mootness,
and to thereupon rule on the objections against the validity and consequently nullify DAO
08-2002 under the premises of the precautionary principle.

In fact, in relation to the latter, it is observed that the Court should not have even delved
into the constitutionality of DAO 08-2002 as it was merely collaterally challenged by
respondents, based on the constitutional precepts of the people's rights to information
on matters of public concern, to public participation, to a balanced and healthful ecology,
and to health.

All told, with respondents' petition for Writ of Kalikasan already mooted by the expiration
of the Biosafoty Permits and the completion of the field trials subject of these cases, and
with none of the exceptions to the mootness principle properly attending, the Court
grants the instant motions for reconsideration and hereby dismisses the aforesaid
petition. With this pronouncement, no discussion on the substantive merits of the same
should be made.
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WHEREFORE, the motions for reconsideration are GRANTED.

The aforementioned Bt talong case is important because it makes mention of the precautionary
principle. First mentioned in the Rio Declaration on Environment and Development of which the
Philippines is a signatory, the precautionary principle dictates that “where there are threats of
serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for
postponing cost-effective measures to prevent environmental degradation.”28

Resident Marine Mammals of the Protected Seascape of Tañon Strait vs.

Secretary Angelo Reyes
G.R. No. 180771, April 21, 2015

Leonardo-de Castro, J., ponente

xxx

Petitioners' Allegations

Protesting the adverse ecological impact of JAPEX's oil exploration activities in the
Tañon Strait, petitioners Resident Marine Mammals and Stewards aver that a study
made after the seismic survey showed that the fish catch was reduced drastically by 50
to 70 percent. They claim that before the seismic survey, the average harvest per day
would be from 15 to 20 kilos; but after the activity, the fisherfolk could only catch an
average of 1 to 2 kilos a day. They attribute this "reduced fish catch" to the destruction
of the "payao" also known as the "fish aggregating device" or "artificial reef." Petitioners
Resident Marine Mammals and Stewards also impute the incidences of "fish
kill” observed by some of the local fisherfolk to the seismic survey. And they further
allege that the ECC obtained by private respondent JAPEX is invalid because public
consultations and discussions with the affected stakeholders, a pre-requisite to the
issuance of the ECC, were not held prior to the
ECC's issuance.

In its separate petition, petitioner FIDEC confirms petitioners Resident Marine

Mammals and Stewards' allegations of reduced fish catch and lack of public
consultations or discussions with the fisherfolk and other stakeholders prior to the
issuance of the ECC.

Public Respondents' Counter-Allegations

Public respondents, through the Solicitor General, contend that petitioners Resident
Marine Mammals and Stewards have no legal standing to file the present petition; that
SC-46 does not violate the 1987 Constitution and the various laws cited in the petitions;
that the ECC was issued in accordance with existing laws and regulations; that public
respondents may not be compelled by mandamus to furnish petitioners copies of all
documents relating to SC-46; and that all the petitioners failed to show that they are
entitled to injunctive relief. They further contend that the issues raised in these petitions
have been rendered moot and academic by the fact that SC-46 had been mutually
terminated by the parties thereto
effective June 21, 2008.

DISCUSSION

At the outset, this Court makes clear that the '"moot and academic principle' is not a
magical formula that can automatically dissuade the courts in resolving a case."

28
Rio Declaration on Environment and Development, 3-14 June 1992. Accessed at
https://www.un.org/documents/ga/conf151/aconf15126-1annex1.htm
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In this case, despite the termination of SC-46, this Court deems it necessary to resolve
these consolidated petitions as almost all of the foregoing exceptions are present in this
case. Both petitioners allege that SC-46 is violative of the Constitution, the environmental
and livelihood issues raised undoubtedly affect the public's interest, and the
respondents'
contested actions are capable of repetition.

Procedural Issues

Locus Standi of Petitioners Resident Marine Mammals and Stewards

The Resident Marine Mammals, through the Stewards, "claim" that they have the legal
standing to file this action since they stand to be benefited or injured by the judgment in
this suit. Citing Oposa v. Factoran, Jr., they also assert their right to sue for the faithful
performance of international and municipal environmental laws created in their favor and
for their benefit. In this regard, they propound that they have the right to demand that
they be accorded the benefits granted to them in multilateral international instruments
that the Philippine Government had signed, under the concept of stipulation pour autrui.
xxx

Recently, the Court passed the landmark Rules of Procedure for Environmental
Cases, which allow for a "citizen suit," and permit any Filipino citizen to file an action
before our courts for violations of our environmental laws. xxx

Impleading Former President Gloria Macapagal-Arroyo as an Unwilling Co-

Petitioner

Section 10, Rule 3 of the Rules of Court provides:

Sec. 10. Unwilling co-plaintiff. - If the consent of any party who should be joined as
plaintiff can not be obtained, he may be made a defendant and the reason therefor shall
be stated in the complaint.
Under the foregoing rule, when the consent of a party who should be joined as a plaintiff
cannot be obtained, he or she may be made a party defendant to the case. This will put
the unwilling party under the jurisdiction of the Court, which can properly implead him or
her through its processes. The unwilling party's name cannot be simply included in a
petition, without his or her knowledge and consent, as such would be a denial of due
process.

Moreover, the reason cited by the petitioners Stewards for including former President
Macapagal-Arroyo in their petition, is not sufficient to implead her as an unwilling co-
petitioner. Impleading the former President as an unwilling co-petitioner, for an act she
made in the performance of the functions of her office, is contrary to the public policy
against embroiling the President in suits, "to assure the exercise of Presidential duties
and functions free from any hindrance or distraction, considering that being the Chief
Executive of the Government is a job that, aside from requiring all of the office holder's
time, also
demands undivided attention."

Therefore, former President Macapagal-Arroyo cannot be impleaded as one of the

petitioners in this suit. Thus, her name is stricken off the title of this case.

Main Issue:
Legality of Service Contract No. 46

Agreements Involving Technical Or Financial Assistance Are Service Contracts

with Safeguards
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In summarizing the matters discussed in the ConCom, we established that paragraph

4, with the safeguards in place, is the exception to paragraph 1, Section 2 of Article
XII. The following are the safeguards this Court enumerated in La Bugal:

Such service contracts may be entered into only with respect to minerals, petroleum and
other mineral oils. The grant thereof is subject to several safeguards, among which are
these requirements:

(1) The service contract shall be crafted in accordance with a general law that will set
standard or uniform terms, conditions and requirements, presumably to attain a certain
uniformity in provisions and avoid the possible insertion of terms disadvantageous to
the country.

(2) The President shall be the signatory for the government because, supposedly
before an agreement is presented to the President for signature, it will have been
vetted several times over at different levels to ensure that it conforms to law and can
withstand public scrutiny.

(3) Within thirty days of the executed agreement, the President shall report it to
Congress to give that branch of government an opportunity to look over the agreement
and interpose timely objections, if any.
Library

Adhering to the aforementioned guidelines, this Court finds that SC-46 is indeed null
and void for noncompliance with the requirements of the 1987 Constitution.

1. The General Law on Oil Exploration

The disposition, exploration, development, exploitation, and utilization of indigenous

petroleum in the Philippines are governed by Presidential Decree No. 87 or the Oil
Exploration and Development Act of 1972. This was enacted by then President
Ferdinand Marcos to promote the discovery and production of indigenous petroleum
through the utilization of government and/or local or foreign private resources to yield
the maximum benefit to the Filipino people and the revenues to the Philippine
Government.

Contrary to the petitioners' argument, Presidential Decree No. 87, although enacted in
1972, before the adoption of the 1987 Constitution, remains to be a valid law unless
otherwise repealed.

2. President was not the signatory to SC-46 and the same was not submitted to
Congress

While the Court finds that Presidential Decree No. 87 is sufficient to satisfy the
requirement of a general law, the absence of the two other conditions, that the President
be a signatory to SC-46, and that Congress be notified of such contract, renders it null
and void.

As SC-46 was executed in 2004, its terms should have conformed not only to the
provisions of Presidential Decree No. 87, but also to those of the 1987 Constitution. xxx

Under this doctrine, which recognizes the establishment of a single executive, all
executive and administrative organizations are adjuncts of the Executive Department,
the heads of the various executive departments are assistants and agents of the Chief
Executive, and, except in cases where the Chief Executive is required by the
Constitution or law to act in person or the exigencies of the situation demand that
he act personally, the multifarious executive and administrative functions of the Chief
Executive are performed by and through the executive departments, and the acts of the
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Secretaries of such departments, performed and promulgated in the regular course of

business, are, unless disapproved or reprobated by the Chief Executive presumptively
the acts of the Chief Executive.

While the requirements in executing service contracts in paragraph 4, Section 2 of Article

XII of the 1987 Constitution seem like mere formalities, they, in reality, take on a much
bigger role. As we have explained in La Bugal, they are the safeguards put in place by
the framers of the Constitution to "eliminate or minimize the abuses prevalent during the
martial law regime." Thus, they are not just mere formalities, which will only render a
contract unenforceable but not void, if not complied with. They are requirements placed,
not just in an ordinary statute, but in the fundamental law, the non-observance of which
will nullify the contract. xxx

Even under the provisions of Presidential Decree No. 87, it is required that the Petroleum
Board, now the DOE, obtain the President's approval for the execution of any contract
under said statute.

Ruling of the Court

On the legality of Service Contract No. 46 vis-a-vis Other Laws

Although we have already established above that SC-46 is null and void for being
violative of the 1987 Constitution, it is our duty to still rule on the legality of SC-46 vis-a-
vis other pertinent laws, to serve as a guide for the Government when executing service
contracts involving not only the Tañon Strait, but also other similar areas

The Tañon Strait is a narrow passage of water bounded by the islands of Cebu in the
East and Negros in the West. It harbors a rich biodiversity of marine life, including
endangered species of dolphins and whales. For this reason, former President Fidel V.
Ramos declared the Tañon Strait as a protected seascape in 1998 by virtue of
Proclamation No. 1234 - Declaring the Tañon Strait situated in the Provinces of Cebu,
Negros Occidental and Negros Oriental as a Protected Area pursuant to the NIP AS Act
and shall be known as Tañon Strait Protected Seascape. During former President
Joseph E. Estrada's time, he also constituted the Tañon Strait Commission via Executive
Order No. 76 to ensure the optimum and sustained use of the resources in that area
without threatening its marine life. He followed this with Executive Order No.
177, wherein he included the mayor of Negros Occidental Municipality/City as a member
of the Tañon Strait Commission, to represent the LGUs concerned. This Commission,
however, was subsequently abolished in 2002 by then President Gloria Macapagal-
Arroyo, via Executive Order No. 72.

True to the constitutional policy that the "State shall protect and advance the right of the
people to a balanced and healthful ecology in accord with the rhythm and harmony of
nature," Congress enacted the NIPAS Act to secure the perpetual existence of all native
plants and animals through the establishment of a comprehensive system of integrated
protected areas. These areas possess common ecological values that were incorporated
into a holistic plan representative of our natural heritage.

The Tañon Strait, pursuant to Proclamation No. 1234, was set aside and declared a
protected area under the category of Protected Seascape. The NIPAS Act defines a
Protected Seascape to be an area of national significance characterized by the
harmonious interaction of man and land while providing opportunities for public
enjoyment through recreation and tourism within the normal lifestyle and economic
activity of this areas; thus a management plan for each area must be designed to protect
and enhance the permanent preservation of its natural conditions. Consistent with this
endeavor is the requirement that an Environmental Impact Assessment (EIA) be made
prior to undertaking any activity outside the scope of the management plan. Unless an
ECC under the EIA system is obtained, no activity inconsistent with the goals of the
NIPAS Act shall be implemented.
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The Environmental Impact Statement System (EISS) was established in 1978 under
Presidential Decree No. 1586. It prohibits any person, partnership or corporation from
undertaking or operating any declared environmentally critical project or areas without
first securing an ECC issued by the President or his duly authorized
representative. Pursuant to the EISS, which called for the proper management of
environmentally critical areas, Proclamation No. 2146 was enacted, identifying the areas
and types of projects to be considered as environmentally critical and within the scope
of the EISS, while DENR Administrative Order No. 2003-30 provided for its Implementing
Rules and Regulations (IRR).

DENR Administrative Order No. 2003-30 defines an environmentally critical area as "an
area delineated as environmentally sensitive such that significant environmental impacts
are expected if certain types of proposed projects or programs are located, developed,
or implemented in it"; thus, before a project, which is "any activity, regardless of scale or
magnitude, which may have significant impact on the environment," is undertaken in it,
such project must undergo an EIA to evaluate and predict the likely impacts of all its
stages on the environment. xxx

Moreover, SC-46 was not executed for the mere purpose of gathering information on the
possible energy resources in the Tañon Strait as it also provides for the parties' rights
and obligations relating to extraction and petroleum production should oil in commercial
quantities be found to exist in the area. While Presidential Decree No. 87 may serve
as the general law upon which a service contract for petroleum exploration and
extraction may be authorized, the exploitation and utilization of this energy
resource in the present case may be allowed only through a law passed by
Congress, since the Tañon Strait is a NIPAS area.Since there is no such law
specifically allowing oil exploration and/or extraction in the Tañon Strait, no
energy resource exploitation and utilization may be done in said protected
seascape.

WHEREFORE, the Petitions in G.R. Nos. 180771 and 181527 are GRANTED, Service
Contract No. 46 is hereby declared NULL AND VOID for violating the 1987 Constitution,
Republic Act No. 7586, and Presidential Decree No. 1586.

1.3.1.2 The Regalian Doctrine

Under the Constitution, all natural resources, including minerals, waters, fisheries, belong to the
State. This is popularly referred to as the Regalian doctrine. A claimant has the burden of proving
that the land has been classified by the government as available for private ownership. The most
prominent affirmation of this rule is the case of Aranda vs. Republic.

Aranda vs. Republic

G.R. No. 172331, August 24, 2011

Villarama, Jr., J., ponente

Subject of a petition for original registration before the RTC is a parcel of land situated
in San Andres, Malvar, Batangas with an area of 9,103 square meters and designated
as Lot 3730, Psc 47, Malvar Cadastre.
xxx
In support of the application, petitioner’s sister Merlita A. Enriquez testified that in 1965
her father Anatalio Aranda donated the subject land to his brother (petitioner), as
evidenced by documents “Pagpapatunay ng Pagkakaloob ng Lupa” which she and her
siblings executed on June 7, 2000. She came to know the land for the first time in 1965
when she was eight years old and his brother Ramon has been tilling the land since
then, planting it with rice and corn. His brother did not introduce any permanent
improvement and also did not hire a tenant to work on the land. As to the donation made
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by his father to his brother Ramon, she recalled there was such a document but it was
eaten by rats.

Another witness, Luis Olan, testified that his father Lucio Olan originally owned the land
and that he had known about this property since he was six (6) years old as he used to
accompany his father in going to the land. His father farmed the land and planted it first,
with rice, and later corn. They had open, peaceful, continuous and adverse possession
of the land in the concept of owner until his father sold the land in 1946 to Anatalio
Aranda. The children of Anatalio then took over in tilling the land, planting it with rice
and corn and adding a few coconut trees. He does not have any copy of the document
of sale because his mother gave it to Anatalio.

xxx

The Property Registration Decree (P.D. No. 1529) provides for original registration of land
in an ordinary registration proceeding. Under Section 14(1) thereof, a petition may be
granted upon compliance with the following requisites: (a) that the property in question is
alienable and disposable land of the public domain; (b) that the applicants by themselves
or through their predecessors-in-interest have been in open, continuous, exclusive and
notorious possession and occupation; and (c) that such possession is under a bona fide
claim of ownership since June 12, 1945 or earlier.

Under the Regalian doctrine which is embodied in Section 2, Article XII of the 1987
Constitution, all lands of the public domain belong to the State, which is the source of
any asserted right to ownership of land. All lands not appearing to be clearly within
private ownership are presumed to belong to the State. Unless public land is shown to
have been reclassified or alienated to a private person by the State, it remains part of
the inalienable public domain. To overcome this presumption, incontrovertible evidence
must be established that the land subject of the application is alienable or disposable.

To prove that the land subject of an application for registration is alienable, an applicant
must establish the existence of a positive act of the government such as a presidential
proclamation or an executive order; an administrative action; investigation reports of
Bureau of Lands investigators; and a legislative act or a statute. The applicant may also
secure a certification from the Government that the lands applied for are alienable and
disposable.
xxx

We have held that a person who seeks the registration of title to a piece of land on the
basis of possession by himself and his predecessors-in-interest must prove his claim by
clear and convincing evidence, i.e., he must prove his title and should not rely on the
absence or weakness of the evidence of the oppositors. Furthermore, the court has the
bounden duty, even in the absence of any opposition, to require the petitioner to show,
by a preponderance of evidence and by positive and absolute proof, so far as possible,
that he is the owner in fee simple of the lands which he is attempting to register. Since
petitioner failed to meet the quantum of proof required by law, the CA was correct in
reversing the trial court and dismissing his application for judicial confirmation of title. xxx

Utilization of natural resources is generally reserved for Filipinos, except for large-scale financial and
technical assistance agreements involving mineral and petroleum resources. 29 In the case of
fisheries, utilization is reserved exclusively for Filipino citizens, with priority given to subsistence
fishermen and protection against foreign intrusion.30

Miners Association of the Philippines vs. Factoran

G.R. No. 98332 January 16, 1995

29
Const. (1987), art. XII, § 2 (Phil.).
30
Const. (1987), art. XII, § 2; Art. XIII, § 7 (Phil.).
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Romero, J., ponente

xxx
Herein controversy was precipitated by the change introduced by Article XII, Section 2
of the 1987 Constitution on the system of exploration, development and utilization of the
country's natural resources. No longer is the utilization of inalienable lands of public
domain through "license, concession or lease" under the 1935 and 1973 Constitutions
allowed under the 1987 Constitution.

The adoption of the concept of jura regalia that all natural resources are owned by the
State embodied in the 1935, 1973 and 1987 Constitutions, as well as the recognition of
the importance of the country's natural resources, not only for national economic
development, but also for its security and national defense, ushered in the adoption of
the constitutional policy of "full control and supervision by the State" in the exploration,
development and utilization of the country's natural resources. The options open to the
State are through direct undertaking or by entering into co-production, joint venture; or
production-sharing agreements, or by entering into agreement with foreign-owned
corporations for large-scale exploration, development and utilization.xxx

Pursuant to the mandate of the above-quoted provision, legislative acts were

successively issued by the President in the exercise of her legislative power.

To implement said legislative acts, the Secretary of the Department of Environment and
Natural Resources (DENR) in turn promulgated Administrative Order Nos. 57 and 82,
the validity and constitutionality of which are being challenged in this petition. xxx

In this petition for certiorari, petitioner Miners Association of the Philippines, Inc. mainly
contends that respondent Secretary of DENR issued both Administrative Order Nos. 57
and 82 in excess of his rule-making power under Section 6 of Executive Order No. 279.
On the assumption that the questioned administrative orders do not conform with
Executive Order Nos. 211 and 279, petitioner contends that both orders violate the
non-impairment of contract provision under Article III, Section 10 of the 1987 Constitution
on the ground that Administrative Order No. 57 unduly pre-terminates existing mining
agreements and automatically converts them into production-sharing agreements within
one (1) year from its effectivity date. On the other hand, Administrative Order No. 82
declares that failure to submit Letters of Intent and Mineral Production-Sharing
Agreements within two (2) years from the date of effectivity of said guideline or on July
17, 1991 shall cause the abandonment of their mining, quarry and sand gravel permits.

The economic policy on the exploration, development and utilization of the country's
natural resources under Article XII, Section 2 of the 1987 Constitution could not be any
clearer. As enunciated in Article XII, Section 1 of the 1987 Constitution, the exploration,
development and utilization of natural resources under the new system mandated in
Section 2, is geared towards a more equitable distribution of opportunities, income, and
wealth; a sustained increase in the amount of goods and services produced by the nation
for the benefit of the people; and an expanding productivity as the key to raising the
quality of life for all, especially the underprivileged.

Upon the effectivity of the 1987 Constitution on February 2, 1987, the State assumed a
more dynamic role in the exploration, development and utilization of the natural
resources of the country. Article XII, Section 2 of the said Charter explicitly ordains that
the exploration, development and utilization of natural resources shall be under the full
control and supervision of the State. Consonant therewith, the exploration, development
and utilization of natural resources may be undertaken by means of direct act of the
State, or it may opt to enter into co-production, joint venture, or production-sharing
agreements, or it may enter into agreements with foreign-owned corporations involving
either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils according to the general terms
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and conditions provided by law, based on real contributions to the economic growth and
general welfare of the country.
xxx

The exploration, development and utilization of the country's natural resources are
matters vital to the public interest and the general welfare of the people. The recognition
of the importance of the country's natural resources was expressed as early as the 1984
Constitutional Convention. In connection therewith, the 1986 U.P. Constitution Project
observed: "The 1984 Constitutional Convention recognized the importance of our natural
resources not only for its security and national defense. Our natural resources which
constitute the exclusive heritage of the Filipino nation should be preserved for those
under the sovereign authority of that nation and for their prosperity. This will ensure the
country's survival as a viable and sovereign republic."

Accordingly, the State, in the exercise of its police power in this regard, may not be
precluded by the constitutional restriction on non-impairment of contract from altering,
modifying and amending the mining leases or agreements granted under Presidential
Decree No. 463, as amended, pursuant to Executive Order No. 211. Police Power, being
co-extensive with the necessities of the case and the demands of public interest; extends
to all the vital public needs. The passage of Executive Order No. 279 which superseded
Executive Order No. 211 provided legal basis for the DENR Secretary to carry into effect
the mandate of Article XII, Section 2 of the 1987 Constitution.

Nowhere in Administrative Order No. 57 is there any provision which would lead us to
conclude that the questioned order authorizes the automatic conversion of mining leases
and agreements granted after the effectivity of the 1987 Constitution, pursuant to
Executive Order No. 211, to production-sharing agreements. The provision in Article 9
of Administrative Order No. 57 that "all such leases or agreements shall be converted
into production sharing agreements within one (1) year from the effectivity of these
guidelines" could not possibility contemplate a unilateral declaration on the part of the
Government that all existing mining leases and agreements are automatically converted
into production-sharing agreements. On the contrary, the use of the term "production-
sharing agreement" if they are so minded. Negotiation negates compulsion or automatic
conversion as suggested by petitioner in the instant petition. A mineral production-
sharing agreement (MPSA) requires a meeting of the minds of the parties after
negotiations arrived at in good faith and in accordance with the procedure laid down in
the subsequent Administrative Order No. 82.

We, therefore, rule that the questioned administrative orders are reasonably directed to
the accomplishment of the purposes of the law under which they were issued and were
intended to secure the paramount interest of the public, their economic growth and
welfare. The validity and constitutionality of Administrative Order Nos. 57 and 82 must
be sustained, and their force and effect upheld.

Special provisions in the Constitution recognize autonomy in Muslim Mindanao.31 The first iteration
of the law implemented the Expanded Organic Act for the Autonomous Region in Muslim Mindanao.32
The Autonomous Region in Muslim Mindanao (ARMM) initially included the provinces of Lanao del
Sur Maguindanao, Basilan (except Isabela City), Sulu, Tawi-Tawi. After the ratification of the
Bangsamoro Organic Law 33 in a plebiscite on January 21, 2019, the Bangsamoro Autonomous
Region in Muslim Mindanao was formed.

The Constitution recognizes the rights of indigenous peoples to their culture, institutions, and
ancestral lands and domain.34 There are 114 ethno-linguistic groups in the Philippines, totaling about

31
Const. (1987), art. X, § 15 (Phil.).
32
Rep. Act 9054 (Phil.).
33
Rep. Act 11054 (Phil.)
34
Const. (1987), art.II, § 22; art XII, § 6; art. XIV, § 17 (Phil.).
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14 million people, of which 63% live in Mindanao. The Badjaos of the Sulu archipelago are sea-
oriented, boat dwelling, nomadic groups that move around Sulu, Sabah, Sulawesi and Kalimantan.

Cariño vs Insular Government

212 U.S. 449 (1909)

Holmes, J., ponente

xxx The applicant and plaintiff in error is an Igorot of the Province of Benguet, where the
land lies. For more than fifty years before the Treaty of Paris, April 11, 1899, as far back
as the findings go, the plaintiff and his ancestors had held the land as owners. His
grandfather had lived upon it, and had maintained fences sufficient for the holding of
cattle, according to the custom of the country, some of the fences, it seems, having been
of much earlier date. His father had cultivated parts and had used parts for pasturing
cattle, and he had used it for pasture in his turn. They all had been recognized as owners
by the Igorots, and he had inherited or received the land from his father in accordance
with Igorot custom. No document of title, however, had issued from the Spanish Crown,
and although, in 1893-1894 and again in 1896-1897, he made application for one under
the royal decrees then in force, nothing seems to have come of it, unless, perhaps,
information that lands in Benguet could not be conceded until those to be occupied for a
sanatorium, etc., had been designated -- a purpose that has been carried out by the
Philippine government and the United States. In 1901, the plaintiff filed a petition,
alleging ownership, under the mortgage law, and the lands were registered to him, that
process, however, establishing only a possessory title, it is said.
xxx
We come, then, to the question on which the case was decided below -- namely, whether
the plaintiff owns the land. The position of the government, shortly stated, is that Spain
assumed, asserted, and had title to all the land in the Philippines except so far as it saw
fit to permit private titles to be acquired; that there was no prescription against the Crown,
and that, if there was, a decree of June 25, 1880, required registration within a limited
time to make the title good; that the plaintiff's land was not registered, and therefore
became, if it was not always, public land; that the United States succeeded to the title of
Spain, and so that the plaintiff has no rights that the Philippine government is bound to
respect.
If we suppose for the moment that the government's contention is so far correct that the
Crown of Spain in form asserted a title to this land at the date of the Treaty of Paris, to
which the United States succeeded, it is not to be assumed without argument that the
plaintiff's case is at an end. It is true that Spain, in its earlier decrees, embodied the
universal feudal theory that all lands were held from the Crown, and perhaps the general
attitude of conquering nations toward people not recognized as entitled to the treatment
accorded to those in the same zone of civilization with themselves. It is true also that, in
legal theory, sovereignty is absolute, and that, as against foreign nations, the United
States may assert, as Spain asserted, absolute power. But it does not follow that, as
against the inhabitants of the Philippines, the United States asserts that Spain had such
power. When theory is left on one side, sovereignty is a question of strength, and may
vary in degree. How far a new sovereign shall insist upon the theoretical relation of the
subjects to the head in the past, and how far it shall recognize actual facts, are matters
for it to decide.
The Province of Benguet was inhabited by a tribe that the Solicitor General, in his
argument, characterized as a savage tribe that never was brought under the civil or
military government of the Spanish Crown. It seems probable, if not certain, that the
Spanish officials would not have granted to anyone in that province the registration to
which formerly the plaintiff was entitled by the Spanish laws, and which would have made
his title beyond question good. Whatever may have been the technical position of Spain,
it does not follow that, in the view of the United States, he had lost all rights and was a
mere trespasser when the present government seized his land. The argument to that
effect seems to amount to a denial of native titles throughout an important part of the
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island of Luzon, at least, for the want of ceremonies which the Spaniards would not have
permitted and had not the power to enforce.
The acquisition of the Philippines was not like the settlement of the white race in the
United States. Whatever consideration may have been shown to the North American
Indians, the dominant purpose of the whites in America was to occupy the land. It is
obvious that, however stated, the reason for our taking over the Philippines was different.
No one, we suppose, would deny that, so far as consistent with paramount necessities,
our first object in the internal administration of the islands is to do justice to the natives,
not to exploit their country for private gain. By the Organic Act of July 1, 1902, c. 1369,
§ 12, 32 Stat. 691, all the property and rights acquired there by the United States are to
be administered "for the benefit of the inhabitants thereof." Xxx 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."
It is true that, by § 14, the government of the Philippines is empowered to enact rules
and prescribe terms for perfecting titles to public lands where some, but not all, Spanish
conditions had been fulfilled, and to issue patents to natives for not more than sixteen
hectares of public lands actually occupied by the native or his ancestors before August
13, 1898. But this section perhaps might be satisfied if confined to cases where the
occupation was of land admitted to be public land, and had not continued for such a
length of time and under such circumstances as to give rise to the understanding that
the occupants were owners at that date. We hesitate to suppose that it was intended to
declare every native who had not a paper title a trespasser, and to set the claims of all
the wilder tribes afloat. xxx
Whatever the law upon these points may be, and we mean to go no further than the
necessities of decision demand, every presumption is and ought to be against the
government in a case like the present. It might, perhaps, be proper and sufficient to 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.

It is important to understand the rights of indigenous peoples in relation to environment and natural
resources policy because IPs have a different worldview of the relation of humans to their
environment. The Cariño case recognized that IPs never lost ownership of their lands (ancestral
domains) even after the Spaniards came to claim the Philippines for the Spanish Crown.

In 1997, Congress passed the Indigenous People’s Rights Act (IPRA, Republic Act No. 8371) that
formally recognized the rights of IPs to their ancestral domains and ancestral lands. The law followed
the reasoning in Cariño and gave flesh to the provisions in the Constitution protecting the rights of
IPs.

Sec. 2. Declaration of State Policies. xxx (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;
xxx

Sec. 3. Definition of Terms.-

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
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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;
xxx
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.

IPRA enumerated specific rights that IPs had and the formal processes in which these rights were
recognized by the State. This appeared to run against the generally applied Regalian doctrine that
governed everyone else not considered IPs. On this basis, former Supreme Court Justice Isagani
Cruz challenged the constitutionality of IPRA.

Isagani Cruz and Cesar Europa vs. Secretary of DENR, et al

G.R. No. 135385, December 6, 2000.

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).
xxx
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: xxx
Petitioners also contend 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.

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.

Finally, petitioners assail the validity of Rule VII, Part II, Section 1 of the NCIP
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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.
After due deliberation on the petition, the members of the Court voted as follows:
Seven (7) voted to dismiss the petition. Justice Kapunan filed an opinion, which the Chief
Justice and Justices Bellosillo, Quisumbing, and Santiago join, sustaining the validity of
the challenged provisions of R.A. 8371. Justice Puno also filed a separate opinion
sustaining all challenged provisions of the law with the exception of Section 1, Part II,
Rule III of NCIP Administrative Order No. 1, series of 1998, the Rules and Regulations
Implementing the IPRA, and Section 57 of the IPRA which he contends should be
interpreted as dealing with the large-scale exploitation of natural resources and should
be read in conjunction with Section 2, Article XII of the 1987 Constitution. On the other
hand, Justice Mendoza voted to dismiss the petition solely on the ground that it does not
raise a justiciable controversy and petitioners do not have standing to question the
constitutionality of R.A. 8371.
Seven (7) other members of the Court voted to grant the petition. Justice Panganiban
filed a separate opinion expressing the view that Sections 3 (a)(b), 5, 6, 7 (a)(b), 8, and
related provisions of R.A. 8371 are unconstitutional. He reserves judgment on the
constitutionality of Sections 58, 59, 65, and 66 of the law, which he believes must await
the filing of specific cases by those whose rights may have been violated by the IPRA.
Justice Vitug also filed a separate opinion expressing the view that Sections 3(a), 7, and
57 of R.A. 8371 are unconstitutional. Justices Melo, Pardo, Buena, Gonzaga-Reyes, and
De Leon Jr., 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.

While the Court’s decision itself did not provide the reasoning behind the votes, Justice Puno
provided a lengthy support for the decision of the Court that traced the roots of the Constitutional
provisions and IPRA:

Puno, J., ponente

When Congress enacted the Indigenous Peoples Rights Act (IPRA), it introduced radical
concepts into the Philippine legal system which appear to collide with settled
constitutional and jural precepts on state ownership of land and other natural resources.
The sense and subtleties of this law cannot be appreciated without considering its
distinct sociology and the labyrinths of its history. This Opinion attempts to interpret IPRA
by discovering its soul shrouded by the mist of our history. After all, the IPRA was
enacted by Congress not only to fulfill the constitutional mandate of protecting the
indigenous cultural communities' right to their ancestral land but more importantly, to
correct a grave historical injustice to our indigenous people.
xxx
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. Private land titles could only be
acquired from the government either by purchase or by the various modes of land grant
from the Crown.
xxx
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The Regalian doctrine was enshrined in the 1935 Constitution. Xxx The 1973
Constitution reiterated the Regalian doctrine in Section 8, Article XIV xxx The 1987
Constitution reaffirmed the Regalian doctrine in Section 2 of Article XII on "National
Economy and Patrimony," xxx 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.

Republic Act No. 8371 xxx 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.
xxx
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.
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. xxx
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.
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. xxx
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."
To recognize the rights of the indigenous peoples effectively, Senator Flavier proposed
a bill based on two postulates: (1) the concept of native title; and (2) the principle of
parens patriae.
According to Senator Flavier, "[w]hile our legal tradition subscribes to the Regalian
Doctrine reinstated in Section 2, Article XII of the 1987 Constitution," our "decisional
laws" and jurisprudence passed by the State have "made exception to the doctrine." This
exception was first laid down in the case of Cariño v. Insular Government xxx
Ancestral Domains and Ancestral Lands are the Private Property of Indigenous
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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. xxx Native title refers to ICCs/IPs' preconquest rights to lands
and domains held under a claim of private ownership as far back as memory
reaches. These lands are deemed never to have been public lands and are
indisputably presumed to have been held that way since before the Spanish
Conquest. The rights of ICCs/IPs to their ancestral domains (which also include
ancestral lands) by virtue of native title shall be recognized and respected. xxx
Like a torrens title, a CADT is evidence of private ownership of land by native title.
Native title, however, is a right of private ownership peculiarly granted to ICCs/IPs
over their ancestral lands and domains. The IPRA categorically declares ancestral
lands and domains held by native title as never to have been public land. Domains
and lands held under native title are, therefore, indisputably presumed to have
never been public lands and are private.
xxx
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. xxx
Following the constitutional mandate that "customary law govern property rights or
relations in determining the ownership and extent of ancestral domains," the IPRA, by
legislative fiat, introduces a new concept of ownership. This is a concept that has long
existed under customary law.
Custom, from which customary law is derived, is also recognized under the Civil Code
as a source of law. Some articles of the Civil Code expressly provide that custom should
be applied in cases where no codal provision is applicable. In other words, in the
absence of any applicable provision in the Civil Code, custom, when duly proven, can
define rights and liabilities.
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.
To be sure, the indigenous concept of ownership exists even without a paper title. The
CADT is merely a "formal recognition" of native title.
xxx

Are ancestral domains therefore, considered private lands in the same way as ordinary titled private
lands? Jurisprudence and IPRA are very clear that these lands are private; however, the reality in
the ground is different and more complex – for example, DENR still considers that ancestral domains
within protected areas are still part of public domain. Succeeding chapters explore the various
dimensions of this issue.

The next case of Zabal vs. Duterte decided in February 2019 declared constitiutitonal the closure of
Boracay for being in the nature of a valid police power measure.

Zabal vs. Duterte

G.R. No. 238467, February 12, 2019

Del Castillo, J., ponente

Xxx
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The Facts

Claiming that Boracay has become a cesspool, President Duterte first made public his plan
to shut it down during a business forum held in Davao sometime February 2018. This was
followed by several speeches and news releases stating that he would place Boracay under
a state of calamity. True to his words, President Duterte ordered the shutting down of the
island in a cabinet meeting held on April 4, 2018. This was confirmed by then Presidential
Spokesperson Harry L. Roque, Jr. in a press briefing the following day wherein he formally
announced that the total closure of Boracay would be for a maximum period of six months
starting April 26, 2018

Following this pronouncement, petitioners contend that around 630 police and military
personnel were readily deployed to Boracay including personnel for crowd dispersal
management. They also allege that the DILG had already released guidelines for the
closure.

Petitioners claim that ever since the news of Boracay's closure came about, fewer tourists
had been engaging the services of Zabal and Jacosalem such that their earnings were
barely enough to feed their families. They fear that if the closure pushes through, they
would suffer grave and irreparable damage. Hence, despite the fact that the government
was then yet to release a formal issuance on the matter, petitioners filed the petition on
April 25, 2018 praying that:

(a)
Upon the filing of [the] petition, a TEMPORARY RESTRAINING ORDER (TRO) and/or a
WRIT OF PRELIMINARY PROHIBITORY INJUNCTION be immediately issued
RESTRAINING and/or ENJOINING the respondents, and all persons acting under their
command, order, and responsibility from enforcing a closure of Boracay Island or from
banning the petitioners, tourists, and non-residents therefrom, and a WRIT OF
PRELIMINARY MANDATORY INJUNCTION directing the respondents, and all persons
acting under their command, order, and responsibility to ALLOW all of the said persons to
enter and/or leave Boracay Island unimpeded;

(b)
In the alternative, if the respondents enforce the closure after the instant petition is filed,
that a STATUS QUO ANTE Order be issued restoring and maintaining the condition prior
to such closure;

(c)
After proper proceedings, a judgment be rendered PERMANENTLY RESTRAINING and/or
ENJOINING the respondents, and all persons acting under their command, order, and
responsibility from enforcing a closure of Boracay Island or from banning the petitioners,
tourists, and non-residents therefrom, and further DECLARING the closure of Boracay
Island or the ban against petitioners, tourists, and non-residents therefrom to be
UNCONSTITUTIONAL.

Other reliefs just and equitable under the premises are similarly prayed for.

On May 18, 2018, petitioners filed a Supplemental Petition 11 stating that the day following
the filing of their original petition or on April 26, 2018, President Duterte issued
Proclamation No. 475 12 formally declaring a state of calamity in Boracay and ordering its
closure for six months from April 26, 2018 to October 25, 2018. The closure was
implemented on even date. Thus, in addition to what they prayed for in their original petition,
petitioners implore the Court to declare as unconstitutional Proclamation No. 475 insofar
as it orders the closure of Boracay and ban of tourists and non-residents therefrom.

In the Resolutions dated April 26, 2018 and June 5, 2018, the Court required respondents
to file their Comment on the Petition and the Supplemental Petition, respectively.
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Respondents filed their Consolidated Comment on July 30, 2018 while petitioners filed their
Reply thereto on October 12, 2018.

On October 26, 2018, Boracay was reopened to tourism.

Petitioners' Arguments

Petitioners state that a petition for prohibition is the appropriate remedy to raise
constitutional issues and to review and/or prohibit or nullify, when proper, acts of legislative
and executive officials. An action for mandamus, on the other hand, lies against a
respondent who unlawfully excludes another from the enjoyment of an entitled right or
office. Justifying their resort to prohibition and mandamus, petitioners assert that (1) this
case presents constitutional issues, i.e., whether President Duterte acted within the scope
of the powers granted him by the Constitution in ordering the closure of Boracay and,
whether the measures implemented infringe upon the constitutional rights to travel and to
due process of petitioners as well as of tourists and non-residents of the island; and, (2)
President Duterte exercised a power legislative in nature, thus unlawfully excluding the
legislative department from the assertion of such power.

As to the substantive aspect, petitioners argue that Proclamation No. 475 is an invalid
exercise of legislative powers. They posit that its issuance is in truth a law-making exercise
since the proclamation imposed a restriction on the right to travel and therefore
substantially altered the relationship between the State and its people by increasing the
former's power over the latter. Simply stated, petitioners posit that Proclamation No. 475
partakes of a law the issuance of which is not vested in the President. As such,
Proclamation No. 475 must be struck down for being the product of an invalid exercise of
legislative power.

Likewise, petitioners argue that Proclamation No. 475 is unconstitutional for infringing on
the constitutional rights to travel and to due process.

xxx
Respondents' Arguments

xxx
At any rate, respondents contend that there is no real justiciable controversy in this case.
They see no clash between the right of the State to preserve and protect its natural
resources and the right of petitioners to earn a living. Proclamation No. 475 does not
prohibit anyone from being gainfully employed.

Respondents moreover maintain that the petition is in the nature of a Strategic Lawsuit
Against Public Participation (SLAPP) under Rule 6 of A.M. No. 09-6-8-SC or the Rules of
Procedure for Environmental Cases, or a legal action filed to harass, vex, exert undue
pressure or stifle any legal recourse that any person, institution or the government has
taken or may take in the enforcement of environmental laws, protection of the environment
or assertion of environmental rights. Respondents thus assert that the petition must be
dismissed since it was filed for the said sole purpose.

With regard to the substantive aspect, respondents contend that the issuance of
Proclamation No. 475 is a valid exercise of delegated legislative power, it being anchored
on Section 16 of Republic Act (RA) No. 10121, otherwise known as the Philippine Disaster
Risk Reduction and Management Act of 2010, or the authority given to the President to
declare a state of calamity, viz.:

SECTION 16.
Declaration of State of Calamity. — The National Council shall recommend to the President
of the Philippines the declaration of a cluster of barangays, municipalities, cities, provinces,
and regions under a state of calamity, and the lifting thereof, based on the criteria set by
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the National Council. The President's declaration may warrant international humanitarian
assistance as deemed necessary.
xxx xxx xxx

They likewise contend that Proclamation No. 475 was issued pursuant to the President's
executive power under Section 1, Article VII of the Constitution. As generally defined,
executive power is the power to enforce and administer laws. It is the power of
implementing the laws and enforcing their due observance. And in order to effectively
discharge the enforcement and administration of the laws, the President is granted
administrative power over bureaus and offices, which includes the power of control. The
power of control, in turn, refers to the authority to direct the performance of a duty, restrain
the commission of acts, review, approve, reverse or modify acts and decisions of
subordinate officials or units, and prescribe standards, guidelines, plans and programs.
Respondents allege that President Duterte's issuance of Proclamation No. 475 was
precipitated by his approval of the recommendation of the National Disaster Risk Reduction
and Management Council (NDRRMC) to place Boracay under a state of calamity. By giving
his imprimatur, it is clear that the President merely exercised his power of control over the
executive branch.

In any case, respondents assert that the President has residual powers which are implied
from the grant of executive power and which are necessary for him to comply with his duties
under the Constitution as held in the case of Marcos v. Manglapus.

In sum, respondents emphasize that the issuance of Proclamation No. 475 is within the
ambit of the powers of the President, not contrary to the doctrine of separation of powers,
and in accordance with the mechanism laid out by the Constitution. xxx

Our Ruling
First, we discuss the procedural issues.
President Duterte is dropped as
respondent in this case

As correctly pointed out by respondents, President Duterte must be dropped as respondent

in this case. The Court's pronouncement in Professor David v. President Macapagal-Arroyo
20 on the non-suability of an incumbent President cannot be any clearer. xxx

Propriety of Prohibition and

Mandamus

Section 2, Rule 65 of the Rules of Court provides for a petition for prohibition as follows:
SEC. 2.
Petition for prohibition. — When the proceedings of any tribunal, corporation, board, officer
or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or
in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or in
excess of jurisdiction, 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 respondent to desist from further proceedings in the action or matter
specified therein, or otherwise granting such incidental reliefs as law and justice may
require.

xxx xxx xxx

"Indeed, prohibition is a preventive remedy seeking that a judgment be rendered directing
the defendant to desist from continuing with the commission of an act perceived to be
illegal. As a rule, the proper function of a writ of prohibition is to prevent the performance
of an act which is about to be done. It is not intended to provide a remedy for acts already
accomplished."

Mandamus, on the other hand, is provided for by Section 3 of the same Rule 65:
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SEC. 3.
Petition for mandamus. — When any tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act which the law specifically enjoins as a duty
resulting from an office, trust, station, or unlawfully excludes another from the use and
enjoyment of a right or office to which such other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with certainty and praying
that judgment be rendered commanding the respondent, immediately or at some other time
to be specified by the court, to do the act required to be done to protect the rights of the
petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful
acts of the respondent.

xxx xxx xxx

"As the quoted provision instructs, mandamus will lie if the tribunal, corporation, board,
officer, or person unlawfully neglects the performance of an act which the law enjoins as a
duty resulting from an office, trust, or station."

It is upon the above-discussed contexts of prohibition and mandamus that respondents

base their contention of improper recourse. Respondents maintain that prohibition is not
proper in this case because the closure of Boracay is already a fait accompli. Neither is
mandamus appropriate since there is no neglect of duty on their part as they were precisely
performing their duty to protect the environment when the closure was ordered.
Suffice it to state, however, that the use of prohibition and mandamus is not merely confined
to Rule 65. These extraordinary remedies may be invoked when constitutional violations or
issues are raised. Xxx

Existence of Requisites for Judicial

Review
xxx
The existence of an actual controversy in this case is evident. President Duterte issued
Proclamation No. 475 on April 26, 2018 and, pursuant thereto, Boracay was temporarily
closed the same day. Entry of non-residents and tourists to the island was not allowed until
October 25, 2018. Certainly, the implementation of the proclamation has rendered
legitimate the concern of petitioners that constitutional rights may have possibly been
breached by this governmental measure. It bears to state that when coupled with sufficient
facts, "reasonable certainty of the occurrence of a perceived threat to any constitutional
interest suffices to provide a basis for mounting a constitutional challenge." And while it
may be argued that the reopening of Boracay has seemingly rendered moot and academic
questions relating to the ban of tourists and non-residents into the island, abstention from
judicial review is precluded by such possibility of constitutional violation and also by the
exceptional character of the situation, the paramount public interest involved, and the fact
that the case is capable of repetition

As to legal standing, petitioners assert that they were directly injured since their right to
travel and, their right to work and earn a living which thrives solely on tourist arrivals, were
affected by the closure. Xxx

Here, as mentioned, Zabal is a sandcastle maker and Jacosalem, a driver. The nature of
their livelihood is one wherein earnings are not guaranteed. As correctly pointed out by
respondents, their earnings are not fixed and may vary depending on the business climate
in that while they can earn much on peak seasons, it is also possible for them not to earn
anything on lean seasons, especially when the rainy days set in. Zabal and Jacosalem
could not have been oblivious to this kind of situation, they having been in the practice of
their trade for a considerable length of time. Clearly, therefore, what Zabal and Jacosalem
could lose in this case are mere projected earnings which are in no way guaranteed, and
are sheer expectancies characterized as contingent, subordinate, or consequential
interest, just like in Galicto. Concomitantly, an assertion of direct injury on the basis of loss
of income does not clothe Zabal and Jacosalem with legal standing.
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As to Bandiola, the petition is bereft of any allegation as to his substantial interest in the
case and as to how he sustained direct injury as a result of the issuance of Proclamation
No. 475. While the allegation that he is a non-resident who occasionally goes to Boracay
for business and pleasure may suggest that he is claiming direct injury on the premise that
his right to travel was affected by the proclamation, the petition fails to expressly provide
specifics as to how. Xxx

Notwithstanding petitioners' lack of locus standi, this Court will allow this petition to proceed
to its ultimate conclusion due to its transcendental importance. Xxx

As to the two other requirements, their existence is indubitable. It will be recalled that even
before a formal issuance on the closure of Boracay was made by the government,
petitioners already brought the question of the constitutionality of the then intended closure
to this Court. And, a day after Proclamation No. 475 was issued, they filed a supplemental
petition impugning its constitutionality. Clearly, the filing of the petition and the
supplemental petition signals the earliest opportunity that the constitutionality of the subject
government measure could be raised. There can also be no denying that the very lis mota
of this case is the constitutionality of Proclamation No. 475.

Defense of SLAPP

Suffice it to state that while this case touches on the environmental issues in Boracay, the
ultimate issue for resolution is the constitutionality of Proclamation No. 475. The procedure
in the treatment of a defense of SLAPP provided for under Rule 6 of the Rules of Procedure
for Environmental Cases should not, therefore, be made to apply.
Now as to the substantive issues.

We first quote in full Proclamation No. 475.

PROCLAMATION NO. 475

DECLARING A STATE OF CALAMITY IN THE BARANGAYS OF BALABAG, MANOC-

MANOC AND YAPAK (ISLAND OF BORACAY) IN THE MUNICIPALITY OF MALAY,
AKLAN, AND TEMPORARY CLOSURE OF THE ISLAND AS A TOURIST DESTINATION

WHEREAS, Section 15, Article II of the 1987 Constitution states that the State shall protect
and promote the right to health of the people and instill health consciousness among them;

WHEREAS, Section 16, Article II of the 1987 Constitution provides that it is the policy of
the State to protect and advance the right of the people to a balanced and healthful ecology
in accord with the rhythm and harmony of nature

WHEREAS, Section 2, Article XII of the 1987 Constitution provides that the State shall
protect the nation's marine wealth in its archipelagic waters, territorial sea, and exclusive
economic zone;

WHEREAS, an Inter-Agency Task Force, composed of the Department of Environment and

Natural Resources (DENR), the [DILG] and the Department of Tourism (DOT), was
established to evaluate the environmental state of the Island of Boracay, and investigate
possible violations of existing environmental and health laws, rules and regulations;

WHEREAS, the investigations and validation undertaken revealed that:

a.
There is a high concentration of fecal coliform in the Bolabog beaches located in the
eastern side of Boracay Island due to insufficient sewer lines and illegal discharge of
untreated waste water into the beach, with daily tests conducted from 6 to 10 March 2018
revealing consistent failure in compliance with acceptable water standards, with an average
result of 18,000 most probable number (MPN)/100ml, exceeding the standard level of 400
MPN/100ml;
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b.
Most commercial establishments and residences are not connected to the sewerage
infrastructure of Boracay Island, and waste products are not being disposed through the
proper sewerage infrastructures in violation of environmental law, rules, and regulations;
c.
Only 14 out of 51 establishments near the shores of Boracay Island are compliant with the
provision of Republic Act (RA) No. 9275 or the Philippine Clean Water Act of 2004;
d.
Dirty water results in the degradation of the coral reefs and coral cover of Boracay Island,
which declined by approximately 70.5% from 1988 to 2011, with the highest decrease
taking place between 2008 and 2011 during a period of increased tourist arrivals
(approximately 38.4%);
e.
Solid waste within Boracay Island is at a generation rate of 90 to 115 tons per day, while
the hauling capacity of the local government is only 30 tons per day, hence, leaving
approximately 85 tons of waste in the Island daily;
f.
The natural habitats of Puka shells, nesting grounds of marine turtles, and roosting grounds
of flying foxes or fruit bats have been damaged and/or destroyed; and
g.
Only four (4) out of nine (9) wetlands in Boracay Island remain due to illegal encroachment
of structures, including 937 identified illegal structures constructed on forestlands and
wetlands, as well as 102 illegal structures constructed on areas already classified as
easements, and the disappearance of the wetlands, which acts as natural catchments,
enhances flooding in the area;

WHEREAS, the findings of the Department of Science and Technology (DOST) reveal that
beach erosion is prevalent in Boracay Island, particularly along the West Beach, where as
much as 40 meters of erosion has taken place in the past 20 years from 1993 to 2003, due
to storms, extraction of sand along the beach to construct properties and structures along
the foreshore, and discharge of waste water near the shore causing degradation of coral
reefs and seagrass meadows that supply the beach with sediments and serve as buffer to
wave action;

WHEREAS, the DOST also reports that based on the 2010-2015 Coastal Ecosystem
Conservation and Adaptive Management Study of the Japan International Cooperation
Agency, direct discharge of waste water near the shore has resulted in the frequent algal
bloom and coral deterioration, which may reduce the source of sand and cause erosion;
WHEREAS, the data from the Region VI-Western Visayas Regional Disaster Risk
Reduction and Management Council shows that the number of tourists in the island in a
day amounts to 18,082, and the tourist arrival increased by more than 160% from 2012 to
2017;

WHEREAS, the continuous rise of tourist arrivals, the insufficient sewer and waste
management system, and environmental violations of establishments aggravate the
environmental degradation and destroy the ecological balance of the Island of Boracay,
resulting in major damage to property and natural resources, as well as the disruption of
the normal way of life of the people therein;

WHEREAS, it is necessary to implement urgent measures to address the abovementioned

human-induced hazards, to protect and promote the health and well-being of its residents,
workers and tourists, and to rehabilitate the Island in order to ensure the sustainability of
the area and prevent further degradation of its rich ecosystem;

WHEREAS, RA No. 9275 provides that the DENR shall designate water bodies, or portions
thereof, where specific pollutants from either natural or man-made source have already
exceeded water quality guidelines as non-attainment areas for the exceeded pollutants and
shall prepare and implement a program that will not allow new sources of exceeded water
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pollutant in non-attainment areas without a corresponding reduction in discharges from

existing sources;

WHEREAS, RA No. 9275 also mandates the DENR, in coordination with other concerned
agencies and the private sectors, to take such measures as may be necessary to upgrade
the quality of such water in non-attainment areas to meet the standards under which it has
been classified, and the local government units to prepare and implement contingency
plans and other measures including relocation, whenever necessary, for the protection of
health and welfare of the residents within potentially affected areas;

WHEREAS, Proclamation No. 1064 (s. 2006) classified the Island of Boracay into 377.68
hectares of reserved forest land for protection purposes and 628.96 hectares of agricultural
land as alienable and disposable land;

WHEREAS, pursuant to the Regalian Doctrine, and as emphasized in recent jurisprudence,

whereby all lands not privately owned belong to the State, the entire island of Boracay is
state-owned, except for lands already covered by existing valid titles;

WHEREAS, pursuant to RA No. 10121, or the Philippine Disaster Risk Reduction and
Management Act of 2010, the National Disaster Risk Reduction and Management Council
has recommended the declaration of a State of Calamity in the Island of Boracay and the
temporary closure of the Island as a tourist destination to ensure public safety and public
health, and to assist the government in its expeditious rehabilitation, as well as in
addressing the evolving socio-economic needs of affected communities;

NOW, THEREFORE, I, RODRIGO ROA DUTERTE, President of the Philippines, by virtue

of the powers vested in me by the Constitution and existing laws, do hereby declare a State
of Calamity in the barangays of Balabag, Manoc-Manoc and Yapak (Island of Boracay) in
the Municipality of Malay, Aklan. In this regard, the temporary closure of the Island as a
tourist destination for six (6) months starting 26 April 2018, or until 25 October 2018, is
hereby ordered subject to applicable laws, rules, regulations and jurisprudence.

Concerned government agencies shall, as may be necessary or appropriate, undertake the

remedial measures during a State of Calamity as provided in RA No. 10121 and other
applicable laws, rules and regulations, such as control of the prices of basic goods and
commodities for the affected areas, employment of negotiated procurement and utilization
of appropriate funds, including the National Disaster Risk Reduction and Management
Fund, for relief and rehabilitation efforts in the area. All departments and other concerned
government agencies are also hereby directed to coordinate with, and provide or augment
the basic services and facilities of affected local government units, if necessary.

The State of Calamity in the Island of Boracay shall remain in force and effect until lifted by
the President, notwithstanding the lapse of the six-month closure period.

All departments, agencies and offices, including government-owned or controlled

corporations and affected local government units are hereby directed to implement and
execute the abovementioned closure and the appropriate rehabilitation works, in
accordance with pertinent operational plans and directives, including the Boracay Action
Plan.

The Philippine National Police, Philippine Coast Guard and other law enforcement
agencies, with the support of the Armed Forces of the Philippines, are hereby directed to
act with restraint and within the bounds of the law in the strict implementation of the closure
of the Island and ensuring peace and order in the area.

The Municipality of Malay, Aklan is also hereby directed to ensure that no tourist will be
allowed entry to the island of Boracay until such time that the closure has been lifted by the
President.
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All tourists, residents and establishment owners in the area are also urged to act within the
bounds of the law and to comply with the directives herein provided for the rehabilitation
and restoration of the ecological balance of the Island which will be for the benefit of all
concerned.

It must be noted at the outset that petitioners failed to present and establish the factual
bases of their arguments because they went directly to this Court. In ruling on the
substantive issues in this case, the Court is, thus, constrained to rely on, and uphold the
factual bases, which prompted the issuance of the challenged proclamation, as asserted
by respondents. Besides, executive determinations, such as said factual bases, are
generally final on this Court.

The Court observes that the meat of petitioners' constitutional challenge on Proclamation
No. 475 is the right to travel.

Clearly then, the one crucial question that needs to be preliminarily answered is — does
Proclamation No. 475 constitute an impairment on the right to travel?

The Court answers in the negative.

Proclamation No. 475 does not pose an

actual impairment on the right to travel

xxx The activities proposed to be undertaken to rehabilitate Boracay involved inspection,

testing, demolition, relocation, and construction. These could not have been implemented
freely and smoothly with tourists coming in and out of the island not only because of the
possible disruption that they may cause to the works being undertaken, but primarily
because their safety and convenience might be compromised. Also, the contaminated
waters in the island were not just confined to a small manageable area. The excessive
water pollutants were all over Bolabog beach and the numerous illegal drainpipes
connected to and discharging wastewater over it originate from different parts of the island.
Indeed, the activities occasioned by the necessary digging of these pipes and the isolation
of the contaminated beach waters to give way to treatment could not be done in the
presence of tourists. Aside from the dangers that these contaminated waters pose, hotels,
inns, and other accommodations may not be available as they would all be inspected and
checked to determine their compliance with environmental laws. Moreover, it bears to state
that a piece-meal closure of portions of the island would not suffice since as mentioned,
illegal drainpipes extend to the beach from various parts of Boracay. Also, most areas in
the island needed major structural rectifications because of numerous resorts and tourism
facilities which lie along easement areas, illegally reclaimed wetlands, and of forested areas
that were illegally cleared for construction purposes. Hence, the need to close the island in
its entirety and ban tourists therefrom.

In fine, this case does not actually involve the right to travel in its essential sense contrary
to what petitioners want to portray. Any bearing that Proclamation No. 475 may have on
the right to travel is merely corollary to the closure of Boracay and the ban of tourists and
non-residents therefrom which were necessary incidents of the island's rehabilitation.
There is certainly no showing that Proclamation No. 475 deliberately meant to impair the
right to travel. The questioned proclamation is clearly focused on its purpose of
rehabilitating Boracay and any intention to directly restrict the right cannot, in any manner,
be deduced from its import. This is contrary to the import of several laws recognized as
constituting an impairment on the right to travel which directly impose restriction on the
right, viz.:

[1]
The Human Security Act of 2010 or Republic Act (R.A.) No. 9372. The law restricts the right
to travel of an individual charged with the crime of terrorism even though such person is
out on bail.
[2]
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The Philippine Passport Act of 1996 or R.A. No. 8239. Pursuant to said law, the Secretary
of Foreign Affairs or his authorized consular officer may refuse the issuance of, restrict the
use of, or withdraw, a passport of a Filipino citizen.
[3]
The 'Anti-Trafficking in Persons Act of 2003' or RA 9208. Pursuant to the provisions thereof,
the Bureau of Immigration, in order to manage migration and curb trafficking in persons,
issued Memorandum Order Radjr No. 2011-011, allowing its Travel Control and
Enforcement Unit to 'offload passengers with fraudulent travel documents, doubtful
purpose of travel, including possible victims of human trafficking' from our ports.
[4]
The Migrant Workers and Overseas Filipinos Act of 1995 or R.A. No. 8042, as amended
by R.A. No. 10022. In enforcement of said law, the Philippine Overseas Employment
Administration (POEA) may refuse to issue deployment permit[s] to a specific country that
effectively prevents our migrant workers to enter such country.
[5]
The Act on Violence Against Women and Children or R.A. No. 9262. The law restricts
movement of an individual against whom the protection order is intended.
[6]
Inter-Country Adoption Act of 1995 or R.A. No. 8043. Pursuant thereto, the Inter-Country
Adoption Board may issue rules restrictive of an adoptee's right to travel 'to protect the
Filipino child from abuse, exploitation, trafficking and/or sale or any other practice in
connection with adoption which is harmful, detrimental, or prejudicial to the child.'
Xxx

Hence, if at all, the impact of Proclamation No. 475 on the right to travel is not direct but
merely consequential; and, the same is only for a reasonably short period of time or merely
temporary.

In this light, a discussion on whether President Duterte exercised a power legislative in

nature loses its significance. Since Proclamation No. 475 does not actually impose a
restriction on the right to travel, its issuance did not result to any substantial alteration of
the relationship between the State and the people. The proclamation is therefore not a law
and conversely, the President did not usurp the law-making power of the legislature.

For obvious reason, there is likewise no more need to determine the existence in this case
of the requirements for a valid impairment of the right to travel.

Even if it is otherwise, Proclamation

No. 475 must be upheld for being in
the nature of a valid police power
measure

Police power, amongst the three fundamental and inherent powers of the state, is the most
pervasive and comprehensive. Xxx

That the assailed governmental measure in this case is within the scope of police power
cannot be disputed. Verily, the statutes from which the said measure draws authority and
the constitutional provisions which serve as its framework are primarily concerned with the
environment and health, safety, and well-being of the people, the promotion and securing
of which are clearly legitimate objectives of governmental efforts and regulations. The
motivating factor in the issuance of Proclamation No. 475 is without a doubt the interest of
the public in general. The only question now is whether the means employed are
reasonably necessary for the accomplishment of the purpose and not unduly oppressive
upon individuals.

The pressing need to implement urgent measures to rehabilitate Boracay is beyond cavil
from the factual milieu that precipitated the President's issuance of Proclamation No. 475.
This necessity is even made more critical and insistent by what the Court said in Oposa v.
Hon. Factoran, Jr. in regard the rights to a balanced and healthful ecology and to health,
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which rights are likewise integral concerns in this case. Oposa warned that unless the rights
to a balanced and healthful ecology and to health are given continuing importance and the
State assumes its solemn obligation to preserve and protect them, the time will come that
nothing will be left not only for this generation but for the generations to come as well. It
further taught that the right to a balanced and healthful ecology carries with it the correlative
duty to refrain from impairing the environment.

Against the foregoing backdrop, we now pose this question: Was the temporary closure of
Boracay as a tourist destination for six months reasonably necessary under the
circumstances? The answer is in the affirmative.

xxx
Certainly, the closure of Boracay, albeit temporarily, gave the island its much needed
breather, and likewise afforded the government the necessary leeway in its rehabilitation
program. Note that apart from review, evaluation and amendment of relevant policies, the
bulk of the rehabilitation activities involved inspection, testing, demolition, relocation, and
construction. These works could not have easily been done with tourists present. The
rehabilitation works in the first place were not simple, superficial or mere cosmetic but
rather quite complicated, major, and permanent in character as they were intended to serve
as long-term solutions to the problem. 56 Also, time is of the essence. Every precious
moment lost is to the detriment of Boracay's environment and of the health and well-being
of the people thereat. Hence, any unnecessary distraction or disruption is most unwelcome.
Moreover, as part of the rehabilitation efforts, operations of establishments in Boracay had
to be halted in the course thereof since majority, if not all of them, need to comply with
environmental and regulatory requirements in order to align themselves with the
government's goal to restore Boracay into normalcy and develop its sustainability. Allowing
tourists into the island while it was undergoing necessary rehabilitation would therefore be
pointless as no establishment would cater to their accommodation and other needs.
Besides, it could not be said that Boracay, at the time of the issuance of the questioned
proclamation, was in such a physical state that would meet its purpose of being a tourist
destination. For one, its beach waters could not be said to be totally safe for swimming. In
any case, the closure, to emphasize, was only for a definite period of six months, i.e., from
April 26, 2018 to October 25, 2018. Xxx

Undoubtedly, Proclamation No. 475 is a valid police power measure. To repeat, police
power constitutes an implied limitation to the Bill of Rights, and that even liberty itself, the
greatest of all rights, is subject to the far more overriding demands and requirements of the
greater number

For the above reasons, petitioners' constitutional challenge on Proclamation No. 475
anchored on their perceived impairment of the right to travel must fail.

Petitioners have no vested rights on

their sources of income as to be entitled
to due process

Petitioners argue that Proclamation No. 475 impinges on their constitutional right to due
process since they were deprived of the corollary right to work and earn a living by reason
of the issuance thereof.

Concededly, "[a] profession, trade or calling is a property right within the meaning of our
constitutional guarantees. One cannot be deprived of the right to work and the right to make
a living because these rights are property rights, the arbitrary and unwarranted deprivation
of which normally constitutes an actionable wrong." 57 Under this premise, petitioners claim
that they were deprived of due process when their right to work and earn a living was taken
away from them when Boracay was ordered closed as a tourist destination. It must be
stressed, though, that "when the conditions so demand as determined by the legislature,
property rights must bow to the primacy of police power because property rights, though
sheltered by due process, must yield to general welfare." 58 Otherwise, police power as an
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attribute to promote the common good would be diluted considerably if on the mere plea of
petitioners that they will suffer loss of earnings and capital, government measures
implemented pursuant to the said state power would be stymied or invalidated.

In any case, petitioners, particularly Zabal and Jacosalem, cannot be said to have already
acquired vested rights to their sources of income in Boracay. As heretofore mentioned,
they are part of the informal sector of the economy where earnings are not guaranteed. In
Southern Luzon Drug Corporation v. Department of Social Welfare and Development, 60
the Court elucidated on vested rights, as follows:

x x x Vested rights are 'fixed, unalterable, or irrevocable.' More extensively, they

are depicted as follows:

Rights which have so completely and definitely accrued to or settled in a person

that they are not subject to be defeated or cancelled by the act of any other private
person, and which it is right and equitable that the government should recognize
and protect, as being lawful in themselves, and settled according to the then
current rules of law, and of which the individual could not be deprived arbitrarily
without injustice, or of which he could not justly be deprived otherwise than by the
established methods of procedure and for the public welfare. x x x A right is not
'vested' unless it is more than a mere expectancy based on the anticipated
continuance of present laws; it must be an established interest in property, not
open to doubt. x x x To be vested in its accurate legal sense, a right must be
complete and consummated, and one of which the person to whom it belongs
cannot be divested without his consent. x x x

Here, Zabal and Jacosalem's asserted right to whatever they may earn from tourist arrivals
in Boracay is merely an inchoate right or one that has not fully developed and therefore
cannot be claimed as one's own. An inchoate right is a mere expectation, which may or
may not come into fruition. "It is contingent as it only comes 'into existence on an event or
condition which may not happen or be performed until some other event may prevent their
vesting.'" Clearly, said petitioners' earnings are contingent in that, even assuming tourists
are still allowed in the island, they will still earn nothing if no one avails of their services.
Certainly, they do not possess any vested right on their sources of income, and under this
context, their claim of lack of due process collapses. To stress, only rights which have
completely and definitely accrued and settled are entitled protection under the due process
clause.

Besides, Proclamation No. 475 does not strip Zabal and Jacosalem of their right to work
and earn a living. They are free to work and practice their trade elsewhere. That they were
not able to do so in Boracay, at least for the duration of its closure, is a necessary
consequence of the police power measure to close and rehabilitate the island.

Also clearly untenable is petitioners' claim that they were being made to suffer the
consequences of the environmental transgressions of others. It must be stressed that the
temporary closure of Boracay as a tourist destination and the consequent ban of tourists
into the island were not meant to serve as penalty to violators of environmental laws. The
temporary closure does not erase the environmental violations committed; hence, the
liabilities of the violators remain and only they alone shall suffer the same. The temporary
inconvenience that petitioners or other persons may have experienced or are experiencing
is but the consequence of the police measure intended to attain a much higher purpose,
that is, to protect the environment, the health of the people, and the general welfare.
Indeed, any and all persons may be burdened by measures intended for the common good
or to serve some important governmental interest.

No intrusion into the autonomy of the

concerned LGUs
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The alleged intrusion of the President into the autonomy of the LGUs concerned is likewise
too trivial to merit this Court's consideration. xxx

The fact that other government agencies are involved in the rehabilitation works does not
create the inference that the powers and functions of the LGUs are being encroached upon.
The respective roles of each government agency are particularly defined and enumerated
in Executive Order No. 53 65 and all are in accordance with their respective mandates.
Also, the situation in Boracay can in no wise be characterized or labelled as a mere local
issue as to leave its rehabilitation to local actors. Boracay is a prime tourist destination
which caters to both local and foreign tourists. Any issue thereat has corresponding effects,
direct or otherwise, at a national level. This, for one, reasonably takes the issues therein
from a level that concerns only the local officials. At any rate, notice must be taken of the
fact that even if the concerned LGUs have long been fully aware of the problems afflicting
Boracay, they failed to effectively remedy it. Yet still, in recognition of their mandated roles
and involvement in the rehabilitation of Boracay, Proclamation No. 475 directed "[a]ll
departments, agencies and offices, including government-owned or controlled corporations
and affected local government units x x x to implement and execute x x x the closure [of
Boracay] and the appropriate rehabilitation works, in accordance with pertinent operational
plans and directives, including the Boracay Action Plan."

As a final note, the Court in Metropolitan Manila Development Authority v. Concerned

Residents of Manila Bay, 66 called out the concerned government agencies for their
cavalier attitude towards solving environmental destruction despite hard evidence and clear
signs of climate crisis. It equated the failure to put environmental protection on a plane of
high national priority to the then lacking level of bureaucratic efficiency and commitment.
Hence, the Court therein took it upon itself to put the heads of concerned department-
agencies and the bureaus and offices under them on continuing notice and to enjoin them
to perform their mandates and duties towards the clean-up and/or restoration of Manila
Bay, through a "continuing mandamus." It likewise took the occasion to state, viz.:

In the light of the ongoing environmental degradation, the Court wishes to

emphasize the extreme necessity for all concerned executive departments and
agencies to immediately act and discharge their respective official duties and
obligations. Indeed, time is of the essence; hence, there is a need to set
timetables for the performance and completion of the tasks, some of them as
defined for them by law and the nature of their respective offices and mandates.

The importance of the Manila Bay as a sea resource, playground and as a

historical landmark cannot be over-emphasized. It is not yet too late in the day
to restore the Manila Bay to its former splendor and bring back the plants and
sea life that once thrived in its blue waters. But the tasks ahead, daunting as
they may be, could only be accomplished if those mandated, with the help and
cooperation of all civic-minded individuals, would put their minds to these tasks
and take responsibility. This means that the State, through [the concerned
department-agencies], has to take the lead in the preservation and protection
of the Manila Bay.

The era of delays, procrastination, and ad hoc measures is over. [The

concerned department-agencies] must transcend their limitations, real or
imaginary, and buckle down to work before the problem at hand becomes
unmanageable. Thus, we must reiterate that different government agencies and
instrumentalities cannot shirk from their mandates; they must perform their
basic functions in cleaning up and rehabilitating the Manila Bay.

There is an obvious similarity in Metropolitan Manila Development Authority and

in the present case in that both involve the restoration of key areas in the country
which were once glowing with radiance and vitality but are now in shambles due
to abuses and exploitation. What sets these two cases apart is that in the
former, those mandated to act still needed to be enjoined in order to act. In this
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case, the bold and urgent action demanded by the Court in Metropolitan Manila
Development Authority is now in the roll out. Still, the voice of cynicism,
naysayers, and procrastinators heard during times of inaction can still be heard
during this time of full action — demonstrating a classic case of "damn if you
do, damn if you don't." Thus, in order for the now staunch commitment to save
the environment not to fade, it behooves upon the courts to be extra cautious in
invalidating government measures meant towards addressing environmental
degradation. Absent any clear showing of constitutional infirmity, arbitrariness
or grave abuse of discretion, these measures must be upheld and even lauded
and promoted. After all, not much time is left for us to remedy the present
environmental situation. To borrow from Oposa, unless the State undertakes its
solemn obligation to preserve the rights to a balanced and healthful ecology and
advance the health of the people, "the day would not be too far when all else
would be lost not only for the present generation, but also for those to come —
generations which stand to inherit nothing but parched earth incapable of
sustaining life."

All told, the Court sustains the constitutionality and validity of Proclamation No.
475.

1.3.2 National legislation

It is often said that the Philippines has comprehensive and highly advanced laws to protect the
environment and conserve natural resources, but that these laws are poorly enforced because of
financial and technical capacity limitations.

Natural resource exploitation was heavily encouraged since the American and Philippine
Commonwealth periods. For a long time the government implemented a policy that emphasized
economic development, with little regard for conservation. In fact, from the 1940s to the 1970s the
Philippines was one of the world’s leading exporters of logs and fisheries. This bias toward extraction
and utilization significantly contributed to the loss and degradation of forest and marine resources.
The attention given to balancing utilization and conservation of natural resources, as seen in current
policy pronouncements, is a relatively recent development.

The policy shift from exploitation to management occurred in the late 1980s, when government
issued policies to protect the remaining forest resources while giving local forest-dependent
communities the right to sustainably use these resources. Community-based Forest Management
(CBFM) has since evolved as a foundation of environmental policy and a strategy for sustainable
forest management under Executive Order No. 263 which was promulgated in 1995, which
pronounced. The CBFM strategy addressed the concern on sustainable forest management, and
also allowed more equitable access to forest resources. Other instruments that served these ends
include the National Integrated Protected Areas System Act and the Indigenous Peoples Rights Act,
which respectively gave local communities and those of indigenous peoples the opportunity to
participate formally in forest management (de Rueda 2007).

In the fisheries sector, local communities and their civil society partners pioneered community-based
coastal management approaches to protected the dwindling marine resources. The enactment of
the Fisheries Code in 1998 and its subsequent amendment in 2014 gave impetus to fisheries
resources conservation and community-based management. Pollution laws have a relatively shorter
history. Before the 1970s, little importance was placed on waste and pollution concerns. As our
population grew and urbanization gained momentum, pollution problems and its attendant woes
(such as environmental health concerns) became a serious concern. In response, the government
came up a succession of laws that have been hailed as landmark legislation, including the Toxic and
Hazardous Waste Management Act (1990), Clean Air Act (1999), the Ecological Solid Waste
Management Act (2000), and the Clean Water Act (2004). These have been lauded for laying down
a comprehensive framework for environmental management in the place of the piecemeal legislation
that previously governed these matters.
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1.3.3 International Agreements35

In the past two decades, environmental laws and policies have been largely shaped by the country’s
participation and commitment to implement international environmental agreements, including the
United Nations Convention on Biological Diversity (UNCBD), UNFCCC, Convention on Wetlands or
Ramsar Convention, Convention on Migratory Species (CMS), CITES, International Convention for
the Prevention of Marine Pollution from Ships (MARPOL), Basel Convention and others, as well as
regional cooperation on the CTI, SDS-SEA and the ASEAN Center for Biodiversity.

In the last 5 years, the Philippines ratified two important international agreements relating to
biodiversity and climate change. In 2015, the Philippines ratified the Nagoya Protocol 39 which
provides a legal framework for the effective implementation of one of the three objectives of the
Convention on Biological Diversity, which is the fair and equitable sharing of benefits arising out of
the utilization of genetic resources, which contributes to the conservation and sustainable use of
biodiversity. In 2017, the Philippines formally joined the Paris Agreement, which is dubbed as the
first truly universal climate treaty. The aim of the Paris Agreement is to curb the threat of climate
change by keeping the increase of the global temperature to well below two degrees Celsius relative
to pre-industrial times, and to make efforts to limit the temperature increase even further, to 1.5
degrees Celsius.

Volume II of this textbook will have a detailed look at international environmental agreements that
the Philippines is party to.

THE RIGHT TO A BALANCED AND

HEALTHFUL ECOLOGY: THE ODYSSEY OF A
CONSTITUTIONAL POLICY*
(Excerpts)
Antonio G.M. La Vina**

Earth give me back your pure gifts, the towers of silence which rose from the solemnity of their roots. I want to
go back to being what I have not been, and learn to go back from such deeps that amongst all natural things I
could live or not live; it does not matter to be one stone more, the dark stone, the pure stone which the river
bears away.

Pablo Neruda

1. Central Thesis

The central thesis that underpins this lecture is that the constitutional policy on the environment is made and
remade, interpreted and reinterpreted, or in other words, operationalized not by the Philippine judiciary
principally nor even by the Philippine government but by the interaction of a plurality of participants in a social
decision process. These participants include government institutions - such as the Judiciary, Congress and the
Executive Branch, industry and other commercial users of natural and ecological resources, communities of
direct users of said resources, nongovernmental organizations, and international entities such as multilateral
financing institutions.

What is the law, including the constitutional policy, in the area of the environment at least, cannot be really
fixed at any given time but is a continuing process of decision-making in forums as diverse as courts,

35
This section serves as an overview of various international agreements. Further discussion may be found in Volume 2
of this series.
39
Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their
Utilization to the Convention on Biological Diversity, adopted on 29 October 2010 in Nagoya, Japan, and entered into force
on 12 October 2014
*
Delivered as Malcolm Lecture on Constitutional Law, March 8, 1994, University of the Philippines .
**
Assistant Professor, College of Law, University of the Philippines; Director, Research and Policy Development Division,
Legal Rights and Natural Resources Center/Kasama sa Kalikasan; JSD Cand., LLM '92, Yale Law School; LLB '89,
University of the Philippines; AB Philosophy '80, Ateneo de Manila University. Research assistance by Atty. Dante Rene
B. Gatmaytan, Ms. Patricia Marie de Guzman and Ms. France Begonia is acknowledged.
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Volume One – Legal Framework for Addressing Environmental Problems
Antonio G.M.La Viña, JSD

administrative processes, the legislature, and international negotiations. Indeed, the decision process extends
even to informal and unofficial forums.

All the participants bring their own perspectives, framed as interpretations of law and policy, into this process
and the determining factor on what perspective prevails at a given point in time is the balance of authority and
power - i.e. the balance between the text of the law as a source of authority and the economic, political and
cultural resources available to the participants in the decision process. In a nutshell, the constitutional policy
on the environment is not only what the Constitution says it is nor even what the Supreme Court proposes it to
be but is the interpretation which prevails in a process characterized by conflict among a plurality of participants.

2. Methodology

To prove this thesis, I propose to use the policy science approach as developed by Professors Myres McDougal
and Harold Lasswell and as articulated by Professor W. Michael Reisman.1 I use this methodology without any
illusion that it is the only theoretical framework that should be used to understand law. In fact, I concede that,
at some points, the framework can be criticized as culturally inappropriate. However, I find the approach a very
useful tool in piercing through and going beyond law as a matter mainly of rules and of logic, a task which I
think is essential in all areas of law and particularly in environmental law.

Professor Reisman describes law as a social decision process. 40 By itself, there is nothing new in this
proposition. At a superficial level, we can all agree that "a lawful decision is a choice made in conformity with
appropriate procedural and substantive norms". 41 But Reisman points out that one does not just make a
decision. Indeed, many functions or operations are concealed in the word "decision" and anyone who wants to
understand as well as make effective a legal norm must deconstruct, i.e. take apart, the meaning of such a
term. Concretely, this means that the lawyer or legal scholar must distinguish law as myth system from law as
operational code.42

By myth system, Reisman refers to the black-letter law, to the official legal norms recognized as such by society
and by organs of the state. Thus, the constitution, statutes, administrative rules, even jurisprudence - all these
form part of law as myth. But, according to Reisman:

there are enough discrepancies between this myth system and the way things
are actually done by key officials or effective' actors to force the observer to apply
another name for the unofficial but nonetheless effective guidelines for behavior
in those discrepant sectors: the operational code. The operational code – how
the legal norms are used and manipulated and enforced by the different actors in a legal system - is
a "byproduct of socialcomplexity. generated by the increase of social divisions and specializations".
In the context of power, the operational code is a "privatesystem of law".43

The operational code is not totally divorced from the myth system. Indeed, it finds legitimacy in being able to
invoke black-letter law. But it is distinct from the myth system. And to understand law as well as to make it more
effective is to go beyond constitutional and statutory policy as myth and into policy as operational code.

Understanding the operational code of Philippine environmental policy is particularly important because staying
at the level of constitutional, statutory and jurisprudential text alone is deceptive. At this level, we have some
of the most progressive policies in the world. Particularly among developing countries, we are certainly one of
the most if not the most advanced in articulated policy. The categorical right to ecological security in the 1987
Constitution44 and our laws on protected areas45 as well as toxic and hazardous wastes46, and the precedent-
setting case of Oposa v. Factoran47 are just some examples. Yet, on the ground, we cannot deny that our
environmental problems remain daunting. We cannot in any way say that we have turned the tide. Hence, it is
imperative to pierce our legal text and ask why there is a gap between policy and reality, i.e. why the operational
code is different from the myth system.

1
See Myres McDougal and Harold Lasswell, "The Identification of Diverse Systems of Public Order" 53 A.J.I.L. 1 (1959);
See also Myres McDougal & Associates, STUDIES IN WORLD PUBLIC ORDER (1960).
40
W. Michael Reisman, "Law from the Policy Perspective", in Myres McDougal & W. Michael Reisman, INTERNATIONAL
LAW ESSAYS (1981) 1,3.
41
Id.
42
Id 3-4.
43
Id 26
44
Const., Art. II. Sec. 16. (Phil.)
45
See Republic Act No. 7586 - "An Act Providing for the Establishment and Management of National Integrated Protected
Areas System, Defining its Scope and Coverage and for Other Purposes" .
46
See Republic Act No. 6969: An Act to Control Toxic Substances And Hazardous And Nuclear Wastes. Providing
Penalties For Violation Thereof, And For Other Purposes.
47
Minors Oposa et. al. v. Factoran. G.R. No. 101083,30 July 1993.
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Antonio G.M.La Viña, JSD

For this lecture, because of time constraints, I decided to present in detail only my analysis of the role of the
Judiciary in environmental policymaking. This analysis I present in two parts: First, the role of the judiciary as
articulated in the myth system; Second, this role as manifested in the operational code. In the first part which I
call - Oposa v. Factoran: Locating the Role of the Judiciary in the Myth System, I will use predominantly legal
texts - the Constitution, statutory provisions, and Philippine and U.S. jurisprudence. In the second part entitled
– The Judiciary and The Environmental Dilemma: The Operational Code, I will make use of various social
sciences, particularly economics and anthropology. In this section, I will also be indicating tentative
observations and conclusions I have made as regards alternative forums for environmental decision-making
as well as the roles of other participants. This is necessary for a clearer overview of the operational code of
environmental law and policy and also for appreciating the role and limits of the judiciary.

3. OPOSA V. FACTORAN: LOCATING THE ROLE OF THE

JUDICIARY IN THE MYTH SYSTEM

The Oposa vs. Factoran case, promulgated on July 30, 1993, is a final and binding judgement of the Supreme
Court. It is not, strictly speaking, the first environmental case in the Philippines. Indeed, we have a long line of
decisions involving disputes in natural resources utilization - ego cases concerning ownership of timber
resources48 and disputes over timber license agreements.49 We have had a number of cases also concerning
pollution50 as well as a case involving nuclear power.51 Winding its way to the Supreme Court are cases
involving conversion of lands from agricultural to industrial or residential.52 All these cases however, while
certainly having environmental implications, dealt with the issue from a conflict-of-rights perspective, thus
usually the ratio decidendis of these decisions were based on due process, property rights, the Regalian
Doctrine or the law on agrarian reform.

What distinguishes Oposa V. Factoran however is that it is our first case which expressly interprets the
constitutional right to a balanced and healthful ecology found in the 1987 Constitution. Oposa v. Factoran is
also the first and so far the only Philippine case which deals with the issue of how to value our natural resources
not only with respect to the present but also for the future generations. Hence, the Oposa case is a landmark
decision for this reason. As Justice Florentino Feliciano describes it in his concurring opinion, it

is one of the most important cases decided by this Court in the last few
years. The seminal principles laid down in this decision are likely to
influence profoundly the direction and course of the protection and
management of the environment, which of course embraces the utilization
of all the natural resources in the territorial base of our polity.53

THE LEGAL IMPLICATIONS

Coupled with the liberalization of the rule on standing, recognizing the constitutional right to a sound
environment as self-executory makes Oposa v. Factoran a truly radical case insofar at least as to its legal
implications.

Justice Feliciano, in a concurring opinion, clearly sees these implications. With all due respect to Justice
Feliciano, I think that his concurring opinion does not clarify what the Court appears to be saying but in fact
diverges substantially from the reasoning in the main decision. Indeed, a dispassionate observer could
sincerely conclude that Justice Feliciano's concurrence is in part a dissent.

For example, on the issue of whether the petitioners had a cause of action, Justice Feliciano disagreed.
According to him, they had not identified one specific fundamental legal right on which to base their claim.
Although the right to a balanced and healthful ecology is indeed a constitutional right, nothing could be more
"comprehensive in scope and generalized in character." He disagreed that Sections 15 and 16 of Article II of
the Constitution were self-executing and judicially enforceable in their present form. The same is true for the
other texts cited by the Court in its main decision.

48
See Santiago v. Basilan, 9 SCRA 349 and People v. CFI of Quezon, BR. VII, 206 SCRA 187
49
See Suarez v. Reyes, 7 SCRA 462, Agusmin Promotional Enterprises v. Court of Appeals 117 SCRA 369, Tan v. Director
of Forestry 125 SCRA 302
50
See Pollution Adjudication Board v. Court of Appeals 195 SCRA 112 and Mead v. Argel 115 SCRA 256.
51
TanadaV. PAEC 141 SCRA 307 (1986)
52
These cases are still at the administrativel level or in the lower courts.
53
Concurring Opinion of Justice Florentino Feliciano in Oposa v. Factoran, Supra note 10 at 1.
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As to legal standing, Justice Feliciano observed that locus standi "is not a function of petitioners' claim that
their suit is properly regarded as a class suit" but refers to "the legal interest in which a plaintiff must have in
the subject matter of the suit". He then pointed the broadness of the class involved in this suit -

[B]ecause of the very broadness of the concept of "class" here

involved - membership in this "class" appears to embrace everyone
living in the country whether now or in the future - it appears to me
that everyone who may be expected to benefit from the course of action
petitioners seek ... is vested with the necessary locus standi.
The Court can be seen therefore to be recognizing a beneficiaries' right
of action in the field of environmental protection as against both the public
administrative agency directly concerned and the private persons or entities
operating in the field or sector of activity involved.58

Justice Feliciano then concludes that whether such right of action "may be found under any and all
circumstances, or whether some failure to act, in the first instance on the part of the government agency
concerned must be shown" is not discussed in the decision and presumably left for future determination in a
proper proceeding.59

On the issue of whether the cancellation of TLAs is a political question, Justice Feliciano clearly agrees, stating
that

[W)hen substantive standards as general as "the right to a balanced and

healthy ecology" and "the right to health" are combined with remedial
standards as broad ranging as "a grave abuse of discretion amounting
to lack or excess of jurisdiction," the result will be ..,to propel courts into the
uncharted ocean of social and economic policy making. At least in respect
of the vast area of environmental protection and management, our courts
have no claim to special technical competence and experience and
professional qualification. Where no specific, operable norms and standards
are shown to exist, then the policy making departments-- the legislative and
executive departments- must be given a real and effective opportunity to
fashion and promulgate those norms and standards, and to implement them
before the courts should intervene.60

Why then did Justice Feliciano concur with the decision? From my reading, I can point out two reasons. First,
he believes that such a specific right on which petitioners may base their cause of action may exist in Philippine
law, and that plaintiffs should be afforded an opportunity to demonstrate this right, and that this opportunity was
denied by granting the defendant's Motion to Dismiss. Second, Justice Feliciano voted to grant the petition
because, in his words, "the protection of the environment, including the forest cover of our territory, is of extreme
importance for the country."

In sum, what are the legal implications of Oposa v. Factoran?

First, the Supreme Court clearly recognizes the constitutional right to a sound and healthful ecology as a self-
executory and actionable right, independent of specific legal rights. Theoretically, although probably imprudent
on the part of a plaintiff or complainant, Article II Section 16 alone can be invoked to question acts or omissions
by the other branches of government. It is as self-implementing as the right to free speech or freedom of religion
and other rights found in the Bill of Rights.

It would however be imprudent on the part of environmentalists or communities to rely on this right alone as a
basis for legal action. Difficulties in determining what evidence to present would arise if such reliance was
made. An environmental case would have a much greater chance of success at the trial level if evidence, for
example, of specific violations by a TLA holder of its concession agreement or of forestry laws be introduced.
I venture to say that this is the specific legal right that Justice Feliciano indicated may exist on which the Oposa
petitioners can anchor their claim for relief.

Second, the case liberalizes standing - at least with respect to environmental disputes. The concept of class
suit recognized in this case departs from our normal understanding of the term. The explicit recognition of the
right of future generations to be represented by present generations was certainly never taught to me in my
remedial law classes.

58
Concurring Opinion of Justice Feliciano, Supra note 16 at 1-2.
59
Id
60
Id., at 6-7
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Oposa v. Factoran is precedent-setting in that it broadens the meaning of who are "proper parties" in a suit.61
As all lawyers know, all actions must be prosecuted and defended in the name of the real party in interest.62
The real party in interest has always been restricted to:

...the party who stands to be benefitted or injured by the judgment or the

party entitled to the avails of the suit. "Interest" within the meaning of the
rule means material interest. an interest in issue and to be affected by the
decree, as distinguished from mere interest in the question involved, or a
mere incidental interest. xxx63

The significance of Oposa is emphasized considering the restrictive ruling of the Supreme Court in Lozada v.
Commission on Elections.64 There, the Court denied a petition to review a decision of the COMELEC which
refused to call an election to fill vacancies in the Batasang Pambansa. According to the Court,

...Petitioners' standing to sue may not be predicated upon an interest of the

kind alleged here. which is held in common by all members of the public
because of the necessarily abstract nature of the injury supposedly shared by
all citizens. Concrete injury, whether actual or threatened, is that
indispensable element of a dispute which serves in part to cast it in a form
traditionally capable of judicial resolution. When the asserted harm is a
"generalized grievance" shared in substantially equal measure by all or a
large class of citizens, that harm alone normally does not warrant exercise
of jurisdiction ...Even his plea as a voter is predicated on an interest held in
common by all members of the public and does not demonstrate any injury
specially directed to him in particular.65

Finally, the Oposa v. Factoran case is precedent for the proposition that the formulation and implementation of
specific environmental policies are not exclusively within the ambit of the political branches of our governmental
system. Since a self-executory constitutional right is involved, our courts may intervene when there is grave of
abuse of discretion in denying relief based on the assertion of such a right.

In the United States, legal standing in environment cases has long been settled. However, unlike Oposa,
standing in the U.S. is always predicated on the complainant's allegation that the action will cause her injury
whether economic, conservational, recreational, or aesthetic. 66 Oposa goes beyond U.S. environmental
jurisprudence which requires that specific, material injury must still be alleged before an action can be filed.

In sum, our constitutional policy on the environment as interpreted by the Supreme Court in Oposa v. Factoran
is as progressive and as strong as it can be. What more can we ask for?

It is at this point that we must look at constitutional policy as operational code. Because to stay on the level of
the myth system is to delude ourselves.

For example, without minimizing the significance of the victory of the plaintiffs in the Oposa case, we must
remember that the decision did not result in the cancellation of any timber license agreement and that it took
the judiciary three full years (one year by the lower court and two years by the Supreme Court) to dispose of
what was basically a procedural issue. In fact, it is highly improbable for the case to proceed to the trial stage
since the Supreme Court, as a matter of due process, ordered that all TLA holders be impleaded as
in~ispensable parties. The implication, it seems to me, is that evidence must be shown against each TLA
holder. One can only surmise how much this will cost and how much time it will take. In the meantime, our
forests continued and continues to be denuded. In fact, at an annual 28U.S. v. Students Challenging Regulatory
Agency Procedures, 412 U.S. 669 and Sierra Club v. Morton, 405 U.S. 727 cited in 61A Am Jur 2d, Pollution
Control, § 35. Injury to aesthetic and environmental interest has been recognized as laying a sufficient
foundation for standing. Save the Courthouse Committee v. Lynn, 408 F. Supp. 1323 cited in 42 U.S.C.A.

61
See Dante Rene B. Gatmaytan, Unpublished Commentary on theOposa v. Factoran Case,
LRC/KSK Files
62
RULES OF COURT. rule 3. sec. 2.
63
Gan Hock v. Court of Appeals 197 SCRA 223, 230 (1991). See also Sustiguer v. Tamayo. G.R. No. 29341, 176 SCRA
579. 587 (1989). cited in Gatmaytan. Supra note 24.
64
Q.R. No. 59068. 120 SCRA 337.340 (1983). cited in Gatmaytan. Supra note 24.
65
ld. at 341-342.
66
U.S. v. Students Challenging Regulatory Agency Procedures, 412 U.S. 669 and Sierra Club v. Morton, 405 U.S. 727
cited in 61A Am Jur 2d, Pollution Control, § 35. Injury to aesthetic and environmental interest has been recognized as
laying a sufficient foundation for standing. Save the Courthouse Committee v. Lynn, 408 F. Supp. 1323 cited in 42
U.S.C.A. 4332.
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4332.deforestation rate of 100,000 hectares per annum, three hundred thousand hectares of forests were lost
while the case was pending from 1990-1993.67

4. THE JUDICIARY AND THE ENVIRONMENTAL DILEMMA:

THE OPERATIONAL CODE

In analyzing the operational code of the Judiciary's role in environmental protection, the practical question that
must be posed is whether the Judiciary is equipped to deal with environmental disputes. On a more constructive
note, a better way of phrasing the question is to ask what the judiciary needs so that its involvement in such
disputes would be efficient, scientifically sound and equitable.

Answering these questions require a discussion of the nature of environmental disputes.

(a) What is an environmental problem?

The classical definition of the environmental problem is that it is a "commons" question. Since the publication
of Garrett Hardin's influential article68 in 1968, the "tragedy of the commons" has become a household word
among social scientists and policymakers concerned with environmental and natural resource problems. The
concept has been used to explain overexploitation in fisheries, overgrazing, air and water population, abuse of
public lands, population problems, extinction of species, fuel wood depletion, wildlife decline, and other
problems of resource misallocation. Simply put, Hardin's paradigm is that environmental degradation results
from the open access status of common goods like air, water, forests and other natural resources. Because
these goods are seen as free goods by all actual and potential users, there is no attempt to internalize in their
usage the costs of such consumption. The attitude of these users is "I will get my share without having to pay
for it". Thus, in the free-for-all, environmental degradation and natural resources depletion becomes inevitable.

Few essays have been as influential as Hardin's, and few ideas so quickly and widely disseminated. But as
one author would put it: "It would be difficult to locate another passage of comparable length and fame
containing as many errors."69 Few questioned Hardin's assumption of individual interest unchecked by social
relations, and his emphasis on competition (rather than cooperation) as the overriding relationship that shaped
interactions among resource users. Under this PersPective, the kneejerk response is the immediate rejection
of common property management systems as inefficient and ecologically unsound.

The "commons" paradigm however is useful for an understanding of the environmental dilemma as, to use an
economic term, an "externalify problem"70. We cannot deny that in the use of natural resources, the actual cost
to the whole society is usually not counted. When we allow our loggers for example to extract our timber
resources while imposing ridiculously low forest charges, we fail to make them pay not only for the actual value
of the extracted resources but also for the ecological damage their activities inflict on our natural resource base
- including among others the loss of biological diversity, the costs of soil erosion and climate changes, and the
deaths and destruction resulting from flash floods. Or when we allow an industrial firm to pollute the air or water,
we do not usually count the costs to our health system and to the productivity of the affected populace.

The usual rationale behind allowing such externalities is that activities such as logging and industrial production
contribute to society by way of job creation and contribution to the GNP. The problem is that in undervaluing
the resources extracted or polluted and in not costing the damage or injury done we have no real basis for
comparing the costs and benefits of allowing or disallowing a particular activity.

This brings us to another way of formulating the environmental dilemma - as a problem of sustainable
development.

"Sustainable development" is a concept that was first articulated formally by the World Commission on
Environment and Development, more popularly known as the Brundtland Commission. In OUR COMMON
FUTURE, the Commission's famous document, "sustainable development" is present without compromising
the ability to meet those of the future".71

The Commission explains why the present generation is faced with this responsibility:

We borrow environmental capital from future generations with no

67
See MASTER PLAN FOR FORESTRY DEVELOPMENT (1990). 2.
68
Garrett Hardin. "The Tragedy of the Commons", 162 Science 1243 (1968).
69
Partha Dasgupta. THE CONTROL OF RESOURCES (1982), in Runge, 6
70
See Herman Daly and John Cobb, FOR THE COMMON GOOD: REDIRECTING THE ECONOMY TOWARD
COMMUNITY, THE ENVIRONMENT AND A SUSTAINABLE FUTURE (1989), 37.
71
World Commission on Environment and Development, OUR COMMON FUTURE
(1987),40.
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intention or prospect of repaying. They may damn us for our

spendthrift ways, but they can never collect on our debt to them.
We act as we do because we can get away with it: future generations
do not vote; they have no political or financial power; they cannot
challenge our decisions.72

Under international law, sustainable development is now an accepted legal principle. Principle 3 of the Rio
Declaration of 1992 states that

[T]he right to development must be fulfilled so as to equitably meet

developmental and environmental needs of present and future generations.73

Under Philippine Agenda 21, sustainable development has also been articulated as a guiding norm for both
economic planning and environmental regulation. In fact as early as Presidential Decree Nos. 1151 issued by
former President Marcos in 1977, the concept of sustainable development was already accepted as a policy
underpinning our environmental law.74

The problem however with the norm of sustainable development is that it is difficult to operationalize.
Experience shows that even when all parties to an environmental issue agree that sustainable development is
to be the goal, divergence in particular positions with regards to the issue often remain inevitable. While it is
possible for Philippine society as an abstract collective entity to decide - through state organs - that an energy
project is required for the development needs of the country and that the resulting environmental damage can
still be absorbed by the carrying capacity of our natural resource base, the communities affected by such
projects - usually economically and politically marginalized - do lose or find their resource base diminished.

RIGHT TO A HEALTHFUL ECOLOGY

For example, a visit today to the site of the Mt. Apo geothermal plant confirms that while it could be argued that
the project conforms to the sustainable development norm from the national or even a Mindanao-wide
perspective, it cannot be denied that the physical changes in the site has altered Mt. Apo forever and that the
communities which relied on this part of Mt. Apo for their economic, cultural and religious needs could no longer
do so. In other words, for almost every environmental issue, one cannot still avoid the choice of which value to
prioritize - environment or development?

(b) Environmental Disputes

The preceding discussion brings us to different aspects or types of the disputes that arise from the
environmental dilemma.

First, the dispute on how to measure and compare the costs and benefits of ecologically harmful activities and
the costs and benefits of preventing or regulating such activities. Cost effectiveness and economic efficiency
is a valid criterion in determining the proper approach to environmental issues. The problem however is that
cost-benefit analysis requires the valuation of all the goods that are relevant to a particular environmental issue.
Unfortunately, up to the present, economists have not really yet agreed on how to value ecological "goods"
such as biodiversity or a stable climate. Complicating matters is the need to develop a valuation formula in
which the proper time scale should span generations, i.e. decades, even centuries. How then can we evaluate
that a particular approach is truly cost-effective from the perspective of its ultimate objective? With this difficulty,
how then can we expect a participant like the Judiciary to deal rationally with environmental disputes?

A typical example of this dispute is the debate over whether we should impose a commercial logging ban or
not. Knowing that such a ban may lead to among others wood supply problems and loss of jobs, the costs of
such a ban are obvious and definite - but the benefits - what society saves if the ban is imposed and succeeds
in helping reverse deforestation - can at the moment only be qualitative: a chance that our forest resources
may recover, a hope that ten years after the ban we can resume timber extraction in a selective and sustainable
way, the expectation that there will be no more deaths from flash floods resulting from deforestation twenty
years from now, and the optimism that one day we will reap economic benefits from the biological and genetic
resources hidden in our forests.

Second, environmental disputes are often manifested as a conflict of specific rights between conflicting users.
In forest resources, the dispute is often between commercial users such as the timber industry and forest
communities, including indigenous cultural communities who have been in the forests since time immemorial.

72
341d., at 8.
73
RIO DECLARATION ON ENVIRONMENT AND DEVELOPMENT (1992).
74
See Section 1 of P.D. No. 1151.
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In energy disputes, communities that need to be relocated or whose quality of life is adversely affected clash
with national priorities such as power supply and industrialization. In pollution disputes - involving air, water or
waste - again the rights of communities conflict with the interests of commercial users and also with the
industrial goals of the country.

The usual form in which this aspect of or kind of dispute arises in our legal system is through the resolution of
a due process question. Should a timber license agreement be canceled? Should a project under Environment
Impact Assessment (EIA) be approved? Should the DENR issue a cease and desist or closure order against
a factory?

In sum, an environmental dispute involves first, a resolution of what general rights or values to prioritize in a
given concrete situation - a task which requires a cost-benefit analysis, and second, which specific legal rights
in a conflict should prevail. What the Judiciary often deals with is only the second aspect or type of dispute. My
contention is that in both aspects, the judiciary playa necessary and indispensable role. In Oposa v. Factoran,
when the case comes to trial, both aspects will be present. While we can predict that our courts can handle the
second aspect with relative ease, I am not as certain if our judges have the necessary technical and conceptual
equipment to deal with the first type of dispute.

The limitations of our judiciary also becomes obvious when we take a look at some of the perspectives that
policymakers take in deciding our specific environmental policies.

DEALING WITH ENVIRONMENTAL DISPUTES:

PERSPECTIVES AND STRATEGIES

I propose to discuss four perspectives that the judiciary or any other participant in the environmental decision
process may adopt singly or incombination. Most of these perspectives, I submit, can be justified under the
Philippine Constitution and under our environmental laws. These are:

(1) A “command and control” strategy;

(2) A market based perspective;
(3) Community Based Resource Management (CBRM); and
(4) Pollution Prevention.

My contention is that when our courts decide on environmental disputes, they cannot escape from making a
choice on which strategy to uphold. All these strategies, except probably pollution prevention, can find a legal
text in the myth system that supports it and stake-holders in environmental issues -like the government,
communities and industry – will directly or indirectly invoke one or more strategies.

(a) Command and Control

By "Command and Control", the strategy that is pursued is that of a superior body - the State laying down
specific standards that all must follow, monitors compliance with such standards and enforces such compliance
by coercive or other measures. For example: in the Philippines, the government through the DENR establishes
and enforces modes of forest utilization through such measures as "annual allowable cut" and "reforestation
requirements". In air pollution, the Environmental Management Bureau of the DENR lays down and enforces
pollution standards, i.e. what kind and how much emissions a factory is allowed.

The justification for a "command and control" strategy in the Philippines is the Regalian Doctrine. This doctrine
is also a good illustration of the limited use of a "command and control strategy".

The premise of the Regalian Doctrine is that all natural resources in the territory belong to the State and
therefore private ownership or title must emanate from the State. This view is articulated in Article XII, Section
2 of the Philippine Constitution which provides that

[A]ll 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 bythe State. With the exception of agricultural lands, all other
natural resources shall not be alienated.

As a consequence of this claim of ownership over all natural resources, the Philippine government has
historically sought to monopolize the decision process on how to utilize these resources. This in turn has had
two adverse environmental results: (a) the adoption of a short-sighted commercially biased and extractive
utilization policy because the State consistently favored commercial users, and (b) an extremely insecure land
tenure system within the forest zones.
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Antonio G.M.La Viña, JSD

For example, included also among lands of the public domain, because they are usually situated in upland
forest zones, are those lands which have been occupied by indigenous cultural communities since time
immemorial. By such inclusion, these forest communities have been effectively disenfranchised of their rights
to their ancestral lands, resulting in their being categorized as squatters in their own lands. While there may be
a trend towards giving indigenous cultural communities more access to their natural resource base, as
exemplified for example by Department Administrative Order No.2 of the DENR, Series of 1993, the DENR
programs remains to be based on the premise that ancestral lands are part of the public domain.

Among the reasons that are frequently cited is the need to protect these lands, usually located in upland forest
zones, from ecological misuse and degradation. The implication is that the time-immemorial occupants are
incapable of utilizing upland forest resources in an ecologically sound manner. This is unfortunate as it ignores
the role of upland indigenes in maintaining an ecologically sound environment. Because they have been on
the land for generations, these communities possess a wealth of local knowledge and concern, including a
reverent attitude toward, as well as a duty to conserve, the natural bounty around them. Furthermore, it must
be pointed out that the monopolization by the government of the mandate to protect the forests has clearly not
yielded satisfactory results. Forest denudation continues to escalate even as commercial users derive the most
profits from upland resources.75

From the point of view therefore of both equity and ecology, there is a need to rethink the application of the
Regalian Doctrine to ancestral lands in forest and other ecologically critical zones. Concretely, the first step is
for the Philippine government to adopt a restrictive rather than expansive interpretation of the Regalian
Doctrine, an interpretation that finds legal support in Carino v. Insular Government76 and in the constitutional
provisions recognizing the rights of indigenous cultural communities to their ancestral domains.77

Regardless of where one stands on the Regalian Doctrine, the validity of a "command and control" strategy as
the primary tool for environmental regulation is increasingly being questioned not only in the Philippines but
globally as well. It has been criticized as inefficient well as unjust. In the Philippines, it is also a valid question
to ask whether the Philippine bureaucracy is in a position to enforce environmental legal norms given its dismal
historical record.

Congress and the Executive Branch historically has supported a command and control strategy. However,
recent policies indicate a small shift in favor of market based strategies78 and community based resource
management systems. 79 On the other hand, the Judiciary has been consistent in upholding the traditional
conception of the doctrine. Unless it is willing to reexamine this, I am not so sure if it can play a positive role in
operationalizing the constitutional right to a sound environment.

(b) Market Based Strategies

A market-based approach is premised on the proposition that the best way of realizing the goals of
environmental policy is to use economic incentives to encourage sustainable and ecologically-friendly activities
or economic sanctions to discourage unsustainable and pollutive actions.80 The usual example given of this
approach is the use of taxation and subsidies. You want to prevent overlogging - tax the activity heavily instead
of prohibiting it, or give incentives for non-extensive use.

The other mechanism favored by those who advocate market-based environmental based strategies is that of
"emissions trading". Basically, this mechanism is premised on the right of industries (or states in international
environmental law) to pollute up to a certain level that the state (or the collective will of States) considers
allowable. So long as this maximum level is not exceeded, the regulatory body will not intervene and will leave
it to the industries or states on how to attain the standard at the lowest possible cost. Thus, among them, they
can trade emission rights with each other. A firm that finds it cost-effective to install the most up-to-date

75
See Lavina, Antonio. "Recognition of Ancestral Domains: An Imperative for a Democratic Upland Resource
Management", in Our Threatened Heritage, edited by Chip Fay, a special issue of SOLIDARITY (No. 124, October-
December, 1989). published by Solidaridad Publishing House. Manila.
76
41 Phil. 935 (1909).
77
This interpretation fmds constitutional support in Article XII, Section 5 of the Philippine Constitution which provides that
the State shall protect the rights of indigenous cultural communities to their ancestral lands to ensure their economic,
social and cultural well-being.
78
See Policy Recommendations of the Policy Studies Component of the Natural Resources Management Program
summarized in its ENVIRONMENTAL ASSESSMENT – FINAL SCOPING REPORT (1993). See also proposed Clean Air
Act pending in Congress which borrows the concept of emissions trading from the U.S. Clean Air Act.
79
See DENR Administrative Order No.2, Series of 1993 - Rules and Regulations for the Identification, Delineation and
recognition of Ancestral Land and Domain Claims. See also NIPAS Law, supra note 8.
80
For a summary of this development in U. S. environmental law, see Marshall 1. Breger, Richard B. Stewart, E. Donald
Elliott, and David Hawkins, "Providing Economic Incentives in Environmental Regulation", 8 Yale J. on Reg. 463 (1991).
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Antonio G.M.La Viña, JSD

technology will do so and profit because it can then sell its emission rights rather than install the best
technology.

In the U.S., the market based approach found its first national legislative articulation in the Clean Air Act of
1991. In the Philippines, many policy recommendations made by the Natural Resources Management Program
of the DENR such as lifting of the export ban on timber and liberalization of the forest industry follows this
approach. With respect to deforestation, it is argued that the better strategy might be to use a taxation system
to discourage such activity. At the very least this would ensure that the true costs of the logging industry's
activities are borne by it and that the whole society benefits from the activity. On the other hand, a legal
framework based on economic incentives would require that non-extractive use, particularly by forest
communities, be subsidized and given financial and technical support. However, for such a framework to be
put into place, a central issue must be addressed: the uncertainty and insecurity of land tenure in forest zones.
Without land tenure security, no amount of economic incentives will ensure sustainable utilization.

Although intended to strengthen control, centralization of proprietary rights to forest lands and resources in the
government have more often "undermined local rules governing access and use, removed local incentives for
conservation, and saddled central governments with far-flung responsibilities beyond their administrative
capabilities".81 In every country with extensive tropical rainforests, the public sector's claims on forest lands
and resources far outstrip its ability to manage or to control resources. The effect is that the government has
institutionalized an open access situation.82

In sum, the market based approach to environmental regulation requires divestment by the State of its
ownership claim over most natural resources and increasing the scope of resources that may be covered by
property rights. But this change or reinterpretation must be accompanied with a bias for communities of direct
users as against commercial and industrial users. A market can work only when there is a level playing field.
Unfortunately, because of the disparity in economic and cultural power, communities are at a disadvantage
when indeed divestment occurs. As a necessary step therefore, community based resource management
systems must be encouraged and supported by the state before a market based system can really work.

(c) Community Based Resource Management

Contrary to the widely-held belief that all communally-held resources are doomed to suffer from "the tragedy
of the commons", it is now known that a wide variety of sustainable community resource management systems
do exist.83 This recent rediscovery of communal institutions as an effective solution to the commons problem
is significant in a variety of ways. These institutions may have a valuable role to play in sustainable use
planning but have usually been overlooked or underutilized in the planning process. This has happened
because of over-emphasis on the kinds of resource management practices dominant in the Western
industrialized world in which the significance of common property institutions have declined over time.

Community based resource management systems can range from the right of the community to be consulted
before any development project is imposed on it to actually recognizing community control and management
of natural resources. Recognizing these systems would also mean developing and accepting common property
regimes in our legal system.

Runge argues that common property regimes are just as viable as their individual private property counterparts
in terms of efficiency and equity. In a number of cases, he says, communal property structures play "a key role
in the effective management of scarce natural resources, complementing and combining with private rights to
promote both equity and efficiency." 84 This can be appreciated, however, only if a communal system is
distinguished from a "free and open access system" - where there are no rules regulating individual use rights.85
Much of the negative understanding of communal property regimes emanates from such a misconception.

There are four reasons why community based resource management systems may be more economically
feasible and desirable. First, such a system "can be relatively less costly to maintain and enforce, and better

81
Roberto Repetto, THE FOREST FOR THE TREES? GOVERNMENT POUCIES AND THE MISUSE OF FOREST
RESOURCES (1988),28.
82
C. Ford Runge, "Common Property Resources In A Global Context", Working Paper, University of Minnesota (April
1990), 18. On file at the Social Science Library, Yale University.
83
See Robert Rhodes & S. J. Thompson, "Adaptive Strategies in Alpine Environments: Beyond Ecological Particularism", 2
American Ethnologist 535; B. S. Orlove, ALPACA, SHEEP AND MEN (1977); David Guillet, AGRARIAN REFORM AND
PEASANT ECONOMY IN SOUTHERN PERU (1979); R. K. Hitchcock, "Traditional Systems of Land Tenure and Agrarian
Reform in Botswana" Journal of African Law, Vol. 24 (1981); A.Legesse, GADA: THREE APPROACHES TO THE
STUDY OF AFRICAN SOCIETY (1973)
84
Runge, Supra note 45 at 3.
85
Id.
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adapted to local conditions". Secondly, as a consequence of the system's institutionalization of fairness in the
face of random allocation of resources, "common use rights may contribute to social stability at the same time
that they promote efficient adaptation to changing resource availability over time". Third, such a system
provides a "hedge" against individual failure. A communal property system, in this sense, offers more security
to the individual members of the community. Fourth, and last, "the opportunity costs associated with changing
established practices are high". By this, Runge refers to the tenacity of the rules under such a society. He
recognizes the linkage between these rules and the natural and social situation from which such rules emerge.
Thus he concludes that economic development should involve the promotion of structures which take into
account and are consistent with the environment in which resource management is to occur.86

Increasingly both in Congress and the Executive Department, lip service is paid to community-based resource
management as an important element of Philippine environmental strategy. Programs like social forestry and
control or resources and the community's right to monitor and enforce environmental norms is increasing. In
many ways, the Local Government Code reflects this philosophy. Notwithstanding this progress, in terms of
actual budgetary allocation as well as emphasis in the implementation of environmental programs, this trend
to recognize community based resource management is not reflected. The gap can be attributed to two
reasons: first in the opposition of those vested interests who have dominated, if not monopolized, the use of
our natural resources, and; second, a shift to community based resource management requires a shift in one's
fundamental paradigm, a task that demands stretching one's legal imagination.

(d) Pollution Prevention

A final strategy that has been proposed in the global level is that of pollution prevention. Simply put,
environmental policy should just prohibit as many forms of pollution as possible. This is justified economically
under the principle that all pollution is a wasted resource and of course the ethical justification is obvious. It is
however doubtful, given the poverty of our people and our development needs, if this is a realistic option for
us. However, let me just observe that an environmental policy characterized by pollution prevention when
coupled with an extensive program of scientific and technological development is a way by which we can leap-
frog industrialization and become a post-industrial, high technology economy.

OTHER PARTICIPANTS AND ALTERNATIVE FORUMS

At this point, let me just say a word about the other participants in the environmental decision process. Allow
me also to indicate alternative forums to the judiciary for the resolution of environmental disputes.

The executive and legislative branches are of course significant players in the area of the environment. I cannot
here present a full analysis of their roles. Suffice it to say that the executive branch - particularly the different
bureaucracies within the DENR - are the first and primary forums of most environmental disputes. While the
DENR is certainly better equipped technically to deal with these issues, I think it is fair to observe that there is
much to be done by the Department to upgrade its organizational capabilities. In many cases, many
environmental decisions by the DENR are made on the basis of political exigency rather than aby the DENR
are made on the basis of political exigency rather than a rigorous economic and scientific analysis of issues.
While most environmental decisions must in the final analysis be political, the space for irrational external
interventions such as corruption and undue political influence becomes much larger when ignorance or
acceptance of the conventional characterizes a bureaucracy. This is not to condemn or criticize all DENR
personnel as there are responsive and creative people in the Department. I make this comment as a statement
only of what still needs to be done.

As to the legislative branch, an analysis of the environmental laws it has passed in recent years such as the
law on toxic and hazardous wastes and the National Integrated Protected Areas Act illustrates its
responsiveness to the environmental dilemma. Legislation on air pollution, on land management, a total
commercial logging ban, a new forestry code, among others - are on the way to enactment. Whether the laws
that will eventually be passed would live up to expectations remains to be seen. The budgetary allocations
however to environmental programs remains inadequate. In particular, the support given to community-based
resource management programs is so small that it cannot be really said that we are giving this strategy a
chance.

Aside from the executive and legislative branches, another alternative forum in environmental disputes are
multilateral and bilateral development assistance agencies. Whether we like it or not, institutions like the Asian
Development Bank, the World Bank and the USAID are central and crucial players in environmental policy-
making in the Philippines. By financing many environmental programs, these entities participate decisively in
the environmental decision process. And often, more than our Congress and the DENR, these institutions are
more - to use a technological term - user friendly, i.e. because of their international political vulnerability, they

86
Id. at 20-22.
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can be pressured to modify, suspend or cancel the financing of environmental programs or projects which have
an adverse effect on the environment. This reality poses important questions and dilemmas regarding national
sovereignty. It also stresses the importance of developing domestic forums as viable forums for environmental
dispute resolution.

As to other stakeholders, the most important are commercial users and communities of direct users.
Commercial users include logging companies, mining companies, and energy developers. To this sector, the
challenge is to realize and accept the fact that the days of unrestrained exploitation is over. My experience with
many, not all but a majority, of those in industry is their refusal to believe this. Hence, many commercial users,
for example loggers, always go for the jugular - i.e. retain as much power as they can without any willingness
to compromise.

A recent example of this unwillingness to compromise is how the logging industry is dealing with the Industrial
Forest Management Agreement (IFMA) - the legal instrument that is supposed to replace the TLA as the vehicle
for commercial utilization of our forest resources. Under the original rules and regulations87 governing IFMA, a
substantial guarantee bond (amounting to approximately P20,000 per hectare in some cases) was required so
as to ensure that the IFMA holder would comply with its obligations.

Our historical experience show that no matter what obligations we impose on our commercial users, our
resources are depleted just the same. This is because our bureaucracy, for political reasons or because of
corruption, cannot enforce these obligations. The political economy of our justice system has also made
negligible, if not impossible, redress through the judicial system. Hence, the guarantee bond as insurance for
compliance. The logging industry however lobbied to repeal this requirement and they succeeded last
December 1993 when DENR Secretary Angel Alcala replaced the guarantee bond with a ridiculous
performance bond amounting to P20 per hectare.88

This experience with IFMA is also an example of the potency of multilateral financing institutions in the
Philippine environmental decision process. Since the guarantee bond was an ADB conditionality in one of its
loan packages and in all probability the bank objected to its cancellation, Secretary Alcala subsequently
suspended last January the cancellation of the bond pending further consultations.89

Fortunately, for all of us, increasingly these commercial users are confronted legally and often physically by
communities of direct users, 90 supported by nongovernmental organizations, advocating community based
resource management strategies. These include indigenous cultural communities protecting their ancestral
domains and peasant and fisherfolk communities make use of legal strategies available to them under our
system, they also often resort to self-help - in the process developing the concept of private enforcement of
legal norms. All over the country today, communities, peoples organizations, and non-governmental
organizations are at the forefront of environmental protection. Whether these communities acquire enough
strength before environmental degradation becomes irreversible is a question that, however, remains open.

CONCLUSION

Let me now conclude this lecture with some final observations about the role of the judiciary in enforcing the
right to ecological security.

I agree with Justice Feliciano that Oposa v. Factoran,if affirmed, will result in propelling courts "into the
uncharted ocean of social and economic policy making". As I tried to illustrate in discussing the operational
code of environmental policymaking, this cannot be avoided. To decide environmental disputes on the basis of
conflict of rights alone, on due process issues for example, is simply inadequate in dealing with the
environmental dilemma. Courts must learn the intricacies of resource valuation. In the area of environment, as
in many other emerging fields such as intellectual property rights and biotechnology, logic as the main tool of
legal construction and decisionmaking will simply be inadequate. Indeed, good environmental decisions are
predicated on a familiarity with the relevant natural and social sciences.

The challenge to the Judiciary is how to limit its role in the decision environmental process. The first obvious
tool is to recognize that primary jurisdiction of most environmental disputes belong to the proper administrative
agencies. The rule on "prior exhaustion of administrative remedies" should be followed. But the Judiciary, if it
wants to be a player in the environmental arena, must also begin to equip itself with the necessary technical
and conceptual tools. A large dose of legal imagination would also be imperative.

87
See DENR Administrative Order No. 60, Series of 1993.
88
See DENR Administrative Order No. 68, Series of 1993.
89
See DENR Memorandwn Circular No.6, Series of 1994.
90
Two recent examples are the anti-logging campaigns in San Fernando, Bukidnon and
Cagayan Valley.
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Antonio G.M.La Viña, JSD

A possible role of the Judiciary - particularly the Regional Trial Courts - is to serve as brokers in arriving at
acceptable compromises on utilization and conservation issues. District courts in the United States have
effectively played this role . A recent example is the ban on logging of old grow the forests in the Pacific
Northwest ordered by a federal court to compel the U.S. Department of Interior to come up with a plan that
would ensure the survival of the spotted ow1. 91

A final point about the judicial role. For the Judiciary to play an effective and useful rule in the environmental
decision process, we must have good, efficient and honest judges - particularly at the level of the Regional
Trial Courts. The delay, for example, which characterizes our court system, militates against using this as a
forum for environmental disputes. The environment, simply put, cannot ' wait for the long grind of justice. The
tragedy is that alternative forums will be used, including those which raises sovereignty questions. Communities
will also have to rely on private enforcement - even physical force, if there is no viable forum left to them. That
is why I think it is so important for the Judiciary to be an attractive forum for environmental disputes.

I started writing the paper from which I extracted this lecture nearly six months ago. I was in my hometown of
Cagayan de Oro at that time to visit my family and to give a lecture on environmental law in Iligan City for the
V.P. Law Center's POPLAW program. During the early morning drive to Iligan, I was filled with sadness as I
went through what is now known as the Cagayan-Iligan Industrial Corridor. In my mind, as I passed through
the rice fields, beaches, coconut lands and fishing villages that have been so part of my life, I saw changes
coming. In a few years, not much is going to be left of the beauty of this place. Perhaps many of the changes
will be good - more jobs, more progress, less poverty. But many of the changes, if we are not careful, will also
not be good. Pollution, urban blight, displaced communities. And I asked myself - how can law be of use in
ensuring that the worst does not happen?

This lecture is an attempt to answer this very personal question. For in the end, in its deepest philosophical
sense, what is the environmental question but an ethical challenge posed to all of us: What does it mean to be
human? What is our relationship with nature? What is the most important value in our lives? What does it mean
to be a community?

When Dean Agabin asked me for the title of my lecture, I did not hesitate to use a word from the Greek poet
Homer: Odyssey. I have always been fascinated by this sequel to Iliad - it always struck me how victory over
Troy did not mean the end of the journey of Odysseus.

In the same way, a legal recognition of a right is useless if it cannot be translated into a victory in the field. And
this is really where we are right now in environmental protection: we are not sure if we can succeed; we are,
as a people, at the beginnings of our journey, a mission, as it were, to make this country, in the words of former
Senator Diokno, "a nation for our children".92 Though we can, we will get lost along the way. And like Odysseus,
stranded in the Island of the Winds and the Land of the Midnight Sun, we will cry out:

My friends, we do not know east from west, we don't know where the sun
rises to give light to all mankind, and where he goes down under the earth.
Well then what are we to do? We must try to think of something at once, and
for my part, I can't think of anything. I have just been up on the cliffs to look
around. We are on some island in the middle of the sea, with no land in sight.
The island is flat, and I saw smoke rising in the air above ... bushes and trees.93

On this note of uncertainty, and also of hope since we know that Odysseus did find his way home, I end this
lecture. Thank you for your attention.

CASE STUDY:
CLOSURE AND REHABILITATION OF THE BORACAY ISLAND, AKLAN

Boracay is a world known tourist destination located in the center Philippines and is famous for its pristine
waters and white sand beaches. But due to unchecked tourism and unregulated infrastructure developments,
the then called “tropical paradise” slowly turned into a “cesspool” – as described by President Rodrigo Duterte
on February 2018. Water quality tests showed that Boracay’s coliform count, biochemical oxygen demand
and dissolved oxygen levels are way above DENR’s regulatory standards. Environmentalists also point that

91
“Logging Ban on Old-Growth Forests”, Business World, 28 February 1994, 6.
92
Jose W. Diokno, "A Nation for Our Children" (1984), reprinted in A NATION FOR OUR CIDLDREN, Ed. Priscila S.
Manalang (1987), 83.
93
Homer, THE ODYSSEY, Tr. W.H.D. Rouse (1937),116.
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Antonio G.M.La Viña, JSD

the annual algae bloom that Boracay experiences are due to the high level of nutrients in water caused by
eutrophication. All of which points to one conclusion: Boracay’s waters are unsafe for human recreational
activities and that it poses a threat to Boracay’s marine life and coral reefs. The island is also dealing with
solid waste management issues. On a regular “business-as-usual” day, Boracay produces 90 to 115 tons of
solid waste per day but its LGU’s hauling capacity is 30 tons per day, leaving at least 60 tons of waste in the
island daily. These issues are also coupled with the island’s maxed out carrying capacity and other
environmental law violations local establishments.

On April 2018 - Proclamation No. 475, the Boracay Island was declared under a state of calamity and was
put under a six-month temporary closure as a tourist destination to ensure public health and safety and, to
begin the island’s rehabilitation. Upon its implementation, the island’s residents, LGUs and all government-
owned and controlled corporations are directed to cooperate and execute all efforts for the island’s closure
and rehabilitation. These efforts include but are not limited to the following: Improvement of the island’s
sewerage system and road networks, elimination of accumulated solid wastes, removal of non-compliant
establishments and recovery of the island’s wetlands lost due to illegal infrastructure encroachment.

With the Boracay Island’s re-opening in October 2018, new rules and regulations were established to promote
an environment-friendly atmosphere in the island. Beach parties, smoking, eating & drinking, sand castle
making and fire dancing is no longer allowed on the beach. Water recreational activities are also regulated
for continued recuperation of marine life on the island. Commercial establishments near the beach are also
prohibited. Environmental laws will be strictly observed and only compliant hotels and other establishments
are allowed to operate. The number of tourists allowed to stay on the island will be restricted to 19,215 at any
given time and only tourists booked in an accredited hotel will be allowed to enter the island.

Stakeholders believe that, although it seems extreme, the closure of the island was very beneficial for the
island and was more than they could have hoped for. The island’s resident and establishment owners have
a renewed appreciation for Boracay and are more proactive in taking care of their environment. And although
the closure is over, the rehabilitation of the island still has a long way to go. They acknowledge that more
work is required from them to continue the island’s rehabilitation and maintenance.

Sources:

https://www.officialgazette.gov.ph/downloads/2018/04apr/20180426-PROC-475-RRD.pdf
https://news.abs-cbn.com/news/04/26/18/duterte-declares-state-of-calamity-in-boracay
https://www.philstar.com/headlines/2018/10/28/1863784/was-6-month-boracay-closure-worth-it-stakeholders-weigh-in
https://pia.gov.ph/news/articles/1014277
https://business.inquirer.net/250309/boracay-aftermath-eco-tourism-next-big-thing
https://wwf.panda.org/our_work/oceans/solutions/reducing_tourism_impact/difference_between_ecotourism_sustainable
_tourism.cfm
http://aboriginal.ubc.ca/2013/06/24/boracay-island-home-of-the-atis-and-their-struggle-for-land/
https://www.manilatimes.net/blood-money-sand-tragic-story-atis-boracay/382990/

Considering all these issues that pose potential threats to the Philippine biodiversity, it is imperative
to discuss the framework on how to handle our environment and natural resources to ensure that
these issues are managed. Chapter Two will discuss this.
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Antonio G.M.La Viña, JSD

Chapter Two

Institutional Framework for Environment and Natural Resources

Management

It is often said that the Philippines has comprehensive and highly advanced laws to protect the
environment and conserve natural resources, but that these laws are poorly enforced because of
financial and technical capacity limitations. The framework for implementing and enforcing the laws
is crucial in achieving the policy objectives of protecting the environment and conserving natural
resources.

2.1 Institutional framework for managing the environment and natural resources

2.1.1 Executive Branch

The Executive Branch comprises two levels of management. The national government operates
through more than twenty executive departments and specialized agencies to deliver basic services
and implement national policies, programs, and projects, including agencies responsible for
environment and natural resources, public works, transportation and communication, trade and
industry, economic and development planning, etc.

The lead environment agency is the Department of Environment and Natural Resources (DENR),
created in 1987 by the Administrative Code (Executive Order No. 192) that consolidated several
government agencies performing ENR functions. The DENR is primarily responsible for the
conservation, management, development, and proper use of the country’s environment and natural
resources, specifically forest and grazing lands, mineral resources, and lands of the public domain,
as well as the licensing and regulation of all natural resources.

The DENR is headed by a Secretary, who is appointed by the President and in whom the authority
and responsibility for exercising the department’s mandate is vested. It consists of the Department
Proper, the staff offices, the staff bureaus, and the regional/provincial/community natural resources
office. The Department Proper consists of the Office of the Secretary, Offices of Undersecretaries,
Offices of Assistant Secretaries, the Public Affairs Office, the Special Concerns Office, and the
Pollution Adjudication Board (PAB). The staff bureaus consist of the Forest Management Bureau
(FMB), Lands Management Bureau, Protected Areas and Wildlife Bureau (PAWB), and Ecosystems
Research and Development Bureau. Two former staff bureaus, the Mines and Geosciences Bureau
and the Environmental Management Bureau (EMB), have been converted into line bureaus by the
Mining Act and the Clean Air Act. A line bureau operates as a sub-organization in the department
with direct line of command, usually with its own representative offices, down to the regional and field
offices of the department. For field operations, the DENR maintains 16 regional offices, 73 provincial
offices, and 171 community offices (World Bank and ADB 2007). The DENR’s Regional Environment
and Natural Resources Office is headed by a Regional Executive Director, who is assisted by four
Regional Technical Directors, one each for forestry, land management, protected areas and wildlife,
and ecosystems research. The DENR exercises its line functions through these field offices.

There are other agencies with ENR and related functions outside of the DENR. These include the
DENR-attached agencies such as the National Mapping and Resource Information Authority, the
Natural Resources Development Corporation, the Laguna Lake Development Authority, and the
National Water Resources Board. The other major agencies with ENR management functions
include the Department of Agriculture (DA) and its Bureau of Fisheries and Aquatic Resources
(BFAR), the Department of Energy; the Department of Health, the National Commission on
Indigenous Peoples (NCIP), the National Power Corporation, and the Philippine National Oil
Company. Moreover, even agencies not traditionally associated with ENR functions, such as the
Department of Trade and Industry, the Department of Transportation and Communication, and the
Department of Public Works and Highways, have been given ENR management roles under the
Clean Air Act and the Clean Water Act.
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A couple of other government-owned and controlled corporations (GOCCs) participate in ENR

management, such as the Philippine Forest and the National Resources Mining and Development
Corporation. In addition, there are special multijurisdictional and coordinative bodies with ENR
functions. These include the Palawan Council for Sustainable Development, for the province of
Palawan, which was created by the Strategic Environmental Plan (SEP) for Palawan Act (Republic
Act No. 7611) to implement the SEP for Palawan. In addition, newer laws created multisectoral
bodies to govern various ENR sectors, such as the Protected Area Management Board under the
NIPAS Act, the Fisheries and Aquatic Resources Management Councils under the Fisheries Code,
the Airshed Governing Board under the Clean Air Act, the National Solid Waste Management
Commission under the Solid Waste Management Act, and the Water Quality Management Board
under the Clean Water Act.

Local Governments

The other level is the local government, which are autonomous sub-units that exercise both corporate
and governing functions. There are three levels of local government units (LGUs): provincial; city and
municipal; and barangay or village. Currently, there are 81 provinces, 138 cities, 1489
municipalities94 and about 40,000 barangays in the Philippines.

The Local Government Code of 1992 (R.A. No. 7160) sets the general powers and functions of
LGUs, including levying taxes, generating other revenues and sharing in benefits from the use of
natural resources. Congress may delegate other powers and functions to LGUs by special laws, such
as specific responsibilities to manage natural resources and protect the environment. Local
legislative councils (Sanggunian) may enact ordinances and resolutions consistent with the powers
and functions delegated by Congress in the relevant national laws.

Table 2. Devolved ENR functions

Law Section Function Responsible LGU
Local Sec. 17 implementation of community-based forestry Municipality
Government (2) projects which include integrated social
Code, R.A. No. forestry programs and similar projects;
7160 (1991) management and control of communal
forests with an area not exceeding fifty (50)
square kilometers; establishment of tree
parks, greenbelts, and similar forest
development projects
Sec. 17 enforcement of forestry laws limited to Province
(3) community-based forestry projects, pollution
control law, small-scale mining law, and
other laws on the protection of the
environment; and mini-hydroelectric projects
for local purposes
Sec. 484 (1) Formulation of measures for the The Local
consideration of the sanggunian and provide Environment and
technical assistance and support to the Natural
governor or mayor, as the case may be, in Resources Office
carrying out measures to ensure the delivery
of basic services and provision of adequate
facilities relative to environment and natural
resources services as provided for under
Section 17 of this Code;

(2) Development of plans and strategies and

upon approval thereof, by the governor or
mayor, as the case may be, and
implementation of the same, particularly

94
Philippine Standard Geographic Code (2016)
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those which have to do with environment

and natural resources programs and
projects which the governor or mayor is
empowered to implement and which the
sanggunian is empowered to provide for
under this Code;

(3) Establishment, maintenance, protection

and preservation of communal forests,
watersheds, tree parks, mangroves,
greenbelts and similar forest projects and
commercial forest, like industrial tree farms
and agro-forestry projects;

(4) Provision of extension services to

beneficiaries of forest development projects
and technical, financial and infrastructure
assistance;

(5) Management and maintenance of seed

banks and production seedlings for forest
and tree parks;

(6) Provision of extension services to

beneficiaries of forest development projects
and rendition of assistance for natural
resources-related conservation and
utilization activities consistent with
ecological balance;

(7) Promotion of the small-scale mining and

utilization of mineral resources, particularly
mining of gold;

(8) Coordination with government agencies

and non-governmental organizations in the
implementation of measures to prevent and
control land, air and water pollution with the
assistance of the Department of
Environment and Natural Resources;

(9) Positioning in the frontline of the delivery

of services concerning the environment and
natural resources, particularly in the renewal
and rehabilitation of the environment during
and in the aftermath of man-made and
natural calamities and disasters;

(10) Recommendation to the sanggunian

and advise to the governor or mayor, as the
case may be, on all matters relative to the
protection, conservation maximum
utilization, application of appropriate
technology and other matters related to the
environment and natural resources
Fisheries Code Sec. 6 With consultation with Fisheries and
Aquatic Resources Management Councils
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(FARMCs), and determination the license Concerned LGUs

fees of fishery activity in municipal waters. (Municipality or
Sec. 8 With consultation with FARMCs, the City)
establishment of catch ceilings in municipal
waters and fishery management areas.
Sec. 9 In consultation with the Secretary of the
Department of Agriculture and FARMCs,
the determination of which municipal
waters, fishery management areas and
other areas reserved for the use of
municipal fisherfolk shall be affected by a
closed season.
Sec. 14 In coordination with the Department of
Agriculture, FARMCs, the private sector
and other agencies, the establishment of a
monitoring, control and surveillance system.
Sec. 15 Determination of fees for the export of all
fish and fishery products (to defray
administrative costs) and issue auxiliary
invoices.
Sec. 16 Enforcement of all fishery laws, rules and
regulations as well as valid fishery
ordinances enacted by the municipality/city
council
may group and coordinate with other LGUs
bordering contiguous fishery resources to
achieve the objectives of the integrated
fishery resource management. The
FARMCs shall serve as their venue.
Sec. 17 Municipal/City council shall have the
authority to grant fishery rights pursuant to
Art. 149 of the Local Government Code
Sec. 18 Municipal or city government may, pursuant
to an ordinance, authorize or permit small
and medium commercial fishing vessels to
operate in municipal waters conditionally.
Sec. 19 Maintenance of a registry of municipal
fisherfolk, who are fishing or may desire to
fish in municipal waters for the purpose of
determining priorities among them, of
limiting entry into the municipal waters, and
of monitoring fishing activities and/or other
related purposes.
In consultation with FARMCs, the
formulation of the necessary mechanisms
for inclusion or exclusion procedures that
shall be most beneficial to resident
municipal fisherfolk.
With assistance of FARMCs, maintenance
of a registry of municipal fishing vessels by
type of gear and other boat particulars.
Sec. 22 Grant of demarcated fishery rights to fishery
organizations/cooperatives for mariculture
operation in specific areas identified by the
Department of Agriculture.
Sec. 23 With the Department of Agriculture, the
determination of whether a municipal water
is overfished or in danger of being
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overfished based on available data or

information.
Prohibition or limitation of fishery activities
in overfished waters or waters in danger of
being overfished.
Sec. 24 With the Department of Agriculture,
provision of support to municipal fisherfolk
through appropriate technology and
research, credit, production and marketing
assistance and other services such as, but
not limited to training for
additional/supplementary livelihood,
Sec. 50 In coordination with the Department, other
concerned agencies and FARMCs,
determination of which abandoned,
undeveloped or underutilized fishponds
covered by Fishpond Lease Agreements
can be reverted lo their original mangrove
state.
The taking of all steps necessary to restore
such areas in their original mangrove state.
Sec. 51 Designation of zones for the construction
and operation of fish pens, fish capes, fish
traps and other structures for the culture of
fish and other fishery products.
In consultation with FARMCs, determination
of the area to be utilized by individuals, for
this purpose.
Sec. 52 The granting of Pearl Farm leases to
qualified persons who possess the
necessary capital and technology.
Sec. 56 In consultation with FARMCs, determination
of the distance from the defined migration
path of migratory fish species within which
there shall be no obstruction, where
construction is prohibited.
Sec. 57 Prescription of minimum standards for fish
hatcheries, fish breeding facilities and
private fishponds; and maintenance a
registry for such.
Sec. 59 Coordination with the private sector and
other concerned agencies and FARMCs in
the establishment of post-harvest facilities
for fishing communities such as, but not
limited to, municipal fish landing sites, fish
ports, ice plants and cold storage and other
fish processing establishments to serve
primarily the needs of municipal fisherfolk.
Sec. 60 Prescription of minimum standards for post-
harvest facilities such as fish processing
plants, ice plants, and cold storages, fish
ports/landings and other fishery business
establishments; and maintenance a registry
for such.
Sec. 62 Through an ordinance, penalization of
fraudulent practices and unlawful
possession or use of instruments of weights
and measures in fishery transactions.
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Sec. 64 (i) Coordination of efforts relating to fishery

production with the BFAR, primary fishery
producers, FARMCs, fishery
organizations/cooperatives.
(j) coordination with the BFAR on the
maintenance of proper sanitation and
hygienic practices in fish markets and fish
landing areas.
(m) coordination with the BFAR and other
concerned agencies for the establishment
of productivity enhancing and market
development programs in fishing
communities to enable women to engage in
other fisheries/economic activities and
contribute significantly to development
efforts
(n) consultation with the BFAR in the
enforcement of all laws, formulation and
enforcement of all rules and regulations
governing the conservation and
management of fishery resources, except in
municipal waters, and to settle conflicts of
resource use and allocation
Sec. 69 Consultation, orientation and assistance to
fisherfolk organizations/cooperatives and
NGOs in the locality in the formation of
FARMCs
Sec. 73 Creation of the Barangay Fisheries and
Aquatic Resources Management Councils
(BFARMCs) and the Lake-wide Fisheries
and Aquatic Resources Management
Councils (LFARMCs whenever necessary.
Sec. 80 In consultation with FARMCs, the
recommendation to the Department of
Agriculture that a portion of the municipal
waters beyond 15 kilometers from the
shoreline be declared as fishery reserves
for special or limited use, for educational,
research, and/or special management
purposes.
Sec. 81 In consultation with the FARMCs, the
establishment of fishery refuges and
sanctuaries in municipal waters.
Sec. 88 Endorsement to the Department of
(1) Agriculture, the use of electricity, poisonous
or noxious substances to catch, take or
gather fish or fishery species, for research,
educational or scientific purposes only,
subject to such safeguards and conditions
deemed necessary,
Sec. 107 The consultation by the Department of
Agriculture in the issuance of Fishery
Administrative Orders or regulations for the
conservation, preservation, management
and sustainable development of fishery and
aquatic resources.
Sec. 124 Authorization of law enforcement officers of
the LGU in the enforcement of this Code
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and other fishery laws, rules and

regulations.
Clean Water Act Sec. 5 Designation of Member to Governing Board Concerned LGU
of Management Area
Sec. 6 The preparation and implementation of
contingency plans and other measures…for
the protection of health and welfare of the
residents within potentially affected areas
within non-attainment areas.
Sec. 7 1. The assistance of DPWH in preparing a
national program for sewerage and septage
management
2. Appropriation of land for construction of
the sewage and/or septage treatment
facilities
3. Raising of funds to subsidize operation
and maintenance expenses of sewerage
treatment or septage facility
Sec. 8 Coordination with the Agency required to
connect existing sewage lines to sewerage
system
Sec. 17 The entrance into agreements with DENR
for incorporation of “programmatic
environmental impact assessment into the
preparation, and the updating or revision of
local land use plans and area development
plans”
Sec. 19 1. The assumption of some responsibility
Sec. 20 regarding some aspects of water quality
management and regulation for the Act in
its territorial jurisdiction upon determination
of the DENR of its readiness and technical
capability
2. prepare compliance scheme
Sec. 21 The coordination with DENR and other
government agencies and private sector to
formulate appropriate incentives for the
adoption procedures that will preserve and
protect our water bodies
Sec. 26 Incentivization for LGU to undertake
effective water quality management and
other programs which will implement the
Act
Sec. 27 “Non-compliance of the LGU with the Water
Quality Framework and Management Area
Action Plan” will subject local government
officials to sanctions
Clean Air Act Sec. 2 Regulation of nuisance and pollution Concerned LGUs
(Republic Act Sec. 8 The Department shall, with public
8749) participation, formulate and implement an
air quality control action plan consistent
with Sec. 7, which will include enforcement
of emission limitations and other control
measures.
Sec. 20
Sec. 21 Ban on incineration
(b) The exhaust emission limit of gaseous
pollutants as a function of the given
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reference mass, for light commercial

Sec. 24 vehicles.
Sec. 31 Pollution from smoking
Sec. 36 Measures of monitoring greenhouse gases
Local Government Units (LGUs) shall
share the responsibility in the
management and maintenance of air
quality within their territorial jurisdiction.
Sec. 39 Public Education and Information
IRR Sec. Campaign
13
Solid waste Sec. 10 Implementation and enforcement of the All LGUs
management provisions of R.A. No. 9003 within their (Province,
under the respective jurisdictions Municipality, City,
Ecological Solid Barangay)
Waste
Management Act
(Republic Act
Sec. 10 Segregation and collection of solid waste, Barangay
9003) specifically for biodegradable, compostable
and reusable wastes
Sec. 10 Collection of non-recyclable materials and Municipality/City
special wastes
Sec. 11 Establishment of Provincial Solid Waste Province
Management Boards
Sec. 12 Establishment of Municipal or City Solid Municipality/City
Waste Management Boards
Sec. 16 Ordering the LGUs concerned to prepare Province,
their respective 10-year solid waste Municipality/City
management plans consistent with the
national solid waste management
framework
Sec. 32 Establishment of LGU Materials Recovery Barangay/Cluster-
Facility Barangay
Sec. 44 Consolidation or coordination of efforts, All LGUs
services, and resources for purposes of
jointly addressing common solid waste
management problems and/or establishing
common waste disposal facilities
National Sec. 5 (d) LGUs shall be advised of the date of LGUs of area
Integrated (5) (i) hearing at least thirty (30) days prior and affected
Protected Areas shall be invited to submit their views on the
System Act proposed action at the hearing not later
(Republic 7586) than thirty (30) days following the date of
the hearing.
Sec. 11 The head of the LGU shall appoint a
(a) representative as a member of the
Protected Area Management Board (except
the Provincial Development Officer who
shall serve ex officio)
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Magna Carta for Sec. 10 The Secretary of Trade and Industry in Concerned LGU
Countryside and consultation with the Secretaries of
Barangay Finance, Labor, and Health, and the local
Enterprises government units shall formulate and
(Kalakalan20) prepare the necessary rules and
(Republic Act regulations to implement the provisions of
6810) this Act within one hundred twenty (120)
days. The rules and regulations issued
pursuant to this section shall take effect
fifteen (15) days after publication in a
newspaper of general circulation and by
such other means as the Secretary of
Trade and Industry may deem reasonably
sufficient to give interested parties general
notice of such issuance.

2.1.2 Congress and Local Legislatures

The legislature participates in ENR management in two significant ways: through the enactment of
ENR legislation and the enactment of appropriation laws. Specific functions were also imposed under
certain ENR laws. A legislative enactment is necessary to establish a protected area under the
NIPAS Act. Congressional oversight committees were created under the Clean Air Act, the
Ecological Solid Waste Management Act, and the Clean Water Act. Table 2 above lists down the
major environmental laws.

Local councils (Sangguniang Panlalawigan, Sangguniang Lungsod/Bayan and Sangguniang

Barangay) exercise legislative functions pursuant to delegated powers granted by Congress. The
scope of these powers is specified in the Local Government Code.

2.1.3 Judiciary

The judiciary influences ENR management through its power of judicial review. Trial courts have
jurisdiction over criminal cases for offenses defined under ENR laws. Meanwhile, in pollution and
mining cases the DENR’s Pollution Adjudication Board and Mines Adjudication Board have exclusive
original jurisdiction, and courts only have appellate jurisdiction. Early in 2008, the Supreme Court
designated45 lower courts as Forestry Courts and 48 first level courts and 24 second level courts to
handle environmental casea, for a total of 117 environmental courts with the jurisdiction to try and
decide violations of environmental laws. This was done based on an inventory and assessment of
pending environmental cases whose objective is to improve efficiency in the administration of justice,
and to provide greater access to environmental justice, by having these courts in places where
environmental violations were shown to be most frequent and by providing judges with specialized
skills and knowledge relevant to the cases prevalent in their area.

Judicial review is defined as the power to settle actual controversies involving rights which are legally
demandable and enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of
the government95. Specifically, courts (i) adjudicate “conflicts and violations that arise out of the
implementation or enforcement of laws dealing with the use of natural resources and impact of
human activities on public health and the ecosystem”96; and decide on the just apportionment of
limited resources97. All single first- and second-level courts are considered special courts for this
purpose

2.1.4 Quasi-judicial agencies

95
Const. (1987), art. VIII, § 1 (Phil.).
96
Consuelo Ynares-Santiago, Framework for Strengthening Environmental Adjudication in the Philippines, Paper
presented at Asian Justices Forum on the Environment, Manila, July 6-7, 2007.
97
Hilario Davide, The Role of Courts in Environmental Protection, in PHILJA Judicial Journal (vol. 6, issue 20, 2004).
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Some executive agencies, such as the Pollution Adjudication Board and the Mines Adjudication
Board, exercise adjudication powers in relation to their function as resource manager. The Laguna
Lake Development Authority also exercises quasi-judicial functions in conjunction with its regulatory
responsibilities in keeping Laguna de Bay clean and productive.

2.1.5 Non-government institutions

Participation by citizens and citizens’ organizations in ENR management can either be through
participation in decision-making and policy making (e.g. as member of the Protected Area
Management Board) or through participation in the direct management of the resource (e.g. through
community-based forest management agreement).

The private sector (generally referring to business or industry sector) participates in environment and
natural resources management in two ways: through corporate social responsibility (CSR) programs
that promote community and environmental health, and in investing in business or industry that
depend on natural resources (e.g. eco-tourism, mining, commercial tree plantations etc). The private
sector is also represented in many multisectoral bodies created under different environmental laws.

No Place Like Manila

EAGLE EYES – Tony La Viña
02 November 2010, Manila Standard Today

In the last 20 years, I have been a constant homo viator, traveling all over the world mostly to work on
environmental issues. My Facebook profile says I have been to 248 cities in 45 countries, although I am
pretty sure I have been to more cities and countries than these. However, as beautiful, grand or otherwise
interesting as all these cities are, to me, there is no place like Metro Manila. After my hometown Cagayan de
Oro, it is Manila that I always look for and always in my mind, as the Hotdog song goes.

It is not that Metro Manila is the most beautiful city in the world. In fact, it is ugly, noisy, dirty, and messy. It
has grown without design and planning, in fact against many good urban development norms. About 13% of
the national population call Metro Manila home; it accounts for about 33% of the country’s gross domestic
product (GDP), so it is no surprise that residents from Bulacan in the north, to Cavite and Laguna in the south,
and Rizal in the east, make the weekly, sometimes even daily trek to the city for work.

Malls sprawl as apartment buildings rise; industries fade as call centers and white-collar businesses take
over; and the network of roads and highways, pipes and sewers, power lines and cell towers grow like vines
on a wall to continually enlarge Metro Manila. The view from the air reveals that Metro Manila is a place built
on water – it should therefore be managed that way. Instead, we have built on Pasig River, Laguna Lake and
other waterways and reclaimed land recklessly. We have also allowed the proliferation of settlements in
unsuitable and dangerous places.

All of these mistakes come together in the problem of pollution in Manila Bay. In 2008, the Supreme Court
had to order its clean-up and, in an unprecedented move, retained jurisdiction over the case on a continuing
mandamus until the executive branch complied with the Court's order. The key agency to making Manila
better is the Metropolitan Manila Development Authority (MMDA). The MMDA is in charge of coordinating the
successful development of the megatropolis, and delivering some basic services common to all its constituent
units, such as traffic management and water, garbage disposal and air quality control, disaster response and
urban land use and zoning regulations. While the MMDA Chairman is not the “mayor” of Metro Manila, he
still exercises similar awesome responsibilities as that godlike mayor of the videogame SimCity, affecting the
lives of over eleven million people who call Metro Manila home. It is an unenviable task.

The MMDA has, at times, courted a measure of controversy, and some voices have clamored for its
dissolution. Such calls are misplaced, though, for even in the absence of the MMDA, Metro Manila will still
need inter-city coordination and management at a high level. Certainly the MMDA can be reformed,
augmented, and streamlined as necessary. Even controversial programs like Metro Manila beautification
should be pursued but in a just and humane manner. The rapid rise of commercial centers like Mall of Asia
and the North EDSA area, beacons of commerce like Makati and Pasig City, call for a well-thought out traffic
management and public transportation scheme that lets roads and commuters breathe freely. As urban
migration and the growth of urban population continue, residential zones must be properly set—and
enforced—with due respect to environmental management and disaster risk reduction, to avoid another
Ondoy. Garbage must be reduced and disposed of safely, while the daily demand for water must be met
without tapping wells dry. These are challenges that no one Metro Manila mayor alone can handle.
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From a psychological point of view, for residents and visitors alike to Metro Manila, the biggest challenge is
unlocking traffic in Epifanio Delos Santos Avenue (EDSA). As one colleague pointed out, we should make
solving this issue a national project because of its potential as a showcase for good governance, and I agree.
There is also historic value in choosing EDSA as a national project, as the highway has become the preferred
venue of our contemporary revolutions. In my view, the MMDA has not been remiss in trying to find solutions
to this problem but it has to try harder and be more creative. Of course, it has to be consultative and get the
support of the people for radical solutions as we saw recently in the opposition to restoring the odd-even
scheme for all vehicles plying the EDSA route.

The task of MMDA may be unenviable, but with a good leader at the helm, accompanied by good policies
and supported by an effective team, I have confidence that it can done. It should be so that for generations
to come, there will always be no place like Manila.
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Chapter Three

Environmental Impact Assessment and Development Planning

3.1 Rationale

In 1977, President Ferdinand Marcos laid down the foundations of a comprehensive policy to protect
the environment through a system of environmental impact assessment. The rationale for the
Philippine Environmental Policy (Presidential Decree No. 1151) was stated as follows:

WHEREAS, the individual and, at times, conflicting demands of population growth,

urbanization, industrial expansion, rapid natural resources utilization and increasing
technological advances have resulted in a piece-meal-approach concept of environmental
protection;

WHEREAS, such tunnel-vision concept is not conducive to the attainment of an ideal

environmental situation where man and nature can thrive in harmony with one another; and

WHEREAS, there is now an urgent need to formulate an intensive, integrated program of

environmental protection that will bring about a concerted effort towards the protection of the
entire spectrum of the environment through a requirement of environmental impact
assessments and statements;

The specific provisions of the policy already hinted at concepts of sustainable development and
intergenerational responsibility that will become buzzwords in decades to come.

Section 1. Policy. - It is hereby declared a continuing policy of the State (a) to create, develop,
maintain, and improve conditions under which man and nature can thrive in productive and
enjoyable harmony with each other, (b) to fulfill the social, economic and other requirements
of present and future generations of Filipino, and (c) to insure the attainment of an
environmental quality that is conducive to a life of dignity and well-being.

Section 2. Goal. - In pursuing this policy, it shall be the responsibility of the Government, in
cooperation with concerned private organizations and entities, to use all practicable means,
consistent with other essential considerations of national policy, in promoting the general
welfare to the end that the Nation may (a) recognize, discharge and fulfill the responsibilities
of each generation as trustee and guardian of the environment for succeeding generations,
(b) to assure the people of a safe, decent, healthful, productive and aesthetic environment, (c)
encourage the widest exploitation of the environment without degrading it, or endangering
human life, health and safety or creating conditions adverse to agriculture, commerce and
industry, (d) preserve important historic and cultural aspects of the Philippine heritage, (e)
attain a rational and orderly balance between population and resource use, and (f) improve
the utilization of renewable and non-renewable resources.

Section 3. Right to a Healthy Environment. -- In furtherance of these goals and policies, the
Government recognizes the right of the people to a healthy environment. It shall be the duty
and responsibility of each individual to contribute to the preservation and enhancement of the
Philippine environment.

Section 4. Environmental Impact Statements. -- Pursuant to the above enunciated policies and
goals, all agencies and instrumentalities of the national government, including government-
owned or controlled corporations, as well as private corporations, firms and entities shall
prepare, file and include in every action, project or undertaking which significantly affects the
quality of the environment a detailed statement on:
• the environmental impact of the proposed action, project or undertaking;
• any adverse environmental effect which cannot be avoided should the proposal be
implemented;
• alternative to the proposed action;
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• a determination that the short-term uses of the resources of the environment are
consistent with the maintenance and enhancement of the long-term productivity of the
same; and
• whenever a proposal involve the use of depletable or non-renewable resources, a
finding must be made that such use and commitment are warranted.

Before an environmental impact statement is issued by a lead agency, all agencies having
jurisdiction over, or special expertise on, the subject matter involved shall comment on the
draft environmental impact statement made by the lead agency within thirty (30) days from
receipt of the same.

The simple requirement for an environmental impact statement has now become an elaborate
process of scientific study, review and stakeholder participation in the evaluation and approval of
development activities that have potential negative impacts on the environment.

The Revised Procedural Manual for DAO 2003-30 defines what an EIA is and its purpose:

Definition - An Environmental Impact Assessment (EIA) is a “process that involves predicting

and evaluating the likely impacts of a project (including cumulative impacts) on the
environment during construction, commissioning, operation and abandonment. It also includes
designing appropriate preventive, mitigating and enhancement measures addressing these
consequences to protect the environment and the community’s welfare”.

Purpose of the EIA Process - As a basic principle, EIA is used to enhance planning and guide
decision-making. In this Manual, EIA is primarily presented in the context of a requirement to
integrate environmental concerns in the planning process of projects at the feasibility stage.
Through the EIA Process, adverse environmental impacts of proposed actions are
considerably reduced through a reiterative review process of project siting, design and other
alternatives, and the subsequent formulation of environmental management and monitoring
plans. A positive determination by the DENR-EMB results to (sic) the issuance of an
Environmental Compliance Commitment (ECC) document, to be conformed to by the
Proponent and represents the project’s Environmental Compliance Certificate. The release of
the ECC allows the project to proceed to the next stage of project planning, which is the
acquisition of approvals from other government agencies and LGUs, after which the project
can start implementation.

The EIA Process in Relation to the Project Cycle - a) The EIA study shall determine the
environmental impacts of the project and shall provide recommendations/guidance at various
stages of the project cycle. It is during the Feasibility Study (FS) stage when a Proponent
defines its range of actions and consider project alternatives, thus, it is the most ideal stage in
the project cycle wherein the EIA study will have most added value. EIA documents are ideally
prepared when prospective proposals are more concrete than mere concept and are
preferably available before the project has reached a stage of investment or commitment
towards implementation. Proponents are in fact directed under Malacanang Administrative
Order No. 42 to conduct simultaneously the environmental impact study and the project
planning or Feasibility Study (FS).

xxx

The Environmental Impact Statement that is based on an EIA process is a generic tool to be used
by project proponents in evaluating the potential environmental effects of their proposed projects.
While this is a useful tool, it does not describe the specific targets of government in pursuing
economic development while protecting the environment. For that we need to look at the
development plans of government, specifically, the national development plan and local development
plans of LGUs.

Section 3.2 looks at the legal requirements for the project-based EIA process, and the requirements
and guidelines for local development planning. Section 3.3 provides a snapshot of the Philippine
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Development Plan (2017-2022) as it relates to the goals of protecting the environment and
conserving natural resources.

3.2 Legal framework

Presidential Decree No. 1586 provides the legal basis for requiring an EIA that the project proponent
then reports to the government to secure an Environmental Compliance Certificate. There is a very
wide range of projects covered by the System and each type of project may require project-specific
studies. The President listed down the various categories of environmentally critical projects and
well as areas that are most vulnerable (environmentally critical) to ensure careful consideration of
the impacts of development activities on the environment.

Establishing An Environmental Impact Statement System xxx

Presidential Decree No. 1586 (1978)
Section 1. Policy. - It is hereby declared the policy of the State to attain and maintain a
rational and orderly balance between socio-economic growth and environmental
protection.
Section 2. Environmental Impact Statement System. - There is hereby established a
Environmental Impact Statement System founded and based on the environmental
impact statement required, under Section 4 of Presidential Decree No. 1151, of all
agencies and instrumentalities of the national government, including government-
owned or controlled corporations, as well as private corporations, firms and entities for
every proposed project and undertaking which significantly affect the quality of the
environment.
xxx
Section 4. Presidential Proclamation of Environmentally Critical Areas and Projects. -
The President of the Philippines may, on his own initiative or upon recommendation of
the National Environmental Protection Council, by proclamation declare certain
projects, undertakings or areas in the country as environmentally critical. No person,
partnership or corporation shall undertake or operate any such declared
environmentally critical project or area without first securing an Environmental
Compliance Certificate issued by the President or his duly authorized representative.
xxx
Section 5. Environmentally Non-Critical Projects. - All other projects, undertakings and
areas not declared by the Presidents as environmentally critical shall be considered as
non-critical and shall not be required to submit an environmental impact statement. The
National Environmental Protection Council, thru the Ministry of Human Settlements may
however require non-critical projects and undertakings to provide additional
environmental safeguards as it may deem necessary.
Section 9. Penalty for Violation. - Any person, corporation or partnership found violating
Section 4 of this Decree, or the terms and conditions in the issuance of the
Environmental Compliance Certificate, or of the standards, rules and regulations issued
by the National Environmental Protection Council (now the Environmental Management
Bureau- DENR) pursuant to this Decree shall be punished the suspension or
cancellation of his/its certificate and/or a fine in an amount not to exceed fifty thousand
pesos (50,000.00) for every violation thereof, at the discretion of the National
Environmental Protection Council.
Section 10. Environmental Revolving Fund. - Proceeds from the penalties prescribed in
the preceding Section 9 and other penalties imposed by the National Pollution Control
Commission (now EMB-DENR) as authorized in P.D. 984 shall be automatically
appropriated into an Environment Revolving Fund hereby created as an exemption to
P.D. 711 and P.D. 1234. The fund shall be used exclusively for the operations of the
National Environmental Protection Council and the National Pollution Control
Commission in the implementation of this Decree. The rules and regulations for the
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utilization of this fund shall be formulated by the Ministry of Human Settlements and
submitted to the President for approval.
Based on Section 4 of PD 1586, Presidential Proclamation No. 2146 was issued on December 14,
1981, proclaiming the following areas and types of projects as environmentally critical and within the
scope of the Environmental Impact Statement System:
A. Environmentally Critical Projects
I. Heavy Industries
a. Non-ferrous metal industries
b. Iron and steel mills
c. Petroleum and petro-chemical industries including oil and gas
d. Smelting plants
II. Resource Extractive Industries
a. Major mining and quarrying projects
b. Forestry projects
1. Logging
2. Major wood processing projects
3. Introduction of fauna (exotic-animals) in public/private forests
4. Forest occupancy
5. Extraction of mangrove products
6. Grazing
c. Fishery Projects
1. Dikes for/and fishpond development projects

III. Infrastructure Projects

a. Major dams
b. Major power plants (fossil-fueled, nuclear fueled, hydroelectric or geothermal)
c. Major reclamation projects
d. Major roads and bridges

B. Environmentally Critical Areas

1. All areas declared by law as national parks, watershed reserves, wildlife preserves and
sanctuaries;
2. Areas set aside as aesthetic potential tourist spots;
3. Areas which constitute the habitat for any endangered or threatened species of
indigenous Philippine Wildlife (flora and fauna);
4. Areas of unique historic, archaeological, or scientific interests;
5. Areas which are traditionally occupied by cultural communities or tribes;
6. Areas frequently visited and/or hard-hit by natural calamities (geologic hazards, floods,
typhoons, volcanic activity, etc.);
7. Areas with critical slopes;
8. Areas classified as prime agricultural lands;
9. Recharged areas of aquifers;
10.Water bodies characterized by one or any combination of the following conditions;
a. tapped for domestic purposes
b. within the controlled and/or protected areas declared by appropriate authorities
c. which support wildlife and fishery activities
11.Mangrove areas characterized by one or any combination of the following conditions:
a. with primary pristine and dense young growth;
b. adjoining mouth of major river systems;
c. near or adjacent to traditional productive fry or fishing grounds;
d. which act as natural buffers against shore erosion, strong winds and storm floods;
e. on which people are dependent for their livelihood.
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12. Coral reefs, characterized by one or any combinations of the following conditions:
a. with 50% and above live coralline cover;
b. spawning and nursery grounds for fish;
c. which act as natural breakwater of coastlines.

Implementing Rules and Regulations (IRR) for the

Philippine Environmental Impact Statement (EIS) System
DENR Administrative Order No. 2003-30

Section 1. Basic Policy and Operating Principles

Consistent with the principles of sustainable development, it is the policy of the DENR to
implement a systems-oriented and integrated approach to the EIS system to ensure a rational
balance between socio-economic development and environmental protection for the benefit of
present and future generations.

The following are the key operating principles in the implementation of the Philippine EIS
System:
a) The EIS System is concerned primarily with assessing the direct and indirect impacts
of a project on the biophysical and human environment and ensuring that these impacts
are addressed by appropriate environmental protection and enhancement measures.
b) The EIS System aids proponents in incorporating environmental considerations in
planning their projects as well as in determining the environment’s impact on their
project.
c) Project proponents are responsible for determining and disclosing all relevant
information necessary for a methodical assessment of the environmental impacts of
their projects;
d) The review of the EIS by EMB shall be guided by three general criteria: (1) that
environmental considerations are integrated into the overall project planning, (2) that
the assessment is technically sound and proposed environmental mitigation measures
are effective, and (3) that social acceptability is based on informed public participation;
e) Effective regulatory review of the EIS depends largely on timely, full, and accurate
disclosure of relevant information by project proponents and other stakeholders in the
EIA process;
f) The social acceptability of a project is a result of meaningful public participation, which
shall be assessed as part of the Environmental Compliance Certificate (ECC)
application, based on concerns related to the project’s environmental impacts;
g) The timelines prescribed by this Order, within which an Environmental Compliance
Certificate must be issued or denied, apply only to processes and actions within the
Environmental Management Bureau’s (EMB) control and do not include actions or
activities that are the responsibility of the proponent.

Section 2. Objective
The objective of this Administrative Order is to rationalize and streamline the EIS System to
make it more effective as a project planning and management tool by:
h) Making the System more responsive to the demands and needs of the project
proponents and the various stakeholders;
i) Clarifying the coverage of the System, and updating it to take into consideration
industrial and technological innovations and trends;
j) Standardizing requirements to ensure focus on critical environment parameters;
k) Simplifying procedures for processing ECC applications, and establishing measures to
ensure adherence to ECC conditions by project proponents, and
l) Assuring that critical environmental concerns are addressed during project development
and implementation.
xxx

Section 4. Scope of the EIS System

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4.1 In general, only projects that pose potential significant impact to the environment shall be
required to secure ECC’s. In coordination with the Department of Trade and Industry (DTI)
and other concerned government agencies, the EMB is authorized to update or make
appropriate revisions to the technical guidelines for EIS System implementation.

4.2 The issuance of ECC or CNC for a project under the EIS System does not exempt the
proponent from securing other government permits and clearances as required by other laws.
In determining the scope of the EIS System, two factors are considered: (i) the nature of the
project and its potential to cause significant negative environmental impacts, and (ii) the
sensitivity or vulnerability of environmental resources in the project area.

4.3 The specific criteria for determining projects or undertakings to be covered by the EIS
System are as follows:
1. Characteristics of the project or undertaking
• Size of the project
• Cumulative nature of impacts vis-à-vis other projects
• Use of natural resources
• Generation of waste and environment-related nuisance
• Environment-related hazards and risk of accidents
2. Location of the Project
• Vulnerability of the project area to disturbances due to its ecological
• importance, endangered or protected status
• Conformity of the proposed project to existing land use, based on
• approved zoning or on national laws and regulations
• Relative abundance, quality and regenerative capacity of natural
resources in the area, including the impact absorptive capacity of the environment
3. Nature of the potential impact
• Geographic extent of the impact and size of affected population
• Magnitude and complexity of the impact
• Likelihood, duration, frequency, and reversibility of the impact

The following are the categories of projects/undertakings under the EIS system:

Category A. Environmentally Critical Projects (ECPs) with significant potential to cause

negative environmental impacts

Category B. Projects that are not categorized as ECPs, but which may cause negative
environmental impacts because they are located in Environmentally Critical Areas (ECA's)

Category C. Projects intended to directly enhance environmental quality or address existing

environmental problems not falling under Category A or B.

Category D. Projects unlikely to cause adverse environmental impacts.

4.4 Proponents of co-located or single projects that fall under Category A and B are required
to secure ECC. For co-located projects, the proponent has the option to secure a
Programmatic ECC. For ecozones, ECC application may be programmatic based on
submission of a programmatic EIS, or locator-specific based on submission of project EIS by
each locator.

4.5 Projects under Category C are required submit Project Description.

4.6 Projects classified under Category D may secure a CNC. The EMB-DENR, however, may
require such projects or undertakings to provide additional environmental safeguards as it may
deem necessary.

4.7 Projects/undertakings introducing new technologies or construction technique but which

may cause significant negative environmental impacts shall be required to submit a Project
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Description which will be used as basis by EMB for screening the project and determining its
category.

5.2.1. Environmental Impact Statement (EIS).

The EIS should contain at least the following:
1. EIS Executive Summary;
2. Project Description;
3. Matrix of the scoping agreement identifying critical issues and concerns,
as validated by EMB;
4. Baseline environmental conditions focusing on the sectors (and
resources) most significantly affected by the proposed action;
5. Impact assessment focused on significant environmental impacts (in relation to project
construction/commissioning, operation and
decommissioning), taking into account cumulative impacts;
6. Environmental Risk Assessment if determined by EMB as necessary
during scoping;
7. Environmental Management Program/Plan;
8. Supporting documents, including technical/socio-economic data
used/generated; certificate of zoning viability and municipal land use plan;
and proof of consultation with stakeholders;
9. Proposals for Environmental Monitoring and Guarantee Funds including
justification of amount, when required;
10. Accountability statement of EIA consultants and the project proponent;
and
11. Other clearances and documents that may be determined and agreed
upon during scoping.

5.2.2. Initial Environmental Examination (IEE) Report

IEE Report is similar to an EIS, but with reduced details of data and depth of assessment and
discussion.

It may be customized for different types of projects under Category B. The EMB shall
coordinate with relevant government agencies and the private sector to customize and update
IEE Checklists to further streamline ECC processing, especially for small and medium
enterprises.
xxx

5.2.5. Environmental Performance Report and Management Plan (EPRMP).

The EPRMP shall contain the following:
1. Project Description;
2. Baseline conditions for critical environmental parameters;
3. Documentation of the environmental performance based on the
current/past environmental management measures implemented;
4. Detailed comparative description of the proposed project expansion and/or process
modification with corresponding material and energy balances in the case of process
industries, and
5. EMP based on an environmental management system framework and standard set by
EMB.

5.2.6. Project Description (PD)

The PD shall be guided by the definition of terms and shall contain the following:
1. Description of the project;
2. Location and area covered;
3. Capitalization and manpower requirement;
4. For process industries, a listing of raw materials to be used, description of
the process or manufacturing technology, type and volume of products and
discharges:
5. For Category C projects, a detailed description on how environmental
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efficiency and overall performance improvement will be attained, or how an existing

environmental problem will be effectively solved or mitigated by the project, and
6. A detailed location map of the impacted site showing relevant features (e.g. slope,
topography, human settlements).
7. Timelines for construction and commissioning

5.3 Public Hearing / Consultation Requirements

For projects under Category A-1, the conduct of public hearing as part of the EIS review is
mandatory unless otherwise determined by EMB. For all other undertakings, a public hearing
is not mandatory unless specifically required by EMB.

Proponents should initiate public consultations early in order to ensure that environmentally
relevant concerns of stakeholders are taken into consideration in the EIA study and the
formulation of the management plan. All public consultations and public hearings conducted
during the EIA process are to be documented. The public hearing/ consultation Process report
shall be validated by the EMB/EMB RD and shall constitute part of the records of the EIA
process.

5.3 Public Hearing / Consultation Requirements

For projects under Category A-1, the conduct of public hearing as part of the EIS review is
mandatory unless otherwise determined by EMB. For all other undertakings, a public hearing
is not mandatory unless specifically required by EMB.

Proponents should initiate public consultations early in order to ensure that environmentally
relevant concerns of stakeholders are taken into consideration in the EIA study and the
formulation of the management plan. All public consultations and public hearings conducted
during the EIA process are to be documented. The public hearing/ consultation Process report
shall be validated by the EMB/EMB RD and shall constitute part of the records of the EIA
process.

5.4 Documentation Requirements for DENR-EMB and EIA Reviewers

The EMB Central Office as well as the EMB Regional Offices shall document the proceedings
of the ECC application process and shall set up and maintain relevant information
management systems. The documentation shall, at a minimum, include the following:

5.4.1. Review Process Report

This is to be prepared by the EMB Central or EMB RO. It is to be forwarded to the DENR
Secretary or RD as reference for decision-making and maintained as part of the records on
the ECC application. The report should contain at least the following:
1. Summary of the environmental impacts of the undertaking, along with the proposed
mitigation and enhancement measures;
2. Key issues/concerns and the proponent's response to these;
3. Documentation of compliance with procedural requirements;
4. Acceptability of proposed EMP including the corresponding cost of
mitigation, EGF and EMF if required;
5. Key bases for the decision on the ECC application.

5.4.2. EIARC Report

This report, to be prepared by the EIA Review Committee, forms part of the EIS review
documentation. The EIARC Report shall be written by the designated member of the EIARC
and signed by all the members within five days after the final review meeting. If an EIARC
member dissents, he or she must submit a memorandum to the EMB Director through the
EIARC Chairman his or her reasons for dissenting.
At a minimum the EIARC report should contain:
1. Detailed assessment of the proposed mitigation and enhancement measures for the
identified environmental impacts and risks;
2. Description of residual or unavoidable environmental impacts despite proposed
mitigation measures;
3. Documentation of compliance with technical/substantive review criteria;
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4. Key issues/concerns and the proponent's response to these, including

social acceptability measures;
5. Assessment of the proposed EMP (including risk reduction/management
plan) and amounts proposed for the Environmental Guarantee Fund and
the Environmental Monitoring Fund, and
6. Recommended decision regarding the ECC application as well as
proposed ECC conditions.

5.4.3. Decision Document

This is an official letter regarding the decision on the application. It may be in the form of an
Environmental Compliance Certificate or a Denial Letter. The ECC shall contain the scope and
limitations of the approved activities, as well as conditions to ensure compliance with the
Environmental Management Plan. The ECC shall also specify the setting up of an EMF and
EGF, if applicable. No ECC shall be released until the proponent has settled all liabilities, fines
and other obligations with DENR.
A Denial Letter on the other hand shall specify the bases for the decision.

The ECC or Denial Letter shall be issued directly to the project proponent or its duly authorized
representative, and receipt of the letter shall be properly documented.

The ECC of a project not implemented within five years from its date of issuance is deemed
expired. The Proponent shall have to apply for a new ECC if it intends to pursue the project.
The reckoning date of project implementation is the date of ground breaking, based on the
proponent’s work plan as submitted to the EMB.
xxx

Section 9. Monitoring of Projects with ECCs

Post ECC monitoring of projects shall follow these guidelines. Other details on requirements
for monitoring of projects with ECC’s shall be stipulated in a procedural manual to be
formulated by EMB.

9.1 Multipartite Monitoring Team

For projects under Category A, a multi-partite monitoring team (MMT) shall be formed
immediately after the issuance of an ECC. Proponents required to establish an MMT shall put
up an Environmental Monitoring Fund (EMF) not later than the initial construction phase of the
project.

The MMT shall be composed of representatives of the proponent and of stakeholder groups,
including representatives from concerned LGU's, locally accredited NGOs/POs, the
community, concerned EMB Regional Office, relevant government agencies, and other
sectors that may be identified during the negotiations. The team shall be tasked to undertake
monitoring of compliance with ECC conditions as well as the EMP. The MMT shall submit a
semi-annual monitoring report within January and July of each year.

The EMB shall formulate guidelines for operationalizing area-based or cluster- based MMT.
The Bureau may also develop guidelines for delegating monitoring responsibilities to other
relevant government agencies as may be deemed necessary.

For projects whose significant environmental impacts do not persist after the construction
phase or whose impacts could be addressed through other regulatory means or through the
mandates of other government agencies, the operations of MMT may be terminated
immediately after construction or after a reasonable period during implementation.

9.2 Self-monitoring and Third Party Audit

The proponent shall also conduct regular self-monitoring of specific parameters indicated in
the EMP through its environmental unit. The proponent’s environmental unit shall submit a
semi-annual monitoring report within January and July of each year.
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For projects with ECCs issued based on a PEPRMP, EPRMP, or an EMS-based EMP, a third
party audit may be undertaken by a qualified environmental or EMS auditor upon the initiative
of the proponent and in lieu of forming an MMT. The said proponent shall submit to EMB a
copy of the audit findings and shall be held accountable for the veracity of the report. The EMB
may opt to validate the said report.

9.3 Environmental Guarantee Fund

An Environmental Guarantee Fund (EGF) shall be established for all co-located or single
projects that have been determined by DENR to pose a significant public risk or where the
project requires rehabilitation or restoration. An EGF Committee shall be formed to manage
the fund. It shall be composed of representatives from the EMB Central Office, EMB Regional
Office, affected communities, concerned LGU's, and relevant government agencies identified
by EMB.

An integrated MOA on the MMT-EMF-EGF shall be entered into among the EMB Central
Office, EMB Regional Office, the proponent, and representatives of concerned stakeholders.

To supplement the details provided in the Implementing Rules and Regulations of the EIS System,
and to facilitate the preparation EIAs and processing of ECCs, the DENR adopted a procedural
manual that guides preparers and evaluators step-by-step in complying with the requirements
(Revised Procedural Manual for DAO 2003-30, August 2007).

In the case of Republic vs City of Davao, the Supreme Court had an opportunity to scrutinize the
power of the DENR in deciding what to require of a development project that has potential negative
environmental impacts.

Republic vs. City of Davao

G.R. No. 148622, September 12, 2002
Ynares-Santiago, J., ponente
xxx On August 11, 2000, respondent filed an application for a Certificate of Non-
Coverage (CNC) for its proposed project, the Davao City Artica Sports Dome, with the
Environmental Management Bureau (EMB), Region XI. Attached to the application
were the required documents for its issuance, namely, a) detailed location map of the
project site; b) brief project description; and c) a certification from the City Planning and
Development Office that the project is not located in an environmentally critical area
(ECA). The EMB Region XI denied the application after finding that the proposed
project was within an environmentally critical area and ruled that, pursuant to Section 2,
Presidential Decree No. 1586, otherwise known as the Environmental Impact Statement
System, in relation to Section 4 of Presidential Decree No, 1151, also known as the
Philippine Environment Policy, the City of Davao must undergo the environmental
impact assessment (EIA) process to secure an Environmental Compliance Certificate
(ECC), before it can proceed with the construction of its project.
Believing that it was entitled to a Certificate of Non-Coverage, respondent filed a petition
for mandamus and injunction with the Regional Trial Court of Davao, docketed as Civil
Case No. 28,133-2000. It alleged that its proposed project was neither an
environmentally critical project nor within an environmentally critical area; thus it was
outside the scope of the EIS system. Hence, it was the ministerial duty of the DENR,
through the EMB-Region XI, to issue a CNC in favor of respondent upon submission of
the required documents.
The Regional Trial Court rendered judgment in favor of respondent,
xxx
With the supervening change of administration, respondent, in lieu of a comment, filed
a manifestation expressing its agreement with petitioner that, indeed, it needs to secure
an ECC for its proposed project. It thus rendered the instant petition moot and
academic. However, for the guidance of the implementors of the EIS law and pursuant
to our symbolic function to educate the bench and bar, we are inclined to address the
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issue raised in this petition.

Section 15 of Republic Act 7160, otherwise known as the Local Government Code,
defines a local government unit as a body politic and corporate endowed with powers
to be exercised by it in conformity with law. As such, it performs dual functions,
governmental and proprietary. Governmental functions are those that concern the
health, safety and the advancement of the public good or welfare as affecting the public
generally. Proprietary functions are those that seek to obtain special corporate benefits
or earn pecuniary profit and intended for private advantage and benefit. When
exercising governmental powers and performing governmental duties, an LGU is an
agency of the national government. When engaged in corporate activities, it acts as an
agent of the community in the administration of local affairs.
Found in Section 16 of the Local Government Code is the duty of the LGUs to promote
the people’s right to a balanced ecology. Pursuant to this, an LGU, like the City of
Davao, cannot claim exemption from the coverage of PD 1586. As a body politic
endowed with governmental functions, an LGU has the duty to ensure the quality of the
environment, which is the very same objective of PD 1586.
xxx
Section 4 of PD 1586 clearly states that “no person, partnership or corporation shall
undertake or operate any such declared environmentally critical project or area without
first securing an Environmental Compliance Certificate issued by the President or his
duly authorized representative.” The Civil Code defines a person as either natural or
juridical. The state and its political subdivisions, i.e., the local government units are
juridical persons. Undoubtedly therefore, local government units are not excluded from
the coverage of PD 1586.
Lastly, very clear in Section 1 of PD 1586 that said law intends to implement the policy
of the state to achieve a balance between socio-economic development and
environmental protection, which are the twin goals of sustainable development. The
above-quoted first paragraph of the Whereas clause stresses that this can only be
possible if we adopt a comprehensive and integrated environmental protection
program where all the sectors of the community are involved, i.e., the government and
the private sectors. The local government units, as part of the machinery of the
government, cannot therefore be deemed as outside the scope of the EIS system.
The foregoing arguments, however, presuppose that a project, for which an
Environmental Compliance Certificate is necessary, is environmentally critical or within
an environmentally critical area. In the case at bar, respondent has sufficiently shown
that the Artica Sports Dome will not have a significant negative environmental impact
because it is not an environmentally critical project and it is not located in an
environmentally critical area. In support of this contention, respondent submitted the
following:
1. Certification from the City Planning and Development Office that the project
is not located in an environmentally critical area;
2. Certification from the Community Environment and Natural Resources Office
(CENRO-West) that the project area is within the 18-30% slope, is outside the scope of
the NIPAS (R.A. 7586), and not within a declared watershed area; and
3. Certification from PHILVOCS that the project site is thirty-seven (37)
kilometers southeast of the southernmost extension of the Davao River Fault and forty-
five (45) kilometers west of the Eastern Mindanao Fault; and is outside the required
minimum buffer zone of five (5) meters from a fault zone.
The trial court, after a consideration of the evidence, found that the Artica Sports Dome
is not within an environmentally critical area. Neither is it an environmentally critical
project. It is axiomatic that factual findings of the trial court, when fully supported by the
evidence on record, are binding upon this Court and will not be disturbed on appeal.
This Court is not a trier of facts.
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xxx
Under Article II, Section 1, of the Rules and Regulations Implementing PD 1586, the
declaration of certain projects or areas as environmentally critical, and which shall fall
within the scope of the Environmental Impact Statement System, shall be by
Presidential Proclamation, in accordance with Section 4 of PD 1586 quoted above.
Pursuant thereto, Proclamation No. 2146 was issued on December 14, 1981,
proclaiming the following areas and types of projects as environmentally critical and
within the scope of the Environmental Impact Statement System established under PD
1586:

xxx
The Artica Sports Dome in Langub does not come close to any of the projects or areas
enumerated above. Neither is it analogous to any of them. It is clear, therefore, that the
said project is not classified as environmentally critical, or within an environmentally
critical area. Consequently, the DENR has no choice but to issue the Certificate of Non-
Coverage. It becomes its ministerial duty, the performance of which can be compelled
by writ of mandamus, such as that issued by the trial court in the case at bar.
In the case above, it seems that the Court made a technical evaluation that the project was not
environmentally critical or located in an environmentally critical area. How did it determine this factual
(and technical) issue? Should it have been more appropriate for the Court to allow the DENR to
modify its decision, since it is the agency vested with the power to evaluate and decide?

In a more recent case, the issue of the enforcement of a reclamation project in the Province of Aklan,
specifically Boracay Island, was raised and decided upon by the Supreme Court. In this case, the
actions of the DENR as the administrator of the EIS system, and the Province of Aklan as the project
proponent, were called into question.

Boracay Foundation Inc. vs. The Province of Aklan represented by Governor

Carlito S. Marquez, The Philippine Reclamation Authority, and the DENR-EMB
(Region VI)
G.R. No. 196870, June 26, 2012

Leonardo-De Castro, J, ponente

Petitioner Boracay Foundation, Inc. (petitioner) is a duly registered, non-stock domestic

corporation. Its primary purpose is “to foster a united, concerted and environment-
conscious development of Boracay Island, thereby preserving and maintaining its
culture, natural beauty and ecological balance, marking the island as the crown jewel of
Philippine tourism, a prime tourist destination in Asia and the whole world.” It counts
among its members at least sixty (60) owners and representatives of resorts, hotels,
restaurants, and similar institutions; at least five community organizations; and several
environmentally-conscious residents and advocates.

Respondent Province of Aklan (respondent Province) is a political subdivision of the

government created pursuant to Republic Act No. 1414, represented by Honorable
Carlito S. Marquez, the Provincial Governor (Governor Marquez).

Respondent Philippine Reclamation Authority (respondent PRA), formerly called the

Public Estates Authority (PEA), is a government entity created by Presidential Decree
No. 1084, which states that one of the purposes for which respondent PRA was created
was to reclaim land, including foreshore and submerged areas. PEA eventually
became the lead agency primarily responsible for all reclamation projects in the country
under Executive Order No. 525, series of 1979. In June 2006, the President of the
Philippines issued Executive Order No. 543, delegating the power “to approve
reclamation projects to PRA through its governing Board, subject to compliance with
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existing laws and rules and further subject to the condition that reclamation contracts to
be executed with any person or entity (must) go through public bidding.”

Respondent Department of Environment and Natural Resources – Environmental

Management Bureau (DENR-EMB), Regional Office VI (respondent DENR-EMB RVI),
is the government agency in the Western Visayas Region authorized to issue
environmental compliance certificates regarding projects that require the environment’s
protection and management in the region.

xxx

Boracay Island (Boracay), a tropical paradise located in the Western Visayas region of
the Philippines and one of the country’s most popular tourist destinations, was declared
a tourist zone and marine reserve in 1973 under Presidential Proclamation No. 1801.
The island comprises the barangays of Manoc-manoc, Balabag, and Yapak, all within
the municipality of Malay, in the province of Aklan.

xxx

More than a decade ago, respondent Province built the Caticlan Jetty Port and
Passenger Terminal at Barangay Caticlan to be the main gateway to Boracay. It also
built the corresponding Cagban Jetty Port and Passenger Terminal to be the receiving
end for tourists in Boracay. Respondent Province operates both ports “to provide
structural facilities suited for locals, tourists and guests and to provide safety and
security measures.”

In 2005, Boracay 2010 Summit was held and participated in by representatives from
national government agencies, local government units (LGUs), and the private sector.
Petitioner was one of the organizers and participants thereto. The Summit aimed “to
re-establish a common vision of all stakeholders to ensure the conservation, restoration,
and preservation of Boracay Island” and “to develop an action plan that [would allow] all
sectors to work in concert among and with each other for the long term benefit and
sustainability of the island and the community.” The Summit yielded a Terminal Report
stating that the participants had shared their dream of having world-class land, water
and air infrastructure, as well as given their observations that government support was
lacking, infrastructure was poor, and, more importantly, the influx of tourists to Boracay
was increasing. The Report showed that there was a need to expand the port facilities
at Caticlan due to congestion in the holding area of the existing port, caused by
inadequate facilities, thus tourists suffered long queues while waiting for the boat ride
going to the island.

The Sangguniang Barangay of Caticlan, Malay Municipality, issued Resolution No. 13,
s. 2008 on April 25, 2008 stating that it had learned that respondent Province had filed
an application with the DENR for a foreshore lease of areas along the shorelines of
Barangay Caticlan, and manifesting its strong opposition to said application, as the
proposed foreshore lease practically covered almost all the coastlines of said barangay,
thereby technically diminishing its territorial jurisdiction, once granted, and depriving its
constituents of their statutory right of preference in the development and utilization of
the natural resources within its jurisdiction.

xxx

On November 20, 2008, the Sangguniang Panlalawigan of respondent Province

approved Resolution No. 2008-369, formally authorizing Governor Marquez to enter
into negotiations towards the possibility of effecting self-liquidating and income-
producing development and livelihood projects to be financed through bonds,
debentures, securities, collaterals, notes or other obligations as provided under Section
299 of the Local Government Code, with the following priority projects: (a)
renovation/rehabilitation of the Caticlan/Cagban Passenger Terminal Buildings and
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Jetty Ports; and (b) reclamation of a portion of Caticlan foreshore for commercial
purposes.

xxx

Governor Marquez sent a letter to respondent PRA on March 12, 2009 expressing the
interest of respondent Province to reclaim about 2.64 hectares of land along the
foreshores of Barangay Caticlan, Municipality of Malay, Province of Aklan.

In April 2009, respondent Province entered into an agreement with the Financial
Advisor/Consultant that won in the bidding process held a month before, to conduct the
necessary feasibility study of the proposed project for the Renovation/Rehabilitation of
the Caticlan Passenger Terminal Building and Jetty Port, Enhancement and Recovery
of Old Caticlan Coastline, and Reclamation of a Portion of Foreshore for Commercial
Purposes (the Marina Project), in Malay, Aklan.

Subsequently, on May 7, 2009, the Sangguniang Panlalawigan of respondent Province

issued Resolution No. 2009–110, which authorized Governor Marquez to file an
application to reclaim the 2.64 hectares of foreshore area in Caticlan, Malay, Aklan
with respondent PRA.

xxx

The Sangguniang Bayan of the Municipality of Malay expressed its strong opposition to
the intended foreshore lease application, throughResolution No. 044, approved on July
22, 2009, manifesting therein that respondent Province’s foreshore lease application
was for business enterprise purposes for its benefit, at the expense of the local
government of Malay, which by statutory provisions was the rightful entity “to develop,
utilize and reap benefits from the natural resources found within its jurisdiction.”

xxx

Governor Marquez submitted an Environmental Performance Report and

Monitoring Program (EPRMP) to DENR-EMB RVI, which he had attached to his letter
dated September 19, 2009, as an initial step for securing an Environmental Compliance
Certificate (ECC).

xxx

On November 19, 2009, the Sangguniang Panlalawigan enacted Resolution No. 2009-
299 authorizing Governor Marquez to enter into a Memorandum of Agreement (MOA)
with respondent PRA in the implementation of the Beach Zone Restoration and
Protection Marina Development Project, which shall reclaim a total of 40 hectares in
the areas adjacent to the jetty ports at Barangay Caticlan and Barangay Manoc-
manoc. The Sangguniang Panlalawigan approved the terms and conditions of the
necessary agreements for the implementation of the bond flotation of respondent
Province to fund the renovation/rehabilitation of the existing jetty port by way of
enhancement and recovery of the Old Caticlan shoreline through reclamation of an area
of 2.64 hectares in the amount of P260,000,000.00 on December 1, 2009.

xxx

On April 27, 2010, DENR-EMB RVI issued to respondent Province ECC-R6-1003-096-

7100 (the questioned ECC) for Phase 1 of the Reclamation Project to the extent of 2.64
hectares to be done along the Caticlan side beside the existing jetty port.

xxx
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Petitioner claims that during the “public consultation meeting” belatedly called by
respondent Province on June 17, 2010, respondent Province presented the
Reclamation Project and only then detailed the actions that it had already undertaken,
particularly: the issuance of the Caticlan Super Marina Bonds; the execution of the MOA
with respondent PRA; the alleged conduct of an Environmental Impact Assessment
(EIA) study for the reclamation project; and the expansion of the project to forty (40)
hectares from 2.64 hectares.

In Resolution No. 046, Series of 2010, adopted on June 23, 2010, the Malay
Municipality reiterated its strong opposition to respondent Province’s project
and denied its request for a favorableendorsement of the Marina Project.
xxx

In the meantime, a study was commissioned by the Philippine Chamber of Commerce

and Industry-Boracay (PCCI-Boracay), funded by the Department of Tourism
(DOT) with the assistance of, among others, petitioner. The study was conducted in
November 2010 by several marine biologists/experts from the Marine Environmental
Resources Foundation (MERF) of the UPMSI. The study was intended to determine
the potential impact of a reclamation project in the hydrodynamics of the strait and on
the coastal erosion patterns in the southern coast of Boracay Island and along the coast
of Caticlan.

xxx

Dr. Villanoy said that the subject project, consisting of 2.64 hectares, would only
have insignificant effect on the hydrodynamics of the strait traversing the coastline of
Barangay Caticlan and Boracay, hence, there was a distant possibility that it would
affect the Boracay coastline, which includes the famous white-sand beach of the island.

Thus, on April 6, 2011, the Sangguniang Panlalawigan of Aklan enacted Resolution

No. 2011-065 noting the report on the survey of the channel between Caticlan and
Boracay conducted by the UPMSI in relation to the effects of the ongoing reclamation
to Boracay beaches, and stating that Dr. Villanoy had admitted that nowhere in their
study was it pointed out that there would be an adverse effect on the white-sand beach
of Boracay.

On June 1, 2011, petitioner filed the instant Petition for Environmental Protection
Order/Issuance of the Writ of Continuing Mandamus. On June 7, 2011, this Court
issued a Temporary Environmental Protection Order (TEPO) and ordered the
respondents to file their respective comments to the petition.

After receiving a copy of the TEPO on June 9, 2011, respondent Province immediately
issued an order to the Provincial Engineering Office and the concerned contractor to
cease and desist from conducting any construction activities until further orders from
this Court.

The petition is premised on the following grounds:

I.

THE RESPONDENT PROVINCE, PROPONENT OF THE RECLAMATION PROJECT,

FAILED TO COMPLY WITH RELEVANT RULES AND REGULATIONS IN THE
ACQUISITION OF AN ECC.

A. THE RECLAMATION PROJECT IS CO-LOCATED WITHIN

ENVIRONMENTALLY CRITICAL AREAS REQUIRING THE PERFORMANCE OF
A FULL, OR PROGRAMMATIC, ENVIRONMENTAL IMPACT ASSESSMENT.
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B. RESPONDENT PROVINCE FAILED TO OBTAIN THE FAVORABLE

ENDORSEMENT OF THE LGU CONCERNED.

C. RESPONDENT PROVINCE FAILED TO CONDUCT THE REQUIRED

CONSULTATION PROCEDURES AS REQUIRED BY THE LOCAL
GOVERNMENT CODE.

D. RESPONDENT PROVINCE FAILED TO PERFORM A FULL ENVIRONMENTAL

IMPACT ASSESSMENT AS REQUIRED BY LAW AND RELEVANT
REGULATIONS.

II.

THE RECLAMATION OF LAND BORDERING THE STRAIT BETWEEN CATICLAN

AND BORACAY SHALL ADVERSELY AFFECT THE FRAIL ECOLOGICAL BALANCE
OF THE AREA.

Petitioner objects to respondent Province’s classification of the reclamation project as

single instead of co-located, as “non-environmentally critical,” and as a mere
“rehabilitation” of the existing jetty port. Petitioner points out that the reclamation project
is on two sites (which are situated on the opposite sides of Tabon Strait, about 1,200
meters apart):

· 36.82 hectares – Site 1, in Bgy. Caticlan

· 3.18 hectares – Site 2, in Manoc-manoc, Boracay Island

Petitioner argues that respondent Province abused and exploited the Revised
Procedural Manual for DENR Administrative Order No. 30, Series of 2003 (DENR
DAO 2003-30) relating to the acquisition of an ECC by:

1. Declaring the reclamation project under “Group II Projects-Non-ECP

(environmentally critical project) in ECA (environmentally critical area) based on
the type and size of the area,” and

2. Failing to declare the reclamation project as a co-located project application which

would have required the Province to submit a Programmatic Environmental Impact
Statement (PEIS) or Programmatic Environmental [Performance] Report
Management Plan (PE[P]RMP). (Emphases ours.)

Petitioner further alleges that the Revised Procedural Manual (on which the
classification above is based, which merely requires an Environmental Impact
Statement [EIS] for Group II projects) is patently ultra vires, and respondent DENR-EMB
RVI committed grave abuse of discretion because the laws on EIS, namely, Presidential
Decree Nos. 1151 and 1586, as well as Presidential Proclamation No. 2146, clearly
indicate that projects in environmentally critical areas are to be immediately considered
environmentally critical. Petitioner complains that respondent
Province applied for an ECC only for Phase 1; hence, unlawfully evading
the requirement that co-located projects within Environmentally Critical Areas
(ECAs) must submit a PEIS and/or a PEPRMP.

The impact assessment allegedly performed gives a patently erroneous and wrongly-
premised appraisal of the possible environmental impact of the reclamation
project. Petitioner contends that respondent Province’s choice of classification was
designed to avoid a comprehensive impact assessment of the reclamation project.

xxx

Respondent Province claimed that application for reclamation of 40 hectares is

advantageous to the Provincial Government considering that its filing fee would only
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cost Php20,000.00 plus Value Added Tax (VAT) which is also the minimum fee as
prescribed under Section 4.2 of Administrative Order No. 2007-2.

Respondent Province considers the instant petition to be premature; thus, it must

necessarily fail for lack of cause of action due to the failure of petitioner to fully exhaust
the available administrative remedies even before seeking judicial relief. According to
respondent Province, the petition primarily assailed the decision of respondent DENR-
EMB RVI in granting the ECC for the subject project consisting of 2.64 hectares and
sought the cancellation of the ECC for alleged failure of respondent Province to submit
proper documentation as required for its issuance. Hence, the grounds relied upon by
petitioner can be addressed within the confines of administrative processes provided by
law.

Respondent Province believes that under Section 5.4.3 of DENR Administrative Order
No. 2003-30 (DAO 2003-30), the issuance of an ECC is an official decision of DENR-
EMB RVI on the application of a project proponent. It cites Section 6 of DENR DAO
2003-30, which provides for a remedy available to the party aggrieved by the final
decision on the proponent’s ECC applications.

xxx

The issue for respondent PRA was whether or not it approved the respondent
Province’s 2.64-hectare reclamation project proposal in willful disregard of alleged
“numerous irregularities” as claimed by petitioner.

xxx

In its Comment dated July 1, 2011, respondent DENR-EMB RVI asserts that its act of
issuing the ECC certifies that the project had undergone the proper EIA process by
assessing, among others, the direct and indirect impact of the project on the biophysical
and human environment and ensuring that these impacts are addressed by appropriate
environmental protection and enhancement measures, pursuant to Presidential Decree
No. 1586, the Revised Procedural Manual for DENR DAO 2003-30, and the existing
rules and regulations.

xxx

Although petitioner insists that the project involves 40 hectares in two sites, respondent
DENR-EMB RVI looked at the documents submitted by respondent Province and saw
that the subject area covered by the ECC application and subsequently granted with
ECC-R6-1003-096-7100 consists only of 2.64 hectares; hence, respondent DENR-EMB
RVI could not comment on the excess area.

Respondent DENR-EMB RVI admits that as regards the classification of the 2.64-
hectare reclamation project under “Non ECP in ECA,” this does not fall within the
definition of a co-located project because the subject project is merely an
expansion of the old Caticlan Jetty Port, which had a previously issued ECC (ECC
No. 0699-1012-171 on October 12, 1999). Thus, only an EPRMP, not a PEIS or
PEPRMP, is required.

xxx

Respondent DENR-EMB RVI claims that the above two scientific studies were enough
for it to arrive at a best professional judgment to issue an amended ECC for the Aklan
Marina Project covering 2.64 hectares

xxx

The Court set the case for oral arguments on September 13, 2011.
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Meanwhile, on September 8, 2011, respondent Province filed a Manifestation and

Motion praying for the dismissal of the petition, as the province was no longer pursuing
the implementation of the succeeding phases of the project due to its inability to comply
with Article IV B.2(3) of the MOA

ISSUES

The Court will now resolve the following issues:

I. Whether or not the petition should be dismissed for having been

rendered moot and academic

II. Whether or not the petition is premature because petitioner failed

to exhaust administrative remedies before filing this case

III. Whether or not respondent Province failed to perform a full EIA as

required by laws and regulations based on the scope and classification of the
project

IV. Whether or not respondent Province complied with all the

requirements under the pertinent laws and regulations

V. Whether or not there was proper, timely, and sufficient public

consultation for the project

DISCUSSION

On the issue of whether or not the Petition should be dismissed for having been
rendered moot and academic

A close reading of the two LGUs’ respective resolutions would reveal that they are not
sufficient to render the petition moot and academic, as there are explicit conditions
imposed that must be complied with by respondent Province

The Sangguniang Bayan of Malay obviously imposed explicit conditions for respondent
Province to comply with on pain of revocation of its endorsement of the project, including
the need to conduct a comprehensive study on the environmental impact of the
reclamation project, which is the heart of the petition before us. Therefore, the contents
of the two resolutions submitted by respondent Province do not support its conclusion
that the subsequent favorable endorsement of the LGUs had already addressed all the
issues raised and rendered the instant petition moot and academic.

On the issue of failure to exhaust administrative remedies

xxx

We do not agree with respondents’ appreciation of the applicability of the rule on

exhaustion of administrative remedies in this case.

xxx

As petitioner correctly pointed out, the appeal provided for under Section 6 of DENR
DAO 2003-30 is only applicable, based on the first sentence thereof, if the person or
entity charged with the duty to exhaust the administrative remedy of appeal to the
appropriate government agency has been a party or has been made a party in the
proceedings wherein the decision to be appealed was rendered. It has been
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established by the facts that petitioner was never made a party to the proceedings
before respondent DENR-EMB RVI. Petitioner was only informed that the project had
already been approved after the ECC was already granted. Not being a party to the said
proceedings, it does not appear that petitioner was officially furnished a copy of the
decision, from which the 15-day period to appeal should be reckoned, and which would
warrant the application of Section 6, Article II of DENR DAO 2003-30.

xxx

The new Rules of Procedure for Environmental Cases, A.M. No. 09-6-8-SC, provides a
relief for petitioner under the writ of continuing mandamus, which is a special civil action
that may be availed of “to compel the performance of an act specifically enjoined by
law” and which provides for the issuance of a TEPO “as an auxiliary remedy prior to the
issuance of the writ itself.” The Rationale of the said Rules explains the writ in this
wise:

Environmental law highlights the shift in the focal-point from the initiation of regulation
by Congress to the implementation of regulatory programs by the appropriate
government agencies.

Thus, a government agency’s inaction, if any, has serious implications on the

future of environmental law enforcement. Private individuals, to the extent that
they seek to change the scope of the regulatory process, will have to rely on such
agencies to take the initial incentives, which may require a judicial component.
Accordingly, questions regarding the propriety of an agency’s action or inaction
will need to be analyzed.

This point is emphasized in the availability of the remedy of the writ of mandamus, which
allows for the enforcement of the conduct of the tasks to which the writ pertains: the
performance of a legal duty. (Emphases added.)

The writ of continuing mandamus “permits the court to retain jurisdiction after judgment
in order to ensure the successful implementation of the reliefs mandated under the
court’s decision” and, in order to do this, “the court may compel the submission of
compliance reports from the respondent government agencies as well as avail of other
means to monitor compliance with its decision.”

xxx

We find that the petition was appropriately filed with this Court under Rule 8, Section 1,
A.M. No. 09-6-8-SC, which reads:

SECTION 1. Petition for continuing mandamus.—When any agency or

instrumentality of the government or officer thereof unlawfully neglects the
performance of an act which the law specifically enjoins as a duty resulting from
an office, trust or station in connection with the enforcement or violation of an
environmental law rule or regulation or a right therein, or unlawfully excludes
another from the use or enjoyment of such right and there is no other plain,
speedy and adequate remedy in the ordinary course of law, the person aggrieved
thereby may file a verified petition in the proper court, alleging the facts with
certainty, attaching thereto supporting evidence, specifying that the petition
concerns an environmental law, rule or regulation, and praying that judgment be
rendered commanding the respondent to do an act or series of acts until the
judgment is fully satisfied, and to pay damages sustained by the petitioner by
reason of the malicious neglect to perform the duties of the respondent, under
the law, rules or regulations. The petition shall also contain a sworn certification
of non-forum shopping.
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SECTION 2. Where to file the petition.—The petition shall be filed with the
Regional Trial Court exercising jurisdiction over the territory where the actionable
neglect or omission occurred or with the Court of Appeals or the Supreme Court.

On the issues of whether, based on the scope and classification of the project, a
full EIA is required by laws and regulations, and whether respondent Province
complied with all the requirements under the pertinent laws and regulations

xxx

The Court notes such manifestation of respondent Province. Assuming, however, that
the area involved in the subject reclamation project has been limited to 2.64 hectares,
this case has not become moot and academic, as alleged by respondents, because the
Court still has to check whether respondents had complied with all applicable
environmental laws, rules, and regulations pertaining to the actual reclamation project.

xxx

We recognize at this point that the DENR is the government agency vested with
delegated powers to review and evaluate all EIA reports, and to grant or deny ECCs to
project proponents. It is the DENR that has the duty to implement the EIS system. It
appears, however, that respondent DENR-EMB RVI’s evaluation of this reclamation
project was problematic, based on the valid questions raised by petitioner.

Being the administrator of the EIS System, respondent DENR-EMB RVI’s submissions
bear great weight in this case. However, the following are the issues that put in question
the wisdom of respondent DENR-EMB RVI in issuing the ECC:

1. Its approval of respondent Province’s classification of the project as a mere

expansion of the existing jetty port in Caticlan, instead of classifying it as anew project;
2. Its classification of the reclamation project as a single instead of a co-
located project;
3. The lack of prior public consultations and approval of local government agencies;
and
4. The lack of comprehensive studies regarding the impact of the reclamation project
to the environment.
The above issues as raised put in question the sufficiency of the evaluation of the project
by respondent DENR-EMB RVI.
Nature of the project

The first question must be answered by respondent DENR-EMB RVI as the agency with
the expertise and authority to state whether this is a new project, subject to the more
rigorous environmental impact study requested by petitioner, or it is a mere expansion
of the existing jetty port facility.

The second issue refers to the classification of the project by respondent Province,
approved by respondent DENR-EMB RVI, as single instead of co-located.

xxx

The very definition of an EIA points to what was most likely neglected by respondent
Province as project proponent, and what was in turn overlooked by respondent DENR-
EMB RVI, for it is defined as follows:
An [EIA] is a ‘process that involves predicting and evaluating the likely impacts of a
project (including cumulative impacts) on the environment during construction,
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commissioning, operation and abandonment. It also includes designing

appropriate preventive, mitigating and enhancement measures addressing these
consequences to protect the environment and the community’s welfare. (Emphases
supplied.)
Thus, the EIA process must have been able to predict the likely impact of the
reclamation project to the environment and to prevent any harm that may otherwise be
caused.
The project now before us involves reclamation of land that is more than five times
the size of the original reclaimed land.

xxx

We had occasion to emphasize the duty of local government units to ensure the quality
of the environment under Presidential Decree No. 1586 in Republic of the Philippines v.
The City of Davao, wherein we held:

Section 15 of Republic Act 7160, otherwise known as the Local Government Code,
defines a local government unit as a body politic and corporate endowed with powers
to be exercised by it in conformity with law. As such, it performs dual functions,
governmental and proprietary. Governmental functions are those that concern the
health, safety and the advancement of the public good or welfare as affecting the public
generally. Proprietary functions are those that seek to obtain special corporate benefits
or earn pecuniary profit and intended for private advantage and benefit. When
exercising governmental powers and performing governmental duties, an LGU is an
agency of the national government. When engaged in corporate activities, it acts as an
agent of the community in the administration of local affairs.

Found in Section 16 of the Local Government Code is the duty of the LGUs to
promote the people’s right to a balanced ecology. Pursuant to this, an LGU, like the
City of Davao, can not claim exemption from the coverage of PD 1586. As a body politic
endowed with governmental functions, an LGU has the duty to ensure the quality of the
environment, which is the very same objective of PD 1586.

xxx

The Court chooses to remand these matters to respondent DENR-EMB RVI for it to
make a proper study, and if it should find necessary, to require respondent Province to
address these environmental issues raised by petitioner and submit the correct EIA
report as required by the project’s specifications. The Court requires respondent
DENR-EMB RVI to complete its study and submit a report within a non-extendible period
of three months. Respondent DENR-EMB RVI should establish to the Court in said
report why the ECC it issued for the subject project should not be canceled.
Lack of prior public consultation

xxx

It was necessary for respondent Province to go through respondent PRA and to execute
a MOA, wherein respondent PRA’s authority to reclaim was delegated to respondent
Province.

xxx

In Lina, Jr. v. Paño, we held that Section 27 of the Local Government Code applies only
to “national programs and/or projects which are to be implemented in a particular local
community” and that it should be read in conjunction with Section 26. We held further
in this manner:
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Thus, the projects and programs mentioned in Section 27 should be interpreted to mean
projects and programs whose effects are among those enumerated in Section 26 and
27, to wit, those that: (1) may cause pollution; (2) may bring about climatic change; (3)
may cause the depletion of non-renewable resources; (4) may result in loss of crop land,
range-land, or forest cover; (5) may eradicate certain animal or plant species from the
face of the planet; and (6) other projects or programs that may call for the eviction of a
particular group of people residing in the locality where these will be implemented.
Obviously, none of these effects will be produced by the introduction of lotto in the
province of Laguna. (Emphasis added.)

During the oral arguments held on September 13, 2011, it was established that this
project as described above falls under Section 26 because the commercial
establishments to be built on phase 1, as described in the EPRMP quoted above, could
cause pollution as it could generate garbage, sewage, and possible toxic fuel discharge.

xxx

Prior consultations and prior approval are required by law to have been
conducted and secured by the respondent Province.

xxx

The claim of respondent DENR-EMB RVI is that no permits and/or clearances from
National Government Agencies (NGAs) and LGUs are required pursuant to the DENR
Memorandum Circular No. 2007-08. However, we still find that the LGC requirements
of consultation and approval apply in this case. This is because a Memorandum
Circular cannot prevail over the Local Government Code, which is a statute and which
enjoys greater weight under our hierarchy of laws.

The lack of prior public consultation and approval is not corrected by the subsequent
endorsement of the reclamation project by the Sangguniang Barangayof Caticlan
on February 13, 2012, and the Sangguniang Bayan of the Municipality of Malay
on February 28, 2012, which were both undoubtedly achieved at the urging and
insistence of respondent Province. As we have established above, the respective
resolutions issued by the LGUs concerned did not render this petition moot and
academic.

WHEREFORE, premises considered, the petition is hereby PARTIALLY

GRANTED. The TEPO issued by this Court is hereby converted into a writ of
continuing mandamus specifically as follows:

1. Respondent Department of Environment and Natural Resources-Environmental

Management Bureau Regional Office VI shall revisit and review the following matters:
a. its classification of the reclamation project as a single instead of a co-located
project;
b. its approval of respondent Province’s classification of the project as a mere
expansion of the existing jetty port in Caticlan, instead of classifying it as a new project;
and
c. the impact of the reclamation project to the environment based on new, updated,
and comprehensive studies, which should forthwith be ordered by respondent DENR-
EMB RVI.
2. Respondent Province of Aklan shall perform the following:
a. fully cooperate with respondent DENR-EMB RVI in its review of the reclamation
project proposal and submit to the latter the appropriate report and study; and
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b. secure approvals from local government units and hold proper consultations with
non-governmental organizations and other stakeholders and sectors concerned as
required by Section 27 in relation to Section 26 of the Local Government Code.
3. Respondent Philippine Reclamation Authority shall closely monitor the submission by
respondent Province of the requirements to be issued by respondent DENR-EMB RVI
in connection to the environmental concerns raised by petitioner, and shall coordinate
with respondent Province in modifying the MOA, if necessary, based on the findings of
respondent DENR-EMB RVI.
4. The petitioner Boracay Foundation, Inc. and the respondents The Province of
Aklan, represented by Governor Carlito S. Marquez, The Philippine Reclamation
Authority, and The DENR-EMB (Region VI) are mandated to submit their respective
reports to this Court regarding their compliance with the requirements set forth in this
Decision no later than three (3) months from the date of promulgation of this Decision.
5. In the meantime, the respondents, their concerned contractor/s, and/or their
agents, representatives or persons acting in their place or stead, shall immediately
cease and desist from continuing the implementation of the project covered by ECC-
R6-1003-096-7100 until further orders from this Court. For this purpose, the
respondents shall report within five (5) days to this Court the status of the project as of
their receipt of this Decision, copy furnished the petitioner.
This Decision is immediately executory.
The two cases above come in sharp contrast on how the Court sees as its oversight role over the
actions of executive agencies. In Republic vs. Davao, the Court made its technical own
determination of the nature of the project activity, while in Boracay Foundation vs. Province of Aklan,
the Court gave the DENR the benefit of correcting its error in making the technical evaluation.

3.2.2 Local Development Planning

The Local Government Code requires all LGUs to convene local development councils to prepare
the development plan for the LGU. The composition and functions of the development councils are
provided below.
SEC. 106. Local Development Councils. - (a) Each local government unit shall have a
comprehensive multisectoral development plan to be initiated by its development council and
approved by its sanggunian. For this purpose, the development council at the provincial city,
municipal, or barangay level, shall assist the corresponding sanggunian in setting the direction
of economic and social development, and coordinating development efforts within its territorial
jurisdiction.
SEC. 107. Composition of Local Development Councils. - The composition of the local
development council shall be as follows:
(a) The barangay development council shall be headed by the punong barangay and shall
be composed of the following members:
(1) Members of the sangguniang barangay;
(2) Representatives of non-governmental organizations operating in the barangay, who
shall constitute not less than one fourth (1/4) of the members of the fully organized
council;
(3) A representative of the congressman.
(b) The city or municipal development council shall be headed by the mayor and shall be
composed of the following members:
(1) All punong barangays in the city or municipality;
(2) The chairman of the committee on appropriations of the sangguniang panlungsod
or sangguniang bayan concerned;
(3) The congressman or his representative; and
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(4) Representatives of nongovernmental organizations operating in the city or

municipality, as the case may be, who shall constitute not less than one-fourth (1/4)
of the members of the fully organized council.
(c) The provincial development council shall be headed by the governor and shall be
composed of the following members:
(1) All mayors of component cities and municipalities;
(2) The chairman of the committee on appropriations of the sangguniang panlalawigan;
(3) The congressman or his representative; and
(4) Representatives of nongovernmental organizations operating in the province, who
shall constitute not less than one-fourth (1/4) of the members of the fully organized
council.
(d) The local development councils may call upon any local official concerned or any official
of national agencies or offices in the local government unit to assist in the formulation
of their respective development plans and public investment programs.
SEC. 108. Representation of Non-Governmental Organizations. - Within a period of sixty (60)
days from the start of organization of local development councils, the nongovernmental
organizations shall choose from among themselves their representatives to said councils. The
local sanggunian concerned shall accredit nongovernmental organizations subject to such
criteria as may be provided by law.
SEC. 109. Functions of Local Development Councils. –
(a) The provincial, city, and municipal development councils shall exercise the following
functions:
(1) Formulate long-term, medium-term, and annual socioeconomic development plans
and policies;
(2) Formulate the medium-term and annual public investment programs;
(3) Appraise and prioritize socioeconomic development programs and projects;
(4) Formulate local investment incentives to promote the inflow and direction of private
investment capital;
(5) Coordinate, monitor, and evaluate the implementation of development programs and
projects; and
(6) Perform such other functions as may be provided by law or competent authority.
(b) The barangay development council shall exercise the following functions:
(1) Mobilize people's participation in local development efforts;
(2) Prepare barangay development plans based on local requirements;
(3) Monitor and evaluate the implementation of national or local programs and projects;
and
(4) Perform such other functions as may be provided by law or competent authority.
xxx
SEC. 114. Relation of Local Development Councils to the Sanggunian and the Regional
Development Council. –
(a) The policies, programs, and projects proposed by local development councils shall be
submitted to the sanggunian concerned for appropriate action. The local development
plans approved by their respective sanggunian may be integrated with the development
plans of the next higher level of local development council.
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(b) The approved development plans of provinces, highly-urbanized cities, and

independent component cities shall be submitted to the regional development council,
which shall be integrated into the regional development plan for submission to the
National Economic and Development Authority, in accordance with existing laws.
SEC. 115. Budget Information. - The Department of Budget and Management shall furnish the
various local development councils information on financial resources and budgetary
allocations applicable to their respective jurisdictions to guide them in their planning functions.

The Local Government Code also mandates LGUs to prepare Comprehensive Land Use Plans
(CLUP) that will be the basis of local zoning ordinances.

Sec 447 (a)(2): (Sangguniang Bayan)

(vii) Adopt a comprehensive land use plan for the municipality: Provided, that the formulation,
adoption, or modification of said plan shall be in coordination with the approved provincial
comprehensive land use plan;
(ix) Enact integrated zoning ordinances in consonance with the approved comprehensive land
use plan, subject to existing laws, rules and regulations; establish fire limits or zones,
particularly in populous centers; and regulate the construction, repair or modification of
buildings within said fire limits or zones in accordance with the provisions of the Fire Code;
Sec 458(a)(2): (Sangguniang Panglungsod)
(vii) Adopt a comprehensive land use plan for the city: Provided, that in the case of component
cities, the formulation, adoption or modification of said plan shall be in coordination with the
approved provincial comprehensive land use plan;
(ix) Enact integrated zoning ordinances in consonance with the approved comprehensive land
use plan, subject to existing laws, rules and regulations; establish fire limits or zones,
particularly in populous centers; and regulate the construction, repair or modification of
buildings within said fire limits or zones in accordance with the provisions of the Fire Code;
Sec 468(a)(2)(vii). (Sangguninang Panlalawigan) Review the comprehensive land use plans
and zoning ordinances of component cities and municipalities and adopt a comprehensive
provincial land use plan, subject to existing laws; xxx

This power of the LGU to determine land-use is specifically limited by the following provision in the
Local Government Code.
SEC. 20. Reclassification of Lands. –
(a) A city or municipality may, through an ordinance passed by the sanggunian after
conducting public hearings for the purpose, authorize the reclassification of agricultural lands
and provide for the manner of their utilization or disposition in the following cases: (1) when
the land ceases to be economically feasible and sound for agricultural purposes as determined
by the Department of Agriculture or (2) where the land shall have substantially greater
economic value for residential, commercial, or industrial purposes, as determined by the
sanggunian concerned: Provided, That such reclassification shall be limited to the following
percentage of the total agricultural land area at the time of the passage of the ordinance:
(1) For highly urbanized and independent component cities, fifteen percent (15%);
(2) For component cities and first to third class municipalities, ten percent (10%); and
(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That agricultural
lands distributed to agrarian reform beneficiaries pursuant to Republic Act Numbered Sixty-
six hundred fifty-seven (R.A. No. 6657), otherwise known as "The Comprehensive
Agrarian Reform Law", shall not be affected by the said reclassification and the conversion of
such lands into other purposes shall be governed by Section 65 of said Act.
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(b) The President may, when public interest so requires and upon recommendation of the
National Economic and Development Authority, authorize a city or municipality to reclassify
lands in excess of the limits set in the next preceding paragraph.
(c) The local government units shall, in conformity with existing laws, continue to prepare their
respective comprehensive land use plans enacted through zoning ordinances which shall be
the primary and dominant bases for the future use of land resources: Provided, That the
requirements for food production, human settlements, and industrial expansion shall be taken
into consideration in the preparation of such plans.
(d) Where approval by a national agency is required for reclassification, such approval shall
not be unreasonably withheld. Failure to act on a proper and complete application for
reclassification within three (3) months from receipt of the same shall be deemed as approval
thereof.
(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any
manner the provisions of R.A. No. 6657.

A Guide to Comprehensive Land Use Plan Preparation (2006)

The Local Government Code sets the institutional mechanism and mandate to prepare the CLUP.
The Housing and Land Use Regulatory Board (HLURB) prepared a guidebook to assist LGUs in the
preparation of the CLUP in order to optimize the usefulness of these plans and for uniformity across
LGUs.98

This guidebook was developed for LGUs through a participatory process and is designed to present
logical planning procedures to ensure a balanced and harmonious development of resources in the
LGU. According to the HLURB, the guidebook is not prescriptive but is designed to allow flexibility,
creativity and analytical thinking on the part of the user.

This new guide suggests a 12-step process that is strategic/proactive in approach shows the general
procedures from which the planning team, with or without a formal training in planning, can proceed
with the CLUP and ZO preparation.

3.2.2 Strategic Environmental Plan

Palawan is an example of a local government that created its own council of sustainable
development. Republic Act No. 7611 or the Strategic Environmental Plan for Palawan introduced the
Palawan Council for Sustainable Development (PCSD) whose mission is to promote development,
conservation, management, protection, and utilization of the natural resources of Palawan for the
present and future generations. While the Stategic Environmental Plan is a national law, its effectivity
covers only the province of Palawan.

In 2019, however, RA 11259 was promulgated, also known as the “Charter of the Provinces of
Palawan del Norte, Palawan Oriental, and Palawan del Sur.” which divides Palawan into three
distinct and independent provinces. With the enactment of the law, questions now arise regarding
the effect of the Republic Act to the PCSD because Republic Act No. 11259 does not repeal Republic
Act No. 7611.

3.3. Policy analysis

3.3.1 Philippine Development Plan (2017-2022)

98
The guidebook, A GUIDE TO COMPREHENSIVE LAND USE PLAN PREPARATION, approved through Board
Resolution No. 789 on 16 February 2006, is the first of a 10-volume Guidelines on the Formulation and Revision of
CLUPs and Planning Strategically. The Guidebook is available for download at http://hlurb.gov.ph/uploads/agency-
profile/lgu/full-text-vol1.pdf
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The Philippines recently approved a new Philippine Development Plan for 2017-2022 (PDP) that
outlines the policy priorities of the government in the medium-term. The PDP serves as the template
for specific programs and actions that agencies with specific mandates include in their annual plans
and budgets. The PDP has twin goals of economic growth and poverty alleviation as components of
the overall goal of inclusive growth.

The Environment and Natural Resources Chapter of the PDP focuses on including more aggressive
strategies for the rehabilitation and restoration of degraded natural resources, and the protection of
fragile ecosystems while improving the welfare of recourse-dependent communities, with the main
goal of ensuring ecological integrity and a clean and healthy environment.

Under the goal on sustaining the biodiversity and functioning of ecosystem services, the PDP
identifies key strategies, including:
• Intensifying sustainable management of natural resources
• Expanding development of resource-based enterprises/industries
• Mainstreaming ecosystem values into national and local development planning

Under the goal on improving environmental quality, the priorities are:

• Strengthening the enforcement of environmental laws
• Promoting sustainable consumption and production (SCP)

Under the goal on adaptive capacities and increasing the resilience of ecosystems, the PDP will:
• Strengthen the implementation of climate change adaptation (CCA) and disaster risk
reduction (DRR) at the local level across sectors
• Strengthen implementation of response, recovery, and rehabilitation efforts
• Strengthen monitoring and evaluation of effectiveness of climate change and
disaster risk reduction and management actions
The Philippines’ rank in environmental management performance has improved since 2014, but
there are a lot more points of improvement. Our management of natural resources has been
improving, but while we have witnessed slight improvement In environmental quality, monitoring of
environmental compliance remains weak. The focus now should be on climate change adaptation
(CCA) and disaster risk reduction (DRR) in view of the fact that our socio-economic and
environmental landscape is changing, including the more frequent and more intense storms that the
Philippines has been facing in recent years.

The environment sector, however, has only a small contribution to GDP. The goal of conservation
is in fact to improve delivery of ecosystem services (water, power, waste/pollution control) that
underpins the economy that is based on agriculture, industry and services. At present, it is very
difficult to measure the contribution of the specific sectors to the economy.

3.4. Further discussion

3.4.1 Recent Updates

EIA is an interdisciplinary analysis used to inform decision-makers and the public about the significant
environmental impacts of a proposed action, and contains possible alternatives and other preventive
actions to avoid, minimize or mitigate these impacts. Since its beginning in the US in 1969, it has
been continuously developed and adopted by multiple countries and international organizations.

Despite various developments, EIA remained as a band-aid solution to mitigate the worst
consequences of rapid industrial development. It was then concluded that EIA is incapable of
providing in-depth analysis on more critical environmental issues and on overlaps and conflicts
between interrelated agencies. In addition, a project level assessment may come too late to ensure
that all impacts and alternatives were considered. Alternative approaches and impacts may be better
initially assessed at the policy, plan or program level. With EIA mainstreamed into project level
assessments, a growing need for consideration of environmental consequences in decision making
above the project level emerged. One proposed solution to address this issue is to pair EIA with
Strategic Environmental Assessment (SEA).
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Strategic Environmental Assessment (SEA) was introduced in the 1980s where it is applied on
“higher decision-making tiers” or what is widely referred to as “policies, plans and programs” (PPPs).
As compared to EIA, SEA tends to be more strategic and conceptual. It relies on sustainable
development strategies and focuses on macroscopic and cumulative impacts of PPPs rather than
the localized, project based impacts that EIA focuses on. It is a systematic, objectives-led, evidence-
based, proactive and participative decision making process for the formulation of sustainable
policies, plans and programs.

Overall, SEA and EIA are instruments that aim to aid decision-makers to inform them of possible
environmental impacts and sustainability aspects they need to consider. Both are intended to be
complementary to each other as they are based on common principles and contain similar
components. Without SEA, PPPs would solely be based upon social and economic considerations,
and all attempts to minimize environmental damages would be only be attempted at project level
which is often limiting and rarely succeeds.

SEA is yet to be adopted in the Philippine legislation but some para-SEA elements (processes or
elements that have the same functions as a formal SEA processes but only some of its
characteristics) are already present in some of its environmental laws. Although unrealized some
examples that utilized para-SEA elements are: Local Government Code, Clean Water Act, Clean Air
Act, Solid Waste Management Act, National Integrated Protected Areas System and, Indigenous
People’s Rights Act. SEA have also been utilized for the assessment and formulation of the following:
Palawan Sustainable Development Act of 1992, Bohol Environment Code of 1998 and, National
Integrated Protected Area Management Systems Act. It has also been applied in regional
environmental assessments for formulating environmentally sustainable development plans,
programs and strategies.

The adoption of SEA in the Philippines was first proposed in 1996 and was outlined at the revised
procedural manual of EIA for “policy-based undertakings” in 2003. Although several steps and public
involvement were introduced into its framework, it was never implemented due to the government’s
lack of technical capacity and resources. On the 15th of August 2012, the House Bill on the
Establishment of the Philippine Environmental Assessment (EA) System (15th Congress) was then
approved by the House Committee on Ecology. It seeks to establish the EA System that aims to
cover policies, plans, programs and projects with potential for adverse environmental impacts by
utilizing both EIA and SEA.

CASE STUDY:
TAMPAKAN GOLD COPPER MINING PROJECT

The Tampakan mine is the home for one of the largest underdeveloped gold-copper resource in Southeast Asian
region and is located at Tampakan, South Cotabato. The 5.9 billion project is operated by the Sagittarius Mines
Incorporated and is the single largest foreign direct investment in the Philippines. The project was granted its
Environmental Compliance Certificate (ECC) in February 2013.

However, in July 2010, 3 years before the insurance of the ECC, the province of South Cotabato have banned
open-pit mining in the region. Added with difficulties in securing other necessary permits, the opposition of the
local government and stakeholders, and the government anti-mining campaign and directive to "put all mining
projects on hold and be placed under strict review" has highlighted other issues with the Tampakan mining project
that hindered the completion of the project.

In addition to the destructive environmental impacts that the mine pose to the local ecosystem of Tampakan, an
estimate of 24,000 hectares of ancestral and agricultural lands of indigenous people (IP) and farmers are also at
stake. 3,000 farmer families, who just received their Certificates of Land Ownership Award (CLOA) from the
Department of Agrarian Reform, are at risk of being displaced by the mining project. Affected IP leaders also
expressed the lack of consultation process in the project, which ignored their views and their rights to their land
and the right to protect their culture and lifestyle.

Last news about the project was on August 2016 where DENR is already at the final stages of the review.
Currently, the Tampakan Gold Copper Mining Project is still on process in securing necessary permits to begin
their mining operations.
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Sources:

https://www.smi.com.ph/faqs.do?id=21909
https://www.rappler.com/nation/142717-review-tampakan-open-pit-mine
W.Irina and S.Loretta, The Tampakan Copper-Cold Mine Project in Mindanao, Philippines,
https://www.academia.edu/22416968/The_Tampakan_Copper-
Gold_Mine_Project_in_Mindanao_Philippines?auto=download
https://www.mining-technology.com/projects/tampakangoldcopperpr/https://news.abs-cbn.com/focus/08/04/15/tampakan-
mines-project-still-go-despite-activist-deaths-un-concern

This case study highlights the limitations of EIA. Although measures were taken to address and
reduce the environmental impacts of the project: such as creating a Tailings Storage Facility (TSF)
for its tailings, and creating a Fresh Water Dam (FWD) to address the issue of the water allocation
from Mal River and ensuring its availability to downstream irrigators and farmers, it failed to recognize
other factors affecting the project. This includes social and economic impacts of the project to its
stakeholders, existing policies and other political issues that will serve as barriers for the project.
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Chapter Four

Forests and Forestland Management

FACTS AND FIGURES

The Philippines has been listed as one of the most severely deforested countries in the tropical regions. It has
been estimated that the country has already lost 13,359,846 ha of forest cover – almost 45% of the original total
forest cover of the Philippines in 1934. Many Filipino communities are already feeling the direct impacts of
degradation of the Philippine forest. These impacts include: food insecurity, increased flood levels and landslide
occurrences due to soil erosion; water shortages due to denuded watersheds that decrease water infiltration and
recharging of water tables; cultural loss due to threats faced by indigenous communities, and wildlife extinction
due to habitat loss.

According to the 2017 Philippine Forestry Statistics, only 7.0 ha of forest cover (24% of the country’s total land
area) remains. 29% of which are closed forests, 67% open forests while the remaining 4% are mangrove forests.
To protect the remaining and recover lost forest cover, multiple initiatives are continuously being held by the
government and private institutions. Recent statistics show that there is 2.6 million ha of watershed forest
reserves, 1.6 million ha of forest land under Community-Based Forest Management arrangements and 727,983
ha of forest land under Integrated Forest Management arrangements. In addition, the government’s National
Greening Program, which was launched in 2011, has already succeeded in rehabilitating 2.0 million ha of forest
land as of December 2018. The project has also been extended to 2028 as part of the country’s contribution
under the Paris agreement to enhance greenhouse gas sinks and reservoirs.

Sources:

https://drive.google.com/file/d/1iOm6bwe7RN4B4D-cf3wbufySwYHRKgba/view
https://www.flipscience.ph/plants-and-animals/5-facts-forests-philippines/
https://rainforests.mongabay.com/deforestation/archive/Philippines.htm
https://essc.org.ph/content/wp-content/uploads/2011/11/ETFRN-NEWS31.pdf
http://www.etfrn.org/etfrn/newsletter/frames/nl31.html

4.1 Environmental situationer

Barangay Bunga is an upland community of farmers. Over the past three decades, families have
migrated to the area from the lowlands in search of work, livelihood and a place to call home. The
area used to be a timber concession (TLA) but abandoned after all the commercially important trees
were cut. The first settlers were workers of the timber concession. There used to be a few patches
of forest trees punctuating large tracts of cogon and make-shift farms (through kaingin). Over the
years, the settlers have developed the area into farms, planting rice, corn, sugarcane, bananas and
other cash crops. They have also planted fruit trees near their homes. Commercial-scale logging
goes on unabated in portions of remaining forests. The settlers are not aware if these operations
are illegal or not, but they would at times work for these logging operators for odd jobs.

None of the farmers have title to the land, as the entire barangay is on classified forest land. Property
rights (land, crops, houses) are recognized through “tax declaration” and customary respect for
possession and informal agreements of sale, rent (arendo) or mortgage (prenda). Kaingin practice
continues as residents clear new areas for farming. Farmers either use the bigger felled trees for
building houses, or for firewood/charcoal for own use and sale. Despite the hardships of making a
living and lack of access to basic services, farmers have lived in the area peacefully for generations.

On one occasion, DENR forest guards arrested two farmers as they were transporting on a carabao
sled 10 sacks of charcoal made from planted madre de cacao trees, assorted cut lumber (Gmelina
species) and a chainsaw. The farmers are not aware of laws or regulations on forestry; they grew up
with charcoal making as decent livelihood. The chainsaw that was confiscated was borrowed from
a logging operator.
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4.2 Legal analysis (application of existing laws)

4.2.1 Land classification

The legal status of the land determines what activities may or may not be conducted on these lands.
In addition, there are laws that regulate the cutting of trees and the use of chainsaws. Following the
Regalian Doctrine, all lands are presumed to be part of the public domain, unless one can show proof
or title of private ownership. Even lands that have already been occupied, developed and sold to
investors, such as the famous Boracay Island, may still be public domain.

DENR Secretary et al. vs. Mayor Yap et al.

G.R. No. 167707 (consolidated with G.R. No. 173775), October 8, 2008

Reyes, R.T., J., ponente

At stake in these consolidated cases is the right of the present occupants of Boracay
Island to secure titles over their occupied lands. xxx

Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand beaches
and warm crystalline waters, is reputedly a premier Philippine tourist destination. The
island is also home to 12,003 inhabitants who live in the bone-shaped island’s three
barangays.

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

On November 10, 1978, then President Ferdinand Marcos issued Proclamation No.
1801 declaring Boracay Island, among other islands, caves and peninsulas in the
Philippines, as tourist zones and marine reserves under the administration of the
Philippine Tourism Authority (PTA). President Marcos later approved the issuance of
PTA Circular 3-82 dated September 3, 1982, to implement Proclamation No. 1801. xxx

On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria
Macapagal-Arroyo issued Proclamation No. 1064 classifying Boracay Island into four
hundred (400) hectares of reserved forest land (protection purposes) and six hundred
twenty-eight and 96/100 (628.96) hectares of agricultural land (alienable and
disposable). The Proclamation likewise provided for a fifteen-meter buffer zone on each
side of the centerline of roads and trails, reserved for right-of-way and which shall form
part of the area reserved for forest land protection purposes. xxx

Petitioners-claimants contended that there is no need for a proclamation reclassifying

Boracay into agricultural land. Being classified as neither mineral nor timber land, the
island is deemed agricultural pursuant to the Philippine Bill of 1902 and Act No. 926,
known as the first Public Land Act. Thus, their possession in the concept of owner for
the required period entitled them to judicial confirmation of imperfect title.

Opposing the petition, the OSG argued that petitioners-claimants do not have a vested
right over their occupied portions in the island. Boracay is an unclassified public forest
land pursuant to Section 3(a) of PD No. 705. Being public forest, the claimed portions
of the island are inalienable and cannot be the subject of judicial confirmation of
imperfect title. It is only the executive department, not the courts, which has authority
to reclassify lands of the public domain into alienable and disposable lands. There is a
need for a positive government act in order to release the lots for disposition. xxx

The 1935 Constitution classified lands of the public domain into agricultural, forest or
timber. Meanwhile, the 1973 Constitution provided the following divisions: agricultural,
industrial or commercial, residential, resettlement, mineral, timber or forest and grazing
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lands, and such other classes as may be provided by law, giving the government great
leeway for classification. Then the 1987 Constitution reverted to the 1935 Constitution
classification with one addition: national parks. Of these, only agricultural lands may be
alienated. Prior to Proclamation No. 1064 of May 22, 2006, Boracay Island had never
been expressly and administratively classified under any of these grand divisions.
Boracay was an unclassified land of the public domain.

The Regalian Doctrine dictates that all lands of the public domain belong to the State,
that the State is the source of any asserted right to ownership of land and charged with
the conservation of such patrimony. The doctrine has been consistently adopted under
the 1935, 1973, and 1987 Constitutions.

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

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

Except for lands already covered by existing titles, Boracay was an unclassified land of
the public domain prior to Proclamation No. 1064. Such unclassified lands are
considered public forest under PD No. 705. The DENR and the National Mapping and
Resource Information Authority certify that Boracay Island is an unclassified land of the
public domain.

PD No. 705 issued by President Marcos categorized all unclassified lands of the public
domain as public forest. Section 3(a) of PD No. 705 defines a public forest as “a mass
of lands of the public domain which has not been the subject of the present system of
classification for the determination of which lands are needed for forest purpose and
which are not.” Applying PD No. 705, all unclassified lands, including those in Boracay
Island, are ipso facto considered public forests. PD No. 705, however, respects titles
already existing prior to its effectivity.

The Court notes that the classification of Boracay as a forest land under PD No. 705
may seem to be out of touch with the present realities in the island. Boracay, no doubt,
has been partly stripped of its forest cover to pave the way for commercial
developments. As a premier tourist destination for local and foreign tourists, Boracay
appears more of a commercial island resort, rather than a forest land.

Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts
on the island; that the island has already been stripped of its forest cover; or that the
implementation of Proclamation No. 1064 will destroy the island’s tourism industry, do
not negate its character as public forest.

Forests, in the context of both the Public Land Act and the Constitution classifying lands
of the public domain into “agricultural, forest or timber, mineral lands, and national
parks,” do not necessarily refer to large tracts of wooded land or expanses covered by
dense growths of trees and underbrushes. The discussion in Heirs of Amunategui v.
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Director of Forestry is particularly instructive:

A forested area classified as forest land of the public domain

does not lose such classification simply because loggers or settlers may
have stripped it of its forest cover. Parcels of land classified as forest land
may actually be covered with grass or planted to crops by kaingin
cultivators or other farmers. “Forest lands” do not have to be on mountains
or in out of the way places. Swampy areas covered by mangrove trees,
nipa palms, and other trees growing in brackish or sea water may also be
classified as forest land. The classification is descriptive of its legal nature
or status and does not have to be descriptive of what the land actually
looks like. Unless and until the land classified as “forest” is released in an
official proclamation to that effect so that it may form part of the disposable
agricultural lands of the public domain, the rules on confirmation of
imperfect title do not apply.

There is a big difference between “forest” as defined in a dictionary and “forest or timber
land” as a classification of lands of the public domain as appearing in our statutes. One
is descriptive of what appears on the land while the other is a legal status, a
classification for legal purposes. At any rate, the Court is tasked to determine the legal
status of Boracay Island, and not look into its physical layout. Hence, even if its forest
cover has been replaced by beach resorts, restaurants and other commercial
establishments, it has not been automatically converted from public forest to alienable
agricultural land. Xxx

The continued possession and considerable investment of private claimants do not

automatically give them a vested right in Boracay. Nor do these give them a right to
apply for a title to the land they are presently occupying. This Court is constitutionally
bound to decide cases based on the evidence presented and the laws applicable. As
the law and jurisprudence stand, private claimants are ineligible to apply for a judicial
confirmation of title over their occupied portions in Boracay even with their continued
possession and considerable investment in the island. Xxx

The Court is aware that millions of pesos have been invested for the development of
Boracay Island, making it a by-word in the local and international tourism industry. The
Court also notes that for a number of years, thousands of people have called the island
their home. While the Court commiserates with private claimants’ plight, We are bound
to apply the law strictly and judiciously. This is the law and it should prevail. Ito ang
batas at ito ang dapat umiral.

All is not lost, however, for private claimants. While they may not be eligible to apply
for judicial confirmation of imperfect title under Section 48(b) of CA No. 141, as
amended, this does not denote their automatic ouster from the residential, commercial,
and other areas they possess now classified as agricultural. Neither will this mean the
loss of their substantial investments on their occupied alienable lands. Lack of title does
not necessarily mean lack of right to possess.

For one thing, those with lawful possession may claim good faith as builders of
improvements. They can take steps to preserve or protect their possession. For
another, they may look into other modes of applying for original registration of title, such
as by homesteador sales patent, subject to the conditions imposed by law.

More realistically, Congress may enact a law to entitle private claimants to acquire title
to their occupied lots or to exempt them from certain requirements under the present
land laws. There is one such bill now pending in the House of
Representatives. Whether that bill or a similar bill will become a law is for Congress to
decide.

In issuing Proclamation No. 1064, the government has taken the step necessary to open
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up the island to private ownership. This gesture may not be sufficient to appease some
sectors which view the classification of the island partially into a forest reserve as
absurd. That the island is no longer overrun by trees, however, does not becloud the
vision to protect its remaining forest cover and to strike a healthy balance between
progress and ecology. Ecological conservation is as important as economic progress.

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

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

Xxx

4.2.2. Land use in forest land

Forest lands, being part of the public domain, are subject to the rules of government on what can
and cannot be done on the land and to all the natural resources therein. It is clear from the Boracay
case above that “forest lands” and “forests” are different. The general applicable law is The Revised
Forestry Code.

Revised Forestry Code

Presidential Decree No. 705, as amended

Section 15. Topography - No land of the public domain eighteen per cent (18%) in
slope or over shall be classified as alienable and disposable, nor any forest land fifty
per cent (50%) in slope or over, as grazing land.

Lands eighteen percent (18%) in slope or over which have already been declared as
alienable and disposable shall be reverted to the classification of forest lands by the
Department Head, to form part of the forest reserves, unless they are already covered
by existing titles approved public land application, or actually occupied openly,
continuously, adversely and publicly for a period of not less than thirty (30) years as of
the effectivity of this Code, where the occupant is qualified for a free patent under the
Public Land Act: Provided, That said lands, which are not yet part of a well-established
communities, shall be kept in a vegetative condition sufficient to prevent erosion and
adverse effects on the lowlands and streams: Provided, further, That when public
interest so requires, steps shall be taken to expropriate, cancel defective titles, reject
public land application, or eject occupants thereof.
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Section 16. Areas Needed for Forest Purposes - The following lands, even if they are
below eighteen percent (18%) in slope, are needed for forest purposes, and may not,
therefore, be classified as alienable and disposable land, to wit:

1. Areas less than 250 hectares which are far from, or are not contiguous with
any certified alienable and disposable land;
2. Isolated patches of forest of at least five (5) hectares with rocky terrain, or
which protect a spring for communal use;
3. Areas which have already been reforested;
4. Areas within forest concessions which are timbered or have good residual
stocking to support an existing, or approved to be established, wood
processing plant;
5. Ridge tops and plateaus regardless of size found within, or surrounded wholly
or partly by, forest lands where headwaters emanate;
6. Appropriately located road-rights-of-way;
7. Twenty-meter strips of land along the edge of the normal high waterline of
rivers and streams with channels of at least five (5) meters wide;
8. Strips of mangrove or swamplands at least twenty (20) meters wide, along
shorelines facing oceans, lakes, and other bodies of water, and strips of land
at least twenty (20) meters wide facing lakes;
9. Areas needed for other purposes, such as national parks, national historical
sites, game refuges and wildlife sanctuaries, forest station sites, and others of
public interest; and
10. Areas previously proclaimed by the President as forest reserves, national
parks, game refuge, bird sanctuaries, national shrines, national historic sites:

Provided, That in case an area falling under any of the foregoing categories shall have
been titled in favor of any person, steps shall be taken, if public interest so requires, to
have said title canceled or amended, or the titled area expropriated.
xxx

Section 19. Multiple Use - The numerous beneficial uses of the timber, land, soil, water,
wildlife, grass and recreation or aesthetic value of forest lands and grazing lands shall
be evaluated and weighted before allowing their utilization, exploitation, occupation or
possession thereof, or the conduct of any activity therein. Only the utilization,
exploitation, occupation or possession of any forest lands and grazing lands, or any
activity therein, involving one or more of its resources, which will produce the optimum
benefits to the development and progress of the country, and the public welfare, without
impairment or with the least injury to its resources, shall be allowed.

All forest reservations may be open to development or uses not inconsistent with the
principal objectives of the reservation; Provided, That critical watersheds, national parks
and established experimental forests shall not be subject to commercial logging or
grazing operations, and game refuges, bird sanctuaries, marine and seashore parks
shall not be subject to hunting or fishing and other activities of commercial nature. [As
amended by PD No. 1559]

Section 20. License Agreement, License, Lease or Permit - No person may utilize,
exploit, occupy, possess or conduct any activity within any forest and grazing land, or
establish, install, add and operate any wood or forest products processing plant, unless
he had been authorized to do under a license agreement, license, lease or permit:
Provided, That when the national interest so requires, the President may amend,
modify, replace, or rescind any contract, concession, permit, license, or any other form
of privilege granted herein: Provided, further, That upon the recommendation of the
appropriate government agency, the President may, pending the conduct of appropriate
hearing, order the summary suspension of any such contract, concession, license,
permit, lease or privilege granted under this decree for violation of any of the conditions
therein such as those pertaining but not limited to reforestation, pollution, environment
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protection, export limitation or such condition as are prescribed by the Department of

Natural Resources in daily issued regulations. [As amended by PD No. 1559]

xxx

Section 52. Census of Kaingineros, Squatters, Cultural Minorities and Other Occupants
and Residents in Forest Lands - Henceforth, no person shall enter into forest lands and
cultivate the same without lease or permit.

A complete census of kaingineros, squatters, cultural minorities and other occupants

and residents in forest lands with or without authority or permits from the government,
showing the extent of their respective occupation and resulting damage, or impairment
of forest resources, shall be conducted.

The Bureau may call upon other agencies of the government and holders of license
agreement, license, lease and permits over forest lands to participate in the census.

Section 53. Criminal Prosecution - Kaingineros, squatters, cultural minorities and other
occupants who entered into forest lands and grazing lands before May 19, 1975, without
permit or authority, shall not be prosecuted: Provided, That they do not increase their
clearings: Provided, further, That they undertake, within two (2) months from notice
thereof, the activities to be imposed upon them by the Bureau in accordance with
management plan calculated to conserve and protect forest resources in the area:
Provided, finally, That kaingineros, squatters, cultural minorities and other occupants
shall whenever the best land use of the area so demands as determined by the Director,
be ejected and relocated to the nearest accessible government resettlement area. [As
amended by PD No. 1559]

xxx

Section 78. Cutting, Gathering and/or Collecting Timber, or Other Forest Products
Without License - Any person who shall cut, gather, collect, remove timber or other
forest products from any forestland, or timber from alienable or disposable public land,
or from private land, without any authority, or possess timber or other forest products
without the legal documents as required under existing forest laws and regulations, shall
be punished with the penalties imposed under Articles 309 and 310 of the Revised
Penal Code: Provided, That in the case of partnership, associations, or corporations,
the officers who ordered the cutting, gathering, collection or possession shall be liable,
and if such officers are aliens, they shall, in addition to the penalty, be deported without
further proceedings on the part of the Commission on Immigration and Deportation.

The Court shall further order the confiscation in favor of the government of the timber
or any forest products cut, gathered, collected, removed, or possessed, as well as the
machinery, equipment, implements and tools illegally used in the area where the timber
or forest products are found. [As amended by PD No. 1559, and by EO No. 277, prom.
July 25, 1987, 83 OG No. 31, Aug. 3, 1987]

Section 78-A. Administrative Authority of the Department Head or His Duly Authorized
Representative to Order Confiscation - In all cases of violations of this Code or other
forest laws, rules and regulations, the Department Head or his duly authorized
representative, may order the confiscation of any forest products illegally cut, gathered,
removed, or possessed or abandoned, and all conveyances used either by land, water
or air in the commission of the offense and to dispose of the same in accordance with
pertinent laws, regulations or policies on the matter. [As added by EO No. 277]

Section 79. Unlawful Occupation or Destruction of Forest Lands and Grazing Lands -
Any person who enters and occupies or possesses, or makes kaingin for his own private
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use or for others, any forest land or grazing land without authority under a license
agreement, lease, license or permit, or in any manner destroys such forest land or
grazing land or part thereof, or causes any damage to the timber stand and other
products and forest growth found therein, or who assists, aids or abets any other person
to do so, or sets a fire, or negligently permits a fire to be set in any forest land or grazing
land, or refuses to vacate the area when ordered to do so, pursuant to the provisions of
Section 53 hereof shall, upon conviction, be fined in an amount of not less than five
hundred pesos (P500.00), nor more than twenty thousand pesos (P20,000.00) and
imprisoned for not less than six (6) months nor more than two (2) years for each such
offense, and be liable to the payment of ten (10) times to the rental fees and other
charges which would have accrued had the occupation and use of the land been
authorized under a license agreement, lease, license or permit: Provided, That in the
case of an offender found guilty of making kaingin, the penalty shall be imprisonment
for not less than two (2) nor more than four (4) years and a fine equal to eight (8) times
the regular forest charges due on the forest products destroyed, without prejudice to the
payment of the full cost of production of the occupied area as determined by the Bureau:
Provided, further, That the maximum of the penalty prescribed herein shall be imposed
upon the offender who repeats the same offense and double the maximum of the
penalty upon the offender who commits the same offense for the third time.

In all cases, the Court shall further order the eviction of the offender from the land the
forfeiture to the government of all improvements made and all vehicles, domestic
animals and equipment of any kind used in the commission of the offense. If not suitable
for use by the Bureau, said vehicles, domestic animals, equipment and improvements
shall be sold at public auction, the proceeds of which shall accrue to the Development
Fund of the Bureau. xxx

Section 85. Tax Declaration on Real Property - Imprisonment for a period of not less
than two (2) nor more than four (4) years and perpetual disqualification from holding an
elective or appointive office, shall be imposed upon any public officer or employee who
shall issue a tax declaration on real property without a certification from the Director of
Forest Development and the Director of Lands or their duly designated representatives
that the area declared for taxation is alienable and disposable lands, unless the property
is titled or has been occupied and possessed by members of the national cultural
minorities prior to July 4, 1955.

Question: In the situationer, does it matter that the charcoal and lumber came from trees that the
farmers planted themselves, even if these were planted on forest land? (Note: Gmelina is not
naturally occurring in the country, one can assume somebody planted it). Cutting of any trees in
public land requires a permit, even if the trees were in fact planted and not naturally growing.

In a case, the Court ruled that even cutting of trees in private lands, including trees that have been
planted, also require a permit. It is covered under Sec. 68 of PD 705 which penalizes the cutting,
gathering, collecting, or removing of timber from alienable or disposable public land, or from private
land without any authority.99

People of the Philippines vs. Alfonso Dator and Benito Genol,

accused (Acquitted), Pastor Telen, accused-appellant.
G.R. No. 136142. October 24, 2000

De Leon, Jr., J., ponente

xxx

99
Merida v. People, G.R. No. 158182 June 12, 2008, 554 SCRA 366.
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It appears that on October 29, 1993, Police Station Commander Alejandro Rojas of
Maasin, Southern Leyte, and SPO1 Necitas Bacala, were on board a police patrol
vehicle heading towards Barangay San Rafael, Maasin, Southern Leyte. Upon reaching
Barangay Laboon of the same municipality, they noticed a Isuzu cargo truck loaded with
pieces of lumber bound toward the town proper of Maasin. Suspicious that the cargo
was illegally cut pieces of lumber, Police Station Commander Rojas maneuvered their
police vehicle and gave chase.

Upon catching up with the Isuzu cargo truck in Barangay Soro-soro, Maasin, Southern
Leyte, they ordered the driver, accused Benito Genol, to pull over. Benito Genol was
left alone in the truck after his companions hurriedly left. When asked if he had the
required documents for the proper transport of the pieces of lumber, Genol answered in
the negative. Genol informed the police authorities that the pieces of lumber were
owned by herein appellant, Pastor Telen, while the Isuzu cargo truck bearing Plate No.
HAF 628 was registered in the name of Southern Leyte Farmers Agro-Industrial
Cooperative, Inc. (SLEFAICO) which is a local cooperative. Consequently, Police
Officers Rojas and Bacala directed Benito Genol to proceed to the Maasin Police
Station, Maasin, Southern Leyte for further investigation.

xxx

The defense denied any liability for the crime charged in the Information. Pastor Telen,
a utility worker at the Integrated Provincial Health Office, Southern Leyte for nineteen
(19) years, testified that he needed lumber to be used in renovating the house of his
grandparents in Barangay Abgao, Maasin, Southern Leyte where he maintained
residence. Knowing that it was prohibited by law to cut trees without appropriate permit
from the Department of Environment and Natural Resources (DENR), Telen sought the
assistance of a certain Lando dela Pena who was an employee at the CENRO, Maasin,
Southern Leyte. Dela Pena accompanied Telen to the office of a certain Boy Leonor,
who was the Officer in Charge of CENRO in Maasin, Southern Leyte. Leonor did not
approve of the plan of Telen to cut teak or hard lumber from his (Telen) mother’s track
of land in Tabunan, San Jose, Maasin, Southern Leyte. However, Leonor allegedly
allowed Telen to cut the aging Dita trees only. According to Telen, Leonor assured him
that a written permit was not anymore necessary before he could cut the Dita trees,
which are considered soft lumber, from the private land of his mother, provided the same
would be used exclusively for the renovation of his house and that he shall plant trees
as replacement thereof, which he did by planting Gemelina seedlings.

xxx

Upon arrival in Barangay Soro-Soro, Telen was accosted by Police Station Commander
Alejandro Rojas who demanded from him DENR permit for the sawn lumber. After
confirming ownership of the sawn lumber, Telen explained to Rojas that he had already
secured verbal permission from Boy Leonor to cut Dita trees, which are considered soft
lumber, to be used in the renovation of his house and that he had already replaced the
sawn Dita trees with Gemelina seedlings, but to no avail. Rojas ordered that the pieces
of lumber and the Isuzu cargo truck be impounded at the municipal building of Maasin,
Southern Leyte for failure of Telen to produce the required permit from the DENR.

Pastor Telen appeared before Bert Pesidas, CENRO hearing officer, in Maasin,
Southern Leyte for investigation in connection with the confiscated pieces of lumber.
Telen had tried to contact Officer-in-Charge Boy Leonor of the CENRO Maasin,
Southern Leyte after the confiscation of the sawn lumber on October 29, 1993 and even
during the investigation conducted by the CENRO hearing officer for three (3) times but
to no avail, for the reason that Boy Leonor was assigned at a reforestation site in Danao,
Cebu province.

xxx

After analyzing the evidence, the trial court rendered a decision, the dispositive portion
of which reads:
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WHEREFORE, judgment is rendered as follows:

1. CONVICTING the accused PASTOR TELEN beyond reasonable doubt of the

offense charged and there being no modifying circumstances, and with the
Indeterminate Sentence Law being inapplicable, the herein accused is hereby
sentenced to suffer the indivisible penalty of RECLUSION PERPETUA, with the
accessory penalties provided by law, which is two (2) degrees higher than
PRISION MAYOR maximum, the authorized penalty similar to Qualified Theft,
and to pay the costs. His bail for his provisional liberty is hereby cancelled and
he shall be committed to the New Bilibid Prisons, Muntinlupa, Metro Manila thru
the Abuyog Regional Prisons, Abuyog, Leyte via the Provincial Warden, Maasin,
Southern Leyte;

xxx

In his appeal Pastor Telen interpose the following assignments of error:

THE LOWER COURT ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY

BEYOND REASONABLE DOUBT FOR VIOLATION OF SEC. 68, P. D. 705, AS
AMENDED, BEING CONTRARY TO LAW AND THE EVIDENCE ON RECORD AND
FOR BEING NOT IN CONFORMITY WITH DENR ADMINISTRATIVE ORDER NO. 79,
SERIES OF 1990.

xxx

The appeal is not impressed with merit.

It is not disputed that appellant Pastor Telen is the owner of the fifty-one (51) pieces of
assorted Antipolo and Dita lumber with a total volume of 1,560.16 board feet. He alleged
that the pieces of lumber were cut from the track of land belonging to his mother in San
Jose, Maasin, Southern Leyte which he intended to use in the renovation of his house
in Barangay Abgao of the same municipality. After having been confiscated by the
police, while in transit, in Barangay Soro-soro, appellant Telen failed to produce before
the authorities the required legal documents from the DENR pertaining to the said
pieces of lumber.

The fact of possession by the appellant of the subject fifty-one (51) pieces of assorted
Antipolo and Dita lumber, as well as his subsequent failure to produce the legal
documents as required under existing forest laws and regulations constitute criminal
liability for violation of Presidential Decree No. 705, otherwise known as the Revised
Forestry Code. Section 68 of the code provides:

Section 68. Cutting, Gathering and/or Collecting Timber or Other Forest

Products Without License.-Any person who shall cut, gather, collect,
remove timber or other forest products from any forest land, or timber from
alienable or disposable public land, or from private land, without any
authority, or possess timber or other forest products without the legal
documents as required under existing forest laws and regulations, shall be
punished with the penalties imposed under Articles 309 and 310 of the
Revised Penal Code: Provided, that in the case of partnerships,
associations, or corporations, the officers who ordered the cutting,
gathering, collection or possession shall be liable, and if such officers are
aliens, they shall, in addition to the penalty, be deported without further
proceedings on the part of the Commission on Immigration and
Deportation.
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The Court shall further order the confiscation in favor of the government of the timber
or any forest products cut, gathered, collected, removed, or possessed, as well as the
machinery, equipment, implements and tools illegally used in the area where the timber
or forest products are found.

Appellant Telen contends that he secured verbal permission from Boy Leonor, Officer-
in-Charge of the DENR-CENRO in Maasin, Southern Leyte before cutting the lumber,
and that the latter purportedly assured him that written permit was not anymore
necessary before cutting soft lumber, such as the Antipolo and Dita trees in this case,
from a private track of land, to be used in renovating appellant’s house, provided that
he would plant trees as replacements thereof, which he already did. It must be
underscored that the appellant stands charged with the crime of violation of Section 68
of Presidential Decree No. 705, a special statutory law, and which crime is considered
mala prohibita. In the prosecution for crimes that are considered mala prohibita, the only
inquiry is whether or not the law has been violated. The motive or intention underlying
the act of the appellant is immaterial for the reason that his mere possession of the
confiscated pieces of lumber without the legal documents as required under existing
forest laws and regulations gave rise to his criminal liability.

In any case, the mere allegation of the appellant regarding the verbal permission given
by Boy Leonor, Officer in Charge of DENR-CENRO, Maasin, Southern Leyte, is not
sufficient to overturn the established fact that he had no legal documents to support
valid possession of the confiscated pieces of lumber. It does not appear from the record
of this case that appellant exerted any effort during the trial to avail of the testimony of
Boy Leonor to corroborate his allegation. Absent such corroborative evidence, the trial
court did not commit an error in disregarding the bare testimony of the appellant on this
point which is, at best, self-serving.

The appellant cannot validly take refuge under the pertinent provision of DENR
Administrative Order No. 79, Series of 1990 which prescribes rules on the deregulation
of the harvesting, transporting and sale of firewood, pulpwood or timber planted in
private lands. Appellant submits that under the said DENR Administrative Order No. 79,
no permit is required in the cutting of planted trees within titled lands except Benguet
pine and premium species listed under DENR Administrative Order No. 78, Series of
1987, namely: narra, molave, dao, kamagong, ipil, acacia, akle, apanit, banuyo,
batikuling, betis, bolong-eta, kalantas, lanete, lumbayao, sangilo, supa, teak, tindalo
and manggis.

Concededly, the varieties of lumber for which the appellant is being held liable for illegal
possession do not belong to the premium species enumerated under DENR
Administrative Order No. 78, Series of 1987. However, under the same DENR
administrative order, a certification from the CENRO concerned to the effect that the
forest products came from a titled land or tax declared alienable and disposable land
must still be secured to accompany the shipment. This the appellant failed to do, thus,
he is criminally liable under Section 68 of Presidential Decree No. 705 necessitating
prior acquisition of permit and “legal documents as required under existing forest laws
and regulations.” The pertinent portion of DENR Administrative Order No. 79, Series of
1990, is quoted hereunder, to wit:

In line with the National Reforestation Program and in order to promote

the planting of trees by owners of private lands and give incentives to the
tree farmers, Ministry Administrative Order No. 4 dated January 19, 1987
which lifted the restriction in the harvesting, transporting and sale of
firewood, pulpwood or timber produced from Ipil-Ipil (leucaenia spp) and
Falcate (Albizzia falcataria) is hereby amended to include all other tree
species planted in private lands except BENGUET PINE and premium
hardwood species. Henceforth, no permit is required in the cutting of
planted trees within the titled lands or tax declared A and D lands with
corresponding application for patent or acquired through court
proceedings, except BENGUET PINE and premium species listed under
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DENR Administrative Order No 78, Series of 1987, provided, that a

certification of the CENRO concerned to the effect that the forest products
came from a titled land or tax declared alienable and disposable land is
issued accompanying the shipment.

The Chainsaw Act regulates the use if chainsaws in cutting and processing wood products:

The Chainsaw Act of 2002

Republic Act No. 9175

Sec. 5. Persons Authorized to Possess and Use a Chain Saw. — The Department
is hereby authorized to issue permits to possess and/or use a chain saw for the felling
and/or cutting of trees, timber and other forest or agro-forest products to any
applicant who:

(a) has a subsisting timber license agreement, production sharing

agreement, or similar agreements, or a private land timber permit;

(b) is an orchard and fruit tree farmer;

(c) is an industrial tree farmer;

(d) is a licensed wood processor and the chain saw shall be used for
the cutting of timber that has been legally sold to said applicant; or

(e) shall use the chain saw for a legal purpose.

Agencies of the government that use chain saws in some aspects of their functions
must likewise secure the necessary permit from the Department before operating the
same.

Sec. 6. Registration of Chain Saws. — Within a period of three (3) months from the
effectivity hereof, all persons who own or are otherwise in possession of chain saws
must register the same with the Department, through any of its Community
Environment and Natural Resources Office, which shall issue the corresponding
registration certificate or permit if it finds such persons to be qualified hereunder.

Every permit to possess and/or use a chain saw for legitimate purpose shall be valid
for two (2) years upon issuance: Provided, That permits to possess and use
chainsaw issued to non-commercial orchard and fruit tree farmers shall be valid for
a period of five (5) years upon issuance. For this purpose, the Department shall be
allowed to collect reasonable registration fees for the effective implementation of this
Act.

Sec. 7. Penal Provisions. —

(1) Selling, Purchasing, Re-selling Transferring, Distributing or Possessing a Chain

Saw Without a Proper Permit. — Any person who sells, purchases, transfers the
ownership, distributes, or otherwise disposes or possesses a chain saw without first
securing the necessary permit from the Department shall be punished with
imprisonment of four (4) years, two (2) months and one (1) day to six (6) years or a
fine of not less than Fifteen thousand pesos (P15,000.00) but not more than Thirty
thousand pesos (P30,000.00) or both at the discretion of the court, and the chain
saw/s confiscated in favor of the government.
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xxx

(4) Actual Unlawful Use of Chain Saw. — Any person who is found to be in
possession of a chain saw and uses the same to cut trees and timber in forest land
or elsewhere except as authorized by the Department shall be penalized with
imprisonment of six (6) years and one (1) day to eight (8) years or a fine of not less
than Thirty thousand pesos (P30,000.00) but not more than Fifty thousand pesos
(P50,000.00) or both at the discretion of the court without prejudice to being
prosecuted for a separate offense that may have been simultaneously committed.
The chain saw unlawfully used shall be likewise confiscated in favor of the
government.

If the violation under this Sec. is committed by or through the command or order of
another person, partnership or corporation, the penalties herein provided shall
likewise be imposed on such other person, or the responsible officer(s) in such
partnership or corporation.

If the offender is a public official or employee, in addition to the above penalties, he

shall be removed from office and perpetually disqualified from holding any public
office.

The chain saws confiscated under this Sec. shall be sold at public auction to qualified
buyers and the proceeds thereof shall go to the Department.

xxx

The penal provisions of the Forestry Code are very clear. Under Section 68, there are two distinct
and separate offenses that are punishable by the Code, to wit: (1) cutting, gathering, collecting, and
removing timber or other forest products from any forest land, or timber from alienable or disposable
public land, or from private land without authority; and (2) possession of timber or forest products
without the legal documents required under existing forest laws and regulations. As for the second
offense, the legality of the cutting, gathering collecting, and removal of the forest products is
immaterial, because mere possession of forest products without the proper documents consummates
the crime. This is because the Forest Code is a special law, and mere possession is considered
malum prohibitum. The clarity of the penal provisions in the Forest Code are illustrated by the
following cases of Paat vs. Court of Appeals, Mustang Lumber vs. Court of Appeals, and
Merida
vs.
People of the Philippines.

Paat v. Court of Appeals

G.R. No. 111107 January 10, 1997

Torres, Jr., J., ponente

xxx

The controversy on hand had its incipiency on May 19, 1989 when the truck of private
respondent Victoria de Guzman while on its way to Bulacan from San Jose, Baggao,
Cagayan, was seized by the Department of Environment and Natural Resources
(DENR, for brevity) personnel in Aritao, Nueva Vizcaya because the driver could not
produce the required documents for the forest products found concealed in the
truck. Petitioner Jovito Layugan, the Community Environment and Natural Resources
Officer (CENRO) in Aritao, Cagayan, issued on May 23, 1989 an order of confiscation
of the truck and gave the owner thereof fifteen (15) days within which to submit an
explanation why the truck should not be forfeited. Private respondents, however, failed
to submit the required explanation. On June 22, 1989, Regional Executive Director
Rogelio Baggayan of DENR sustained petitioner Layugan’s action of confiscation
and ordered the forfeiture of the truck invoking Section 68-A of Presidential Decree
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No. 705 as amended by Executive Order No. 277. Private respondents filed a letter of
reconsideration dated June 28, 1989 of the June 22, 1989 order of Executive Director
Baggayan, which was, however, denied in a subsequent order of July 12, 1989.
Subsequently, the case was brought by the petitioners to the Secretary of DENR
pursuant to private respondents’ statement in their letter dated June 28, 1989 that in
case their letter for reconsideration would be denied then “this letter should be
considered as an appeal to the Secretary.” Pending resolution however of the appeal,
a suit for replevin, docketed as Civil Case 4031, was filed by the private respondents
against petitioner Layugan and Executive Director Baggayan with the Regional Trial
Court, Branch 2 of Cagayan, which issued a writ ordering the return of the truck to
private respondents. Petitioner Layugan and Executive Director Baggayan filed a
motion to dismiss with the trial court contending, inter alia, that private respondents had
no cause of action for their failure to exhaust administrative remedies. The trial court
denied the motion to dismiss in an order dated December 28, 1989. Their motion for
reconsideration having been likewise denied, a petition for certiorari was filed by the
petitioners with the respondent Court of Appeals which sustained the trial court’s order
ruling that the question involved is purely a legal question. Hence, this present petition,
with prayer for temporary restraining order and/or preliminary injunction, seeking to
reverse the decision of the respondent Court of Appeals was filed by the petitioners on
September 9, 1993. By virtue of the Resolution dated September 27, 1993, the prayer
for the issuance of temporary restraining order of petitioners was granted by this Court.

Invoking the doctrine of exhaustion of administrative remedies, petitioners aver that the
trial court could not legally entertain the suit for replevin because the truck was under
administrative seizure proceedings pursuant to Section 68-A of P.D. 705, as amended
by E.O. 277. Private respondents, on the other hand, would seek to avoid the operation
of this principle asserting that the instant case falls within the exception of the doctrine
upon the justification that (1) due process was violated because they were not given the
chance to be heard, and (2) the seizure and forfeiture was unlawful on the grounds: (a)
that the Secretary of DENR and his representatives have no authority to confiscate and
forfeit conveyances utilized in transporting illegal forest products, and (b) that the truck
as admitted by petitioners was not used in the commission of the crime.

Upon a thorough and delicate scrutiny of the records and relevant jurisprudence on the
matter, we are of the opinion that the plea of petitioners for reversal is in order.

This Court in a long line of cases has consistently held that before a party is allowed to
seek the intervention of the court, it is a pre-condition that he should have availed of all
the means of administrative processes afforded him. Hence, if a remedy within the
administrative machinery can still be resorted to by giving the administrative officer
concerned every opportunity to decide on a matter that comes within his jurisdiction
then such remedy should be exhausted first before court's judicial power can be sought,
The premature invocation of court's intervention is fatal to one's cause of
action. Accordingly, absent any finding of waiver or estoppel the case is susceptible of
dismissal for lack of cause of
action.
xxx

There is no question that the controversy was pending before the Secretary of DENR
when it was forwarded to him following the denial by the petitioners of the motion for
reconsideration of private respondents through the order of July 12, 1989. In their letter
of reconsideration dated June 28, 1989, private respondents clearly recognize the
presence of an administrative forum to which they seek to avail, as they did avail, in the
resolution of their case. The letter reads, thus:

xxx
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If this motion for reconsideration does not merit your favorable action, then this
letter should be considered as an appeal to the Secretary.

It was easy to perceive then that the private respondents looked up to the Secretary for
the review and disposition of their case. By appealing to him, they acknowledged the
existence of an adequate and plain remedy still available and open to them in the
ordinary course of the law. Thus, they cannot now, without violating the principle of
exhaustion of administrative remedies, seek court's intervention by filing an action for
replevin for the grant of their relief during the pendency of an administrative proceeding.

xxx

It is important to point out that the enforcement of forestry laws, rules and regulations
and the protection, development and management of forest lands fall within the primary
and special responsibilities of the Department of Environment and Natural Resources.
By the very nature of its function, the DENR should be given a free hand unperturbed
by judicial intrusion to determine a controversy which is well within its jurisdiction. The
assumption by the trial court, therefore, of the replevin suit filed by private respondents
constitutes an unjustified encroachment into the domain of the administrative agency's
prerogative. The doctrine of primary jurisdiction does not warrant a court to arrogate
unto itself the authority to resolve a controversy the jurisdiction over which is initially
lodged with an administrative body of special competence.

xxx

Second, private respondents imputed the patent illegality of seizure and forfeiture of the
truck because the administrative officers of the DENR allegedly have no power to
perform these acts under the law. They insisted that only the court is authorized to
confiscate and forfeit conveyances used in transporting illegal forest products as can be
gleaned from the second paragraph of Section 68 of P.D. 705, as amended by E.O.
277. The pertinent provision reads as follows:

Sec. 68. . . .

xxx xxx xxx

The court shall further order the confiscation in favor of the government
of
the timber or any forest products cut, gathered, collected, removed, or
possessed, as well as the machinery, equipments ,implements and tools
illegaly [sic] used in the area where the timber or forest products are found.
(Emphasis ours)

A reading, however, of the law persuades us not to go along with private respondents'
thinking not only because the aforequoted provision apparently does not mention nor
include "conveyances" that can be the subject of confiscation by the courts, but to a
large extent, due to the fact that private respondents' interpretation of the subject
provision unduly restricts the clear intention of the law and inevitably reduces the other
provision of Section 68-A, which is quoted herein below:

Sec. 68-A. Administrative Authority of the Department or His Duly

Authorized Representative To Order Confiscation. In all cases of violation
of this Code or other forest laws, rules and regulations, the Department
Head or his duly authorized representative, may order the confiscation of
any forest products illegally cut, gathered, removed, or possessed or
abandoned, and all conveyances used either by land, water or air in the
commission of the offense and to dispose of the same in accordance with
pertinent laws, regulations and policies on the matter. (Emphasis ours)
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It is, thus, clear from the foregoing provision that the Secretary and his duly authorized
representatives are given the authority to confiscate and forfeit any conveyances utilized
in violating the Code or other forest laws, rules and regulations. The phrase "to dispose
of the same" is broad enough to cover the act of forfeiting conveyances in favor of the
government. The only limitation is that it should be made "in accordance with pertinent
laws, regulations or policies on the matter." In the construction of statutes, it must be
read in such a way as to give effect to the purpose projected in the statute. Statutes
should be construed in the light of the object to be achieved and the evil or mischief to
be suppressed, and they should be given such construction as will advance the object,
suppress the mischief, and secure the benefits intended.

In this wise, the observation of the Solicitor General is significant, thus:

“But precisely because of the need to make forestry laws ‘more responsive
to present situations and realities’ and in view of the ‘urgency to conserve
the remaining resources of the country,’ that the government opted to add
Section 68-A. This amendatory provision is an administrative
remedy totally separate and distinct from criminal proceedings. More than
anything else, it is intended to supplant the inadequacies that characterize
enforcement of forestry laws through criminal actions. The preamble of EO
277-the law that added Section 68-A to PD 705-is most revealing:

‘WHEREAS, there is an urgency to conserve the remaining forest

resources of the country for the benefit and welfare of the present and
future generations of Filipinos;

WHEREAS, our forest resources may be effectively conserved and

protected through the vigilant enforcement and implementation of our
forestry laws, rules and regulations;

WHEREAS, the implementation of our forestry laws suffers from

technical difficulties, due to certain inadequacies in the penal
provisions of the Revised Forestry Code of the Philippines; and

WHEREAS, to overcome this difficulties, there is a need to penalize

certain acts more responsive to present situations and realities;’

It is interesting to note that Section 68-A is a new provision authorizing the

DENR to confiscate, not only ‘conveyances,’ but forest products as well.
On the other hand, confiscation of forest products by the ‘court’ in a
criminal action has long been provided for in Section 68. If as private
respondents insist, the power on confiscation cannot be exercised except
only through the court under Section 68, then Section 68-A would have no
purpose at all. Simply put, Section 68-A would not have provided any
solution to the problem perceived in EO 277, supra.”

xxx

With the introduction of Executive Order No. 277 amending Section 68 of P.D. 705, the
act of cutting, gathering, collecting, removing, or possessing forest products without
authority constitutes a distinct offense independent now from the crime of theft under
Articles 309 and 310 of the Revised Penal Code, but the penalty to be imposed is that
provided for under Article 309 and 310 of the Revised Penal Code. This is clear from
the language of Executive Order No. 277 when it eliminated the phrase "shall be guilty
of qualified theft as defined and punished under Articles 309 and 310 of the Revised
Penal Code" and inserted the words "shall be punished with the penalties imposed
under Article 309 and 310 of the Revised Penal Code". When the statute is clear and
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explicit, there is hardly room for any extended court ratiocination or rationalization of the
law.

From the foregoing disquisition, it is clear that a suit for replevin can not be sustained
against the petitioners for the subject truck taken and retained by them for administrative
forfeiture proceedings in pursuant to Section 68-A of the P.D. 705, as amended.
Dismissal of the replevin suit for lack of cause of action in view of the private
respondents' failure to exhaust administrative remedies should have been the proper
course of action by the lower court instead of assuming jurisdiction over the case and
consequently issuing the writ ordering the return of the truck. Exhaustion of the
remedies in the administrative forum, being a condition precedent prior to one's
recourse to the courts and more importantly, being an element of private respondents'
right of action, is too significant to be waylaid by the lower court.

Petition Granted; Decision of the respondent Court of Appeals and its Resolution are
hereby SET ASIDE AND REVERSED; the Restraining Order is hereby made
permanent.

Mustang Lumber v. Court of Appeals

G.R. No. 104988 June 18, 1996

Davide, Jr., J., ponente

Petitioner, a domestic corporation with principal office at Nos. 1350-1352 Juan Luna
Street, Tondo, Manila, and with a Lumberyard at Fortune Street, Fortune Village, Paseo
de Blas, Valenzuela, Metro Manila, was duly registered as a lumber dealer with the
Bureau of Forest Development (BFD) under Certificate of Registration No. NRD-4-
092590-0469. Its permit as such was to expire on 25 September 1990.

Respondent Secretary Fulgencio S. Factoran, Jr., and respondent Atty. Vincent A.

Robles were, during all the time material to these cases, the Secretary of the
Department of Environment and Natural Resources (DENR) and the Chief of the Special
Actions and Investigation Division (SAID) of the DENR, respectively.

xxx

On 1 April 1990, acting on an information that a huge stockpile of narra flitches, shorts,
and slabs were seen inside the lumberyard of the petitioner in Valenzuela, Metro Manila,
the SAID organized a team of foresters and policemen and sent it to conduct
surveillance at the said lumberyard. In the course thereof, the team members saw
coming out from the lumberyard the petitioner's truck, with Plate No. CCK-322, loaded
with lauan and almaciga lumber of assorted sizes and dimensions. Since the driver
could not produce the required invoices and transport documents, the team seized the
truck together with its cargo and impounded them at the DENR compound at Visayas
Avenue, Quezon City. The team was not able to gain entry into the premises because
of the refusal of the owner.

On 3 April 1990, the team was able to secure a search warrant from Executive Judge
Adriano R. Osorio of the Regional Trial Court (RTC) of Valenzuela, Metro Manila. By
virtue thereof, the team seized on that date from the petitioner's lumberyard four
truckloads of narra shorts, trimmings, and slabs; a negligible number of narra lumber;
and approximately 200,000 board feet of lumber and shorts of various species including
almaciga and supa.
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On 4 April 1990, the team returned to the premises of the petitioner's lumberyard in
Valenzuela and placed under administrative seizure the remaining stockpile of
almaciga, supa, and lauan lumber with a total volume of 311,000 board feet because
the petitioner failed to produce upon demand the corresponding certificate of lumber
origin, auxiliary invoices, tally sheets, and delivery receipts from the source of the
invoices covering the lumber to prove the legitimacy of their source and origin.

Parenthetically, it may be stated that under an administrative seizure the owner retains
the physical possession of the seized articles. Only an inventory of the articles is taken
and signed by the owner or his representative. The owner is prohibited from disposing
them until further orders.

xxx

On 3 May 1990, Secretary Factoran issued another order wherein, after reciting the
events which took place on 1 April and 3 April 1990, he ordered "CONFISCATED in
favor of the government to be disposed of in accordance with law" the approximately
311,000 board feet of lauan, supa, and almaciga lumber, shorts, and sticks found inside
the petitioner's lumberyard.

xxx

On 17 September 1990, in response to reports that violations of P.D. No. 705 (The
Revised Forestry Code of the Philippines), as amended, were committed and acting
upon instruction of Robles and under Special Order No. 897, series of 1990, a team of
DENR agents went to the business premises of the petitioner located at No. 1352 Juan
Luna Street, Tondo, Manila. The team caught the petitioner operating as a lumber
dealer although its lumber-dealer's permit had already been suspended or 23 April
1990. Since the gate of the petitioner's lumberyard was open, the team went inside and
saw an owner-type jeep with a trailer loaded with lumber. Upon investigation, the team
was informed that the lumber loaded on the trailer was to be delivered to the petitioner's
customer. It also came upon the sales invoice covering the transaction. The members
of the team then introduced themselves to the caretaker, one Ms. Chua, who turned out
to be the wife of the petitioner's president and general manager, Mr. Ri Chuy Po, who
was then out of town. The team's photographer was able to take photographs of the
stockpiles of lumber including newly cut ones, fresh dust around sawing or cutting
machineries and equipment, and the transport vehicles loaded with lumber. The team
thereupon effected a constructive seizure of approximately 20,000 board feet of lauan
lumber in assorted sizes stockpiled in the premises by issuing a receipt therefor.

Petitioner filed with the RTC of Manila a petition forcertiorari and prohibition. The case
(hereinafter, the SECOND CIVIL CASE) was docketed as Civil Case No. 90-54610 and
assigned to Branch 24 of the said court.

xxx

An information was filed on 5 June 1991 by the DOJ with Branch 172 of the RTC of
Valenzuela, charging Ri Chuy Po with the violation of Section 58 of P.D. No. 705, as
amended, which was docketed as Criminal Case No. 324-V-91 (hereinafter,
the CRIMINAL CASE). The accusatory portion of the information reads as follows:

That on or about the 3rd day of April 1990, or prior to or subsequent thereto, within the
premises and vicinity of Mustang Lumber, Inc. in Fortune Village, Valenzuela, Metro
Manila, and within the jurisdiction of this Honorable Court, the above-named accused,
did then and there wilfully, feloniously and unlawfully have in his possession truckloads
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of almaciga and lauan and approximately 200,000 bd. ft. of lumber and shorts of various
species including almaciga and supa, without the legal documents as required under
existing forest laws andregulations.

On 7 June 1991, Branch 35 of the RTC of Manila rendered its decision in the FIRST
CIVIL CASE, the dispositive portion of which reads:

WHEREFORE, judgment in this case is rendered as follows:

1. The Order of Respondent Secretary of the DENR, the Honorable Fulgencio S.

Factoran, Jr., dated 3 May 1990 ordering the confiscation in favor of the Government
the approximately 311,000 board feet of Lauan, supa, end almaciga Lumber, shorts and
sticks, found inside and seized from the Lumberyard of the petitioner at Fortune Drive,
Fortune Village, Paseo de Blas, Valenzuela, Metro Manila, on April 4, 1990 (Exhibit 10),
is hereby set aside and vacated, and instead the respondents are required to report and
bring to the Hon. Adriano Osorio, Executive Judge, Regional Trial Court, NCR,
Valenzuela, Metro Manila, the said 311,000 board feet of Lauan, supa and almaciga
Lumber, shorts and sticks, to be dealt with as directed by Law;

2. The respondents are required to initiate and prosecute the appropriate action before
the proper court regarding the Lauan and almaciga lumber of assorted sizes and
dimensions Loaded in petitioner's truck bearing Plate No. CCK-322 which were seized
on April 1, 1990;

3. The Writ of Preliminary Injunction issued by the Court on August 2, 1990 shall be
rendered functus oficio upon compliance by the respondents with paragraphs 1 and 2
of this judgment;.

4. Action on the prayer of the petitioner that the Lauan, supa and almaciga lumber,
shorts and sticks mentioned above in paragraphs 1 and 2 of this judgment be returned
to said petitioner is withheld in this case until after the proper court has taken cognizance
and determined how those Lumber, shorts and sticks should be disposed of; and

5. The petitioner is ordered to pay the costs.

SO ORDERED

xxx

The trial court, however, set aside Secretary Factoran's order of 3 May 1990 ordering
the confiscation of the seized articles in favor of the Government for the reason that
since the articles were seized pursuant to the search warrant issued by Executive Judge
Osorio they should have been returned to him in compliance with the directive in the
warrant.

Xxx

In the CRIMINAL CASE, respondent Judge Teresita Dizon-Capulong granted the

motion to quash and dismissed the case on the ground that "possession of lumber
without the legal documents required by forest laws and regulations is not a crime.

Its motion for reconsideration having been denied in the order of 18 October 1991, the
People filed a petition for certiorari with this Court in G.R. No. 106424, wherein it
contends that the respondent Judge acted with grave abuse of discretion in granting the
motion to quash and in dismissing the case.
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The People filed a petition for certiorari with this Court in G.R. No. 106424, wherein it
contends that the respondent Judge acted with grave abuse of discretion in granting the
motion to quash and in dismissing the case.

The Court of Appeals rendered a decision in CA-G.R. SP No. 25510 dismissing for lack
of merit the petitioner's appeal from the decision in the FIRST CIVIL CASE and affirming
the trial court's rulings on the issues raised. As to the claim that the truck was not
carrying contraband articles since there is no law punishing the possession of lumber,
and that lumber is not timber whose possession without the required legal documents
is unlawful under P.D. No. 705, as amended, the Court of Appeals held:

This undue emphasis on lumber or the commercial nature of the forest product involved
has always been foisted by those who claim to be engaged in the legitimate business
of lumber dealership. But what is important to consider is that when appellant was
required to present the valid documents showing its acquisition and lawful possession
of the lumber in question, it failed to present any despite the period of extension granted
to it.

The petitioner's motion to reconsider the said decision was denied by the Court of
Appeals in its resolution of 3 March 1992. Hence, the petitioner came to this Court by
way of a petition for review on certiorari in G.R. No. 104988, which was filed on 2 May
1992

xxx

On 24 September 1992, Branch 24 of the RTC of Manila handed down a decision in the
SECOND CIVIL CASE dismissing the petition for certiorari and prohibition because (a)
the petitioner did not exhaust administrative remedies; (b) when the seizure was made
on 17 September 1990 the petitioner could not lawfully sell lumber, as its license was
still under suspension; (c) the seizure was valid under Section 68-A of P.D. No. 705, as
amended; and (d) the seizure was justified as a warrantless search and seizure under
Section 80 of P.D. No. 705, as amended.

The petitioner appealed from the decision to the Court of Appeals, which docketed the
appeal as CA-G.R. SP No. 33778.

In its decision of 31 July 1995, the Court of Appeals dismissed the petitioner's appeal in
CA-G.R. SP No. 33778 for lack of merit and sustained the grounds relied upon by the
trial court in dismissing the SECOND CIVIL CASE. Relying on the definition of "lumber"
by Webster, viz., "timber or logs, especially after being prepared for the market," and by
the Random House Dictionary of the English Language, viz., "wood, esp. when suitable
or adapted for various building purposes," the respondent Court held that since wood is
included in the definition of forest product in Section 3(q) of P.D. No. 705, as
amended, lumber is necessarily included in Section 68 under the term forest product.

G.R. No. 106424

Xxx

Respondent Ri Chuy Po is charged with the violation of Section 68 of P.D. No. 705, as
amended by E.O. No. 277, which provides:

Sec. 68. Cutting, Gathering and/or collecting Timber, or Other Forest Products Without
License. -- Any person who shall cut, gather, collect, remove timber or other forest
products from any forest land, or timber from alienable or disposable public land, or from
private land, without any authority, or possess timber or other forest products without
the legal documents as required under existing forest laws and regulations, shall be
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punished with the penalties imposed under Articles 309 and 310 of the Revised Penal
Code: Provided, That in the case of partnerships, associations, or corporations, the
officers who ordered the cutting, gathering, collection or possession shall be liable, and
if such officers are aliens, they shall, in addition to the penalty, be deported without
further proceedings on the part of the Commission on Immigration and Deportation.

The Court shall further order the confiscation in favor of the government of the timber
or any forest products cut, gathered, collected, removed, or possessed, as well as the
machinery, equipment, implements and tools illegally used in the area where the timber
or forest products are found.

Punished then in this section are (1) the cutting, gathering, collection,
or removal of timber or other forest products from the places therein mentioned without
any authority; and (b) possession of timber forest products without the legal documents
as required under existing forest laws and regulations.

Indeed, the word lumber does not appear in Section 68. But conceding ex gratia that
this omission amounts to an exclusion of lumber from the section's coverage, do the
facts averred in the information in the CRIMINAL CASE validly charge a violation of the
said section?

A cursory reading of the information readily leads us to an infallible conclusion

that lumber is not solely its subject matter. It is evident therefrom that what are alleged
to be in the possession of the private respondent, without the required legal documents,
are truckloads of

(1) almaciga and lauan; and

(2) approximately 200,000 bd. ft. of lumber and shorts of various species including
almaciga and supa.

The "almaciga and lauan" specifically mentioned in no. (1) are not described as
"lumber." They cannot refer to the "lumber" in no. (2) because they are separated by
the words "approximately 200,000 bd. ft." with the conjunction "and," and not with the
preposition "of." They must then be raw forest products or, more
specifically, timbers under Section 3(q) of P.D. No. 705, as amended, which reads:

Sec. 3. Definitions. --

xxx xxx xxx

(q) Forest product means timber, firewood, bark, tree top, resin, gum, wood, oil, honey,
beeswax, nipa, rattan, or other forest plant, the associated water, fish game, scenic,
historical, recreational and geological resources in forest lands.

It follows then that lumber is only one of the items covered by the information. The public
and the private respondents obviously miscomprehended the averments in the
information. Accordingly, even if lumber is not included in Section 68, the other items
therein as noted above fall within the ambit of the said section, and as to them, the
information validly charges an offense

xxx

The Revised Forestry Code contains no definition of either timber or lumber. While the
former is included inforest products as defined in paragraph (q) of Section 3, the latter
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is found in paragraph (aa) of the same section in the definition of "Processing plant,"
which reads:

(aa) Processing plant is any mechanical set-up, machine or combination of machine

used for the processing of logs and other forest raw materials into lumber, veneer,
plywood, wallbond, blockboard, paper board, pulp, paper or other finished wood
products.

This simply means that lumber is a processed log or processed forest raw material.
Clearly, the Code uses the term lumber in its ordinary or common usage. In the 1993
copyright edition of Webster's Third New International Dictionary, lumber is
defined, inter alia, as "timber or logs after being prepared for the market." 32 Simply put,
lumber is a processed log or timber.

It is settled that in the absence of legislative intent to the contrary, words and phrases
used in a statute should be given their plain, ordinary, and common usage
meaning. And insofar as possession of timber without the required legal documents is
concerned, Section 68 of P.D. No. 705, as amended, makes no distinction between raw
or processed timber. Neither should we. Ubi lex non distinguere debemus.

G.R. No. 104988

We find this petition to be without merit.

xxx

The seizure of such truck and its cargo was a valid exercise of the power vested upon
a forest officer or employee by Section 80 of P.D. No. 705, as amended by P.D. No.
1775. Then, too, as correctly held by the trial court and the Court of Appeals in the
FIRST CIVIL CASE, the search was conducted on a moving vehicle. Such a search
could be lawfully conducted without a search warrant.

Search of a moving vehicle is one of the five doctrinally accepted exceptions to the
constitutional mandate that no search or seizure shall be made except by virtue of a
warrant issued by a judge after personally determining the existence of probable cause.
The other exceptions are (3) search as an incident to a lawful arrest, (2) seizure of
evidence in plain view, (3) customs searches, and (4) consented warrantless search.

G.R. No. 123784

The Court of Appeals correctly dismissed the petitioner's appeal from the judgment of
the trial court in the SECOND CIVIL CASE. The petitioner never disputed the fact that
its lumber-dealer's license or permit had been suspended by Secretary Factoran on 23
April 1990. The suspension was never lifted, and since the license had only a lifetime
of up to 25 September 1990, the petitioner has absolutely no right to possess, sell, or
otherwise dispose of lumber. Accordingly, Secretary Factoran or his authorized
representative had the authority to seize the Lumber pursuant to Section 68-A of P.D.
No. 705, as amended, which provides as follows:

Sec. 68-A Administrative Authority of the Department Head or his Duly Authorized
Representative to Order Confiscation. -- In all cases of violations of this Code or other
forest laws, rules and regulations, the Department Head or his duly authorized
representative may order the confiscation of any forest products illegally cut, gathered,
removed, or possessed or abandoned. . . .

xxx
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WHEREFORE, judgment is hereby rendered

1. (a) GRANTING the petition in G.R. No. 106424; (b) SETTING ASIDE and
ANNULLING, for having been rendered with grave abuse of discretion, the challenged
orders of 16 August 1991 and 18 October 1991 of respondent Judge Teresita Dizon-
Capulong, Branch 172, Regional Trial Court of Valenzuela, Metro Manila, in Criminal
Case No. 324-V-91, entitled "People of the Philippines vs. Ri Chuy Po"; (c)
REINSTATING the information in the said criminal case; and (d) DIRECTING the
respondent Judge or her successor to hear and decide the case with purposeful
dispatch; and

2. DENYING the petitions in G.R. No. 104988 and in G. R. No. 123784 for utter failure
of the petitioner to show that the respondent Court of Appeals committed any reversible
error in the challenged decisions of 29 November 1991 in CA-G.R. SP No. 25510 in the
FIRST CIVIL CASE and of 31 July 1995 in CA-G.R. SP No. 33778 on the SECOND
CIVIL CASE.

Costs against the petitioner in each of these three cases.

SO ORDERED.

Merida
vs.
People of the Philippines

G.R. No. 158182, June 12, 2008

Carpio, J., ponente

Petitioner was charged in the Regional Trial Court of Romblon, Romblon, Branch 81
(trial court) with violation of Section 68 of PD 705, as amended, for "cut[ting], gather[ing],
collect[ing] and remov[ing]" a lone narra tree inside a private land in Mayod, Ipil,
Magdiwang, Romblon (Mayod Property) over which private complainant Oscar M.
Tansiongco (Tansiongco) claims ownership.

The prosecution evidence showed that on 23 December 1998, Tansiongco learned that
petitioner cut a narra tree in the Mayod Property. Tansiongco reported the matter to
Florencio Royo (Royo), the punong barangay of Ipil. On 24 December 1998, Royo
summoned petitioner to a meeting with Tansiongco. When confronted during the
meeting about the felled narra tree, petitioner admitted cutting the tree but claimed that
he did so with the permission of one Vicar Calix (Calix) who, according to petitioner,
bought the Mayod Property from Tansiongco in October 1987 under a pacto de retro
sale. Petitioner showed to Royo Calix's written authorization signed by Calix's wife.

On 11 January 1999, Tansiongco reported the tree-cutting to the Department of

Environment and Natural Resources (DENR) forester Thelmo S. Hernandez
(Hernandez) in Sibuyan, Romblon. When Hernandez confronted petitioner about the
felled tree, petitioner reiterated his earlier claim to Royo that he cut the tree with Calix's
permission. Hernandez ordered petitioner not to convert the felled tree trunk into lumber.

On 26 January 1999, Tansiongco informed Hernandez that petitioner had converted the
narra trunk into lumber. Hernandez, with other DENR employees and enforcement
officers, went to the Mayod Property and saw that the narra tree had been cut into six
smaller pieces of lumber. Hernandez took custody of the lumber, deposited them for
safekeeping with Royo, and issued an apprehension receipt to petitioner. A larger
portion of the felled tree remained at the Mayod Property.

Section 68, as amended, one of the 12 acts25 penalized under PD 705, provides:
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SECTION 68. Cutting, Gathering and/or Collecting Timber, or Other Forest Products
Without License. - Any person who shall cut, gather, collect, remove timber or other
forest products from any forest land, or timber from alienable or disposable public land,
or from private land, without any authority, or possess timber or other forest products
without the legal documents as required under existing forest laws and regulations, shall
be punished with the penalties imposed under Articles 309 and 310 of the Revised
Penal Code: Provided, That in the case of partnerships, associations, or corporations,
the officers who ordered the cutting, gathering, collection or possession shall be liable,
and if such officers are aliens, they shall, in addition to the penalty, be deported without
further proceedings on the part of the Commission on Immigration and Deportation.

The court shall further order the confiscation in favor of the government of the timber or
any forest products cut, gathered, collected, removed, or possessed as well as the
machinery, equipment, implements and tools illegally used in the area where the timber
or forest products are found. (Emphasis supplied)

Section 68 penalizes three categories of acts: (1) the cutting, gathering, collecting, or
removing of timber or other forest products from any forest land without any authority;
(2) the cutting, gathering, collecting, or removing of timber from alienable or disposable
public land, or from private land without any authority; and (3) the possession of timber
or other forest products without the legal documents as required under existing forest
laws and regulations. Petitioner stands charged of having "cut, gathered, collected and
removed timber or other forest products from a private land without x x x the necessary
permit x x x " thus his liablity, if ever, should be limited only for "cut[ting], gather[ing],
collect[ing] and remov[ing] timber," under the second category. Further, the prosecution
evidence showed that petitioner did not perform any acts of "gathering, collecting, or
removing" but only the act of "cutting" a lone narra tree. Hence, this case hinges on the
question of whether petitioner "cut x x x timber" in the Mayod Property without a DENR
permit.

We answer in the affirmative and thus affirm the lower courts' rulings.

On the question of whether petitioner cut a narra tree in the Mayod Property without a
DENR permit, petitioner adopted conflicting positions. Before his trial, petitioner
consistently represented to the authorities that he cut a narra tree in the Mayod Property
and that he did so only with Calix's permission. However, when he testified, petitioner
denied cutting the tree in question. We sustain the lower courts' rulings that petitioner's
extrajudicial admissions bind him. Petitioner does not explain why Royo and Hernandez,
public officials who testified under oath in their official capacities, would lie on the stand
to implicate petitioner in a serious criminal offense, not to mention that the acts of these
public officers enjoy the presumption of regularity. Further, petitioner does not deny
presenting Calix's authorization to Royo and Hernandez as his basis for cutting the narra
tree in the Mayod Property. Petitioner has no use of Calix's authorization if, as he
claimed during the trial, he did not cut any tree in the Mayod Property.

We further hold that the lone narre tree petitioner cut from the Mayod Property
constitutes "timber" under Section 68 of PD 705, as amended. PD 705 does not define
"timber," only "forest product" (which circuitously includes "timber.") Does the narra tree
in question constitute "timber" under Section 68? The closest this Court came to defining
the term "timber" in Section 68 was to provide that "timber," includes "lumber" or
"processed log." In other jurisdictions, timber is determined by compliance with specified
dimensions or certain "stand age" or "rotation age." In Mustang Lumber, Inc. v. Court of
Appeals, this Court was faced with a similar task of having to define a term in Section
68 of PD 705 - "lumber" - to determine whether possession of lumber is punishable
under that provision. In ruling in the affirmative, we held that "lumber" should be taken
in its ordinary or common usage meaning to refer to "processed log or timber," thus:
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The Revised Forestry Code contains no definition of either timber or lumber. While the
former is included in forest products as defined in paragraph (q) of Section 3, the latter
is found in paragraph (aa) of the same section in the definition of "Processing plant,"
which reads:

(aa) Processing plant is any mechanical set-up, machine or combination of machine

used for the processing of logs and other forest raw materials into lumber, veneer,
plywood, wallboard, blackboard, paper board, pulp, paper or other finished wood
products.

This simply means that lumber is a processed log or processed forest raw material.
Clearly, the Code uses the term lumber in its ordinary or common usage. In the 1993
copyright edition of Webster's Third New International Dictionary, lumber is defined,
inter alia, as "timber or logs after being prepared for the market." Simply put, lumber is
a processed log or timber.

It is settled that in the absence of legislative intent to the contrary, words and phrases
used in a statute should be given their plain, ordinary, and common usage meaning.
And in so far as possession of timber without the required legal documents is
concerned, Section 68 of PD No. 705, as amended, makes no distinction between raw
and procesed timber. Neither should we. x x x x.100

We see no reason why, as in Mustang, the term "timber" under Section 68 cannot be
taken in its common acceptation as referring to "wood used for or suitable for building
or for carpentry or joinery." Indeed, tree saplings or tiny tree stems that are too small for
use as posts, panelling, beams, tables, or chairs cannot be considered timber.

Here, petitioner was charged with having felled a narra tree and converted the same
into "several pieces of sawn lumber, about three (3) pcs. 2x16x6 and three (3) pcs.
2x18x7 x x x consisting of 111 board feet x x x." These measurements were indicated
in the apprehension receipt Hernandez issued to petitioner on 26 January 1999 which
the prosecution introduced in evidence.Further, Hernandez testified that the larger
portion of the felled log left in the Mayod Property "measured 76 something centimeters
[at the big end] while the smaller end measured 65 centimeters and the length was 2.8
meters." Undoubtedly, the narra tree petitioner felled and converted to lumber was
"timber" fit "for building or for carpentry or joinery" and thus falls under the ambit of
Section 68 of PD 705, as amended.

Despite this, illegal logging is rampant throughout the country, not because of the absence of
effective laws, but because of the government’s lack of resources devoted to enforcement.

In addition to the abovementioned, it is to be noted that the plain view doctrine is applicable in illegal
possession of timber. In Revaldo vs. People of the Philippines, G.R. No. 170589, April 16, 2009, the
Court made mention of the plain view doctrine to penalize the accused. Under this doctrine, objects
falling in the “plain view” of an officer, who has a right to be in the position to have that view, are
subject to seizure and may be presented as evidence. In the aforementioned case, the police went
to the house of the accused because they received information that he had in his possession illegally
cut lumber. When they arrived, they saw the lumber lying around the vicinity of the accused’s house.
Hence, the lumber were in plain view. In addition, when he failed to present the permit when he was
asked whether he had the necessary permit to possess the lumber, there became probable cause
for the police officers to confiscate the lumber, rendering the issuance of a search warrant
unnecessary. The most recent case highlighting this is Crescencio vs. People of the Philippines:

Crescencio vs. People of the Philippines

G.R. No. 205015, November 19, 2014

100
Italicization in the original; boldfacing supplied.
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Carpio, J., ponente

xxx

Acting on an information that there was a stockpile of lumber or forest products in the
vicinity of the house of the petitioner, Eufemio Abaniel (Abaniel), the Chief of the
ForestProtection Unit of Department of Environment and Natural Resources (DENR) -
Community Environment and Natural Resources Office, Talibon, Bohol, together with
Forest Rangers Urcino Butal (Butal), Alfredo Bastasa and Celso Ramos (Ramos) went
to the petitioner’s house at Balico, Talibon, Bohol on March 15, 1994 at 3:00 p.m. Upon
arriving thereat, they saw forest products lying under the house of the petitioner and at
the shoreline about two meters away from the petitioner’s house. As the DENR
personnel tried to investigate from the neighborhood as to who was the owner of the
lumber, the petitioner admitted its ownership. Thereafter, the DENR personnel entered
the premises of the petitioner’s house without a search warrant.

Upon inspection, 24 pieces of magsihagonlumber, which is equivalent to 452 board feet,

were discovered. When the DENR personnel asked for documents to support the
petitioner’s claim of ownership, the latter showed to them Official Receipt No. 35053
issued by Pengavitor Enterprises where she allegedly bought the said lumber. However,
when the DENR personnel scaled the lumber, they found out that the dimensions and
the species of the lumber did not tally with the items mentioned in the receipt. The said
receipt showed that the petitioner bought 10 pieces of red lawaan lumber with sizes
2x6x18 and 5 pieces with sizes 2x8x16 on March 13, 1994. On the other hand, the
lumber in the petitioner’s house, on March 15, 1994, was 24 pieces of
magsihagonlumber of three different sizes, to wit: 20 pieces 2x6x18; 3 pieces 2x8x18;
and 1 piece 2x10x12.

Since the petitioner could not present any other receipt, Abaniel ordered the confiscation
of the lumber, asked for police assistance, and told the petitioner that they were going
to transport the confiscated lumber to the DENR office for safekeeping. Seizure Receipt
No. 004157 and a Statement Showing the Number/Pieces and Volume of Lumber Being
Confiscated, which showed the value of the lumber to be 9,040.00, were issued to the
petitioner. Forest Rangers Butal and Ramos corroborated Abaniel’s testimony.

xxx

In this regard, the Court agrees that the CA should have taken a liberal view of the rules
and ruled on the merits of the appeal, especially when what is involved is no less than
the petitioner’s liberty.

Nonetheless, even if the Court brushes aside the technicality issue, it will still find that
the prosecution was able to prove beyond reasonable doubt the petitioner’s culpability.

In attempting to escape liability, the petitioner contends that: (a) she had the supporting
documents to show that she bought the questioned lumber from legitimate sources; and
(b) the warrantless search and seizure conducted by the DENR personnel was illegal
and, thus, the items seized should not have been admitted in evidence against her.

The Constitution recognizes the right of the people to be secured in their persons,
houses, papers, and effects against unreasonable searches and seizures. Nonetheless,
the constitutional prohibition against warrantless searches and seizures admits of
certain exceptions, one of which is seizure of evidence in plain view. Under the plain
view doctrine, objects falling in the "plain view" of an officer, who has a right to be in the
position to have that view, are subject to seizure and may be presented as evidence.
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There is no question that the DENR personnel were not armed with a search warrant
when they went to the house of the petitioner. When the DENR personnel arrived at the
petitioner’s house, the lumbers were lying under the latter’s house and at the shoreline
about two meters away from the house of the petitioner. It is clear, therefore, that the
said lumber is plainly exposed to sight. Hence, the seizure of the lumber outside the
petitioner’s house falls within the purview of the plain view doctrine.

Besides, the DENR personnel had the authority to arrest the petitioner, even without a
warrant. Section 80 of the Forestry Code authorizes the forestry officer or employee of
the DENR or any personnel of the Philippine National Police to arrest, even without a
warrant, any person who has committed or is committing in his presence any of the
offenses defined by the Forestry Code and to seize and confiscate the tools and
equipment used in committing the offense or the forest products gathered or taken by
the offender. Clearly, in the course of such lawful intrusion, the DENR personnel had
inadvertently come across the lumber which evidently incriminated the petitioner.

The fact of possession by the petitioner of the 24 pieces of magsihagon lumber, as well
as her subsequent failure to produce the legal documents as required under existing
forest laws and regulations constitute criminal liability for violation of the Forestry Code.
Under Section 68 of the Forestry Code, there are two distinct and separate offenses
punished, namely: (1) cutting, gathering, collecting and removing timber or other forest
products from any forest land, or timber from alienable or disposable public land, or from
private land without any authority; and (2) possession of timber or other forest products
without the legal documents required under existing forest laws and regulations.

In the second offense, it is immaterial whether the cutting, gathering, collecting and
removal of the forest products are legal or not. Mere possession of forest products
without the proper documents consummates the crime. Whether or not the lumber
comes from a legal source is immaterial because the Forestry Code is a special law
which considers mere possession of timber or other forest products without the proper
documentation as malum prohibitum.

xxx

4.3 Policy analysis (effectiveness of laws in addressing environmental problem)

4.3.1 Evolution of Forest Policies

The history of Philippine Forestry has been marked by rampant and rapid human utilization and
exploitation of the forest resources encouraged by past forest policies that allowed exploitative
activities, which led to severe deforestation of the country’s forest lands. 101 The primary law on
Philippine Forestry is Presidential Decree 705, more commonly known as the Revised Forestry
Code, which was issued during the Marcos Administration in 1975. It exhibits the same utilitarian
policy, but introduced the idea of sustainable use of forest resources.

The Code identified the need to regulate forestry activities in order to maximize and ensure the
continuous productivity of the forests to support the demands of the country. This had been
addressed through the issuance of license agreements, licenses, leases or permits that grant its
holders the privilege to pursue any activity within specific forest concession areas, subject to further
government regulation to guarantee sustainable utilization of forest resources. To enforce its policy
of sustainable forest utilization, the Code authorized the President of the country to “amend, modify,
replace, or rescind” any privileges granted in consideration of national interest and to suspend the
same upon determination of any violation of the stipulated conditions therein such as reforestation

101
Juan Pulhin, Trends in Forest Policy in the Philippines 29, 31-33 (Policy Trend Report, 2002)
< http://enviroscope.iges.or.jp/modules/envirolib/upload/371/attach/03_Philippines.pdf >
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and environmental protection.102 This is one manner by which to deter the grant holders from violating
the requirements of forest protection and rehabilitation especially since these activities would require
additional financial expenditures on their part. P.D. No. 705 also provide for penal sanctions for the
conduct unauthorized logging and/or other forest activities, among other things. 103 The
criminalization of these activities emphasize the importance of ensuring sustainability of forest
productivity to secure its continued contribution of the timber industry to the country’s economic
growth.

Privileges Definitions as stated in Section 3 of PD 705

Lease “a privilege granted by the State to a person to occupy and possess, in
consideration of specified rental, any forest land of the public domain in order
to undertake any authorized activity therein”
License “a privilege granted by the State to a person to utilize forest resources within
any forest land, without any right of occupation and possession over the
same, to the exclusion of others, or establish and operate a wood-processing
plant, or conduct any activity involving the utilization of any forest resources”
License “a privilege granted by the State to a person to utilize forest resources within
Agreement any forest land with the right of possession and occupation thereof to the
exclusion of others, except the government, but with the corresponding
obligation to develop, protect and rehabilitate the same in accordance with
the terms and conditions set forth in said agreement”
Permit “short-term privilege or authority granted by the State to a person to utilize
any limited forest resources or undertake a limited activity within any forest
land without any right to occupation and possession therein”
Table 3. Definitions of the Different Privileges or Grants authorized by the Revised Forestry Code104

While the Code mainly regulates forestry activities, namely timber harvesting and wood processing,
we must note that it did pave the way for more protectionist laws subsequently enforced by the
government. Section 37 of the said Code states that “all measures shall be taken to protect the forest
resources from destruction, impairment and depletion.” 105 This provision can be taken as an
authorization from Congress for all subsequent actions or measures undertaken by concerned
government agencies and offices pursuant to forest protection and conservation.

In 1991, more than a decade after P.D. No. 705’s enactment, came the next significant forest
protection measure in the form of DENR Administrative Order No. 24 during the Aquino
administration. This DAO signified the beginning of the State’s gradual shift on its approach
concerning the country’s forest resources, from one that was primarily utilitarian to that of
conservationist since it implemented a nationwide ban on logging activities in all Old-Growth (Virgin)
Forests and limited the same to only Second-Growth (Residual) Forest. The remaining virgin forests
were then reclassified to become part of the permanent national forest estate of the country.106 DAO
No. 24’s policy then was not to ban commercial logging altogether but to minimize the extent of its
destructive impact on Philippine Forests.

Furthering the shift in forestry policy towards a more protectionist slant was the enactment of
Executive Order No. 263 in 1995. While previously, the government relied on commercial logging
ventures to ensure forest management and conservation under P.D. No. 705, this E.O.
acknowledged the important role of local communities, the main stakeholders in terms of the forests
and its resources, in effectively protecting the said resources. Through this E.O., the Community-
Based Forest Management was formally adopted as the “national strategy to achieve sustainable
forestry…” 107 Under this strategy, the grant of long-term tenurial agreements to organized
communities allowed them to engage in forestry activities within their allocated areas as long as they
utilize “environment-friendly, ecologically sustainable and labor-intensive harvesting methods.” 108

102
P.D. No. 705, Sections 2, 19, 20
103
Ibid., Sections 77-88
104
Ibid, Section 3
105
Ibid, Section 37
106
DENR Administrative Order No. 24 (May 3, 1991)
107
Executive Order No. 263 (1995), Section 1
108
Ibid., Section 3
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However, to be able to achieve its goal of conserving and rehabilitating the forests, the E.O. not only
gives community stakeholders equal access to forest lands – it also empowers them to be able to
take advantage of such opportunity. To realize its goal of empowering the local communities to take
part in these forest conservation schemes, the E.O. mandates the DENR to provide financing and
support mechanisms such as community forestry training programs to the communities that will equip
them with the knowledge, skills and financial capacity to responsibly utilize and effectively protect the
country’s forest resources.109

Unfortunately, even with the actions taken to veer Philippine forestry policy away from the historical
utilitarian thinking to a more protectionist orientation, the problem of deforestation has not been
abated. The effects of deforestation, primarily flash floods and landslides across the country that
cause injury to persons and property, still remained over the years. This reality led to the issuance
of Executive Order No. 23, under the second Aquino administration in 2011.110 This E.O. imposed a
moratorium on all logging activities in all natural and residual Philippine forests. To implement this
mandate, the DENR is restricted from granting and renewing any logging contract or agreement
concerning said forests previously authorized by law including the Revised Forestry Code and E.O.
No 263. It also has the power to immediately rescind any of the existing contracts upon finding of
violation of any of its conditions.111 This latest policy on Philippine forestry is therefore a complete
turn-around from what started and has long been maintained as an exploitative forest management
policy to one that is almost completely for forest conservation and development in the hope of being
able to save what little forests of the country is left. Administrative Order No. 2013-19, in addition,
was passed with the general objective of recognizing and operationalizing ecotourism for the
conservation and sustainable use of natural resources in protected areas.

Adoption of
Community-
Forest Based Forest Moratorium on
Pre-PD Zero-forest Protection to DAO Total ban on Management all logging
protection from PD 705 sustain long- logging in Virgin EO 263 discontinuing EO 23 activities in all
705 utilization term viability of 24 Forests Commercial- types of forests
forest industry Based approach in the country
in forest
rehabilitation

Illustration 1. Evolution of Philippine Forestry Policy within the last 40 years

Bias: From Commercial to Community-Based Forestry Management

The long history of government-controlled and non-participatory forest management approach in the
country allowed for highly commercialized exploitation of forest resources that was mainly taken
advantage of by the country’s elite. 112 In this light, P.D. No. 705 is not much different from the
previous forest regulations since for the most part it tackles regulatory issues concerning commercial
forestry privileges that allow logging activities and the production of wood products for profit.
Moreover, a closer reading of Section 60 of the Code reveals a preference with respect to potential
grantees of forest privileges by stating that the same shall be made available only to those who are
able to show their financial and technical capacity to minimize forest exploitation in their logging
activity, and their ability to support a correlative forest conservation and development program.113
This qualification implies that commercial corporations because of their vast resources are most likely
the only ones that can participate in such forestry activities, to the exclusion of local communities
who though desirous of participating, might not necessarily have the financial or technical means to
meet the said requirement.

The Code establishes the general rule of commercial forest utilization management, by merely
referring to local communities such as cultural minorities as an exception. Section 52 of the Code

109
Ibid., Sections 6, 8, 10, 11
110
Situationer for Annex of Executive Order 23 (2011).
111
Executive Order No. 23 (2011), Section 2
112
Juan Pulhin and Makoto Inoue, Dynamics Of Devolution Process In The Management Of The Philippine Forests, in
International Journal of Social Forestry 3-5 (2008),
http://www.ijsf.org/dat/art/vol01/ijsf_vol1_no1_01_pulhin_philippines.pdf
113
P.D. No. 705, Section 60
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emphasizes that upon the effectivity of the same, only those with licenses or permits shall be allowed
to enter, cultivate and utilize forest lands, save for occupants of forest lands such as cultural
minorities or those from the local community who have entered the area prior to its effectivity. This
exemption, however, is subject to the condition that their forest land holdings shall not be increased,
and that they may subsequently be made to vacate the premises when the “best land use of the
area” arises.114 As earlier mentioned, the Code appears to favor commercial corporations for the
utilization of forest resources upon whom part of the burden of forest protection is given. However,
this in itself presents a problem since there will always be the temptation on the part of commercial
establishments to skirt away from the responsibility of conserving and rehabilitating their forest areas
due to additional expenses that they will have to shoulder, which could reduce their profitability.

Commercial-based forest management was the main forestry policy until it had been abandoned by
the issuance of Executive Order No. 263, which adopted the community-based forest management
approach as the national strategy for sustainable forest development. Here, the local communities
are given equitable access to the forest lands with the responsibility of forest protection through long-
term tenurial agreements backed by financial and technical assistance to be provided by the
DENR.115

Compared, therefore, to the Revised Forestry Code, this E.O. expressly gives preference to local
communities as opposed to commercial corporations. It not only grants them an opportunity to
participate in forestry activities including its conservation but also ensures that they have the
necessary capacity to effectively do so. Although forest policies have allegedly become participatory
through the years, reality belies this assertion due to some technicalities. The E.O. as well as its
Implementing Rules and Regulations have failed to define distinctly the composition of the
community to which it primarily refers. DAO No. 96-29 provides a broad definition of what is to be
considered a “community,” thus allowing persons though with varied or even conflicting interests to
be considered as one group. Regulating agents themselves have not taken measures to make such
differentiation of interests within groups, which has led to the continued capture of forest benefits by
the elite. 116 This therefore brings the situation back to square one, with forest management still
largely in the hands of commercial corporations for whom forest rehabilitation and development is
more an expense than an asset.

4.3.2 Logging moratorium

Executive Order No. 23, which imposed a nationwide logging moratorium, is a “policy instrument
used by government in response to environmental, socio-economic, political and other concerns and
issues that threaten the forest and the resources within.”117 Executive Order No. 23 imposed this
policy with the goal of mitigating the occurrence of calamities such as flooding and landslides due to
the unabated deforestation happening in the country. 118 Indeed, the imposition of a logging
moratorium is primarily for the purpose of protecting forests from further exploitation, in order to
ensure a livable environment for society in general. However, despite the noble intentions behind the
issuance of EO 23, the idea of a nationwide logging moratorium has been criticized as follows:

1. Inadequate government resources to effectively implement the logging moratorium.

To illustrate this problem, consider the fact that there is only one forest guard to every 2,500
to 4,000 ha of forest land instead the optimal situation of having one forest guard to every
500 to 2,000 ha.119

114
Id, at Section 52, 53
115
Executive Order No. 263 (1995)
116
Juan Pulhin, Community Forestry in the Philippines: Trends, Issues and Challenges, 3-4 (1998)
<http://www.recoftc.org/site/search.php?text=juan+pulhin>
117
Leonida A. Bugayong, Effectiveness Of Logging Ban Policies In Protecting The Remaining Natural Forests Of The
Philippines, 4 (2006), available at http://userpage.fu-
berlin.de/ffu/akumwelt/bc2006/papers/Bugayong_06BerlinConference.pdf (Paper presented at the 2006 Berlin
Conference on Human Dimensions of Global Environmental Change – Resource Policies: Effectiveness, Efficiency, and
Equity, held at Freie University, Berlin, Germany, on 17-18 November 2006).
118
Executive Order No. 23-2011 (Phil.); Situationer for Annex of Executive Order 23 (2011).
119
Leonida A. Bugayong, Effectiveness Of Logging Ban Policies In Protecting The Remaining Natural Forests Of The
Philippines, 8 (2006), available at http://userpage.fu-
berlin.de/ffu/akumwelt/bc2006/papers/Bugayong_06BerlinConference.pdf (Paper presented at the 2006 Berlin
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2. Calamities identified as the destructive results of deforestation, will not be averted by

a logging moratorium. According to Dr. Rex Cruz, the flooding incidents in certain parts of
the country that prompted the issuance of EO 23, was caused by climate change and not by
deforestation. Even forested areas are not spared from said calamities.120
3. Forest lands lose protection without the logging concessions. When forest
concessioners stop operating, their concessions will be left defenseless against illegal
logging activities. 121 More specifically, if the log ban is improperly implemented it may
estrange the communities involved in Community-Based forest management who are the
“ultimate protectors of forests.”122
4. Forestry is an economic activity upon which a fraction of the population relies upon
for their daily sustenance. A logging ban will approximately affect 2 Million employees who
depend on the forest industry for their wages.123
5. No forest charges. Since the logging moratorium will halt forest industry activities, the
government will therefore lose the opportunity to impose taxes on forest products that
contribute to the income of the government.124
6. ‘Loose’ exceptions that could be windows for deforestation activities. Exceptions to
the logging moratorium such as road construction, if not specifically defined can be taken
advantage and result to even greater deforestation. 125

4.4 Further discussion

4.4.1 Illegal logging or subsistence livelihood

In the enforcement of forestry laws, it is often the poor who are adversely affected – because they
are dependent on forest resources for livelihood and have few, if any, other options; they are not
aware of the laws and the heavy penalties for violation; they have been accustomed to traditional
forest use practices that are often in conflict with formal laws.

A recent study126 analyzed the logging activities in the Northern Sierra Madre Natural Park, tracing
the chain of people – who are involved, and who benefits. They summarize the results as follows:

Illegal logging is a threat to biodiversity and rural livelihoods in the Northern Sierra Madre
Natural Park, the largest protected area in the Philippines. Every year, between 20,000
to 35,000 cu.m. in wood is extracted from the park. The forestry service and municipal
governments tolerate illegal logging in the protected area; government officials argue that
banning an important livelihood activity of the households along the forest frontier will
aggravate rural poverty. However, this reasoning underestimates the scale of timber
extraction, and masks resource capture and collusive corruption. Illegal logging in fact
forms an obstacle for sustainable rural development in and around the protected area by
destroying ecosystems, distorting markets, and subverting the rule of law. Strengthening
law enforcement and controlling corruption are prerequisites for sustainable forest
management in and around protected areas in insular Southeast Asia.

Conference on Human Dimensions of Global Environmental Change – Resource Policies: Effectiveness, Efficiency, and
Equity, held at Freie University, Berlin, Germany, on 17-18 November 2006)
120
Jennifer Ng, Log Ban Won’t Spell End To Floods: Expert, in Business Mirror (February 8, 2011)
<http://www.businessmirror.com.ph/home/top-news/7224-log-ban-wont-spell-end-to-floods-expert>
121
Id.
122
Antonio La Viña, The Forest and the Trees, in Manila Standard Today (February 15, 2011)
<http://www.asg.ateneo.edu/blog2.php?newsid=199>
123
Leonida A. Bugayong, Effectiveness Of Logging Ban Policies In Protecting The Remaining Natural Forests Of The
Philippines, 7 (2006), available at http://userpage.fu-
berlin.de/ffu/akumwelt/bc2006/papers/Bugayong_06BerlinConference.pdf (Paper presented at the 2006 Berlin
Conference on Human Dimensions of Global Environmental Change – Resource Policies: Effectiveness, Efficiency, and
Equity, held at Freie University, Berlin, Germany, on 17-18 November 2006)
124
Id.
125
Antonio La Viña, The Forest and the Trees, in Manila Standard Today (February 15, 2011)
<http://www.asg.ateneo.edu/blog2.php?newsid=199>
126
Jan van der Ploeg, Merlijn van Weerd, Andres Masipiqueña, Gerard Persoon, Illegal logging in the Northern Sierra
Madre Natural Park, the Philippines, in Conservation & Society (Vol.9, Issue 3, 2011).
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In both the above study and the situationer at the beginning of this Chapter, poor upland people are
dependent on the forest for their livelihood. What are the differences between the two situations? Should
the laws or policies also distinguish between the situations of the poor in both instances?

CASE STUDY:
COMMUNITY-BASED FOREST MANAGEMENT PROJECT – MAASIN, SOUTHERN LEYTE

Since the 1980s, residents of Brgy. Lunas, Maasin City of Southern Leyte have always been heavily reliant
on their forests for their livelihoods and daily sustenance. When Maasin City was hit by an 11-month drought
that was followed by a forest fire that wiped hectares of their forest land, the residents lost their crops and
clean water sources. This led them to realize the importance of taking care of their forest. Although logging
became illegal, the local residents considered it as their only option for livelihood and continued cutting down
trees despite the local government’s prohibition.

To prevent further deforestation, Maasin city became one of the early recipients for the Community-Based
Forest Management (CBFM) project of DENR. A people’s organization (PO) called the Young Innovators for
Social & Environmental Development Association (YISEDA) was established whose purpose is to promote
the sustainable use of the forests in the province of Southern Leyte by protecting natural forests and
promoting reforestation efforts.

Though CBFM, the residents of Maasin were trained on how to sustainably use their forest resources and
establish plantation areas for timber harvesting. They were also provided with training for reforestation and
agro-forestry, domesticated animal-raising and other alternative livelihood options as part of the CBFM
project. This helped in providing the residents an alternative source of income which in turn, helped deter the
residents to prematurely harvest trees. And to ensure the project’s continuity, the youths were also involved
in the project. They were engaged in community meetings & activities and were taught about the importance
of their forest as part of their community and not just as a source of timber.

As a result of its good performance, the government recently entrusted to YIESDA another 75 hectares for
reforestation, 25 hectares for agro-forestry and 50 hectares for assisted natural regeneration as part of the
Aquino administration’s National Greening Program. They have also been recognized for their efforts with
the following awards: Best Performing CBFM PO (2012) –DENR Region; 83rd Place Most Environment-
Friendly PO (2016) -PENRMO, S. Leyte; and 1st Place Most Outstanding Environment-Friendly & Climate
Resilient Pos (2017) –LGU -Maasin City.

Sources:

https://ipfs.io/ipfs/QmXoypizjW3WknFiJnKLwHCnL72vedxjQkDDP1mXWo6uco/wiki/Community_based_forest_manage
ment_in_the_Philippines.html#cite_note-Lerma-6
https://forestindustries.eu/de/content/illegal-logger-conservationist
https://www.gmanetwork.com/news/news/specialreports/232677/after-20-years-forest-crusaders-reap-rewards-for-
conserving-resources/story/
https://newsinfo.inquirer.net/64575/southern-leyte-farmers-show-how-to-manage-forests
http://ocean.ait.ac.th/wp-content/uploads/sites/10/2018/07/Rose-Jane-Peras-et-al._Forest-Governance-Matters-in-
CBFM-and-REDD.pdf

Our Forests, Our Life

EAGLE EYES – Tony La Viña
14 June 2011, Manila Standard Today

Wood is a classical element unique to Chinese astrology. Its influence over those born of those Chinese
astrological signs associated with Wood imbues that person with confidence and strong will, compassion and
desire for cooperation. Wood, which is also known as the Tree in the Wu Xing elemental cycle, also symbolizes
renewal and rebirth, spring and the arrival of a new season of growth.

Wood, in short, symbolizes Life: its vitality, perseverance in the face of obstacles, continuing growth, and
flexibility. It should be no surprise that this element also symbolizes life in the natural sciences as well.

This immediately brings to mind forests. Apart from providing fodder and shelter, forests anchor the soil with their
roots, preserving them against the erosive forces of wind, water, and storm. Through photosynthesis, they help
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regulate the climate, also serving in this way as carbon “sinks” or stores from the conversion of carbon dioxide
to oxygen. Trees help maintain a suitably moist, humid climate, and also prevent flash floods and landslides
when too much water inundates the land.

Trees also have religious meaning; many indigenous peoples see trees as sacred. Buddha, for instance, found
enlightenment under a tree. All the great monotheistic religions - the Jewish Religion, Islam and Christianity -
recognize the tree of knowledge in paradise and its role in salvation. In the bible, we see this reference to trees
frequently, from "the cedars of Lebanon," in the Song of Songs to the fig tree cursed by the Jesus Christ to wither
for not bearing fruit, and the sycamore tree the tax collector Zacchaeus climbed so that Jesus would noticed him.
We know the story: after seeing Zacchaeus up the tree, the Lord asked him to come down, entered his house
and Zacchaeus and his family were "born again" (a good story for the feast of Pentecost which we celebrated
last Sunday). And then there is the olive tree "on which the Savior of the world was nailed."

What is at stake with our forests is life itself, especially in a country that has lost most of its forests and has made
itself more vulnerable to floods and other natural disasters. I believe President Aquino’s total logging ban policy
was not an overreaction, but a needed response to the state of our forests. The National Greening Program is
also a good initiative and deserves to be supported. What comes next, however, is more important.

The most serious challenge we must address to protect our remaining forests and to renew or rejuvenate our
forest land that have not yet been converted into other uses is where to get the funds to pay for such protection
and reforestation. The money needed for this massive effort is enormous; right now, we do not have it. Money is
needed not only for forest guards or seedlings needed for tree planting, but above all money is needed to
compensate communities who protect these forests and newly planted trees. Many of these communities are
indigenous peoples; and unfortunately, many are poor and marginalized.

In order to solve our forest crisis, we have to change the way we see our forests, as we have reduced its value
to the revenue we get from the timber we can extract from it. This was wrong at the time when logging was a
major industry in the country – because we as a country and society ended up getting very little from that industry.
It is even more wrong now that we can no longer harvest timber – if we follow that logic, our forests have will no
longer have value now that logging is prohibited.

Clearly, what we need to do is to change the way we see not just our forests but all of our environmental and
natural ecosystems. We have to begin to see and value these ecosystems for what they are – sources of critical
and essential ecosystem goods and services that our society and economy cannot do without. These ecosystems
provide food, fiber, water and shelter. These ecosystems are critical for climate change – to help us adapt to it,
and to help us mitigate our own contribution to the problem.

Reducing Emissions from Deforestation and Forest Degradation (REDD-Plus) is a series of initiatives to stop
deforestation, reverse its degradation, and conserve and enhance forests. The goal of the REDD-Plus
mechanism is to provide incentives for governments, private firms, and local stakeholders to preserve and
enhance forests, as opposed to harvesting or converting them. The mechanism, however, if designed or
implemented badly, could negatively impact forest-dependent communities, including indigenous peoples, or the
environment. That is why REDD-Plus must be accompanied by safeguards for the protection of stakeholder
rights, environmental integrity, and governance. The Philippines has worked hard and successfully so that the
REDD-Plus agreement (adopted finally in Cancun in 2010) included such safeguards. Fortunately, as I am able
to confirm now in Bonn, it is now widely accepted that a REDD-Plus mechanism can only succeed if safeguards
and co-benefits such as the conservation of biodiversity and ecosystem services, and the alleviation of poverty,
are also realized.

Much as the bamboo adapts to the typhoon winds, flexing in order to prevent breaking under severe forces, the
Philippines must quickly adapt to the pressures of environmental destruction in order to prevent catastrophe.
Much as tree roots anchor soil, Filipinos must unite in preserving our country’s woodlands as the anchor of our
environmental health. Because, indeed, our forests are our life.

The Forest and the Trees

EAGLE EYES – Tony La Viña
15 February 2011, Manila Standard Today

There is a well-known idiom about people "missing the forest for the trees," i.e., by immersing too much in details,
people fail to see the big picture. In the case of the moratorium on the cutting and harvesting of timber in natural
forests in the country, more popularly called a logging ban, "the forest" (the big picture of the state of our forests
and environment) and "the trees" (the details of implementation) are equally important. Paying attention only to
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"the forest" and not "the trees" will, in fact, be counter productive and result in an even worse situation for the
country's environment.

My position on Executive Order No. 23, issued by President Benigno Aquino III in February 2011, is clear. I
support it; indeed, I wrote an open letter thanking the President for issuing this order imposing a nationwide ban
on logging.

For the last twenty years, the environmental movement has demanded an absolute commercial logging ban. In
the late 1980s and early 1990s, we lobbied Congress for such a ban but failed because of the political influence
of the timber industry. Even if we had the facts on our side, we could not win enough legislators over, and could
not get the support of the executive branch for the ban.

In the early 1990s, environmental lawyer Tony Oposa filed a case to compel the Department of Environment and
Natural Resources (DENR) to cancel all Timber License Agreements (TLAs). While the famous case of Oposa
vs. Factoran laid down important legal principles, such as intergenerational equity and the liberalization of
standing in environmental lawsuits, the Supreme Court stopped short of stopping logging and deforestation
continued unabated for another decade or so.

From 1996-1998, then DENR Secretary Victor Ramos, one of the most committed and competent among public
servants I have worked with, became strict with logging companies and canceled TLAs that were not complying
with their legal obligations. As a result, when we left the DENR in 1998, only a handful of logging operations
remained. Indeed, when President Aquino acted two weeks ago, very little legal logging was going on in the
country – rendering the log ban mainly symbolic in its value, but important nonetheless.

While it would have been better if Congress passed a law to impose a log ban, it did delegate this power to the
President under the Revised Forestry Code. The President rightfully acted to avert climate impacts like floods
and protects forests and biodiversity.

While supporting the President's decision, it must be remembered that "the devil is in the details." We have to
work hard to ensure that the log ban is well-implemented, not just to enforce it, but also so that the ban does not
adversely affect the hundreds of forest communities that depend on forests for their livelihoods. In particular,
Community Based Forest Management Agreement holders, those communities who have been given the right
to manage forests that they have occupied, protected and utilized for a long time, might be unjustly impacted.
This includes indigenous peoples and communities that utilize forest resources for livelihood and not just for
cultural reasons. If it alienates forest peoples and communities, the log ban will fail, as these peoples and
communities, and not (never) the state, are the ultimate protectors of forests in the country.

Executive Order No. 23 should be harmonized with Executive Order No. 263, which was issued by President
Fidel V. Ramos in 1995. The latter adopted community-based forest management (CBFM) as the national
strategy to ensure the sustainable development of the country's forests, and Executive Order No. 318, issued in
2004 by President Gloria Macapagal-Arroyo, affirmed the primacy of CBFM as our forest strategy. Executive
Order No. 23 does not repeal these previous orders and CBFM remains the national forest strategy. Executive
Order No. 23, however, must be amended to identify, under strictly defined criteria and circumstances,
exceptions for CBFM areas.

Given the log ban's potential adverse economic impacts, the Climate Change Commission should fast track
implementation of the Reducing Emissions from Deforestation and Degradation-Plus (REDD-Plus) program
under the United Nations Framework Convention on Climate Change. In the Cancun conference on climate
change in 2010, the Philippines was instrumental in getting REDD-Plus approved. If designed properly with
social, environmental and governance safeguards, the Philippine National REDD-plus Strategy (based on
CBFM) should bring significant resources for forest protection and to support forest workers and communities.
When REDD-Plus is fully implemented, we might not even have to exempt CBFM areas from the log ban.

Another priority in implementation is ensuring that the good intentions behind Executive Order No. 23 are not
defeated by loopholes that ill-motivated persons could exploit. These include tightening the exceptions indicated
in the order, such as exempting road construction and area preparation for plantations from the moratorium, and
exceptions that could result in massive deforestation activities. One issue to clarify is whether cutting trees for
mining purposes is allowed under the log ban. It is not one of the exceptions indicated, but mining companies
will probably argue differently.

Finally, in order to thresh out the details for implementing the logging ban, extensive public consultations should
be undertaken. Unfortunately, we do have an implementation gap in our country, and enforcing our forest laws,
including those on illegal logging, have not been an exception. Among others, we have to pay attention to the
role of enforcement agencies, local governments and forest communities who are the front liners in implementing
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the ban. Funds must be provided for enforcement. And, of course, corruption in the forest sector must be
addressed.

Scientists should be also be consulted, in order to better understand the role of deforestation in floods and other
climate impacts. A more holistic response to these events should be adopted. Environmental Science for Social
Change (ESSC), a Jesuit institution based in the Manila Observatory inside the Ateneo de Manila campus, has
pointed out that flooding will continue in areas that are flood-prone as this is the natural course of
water. According to ESSC, "[t]he response needed is to get people out of harm’s way and minimize the debris
that will be brought along by the floodwaters. Major landslides will recur in areas where soil is of sufficient depth
and has reached saturation point after continuous heavy rainfall. The response is to get people off of steep
slopes and ensure that the appropriate vegetation is planted to regenerate water infiltration and biodiversity that
will sustain the environment under average climatic conditions."

Climate, forests, and peoples

Tony La Viña
03 August 2014, Rappler.com

How do you solve a wicked problem like climate change? The truth is that no single country or approach can
succeed in overcoming this most serious of sustainable development challenges.

Strong commitments at the global level must be combined with local actions to reducing greenhouse gas
emissions and bringing warming down to a 2 degree Celsius scenario, as urged by the Intergovernmental Panel
on Climate Change (IPCC).

Thankfully, many emerging solutions are integrated with sustainable development, so that confronting climate
change is coupled with stimulating economic growth in the developing world. One such proposition involves
strengthening the rights of indigenous and local communities over their forests.

Last week, on July 24, the World Resources Institute (WRI) and the Rights and Resources Initiative (RRI), both
of whom are partners of the Ateneo School of Government, released a report presenting compelling new
research on the relationship between strengthening community forest rights and climate change mitigation. The
report, titled Securing Rights, Combating Climate Change, sheds light on an approach to reducing greenhouse
gas emissions that has so far been largely undervalued. It makes a strong case that protecting community and
indigenous tenure over forests has enormous potential to preserve healthy forests and prevent deforestation.

Deforestation and forest degradation play a substantial role in climate change. In addition to destroying
ecosystems and threatening biodiversity, deforestation accounts for 11% of annual global greenhouse gas
emissions. This destruction is happening at a rate of 50 soccer fields a minute, with 13 million hectares of forests
cleared each year around the world. There is thus a growing consensus among the global climate community on
the importance of forest conservation as a mechanism for reducing greenhouse gas emissions and mitigating
climate change.

What role, then, can communities play in reducing greenhouse gas emissions from deforestation? Globally,
communities have legal or official rights to 513 million hectares of forest, making up 1/8 of the world’s forests.
These community forests contain about 37.7 billion tons of carbon, 29 times more than the annual carbon
footprint of all passenger vehicles in the world. Still even larger areas of forest are held by communities under
customary tenure systems that are not recognized by governments, or only weakly so.

This constitutes a significant volume of global forests in which legal rights and recognition for community
customary tenure can help maintain and protect healthy forests, ensuring their role as carbon sinks. Forest
communities already have a strong interest in protecting forest health as they depend on the forest for their food,
livelihoods, and culture. Strengthening their forest rights is therefore a promising policy tool to reduce
deforestation and degradation.

Securing Rights, Combating Climate Change finds a compelling link between strong legal rights for forest
communities, government actions to protect and support those rights and lower carbon dioxide (CO2) emission
from deforestation. Examining community forest rights in 14 forest-rich countries in Latin America, Africa, and
Asia, the report reveals that deforestation in community forests with strong legal recognition and government
protection are dramatically lower than in forests outside these areas. For example, in the Brazilian Amazon, the
most carbon-rich forest in the world, deforestation was 11 times lower in community forests with strong legal
recognition and government protection than in other parts of the Brazilian Amazon.
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However, governments in low- and middle-income countries often face pressures to issue mining, hydrocarbon,
agricultural, and logging concessions, leading to deforestation that destroys communities’ livelihoods and homes.
This is a significant problem in Papua New Guinea, where communities own almost all forests, but the
government still issues leases to private investors, giving them the freedom to engage in deforestation and forest
degradation. So far, the government has leased out about 4 million hectares of forest, which could release almost
3 billion tons of CO2 if converted to palm oil plantations as planned.

In Indonesia, where only one million out of 42 million hectares of community forest is legally recognized, the
government also gives out vast concessions over forest land to be used for palm oil, timber, and other conflicting
land uses. As the second largest global emitter of CO2 from deforestation and other land uses, strengthening
forest community rights is an approach that the Indonesian government can embrace that would benefit forest
communities while also generating substantial reductions in the country’s greenhouse gas emissions.

Based on these and other findings, the report persuasively argues that governments should recognize community
forest rights to meet climate goals, safeguard forests, and protect the livelihoods of their citizens. In addition to
granting legal recognition for indigenous and local community forests, governments should enforce the rights
granted to these societies by preventing trespassing and illegal forest use, and provide technical assistance and
training to build local capacity for sustainable forest management. It would also be beneficial for governments to
set aside funds to compensate local communities for their sustainable forest management practices, thus
creating further economic incentives for safeguarding forests.

Forest communities represent a vast potential for national governments to make headway in countering climate
change. For too long that potential has gone underappreciated and undervalued.

Incidentally, although not include in the report, Securing Rights, Combating Climate Change is also relevant in
the Philippines where we have shifted forest policy from one focusing on commercial utilization to emphasizing
indigenous peoples rights and community based forest management. The National Greening Program, where
the government is investing billions to regenerate our forest, can be informed by the findings and
recommendations of the report.

Climate change is a formidable problem but solutions are possible. An approach that combines climate and forest
objectives, while respecting and promoting community rights, is one that will make a difference.
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Chapter Five

Wildlife and Biodiversity Conservation

FACTS AND FIGURES

For a country to be classified as "mega-diverse", it is required to have at least 5000 species of endemic plants
and border a marine ecosystem. And the Philippines is one of the few mega-diverse countries in the world while
having high wildlife endemism due to its archipelagic nature. According to the Biodiversity Management Bureau
(BMB-DENR), the country hosts more than 52,000 described flora and fauna species. The country also sits at
the heart of the coral triangle - the global center of marine biodiversity. It houses the Verde Island Passage which
is boasted to have the highest concentration of marine species on the planet. But due to climate change, resource
exploitation and other anthropogenic activities, the Philippines have also been coined as "the hottest of the
biodiversity hotspots". As of 2019, there are at least 780 identified threatened species in the country. Invasive
alien species also continuously threaten our environment. Due to the lack of natural predators or competitors,
these introduced species often displace native species and destabilize local ecosystems. As of 2006, 47 alien
species have already been introduced in the country.

As people become more aware of the state of the environment, more actions are taken to protect Philippine
wildlife and biodiversity. These include the development of conservation programs for various endangered
species, the establishment of wildlife sanctuaries and community-based resource management. In 2018, DENR
started to push more public action for wildlife conservation through information drives. Inter-agency relations are
also being strengthened, specifically with NBI and PNP. Multi-agency action is required since illegal wildlife
trafficking is multi-million worth trade that crosses borders. In 2019 alone, 15 wildlife crime arrests have already
been made as well as confiscation of illegally acquired wildlife items that are valued over 57 million pesos.

The government has also engaged in inter-governmental activities to ensure the survival of our endangered
species. Early 2019, a wildlife loan agreement of lending a pair of Philippine Eagles to Singapore was formalized
for breeding purposes. The agreement is perceived as a biosecurity measure against species extinction in case
a disease wipes the rest of the remaining population of the eagle within the country. Coined as a new chapter in
biodiversity conservation, this approach is also being explored for the protection of threatened migratory species.

Sources:

http://www.seafdec.org/fisheries-country-profile-philippines/
http://bmb.gov.ph/388-protection-and-conservation-of-wildlife/facts-and-figures/786-status-of-the-philippine-biodiversity
https://www.pna.gov.ph/articles/1027306
pna.gov.ph/articles/1069954
https://www.pna.gov.ph/articles/1072396
https://www.pna.gov.ph/articles/1070302
http://www.neda.gov.ph/wp-content/uploads/2013/09/CHAPTER-10.pdf
https://pia.gov.ph/features/articles/1018601

Summary for policymakers of the global assessment report on biodiversity and ecosystem services
of the Intergovernmental
Science-Policy Platform on Biodiversity and Ecosystem Services

In a recent assessment report from the Intergovernmental Science-Policy Platform on Biodiversity and
Ecosystem Services (IPBES), it showed the current status of the world's biodiversity and ecosystems and its
drivers of change. It stated that in the past 50 years, the human population has doubled and with it is the
exponential growth in demand for energy and materials. This growth then leads to a significant increase in
anthropocentric activities to cater to these demands that often favors the expansion of economic activities
and environmental harm over conservation and restoration. In many cases, these activities serve as direct
and indirect drivers of changes in nature that often leads to its deterioration, decline in biodiversity and
disruption of ecological systems.

As an example, an identified driver of global change in nature with the most impact is land-use and sea-use
change. The most widespread form of land-use change is agricultural expansion to ensure food security and
alongside it is to expand urban areas and infrastructures to cater to the growing population. These changes
are often made at the expense of terrestrial and aquatic ecosystems - specifically to its local species losing
their habitat and source of food for survival.
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Overall, human-induced activities (specifically land/sea-use change, direct exploitation of organisms and
pollution) is the top direct driver of the global decline in terrestrial, freshwater and marine ecosystems and
biodiversity. The global rate of species extinction has accelerated, with 25 percent of the global total number
of species already threatened. The genetic variety of local species of domesticated plants and animals are
declining, leading to the decrease in biodiversity and in biosecurity or resilience to biological threats. Lastly,
human-induced activities have created conditions for fast biological evolution which creates uncertainty on
the sustainability of an ecological system or may cause threat in its balance and its natural processes.

In summary, the report highlights one basic idea: Nature is deteriorating worldwide and our current efforts
are not enough to meet our conservation and sustainability goals unless we make urgent and concerted
efforts to make a significant change. Our current trajectories cannot meet our goals for conservation and
sustainability, and as a developing country that is highly dependent to our natural resources, the Philippines
is one of the most vulnerable to the negative effects of these changes, especially the poor and marginalized
sectors. This negative trend is projected to continue and worsen even beyond 2050 unless actions to make
transformative changes are taken. Although these actions may be complex and context-dependent;
conservation, restoration and sustainable use of nature while simultaneously meeting other societal goals
are possible through enhanced international cooperation and widespread adoption of locally relevant
measures that are grounded on best available scientific knowledge. Inclusive, informed and adaptive
governance approaches are needed to reduce risks due to uncertainties and complexities of actions taken
towards sustainability. While current global financial and economic systems need to evolve to build a global
sustainable economy through informed policy changes, improved multilateral agreements, and enhanced
environmental monitoring & evaluation. This entails going beyond standard economic indicators (such as
GDP) and look into more holistic indicators that capture long-term views of economics and quality of life.

-----

Source:

IPBES. 2019. Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science- Policy
Platform on Biodiversity and Ecosystem Services. E. S. Brondizio, J. Settele, S. Díaz, and H. T. Ngo (editors). IPBES
Secretariat, Bonn, Germany.

5.1 Environmental situationer

In the coastal Barangay of Bahura, fishermen engage in the lucrative trade of collecting live fish for
sale to middlemen who ship the fish to the city and abroad. The demand is of two kinds: live fish (e.g.
grouper (lapu-lapu), humpback wrasse (mameng) for food in fancy restaurants, and aquarium fishes
(e.g. lionfish, clownfish, butterfly fishes) for hobbyists. The high demand and high prices for live fish
abroad has created a big incentive for local businessmen to get into the business. The hobbyists are
also expanding demand to live corals and invertebrates (e.g. nudibranchs and cone shells). Because
of the high demand, unscrupulous businessmen have trained local fishers to use cyanide to stun the
fish, in order for them to be easily caught. While this cyanide mixture does not kill the fish, the poison
eventually ends up in coral reefs and kills corals and other associated creatures.

This problem had become so serious that the LGU issued a local ordinance banning the transport of
all live fish regardless of the method it was caught, and declared the reef areas as fish sanctuaries.
The DENR also studied the area and has proposed that it be declared as a protected area.

5.2 Legal analysis (application of existing laws)

5.2.1 What is wildlife?

There are two laws that apply to this case, namely the Wildlife Act and Fisheries Code. The
application of the law depends on whether the particular species caught can be considered wildlife
or fisheries.
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Wildlife Protection and Conservation Act

Republic Act No. 9147 (2001)

xxx
Section 5. Definition of Terms. - "Wildlife" means wild forms and varieties of flora and
fauna, in all developmental stages, including those which are in captivity or are being
bred or propagated;
xxx

Sec. 7. Collection of Wildlife. - Collection of wildlife may be allowed in accordance with

Section 6 of this Act: Provided, That in the collection of wildlife, appropriate and
acceptable wildlife collection techniques with least or no detrimental effects to the
existing wildlife populations and their habitats shall, likewise, be required: Provided,
further, That collection of wildlife by indigenous people may be allowed for traditional
use and not primarily for trade: Provided, furthermore, That collection and utilization for
said purpose shall not cover threatened species: Provided, finally, That Section 23 of
this Act shall govern the collection of threatened species.

Sec. 8. Possession of Wildlife. - No person or entity shall be allowed possession of

wildlife unless such person or entity can prove financial and technical capability and
facility to maintain said wildlife: Provided, That the source was not obtained in violation
of this Act.

Sec. 9. Collection and/or Possession of By-Products and Derivatives. - By-products

and derivatives may be collected and/or possessed: Provided, That the source was not
obtained in violation of this Act.
xxx

Sec. 18. Economically Important Species. - The Secretary, within one (1) year after the
effectivity of this Act, shall establish a list of economically-important species. A
population assessment of such species shall be conducted within a reasonable period
and shall be regularly reviewed and updated by the Secretary.

The Collection of certain species shall only be allowed when the results of the
assessment show that, despite certain extent of collection, the population of such
species can still remain viable and capable of recovering its numbers. For this purpose,
the Secretary shall establish a schedule and volume of allowable harvests.

Whenever an economically important species become threatened, any form of

collection shall be prohibited except for scientific, educational or breeding/propagation
purposes, pursuant to the provisions of this Act.
xxx

Sec. 22. Determination of Threatened Species. - The Secretary shall determine

whether any wildlife species or subspecies is threatened, and classify the same as
critically endangered, endangered, vulnerable or other accepted categories based on
the best scientific data and with due regard to internationally accepted criteria, including
but not limited to the following:

(a) present or threatened destruction, modification or curtailment of its habitat

or range;
(b) over-utilization for commercial, recreational, scientific or educational
purposes;
(c) inadequacy of existing regulatory mechanisms; and
(d) other natural or man-made factors affecting the existence of wildlife.
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The Secretary shall review, revise and publish the list of categorized threatened wildlife
within one (1) year after effectivity of this Act. Thereafter, the list shall be updated
regularly or as the need arises: Provided, That a species listed as threatened shall not
be removed there from within three (3) years following its initial listing.

Upon filing of a petition based on substantial scientific information of any person seeking
for the addition or deletion of a species from the list, the Secretary shall evaluate in
accordance with the relevant factors stated in the first paragraph of this section, the
status of the species concerned and act on said petition within a reasonable period.
The Secretary shall also prepare and publish a list of wildlife which resembles so closely
in appearance with listed threatened wildlife, which species shall likewise be
categorized as threatened.

Sec. 23. Collection of Threatened Wildlife, By-products and Derivatives - The collection
of threatened wildlife, as determined and listed pursuant to this Act, including its by-
products and derivatives, shall be allowed only for scientific, or breeding or propagation
purposes in accordance with Section 6 of this Act: Provided, That only the accredited
individuals, business, research, educational or scientific entities shall be allowed to
collect for conservation breeding or propagation purposes.
xxx

Sec. 25. Establishment of Critical Habitats. - Within two (2) years following the
effectivity of this Act, The Secretary shall designate critical habitats outside protected
areas under Republic Act No. 7586, where threatened species are found. Such
designation shall be made on the basis of the best scientific data taking into
consideration species endemicity and/or richness, presence of man-made
pressures/threats to the survival of wildlife living in the area, among others.

All designated, critical habitats shall be protected, in coordination with the local
government units and other concerned groups, from any form of exploitation or
destruction which may be detrimental to the survival of the threatened species
dependent therein. For such purpose, the Secretary may acquire, by purchase, donation
or expropriation, lands, or interests therein, including the acquisition of usufruct,
establishment of easements or other undertakings appropriate in protecting the critical
habitat.
Xxx

Sec. 27. Illegal Acts. - Unless otherwise allowed in accordance with this Act, it shall be
unlawful for any person to willfully and knowingly exploit wildlife resources and their
habitats, or undertake the following acts: 


(a) killing and destroying wildlife species, except in the following instances;
(i) when it is done as part of the religious rituals of established tribal groups or
indigenous cultural communities;
(ii) when the wildlife is afflicted with an incurable communicable disease;
(iii) when it is deemed necessary to put an end to the misery suffered by the
wildlife;
(iv) when it is done to prevent an imminent danger to the life or limb of a human
being; and
(v) when the wildlife is killed or destroyed after it has been used in authorized
research or experiments.
(b) inflicting injury which cripples and/or impairs the reproductive system of
wildlife species;
(c) effecting any of the following acts in critical habitat(s)
(i) dumping of waste products detrimental to wildlife;
(ii) squatting or otherwise occupying any portion of the critical habitat;
(iii) mineral exploration and/or extraction;
(iv) burning;
(v) logging; and
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(vi) quarrying
(d) introduction, reintroduction or restocking of wildlife resources;
(e) trading of wildlife;
(f) collecting, hunting or possessing wildlife, their by-products and derivatives;
(g) gathering or destroying of active nests, nest trees, host plants and the like;
(h) maltreating and/or inflicting other injuries not covered by the preceding
paragraph; and
(i) transporting of wildlife.
xxx

It must be noted that many of the fish and shellfish species considered wildlife are also commonly
caught for food. Under the Fisheries Code, the harvesting of food species that are endangered or
threatened is regulated.

Fisheries Code
Republic Act No. 8550 (1998)

Section 4. Definition of Terms – xxx (17) Endangered, Rare and/or Threatened

Species - aquatic plants, animals, including some varieties of corals and sea shells in
danger of extinction as provided for in existing fishery laws, rules and regulations or in
the Protected Areas and Wildlife Bureau of the Department of Environment and
Natural Resources (DENR) and in the Convention of the International Trade of
Endangered Species of Flora and Fauna (CITES).

xxx
(22). Fish and Fishery/Aquatic Products - include not only finfish but also mollusks,
crustaceans, echinoderms, marine mammals, and all other species of aquatic flora
and fauna and all other products of aquatic living resources in any form.

Sec. 11. Protection of Rare, Threatened and Endangered Species. - The Department
shall declare closed seasons and take conservation and rehabilitation measures for
rare, threatened and endangered species, as it may determine, and shall ban the
fishing and/or taking of rare, threatened and/or endangered species, including their
eggs/offspring as identified by existing laws in concurrence with concerned
government agencies.

Sec. 86. Unauthorized Fishing or Engaging in Other Unauthorized Fisheries Activities

- No person shall exploit, occupy, produce, breed, culture, capture or gather fish, fry
or fingerlings of any fishery species or fishery products, or engage in any fishery
activity in Philippine waters without a license, lease or permit.

Sec. 88. Fishing Through Explosives, Noxious or Poisonous Substance, and/or

Electricity. - (1) It shall be unlawful for any person to catch, take or gather or cause to
be caught, taken or gathered, fish or any fishery species in Philippine waters with the
use of electricity, explosives, noxious or poisonous substance such as sodium cyanide
in the Philippine fishery areas, which will kill, stupefy, disable or render unconscious
fish or fishery species: Provided, That the Department, subject to safeguards and
conditions deemed necessary and endorsement from the concerned LGUs, may allow,
for research, educational or scientific purposes only, the use of electricity, poisonous
or noxious substances to catch, take or gather fish or fishery species: Provided,
further, That the use of poisonous or noxious substances to eradicate predators in
fishponds in accordance with accepted scientific practices and without causing
adverse environmental impact in neighboring waters and grounds shall not be
construed as illegal fishing.

It will likewise be unlawful for any person, corporation or entity to possess, deal in, sell
or in any manner dispose of, any fish or fishery species which have been illegally
caught, taken or gathered.
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The discovery of dynamite, other explosives and chemical compounds which contain
combustible elements, or noxious or poisonous substances, or equipment or device
for electro-fishing in any fishing vessel or in the possession of any fisherfolk, operator,
fishing boat official or fishworker shall constitute prima facie evidence, that the same
was used for fishing in violation of this Code. The discovery in any fishing vessel of
fish caught or killed with the use of explosive, noxious or poisonous substances or by
electricity shall constitute prima facie evidence that the fisherfolk, operator, boat official
or fishworker is fishing with the use thereof.

(2) Mere possession of explosive, noxious or poisonous substances or electrofishing

devices for illegal fishing shall be punishable by imprisonment ranging from six (6)
months to two (2) years.

(3) Actual use of explosives, noxious or poisonous substances or electrofishing

devices for illegal fishing shall be punishable by imprisonment ranging from five (5)
years to ten (10) years without prejudice to the filing of separate criminal cases when
the use of the same result to physical injury or loss of human life.

(4) Dealing in, selling, or in any manner disposing of, for profit, illegally
caught/gathered fisheries species shall be punished by imprisonment ranging from six
(6) months to two (2) years.

(5) In all cases enumerated above, the explosives, noxious or poisonous substances
and/or electrical devices, as well as the fishing vessels, fishing equipment and catch
shall be forfeited.

Sec. 97. Fishing or Taking of Rare, Threatened or Endangered Species. - It shall be

unlawful to fish or take rare, threatened or endangered species as listed in the CITES
and as determined by the Department. Violation of the provision of this section shall
be published by imprisonment of twelve (12) years to twenty (20) years and/or a fine
of One hundred and twenty thousand pesos (120,000.00) and forfeiture of the catch,
and the cancellation of fishing permit.

DENR has issued a list of threatened terrestrial species of animals DAO 2004-15 (fauna), and plants
DAO 2007-01 (flora). The humpback wrasse or mameng is listed under CITES Appendix II, so are
many corals and cone shells. These are species that are not necessarily threatened with extinction,
but may become so unless trade in specimens of such species is subject to strict regulation in order
to avoid utilization incompatible with the survival of the species in the wild.

In the case of Tano, et al. vs. Socrates, et al., the Supreme Court had the occasion to review the
local ordinances issued by Puerto Princesa City and Palawan Province that banned the shipment of
live fish. The extreme measure was necessary because illegal fishermen were using cyanide to
catch the live fish. Cyanide fishing has also resulted in the destruction of the coral reef habitats of
the target fishes.

Tano et al. vs. Socrates et al.

G.R. No. 110249, August 21, 1997

Davide, Jr., J., ponente

On December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City enacted
Ordinance No. 15-92 which took effect on January 1, 1993 entitled: "AN ORDINANCE
BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO
PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING
EXEMPTIONS, PENALTIES AND FOR OTHER PURPOSES THEREOF"
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To implement said city ordinance, then Acting City Mayor Amado L. Lucero issued
Office Order No. 23, Series of 1993 dated January 22, 1993 which reads as follows: In
the interest of public service and for purposes of City Ordinance No. PD 426-14-74,
otherwise known as "AN ORDINANCE REQUIRING ANY PERSON ENGAGED OR
INTENDING TO ENGAGE IN ANY BUSINESS, TRADE, OCCUPATION, CALLING OR
PROFESSION OR HAVING IN HIS POSSESSION ANY OF THE ARTICLES FOR
WHICH A PERMIT IS REQUIRED TO BE HAD, TO OBTAIN FIRST A MAYOR'S
PERMIT" and "City Ordinance No. 15-92, AN ORDINANCE BANNING THE SHIPMENT
OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM
JANUARY 1, 1993 TO JANUARY 1, 1998, you are hereby authorized and directed to
check or conduct necessary inspections on cargoes containing live fish and lobster
being shipped out from the Puerto Princesa Airport, Puerto Princesa Wharf or at any
port within the jurisdiction of the City to any point of destinations [sic] either via aircraft
or seacraft.

On February 19, 1993, the Sangguniang Panlalawigan, Provincial Government of

Palawan enacted Resolution No. 33 entitled: "A RESOLUTION PROHIBITING THE
CATCHING, GATHERING, POSSESSING, BUYING, SELLING AND SHIPMENT OF
LIVE MARINE CORAL DWELLING AQUATIC ORGANISMS, TO WIT: FAMILY:
SCARIDAE (MAMENG), EPINE PHELUS FASCIATUS (SUNO). CROMILEPTES
ALTIVELIS (PANTHER OR SENORITA), LOBSTER BELOW 200 GRAMS AND
SPAWNING, TRIDACNA GIGAS (TAKLOBO), PINCTADA MARGARITEFERA
(MOTHER PEARL, OYSTERS, GIANT CLAMS AND OTHER SPECIES), PENAEUS
MONODON (TIGER PRAWN-BREEDER SIZE OR MOTHER), EPINEPHELUS
SUILLUS (LOBA OR GREEN GROUPER) AND FAMILY: BALISTIDAE (TROPICAL
AQUARIUM FISHES) FOR A PERIOD FIVE (5) YEARS IN AND COMING FROM
PALAWAN WATERS

xxx

Without seeking redress from the concerned local government units, prosecutor's office
and courts, petitioners directly invoked our original jurisdiction by filing this petition on 4
June 1993. In sum, petitioners contend that:

First, the Ordinances deprived them of due process of law, their livelihood, and unduly
restricted them from the practice of their trade, in violation of Section 2, Article XII and
Sections 2 and 7 of Article XIII of the 1987 Constitution.

Second, Office Order No. 23 contained no regulation nor condition under which the
Mayor's permit could be granted or denied; in other words, the Mayor had the absolute
authority to determine whether or not to issue the permit.

Third, as Ordinance No. 2 of the Province of Palawan "altogether prohibited the

catching, gathering, possession, buying, selling and shipping of live marine coral
dwelling organisms, without any distinction whether it was caught or gathered through
lawful fishing method," the Ordinance took away the right of petitioners-fishermen to
earn their livelihood in lawful ways; and insofar as petitioners-members of Airline
Shippers Association are concerned, they were unduly prevented from pursuing their
vocation and entering "into contracts which are proper, necessary, and essential to carry
out their business endeavors to a successful conclusion."

xxx

After a scrutiny of the challenged Ordinances and the provisions of the Constitution
petitioners claim to have been violated, we find petitioners' contentions baseless and so
hold that the former do not suffer from any infirmity, both under the Constitution and
applicable laws.
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xxx

The LGC provisions invoked by private respondents merely seek to give flesh and blood
to the right of the people to a balanced and healthful ecology. In fact, the General
Welfare Clause, expressly mentions this right:

Sec. 16. General Welfare. — Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective
governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units
shall ensure and support, among other things, the preservation and
enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve
public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve
the comfort and convenience of their inhabitants. (emphasis supplied).

Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare
provisions of the LGC "shall be liberally interpreted to give more powers to the local
government units in accelerating economic development and upgrading the quality of
life for the people of the community."

The LGC vests municipalities with the power to grant fishery privileges in municipal
waters and impose rentals, fees or charges therefor; to penalize, by appropriate
ordinances, the use of explosives, noxious or poisonous substances, electricity, muro-
ami, and other deleterious methods of fishing; and to prosecute any violation of the
provisions of applicable fishery laws. Further, the sangguniang bayan, the sangguniang
panlungsod and the sangguniang panlalawigan are directed to enact ordinances for the
general welfare of the municipality and its inhabitants, which shall include, inter alia,
ordinances that "[p]rotect the environment and impose appropriate penalties for acts
which endanger the environment such as dynamite fishing and other forms of
destructive fishing . . . and such other activities which result in pollution, acceleration of
eutrophication of rivers and lakes, or of ecological imbalance."

Finally, the centerpiece of LGC is the system of decentralization as expressly mandated

by the Constitution. Indispensable to decentralization is devolution and the LGC
expressly provides that "[a]ny provision on a power of a local government unit shall be
liberally interpreted in its favor, and in case of doubt, any question thereon shall be
resolved in favor of devolution of powers and of the lower local government unit. Any
fair and reasonable doubt as to the existence of the power shall be interpreted in favor
of the local government unit concerned." Devolution refers to the act by which the
National Government confers power and authority upon the various local government
units to perform specific functions and responsibilities.

One of the devolved powers enumerated in the section of the LGC on devolution is the
enforcement of fishery laws in municipal waters including the conservation of
mangroves. This necessarily includes the enactment of ordinances to effectively carry
out such fishery laws within the municipal waters.

xxx

At this time then, it would be appropriate to determine the relation between the assailed
Ordinances and the aforesaid powers of the Sangguniang Panlungsod of the City of
Puerto Princesa and the Sangguniang Panlalawigan of the Province of Palawan to
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protect the environment. To begin, we ascertain the purpose of the Ordinances as set
forth in the statement of purposes or declaration of policies quoted earlier.

It is clear to the Court that both Ordinances have two principal objectives or purposes:
(1) to establish a "closed season" for the species of fish or aquatic animals covered
therein for a period of five years; and (2) to protect the coral in the marine waters of the
City of Puerto Princesa and the Province of Palawan from further destruction due to
illegal fishing activities.

The accomplishment of the first objective is well within the devolved power to enforce
fishery laws in municipal waters, such as P.D. No. 1015, which allows the establishment
of "closed seasons." The devolution of such power has been expressly confirmed in the
Memorandum of Agreement of 5 April 1994 between the Department of Agriculture and
the Department of Interior and Local Government.

The realization of the second objective clearly falls within both the general welfare
clause of the LGC and the express mandate thereunder to cities and provinces to
protect the environment and impose appropriate penalties for acts which endanger the
environment.

The destruction of coral reefs results in serious, if not irreparable, ecological imbalance,
for coral reefs are among nature's life-support systems. They collect, retain and recycle
nutrients for adjacent nearshore areas such as mangroves, seagrass beds, and reef
flats; provide food for marine plants and animals; and serve as a protective shelter for
aquatic organisms. It is said that "[e]cologically, the reefs are to the oceans what forests
are to continents: they are shelter and breeding grounds for fish and plant species that
will disappear without them."

The prohibition against catching live fish stems, in part, from the modern phenomenon
of live-fish trade which entails the catching of so-called exotic species of tropical fish,
not only for aquarium use in the West, but also for "the market for live banquet fish
[which] is virtually insatiable in ever more affluent Asia. These exotic species are coral-
dwellers, and fishermen catch them by "diving in shallow water with corraline habitats
and squirting sodium cyanide poison at passing fish directly or onto coral crevices; once
affected the fish are immobilized [merely stunned] and then scooped by hand." The
diver then surfaces and dumps his catch into a submerged net attached to the skiff.
Twenty minutes later, the fish can swim normally. Back on shore, they are placed in
holding pens, and within a few weeks, they expel the cyanide from their system and are
ready to be hauled. They are then placed in saltwater tanks or packaged in plastic bags
filled with seawater for shipment by air freight to major markets for live food fish. While
the fish are meant to survive, the opposite holds true for their former home as "[a]fter
the fisherman squirts the cyanide, the first thing to perish is the reef algae, on which fish
feed. Days later, the living coral starts to expire. Soon the reef loses its function as
habitat for the fish, which eat both the algae and invertebrates that cling to the coral.
The reef becomes an underwater graveyard, its skeletal remains brittle, bleached of all
color and vulnerable to erosion from the pounding of the waves." It has been found that
cyanide fishing kills most hard and soft corals within three months of repeated
application.

The nexus then between the activities barred by Ordinance No. 15-92 of the City of
Puerto Princesa and the prohibited acts provided in Ordinance No. 2, Series of 1993 of
the Province of Palawan, on one hand, and the use of sodium cyanide, on the other, is
painfully obvious. In sum, the public purpose and reasonableness of the Ordinances
may not then be controverted.

xxx

5.3 Policy analysis

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Enforcement of the law banning the use of cyanide is difficult, as shown by the evidentiary
requirements discussed in the case of Hizon. In this case, the chain of custody of samples sent for
testing was called into question.

Hizon, et al. vs. Court of Appeals, et al.

G.R. No. 119619 December 13, 1996

Puno, J., ponente

In September 1992, the Philippine National Police (PNP) Maritime Command of Puerto
Princesa City, Palawan received reports of illegal fishing operations in the coastal
waters of the city. In response to these reports, the city mayor organized Task Force
Bantay Dagat to assist the police in the detection and apprehension of violators of the
laws on fishing.

On September 30, 1992 at about 2:00 in the afternoon, the Task Force Bantay Dagat
reported to the PNP Maritime Command that a boat and several small crafts were fishing
by "muro ami" within the shoreline of Barangay San Rafael of Puerto Princesa. The
police, xxx immediately proceeded to the area and found several men fishing in
motorized sampans and a big fishing boat identified as F/B Robinson within the seven-
kilometer shoreline of the city. They boarded the F/B Robinson and inspected the boat
with the acquiescence of the boat captain, Silverio Gargar. In the course of their
inspection, the police saw two foreigners in the captain's deck. SP03 Enriquez examined
their passports and found them to be mere photocopies. The police also discovered a
large aquarium full of live lapu-lapu and assorted fish weighing approximately one ton
at the bottom of the boat. They checked the license of the boat and its fishermen and
found them to be in order. Nonetheless, SP03 Enriquez brought the boat captain, the
crew and the fishermen to Puerto Princesa for further investigation.

xxx

The following day, October 1, 1992, SPO3 Enriquez directed the boat captain to get
random samples of fish from the fish cage of F/B Robinson for laboratory examination.
As instructed, the boat engineer, petitioner Ernesto Andaya, delivered to the Maritime
Office four (4) live lapu-lapu fish inside a plastic shopping bag filled with water. SPO3
Enriquez received the fish and in the presence of the boat engineer and captain, placed
them inside a large transparent plastic bag without water. He sealed the plastic with
heat from a lighter.

The specimens were brought to the National Bureau of Investigation (NBI) sub-office in
the city for examination "to determine the method of catching the same for record or
evidentiary purposes." They were received at the NBI office at 8:00 in the evening of
the same day. The receiving clerk, Edna Capicio, noted that the fish were dead and she
placed the plastic bag with the fish inside the office freezer to preserve them. Two days
later, on October 3, 1992, the chief of the NBI sub-office, Onos Mangotara, certified the
specimens for laboratory examination at the NBI Head Office in Manila. The fish
samples were to be personally transported by Edna Capicio who was then scheduled
to leave for Manila for her board examination in Criminology. On October 4, 1992, Ms.
Capicio, in the presence of her chief, took the plastic with the specimens from the freezer
and placed them inside two shopping bags and sealed them with masking tape. She
proceeded to her ship where she placed the specimens in the ship's freezer.

Capicio arrived in Manila the following day, October 5, 1992 and immediately brought
the specimens to the NBI Head Office. On October 7, 1992, NBI Forensic Chemist
Emilia Rosaldes conducted two tests on the fish samples and found that they contained
sodium cyanide, xxx
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In light of these findings, the PNP Maritime Command of Puerto Princesa City filed the
complaint at bar against the owner and operator of the F/B Robinson, the First
Fishermen Fishing Industries, Inc., represented by herein petitioner Richard Hizon, the
boat captain, Silverio Gargar, the boat engineer, Ernesto Andaya, two other crew
members, the two Hongkong nationals and 28 fishermen of the said boat.

xxx

We now review the evidence to determine whether petitioners have successfully

rebutted this presumption. The facts show that on November 13, 1992, after the
Information was filed in court and petitioners granted bail, petitioners moved that the
fish specimens taken from the F/B Robinson be reexamined. 37 The trial court granted
the motion38. As prayed for, a member of the PNP Maritime Command of Puerto
Princesa, in the presence of authorized representatives of the F/B Robinson, the NBI
and the local Fisheries Office, took at random five (5) live lapu-lapu from the fish cage
of the boat. The specimens were packed in the usual manner of transporting live fish,
taken aboard a commercial flight and delivered by the same representatives to the NBI
Head Office in Manila for chemical analysis.

On November 23, 1992, Salud Rosales, another forensic chemist of the NBI in Manila
conducted three (3) tests on the specimens and found the fish negative for the presence
of sodium cyanide, xxx

The Information charged petitioners with illegal fishing "with the use of obnoxious or
poisonous substance (sodium cyanide), of more or less one (1) ton of assorted live
fishes" There was more or less one ton of fishes in the F/B Robinson's fish cage. It was
from this fish cage that the four dead specimens examined on October 7, 1992 and the
five specimens examined on November 23, 1992 were taken. Though all the specimens
came from the same source allegedly tainted with sodium cyanide, the two tests
resulted in conflicting findings. We note that after its apprehension, the F/B Robinson
never left the custody of the PNP Maritime Command. The fishing boat was anchored
near the city harbor and was guarded by members of the Maritime Command41. It was
later turned over to the custody of the Philippine Coast Guard Commander of Puerto
Princesa City42.

The prosecution failed to explain the contradictory findings on the fish samples and this
omission raises a reasonable doubt that the one ton of fishes in the cage were caught
with the use of sodium cyanide.

The absence of cyanide in the second set of fish specimens supports petitioners' claim
that they did not use the poison in fishing. According to them, they caught the fishes by
the ordinary and legal way, i.e., by hook and line on board their sampans.
xxx

The only basis for the charge of fishing with poisonous substance is the result of the
first NBI laboratory test on the four fish specimens. Under the circumstances of the case,
however, this finding does not warrant the infallible conclusion that the fishes in the F/B
Robinson, or even the same four specimens, were caught with the use of sodium
cyanide.

Prosecution witness SPO1 Bernardino Visto testified that for the first laboratory test,
boat engineer Ernesto Andaya did not only get four (4) samples of fish but actually got
five (5) from the fish cage of the F/B Robinson. The Certification that four (4) fish
samples were taken from the boat shows on its face the number of pieces as originally
"five (5)" but this was erased with correction fluid and "four (4)" written over it. The
specimens were taken, sealed inside the plastic bag and brought to Manila by the police
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authorities in the absence of petitioners or their representative. SP02 Enriquez testified

that the same plastic bag containing the four specimens was merely sealed with heat
from a lighter. Emilia Rosales, the NBI forensic chemist who examined the samples,
testified that when she opened the package, she found the two ends of the same plastic
bag knotted. These circumstances as well as the time interval from the taking of the fish
samples and their actual examination 51 fail to assure the impartial mind that the integrity
of the specimens had been properly safeguarded.

Apparently, the members of the PNP Maritime Command and the Task Force Bantay
Dagat were the ones engaged in an illegal fishing expedition. As sharply observed by
the Solicitor General, the report received by the Task Force Bantay Dagat was that a
fishing boat was fishing illegally through "muro ami" on the waters of San Rafael. "Muro
ami" according to SPO1 Saballuca is made with "the use of a big net with sinkers to
make the net submerge in the water with the fishermen surround[ing] the net." This
method of fishing needs approximately two hundred (200) fishermen to execute. What
the apprehending officers instead discovered were twenty eight (28) fishermen in their
sampans fishing by hook and line. The authorities found nothing on the boat that would
have indicated any form of illegal fishing. All the documents of the boat and the
fishermen were in order. It was only after the fish specimens were tested, albeit under
suspicious circumstances, that petitioners were charged with illegal fishing with the use
of poisonous substances. xxx

It is worth noting that in the Hizon case, the prosecution failed to explain the inconsistency of the first
and second sampling results. Perhaps the prosecution was unaware that the small traces of cyanide
that turned up in the first sampling will have been metabolized (therefore undetectable) in a matter
of hours or days. The levels of cyanide would have been very small to begin with or it would have
killed the fish. After the trace amounts of cyanide were metabolized, the results of the second testing
would likely be negative for cyanide.

5.4 Further discussion

There are two environmental issues often related to biodiversity and wildlife: biosafety and
bioprospecting. Biosafety refers to “a condition in which the probability of harm, injury and damage
resulting from the intentional and unintentional introduction and/or use of a regulated article is within
acceptable and manageable levels;”127 bioprospecting “means the research, collection and utilization
of biological and genetic resources for purposes of applying the knowledge derived there from solely
for commercial purposes.”128

5.4.1. Biosafety and Alien Invasive Species

A genetically modified organism is a product of genetic engineering, a process that allows for the
selection and transfer of specific genes from one organism to another. 129 Although genetically
modified organisms may seem promising – especially with regard to their potential to end food
security issues in developing countries – safety issues with respect to their possible effects on
humans and the environment have been and continue to be raised.130 The following issues have
been raised against GMO introduction and commercialization:

1. Human Health Concern

127
National Biosafety Framework, § 3.3.1
128
Rep. Act 9147, § 5, cl. A (Phil.).
129
Ameurfina Dumlao-Santos, A Crash Course in GMOs, in Selected Essays on Science and Technology for Securing A
Better Philippines 318 (Cesar Saloma, et. al. eds., 2008).
130
Corazon Catibog-Sinha and Lawrence R. Heaney, Philippine Biodiversity: Principles and Practice, HARIBON 104
(2006).
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Opposition groups to GMOs claim that this type of food pose health risks to human
beings.131 The case of the Bt Corn crop introduced in the country is illustrative of this
point. Bt Corn is a corn plant, which was incorporated with an additional gene from a
particular soil microorganism intended to make the same resistant to particular insects
responsible for crop destruction. It is “so far, the only approved GM crop for commercial
propagation.”132 An advantage of this crop is that it generates more produce for the
farmers because insect infestations are greatly reduced. However, there are certain
issues that prevent its widespread acceptance by the public. A significant issue involves
the “Fear, Uncertainty and Doubt tactics” used by those rallying against GMOs. In 2004,
a certain Norwegian scientist was quoted by the media to have observed ill effects on
particular persons in a community in Mindanao, which he attributed to Bt corn. However,
the ill effects claimed had been subsequently investigated by private and public health
professionals and was confirmed to be “unlikely due to Bt corn.”133 Unfortunately claims
similar to these can indeed make the public doubt the safety of the crop for human
consumption. A statement by Dumlao-Santos may be found by many to be enlightening:
“But in dealing with the GMO debate, it is human logic that will resolve issues
on human technology. This Bt substance, a protein, exists in an inactivated
form; it is activated only in the alkaline medium of the insect’s gut. Once
activated, this toxin binds to specific receptors in the insect’s gut and bores
holes through the membrane. The toxin is thus known as gut poison. But our
stomachs are acidic; thus, the toxin cannot be activated. Furthermore, we do
not have receptors to bind the toxin. So what happens to the Bt substance in
the corn that we eat? This will be treated by our digestive systems just like any
protein, and will be broken down into tiny pieces. Eating Bt corn is no different
from eating non-Bt corn.”134

2. Environmental Concerns (especially with regard to GM crops)

One risk to the environment cited against GM crop cultivation is the danger of “gene
flow,” which is “the possibility that GM crops will hybridize with their wild relatives,
resulting in the transfer of the transgenes from the GM crops to their wild counterparts.”
This gene flow can lead to certain harmful environmental situations such as:135

1. The occurrence of the so-called “superweeds”136

2. The threat of extinction of the wild relatives of the GM crops137
3. The “‘genetic pollution’ of natural ecosystem diversity”138

In addition, GM crops may have repercussions on non-targeted organisms as well as

cause the intended recipients to become immune to the pesticides or diseases.139

3. Regulatory Concerns
The slow commercialization of GM products in developing countries can be attributed to
several factors, one of which is the cost incurred in complying with the biosafety
regulatory requirements. “A high cost of compliance with biosafety regulations may deter
a small firm or public-sector institution from pursuing GM technologies, or may cause

131
David Dawe and Laurian Unnevehr, Crop Case Study: GMO Golden Rice in Asia with Enhanced Vitamin A Benefits for
Consumers, in AgBioForum 10(3) 155 (2007), avaible at: http://www.agbioforum.org/v10n3/v10n3a04-unnevehr.pdf.
132
Ameurfina Dumlao-Santos, A Crash Course in GMOs, in Selected Essays On Science And Technology For Securing A
Better Philippines 318-319 (Cesar Saloma, et. al. eds., 2008).
133
Benigno Peczon, The Continuing Bt Corn War, in Selected Essays On Science And Technology For Securing A Better
Philippines 298-299 (Cesar Saloma, et. al. eds., 2008).
134
Ameurfina Dumlao-Santos, A Crash Course in GMOs, in Selected Essays On Science And Technology For Securing A
Better Philippines 319 (Cesar Saloma, et. al. eds., 2008).
135
Christina L. Richmond, Genetically Modified Crops in the Philippines: Can Existing Biosafety Regulations Adequately
Protect the Environment, in Pacific Rim Law & Policy Journal 573 ( 2006), available at:
http://www.nationalaglawcenter.org/assets/bibarticles/richmond_genetically.pdf.
136
Id, at 574.
137
Id.
138
Id.
139
Id.
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them to abandon or delay commercialization of potentially valuable products.” This limits

the avenues for commercialization to mostly large corporations who have enough capital
to shoulder high transactional costs. Another deterrent related to regulatory compliance
is the resulting delay in time for regulatory approval caused for example by slow or
lengthy review procedures, which in turn result to losses for the investing entity.140 Other
criticisms regarding the present biosafety regulations in the Philippines as highlighted
by the issue of the Bt corn approval are that they lack measures for “transparent,
independent, and participatory” implementation and “mechanisms through which socio-
economic concerns could be addressed in the biosafety decision process.”141

5.4.2 Bioprospecting

The Wildlife Resources Conservation and Protection Act (R.A. No. 9147) defines bioprospecting as
“the research, collection and utilization of biological and genetic resources for purposes of applying
the knowledge derived there solely for commercial purposes.”

Section 14. Bioprospecting shall be allowed upon execution of an undertaking by any

proponent, stipulating therein its compliance with and commitment(s) to reasonable
terms and conditions that may be imposed by the Secretary, which are necessary to
protect biological diversity.

The Secretary or the authorized representative, in consultation with the concerned

agencies, before granting the necessary permit, shall require that prior informed
consent be obtained by the applicant from the concerned indigenous cultural
communities, local communities, management board under Republic Act No. 7586
or private individual or entity. The applicant shall disclose fully the intent and scope
of the bioprospecting activity in a language and process understandable to the
community. The prior informed consent from the indigenous peoples shall be
obtained in accordance with existing laws. The action on the bioprospecting proposal
by concerned bodies shall be made within a reasonable period.

Upon submission of the complete requirements, the Secretary shall act on the
research proposal within a reasonable period. If the applicant is a foreign entity or
individual, a local institution should be actively involved in the research, collection
and, whenever applicable and appropriate in the technological development of the
products derived from the biological and genetic resources.

Section 15. Collection and utilization of biological resources for scientific research
and not for commercial purposes shall be allowed upon execution of an
undertaking/agreement with and issuance of a gratuitous permit by the Secretary or
the authorized representative: Provided, that prior clearance from concerned bodies
shall be secured before the issuance of the gratuitous permit: Provided, further, That
the last paragraph of Section 14 shall likewise apply.

The Philippines has been a global pioneer in the adoption of bioprospecting regulations. Executive
Order No. 247, deemed internationally as the first access to genetic resources and benefit-sharing
law, was issued after Philippine ratification of the Convention of Biological Diversity.142 However, this
Executive Order has been criticized as follows:

140
Jessica C. Bayer, et. al., Cost of Compliance with Biotechnology Regulation in the Philippines: Implications for
Developing Countries,in AgBioForum, 13(1) 53, 57-60 (2010), available at: http://www.agbioforum.org/v13n1/v13n1a04-
norton.pdf.
141
Lindsey Fransen, et. al., Integrating Socio-Economic Considerations into Biosafety Decisions: The Role of Public
Participation, World Resources Institute 38 (2005), available at: http://pdf.wri.org/fransen_lavina_biosafetywhitepaper.pdf.
142
Kathryn Garforth, et. al., Overview of the National and Regional Implementation of Access to Genetic Resources and
Benefit-Sharing Measures, in Centre for International Sustainable Development Law, 19 (3rd ed. 2005), available at:
http://www.cisdl.org/pdf/ABS_ImpStudy_sm.pdf.
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1. In defining the concept of bioprospecting, E.O. 247 in effect limited its scope to sampling and
collecting materials instead of dealing with the entire subject matter, which also includes
exploration and documentation of such materials. 143
2. The Prior Informed Consent requirement as carried out pursuant to the E.O.’s Implementing
Rules and Regulations requires only notice to the affected community of the proposed
bioprospecting activity, but not dialogue regarding the same.144
3. With the benefit sharing scheme only characterized as to be made “equitably” but no
quantified ratio is identified, the benefits to be gained by the affected communities is
uncertain.145
4. E.O. No. 247 imposed a difficult process for obtaining permits that has hindered the research
activities of Filipino scientists like those aiming to study natural products.146

The Wildlife Resources Conservation and Protection Act included provisions that tackle the
bioprospecting concerns on E.O. No. 247,147 some of which are listed below:

1. It provided a new definition of bioprospecting as the “research, collection and utilization of

biological and genetic resources for purposes of applying the knowledge derived therefrom
solely for commercial purposes.”148
2. Affected communities through the Prior Informed Consent requirement are entitled to bargain
as to their share in the benefits derived from the bioprospecting activity.149
3. The Guidelines of the Wildlife Act laid down “detailed benefit-sharing provisions.”150
4. Instead of obtaining Commercial or Academic Research Agreements under E.O. No. 247,
the Act now requires a Bioprospecting Undertaking permit for commercial undertakings and
a gratuitous permit for scientific studies.151

CASE STUDY:
THE LAST LUNG OF METRO MANILA - ARROCEROS FOREST PARK

Arroceros Forest Park, also known as the "last lung" of Manila, is a 21,428 square meter piece of land situated in
the heart of downtown Manila. It is home to various species of flora and fauna and is the last remaining oasis of
mature trees in Metro Manila. This also includes six different bird species that are residing in the park as identified
by Haribon Society, namely the long-tailed shrike, pied fantail, zebra dove, pacific swallow, yellow-vested bulbul,
and the brown shrike.

The Arroceros Forest Park is also where Parian de Arroceros (Parian: Old Malay for "to go", Arroceros: Spanish
for "rice cultivators) used to be situated. It was the commercial center of Manila during the Spanish Occupation of
the Philippines in the 16th and 17th century, housing more than a hundred shops of Chinese products and
tradesmen. It also housed the Fabrica de Tobacos in the 19th Century. The land was then purchased by the City
School Board of Manila in 1992 with an aim for it to be used for educational, sports, and recreational and/or public
service-oriented project. In 1993, the park was placed under the care of Winner foundation, a private
environmentalist group tasked for the development and maintenance of the forest park, in accordance to the
Memorandum of Agreement (MOA) created between the foundation and the City Government of Manila. In 2008,
the MOA expired and was extended until 2013. Upon expiration, the Winner Foundation have to turn over the park
to Manila or renegotiate a new MOA to keep their stewardship over the park.

143
Oscar B. Zamora, The Philippines: A Bridle on Bioprospecting?, in GRAIN (1997),
http://www.grain.org/article/entries/213-the-philippines-a-bridle-on-bioprospecting.
144
Id.
145
Id.
146
Lourdes J. Cruz, Natural Products Research and Bioprospecting, in PES: Sustainable Financing for Conservation and
Development, Padilla, J.E. et. al. eds., 118-119, (Proceedings from the National Conference-Workshop on Payments for
Environmental Services: Direct Incentives for Biodiversity Conservationand Poverty Alleviation, Manila, March 1-2, 2005)
<http://www.wwf.org.ph/downloads/PES.pdf>
147
Id, 119
148
Id.
149
Kathryn Garforth, et. al., Overview of the National and Regional Implementation of Access to Genetic Resources and
Benefit-Sharing Measures, in Centre for International Sustainable Development Law 20 (3rd ed. 2005), available at:
http://www.cisdl.org/pdf/ABS_ImpStudy_sm.pdf
150
Id.
151
Lourdes J. Cruz, Natural Products Research and Bioprospecting, in PES: Sustainable Financing for Conservation and
Development, Padilla, J.E. et. al. eds., 119, (Proceedings from the National Conference-Workshop on Payments for
Environmental Services: Direct Incentives for Biodiversity Conservationand Poverty Alleviation, Manila, March 1-2, 2005)
<http://www.wwf.org.ph/downloads/PES.pdf>
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In July 2017, the Winner foundation was asked by the city government to vacate the park for it to be developed
into a sports gymnasium. Due to its historical significance and being Manila's "last lung" as the city's only nature
park, Petitions by heritage and environmental conservationists were made against the development to preserve
the park's heritage and the thousands of trees and ornamental plants housed in it. A month later, the city
government deferred its decision to reclaim the Arroceros Forest Park and allowed the Winner foundation to stay
in the park while the city government studies how to best utilize the property.

The park already lost 70% of its trees and other artifacts from the Parian days in the early 2000s when a part of
the park was utilized to construct a parking lot and the city Department of Education building. Now, the Save the
Arroceros Park Movement aims for the passage of the proposed city ordinance to declare Arroceros as a
permanent tree park to save whatever remains in the park. With the expiration of the two-decade-long
memorandum of agreement between the City government and Winner foundation, the absence of any policy to
protect the park, and as well as the failure to secure a new contract for the park's development serves as a constant
threat to the existence Manila's last lung. Fortunately, on 18 May 2019, newly elected Manila Mayor Isko Moreno
Domagoso has announced that he plans on halting the plans for the development of the gymnasium and has
committed to preserve the Arroceros Forest Park.

Sources:

https://news.mb.com.ph/2018/08/24/environmental-group-to-file-petition-against-construction-of-a-gym-in-arroceros-forest-
park/
https://businessmirror.com.ph/2017/08/21/manila-mayor-defers-reclaiming-arroceros-park/
https://news.mb.com.ph/2019/04/03/save-arroceros-movement-worries-about-the-fate-of-the-arroceros-forest-park/
https://www.philstar.com/lifestyle/modern-living/2017/10/06/1746144/saving-arroceros
https://www.philstar.com/opinion/2003/02/11/194951/impose-rule-law-arroceros-forest-park
https://www.philstar.com/opinion/2007/11/08/26232/arroceros-forest-park-manilarsquos-last-lung
https://news.mb.com.ph/2017/08/20/erap-defers-decision-on-arroceros-park/
https://www.rappler.com/nation/230985-isko-moreno-says-no-to-building-gym-arroceros-forest-park-manila
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Chapter Six

Protected Areas and Watershed Management

FACTS AND FIGURES

As of 2013, there are 240 protected areas in the country which totals to 5.45 million hectares of land managed
under the National Integrated Protected Areas System (NIPAS). This covers 4.07 million hectares of terrestrial and
1.38 million hectares of marine areas such as parks, forest reserves, and wildlife sanctuaries. There are also 143
identified critical watershed areas in the country.

It is estimated that the total water availability in the country from its water reservoirs is at 146 billion cubic meters
(BCM) of water per year. Theoretically, the country's supply of water far exceeds its demand. But the rapid
urbanization, improper management, pollution, and climate change continuously threatens water security in the
country.

The water scarcity is most especially felt in a highly urbanized area. These areas are often dependent either water
lines from nearby watersheds and groundwater aquifers. The continuous increase in water demand resulted in
uncontrolled withdrawal from groundwater aquifers. Coupled with the rapid urbanization and deterioration of
watersheds due to deforestation, the rate of aquifer recharge slowed significantly and eventually lead to the decline
of groundwater levels and saltwater intrusion. According to PSA, the trend of the increase in the rate of water
withdrawal or water demand and decrease of groundwater recharge have already been observed since 1988. And
as early as 1994, it has already been observed that the country's annual water withdrawal has reached 5.8 BCM
while groundwater aquifers annual recharge is only 1.5 BCM. This sufficiently explains the Metro Manila water
shortage phenomenon in 2019.

Sources:

http://www.bmb.gov.ph/downloads/References/PA_Guidebook_Final.pdf
https://www.pna.gov.ph/articles/1072856
http://www.neda.gov.ph/wp-content/uploads/2013/09/CHAPTER-10.pdf

6.1 Environmental situationer

Mt. Tinagong-Yaman is the legendary home of engkanto (spirits) that protect plants, animals and
waters of the forests. For centuries, the --- Tribe lived within and around the thick forests, moving
from place to place doing shifting cultivation and hunting wild animals for food. The Tribe considers
the forest as its home, and integral to the Tribe’s spiritual and social identity. Over the years, settlers
from different provinces have come to live at the edges of the forests. These settlers befriended the
Tribe, engaging in trade, including buying portions of lands from some tribal members. The settlers
cleared some portions of the forest to plant crops. Some areas of the mountain were not suitable for
farming because the land was rocky and inhospitable.

In recent years, scientists from the government and international academic institutions conducted
biological surveys in Mt. Tinagong Yaman and found that the area is rich in unique species of plants
and animals. Government scientists also discovered that the rocky areas were actually rich in
mineral deposits. This was confirmation of old folks tales about finding gold nuggets in the rivers
than ran through the mountains.

The scientific discoveries became the basis of moves to declare the mountain as a protected area to
conserve the biodiversity and natural beauty of the place. The local communities and even the tribal
leaders were happy about the program to protect area. It was also recently discovered that the area
had once been declared as a forest reserve.

However, the news of rich mineral deposits also attracted many investors to apply for mining permits
in the area. Suddenly there have been an influx of small-scale miners, and geologists from large
mining companies have also visited the area to conduct tests. Many small-scale miners have started
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digging and panning – and set up processing facilities. Local communities and tribal leaders noticed
that the waters near the mining areas have become very murky; government investigations found
that the waters have become silted and contaminated with chemicals used by the miners.

6.2 Legal analysis (application of existing laws)

The framework for protecting terrestrial and aquatic ecosystems that are considered important for
biodiversity conservation is the National Integrated Protected Areas System of 1992, as amended
by Republic Act No. 11038 or the Expanded National Integrated Protected Areas System Act of 2008,
which adopted strong amendatory measures to the NIPAS. Section 5 of R.A. No. 11038 established
specific protected areas, such as national parks, in addition to those already declared as protected
areas through acts of Congress. The number of prohibited acts has also been increased.

Expanded National Integrated Protected Areas System Act of 2008

Republic Act No. 11038 (2017)

Sec. 20. Prohibited Acts. - Except as may be allowed by the nature of their categories and
pursuant to rules and regulations governing the same, the following acts are prohibited
within protected areas:

(a) Poaching, killing, destroying, disturbing of any wildlife including in private lands
within the protected area;
(b) Hunting, taking, collecting, or possessing of any wildlife, or by-products derived
therefrom, including in private lands within the protected area without the necessary
permit, authorization or exemption: Provided, That the PASU as authorization or
exemption only for culling, scientific research , the exemptions provided under Section
27(a) of Republic Act No. 9147 (Wildlife Resources, Conservation and Protection Act)
or harvests of nonprotected species in multiple-use zones by tenured migrants and
IPs;
(c) Cutting, gathering, removing or collecting timber within the protected area including
provate lands therein, without the necessary permit, authorization, certification of
planted trees or exemption such acts are done in accordance with the duly recognized
practices of the IPs/ICCs for subsistence puposes;
(d) Possessing or transporting outside the protected area any timber, forest products,
wildlife, or by-products derived therefrom which are ascertained to have been taken
from the protected area other that exotic species, the culling of which has been
authorized under an appropriate permit;
(e) Using any fishing or harvesting gear and practices or any of their variations that
destroys coral reefs, seagrass beds or other marine life and their associated habitats
or terrestrial habitat as may be determined by the DA or the DENR; Provided, That
mere possession of such gears within the protected areas shall be prima
facie evidence of their use;
(f) Dumping, throwing, using, or causing to be dumped into or places in the protected
area of any toxic chemical, noxious or poisonous substance or nonbiodegradable
material, untreated sewage or animal waste or products whether in liquid, solid or gas
state, including pesticides and other hazardous substances as defined under Republic
Act No. 6969, otherwise known as the "Toxic Substances and Hazardous and Nuclear
Waste Control Act of 1990' detrimental to the protected area, or to the plants and
animals or inhabitants therein;
(g) Operating any motorized conveyance within the protected area without permit from
the PAMB, except when the use of such motorized conveyance is the only practical
means of transportation of IPs/ICCs in accessing their ancestral domain/land;
(h) Altering, removing, destroying or defacing boundary marks or signs;
(i) Engaging in 'kaingin' or, any manner, causing forest fires inside the protected area;
(j) Mutilating, defacing, destroying, excavating, vandalizing or, in any manner
damaging any natural formation, religious, spiritual, historical sites, artifacts and other
objects of natural beauty, scenic value or objects of interest to IPs/ICCs;
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(k) Damaging and leaving roads and trails in damaged condition;

(l) Littering or depositing refuse or debris on the ground or in bodies of water;
(m) Possessing or using blasting caps or explosives anywhere within the protected
area;
(n) Occupying or dwelling in any public land within the protected area without
clearance from the PAMB;
(o) Constructing, erecting, or maintaining any kind of structure, fence or enclosure,
conducting any business enterprise within the protected area without prior clearance
from the PAMB and permit from the DENR, or conducting these activities in a manner
that is inconsistent with the management plan duly approved by the PAMB;
(p) Undertaking mineral exploration or extraction within the protected area;
(q) Engaging in commercial or large-scale qaurrying within the protected area;
(r) Establishing or introducing exotic species, including GMOs or invasive alien
species within the protected area;
(s) Conducting bioprospecting within the protected area without prior PAMB clearance
in accordance with existing guidelines: Provided, That in addition to the penalty
provided herein, any commercial use of any substance derived from nonpermitted
bioprospecting within a protected area will not be allowed and all revenue earned from
illegal commercialization thereof shall be forfeited and deposited as part of the I{AF;
(t) Prospecting, hunting or otherwise locating hidden treasure within the protected
area;
(u) Purchasing or selling, mortgaging or leasing lands or other portions of the protected
area which are covered by any tenurial instrument; and
(v) Constructing any permanent structure within the forty (40)-meter easement from
the high water mark of any natural body of water or issuing a permit for such
construction pursuant to Article 51 of Presidential Decree No. 1067: Provided, That
construction for common usage wharves and shoreline protection shall be permitted
by the PAMB only after thorough EIA.

Mining Act
Republic Act No. 7942 (1995)

Section 19. Areas Closed to Mining Applications. Mineral agreement or financial or

technical assistance agreement applications shall not be allowed:

a. In military and other government reservations, except upon prior written clearance
by the government agency concerned;
b. Near or under public or private buildings, cemeteries, archeological and historic
sites, bridges, highways, waterways, railroads, reservoirs, dams or other
infrastructure projects, public or private works including plantations or valuable
crops, except upon written consent of the government agency or private entity
concerned;
c. In areas covered by valid and existing mining rights;
d. In areas expressedly prohibited by law;
e. In areas covered by small-scale miners as defined by law unless with prior
consent of the small-scale miners, in which case a royalty payment upon the
utilization of minerals shall be agreed upon by the parties, said royalty forming a
trust fund for the socioeconomic development of the community concerned; and
f. Old growth or virgin forests, proclaimed watershed forest reserves, wilderness
areas, mangrove forests, mossy forests, national parks provincial/municipal
forests, parks, greenbelts, game refuge and bird sanctuaries as defined by law
and in areas expressly prohibited under the National Integrated Protected Areas
System (NIPAS) under Republic Act No. 7586, Department Administrative Order
No. 25, series of 1992 and other laws.
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DENR Memorandum Order No. 2011-04

Pursuant to Section 6 and 10(d) of Republic Act No. 7586 or the National Integrated
Protected Areas System (NIPAS) Act of 1992, and in view of Rule 7.1 of DENR
Administrative Order No. 2008-26, the following guidelines are hereby issued for the
compliance of all concerned:

1. The survey and processing of all public land applications (PLAs) for titling
purposes over lands covered by proposed Proclamations for Protected
Areas submitted by the DENR to the Office of the President are hereby
declared suspended effective upon the actual date of the submission of the
draft Proclamation by the Office of the RED to the Central Office. Beginning
on the said date, no PLAs over lands within these areas shall be accepted;
2. Also on the same date, the processing of applications for lease/license/
permit of any project/activity therein shall be held in abeyance and no new
applications shall be accepted, except for projects that are compatible with
the objectives of the NIPAS; xxx

As of writing, the Implementing Rules and Regulations (IRR) of the s Act (Republic Act No. 11038),
which was approved by DENR Secretary Roy Cimatu in May 2019 is yet to be rolled out.

The constant tension between use of land for conservation and utilization is exemplified by the cases
of PICOP Resources Inc. vs. Base Metals Mineral Resources Corp and MAB, and Apex Mining v
Southeast Mindanao Gold Mining (SEM). Much of the conflict today involves what are considered
‘initial components’ of the NIPAS, under Section 5(a) quoted above.

PICOP Resources Inc. vs. Base Metals Mineral Resources Corporation,

and the Mines Adjudication Board
G.R. No. 163509, December 6, 2006

Tinga, J., ponente

xxx a portion of Banahaw Mining's mining claims152 was located in petitioner PICOP's
logging concession in Agusan del Sur, Banahaw Mining and petitioner PICOP entered
into a Memorandum of Agreement, whereby, in mutual recognition of each other's right
to the area concerned, petitioner PICOP allowed Banahaw Mining an access/right of
way to its mining claims.

In 1991, Banahaw Mining converted its mining claims to applications for Mineral
Production Sharing Agreements (MPSA for brevity). Xxx

PICOP filed with the Mines Geo-Sciences Bureau (MGB), Caraga Regional Office No.
XIII an Adverse Claim and/or Opposition to private respondent Base Metals' application
xxx

PICOP then proceeded to claim that the area should remain forest land if the purpose
of the presidential fiat were to be followed. It stated:

Technically, the areas applied for by Base Metals are classified as permanent forest
being land of the public domain determined to be needed for forest purposes (Paragraph
6, Section 3 of Presidential Decree No. 705, as amended) If these areas then are
classified and determined to be needed for forest purpose then they should be
developed and should remain as forest lands. Identifying, delineating and declaring
them for other use or uses defeats the purpose of the aforecited presidential fiats. Again,
if these areas would be delineated from Oppositor's forest concession, the forest therein
would be destroyed and be lost beyond recovery.

152
Later sold to Base Metals
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xxx

PICOP contends that its concession area is within the Agusan-Surigao-Davao Forest
Reserve established under Proclamation No. 369 and is closed to mining application
citing several paragraphs of Sec. 19 of RA 7942. xxx

(f) Old growth or virgin forests, proclaimed watershed forest reserves, wilderness
areas, mangrove forests, mossy forests, national parks, provincial/municipal forests,
parks, greenbelts, game refuge and bird sanctuaries as defined by law in areas
expressly prohibited under the National Ingrated Protected Areas System (NIPAS)
under Republic Act No. 7586, Department Administrative Order No. 25, series of 1992
and other laws (emphasis supplied).

xxx

Firstly, assuming that the area covered by Base Metals' MPSA is a government
reservation, defined as proclaimed reserved lands for specific purposes other than
mineral reservations, such does not necessarily preclude mining activities in the area.
Sec. 15(b) of DAO 96-40 provides that government reservations may be opened for
mining applications upon prior written clearance by the government agency having
jurisdiction over such reservation.

Sec. 6 of RA 7942 also provides that mining operations in reserved lands other than
mineral reservations may be undertaken by the DENR, subject to certain limitations.
xxx

Secondly, RA 7942 does not disallow mining applications in all forest reserves but only
those proclaimed as watershed forest reserves. There is no evidence in this case that
the area covered by Base Metals' MPSA has been proclaimed as watershed forest
reserves.

Even granting that the area covered by the MPSA is part of the Agusan-Davao-Surigao
Forest Reserve, such does not necessarily signify that the area is absolutely closed to
mining activities. Contrary to PICOP's obvious misreading of our decision in Apex
Mining Co., Inc. v. Garcia, supra, to the effect that mineral agreements are not allowed
in the forest reserve established under Proclamation 369, the Court in that case actually
ruled that pursuant to PD 463 as amended by PD 1385, one can acquire mining rights
within forest reserves, such as the Agusan-Davao-Surigao Forest Reserve, by initially
applying for a permit to prospect with the Bureau of Forest and Development and
subsequently for a permit to explore with the Bureau of Mines and Geosciences.

Moreover, Sec. 18 RA 7942 allows mining even in timberland or forestry subject to

existing rights and reservations.
xxx

Thirdly, PICOP failed to present any evidence that the area covered by the MPSA is a
protected wilderness area designated as an initial component of the NIPAS pursuant to
a law, presidential decree, presidential proclamation or executive order as required by
RA 7586.

Sec. 5(a) of RA 7586 provides:

Sec. 5. Establishment and Extent of the System.—The establishment and

operationalization of the System shall involve the following:

(a) All areas or islands in the Philippines proclaimed, designated or set aside,
pursuant to a law, presidential decree, presidential proclamation or executive
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order as national park, game refuge, bird and wildlife sanctuary, wilderness area, strict
nature reserve, watershed, mangrove reserve, fish sanctuary, natural and historical
landmark, protected and managed landscape/seascape as well as identified virgin
forests before the effectivity of this Act are hereby designated as initial components of
the System. The initial components of the System shall be governed by existing laws,
rules and regulations, not inconsistent with this Act.

Although the above-cited area status and clearances, particularly those pertaining to
MPSA Nos. 012 and 013, state that portions thereof are within the wilderness area of
PICOP, there is no showing that this supposed wilderness area has been proclaimed,
designated or set aside as such, pursuant to a law, presidential decree, presidential
proclamation or executive order. It should be emphasized that it is only when this area
has been so designated that Sec. 20 of RA 7586, which prohibits mineral locating within
protected areas, becomes operational.

From the foregoing, there is clearly no merit to PICOP's contention that the area covered
by Base Metals' MPSA is, by law, closed to mining activities. xxx

Apex Mining vs. Southeast Mindanao Gold Mining (SEM)

G.R. No. 152613 & 152628, February 3, 2009

RESOLUTION

Chico-Nazario, J., ponente

xxx

Proclamation No. 297 Is in Harmony with Article XII, Section 4, of the Constitution

At any rate, even if this Court were to consider the arguments belatedly raised by SEM,
said arguments are not meritorious.

SEM asserts that Article XII, Section 4 of the Constitution, bars the President from
excluding forest reserves/reservations and proclaiming the same as mineral
reservations, since the power to de-classify them resides in Congress.

Section 4, Article XII of the Constitution reads:

The Congress shall as soon as possible, determine by law the specific

limits of forest lands and national parks, marking clearly their
boundaries on the ground. Thereafter, such forest lands and national
parks shall be conserved and may not be increased nor diminished,
except by law. The Congress shall provide, for such periods as it may
determine, measures to prohibit logging in endangered forests and in
watershed areas.

The above-quoted provision says that the area covered by forest lands and national
parks may not be expanded or reduced, unless pursuant to a law enacted by
Congress. Clear in the language of the constitutional provision is its prospective tenor,
since it speaks in this manner: “Congress shall as soon as possible.” It is only after the
specific limits of the forest lands shall have been determined by the legislature will this
constitutional restriction apply. SEM does not allege nor present any evidence that
Congress had already enacted a statute determining with specific limits forest lands and
national parks. Considering the absence of such law, Proclamation No. 297 could not
have violated Section 4, Article XII of the 1987 Constitution. In PICOP Resources, Inc.
v. Base Metals Mineral Resources Corporation, the Court had the occasion to similarly
rule in this fashion:
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x x x Sec. 4, Art. XII of the 1987 Constitution, on the other hand,

provides that Congress shall determine the specific limits of forest lands
and national parks, marking clearly their boundaries on the ground.
Once this is done, the area thus covered by said forest lands and
national parks may not be expanded or reduced except also by
congressional legislation. Since Congress has yet to enact a law
determining the specific limits of the forest lands covered by
Proclamation No. 369 and marking clearly its boundaries on the
ground, there can be no occasion that could give rise to a violation
of the constitutional provision.

Section 4, Article XII of the Constitution, addresses the concern of the drafters of the
1987 Constitution about forests and the preservation of national parks. This was
brought about by the drafters’ awareness and fear of the continuing destruction of this
country’s forests. In view of this concern, Congress is tasked to fix by law the specific
limits of forest lands and national parks, after which the trees in these areas are to be
taken care of. Hence, these forest lands and national parks that Congress is to delimit
through a law could be changed only by Congress.

In addition, there is nothing in the constitutional provision that prohibits the President
from declaring forest land as an environmentally critical area and from regulating the
mining operations therein by declaring it as a mineral reservation in order to prevent the
further degradation of the forest environment and to resolve the health and peace and
order problems that beset the area.

A closer examination of Section 4, Article XII of the Constitution and Proclamation No.
297 reveals that there is nothing contradictory between the two. Proclamation No. 297,
a measure to attain and maintain a rational and orderly balance between socio-
economic growth and environmental protection, jibes with the constitutional policy of
preserving and protecting the forest lands from being further devastated by denudation.
In other words, the proclamation in question is in line with Section 4, Article XII of the
Constitution, as the former fosters the preservation of the forest environment of the
Diwalwal area and is aimed at preventing the further degradation of the same. These
objectives are the very same reasons why the subject constitutional provision is in place.

What is more, jurisprudence has recognized the policy of multiple land use in our laws
towards the end that the country’s precious natural resources may be rationally
explored, developed, utilized and conserved. It has been held that forest reserves or
reservations can at the same time be open to mining operations, provided a prior written
clearance by the government agency having jurisdiction over such reservation is
obtained. In other words, mineral lands can exist within forest reservations. These two
terms are not anti-thetical. This is made manifest if we read Section 47 of Presidential
Decree No. 705 or the Revised Forestry Code of the Philippines, which provides:

Mining operations in forest lands shall be regulated and conducted with

due regard to protection, development and utilization of other surface
resources. Location, prospecting, exploration, utilization or
exploitation of mineral resources in forest reservations shall be
governed by mining laws, rules and regulations. (Emphasis supplied.)

Also, Section 6 of Republic Act No. 7942 or the Mining Act of 1995, states that mining
operations in reserved lands other than mineral reservations, such as forest
reserves/reservations, are allowed, viz:

Mining operations in reserved lands other than mineral

reservations may be undertaken by the Department, subject to
limitations as herein provided. In the event that the Department cannot
undertake such activities, they may be undertaken by a qualified person
in accordance with the rules and regulations promulgated by the
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Secretary. (Emphasis supplied.)

Since forest reservations can be made mineral lands where mining operations are
conducted, then there is no argument that the disputed land, which lies within a forest
reservation, can be declared as a mineral reservation as well.

Republic Act No. 7942 Otherwise Known as the “Philippine Mining Act of 1995,”
is the Applicable Law

Determined to rivet its crumbling cause, SEM then argues that Proclamation No. 297 is
invalid, as it transgressed the statutes governing the exclusion of areas already declared
as forest reserves, such as Section 1 of Republic Act No. 3092, Section 14 of the
Administrative Code of 1987, Section 5(a) of Republic Act No. 7586,and Section 4(a) of
Republic Act No. 6657.

Citing Section 1 of Republic Act No. 3092, which provides as follows:

Upon the recommendation of the Director of Forestry, with the approval

of the Department Head, the President of the Philippines shall set
apart forest reserves which shall include denuded forest lands from
the public lands and he shall by proclamation declare the establishment
of such forest reserves and the boundaries thereof, and thereafter such
forest reserves shall not be entered, or otherwise disposed of, but shall
remain indefinitely as such for forest uses.

The President of the Philippines may, in like manner upon the

recommendation of the Director of Forestry, with the approval of the
Department head, by proclamation, modify the boundaries of any
such forest reserve to conform with subsequent precise survey
but not to exclude any portion thereof except with the concurrence
of Congress. (Underscoring supplied.)

SEM submits that the foregoing provision is the governing statute on the exclusion of
areas already declared as forest reserves. Thus, areas already set aside by law as
forest reserves are no longer within the proclamation powers of the President to modify
or set aside for any other purposes such as mineral reservation.

To bolster its contention that the President cannot disestablish forest reserves into
mineral reservations, SEM makes reference to Section 14, Chapter 4, Title I, Book III of
the Administrative Code of 1987, which partly recites:

The President shall have the power to reserve for settlement or public
use, and for specific public purposes, any of the lands of the public
domain, the use of which is not otherwise directed by law. The
reserved land shall thereafter remain subject to the specific public
purpose indicated until otherwise provided by law or
proclamation. (Emphases supplied.)

SEM further contends that Section 7 of Republic Act No. 7586, which declares that the
disestablishment of a protected area shall be done by Congress, and Section 4(a) of
Republic Act No. 6657, which in turn requires a law passed by Congress before any
forest reserve can be reclassified, militate against the validity of Proclamation No. 297.

Proclamation No. 297, declaring a certain portion of land located in Monkayo,

Compostela Valley, with an area of 8,100 hectares, more or less, as a mineral
reservation, was issued by the President pursuant to Section 5 of Republic Act No.
7942, also known as the “Philippine Mining Act of 1995.”
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Proclamation No. 297 did not modify the boundaries of the Agusan-Davao-Surigao
Forest Reserve since, as earlier discussed, mineral reservations can exist within forest
reserves because of the multiple land use policy. The metes and bounds of a forest
reservation remain intact even if, within the said area, a mineral land is located and
thereafter declared as a mineral reservation.

More to the point, a perusal of Republic Act No. 3092, “An Act to Amend Certain
Sections of the Revised Administrative Code of 1917,” which was approved on 17
August 1961, and the Administrative Code of 1987, shows that only those public lands
declared by the President as reserved pursuant to these two statutes are to remain
subject to the specific purpose. The tenor of the cited provisions, namely: “the President
of the Philippines shall set apart forest reserves” and “the reserved land shall thereafter
remain,” speaks of future public reservations to be declared, pursuant to these two
statutes. These provisions do not apply to forest reservations earlier declared as such,
as in this case, which was proclaimed way back on 27 February 1931, by Governor
General Dwight F. Davis under Proclamation No. 369.

Over and above that, Section 5 of Republic Act No. 7942 authorizes the President to
establish mineral reservations, to wit:

Sec. 5. Mineral Reservations. - When the national interest so requires,

such as when there is a need to preserve strategic raw materials for
industries critical to national development, or certain minerals for
scientific, cultural or ecological value, the President may establish
mineral reservations upon the recommendation of the Director
through the Secretary. Mining operations in existing mineral
reservations and such other reservations as may thereafter be
established, shall be undertaken by the Department or through a
contractor x x x. (Emphasis supplied.)

It is a rudimentary principle in legal hermeneutics that where there are two acts or
provisions, one of which is special and particular and certainly involves the matter in
question, the other general, which, if standing alone, would include the matter and thus
conflict with the special act or provision, the special act must as intended be taken as
constituting an exception to the general act or provision, especially when such general
and special acts or provisions are contemporaneous, as the Legislature is not to be
presumed to have intended a conflict.

Hence, it has become an established rule of statutory construction that where one
statute deals with a subject in general terms, and another deals with a part of the same
subject in a more detailed way, the two should be harmonized if possible; but if there is
any conflict, the latter shall prevail regardless of whether it was passed prior to the
general statute. Or where two statutes are of contrary tenor or of different dates but are
of equal theoretical application to a particular case, the one specially designed therefor
should prevail over the other.

It must be observed that Republic Act No. 3092, “An Act to Amend Certain Sections of
the Revised Administrative Code of 1917,” and the Administrative Code of 1987, are
general laws. Section 1 of Republic Act No. 3092 and Section 14 of the Administrative
Code of 1987 require the concurrence of Congress before any portion of a forest reserve
can be validly excluded therefrom. These provisions are broad since they deal with all
kinds of exclusion or reclassification relative to forest reserves, i.e., forest reserve areas
can be transformed into all kinds of public purposes, not only the establishment of a
mineral reservation. Section 5 of Republic Act No. 7942 is a special provision, as it
specifically treats of the establishment of mineral reservations only. Said provision
grants the President the power to proclaim a mineral land as a mineral reservation,
regardless of whether such land is also an existing forest reservation.
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Sec. 5(a) of Republic Act No. 7586 provides:

Sec. 5. Establishment and Extent of the System. — The establishment

and operationalization of the System shall involve the following:

(a) All areas or islands in the Philippines proclaimed, designated or set

aside, pursuant to a law, presidential decree, presidential proclamation
or executive order as national park, game refuge, bird and wildlife
sanctuary, wilderness area, strict nature reserve, watershed, mangrove
reserve, fish sanctuary, natural and historical landmark, protected and
managed landscape/seascape as well as identified virgin forests before
the effectivity of this Act are hereby designated as initial components of
the System. The initial components of the System shall be governed by
existing laws, rules and regulations, not inconsistent with this Act.

Glaring in the foregoing enumeration of areas comprising the initial component of the
NIPAS System under Republic Act No. 7586 is the absence of forest reserves. Only
protected areas enumerated under said provision cannot be modified. Since the subject
matter of Proclamation No. 297 is a forest reservation proclaimed as a mineral reserve,
Republic Act No. 7586 cannot possibly be made applicable. Neither can Proclamation
No. 297 possibly violate said law.

Similarly, Section 4(a) of Republic Act No. 6657 cannot be made applicable to the
instant case.

Section 4(a) of Republic Act No. 6657 reads:

All alienable and disposable lands of the public domain devoted to or

suitable for agriculture. No reclassification of forest or mineral lands
to agricultural lands shall be undertaken after the approval of this
Act until Congress, taking into account ecological, developmental
and equity considerations, shall have determined by law, the
specific limits of the public domain. (Underscoring supplied.)

Section 4(a) of Republic Act No. 6657 prohibits the reclassification of forest or mineral
lands into agricultural lands until Congress shall have determined by law the specific
limits of the public domain. A cursory reading of this provision will readily show that the
same is not relevant to the instant controversy, as there has been no reclassification of
a forest or mineral land into an agricultural land.

Furthermore, the settled rule of statutory construction is that if two or more laws of
different dates and of contrary tenors are of equal theoretical application to a particular
case, the statute of later date must prevail being a later expression of legislative will.

In the case at bar, there is no question that Republic Act No. 7942 was signed into law
later than Republic Act No. 3092, the Administrative Code of 1987, Republic Act No.
7586 and Republic Act No. 6657. Applying the cited principle, the provisions of Republic
Act No. 3092, the Administrative Code of 1987, Republic Act No. 7586 and Republic
Act No. 6657 cited by SEM must yield to Section 5 of Republic Act No. 7942.

xxx

6.3 Policy analysis (effectiveness of laws in addressing environmental problem)

6.3.1 Governance

Who is responsible for managing areas designated for conservation, and who decides on what
activities may be conducted therein? The governance issue is complicated by the various interests
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and needs at the national and local levels, which can be gleaned in the case involving the San Mateo
Landfill in the Marikina Watershed.

Province of Rizal, et al. v Executive Secretary, et al.

G.R. No. 129546, December 13, 2005

Chico-Nazario, J., ponente

At the height of the garbage crisis plaguing Metro Manila and its environs, parts of the
Marikina Watershed Reservation were set aside by the Office of the President, through
Proclamation No. 635 dated 28 August 1995, for use as a sanitary landfill and similar
waste disposal applications. In fact, this site, extending to more or less 18 hectares,
had already been in operation since 19 February 1990 for the solid wastes of Quezon
City, Marikina, San Juan, Mandaluyong, Pateros, Pasig, and Taguig.

This is a petition filed by the Province of Rizal, the municipality of San Mateo, and
various concerned citizens for review on certiorari of the Decision of the Court of
Appeals in CA-G.R. SP No. 41330, denying, for lack of cause of action, the petition for
certiorari, prohibition and mandamus with application for a temporary restraining
order/writ of preliminary injunction assailing the legality and constitutionality of
Proclamation No. 635.

xxx

We hold that the San Mateo Landfill will remain permanently closed.

xxx

We thus feel there is also the added need to reassure the residents of the Province of
Rizal that this is indeed a final resolution of this controversy, for a brief review of the
records of this case indicates two self-evident facts. First, the San Mateo site has
adversely affected its environs, and second, sources of water should always be
protected.

As to the first point, the adverse effects of the site were reported as early as 19 June
1989, when the Investigation Report of the Community Environment and Natural
Resources Officer of DENR-IV-1 stated that the sources of domestic water supply of
over one thousand families would be adversely affected by the dumping operations. The
succeeding report included the observation that the use of the areas as dumping site
greatly affected the ecological balance and environmental factors of the community.
Respondent LLDA in fact informed the MMA that the heavy pollution and risk of disease
generated by dumpsites rendered the location of a dumpsite within the Marikina
Watershed Reservation incompatible with its program of upgrading the water quality of
the Laguna Lake.

The DENR suspended the site’s ECC after investigations revealed ground slumping
and erosion had resulted from improper development of the site. Another Investigation
Report submitted by the Regional Technical Director to the DENR reported respiratory
illnesses among pupils of a primary school located approximately 100 meters from the
site, as well as the constant presence of large flies and windblown debris all over the
school’s playground. It further reiterated reports that the leachate treatment plant had
been eroded twice already, contaminating the nearby creeks that were sources of
potable water for the residents. The contaminated water was also found to flow to
the Wawa Dam and Boso-boso River, which in turn empties into Laguna de Bay.

This brings us to the second self-evident point. Water is life, and must be saved at all
costs. In Collado v. Court of Appeals, we had occasion to reaffirm our previous
discussion in Sta. Rosa Realty Development Corporation v. Court of Appeals, on the
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primordial importance of watershed areas, thus: “The most important product of a

watershed is water, which is one of the most important human necessities. The
protection of watersheds ensures an adequate supply of water for future generations
and the control of flashfloods that not only damage property but also cause loss of
lives. Protection of watersheds is an “intergenerational” responsibility that needs to be
answered now.

Three short months before Proclamation No. 635 was passed to avert the garbage
crisis, Congress had enacted the National Water Crisis Act to “adopt urgent and
effective measures to address the nationwide water crisis which adversely affects the
health and well-being of the population, food production, and industrialization
process. One of the issues the law sought to address was the “protection and
conservation of watersheds.”

In other words, while respondents were blandly declaring that “the reason for the
creation of the Marikina Watershed Reservation, i.e., to protect Marikina River as the
source of water supply of the City of Manila, no longer exists,” the rest of the country
was gripped by a shortage of potable water so serious, it necessitated its own
legislation.

Respondents’ actions in the face of such grave environmental consequences defy all
logic. The petitioners rightly noted that instead of providing solutions, they have, with
unmitigated callousness, worsened the problem. It is this readiness to wreak
irrevocable damage on our natural heritage in pursuit of what is expedient that has
compelled us to rule at length on this issue. We ignore the unrelenting depletion of our
natural heritage at our peril.

I.
THE REORGANIZATION ACT OF THE DENR DEFINES AND
LIMITS ITS POWERS OVER THE COUNTRY’S NATURAL RESOURCES

The respondents next point out that the Marikina Watershed Reservation, and thus the
San Mateo Site, is located in the public domain. They allege that as such, neither the
Province of Rizal nor the municipality of San Mateo has the power to control or regulate
its use since properties of this nature belong to the national, and not to the local
governments.

It is ironic that the respondents should pursue this line of reasoning.

In Cruz v. Secretary of Environment and Natural Resources, we had occasion to

observe that “(o)ne of the fixed and dominating objectives of the 1935 Constitutional
Convention was the nationalization and conservation of the natural resources of the
country. 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 Regalian doctrine was embodied in the 1935 Constitution, in Section 1 of Article
XIII on “Conservation and Utilization of Natural Resources.” This was reiterated in the
1973 Constitution under Article XIV on the “National Economy and the Patrimony of the
Nation,” and reaffirmed in the 1987 Constitution 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
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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.

Clearly, the state is, and always has been, zealous in preserving as much of our natural
and national heritage as it can, enshrining as it did the obligation to preserve and protect
the same within the text of our fundamental law.

It was with this objective in mind that the respondent DENR was mandated by then
President Corazon C. Aquino, under Section 4 of Executive Order No. 192, otherwise
known as “The Reorganization Act of the Department of Environment and Natural
Resources,” to be “the primary government agency responsible for the conservation,
management, development and proper use of the country’s environment and natural
resources, specifically forest and grazing lands, mineral resources, including those in
reservation and watershed areas, and lands of the public domain. It is also
responsible for the licensing and regulation of all natural resources as may be provided
for by law in order to ensure equitable sharing of the benefits derived therefrom for
the welfare of the present and future generations of Filipinos.”

We expounded on this matter in the landmark case of Oposa v. Factoran, where we

held that the right to a balanced and healthful ecology is a fundamental legal right that
carries with it the correlative duty to refrain from impairing the environment. This right
implies, among other things, the judicious management and conservation of the
country’s resources, which duty is reposed in the DENR under the aforequoted Section
4 of Executive Order No. 192. Moreover, Section 3 (of E. O. No. 192) makes the
following statement of policy:

SEC. 3. Declaration of Policy. - It is hereby declared the policy of the State

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

This policy declaration is substantially re-stated in Title XIV, Book IV of the

Administrative Code of 1987, specifically in Section 1 thereof which reads:

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

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

The above provision stresses “the necessity of maintaining a sound ecological balance
and protecting and enhancing the quality of the environment.” (Emphasis ours.)

In sum, the Administrative Code of 1987 and Executive Order No. 192 entrust the DENR
with the guardianship and safekeeping of the Marikina Watershed Reservation and our
other natural treasures. However, although the DENR, an agency of the government,
owns the Marikina Reserve and has jurisdiction over the same, this power is not
absolute, but is defined by the declared policies of the state, and is subject to the law
and higher authority. Section 2, Title XIV, Book IV of the Administrative Code of 1987,
while specifically referring to the mandate of the DENR, makes particular reference to
the agency’s being subject to law and higher authority, thus:

SEC. 2. Mandate. - (1) The Department of Environment and Natural

Resources shall be primarily responsible for the implementation of the
foregoing policy.

(2) It shall, subject to law and higher authority, be in charge of carrying

out the State's constitutional mandate to control and supervise the
exploration, development, utilization, and conservation of the country's
natural resources.

With great power comes great responsibility. It is the height of irony that the public
respondents have vigorously arrogated to themselves the power to control the San
Mateo site, but have deftly ignored their corresponding responsibility as guardians and
protectors of this tormented piece of land.

II.
THE LOCAL GOVERNMENT CODE GIVES TO LOCAL GOVERNMENT UNITS ALL
THE NECESSARY POWERS TO PROMOTE THE GENERAL WELFARE OF THEIR
INHABITANTS

The circumstances under which Proclamation No. 635 was passed also violates Rep.
Act No. 7160, or the Local Government Code.

Contrary to the averment of the respondents, Proclamation No. 635, which was passed
on 28 August 1995, is subject to the provisions of the Local Government Code, which
was approved four years earlier, on 10 October 1991.

Section 2(c) of the said law declares that it is the policy of the state “to require all national
agencies and offices to conduct periodic consultations with appropriate local
government units, non-governmental and people's organizations, and other concerned
sectors of the community before any project or program is implemented in their
respective jurisdictions.” Likewise, Section 27 requires prior consultations before a
program shall be implemented by government authorities and the prior approval of the
sanggunian is obtained.

During the oral arguments at the hearing for the temporary restraining order, Director
Uranza of the MMDA Solid Waste Management Task Force declared before the Court
of Appeals that they had conducted the required consultations. However, he added that
“(t)his is the problem, sir, the officials we may have been talking with at the time this
was established may no longer be incumbent and this is our difficulty now. That is what
we are trying to do now, a continuing dialogue.”
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The ambivalent reply of Director Uranza was brought to the fore when, at the height of
the protest rally and barricade along Marcos Highway to stop dump trucks from reaching
the site, all the municipal mayors of the province of Rizal openly declared their full
support for the rally and notified the MMDA that they would oppose any further attempt
to dump garbage in their province.

The municipal mayors acted within the scope of their powers, and were in fact fulfilling
their mandate, when they did this. Section 16 allows every local government unit to
“exercise the powers expressly granted, those necessarily implied therefrom, as well as
powers necessary, appropriate, or incidental for its efficient and effective governance,
and those which are essential to the promotion of the general welfare,” which involve,
among other things, “promot(ing) health and safety, enhance(ing) the right of the
people to a balanced ecology, and preserv(ing) the comfort and convenience of
their inhabitants.”

In Lina, Jr. v. Paño, we held that Section 2 (c), requiring consultations with the
appropriate local government units, should apply to national government projects
affecting the environmental or ecological balance of the particular community
implementing the project. Rejecting the petitioners’ contention that Sections 2(c) and
27 of the Local Government Code applied mandatorily in the setting up of lotto outlets
around the country, we held that:

From a careful reading of said provisions, we find that these apply only to
national programs and/or projects which are to be implemented in a
particular local community. Lotto is neither a program nor a project of the
national government, but of a charitable institution, the PCSO. Though
sanctioned by the national government, it is far fetched to say that lotto
falls within the contemplation of Sections 2 (c) and 27 of the Local
Government Code.

Section 27 of the Code should be read in conjunction with Section 26 thereof. Section
26 reads:

SECTION 26. Duty of National Government Agencies in the Maintenance

of Ecological Balance. It shall be the duty of every national agency or
government-owned or controlled corporation authorizing or involved in the
planning and implementation of any project or program that may cause
pollution, climatic change, depletion of non-renewable resources, loss of
crop land, range-land, or forest cover, and extinction of animal or plant
species, to consult with the local government units, nongovernmental
organizations, and other sectors concerned and explain the goals and
objectives of the project or program, its impact upon the people and the
community in terms of environmental or ecological balance, and the
measures that will be undertaken to prevent or minimize the adverse
effects thereof.

Thus, the projects and programs mentioned in Section 27 should be

interpreted to mean projects and programs whose effects are among those
enumerated in Section 26 and 27, to wit, those that: (1) may cause pollution; (2)
may bring about climatic change; (3) may cause the depletion of non-renewable
resources; (4) may result in loss of crop land, range-land, or forest cover; (5) may
eradicate certain animal or plant species from the face of the planet; and (6) other
projects or programs that may call for the eviction of a particular group of people
residing in the locality where these will be implemented. Obviously, none of these
effects will be produced by the introduction of lotto in the province of Laguna. (emphasis
supplied)
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We reiterated this doctrine in the recent case of Bangus Fry Fisherfolk v. Lanzanas153
where we held that there was no statutory requirement for the sangguniang bayan of
Puerto Galera to approve the construction of a mooring facility, as Sections 26 and 27
are inapplicable to projects which are not environmentally critical.

Moreover, Section 447, which enumerates the powers, duties and functions of the
municipality, grants the sangguniang bayan the power to, among other things, “enact
ordinances, approve resolutions and appropriate funds for the general welfare of the
municipality and its inhabitants pursuant to Section 16 of th(e) Code.” These include:

(1) Approving ordinances and passing resolutions to protect the

environment and impose appropriate penalties for acts which
endanger the environment, such as dynamite fishing and other forms
of destructive fishing, illegal logging and smuggling of logs, smuggling
of natural resources products and of endangered species of flora and
fauna, slash and burn farming, and such other activities which result
in pollution, acceleration of eutrophication of rivers and lakes, or
of ecological imbalance; [Section 447 (1)(vi)]
(2) Prescribing reasonable limits and restraints on the use of
property within the jurisdiction of the municipality, adopting a
comprehensive land use plan for the municipality, reclassifying land
within the jurisdiction of the city, subject to the pertinent provisions of
this Code, enacting integrated zoning ordinances in consonance
with the approved comprehensive land use plan, subject to existing
laws, rules and regulations; establishing fire limits or zones, particularly
in populous centers; and regulating the construction, repair or
modification of buildings within said fire limits or zones in accordance
with the provisions of this Code; [Section 447 (2)(vi-ix)]
(3) Approving ordinances which shall ensure the efficient and effective
delivery of the basic services and facilities as provided for under
Section 17 of this Code, and in addition to said services and facilities,
…providing for the establishment, maintenance, protection, and
conservation of communal forests and watersheds, tree parks,
greenbelts, mangroves, and other similar forest development
projects ….and, subject to existing laws, establishing and providing for
the maintenance, repair and operation of an efficient waterworks
system to supply water for the inhabitants and purifying the source of
the water supply; regulating the construction, maintenance, repair and
use of hydrants, pumps, cisterns and reservoirs; protecting the purity
and quantity of the water supply of the municipality and, for this
purpose, extending the coverage of appropriate ordinances over
all territory within the drainage area of said water supply and
within one hundred (100) meters of the reservoir, conduit, canal,
aqueduct, pumping station, or watershed used in connection with
the water service; and regulating the consumption, use or wastage of
water.” [Section 447 (5)(i) & (vii)]

Under the Local Government Code, therefore, two requisites must be met before a
national project that affects the environmental and ecological balance of local
communities can be implemented: prior consultation with the affected local
communities, and prior approval of the project by the appropriate sanggunian. Absent
either of these mandatory requirements, the project’s implementation is illegal.

III.
WASTE DISPOSAL IS REGULATED BY THE ECOLOGICAL
SOLID WASTE MANAGEMENT ACT OF 2000

153
Available at: http://www.supremecourt.gov.ph/jurisprudence/2005/dec2005/129546.htm#_ftn50.
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The respondents would have us overlook all the abovecited laws because the San
Mateo site is a very expensive - and necessary - fait accompli. The respondents cite
the millions of pesos and hundreds of thousands of dollars the government has already
expended in its development and construction, and the lack of any viable alternative
sites.

The Court of Appeals agreed, thus:

During the hearing on the injunction, questions were also asked. “What will
happen if the San Mateo Sanitary Landfill is closed? Where will the daily
collections of garbage be disposed of and dumped?” Atty. Mendoza, one of
the lawyers of the petitioners, answered that each city/municipality ‘must take
care of its own.’ Reflecting on that answer, we are troubled: will not the
proliferation of separate open dumpsites be a more serious health hazard
(which ha(s) to be addressed) to the residents of the community? What with
the galloping population growth and the constricting available land area in
Metro Manila? There could be a ‘mini-Smokey Mountain’ in each of the ten
cities…comprising Metro Manila, placing in danger the health and safety of
more people. Damage to the environment could be aggravated by the
increase in number of open dumpsites. An integrated system of solid waste
management, like the San Mateo Sanitary Landfill, appears advisable to a
populous metropolis like the Greater Metro Manila Area absent access to
better technology.

We acknowledge that these are valid concerns. Nevertheless, the lower court should
have been mindful of the legal truism that it is the legislature, by its very nature, which
is the primary judge of the necessity, adequacy, wisdom, reasonableness and
expediency of any law.

Moreover, these concerns are addressed by Rep. Act No. 9003. Approved on 26
January 2001, “The Ecological Solid Waste Management Act of 2000” was enacted
pursuant to the declared policy of the state “to adopt a systematic, comprehensive and
ecological solid waste management system which shall ensure the protection of public
health and environment, and utilize environmentally sound methods that maximize the
utilization of valuable resources and encourage resource conservation and recovery.” It
requires the adherence to a Local Government Solid Waste Management Plan with
regard to the collection and transfer, processing, source reduction, recycling,
composting and final disposal of solid wastes, the handling and disposal of special
wastes, education and public information, and the funding of solid waste management
projects.

The said law mandates the formulation of a National Solid Waste Management
Framework, which should include, among other things, the method and procedure for
the phaseout and the eventual closure within eighteen months from effectivity of the Act
in case of existing open dumps and/or sanitary landfills located within an aquifer,
groundwater reservoir or watershed area. Any landfills subsequently developed must
comply with the minimum requirements laid down in Section 40, specifically that the site
selected must be consistent with the overall land use plan of the local government
unit, and that the site must be located in an area where the landfill’s operation will
not detrimentally affect environmentally sensitive resources such as aquifers,
groundwater reservoirs or watershed areas.

This writes finis to any remaining aspirations respondents may have of reopening the
San Mateo Site. Having declared Proclamation No. 635 illegal, we see no compelling
need to tackle the remaining issues raised in the petition and the parties’ respective
memoranda.

A final word. Laws pertaining to the protection of the environment were not drafted in a
vacuum. Congress passed these laws fully aware of the perilous state of both our
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economic and natural wealth. It was precisely to minimize the adverse impact
humanity’s actions on all aspects of the natural world, at the same time maintaining and
ensuring an environment under which man and nature can thrive in productive and
enjoyable harmony with each other, that these legal safeguards were put in place. They
should thus not be so lightly cast aside in the face of what is easy and expedient.

xxx

CASE STUDY:
METRO MANILA WATER SHORTAGE AND THE KALIWA DAM PROJECT

March 2019, an estimate of 52,000 households across Metro Manila began to experience water shortage and was
said to be caused by El Niño. But Manila Water officials clarified that although the El Niño aggravated the water
shortage, the real problem lied on the supply and demand of water in Metro Manila. The rising population of Metro
Manila and lack of new water source was the pointed cause of the water supply issues, and many warnings about
the looming water shortage have been made since 2010 if no new water source was not found to cater to the
increasing water demand of the population.

Last 2014, a plan was proposed to ensure the water security of Metro Manila: the New Centennial Water Source
- Kaliwa Dam Project (NCWP - KDP). The proposed dam was supposed to get its water from the Kaliwa River in
Tanay, Rizal and was expected to serve as an additional source water supply for Metro Manila. This 18.7 billion
peso project was originally postponed due to oppositions of various groups but was reopened as it was the only
expected solution to the water crisis of Metro Manila.

With the reopening of the Kaliwa Dam Project proposal, a coalition of environmental and rights group called Sectors
Opposed to the Kaliwa Dam (STOP Kaliwa Dam) was formed to strongly oppose the construction of the proposed
project.

Legal violations and economic repercussions aside, the coalition stresses that the dam will cause irreparable
damage to the ecosystem and biodiversity of the area. The Sierra Madre is one of the most biodiversity-rich and
the largest remaining tract of rain forest the Philippines. And the Kaliwa River Watershed, which it is a part of and
the location where the dam was proposed to be constructed, was declared a forest reserve through Proclamation
573 of 1969. Part of the watershed have also been declared as a National Park and Wildlife Sanctuary
(Proclamation 1939, s. 1977) as it is the home to various endemic species in the Philippines such as the
endangered Northern Philippine Hawk-eagle, Philippine Brown Deer, Philippine Warty Pig, vulnerable Northern
Rufous Hornbill, critically-endangered Philippine Eagle, and many others.

The watershed is also the ancestral lands of indigenous people's groups: Dumagats and Remontados. The IP
leaders expressed their grievances against the Kaliwa dam project since it did not undergo due process to secure
their consent in accordance with the Indigenous People's Rights Act. The project would cost the IP groups their
livelihood, culture, and would cause additional risks to their communities as it would increase the chances of
flooding and landslides in their areas. The dam will also be constructed within two active tectonic zones — the
Philippine Fault Zone and the Valley Fault System, posing further danger to the population living downstream of
the Kaliwa River.

Due to lack of proper documentations and permits such as the Free, Prior and Informed Consent (FPIC) of
indigenous occupants of the land, the Kaliwa Dam Project still have no Environmental Compliance Certificate
(ECC) to push forward its construction. With the continuous threat of water shortage in Metro Manila, STOP
Kaliwa Dam insists that there are many other cost effective measures in ensuring continued water supply in
Metro Manila. These suggested measures include rehabilitation of existing water reservoirs, implementation of
efficient water distribution system and facilities, reduction of non-revenue water lost to leakages and water
recycling.

Sources:

https://www.philstar.com/headlines/2019/03/20/1903048/duterte-summons-mwss-officials-over-water-shortage
https://www.untvweb.com/news/kaliwa-dam-project-will-destroy-us-our-homes-dumagat-tribe/
https://www.untvweb.com/news/mwss-chief-regulator-rising-population-no-new-water-source-caused-manila-waters-supply-
shortage/
https://www.manilatimes.net/is-the-kaliwa-dam-really-the-best-option-to-avoid-a-recurrence-of-the-water-shortage/534241/
https://www.gmanetwork.com/news/news/regions/675489/kaliwa-dam-to-destroy-sierra-madre-s-biodiversity-haribon/story/
https://www.manilatimes.net/haribon-kaliwa-dam-a-biodiversity-threat/471372/
https://news.abs-cbn.com/news/03/12/19/explainer-why-is-there-a-water-shortage-in-metro-manila
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[OPINION] Road to damnation through Chinese-funded dams

Tony La Viña and Joy Reyes
12 February 2019, Rappler.com

Beyond the provisions of the loan agreements and contentions on patrimonial property lie the reality on the
ground, and the problems that creating dams might create.
While the Kaliwa Dam, with its expected completion by 2023, will be an alternative water source for the residents
of Metro Manila and neighboring provinces, it still faces a lot of opposition from different groups, particularly the
indigenous communities, that have been adamant about not having the dam built ever since it was first proposed
during the Marcos era.
Even politicians have started to question the propriety of such a move, with Vice President Robredo questioning
the need for asking loans, especially from China.
The Dumagat, the indigenous people who live in the areas that will largely be affected by the construction of the
dam, claim that the $12-billion project will displace them and leave them homeless. Moreover, a part of the area
where the Kaliwa Dam will be erected is considered sacred land and is a burial ground for the departed Dumagat,
which has given reason for the Dumagat to double efforts in ensuring that the construction does not take place.
Even church leaders, particularly those from the Catholic Church, are staunch advocates of the movement against
the construction of the Kaliwa Dam.
Environmentalists have also expressed their opposition to the building of the dam, as the Sierra Madre is not just
home to a wide array of indigenous groups, but also of rich biodiversity. Even the already critically endangered
Philippine Eagle might be facing extinction because of the alterations in the landscape that creating a dam would
entail.
Others have claimed that a new dam would simply be a useless extravagance, as Angat Dam, which is the main
reservoir for Metro Manila, actually has enough water to last through the dry summer months. They say that to
create a dam largely funded by a loan from the Chinese, is nothing but a flexing of China’s muscles, and an exhibit
of how easily a foreign country such as China can make large and all-encompassing political decisions in the
Philippines.
Right now, the Kaliwa Dam still lacks the environmental compliance certificate which is necessary for the
construction to take place. With the backlash this project is facing, it might be a while before actual construction
occurs, if it even does. In the meantime, the months continue to progress and the fear of delay in payment may
actually turn into fruition.
The Chinese as creditor
Another concern that is increasingly being put into the forefront of the issue is the propriety of having China as a
creditor. On the first level, it appears as though the Kaliwa Dam is not the only possible water source for Metro
Manila, as many other dams that are less destructive may be built, which can provide the same amount of water
to the surrounding areas.
On the second level, both Europe and Japan have offered to lend the Philippines the money needed for the
construction of the dam, and have actually offered less onerous alternatives through their repayment schemes,
which were not considered by the government. Interestingly, Japan even came up with a cheaper substitute, which
will come at practically no cost to the government with none of the environmental hazards the Kaliwa Dam can
potentially cause. It proposed the creation of a weir, which is significantly cheaper and won’t have to displace the
indigenous peoples living in the area. The government has since rejected this idea.
On a third and final level, considering issues today regarding the West Philippine Sea and China’s blatant disregard
for the arbitral award by the Permanent Court of Arbitration, and China’s track record when it comes to building
infrastructure in different countries which have proved to be harmful for those who live in the surrounding areas, it
would appear that China is looking out for its self-interest far more than its borrowers’. If that happens, then the
repayment of the loan, which could potentially amount to more than P24 billion, will probably be the least of our
worries.
While it is a mark of good governance to always be ready in case difficult times arise, it is also extremely important
to exercise prudence in governing, taking into consideration always the various stakeholders and the impact of
each decision made.
A cheap, alternative water source, then, may probably be exactly what the Filipino people need, considering
climate change and the hotter summers, the longer El Niños. However, the Philippine government also owes to its
people the duty to find not just an alternative that is cheap, but one that is also environmentally-friendly, ecologically
sound, and sustainable in the long run.
Repeating the fight over Chico River
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The arguments against the Kaliwa Dam equally apply to the Chico River Pump Irrigation Project (CRPIP) currently
being built in Kalinga. Preparatory work has already begun which is illegal given that the project has not yet
obtained an environmental compliance certificate as required by law, as well as the free and prior informed consent
of the indigenous peoples that will be affected. The latter is a requirement of the Indigenous Peoples’ Rights Act
and an international norm established by the United Nations Declaration on the Rights of Indigenous Peoples.
According to the Cordillera Peoples’ Alliance (CPA): “The CRPIP is an outright violation of our right to Free Prior
and Informed Consent (FPIC), right to our ancestral lands including the Chico River, and right to self determination.
The project falls within the ancestral domain of the indigenous peoples in Kalinga but no FPIC from the
communities was secured for the project before the loan agreement was signed on April 10, 2018. The indigenous
communities affected by the project and the local government units (LGUs) in Kalinga have not been consulted
and were totally unaware of the project until after the loan agreement. LGUs were not provided with any documents
pertaining to the project.”
The CPA also points out that the CRPIP will fail because it did not take into account the overall “development plan”
in the Chico River and the province of Kalinga, such as the building of many hydropower, geothermal and mining
projects.
There are even claims that the irrigation project is a grand deception and is intended to reintroduce the infamous
Chico river dam project that the Marcos government wanted to build in the 1970s and '80s, a plan that did not
materialize because of oppositon from the Kalinga and other Cordillera peoples and at a cost of many lives,
including the hero Macling Dulag.
Columnist Tonyo Cruz quotes the the CPA as putting President Duterte on notice that he is an enemy of the
Kaigorotan if he insists on the project: “The history of the Kaigorotan is marked by strong resistance to colonization
and vehement opposition to destructive projects that encroach on and privatize ancestral lands and deny us our
rights to our very own resources. Our forefathers fought fearlessly against similar attempts in the past during the
Marcos dictatorship, when the people of Kalinga and Mountain Province successfully opposed the US$50-million
World Bank-funded Chico River Irrigation Project, also known as the Chico Dams Project, from 1976-1985.”
Bad for environment, people, and economy
We repeat what we said in the first part of this article. The Kaliwa and Chico river projects should be reviewed not
only because its loan conditionalities are unfair and onerous for the Philippines. They must also be evaluated from
an environmental perspective as well as its impact on people, especially the communities directly affected by the
dams. Once this is done, it is obvious that these projects are development aggression at its worst. They are bad
for nature and for our people, and will result in social conflict and fuel an already intensifying insurgency in both
the Sierra Madre and the Cordillera.
Both the Kaliwa and Chico projects are also bad for the economy. Because they are controversial, they are likely
not to be built. We predict that future administrations will have to cancel these projects and default on the Chinese
loans, which will result in the Philippines being sued by China in arbitration proceedings that have been designed
to favor the creditor.
Let us not be foolish. Just cut our losses now and do right with nature, our people, and the Philippine economy.
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Chapter Seven

Fisheries and Marine Resources

FACTS AND FIGURES

As an archipelagic country, the Philippines has one of the world's longest coastlines with a total of 36,289
kilometers. In addition, being located within the Coral Triangle (center of high marine biodiversity), the country is
rich with diverse coastal and marine resources and is estimated to have 21.16 million ha of shelf and coral reef
cover. The country also has about 421 principal rivers, 59 natural lakes and multiple individual streams that total
to almost 500,000 ha of inland bodies.

With its large source of water resources, the Philippines is naturally one of the top fish producing countries in the
world. Its top export commodity is tuna along with seaweeds and shrimp. In 2015, its total volume of fisheries
production reached 4.65 million MT with an equivalent value of US$ 7.26 billion. It accounted for 1.5% and 1.7%
(at current and constant prices, respectively) of that year's gross domestic products (GDP) of the Philippines. The
fisheries sector also provides employment to more than 1.6 million people that are involved in municipal fisheries,
commercial fisheries, and aquaculture sector.

However, due to destructive human activities, the productivity of the country's water ecosystems has been
declining at an alarming rate. 70% of Philippine's coral reef cover are in poor or fair quality while the remaining 5%
that are in excellent condition are also steadily declining since 2004 and is projected to only be at 1% at present
date. In addition, the mangrove forests that protect coastal areas from tidal currents and typhoons, as well as serve
as habitat and food sources for multiple coastal wildlife are in constant decline. In addition, thousands of hectares
of mangrove swamps also been developed into aquaculture swamps, salt beds and other agricultural activities
which lead to the degradation of mangrove ecosystems. As of 2008, the country's mangrove cover has decreased
from 450,000 ha in 1918 to only 140,000 ha. As for freshwater bodies of water, out of 421 rivers in the country, 50
are already considered as biologically dead.

Sources:

http://www.seafdec.org/fisheries-country-profile-philippines/
https://www.gaiadiscovery.com/marine-life-latest/will-marine-turtles-be-soon-extinct.html
https://www.pna.gov.ph/articles/1049301
https://www.rappler.com/science-nature/environment/225272-philippine-survey-shows-shocking-plastic-waste-march-2019
https://www.borgenmagazine.com/water-pollution-in-the-philippines/

7.1 Environmental situationer

The Visayan Sea [bounded by Iloilo, Romblon, Masbate, Cebu, Negros] is one of the country’s richest
fishing grounds. Under the Fisheries Code of 1998 (Fish Code), as amended by Republic Act No.
10654, commercial fishing is not allowed within fifteen (15) kilometers from shore. In the Visayan
Sea, there is only a small patch in the center, which is farther than fifteen (15) kilometers from shore
of the surrounding islands. Small-scale fishermen complain of rampant commercial fishing in the
entire Visayan Sea, which they say is the cause of the depletion of fish catch. Commercial fishing
operators claim that they are not fishing in the area, but just passing through on their way to the fish
port in Cadiz City. Commercial fishers counter that small-scale fishermen have resorted to illegal
fishing methods [dynamite, fine mesh net] to increase their catch – but which have caused the
destruction of the habitats and decline of fish populations. Local governments in Iloilo and Negros
Provinces have intensified enforcement to protect their fishing grounds. Fishermen from Negros
have occasionally been caught by the bantay dagat from Iloilo for ‘illegally fishing [no permit]’ in their
municipal waters. This has caused conflict among LGUs and residents of the 2 provinces. BFAR
regular closed seasons declared in the Visayan Sea.154

154
See relevant FAOs
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7.2 Legal analysis (application of existing laws)

The Fisheries Code of 1998 provides the framework for managing the country’s fisheries resources,
as well as allocating access to fisheries among the various users. In 2014, the Fisheries Code of
1998 was amended by Republic Act No. 10654 or An Act to Prevent, Deter and Eliminate Illegal,
Unreported and Unregulated Fishing. The Constitution provides preferential access to marginal
fishermen, as well as reserves the exploitation of fisheries exclusively to Filipinos.

Fisheries Code
Republic Act No. 8550

Section 4. Definition of Terms

10. Commercial Fishing – the taking of fishery species by passive or active gear for
trade, business or profit beyond subsistence or sports fishing to be further classified as:

1. Small scale commercial fishing – fishing with passive or active gear utilizing fishing
vessels of 3.1 gross tons (GT ) up to twenty (20) GT;
2. Medium scale commercial fishing – fishing utilizing active gears and vessels of
20.1 GT; up to one hundred fifty ( 150) GT; and
3. Large scale commercial fishing – fishing utilizing active gears and vessels of more
than one hundred fifty (150) GT.
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56. Municipal fisherfolk – persons who are directly or indirectly engaged in municipal
fishing and other related fishing activities.

57. Municipal fishing – refers to fishing within municipal waters using fishing vessels of
three (3) gross tons or less, or fishing not requiring the use of fishing vessels.

58. Municipal waters – include not only streams, lakes, inland bodies of water and tidal
waters within the municipality which are not included within the protected areas as
defined under Republic Act No. 7586 (The NIPAS Law), public forest, timber lands,
forest reserves or fishery reserves, but also marine waters included between two (2)
lines drawn perpendicular to the general coastline from points where the boundary lines
of the municipality touch the sea at low tide and a third line parallel with the general
coastline including offshore islands and fifteen (15) kilometers from such coastline.
Where two (2) municipalities are so situated on opposite shores that there is less than
thirty (30) kilometers of marine waters between them, the third line shall be equally
distant from the opposite shore of the respective municipalities.
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Sec. 16. Jurisdiction of the Municipal/City Governments. – The municipal/city

government shall have jurisdiction over municipal waters as defined in this Code. The
municipality/city government, in coordination with FARMC, enact appropriate
ordinances for this purpose and in accordance with the National Fisheries Policy. The
ordinance enacted by the municipality and component city shall be reviewed pursuant
to RA 7160 by their sanggunian of the province which has jurisdiction over the same.
The LGUs shall also enforce all fishery laws, rules and regulations as well as valid
fishery ordinances enacted by the municipality/city councilor.

The management of contiguous fishery resources such as bays which straddled several
municipalities, cities, and provinces, shall be done in an integrated manner and not
based on political subdivisions of municipal waters in order to facilitate their
management as single resource systems. The LGUs which share or border such
resources may group themselves and coordinate with each other to achieve the
objectives of integrated fishery resource management. The integrated Fisheries and
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Aquatic Resource Management Councils (FARMCs) established under Section 76 of

this Code shall serve as the venues for close collaboration among LGUs in the
management of contiguous resources.

Sec. 17. Grant of fishing privileges in municipal waters. – The duly registered fisherfolk
organization/cooperatives shall have preferences in the grant of fishery rights by the
Municipal/City Council pursuant to Section 149 of the Local Government Code:
Provided, that the in the area where there are special agencies or offices vested with
jurisdiction over municipal water by virtue of special law creating these agencies such
as, but not limited to the Laguna Lake Development Authority and the Palawan Council
for Sustainable Development, said offices and agencies shall continue to grant permits
for proper management and implementation of the aforementioned structures.

Sec. 18. Users of Municipal Waters. – All fishery related activities in municipal waters,
as defined in this Code, shall be utilized by municipal fisherfolk and their
cooperatives/organizations who are listed as such in the registry of municipal fisherfolk.

The municipal or city government, however, may, through its local chief executive and
acting pursuant to an appropriate ordinance, authorize or permit shall and medium
commercial fishing vessels to operate within then point one (10.1) to fifteen (15)
kilometer area from the shoreline in municipal waters as defined herein, provided, that
all the following are met:

5. no commercial fishing in municipal waters with depth less than seven (7) fathoms as
certified by the appropriate agency;

b. fishing activities utilizing methods and gears that are determined to be consistent
with national polices set by the Department.

c. prior consultation, through public hearing, with the M/CFARMC has been
conducted; and
d. the applicant vessel as well as the ship owner, employer, captain and crew have
been certified by the appropriate agency as not having violated this Code,
environmental laws and related laws.

In no case shall the authorization or permit mentioned above be granted for fishing in
bays as determined by the Department to be in an environmentally critical condition and
during closed season as provided for in Section 9 of this Code.
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An Act to Prevent, Deter and Eliminate Illegal, Unreported and Unregulated

Fishing
Republic Act No. 10654 (2014)

CHAPTER VI.
PROHIBITIONS AND PENALTIES

Section 86. Unauthorized Fishing. – (a) It shall be unlawful for any person to capture
or gather or to cause the capture or gathering of fish, fry or fingerlings of any fishery
species or fishery products without license or permit from the Department or LGU.

Except in cases specified under this Code, it shall also be unlawful for any commercial
fishing vessel to fish in municipal waters.

The discovery of any person in possession of a fishing gear or operating a fishing vessel
in a fishing area where he has no license or permit shall constitute & prima
facie presumption that the person is engaged in unauthorized fishing: Provided, That
fishing for daily food sustenance or for leisure which is not for commercial, occupation
or livelihood purposes may be allowed.
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Section 87. Engaging in Unauthorized Fisheries Activities. – It shall be unlawful for any
person to exploit, occupy, produce, breed or culture fish, fry or fingerlings of any fishery
species or fishery products or construct and operate fish corrals, fish traps, fish pens
and fish cages or fishponds without a license, lease or permit.

The discovery of any person engaging in any of the above activities without a lease,
license or permit shall constitute & prima facie presumption that the person is engaged
in unauthorized fisheries activity.

Xxx

Section 88. Failure to Secure Fishing Permit Prior to Engaging in Distant Water
Fishing. – (a) It shall be unlawful for any person to fish in the high seas, in the territorial
seas, archipelagic waters, and Exclusive Economic Zones of other states using a
Philippine flagged fishing vessel without first securing a fishing permit from the
Department and authorization from the coastal state.

The discovery of any person in possession of a fishing gear or operating a fishing vessel
in the abovementioned areas without a fishing permit from the Department or
authorization from the coastal state shall constitute a prima facie presumption that the
person is in violation of this provision.

(b) It shall be unlawful for an owner or operator, and the three (3) highest officers, of a
commercial fishing vessel to commit acts that are in contravention of the terms and
conditions stated in the fishing permit or as may be promulgated by the Department.

Xxx

Section 89. Unreported Fishing. – It shall be unlawful for any person to engage in
unreported fishing or to fail to comply with the reportorial requirements in Section 38 of
this Code.

Xxx

Section 90. Unregulated Fishing. – It shall be unlawful for any person to engage in
unregulated fishing in waters within and beyond national jurisdiction.

Xxx

Section 91. Poaching in Philippine Waters. – It shall be unlawful for any foreign person,
corporation or entity to fish or operate any fishing vessel in Philippine waters.

The entry of any foreign fishing vessel in Philippine waters shall constitute a prima
facie presumption that the vessel is engaged in fishing in Philippine waters.

Xxx

Section 92. Fishing Through Explosives, Noxious or Poisonous Substance, or

Electricity. – (a) It shall be unlawful for any person to catch, take or gather or cause to
be caught, taken or gathered fish or any fishery species in Philippine waters with the
use of explosives, noxious or poisonous substance such as sodium cyanide, which will
kill, stupefy, disable or render unconscious fish or fishery species: Provided, That the
Department, subject to such safeguards and conditions deemed necessary and with the
endorsement from the concerned LGUs, may allow, for research, educational or
scientific purposes only, the use of poisonous or noxious substances to catch, take or
gather fish or fishery species: Provided, further, That the use of poisonous or noxious
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substances to eradicate predators and pests in fishponds in accordance with accepted

scientific practices and without causing adverse environmental impact in neighboring
waters and grounds shall not be construed as illegal fishing.

The discovery of dynamite, other explosives and chemical compounds which contain
combustible elements, or noxious or poisonous substances, or equipment or device for
electrofishing in any fishing vessel or in the possession of any fisherfolk, operator,
fishing boat official or fishworker shall constitute a prima facie presumption that any of
these devices was used for fishing in violation of this Code.

The discovery in any fishing vessel of fish caught or killed with the use of explosives,
noxious or poisonous substances, or by electricity shall constitute a prima
facie presumption that the fisherfolk, operator, boat official or fishworker is fishing with
the use thereof.

Xxx

Section 93. Use of Fine Mesh Net. – It shall be unlawful to engage in fishing using nets
with mesh smaller than that which may be determined by the
Department: Provided, That the prohibition on the use of fine mesh net shall not apply
to the gathering of fry, glass eels, elvers, tabios, and alamang and other species that by
their nature are small but already mature, as identified in the implementing rules and
regulations by the Department.

The discovery of a fine mesh net in a fishing vessel shall constitute a prima
facie presumption that the person or fishing vessel is engaged in fishing with the use of
fine mesh net.

Xxx

Section 94. Fishing in Overexploited Fishery Management Areas. – It shall be unlawful

for any person to fish in fishery management areas declared as overexploited.

Xxx

Section 95. Use of Active Gear in Municipal Waters, Bays and Other Fishery
Management Areas. – It shall be unlawful to engage in fishing in municipal waters and
in all bays as well as other fishery management areas using active fishing gears as
defined in this Code.

Xxx

Section 96. Ban on Coral Exploitation and Exportation. – It shall be unlawful for any
person or corporation to gather, possess, commercially transport, sell or export ordinary,
semi-precious and precious corals, whether raw or in processed form, except for
scientific or research purposes. It shall also be unlawful for any person, corporation or
entity to commit any activity that damage coral reefs.

Xxx

Section 97. Ban on Muro-ami, Other Methods and Gear Destructive to Coral Reefs and
Other Marine Habitat. – (a) It shall be unlawful for any person, natural or juridical, to fish
with gear or method that destroys coral reefs, seagrass beds, and other fishery marine
life habitat as may be determined by the Department. ‘Muro-ami’ and any of its variation,
and such similar gears and methods that require diving, other physical or mechanical
acts to pound the coral reefs and other habitat to entrap, gather or catch fish and other
fishery species are also prohibited.
Xxx
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(b) Except in cases allowed by law, it shall be unlawful for any person, natural or
juridical, to gather, possess, commercially transport, sell or export coral sand, coral
fragments, coral rocks, silica, and any other substances which make up any marine
habitat.

Xxx

Section 98. Illegal Use of Superlights or Fishing Light Attractor. – It shall be unlawful to
engage in fishing with the use of superlight in municipal waters, or to fish with fishing
light attractor using candlelight power or intensity beyond the standards set by the
Department in consultation with the LGUs for fishing in municipal waters, or in violation
of the rules promulgated by the Department for fishing with the use of superlight or
fishing light attractor outside municipal waters.

Xxx

Section 99. Conversion of Mangroves. – It shall be unlawful for any person to convert
mangroves into fishponds or for any other purpose.

Xxx

Section 100. Fishing During Closed Season. – It shall be unlawful to fish during closed
season.

Xxx

Section 101. Fishing in Marine Protected Areas, Fishery Reserves, Refuge and
Sanctuaries. – It shall be unlawful to fish in marine protected areas, fishery reserves,
refuge, or fish sanctuaries as declared by the Department or the LGUs.

Xxx

Section 102. Fishing or Taking of Rare, Threatened or Endangered Species. – (a) It

shall be unlawful to fish or take, catch, gather, sell, purchase, possess, transport, export,
forward or ship out aquatic species listed in Appendix I of the Convention on the
International Trade in Endangered Species of Wild Flora and Fauna (CITES), or those
categorized by the International Union for Conservation of Nature and Natural
Resources (IUCN) as threatened and determined by the Department as such.
Xxx
(b) It shall be unlawful to fish, take, catch, gather, sell, purchase, possess, transport,
export, forward or ship out aquatic species listed in CITES Appendices II and III if
scientific assessments show that population of the species in the wild cannot remain
viable under pressure of collection and trade: Provided, That the taking or fishing of
these species from the wild for scientific research, or conservation breeding
simultaneous with commercial breeding may be allowed.
Xxx
I It shall be unlawful to gather, take, possess, transport, or export, forward or ship out
captive-bred species that have been transplanted to the wild.

Xxx

Section 103. Capture of Sabalo and Other Breeders/Spawners. – It shall be unlawful

for any person to catch, gather, capture or possess mature milkfish or sabalo and other
breeders or spawners of other fishery species as may be determined by the
Department: Provided, That catching of sabalo and other breeders/spawners for local
breeding purposes or scientific or research purposes may be allowed subject to
guidelines that shall be promulgated by the Department.

Xxx
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Section 104. Exportation of Breeders, Spawners, Eggs or Fry. – Exportation of

breeders, spawners, eggs or fry as prohibited in this Code shall be punished under this
Act: Provided, That the export of hatchery-bred or captive-bred breeder, spawner, egg
or fry, may be allowed subject to the regulations to be promulgated by the Department.

Failure on the part of the shipping or forwarding company from whose possession the
breeders, spawners, eggs, or fry are discovered or seized to fully cooperate in the
investigation conducted by concerned government authorities on the matter shall create
a presumption that there is connivance or conspiracy between the company and the
shipper to violate the provisions of this section.

Xxx

Section 105. Importation or Exportation of Fish or Fishery Species. – Any importation

or exportation of fish or fishery species in violation of this Code shall be unlawful.

Failure on the part of the shipping or forwarding company from whose possession the
fish or fishery species imported or exported are discovered or seized to fully cooperate
in the investigation conducted by concerned government authorities shall create a
presumption that there is connivance or conspiracy between the shipping company and
the shipper to perpetrate the aforementioned offense.

Xxx

Section 106. Violation of Harvest Control Rules. – It shall be unlawful for any person to
fish in violation of harvest control rules as determined by the Department.

Xxx

Section 107. Aquatic Pollution. – Aquatic pollution, as defined in this Code, shall be
unlawful.

Xxx

Section 108. Failure to Comply with Minimum Safety Standards. – The owner and
captain of a commercial fishing vessel engaged in fishing who, upon demand by proper
authorities, fails to exhibit or show proof of compliance with the safety standards
provided in this Code shall be liable administratively and criminally.

Upon apprehension, the fishing vessel shall be escorted to the nearest port or landing
point and prevented from continuing with the fishing activity.

Xxx

Section 109. Failure to Submit a Yearly Report on All Fishponds, Fish Pens and Fish
Cages. – It shall be unlawful for owners and operators of fishponds, fishpens and fish
cages to fail to submit an annual report to the Department pursuant to Section 57 of this
Code.

Xxx

Section 110. Gathering and Marketing of Shell Fishes or Other Aquatic Species. – It
shall be unlawful for any person to gather, take, sell, transfer, possess, commercially
transport, export, forward or ship out any sexually mature shell fish or other aquatic
species identified by the Department, or below the minimum size, or above the
maximum quantities prescribed for the species. Other parameters for the protection of
heavily traded aquatic species may be promulgated by the Department.
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Section 111. Obstruction to Navigation or Flow or Ebb of Tide in any Stream, River,
Lake or Bay. – It shall be unlawful for any person to cause obstruction to navigation or
flow or ebb of tide.

Xxx

Section 112. Noncompliance with Good Aquaculture Practices. – Fishery operations

involving the breeding and farming of fish and other fishery species shall comply with
good aquaculture practices and the guidelines for environmentally-sound design and
operation for the sustainable development of the aquaculture industry which shall be
promulgated by the Department.

Xxx

Section 113. Commercial Fishing Vessel Operators Employing Unlicensed Fisherfolk,

Fishworker or Crew. – (a) The owner or operator of a commercial fishing vessel
employing unlicensed fisherfolk or fishworker or crew shall, upon a summary finding of
administrative liability, be fined Four thousand pesos (P4,000.00) for each unlicensed
fisherfolk or fishworker or crew and suspension or revocation of license for commercial
fishing.
(b) It shall likewise be unlawful for Philippine flagged fishing vessels engaged in distant
water fishing to employ unlicensed fisherfolk or fishworker or crew.

Xxx

Section 115. Obstruction to Fishery Law Enforcement Officer. – The fishing vessel
owner, master or operator or any other person acting on behalf of any fishing vessel
who assaults, resists, intimidates, harasses, seriously interferes with, or unduly
obstructs or delays a fishery law enforcement officer, authorized inspector or observer,
the deputized fishwarden of the LGU, or any lawfully-boarding government officers, in
the exercise of their duties shall be penalized under this Code. Any person who does
not allow any authorized officer or an observer to exercise any of the legal duties shall
be deemed to be obstructing that officer or person.

Xxx

Section 116. Noncompliance with Fisheries Observer Coverage. – (a) It shall be

unlawful for Philippine distant water fishing vessel to sail without a fisheries observer on
board as required by RFMO conservation and management measures.
(b) It shall be unlawful for commercial fishing vessels to sail without a fisheries observer
in compliance with this Code and the rules and regulations promulgated by the
Department.

Xxx

Section 117. Noncompliance with Port State Measures. – No foreign fishing vessel
shall be allowed entry without providing at least twenty-four (24)-hour prior notice. When
a foreign fishing vessel is granted entry, failure to provide a catch report shall be deemed
unlawful. It shall likewise be unlawful for any person to fail to comply with other rules on
port state measures promulgated by the Department in coordination with port state
authorities.

Failure to comply with the 24-hour period may result in denial of permission to enter or
use of port facilities and the vessel may be subject to onboard inspection and/or
impoundment.
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Section 118. Failure to Comply with Rules and Regulations on Conservation and
Management Measures. – It shall be unlawful for any person to fail to comply with
conservation and management measures adopted in rules and regulations to be
promulgated by the Department pursuant to international conventions, RFMO
resolutions and laws of coastal states where Philippine vessels fish.

Xxx

Section 119. Noncompliance with Vessel Monitoring Measures. – No municipal,

commercial or distant water fishing vessel shall engage in fishing activity without
complying with the vessel monitoring measures promulgated by the Department in
coordination with the LGUs: Provided, That for vessels operating in Philippine waters,
only the catcher vessel shall be covered by this requirement. It shall also be unlawful to
intentionally tamper with, switch off or disable the vessel monitoring system.

Xxx
Section 120. Constructing, Importing or Converting Fishing Vessels or Gears Without
Permit from the Department. – It shall be unlawful for any person to construct or import
fishing vessels or gears or to convert other vessels into fishing vessels without permit
from the Department.

Xxx

Section 121. Use of Unlicensed Gear. – Any person who uses a fishing gear or method
for commercial fishing without license from the Department shall, upon a summary
finding of administrative liability, be fined from Two hundred thousand pesos
(P200,000.00) to Five hundred thousand pesos (P500,000.00) per gear depending on
the seriousness of the violation.
Upon conviction by a court of law, the offender shall be imposed the penalty of fine from
Four hundred thousand pesos (P400,000.00) to One million pesos (P1,000,000.00)
depending on the seriousness of the violation.

Section 122. Falsifying, Concealing or Tampering with Vessel Markings, Identity or

Registration. – It shall be unlawful for any person to falsify, conceal vessel identity or
lack of registration or tamper with the vessel markings, identity or registration.

Xxx

Section 123. Concealing, Tampering or Disposing of Evidence Relating to an

Investigation of a Violation. – It shall be unlawful for any person to conceal, tamper or
dispose evidence relating to an investigation of a violation.

Xxx

Section 124. Noncompliance with the Requirements for the Introduction of Foreign or
Exotic Aquatic Species. – It shall be unlawful to import, introduce, or breed, foreign or
exotic aquatic species without the conduct of risk analysis and prior approval of the
Department.

Xxx

Section 125. Failure to Comply with Standards and Trade-Related Measures. – It shall
be unlawful for any person to fail to comply with standards for weights, volume, quality
and other requirements for all fishery transactions and trade and trade-related measures
prescribed by the Department.

Section 126. Possessing, Dealing in or Disposing Illegally Caught or Taken Fish. – It

shall be unlawful to ship, commercially transport, offer for sale, sell, import, export, or
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have custody, control, or possession of, or to deal in or in any manner dispose of any
fish or species caught, taken or retained in violation of this Code.

The discovery of any fish or species caught with the use of explosives or noxious or
poisonous substances shall constitute a prima facie presumption that the possessor,
seller, fish dealer, transporter, importer, or exporter thereof has knowledge that the fish
or species was caught or taken in violation of this Code.

Section 127. Unauthorized Disclosure of Sensitive Technical Information. – Data from

the vessel monitoring system or vessel monitoring measure and other related data
arising therefrom shall be considered as sensitive technical information. Any
unauthorized disclosure of said data including all other data referred to in Section 155
in this Code, by any person shall be penalized with imprisonment of six (6) months and
one day to six (6) years, removal from office and forfeiture of all retirement benefits,
where applicable.

Section 128. Other Violations. – In addition to the prohibitions in this Code, the
Department, in consultation with the LGUs, local FARMCs and NFARMC, shall issue
fishery administrative orders or regulations for the conservation, preservation,
management and sustainable development of fisheries and aquatic resources.

The Local Government Code also provides key regulatory mechanisms on Fisheries, which
complements the Fisheries Code155, as amended by Rep. Act No. 10654.

Local Government Code

Republic Act No. 7160

SEC. 149. Fishery Rentals, Fees and Charges. – (a) Municipalities shall have the
exclusive authority to grant fishery privileges in the municipal waters and impose rentals,
fees or charges therefor in accordance with the provisions of this Section.

(b) The sangguniang bayan may:

6. Grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or
bangus fry areas, within a definite zone of the municipal waters, as determined by it:
Provided, however, That duly registered organizations and cooperatives of marginal
fishermen shall have the preferential right to such fishery privileges: Provided, further,
That the sangguniang bayan may require a public bidding in conformity with and
pursuant to an ordinance for the grant of such privileges: Provided, finally, That in the
absence of such organizations and cooperatives or their failure to exercise their
preferential right, other parties may participate in the public bidding in conformity with
the above cited procedure.

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

(3) Issue licenses for the operation of fishing vessels of three (3) tons or less for
which purpose the sangguniang bayan shall promulgate rules and regulations
regarding the issuances of such licenses to qualified applicants under existing
laws.

Provided, however, That the sanggunian concerned shall, by appropriate ordinance,

penalize the use of explosives, noxious or poisonous substances, electricity, muro-ami,
and other deleterious methods of fishing and prescribe a criminal penalty therefor in

155
Note that the Fisheries Code is the later law.
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accordance with the provisions of this Code: Provided, finally, That the sanggunian
concerned shall have the authority to prosecute any violation of the provisions of
applicable fishery laws.

Under both laws, access to fisheries is allocated to municipal and commercial fishers. However,
there are many instances of conflicts among the two stakeholder groups because of competition over
nearshore fisheries – commercial fishers have more efficient gear, but they are banned in municipal
waters because they could easily deplete the resources to the detriment of mostly poor municipal
fishes who have less efficient fishing gear.

7.3 Policy analysis (effectiveness of laws in addressing environmental problem)

The Fisheries Code as amended was enacted primarily to ensure that fisheries resources are
sufficient to meet food security.

Sec. 2. Declaration of Policy. – it is hereby declared the policy of the State:

a. to achieve food security as the overriding consideration in the utilization,

management, development conservation and protection of fishery resources in
order to provide the food needs of the population. A flexible policy towards the
attainment of food security shall be adopted in response to changes in
demographic trends for fish, emerging trends in the trade of fish and other aquatic
products in domestic and international markets, and the law of supply and
demand;
b. to limit access to the fishery and aquatic resources of the Philippines for the
exclusive use and enjoyment of Filipino citizens;
c. to ensure the rational and sustainable development, management and
conservation of the fishery and aquatic resources in Philippine waters including
the Exclusive Economic Zone (EEZ) and in the adjacent high seas, consistent
with the primordial objective of maintaining a sound ecological balance,
protecting and enhancing the quality of the environment. The Philippines shall
pursue its commitment to international conventions and cooperate with other
states and international bodies, in order to conserve and manage threatened ,
aquatic species, straddling and highly migratory fish stocks and other living
marine resources;
d. to protect the rights of fisherfolk, especially of the local communities with priority
to municipal fisherfolk, in the preferential use of the municipal waters. Such
preferential use, shall be based on, but not limited to, Maximum Sustainable Yield
(MSY) or Total Allowable Catch (TAC) on the basis of resources and ecological
conditions, and shall be consistent with our commitments under international
treaties and agreement;
e. to provide support to the fishery sector, primarily to the municipal fisherfolk,
including women and youth sectors, through appropriate technology and
research, adequate financial, production, construction of post-harvest facilities,
marketing assistance, and other services.
f. to adopt the precautionary principle and manage fishery and aquatic resources, in
a manner consistent with the concept of an ecosystem-based approach to
fisheries management and integrated coastal area management in specific
natural fishery management areas, appropriately supported by research,
technical services and guidance provided by the State; and
g. to grant the private sector the privilege to utilize fishery resources under the basic
concept that the grantee, licensee or permittee thereof shall not only be a
privileged beneficiary of the State but also active participant and partner of the
Government in the sustainable development, management, conservation and
protection of the fishery and aquatic resources of the country.
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According to a 2004 paper by Luna,156 the following are issues confronted by Philippine marine
fisheries today:

• depleted fishery resources;

• degraded coastal environment and critical fisheries habitats;
• low catches and incomes, and dissipated resource rents;
• physical losses and reduced value of catches due to improper post-harvest practices and
inefficient marketing;
• inequitable distribution of benefits from resource use;
• intersectoral and intrasectoral conflicts;
• poverty among small-scale fishers; and
• inadequate systems and structures for fisheries management.

Open access is one of the main interconnections among all the issues identified. They recommended
six critical actions to reverse the decline in Philippine marine fisheries:

• reduction and rationalization of fishing effort;

• protection, rehabilitation and enhancement of coastal habitats;
• improved utilization of harvests;
• enhanced local stewardship and management of resources;
• supplemental and alternative livelihoods for fishers; and capacity building and institutional
strengthening.157

The Marine Science Institute of the University of the Philippines158 further identified several issues
which need tackling:

7. Lingayen Gulf and Manila Bay: too many fishers and environmental stress

One of the common features in many fishing areas is how the varying degrees of
environmental stress induced by human impacts interact with fisheries overexploitation
(e.g., siltation together with pollution in Lingayen Gulf and Manila Bay).159,160 The most
prevalent fisheries concern is the condition that is referred to as ‘malthusian
overfishing’. This condition often related to an increasing density of fishers’ population
and leads to using more efficient but destructive fishing practices such as
blastfishing.161 In addition, the competition between commercial and municipal fishing
activities within municipal waters has been consistently seen as one of the major
concerns.

8. Municipal fisheries vs. commercial fisheries

Due to the overexploited state in the coastal areas and the need to regulate fishing
effort (i.e., municipal waters within 10 to 15 km from the shore), illegal access by the
commercial fleets has been seen as a major problem in the fisheries sector.

156
Luna, C.Z., Silvestre, G.T., Carreon, M.F. III, White, A.T. & Green, S.J., Sustaining Philippine Marine Fisheries Beyond
“Turbulent Seas: A Synopsis of Key Management Issues and opportunities, in Department of Agriculture- Bureau of
Fisheries and Aquatic Resoures 345–358 (2004).
157
Id.
158
P.M. Alinio, An Overview of Philippine Fisheries (undated), available at:
http://innri.unuftp.is/pdf/Philippine%20Fisheries.pdf
159
J.E. Padilla & A.C. Morales, Evaluation of Fisheries Management Alternatives for Lingayen Gulf: An Options Paper, in
Studies on Lingayen Gulf, Final report of The Philippine Environmental and Natural Resources Accounting Project
(ENRAP-Phase IV) (1997).
160
D. Pauly, T-E Chua, The Overfishing of Marine Resources: Socioeconomic Background in Southeast Asia , in AMBIO
17: 200-206 (1988).
161
D. Pauly, G.T. Silvestre & I.R. Smith, On development, fisheries and dynamite: a brief review of tropical fisheries
management, in Natural Resources Modelling 3(3): 307-329 (1989).
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This social equity and uneven competition have been considered characteristic not
only in the Philippines, but also in many other coastal fisheries of developing countries.
Thus, solutions require greater empowerment mechanisms (e.g., community-based
efforts for improved enforcement), which, to some extent, have been initiated through
some of the decentralization devolution mechanisms of the Philippine Local
Government Code of 1992.

Unfortunately, the small-scale municipal fisheries sector also requires considerable

effort reductions in order to have any significant change to mitigate for the decline of
the fisheries resources. 162 As mentioned earlier, 202 althusian overexploitation,
together with the marginalization of the municipal fishers, have led them further to
desperate measures for more effective and destructive fishing practices (e.g., blast
fishing, poison fishing).

9. Capture fisheries and mariculture

Due to the expected stagnation of capture fisheries in the coastal areas and, on the
other hand, with a projected continuous increase in population, cheap fish protein food
may be less available in future.163 Hence, mariculture has been seen as the logical
panacea to augment the fisheries deficit. This suggestion, however, has been wrought
with problems such as the issue of degradation of important fisheries habitats. In the
Philippines, fishpond conversion of mangrove areas has been identified as one of the
major cause of mangrove destruction. 164 Recently in the Lingayen Gulf, the
introduction of fish pens and fish cages brought about serious problems. Aside from
the problems of water quality and fish kills due to unrequlated aquaculture activities,
further displacement of fishers has occurred in addition to the unfair access
arrangements in the commons.165

10. Transboundary issues: pelagic stocks and disputed areas

A report on the innovation by the Filipinos’ introduction of the payao (a fish aggregating
device) suggested that catch rates in the Philippines may be beyond their potentials
and may also have signs of growth overfishing.166

It also identified some recommendations on tackling the various issues and concerns on Philippine
Fisheries:167

11. Enhance capabilities of Fisheries Management councils at all levels specially

through the establishment of National and Regional Fisheries Councils. To date, with
Republic Act 8550 (the Philippine Fisheries Code of 1998) and its amending law, the
Fisheries and Aquatic Resources Management Councils (FARMCs) have been
institutionalized by law. Unfortunately, they are mainly a consultative body and would

162
VV Hilomen & L. Jimenez , Resource and Social assessment of Lingayen Gulf: Capture Fisheries (2001) (unpublished
report) (on file with authors).
163
G. Bernacsek, Principal Fisheries Development Policy Issues for the Five-Year Development Plan of the Philippines
(1987) (unpublished conference paper) (presented at the National Fisheries Policy Workshop, 16-20 Mar 1987, Baguio
City).
164
P.M. Aliño, C.L. Nañola, D.G. Ochavillio & M.C. Rañola, The Fisheries Potential of the Kalayaan Island Group, South
China Sea 219-226. (B. Morton, ed. 1998) (presented at Proc. 3rd International Conference on Marine Biology of the
South China Sea, Hong Kong, 28 Oct - 1 Nov 1996).
165
L.F. Verceles, L.T. McManus & P.M. Aliño, Participatory Monitoring and Feedback System: An Important Entry Towards
Sustainable Aquaculture in Bolinao, Northern Philippines 78- 87 (2001).
166
R. Ganaden, B. Stequert, Tuna Fisheries in the Philippines (1987) (presented at the IPTP Tuna Working Group, Aug
1987, Manila, Philippines).
167
G.T. Silvestre, Philippine Marine Capture Fisheries: Exploitation, Potential and Options for Sustainable Development 87
(International Center for Marine Resource Development, The University of Rhode Island, Working Paper No 48, 1989).
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require improved ways of making them more effective in actual management

interventions in the ground.

12. There is a need to clarify the management goals that fisheries management
programs often confuse the management concerns that deal with intermediate
causes (e.g., overexploitation of fisheries and habitat destruction) and those that deal
with the root causes (e.g., poverty, population growth, social equity, political
economy). Aside from the clarification of these goals and objectives, it is crucial that
appropriate stakeholders’ roles and responsibilities be identified to contribute to
coordinated, integrated and complementary outcomes.

13. Pursue innovative ways of reducing fishing effort and more effective ways of
enforcement and compliance. Considering the dire depauperate condition of the
Philippines and widespread hunger and deprivation in its social development,
controlling fishing effort requires more than the usual command and control
monitoring, control and surveillance mechanisms of developed states. Much of the
successful initiatives tended to provide social pressures from the community through
a changed social view of community stewardship. A broader compliance to local and
national ordinances can be improved if political-will is demonstrated by the local
government. On the other hand, many broad-based organized community (e.g.,
through militant peoples organizations) or through citizens watch programs known
as Bantay Dagat (sea watchers or local community coast guards) have also been
successful. Though only documented in fewer cases in the Philippines, some
communities still assert some of their local beliefs (akin to traditional ecological
knowledge and wisdom) as a guide for their fishing practices.168

14. Explore incentives for livelihood-linked programs to sustain resource management

and disincentives for sustainable practices. Due to the broader development
concerns prevalent in developing countries, regulating fishing as a crucial livelihood
for the sustenance of fishers requires effective incentives to shift towards sustainable
practices. Some success has been shown for areas where some fishers have shifted
towards some ecotourism related activities involving marine sanctuaries where
resource extraction has been minimized.169 In addition, it has been suggested that
resource enhancement activities involving community stakeholders has shown some
promise. Such experiences in learning by doing as part their livelihood and as
stewardship responsibility creates a greater social pressure for unsustainable
practices. Reducing product acceptance derived from unsustainable livelihood
practices (e.g., blast fishing and poison fishing) and as compared to more acceptable
ecolabelled goods and services also offer complementary value-added incentives.

15. Encourage joint ventures in international waters and consider incentives in lightly
exploited international areas. The broad Philippine fisheries experience in the region
may offer the problems of its local fisheries resource depletion to explore lightly
exploited areas in the Pacific international waters areas with other regional partners
(e.g., Indonesia and Papua New Guinea). Improvement of the private sector and
state interaction needs to be explored further especially in facilitating goodwill and
clarifying mutually beneficial trade agreements.

168
Mahar Mangahas, Indigenous Coastal Resources Management: The Case of the Hataw Fishing in Batanes, Center for
Development Studies (1993).
169
P.H. Vogt, The Economic Benefits of Tourism in the Marine Reserve of Apo Island, Philippines 7 (1997) (presented at
the 8th International Coral Reef Sympsosium, June 1997, Panama).
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16. Improve effectiveness of enhancement and rehabilitation through an ecosystem and

integrated coastal management approach. Some reseeding efforts and mangrove
enhancement initiatives have met with less success due to the inappropriate context
that they have been undertaken. Thus sea ranching without sufficient efforts to
regulate access and area control (e.g., with a complementary marine sanctuary area)
or proper grow out educated cooperators would not be sustainable. In addition,
enhancement areas situated in areas where conflicts in general usage of the zones
(e.g., international ports and industrial discharges or possible pollution sources)
would jeopardize enhancement and rehabilitation. As shown in the example for
mariculture, more and more fisheries management concerns of municipalities’ are
now being approached as part of its’ integrated coastal development plans.

7.4 Further discussion

The Philippine fisheries industry comprises marine fisheries, inland fisheries, and aquaculture.
Marine fisheries can be further divided into municipal fisheries and commercial fisheries.
Recreational fisheries have not developed in the country.

Municipal marine fisheries operate in coastal waters within fifteen (15) kilometers from the coastline
(“municipal marine waters”), using vessels as well as fishing without the use of vessels. Commercial
fisheries operate outside municipal waters.

Inland fisheries operate in inland waters such as lakes, reservoirs and rivers, including estuaries.
Aquaculture involves aquatic organisms in fresh, brackish and marine waters.

The Philippines ranked eleventh among the top fish producing countries in the world in 2003, with
production of 2.63 million tonnes of fish, crustaceans, molluscs and aquatic plants (including
seaweed). In 2012, the Philippines had a total production of 3.1 million tonnes, and aquaculture
contributed 25.4% to the total fish production.

As an archipelagic state with over 2.2 million km of highly productive seas, the Philippines is fortunate
to have vast fishery resources at its disposal. However, all of the country’s main fish species and
marine organisms are showing signs of overfishing.

Marine fisheries

In 2003, reported marine fisheries production was 2,169,164 tonnes: 45.38% from municipal and
54.62% from commercial fisheries.170 In 2012, this number from municipal fisheries increased to 51%
while the number from commercial fisheries decreased to 49%.171

Of the eight top species caught by both municipal and commercial fisheries, almost two-thirds were
harvested by commercial fishers compared with one-third caught by municipal fishers. This suggests
that, although the commercial and municipal fisheries are purported to be two distinctly different
sectors, they are in fact competing directly with each other.

Despite the continued expansion of the country’s commercial fishing fleet, total fish catch levelled off
at around 1.65 million tonnes in the early 1990s. Indeed, the country had reached the maximum
economic yield from its demersal fish stocks as early as the late 1960s, except in the offshore hard
bottoms around Palawan, Southern Sulu Sea and the central part of the country’s Pacific coast.
Studies on pelagic fisheries also indicate overfishing and declining catch per unit effort. Exceptions
are in lightly fished areas in waters off Palawan, parts of the country’s Pacific coast and some parts
of Mindanao. Such findings are supported by an observed change in species composition, i.e.
anchovies have partially replaced sardines, scads and mackerels in the catch, an indication of
gradual stock collapse.

170
Bureau of Fisheries and Aquatic Resources, Philippine Fisheries Profile (2003).
171
Food and Agriculture Organization of the United Nations, Fishery and Aquaculture Country Profiles.
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A major fishing ground, Lingayen Gulf, reached its maximum sustainable yield (MSY) more than 20
years ago. The fishery now has four times the optimum effort for the available fish stocks. Catch
rates in the gulf are only one-fifth of what they were 15 years ago, compelling fishers to invest more
time and money in dwindling catches.172

In some areas, not only has the volume of catch been reduced, but also quality. For example, in
Central Visayas, there has been an overall shift in catch composition, away from coastal pelagic to
oceanic pelagic species and away from demersal to pelagic species. In the Visayan Sea, one of the
most productive fishing grounds of the country, a major change in composition of catch took place in
the 1980s, with coastal pelagics replacing the demersals as the most abundant catch, and
invertebrate species shifting from shrimp-dominant to squid-dominant, reflecting a shift in the
ecosystem due to fishing pressure and a shift away from trawling to purse seine and ring net. These
changes indicate that the Visayan Sea was exhibiting signs of overexploitation as far back as the
1980s.173

Inland fisheries

Based on the statistics for the period 2001–2003, inland fisheries contribute an average of 13.3% to
the aggregate (marine and inland). In 2003, inland fisheries produced a reported 133,292 tonnes of
fish. In spite of its low quantity, inland fisheries provides subsistence livelihood for thousands of
marginal fishermen.

Inland fisheries production fell from 229,973 tonnes in 1992 to 136,347 tonnes in 2001. The reduction
can be attributed to overexploitation and increasing pollution.174 It has declined further in recent
years.

Fishermen communities in municipal areas

Municipal fisherfolk are considered the “poorest among the poor.” In 2000, households whose heads
were fishers had a significantly higher poverty incidence than households in general. Their daily
income was roughly the retail value of two (2) kilograms of fish. Low incomes can be attributed to
declining fish catch, estimated to be about two (2) kilograms per day, down from the twenty (20)
kilograms per day that was the average catch during the 1970s.

Households of fishers and those in the fishing industry also had heads with relatively lower education
levels compared with households in general. Fishers’ households had lower access rates to basic
necessities like safe water, sanitary toilets and electricity than other households, and were more
likely to live in makeshift houses or were squatting. Also, the average size of households of fishers
and of those in the fishing industry was greater than the national average.175

According to the 2002 Census of Fisheries, there were 1.8 million municipal and commercial fishing
operators. This was a three-fold increase from the 584,000 fishing operators recorded in 1980.
Municipal fishing dominated the fishing industry in terms of numbers of operators. In 2002, 1.78
million operators (99.6%) were engaged in municipal fishing compared with only 7,800 in commercial
fishing operations.

The vast majority of municipal fishing operations (1.752 million or 98.4%) were individual operations.
At 1.7 million, male operators accounted for 94.5% of the municipal fishing operators, with a median
age of forty-one (41) years.

172
S.J. Green, A.T. White, J.O. Flores, M.F. Carreon, & A.E. Sia, Philippine fisheries in crisis: A Framework for
Management, Coastal Resource Management Project DENR-Cebu 77 (2003).
173
S.J. Green, J.O. Flores, J.Q. Dizon-Corrales, R.T. Martinez, D.R.M Nunal, N.B. Armada & A.T. White, The Fisheries of
Central Visayas, Philippines: Status and Trend, Coastal Resource Management Project DENR, DA-BFAR Cebu 159
(2004).
174
R.O. Juliano, Inland fisheries and lake management: Situation, Issues and Problems, and Recommendations (1996)
(presented during the Second National Fisheries Workshop on Policy Planning and Industry Development, Cavite, the
Philippines).
175
D.C. Israel, Economics and Environment in the Fisheries Sector, in DA-BFAR 131–137 (q.v., 2004).
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In 2002, out of 7,200 commercial fishing operations, 7,190 were operated by individuals, and almost
all (98.6%) were males, with a median age of 39 years.

Women also have a role in fisheries and helping in the livelihood of the family. Their roles include:
(1) fish marketing or vending, (2) fish processing, (3) fry gathering, (4) gear preparation, (5) fishing,
(6) net mending, and (7) fishing boat ownership and operation.176

Fishermen communities in inland areas

Socio-economic data on inland fisheries communities are limited in the literature. More data can be
found on small-scale fisherfolk in coastal communities. However, it can be assumed that the socio-
economics of coastal fishing communities will not differ significantly from those of inland fishing
communities.177

Fish Export and Import

The Philippines is an exporter as well as importer of fish and fishery products. In 2003, the balance
of trade was positive in terms of quantity and value.

In 2003, total exports of fish and fishery products amounted to 202,016 tonnes, valued at over US$
525.4 million. The products consisted mainly of fresh and processed fish, crustaceans and molluscs.
Leading fishery products were tuna, shrimp and seaweed. The major export destinations of tuna
were Japan and the United States of America. The major export destinations of shrimps were Japan,
Spain and the United States of America. The major export destinations for dried seaweed were
China, France, Republic of Korea and the United States of America, while the major export
destinations for carageenan were Denmark, France and the United States of America.

For the past several years, the Philippines has been importing large quantities of pelagic species
such as tuna (mainly from Indonesia). Large quantities of fishmeal are also imported (mostly from
Peru and the United States of America) for feed preparations.

Economics

In 2003, the fisheries sector had a total value of US$ 1,832 million, accounting for 2.2% of GDP. The
Philippines ranked 11th among the top fish producing countries in the world for 2001, accounting for
2.2% of global production. The Philippines is the world’s largest producer of carageenophyte
seaweed.

However, globally in the last 20 years, the Philippines’ ranking in world aquaculture production
steadily slid from 4th place in 1985 to 12th at present. From 5% of global farmed fish supply, the
Philippines now contributes only a little over 1% of world production.

Supply & Demand

Fish demand is robust in the Philippines, with three main uses. Domestic human consumption is by
far the largest single use (2,335,474 tonnes in 2003). The most important species consumed are
roundscad, Indian sardines, frigate tuna, big-eyed scad, fimbriated sardines and anchovies, which
originate from marine waters and are augmented by imports and milkfish and tilapia from aquaculture
and inland fisheries. Fish exports are the second largest use of supply (155,129 tonnes in 2003).
The main exported products are tuna, which originate from commercial and municipal marine
fisheries, and shrimp from aquaculture. The smallest portion of demand (332,268 tonnes in 2003) is
for non-food uses. This consists mainly of imported fishmeal for animal feeds, and snails caught in
inland waters for duck feed.

The supply divides as about 83% for human consumption and 17% for exports and non-food uses.

176
Siason, I.M. 2004. Women in fisheries in the Philippines. pp. 144–149. In: DA-BFAR, 2004, q.v.
177
Juliano, R.O. 1999. Inland fisheries in the Philippines: Its development, management and future. pp. 116–192. In: R.D.
Guerrero III (ed). 100 Years of Philippine fisheries and marine science 1898–1998. Philippine Council for Aquatic and
Marine Research and Development, Los Banos, Laguna, the Philippines.
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Fish contributes around 22.4% of the total protein intake of the average Filipino. It is the main source
of animal protein in the diet, contributing 56% to animal protein intake.178 The Philippine per capita
fish consumption was 28.8 kg in 2003.

Food Security

On the role of fisheries in food security in the Philippines: “There are clear indications that fisheries
quantity production is approaching real limits to further growth. Government of the Philippines
fisheries policy should re-orient and re-focus to emphasize growth in product value added and
increase in profitability, rather than the historical focus on quantity output. A new development climate
needs to be created which will facilitate active entrepreneurial exploration of new markets for fish
products and new export opportunities. Parallel to this policy shift, sustainability of domestic
production needs to be achieved through effective management in order for producers to be able to
provide a secure source of raw materials for processors and marketers.179
Trade

The foreign trade performance of the sector for 2003 recorded a trade surplus of US$ 445 million.
Total fishery exports showed a 3.6% growth in value terms compared with the previous year.
Combined, the earnings of the top three fishery exports (tuna, shrimp and seaweed) contributed US$
363.2 million (69.3%) to total fishery products exports of US$ 524.3 million.

Significant changes in international trade policy, quality and safety criteria have put pressure on the
fish processing industry to improve the products that are being manufactured. The Philippines has
adopted the Hazard Analysis Critical Control Point (HACCP) system for food safety management.
The Philippines continues to face challenges regarding access of its fishery products in international
markets.

Employment

According to the 2002 Census of Fisheries, there were 2,009,300 fishing operators and aquafarm
operators. Municipal fishing operators, commercial fishing operators and aquafarm operators
constituted 88.6%, 0.39% and 11.0%, respectively. Estimates of the employment generated from
ancillary industries are not available, but it is accepted that they provide jobs for many people.180

Rural Development

Various socio-economic data indicate that the ability of the sea to provide a cheap source of food
and income for the Filipino masses has been severely compromised. The Philippines – one of the
world’s forty (4) largest fish-producing nations – is also among the ten (10) low-income, food-deficit
countries of the world.181 With regard to aquaculture, its full potential for rural development has yet
to be realized.

Effectiveness of protecting critical habitats

Less than five percent of the Philippines’ coral reef ecosystems remain in pristine health, and there
are fishing grounds that contain a mere 10% of the fish stock present just fifty (50) years ago. Most
near-shore fishing is conducted by subsistence fishers in coastal communities – a group that
represents not just a formidable threat, but the most likely driver of an effective solution.

As overfishing has identified as the leading threat to the marine ecosystem, the Philippines
established itself as a world leader in marine conservation, decentralizing natural resource

178
J. Espejo-Hermes, Trends and Status of Fish Processing Technology, in DA-BFAR 122–126 (q.v., 2004)
179
B. Bernacsek, The Role of Fisheries in Food Security in the Philippines: A Perspective Study for the Fisheries Sector to
the Year 2010 (1996) (presented during the Second National Fisheries Workshop on Policy Planning and Industry
Development, Cavite, the Philippines).
180
National Statistics Office (2005).
181
S.J. Green, A.T. White, J.O. Flores, M.F. Carreon, & A.E. Sia, Philippine fisheries in crisis: A Framework for
Management, Coastal Resource Management Project DENR-Cebu 77 (2003).
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management and establishing what many experts agree are the key to successful protected areas –
no-take zones. These NTZs are marine areas where absolutely no fishing is allowed and which –
when well managed by surrounding communities – yield greater stocks of fish to support local
livelihoods and food security long term; preserve coral reefs on which tourism depends; and buffer
coastal areas from the negative impacts of climate change. This, of course, requires that communities
have both the will and the way to adopt better management practices. More than a quarter of the
world’s 4,700+ documented NTZs are located in the Philippines, but many exist only on paper.182

The study conducted by Weeks et. al.183 indicates “that the current extent, distribution, and size
of MPAs are inadequate to fulfill conservation objectives at this scale.” It was said that while
individual MPAs are sufficient for “local-scale fisheries objectives,” they are still no substitute to
a comprehensive national MPA network “to achieve an adequate representation of biodiversity.”
However, even established large MPAs are problematic, as most of them allow extractive
activities within their boundaries, and these extractive activities “provide little protection to
marine biodiversity.” Just the same, these large MPAs do “offer an existing commitment to the
management of marine resources.”

According to the results, the current percentage of coastal municipal waters and coral reef areas
covered by no-take MPAs (approximately 0.5% and between 2.7% and 3.4%, respectively) does
not meet the prescribed legislated targets. However, it was noted that there is scarcely any
available basis as to the pegging of the required 15% of coastal municipal waters in no-take
MPAs as mandated by the 1998 Fisheries Code. “The process was likely one of political
convenience rather than scientific endeavor. Given that 15% of Philippine municipal waters are
about twice the total coral reef area in the country, it does not appear to be an achievable or
appropriate goal.” The study offered a hypothetical solution to “fulfill the legislated requirements
by establishing MPAs exclusively between 10 km and 15 km offshore,” but at the same time
surmised that such action would not benefit coral reef ecosystems, which are most at threat of
overexploitation. The study also introduced the Philippine Marine Sanctuary Strategy target of
“protecting 10% of reef area,” although it “falls short of general recommendations that a
minimum of 20% and an optimum of 30%–50% of area be set aside in marine reserves.”

However, a count of established MPAs can only be a proper conservation indicator if they are
likewise managed effectively. According to the Marine Protected Area Rating System, of the
251 MPAs surveyed “only 12% are rated as ‘sustained,’ meaning they have a fully operational
enforcement system, management plan, and monitoring program,” [while] a further 35% are
rated as ‘enforced.’ If these figures are accurate, our results are optimistic assessments of
conservation effectiveness.”

CASE STUDY:
RECTO BANK INCIDENT

In the early hours of June 9, 2019, F/B Gem-Ver, a Filipino fishing boat anchored near the Recto Bank in the South
China Sea was rammed by a Chinese vessel, Yuemaobinyu 422, which led to its sinking. The Filipino crew was
later rescued by Vietnamese fishermen.

Described by the Chinese government as an ordinary maritime incident, there has been pressure put on the
Philippine government by civic society and environmental advocates to seek accountability from the Chinese
government. They anchor their reasoning on the fact that the 2016 arbitration ruling (PCA case number 2013-19)
determined that the area in which F/B Gem-Ver was found was within the exclusive economic zone (EEZ) of the
Philippines, and thus the presence of the Chinese fishing boat in the area was illegal in nature.

President Duterte has since made a statement stating that it was indeed a “maritime incident,” and later said that
China can fish in the Philippines’ EEZ. He said that he made an agreement with Chinese President Xi Jinping to

182
Rare Conservation, Program for Sustainable Fishing in the Philippines, http://rareconservation.org/program-sustainable-
fishing-philippines (last visited June 2012).
183
Rebecca Weeks, Garry Russ, Angel Alcala, Alan White, Effectiveness of Marine Protected Areas in the Philippines for
Biodiversity Conservation, in Conservation Biology (Contributed Paper, 2010).
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allow China to fish in the Philippine EEZ after Filipino fishermen were granted access by Beijing to Scarborough
Shoal. It is to be remembered that the Scarborough Shoal was seized by Beijing in 2012.

Such proclamation has ignited conversation on the possibility of impeaching the President because of his claims,
while the latter has threatened to jail those who would attempt to impeach him.

Related to the Scarborough Shoal is the petition filed by members of the Kalayaan Palawan Farmers and Fisherfolk
Association praying for the issuance of a writ of kalikasan to prevent violations of Philippine environmental laws in
the Philippine Waters and the Philippine EEZ. They bring up the government’s inaction regarding the activities of
the Chinese in the contested areas of the West Philippine Sea.

Sources:

https://pca-cpa.org/wp-content/uploads/sites/175/2016/07/PH-CN-20160712-Award.pdf
https://globalnation.inquirer.net/177040/duterte-china-can-fish-in-philippines-eez
https://www.philstar.com/headlines/2019/06/29/1930449/makabayan-bloc-initiate-duterte-impeachment
http://sc.judiciary.gov.ph/3304/ (G.R. No. 246209, Abogado, et al., vs. Department of Environment and Natural Resources, et al.,
May 3, 2019)

CASE STUDY:
MANILA BAY REHABILITATION

Manila Bay is slowly dying. Known for its scenic view, iconic sunset and historical significance, Manila Bay have
turned into a catch basin of wastes for Metro Manila. Water quality tests show that the coliform levels of Manila
Bay far exceed safe standards. This is mostly attributed to the low sewerage system and lack of water treatment
facilities of Metro Manila. Data from water concessionaires showed that the sewerage coverage in Metro Manila is
only 21.91%, while the rest either have their own septic tanks, are connected to a local wastewater facility, or
directly discharges their waste straight to bodies of water. There a total of 17 major river systems that drain into
Manila Bay. This includes the Navotas-Malabon-Tenejeros-Tullahan River system, Las Piñas-Parañaque River
system, Marilao-Meycauayan-Obando River system, Imus-Ylang-Ylang-Rio Grande River system, San Juan River
and others. All of which are domestic waste channels that contribute to the pollution load on Manila Bay. The rapid
urbanization, overpopulation and uncontrolled municipal, agricultural and industrial waste discharge continuously
threatened the natural environment of Manila Bay. All of which are factors that eventually lead to its water quality
deterioration, coastal erosion, water resources exploitation, habitat degradation, and biodiversity loss.

Various calls to save the Manila Bay were made. And although a Supreme Court order to clean the Manila Bay in
2008, the rehabilitation only began on the latter part of January 2019. Its main objective is to reduce Manila Bay's
fecal coliform levels and restore it to a point where it is fit for swimming, skin-diving, and other forms of contact
recreation. The allocated budget for the three-year duration of the rehabilitation project is 42.95 billion pesos. This
includes the clean-up of Manila Bay, as well as the relocation of settlers residing in the area.

Learning from the Pasig River rehabilitation, a sound action plan and continuity is required. Even then, it could still
take years or decades to save Manila Bay. There is still the need to improve Metro Manila's sewerage systems,
enhance the implementation of environmental laws, utilize technological interventions to enhance the water quality
of Manila Bay, and increase stakeholder engagements and awareness campaigns. It also entails addressing all
the other river systems that drain into the bay, which includes the Pasig River - whose rehabilitation has been
ongoing for two decades. Overall, all participating sectors are needed to exert great effort and to put their best foot
forward to fully rehabilitate Manila Bay and sustain it.

Sources:

http://www.pna.gov.ph/articles/1064975
https://www.rappler.com/newsbreak/in-depth/224306-stilt-houses-manila-bay-rehabilitation-series-part-1
https://www.rappler.com/newsbreak/in-depth/224287-why-manila-bay-cannot-be-saved-6-months-rehabilitation-series-part-2
http://www.bmb.gov.ph/391-management-of-coastal-and-marine-resources/programs/813-manila-bay-rehabilitation-project
https://www.rappler.com/nation/223995-duterte-creates-manila-bay-rehabilitation-task-force
https://newsinfo.inquirer.net/1122293/400-truckloads-of-trash-taken-from-manila-bay-since-january
https://www.rappler.com/nation/220747-establishments-may-face-closure-manila-bay-rehabilitation
http://pemsea.org/our-work/pollution-and-waste-management/pollution-hotspots/manila-bay

What we need to do in Manila Bay

EAGLE EYES – Tony La Viña
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12 February 2019, Manila Standard Today

Last Saturday, I wrote about the 2008 decision of the Supreme Court Decision which ordered the Metropolitan
Manila Development Authority, Department of Environment and Natural Resources, and other government
agencies to clean up, rehabilitate and preserve Manila Bay in their different capacities. This continuing mandamus
order, according to the Court, would remain pending until the cleanup was achieved.

Two months after that historic decision, on Febr. 10, 2009, the Court En Banc created the Manila Bay Advisory
Committee (MBAC), composed of two members of the Court and three technical experts (I was one of those
originally appointed but stayed only for three years because of other commitments). MBAC was created to monitor
the execution of the Court’s decision and was chaired by Justice Presbitero Velasco, the ponente of the 2008
decision.

Following the recommendations of MBAC, the Court issued another resolution on Feb. 15, 2011 giving timeframes
and tasks for the concerned agencies to implement the 2008 decision. In that decision, Associate Justices Antonio
Carpio and Maria Lourdes Sereno dissented on the basis that the resolution constituted judicial overreach by
usurping and performing executive functions by giving specific orders to the agencies on what to do to clean up
and rehabilitate Manila Bay. The majority of the Court disagreed as for them the issuance of subsequent resolutions
by the Court was simply an exercise of judicial power under Article VIII of the Constitution, the execution of the
decision being an integral part of the adjudicative function of the Court. It should be noted that the 2011 Resolution
was based on the discussions with the concerned agencies and none of the directives were new to them.

I summarize below these directives to emphasize that the government does not have to start from scratch in doing
its work on Manila Bay. The 2011 resolution might be a good starting point now that the executive branch is giving
the highest political priority to Manila Bay.

First, the Department of Environment and Natural Resources (DENR) was ordered to submit within a specified
period the updated Operational Plan for the Manila Bay Coastal Strategy. It was further ordered to submit the
names and addresses of persons and companies in Metro Manila, Rizal, Laguna, Cavite, Bulacan, Pampanga and
Bataan that generate toxic and hazardous waste.

Second, the Department of the Interior and Local Government (DILG) asked by the Court to order the mayors of
all cities in Metro Manila; the governors of Rizal, Laguna, Cavite, Bulacan, Pampanga and Bataan; and the mayors
of all the cities and towns in said provinces, to inspect all factories, commercial establishments and private homes
along the banks of the major river systems to determine if they have wastewater treatment facilities and/or hygienic
septic tanks, as prescribed by existing laws, ordinances, rules and regulations.

Third, the MWSS was ordered to submit to the Court on or before June 30, 2011 the list of areas in Metro Manila,
Rizal and Cavite that do not have the necessary wastewater treatment facilities.
Fourth, the Local Water Utilities Administration is ordered to submit on or before Sept. 30, 2011 its plan to provide,
install, operate and maintain sewerage and sanitation facilities in said cities and towns and the completion period
for said works.

Fifth, the Metropolitan Manila Development Authority (MMDA) was ordered to submit, among others, the names
and addresses of the informal settlers in Metro Manila.

In addition, the Departments of Agriculture, Health, and Education, the Philippine Ports Authority (PPA), and the
Philippine National Police (PNP) were also ordered to do specific tasks related to the cleanup.

This was a comprehensive order but clearly it was not enough and 10 years after the original decision, Manila Bay
is even more polluted; its environment degraded.

In my view, it is time now for the Supreme Court to remand this case to the lower court for execution of its final
order. There is no value in this case remaining any further in the Supreme Court. Justice Velasco, the MBAC, and
the Supreme Court were diligent in pushing this to the limit but clearly it is the executive branch, and specially the
DENR and DILG with the local governments, that should get this done.

With the executive branch firmly in charge again of this monumental task of cleaning Manila Bay, I suggest an
overall approach to that effort that would be based on two pillars—sustainable development and environmental
justice. These two principles should guide the government strategy and interventions in Manila Bay.

Sustainable development is defined as development that meets the needs of present generations while not
sacrificing the interests of future generations. Obviously it is not an option to stop economic activities in the Manila
Bay area, a region which comprises all of Metro Manila and several Central Luzon and Southern Tagalog
provinces. In fact, if anything, given the needs for the future of this region, more development is needed—but
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development that is environmentally smart and climate friendly while also sustainable and equitable, For that to be
achieved, a long-term masterplan must be adopted, and faithfully implemented. Such a plan is now being
developed by a team commissioned by the National Economic Development Authority (disclosure: I have a mirror
advising role in this project) and should be ready for presentation to the government this year.

As I pointed out last Saturday, the first thing to do is to accelerate the putting into place of a comprehensive
sewerage system for the region. We must all be connected to a modern sewerage system in ten years. This was
the big mistake of the Ramos government when it privatized the water system of Metro Manila; it should have
embedded into the contracts of Manila Water and Maynilad stipulations that required them to prioritize sewerage.

As I have written, before, all major reclamation projects in the Manila Bay region must be stopped. It is immoral
and criminal to allow activities that would lead to the destruction of Luneta, Manila Hotel, Intramuros, Chinatown,
Ermita, our national museums, and other heritage sites. Thousands of lives could also be lost when the impact of
reclamation combines with subsidence (the sinking of Metro Manila and surroundings because of unsustainable
extraction of water) and climate change impact (sea level rise and storm surges) in future disasters.

Environmental justice must animate the clean-up of Manila Bay. The burden should fall principally on those who
have polluted the Bay the most and those who have the resources to bear the costs. I support the DENR’s
enforcement efforts being directed first at the big malls, hotels, and condominiums in the Roxas Boulevard area,
but these efforts should be expanded to the whole region as every discharge from every establishment, village,
household, and building ends up in the bay and if untreated pollutes its waters. The rich should be targeted first
because they have the means to put up facilities to manage their waste and treat their waste water.

Informal settlers should be given a just transition, their relocation on or near their places of work and business (and
their children’s schools) to be given priority. It is never right to use the law to further marginalize and disadvantage
the poor even for a good cause like a clean environment. In fact, environmental injustice usually backfires and
makes matters worse for the environment.

Environment Secretary Roy Cimatu is a visionary and decisive leader. He has said that fixing Manila Bay requires
a change of culture, in my view from a culture of reckless economic and bad land use decisions to sustainability
as the norm for those decisions—from treating the poor terribly to making development truly inclusive. With
sustainable development and environmental justice as our guiding principles, we will yet save Manila Bay.
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Chapter Eight

Mineral Resources Extraction184

FACTS AND FIGURES

The Philippines is one of the top mineral-rich countries in the world for gold, nickel, copper, and chromite. It also
has the largest copper-gold deposit and has been estimated to have $840 billion worth of untapped mineral wealth
as of 2012 - amounting to a total of 40.8 billion metric tons of metal and non-metal mineral deposits. As of 2018,
there are 109 mines and 3,389 small quarries operating in the country and providing employment to 212,000
workers. The mining industry has been viewed to have high potential as a driver of economic growth for the country.
As a result, multiple investments were made to prioritize mineral exploration, development, and processing projects
from 2006 to 2009. The mining industry's contribution to the country's GDP has been continuously increasing from
0.60% in 2016 to 0.66% by 2019.

However, mining has always been closely associated with environmental destruction. Due to the nature of its
activities, it often causes environmental degradation, displacement of indigenous people and cultural loss. In
addition, it also poses great risks to its surrounding environment and to the health of communities near it. From
1990 to 1999 the mining industry have generated 131 million metric tons (MT) of mine waste and 136 million MT
of mine tailings.

Due to the extensive history of disasters caused by the mining industry, many mining companies are made to
adhere to stringent standards of responsible mining. This includes making sure that mining companies invest in
social development and management programs for their host and neighboring communities, as well as
environmental protection and management programs such as rehabilitation and mine decommissioning plans. As
of 2019, the amount committed by mining companies in the country for such programs has totaled to PHP 44.09
billion.

Sources:

http://www.mgb.gov.ph/attachments/article/162/MIS(2018)%20Annual%203Yr-2016%20to%20Q1-
2019%20for%20UPload%2030May2019.pdf
http://www.mgb.gov.ph/images/homepage-images/mining-facts-and-figures-------updated-January-2017.pdf
http://www.neda.gov.ph/wp-content/uploads/2013/09/CHAPTER-10.pdf
http://www.mgb.gov.ph/attachments/article/162/mining%20facts%20and%20figures%20updated%20March%202019.pdf

8.1 Environmental situationer

The Philippines is a country rich in mineral resources that would be worth trillions of pesos if sold
today (PhP 47 Trillion, according to a leader in the mining industry). These mineral resources are
located within our lands or under our seas, both of which locations are also rich in other living or non-
living resources that sustain economic activities such as farming, eco-tourism, and fishing. Mining
operations necessarily involve the alteration of the land or seabed, such that people who use the
land or sea for settlement and/or livelihood are likely to be displaced by mining operations. The lands
where mineral resources are located may also have cultural or ecological values not easily measured
in monetary terms.

The benefits derived from mining must balance its costs on people and the environment.
Compensation for losses must be provided on top of the rightful share of the country and local people
of the income from mineral wealth.

Minerals are non-renewable resources. Therefore, mining operations have a limited lifespan. The
scale of alteration or disturbance resulting from mining operations (spatial and temporal) depends on
the type of minerals, size of deposit, type of technology used, economic feasibility, and similar factors.
The impacts on the environment and people, at any scale, depend on unique local factors: customary
traditions and practices, uniqueness of natural ecosystems, risk of accidents brought by natural

184
Based on the Policy Brief that the author prepared from research and consultations conducted by the Ateneo School of
Government, where the author is Dean.
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disasters, availability of livelihood alternatives, or the general ability of people and ecosystems to
adjust to the scale of alteration or disturbance.

The extent of alteration or disturbance resulting from mining operations may be limited to the period
of operations and controlled to minimize its adverse impacts. However, the impacts on the
environment and on people generally last longer than the mining operations, and may or may not be
reversible. The impacts of mining operations in the Philippines are magnified because their scale is
large compared to the total area and population affected (often in small islands, with many
communities living in the area intended for mining, with high risk of natural disasters).

Mining operations are either large-scale or small-scale, depending on the perspective of regulating
the mining operator relative to the size of its operations. The policy criteria for categorizing small-
versus large-scale mining do not always match the criteria for determining the scale of environmental
impacts or economic benefits.

The issues regarding mining as alternative to other land uses were discussed in the Chapter on
Protected Areas and Watershed Management. In this Chapter, the focus is on the mining industry
as a pillar of the economy, its contributions and costs.

8.2 Legal analysis (application of existing laws)

In the Fraser Institute Policy Potential Index (PPI) in 2010/2011, the Philippines ranked 66th out of 72
countries in conduciveness of policies to mining investments. The country ranked low despite fiscal
and other incentives provided by the government to mining companies. Could this be due to the
lingering uncertainty and conflicts associated with mining activities in the country? In the case of La
Bugal B’laan, the Supreme Court extensively examined the contribution of the mining industry and
the conflicts surrounding access to mineral resources, tracing its history and current status. In the
original decision (January 2004), the Court ruled that the Mining Act that regulates mining
contradicted the Constitution in allowing foreign entities to engage in activities exclusively reserved
for Filipinos. The decision was met with grave concern that the mining industry will collapse if foreign
investments leave the country. The decision was dramatically overturned in the Resolution of the
Court issued December 2004, which held that the Mining Act was consistent with the Constitution,
especially on the matter involving foreign participation under the FTAA.

La Bugal-B'laan Tribal Association, Inc., vs.

Victor O. Ramos, Secretary of (DENR), et al.
G.R. No. 127882, January 27, 2004

Carpio-Morales, J.,ponente:

The present petition for mandamus and prohibition assails the constitutionality of
Republic Act No. 7942,5 otherwise 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 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
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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).

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." R.A.
No. 7942 defines the modes of mineral agreements for mining operations, outlines the
procedure for their filing and approval, assignment/transfer and withdrawal, and fixes
their terms. Similar provisions govern financial or technical assistance agreements.

The law prescribes the qualifications of contractors and grants them certain rights,
including timber, water and easement rights, and the right to possess explosives.
Surface owners, occupants, or concessionaires are forbidden from preventing holders
of mining rights from entering private lands and concession areas. A procedure for the
settlement of conflicts is likewise provided for.

The Act restricts the conditions for exploration, quarry and other permits. It regulates
the transport, sale and processing of minerals, and promotes the development of mining
communities, science and mining technology, and safety and environmental protection.

The government's share in the agreements is spelled out and allocated, taxes and fees
are imposed, incentives granted. Aside from penalizing certain acts, the law likewise
specifies grounds for the cancellation, revocation and termination of agreements and
permits.

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. 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.

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, giving the DENR fifteen days from receipt to act thereon. The DENR, however, has
yet to respond or act on petitioners' letter.

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,
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.

Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:

x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing

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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;

xxx

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;

xxx

VII

x x x in recommending approval of and implementing the Financial and Technical

Assistance Agreement between the President of the Republic of the Philippines and
Western Mining Corporation Philippines Inc. because the same is illegal and
unconstitutional.

xxx

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. WMCP was subsequently
renamed "Tampakan Mineral Resources 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. It further
claims that by such sale and transfer of shares, "WMCP has ceased to be connected in
any way with WMC."

By virtue of such sale and transfer, the DENR Secretary, by Order of December 18,
2001, 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. Its
motion for reconsideration having been denied by the Office of the President by
Resolution of November 12, 2002, Lepanto filed a petition for review 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.

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. 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, 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; and that these
three companies are the same companies that consolidated their interests in Sagittarius
to whom WMC sold its 100% equity in WMCP. WMCP concludes that in the event that
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the FTAA is invalidated, the MPSAs of the three corporations would be revived and the
mineral claims would revert to their original claimants.

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.

xxx

The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40 likewise
fulfills the requisites of justiciability. Although these laws were not in force when the
subject FTAA was entered into, the question as to their validity is ripe for adjudication.

xxx

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 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
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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.

Xxx

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.

Xxx

The Regalian doctrine extends not only to land but also to "all natural wealth that may
be found in the bowels of the earth." 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. Mining laws during the Spanish
regime reflected this perspective.

xxx

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. 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. Thus, earlier jurisprudence 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.

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.

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. 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 xxx Section 21 also made possible the concession (frequently styled "permit",
license" or "lease") system. 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.).

Under the concession system, the concessionaire makes a direct equity investment for
the purpose of exploiting a particular natural resource within a given area. 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. 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.

Later statutory enactments by the legislative bodies set up in the Philippines adopted
the contractual framework of the concession. For instance, Act No. 2932, 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, approved on May 14, 1917, which provided for the leasing and development of
coal lands in the Philippines, both utilized the concession system.

xxx

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. 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.

xxx

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.

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.
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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 resources. Grants, however, were
limited to Filipinos or entities at least 60% of the capital of which is owned by Filipinos.

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. 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:

xxx

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.

xxx

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.

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,
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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.

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.

A shift to a new regime for the development of natural resources thus seemed imminent.

xxx

The promulgation on December 31, 1972 of Presidential Decree No. 87, 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."

"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. 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.

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. The
contractor must be technically competent and financially capable to undertake the
operations required in the contract.

Financing is supposed to be provided by the Government to which all petroleum

produced belongs. 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.
The contractor shall undertake, manage and execute petroleum operations, subject to
the government overseeing the management of the operations. 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. Once petroleum in commercial
quantity is discovered, the contractor shall operate the field on behalf of the government.
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P.D. No. 87 prescribed minimum terms and conditions for every service contract. It also
granted the contractor certain privileges, including exemption from taxes and payment
of tariff duties, and permitted the repatriation of capital and retention of profits abroad.

Ostensibly, the service contract system had certain advantages over the concession
regime. 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.

On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification
of a new Constitution. xxx

While Section 9 of the same Article [Art. XIV] 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.

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. 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."

The original idea was to authorize the government, not private entities, to enter into
service contracts with foreign entities. As finally approved, however, a citizen or private
entity could be allowed by the National Assembly to enter into such service contract.
The prior approval of the National Assembly was deemed sufficient to protect the
national interest. Notably, none of the laws allowing service contracts were passed by
the Batasang Pambansa. Indeed, all of them were enacted by presidential decree.

xxx

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.

xxx

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, 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.
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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. Under this provision, the
State assumes "a more dynamic role" in the exploration, development and utilization of
natural resources.

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.

Having omitted the provision on the concession system, Section 2 proceeded to

introduce "unfamiliar language":

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." 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.
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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."

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.

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.

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, 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.
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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.

Except to charge the Mines and Geosciences Bureau of the DENR with performing
researches and surveys, and a passing mention of government-owned or controlled
corporations, 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. 7076 (the
People's Small-Scale Mining Act of 1991) and other pertinent laws. 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." The Government participates the
least in a mineral production sharing agreement (MPSA). In an MPSA, the Government
grants the contractor the exclusive right to conduct mining operations within a contract
area and shares in the gross output. The MPSA contractor provides the financing,
technology, management and personnel necessary for the agreement's
implementation. The total government share in an MPSA is the excise tax on mineral
products under Republic Act No. 7729, amending Section 151(a) of the National Internal
Revenue Code, as amended.

In a co-production agreement (CA), the Government provides inputs to the mining

operations other than the mineral resource, 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. Aside from
earnings in equity, the Government in a JVA is also entitled to a share in the gross
output. The Government may enter into a CA or JVA 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.
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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. A
"qualified person" may enter into any of the mineral agreements with the Government.
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 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.

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." 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. 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) is deemed a "qualified person."

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. "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. 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.

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.

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. 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. 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. 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.

WMCP nevertheless submits that the word "technical" in the fourth paragraph of Section
2 of E.O. No. 279 encompasses a "broad number of possible services," perhaps,
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"scientific and/or technological in basis." It thus posits that it may also well include "the
area of management or operations . . . so long as such assistance requires specialized
knowledge or skills, and are related to the exploration, development and utilization of
mineral resources."

This Court is not persuaded. As priorly pointed out, the phrase "management or other
forms of assistance" in the 1973 Constitution was deleted in the 1987 Constitution,
which allows only "technical or financial assistance." Casus omisus pro omisso
habendus est. A person, object or thing omitted from an enumeration must be held to
have been omitted intentionally. As will be shown later, the management or operation
of mining activities by foreign contractors, which is the primary feature of service
contracts, was precisely the evil that the drafters of the 1987 Constitution sought to
eradicate.

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 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.'" xxx

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. 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.

xxx

WMCP cites Opinion No. 75, s. 1987, and Opinion No. 175, s. 1990 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.
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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." 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." Indeed, 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.

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.

"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 purpose
of determining the existence, extent, quantity and quality thereof and the feasibility of
mining them for profit.

A legally organized foreign-owned corporation may be granted an exploration permit,

which vests it with the right to conduct exploration for all minerals in specified areas,
i.e., to enter, occupy and explore the same. Eventually, the foreign-owned corporation,
as such permittee, may apply for a financial and technical assistance agreement.

"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.

"Utilization" "means the extraction or disposition of minerals." 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.

A foreign-owned/-controlled corporation may likewise be granted a mineral processing

permit. "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.

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 rules and for work
programs and minimum expenditures and commitments. And it obliges itself to furnish
the Government records of geologic, accounting, and other relevant data for its mining
operation.

"Mining operation," as the law defines it, means mining activities involving exploration,
feasibility, development, utilization, and processing.
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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). 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, provided that it reduces its equity in the
corporation, partnership, association or cooperative to forty percent (40%).

Finally, under the Act, an FTAA contractor warrants that it "has or has access to all the
financing, managerial, and technical expertise. . . ." 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, 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, which enumerates the terms and conditions for every financial
or technical assistance agreement;

(5) Section 39, which allows the contractor in a financial and technical
assistance agreement to convert the same into a mineral production-sharing
agreement;

(6) Section 56, 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:
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(1) Section 3 (g), which defines the term "contractor," insofar as it applies to
a financial or technical assistance agreement.

Section 34, which prescribes the maximum contract area in a financial or

technical assistance agreements;

Section 36, which allows negotiations for financial or technical assistance

agreements;

Section 37, which prescribes the procedure for filing and evaluation of
financial or technical assistance agreement proposals;

Section 38, which limits the term of financial or technical assistance

agreements;

Section 40, which allows the assignment or transfer of financial or technical

assistance agreements;

Section 41, which allows the withdrawal of the contractor in an FTAA;

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, 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.

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." 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
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(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.

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.

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," and to "furnish all materials,
labour, equipment and other installations that may be required for carrying on all Mining
Operations." 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.

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, 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
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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.

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. The
equal protection clause 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. 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.

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. 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. That is a strong argument against its adoption.
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:
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(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

(f) Section 90.

(2) All provisions of Department of Environment and Natural Resources Administrative

Order 96-40, s. 1996 which are not in conformity with this Decision, and

(3) The Financial and Technical Assistance Agreement between the Government of the
Republic of the Philippines and WMC Philippines, Inc.

SO ORDERED.

EN BANC
G.R. No. 127882. December 1, 2004

RESOLUTION

Panganiban, J., ponente:

All mineral resources are owned by the State. Their exploration, development and
utilization (EDU) must always be subject to the full control and supervision of the
State. More specifically, given the inadequacy of Filipino capital and technology in
large-scale EDU activities, the State may secure the help of foreign companies in all
relevant matters -- especially financial and technical assistance -- provided that, at all
times, the State maintains its right of full control. The foreign assistor or contractor
assumes all financial, technical and entrepreneurial risks in the EDU activities; hence,
it may be given reasonable management, operational, marketing, audit and other
prerogatives to protect its investments and to enable the business to succeed.

Full control is not anathematic to day-to-day management by the contractor, provided

that the State retains the power to direct overall strategy; and to set aside, reverse or
modify plans and actions of the contractor. The idea of full control is similar to that which
is exercised by the board of directors of a private corporation: the performance of
managerial, operational, financial, marketing and other functions may be delegated to
subordinate officers or given to contractual entities, but the board retains full residual
control of the business.

Who or what organ of government actually exercises this power of control on behalf of
the State? The Constitution is crystal clear: the President. Indeed, the Chief Executive
is the official constitutionally mandated to “enter into agreements with foreign owned
corporations.” On the other hand, Congress may review the action of the President
once it is notified of “every contract entered into in accordance with this [constitutional]
provision within thirty days from its execution.” In contrast to this express mandate of
the President and Congress in the EDU of natural resources, Article XII of the
Constitution is silent on the role of the judiciary. However, should the President and/or
Congress gravely abuse their discretion in this regard, the courts may -- in a proper
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case -- exercise their residual duty under Article VIII. Clearly then, the judiciary should
not inordinately interfere in the exercise of this presidential power of control over the
EDU of our natural resources.

The Constitution should be read in broad, life-giving strokes. It should not be used to
strangulate economic growth or to serve narrow, parochial interests. Rather, it should
be construed to grant the President and Congress sufficient discretion and reasonable
leeway to enable them to attract foreign investments and expertise, as well as to secure
for our people and our posterity the blessings of prosperity and peace.

On the basis of this control standard, this Court upholds the constitutionality of the
Philippine Mining Law, its Implementing Rules and Regulations -- insofar as they relate to
financial and technical agreements -- as well as the subject Financial and Technical
Assistance Agreement (FTAA).

SUMMATION

To conclude, a summary of the key points discussed above is now in order.

The Meaning of “Agreements Involving

Either Technical or Financial Assistance”

Applying familiar principles of constitutional construction to the phrase agreements

involving either technical or financial assistance, the framers’ choice of words does not
indicate the intent to exclude other modes of assistance, but rather implies that there
are other things being included or possibly being made part of the agreement, apart
from financial or technical assistance. The drafters avoided the use of restrictive and
stringent phraseology; a verba legis scrutiny of Section 2 of Article XII of the Constitution
discloses not even a hint of a desire to prohibit foreign involvement in the management
or operation of mining activities, or to eradicate service contracts. Such moves would
necessarily imply an underlying drastic shift in fundamental economic and
developmental policies of the State. That change requires a much more definite and
irrefutable basis than mere omission of the words “service contract” from the new
Constitution.

Furthermore, a literal and restrictive interpretation of this paragraph leads to logical

inconsistencies. A constitutional provision specifically allowing foreign-owned
corporations to render financial or technical assistance in respect of mining or any other
commercial activity was clearly unnecessary; the provision was meant to refer to more
than mere financial or technical assistance.

Also, if paragraph 4 permits only agreements for financial or technical assistance, there
would be no point in requiring that they be “based on real contributions to the economic
growth and general welfare of the country.” And considering that there were various
long-term service contracts still in force and effect at the time the new Charter was being
drafted, the absence of any transitory provisions to govern the termination and closing-
out of the then existing service contracts strongly militates against the theory that the
mere omission of “service contracts” signaled their prohibition by the new Constitution.

Resort to the deliberations of the Constitutional Commission is therefore unavoidable,

and a careful scrutiny thereof conclusively shows that the ConCom members discussed
agreements involving either technical or financial assistance in the same sense as
service contracts and used the terms interchangeably. The drafters in fact knew that
the agreements with foreign corporations were going to entail not mere technical or
financial assistance but, rather, foreign investment in and management of an enterprise
for large-scale exploration, development and utilization of minerals.

The framers spoke about service contracts as the concept was understood in the 1973
Constitution. It is obvious from their discussions that they did not intend to ban or eradicate
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service contracts. Instead, they were intent on crafting provisions to put in place safeguards
that would eliminate or minimize the abuses prevalent during the martial law regime. In brief,
they were going to permit service contracts with foreign corporations as contractors,
but with safety measures to prevent abuses, as an exception to the general norm
established in the first paragraph of Section 2 of Article XII, which reserves or limits to
Filipino citizens and corporations at least 60 percent owned by such citizens the
exploration, development and utilization of mineral or petroleum resources. This was
prompted by the perceived insufficiency of Filipino capital and the felt need for foreign
expertise in the EDU of mineral resources.

Despite strong opposition from some ConCom members during the final voting, the
Article on the National Economy and Patrimony -- including paragraph 4 allowing
service contracts with foreign corporations as an exception to the general norm in
paragraph 1 of Section 2 of the same Article -- was resoundingly and overwhelmingly
approved.

The drafters, many of whom were economists, academicians, lawyers,

businesspersons and politicians knew that foreign entities will not enter into agreements
involving assistance without requiring measures of protection to ensure the success of
the venture and repayment of their investments, loans and other financial assistance,
and ultimately to protect the business reputation of the foreign corporations. The
drafters, by specifying such agreements involving assistance, necessarily gave implied
assent to everything that these agreements entailed or that could reasonably be
deemed necessary to make them tenable and effective -- including management
authority with respect to the day-to-day operations of the enterprise, and measures for
the protection of the interests of the foreign corporation, at least to the extent that they
are consistent with Philippine sovereignty over natural resources, the constitutional
requirement of State control, and beneficial ownership of natural resources remaining
vested in the State.

From the foregoing, it is clear that agreements involving either technical or financial
assistance referred to in paragraph 4 are in fact service contracts, but such new service
contracts are between foreign corporations acting as contractors on the one hand, and
on the other hand government as principal or “owner” (of the works), whereby the
foreign contractor provides the capital, technology and technical know-how, and
managerial expertise in the creation and operation of the large-scale mining/extractive
enterprise, and government through its agencies (DENR, MGB) actively exercises full
control and supervision over the entire enterprise.

Such service contracts may be entered into only with respect to minerals, petroleum
and other mineral oils. The grant of such service contracts is subject to several
safeguards, among them: (1) that the service contract be crafted in accordance with a
general law setting standard or uniform terms, conditions and requirements; (2) the
President be the signatory for the government; and (3) the President report the executed
agreement to Congress within thirty days.

Ultimate Test:
Full State Control

To repeat, the primacy of the principle of the State’s sovereign ownership of all mineral
resources, and its full control and supervision over all aspects of exploration,
development and utilization of natural resources must be upheld. But “full control and
supervision” cannot be taken literally to mean that the State controls and supervises
everything down to the minutest details and makes all required actions, as this would
render impossible the legitimate exercise by the contractor of a reasonable degree of
management prerogative and authority, indispensable to the proper functioning of the
mining enterprise. Also, government need not micro-manage mining operations and
day-to-day affairs of the enterprise in order to be considered as exercising full control
and supervision.
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Control, as utilized in Section 2 of Article XII, must be taken to mean a degree of control
sufficient to enable the State to direct, restrain, regulate and govern the affairs of the
extractive enterprises. Control by the State may be on a macro level, through the
establishment of policies, guidelines, regulations, industry standards and similar
measures that would enable government to regulate the conduct of affairs in various
enterprises, and restrain activities deemed not desirable or beneficial, with the end in
view of ensuring that these enterprises contribute to the economic development and
general welfare of the country, conserve the environment, and uplift the well-being of
the local affected communities. Such a degree of control would be compatible with
permitting the foreign contractor sufficient and reasonable management authority over
the enterprise it has invested in, to ensure efficient and profitable operation.

Government Granted Full Control

by RA 7942 and DAO 96-40

Baseless are petitioners’ sweeping claims that RA 7942 and its Implementing Rules and
Regulations make it possible for FTAA contracts to cede full control and management
of mining enterprises over to fully foreign owned corporations. Equally wobbly is the
assertion that the State is reduced to a passive regulator dependent on submitted plans
and reports, with weak review and audit powers and little say in the decision-making of
the enterprise, for which reasons “beneficial ownership” of the mineral resources is
allegedly ceded to the foreign contractor.

As discussed hereinabove, the State’s full control and supervision over mining
operations are ensured through the following provisions in RA 7942: Sections 8, 9, 16,
19, 24, 35[(b), (e), (f), (g), (h), (k), (l), (m) and (o)], 40, 57, 66, 69, 70, and Chapters XI
and XVII; as well as the following provisions of DAO 96-40: Sections7[(d) and (f)], 35(a-
2), 53[(a-4) and (d)], 54, 56[(g), (h), (l), (m) and (n)], 56(2), 60, 66, 144, 168, 171 and
270, and also Chapters XV, XVI and XXIV.

Through the foregoing provisions, the government agencies concerned are empowered
to approve or disapprove -- hence, in a position to influence, direct, and change -- the
various work programs and the corresponding minimum expenditure commitments for
each of the exploration, development and utilization phases of the enterprise. Once
they have been approved, the contractor’s compliance with its commitments therein will
be monitored. Figures for mineral production and sales are regularly monitored and
subjected to government review, to ensure that the products and by-products are
disposed of at the best prices; copies of sales agreements have to be submitted to and
registered with MGB.

The contractor is mandated to open its books of accounts and records for scrutiny, to
enable the State to determine that the government share has been fully paid. The State
may likewise compel compliance by the contractor with mandatory requirements on
mine safety, health and environmental protection, and the use of anti-pollution
technology and facilities. The contractor is also obligated to assist the development of
the mining community, and pay royalties to the indigenous peoples concerned. And
violation of any of the FTAA’s terms and conditions, and/or non-compliance with statutes
or regulations, may be penalized by cancellation of the FTAA. Such sanction is
significant to a contractor who may have yet to recover the tens or hundreds of millions
of dollars sunk into a mining project.

Overall, the State definitely has a pivotal say in the operation of the individual
enterprises, and can set directions and objectives, detect deviations and non-
compliances by the contractor, and enforce compliance and impose sanctions should
the occasion arise. Hence, RA 7942 and DAO 96-40 vest in government more than a
sufficient degree of control and supervision over the conduct of mining operations.

Section 3(aq) of RA 7942 was objected to as being unconstitutional for allowing a foreign
contractor to apply for and hold an exploration permit. During the exploration phase,
the permit grantee (and prospective contractor) is spending and investing heavily in
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exploration activities without yet being able to extract minerals and generate
revenues. The exploration permit issued under Sections 3(aq), 20 and 23 of RA 7942,
which allows exploration but not extraction, serves to protect the interests and rights of
the exploration permit grantee (and would-be contractor), foreign or local. Otherwise,
the exploration works already conducted, and expenditures already made, may end up
only benefiting claim-jumpers. Thus, Section 3(aq) of RA 7942 is not unconstitutional.

WMCP FTAA Likewise Gives the

State Full Control and Supervision

The WMCP FTAA obligates the contractor to account for the value of production and
sale of minerals (Clause 1.4); requires that the contractor’s work program, activities and
budgets be approved by the State (Clause 2.1); gives the DENR secretary power to
extend the exploration period (Clause 3.2-a); requires approval by the State for
incorporation of lands into the contract area (Clause 4.3-c); requires Bureau of Forest
Development approval for inclusion of forest reserves as part of the FTAA contract area
(Clause 4.5); obligates the contractor to periodically relinquish parts of the contract area
not needed for exploration and development (Clause 4.6); requires submission of a
declaration of mining feasibility for approval by the State (Clause 4.6-b); obligates the
contractor to report to the State the results of its exploration activities (Clause 4.9);
requires the contractor to obtain State approval for its work programs for the succeeding
two year periods, containing the proposed work activities and expenditures budget
related to exploration (Clause 5.1); requires the contractor to obtain State approval for
its proposed expenditures for exploration activities (Clause 5.2); requires the contractor
to submit an annual report on geological, geophysical, geochemical and other
information relating to its explorations within the FTAA area (Clause 5.3-a); requires the
contractor to submit within six months after expiration of exploration period a final report
on all its findings in the contract area (Clause 5.3-b); requires the contractor after
conducting feasibility studies to submit a declaration of mining feasibility, along with a
description of the area to be developed and mined, a description of the proposed mining
operations and the technology to be employed, and the proposed work program for the
development phase, for approval by the DENR secretary (Clause 5.4); obligates the
contractor to complete the development of the mine, including construction of the
production facilities, within the period stated in the approved work program (Clause 6.1);
requires the contractor to submit for approval a work program covering each period of
three fiscal years (Clause 6.2); requires the contractor to submit reports to the secretary
on the production, ore reserves, work accomplished and work in progress, profile of its
work force and management staff, and other technical information (Clause 6.3); subjects
any expansions, modifications, improvements and replacements of mining facilities to
the approval of the secretary (Clause 6.4); subjects to State control the amount of funds
that the contractor may borrow within the Philippines (Clause 7.2); subjects to State
supervisory power any technical, financial and marketing issues (Clause 10.1-a);
obligates the contractor to ensure 60 percent Filipino equity in the contractor within ten
years of recovering specified expenditures unless not so required by subsequent
legislation (Clause 10.1); gives the State the right to terminate the FTAA for unremedied
substantial breach thereof by the contractor (Clause 13.2); requires State approval for
any assignment of the FTAA by the contractor to an entity other than an affiliate (Clause
14.1).

In short, the aforementioned provisions of the WMCP FTAA, far from constituting a
surrender of control and a grant of beneficial ownership of mineral resources to the
contractor in question, vest the State with control and supervision over practically all
aspects of the operations of the FTAA contractor, including the charging of pre-operating
and operating expenses, and the disposition of mineral products.

There is likewise no relinquishment of control on account of specific provisions of the

WMCP FTAA. Clause 8.2 provides a mechanism to prevent the mining operations from
grinding to a complete halt as a result of possible delays of more than 60 days in the
government’s processing and approval of submitted work programs and
budgets. Clause 8.3 seeks to provide a temporary, stop-gap solution in case a
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disagreement between the State and the contractor (over the proposed work program
or budget submitted by the contractor) should result in a deadlock or impasse, to avoid
unreasonably long delays in the performance of the works.

The State, despite Clause 8.3, still has control over the contract area, and it may, as
sovereign authority, prohibit work thereon until the dispute is resolved, or it may
terminate the FTAA, citing substantial breach thereof. Hence, the State clearly retains
full and effective control.

Clause 8.5, which allows the contractor to make changes to approved work programs
and budgets without the prior approval of the DENR secretary, subject to certain
limitations with respect to the variance/s, merely provides the contractor a certain
amount of flexibility to meet unexpected situations, while still guaranteeing that the
approved work programs and budgets are not abandoned altogether. And if the
secretary disagrees with the actions taken by the contractor in this instance, he may
also resort to cancellation/termination of the FTAA as the ultimate sanction.

Clause 4.6 of the WMCP FTAA gives the contractor discretion to select parts of the
contract area to be relinquished. The State is not in a position to substitute its judgment
for that of the contractor, who knows exactly which portions of the contract area do not
contain minerals in commercial quantities and should be relinquished. Also, since the
annual occupation fees paid to government are based on the total hectarage of the
contract area, net of the areas relinquished, the contractor’s self-interest will assure
proper and efficient relinquishment.

Clause 10.2(e) of the WMCP FTAA does not mean that the contractor can compel
government to use its power of eminent domain. It contemplates a situation in which
the contractor is a foreign-owned corporation, hence, not qualified to own land. The
contractor identifies the surface areas needed for it to construct the infrastructure for
mining operations, and the State then acquires the surface rights on behalf of the
former. The provision does not call for the exercise of the power of eminent domain (or
determination of just compensation); it seeks to avoid a violation of the anti-dummy law.

Clause 10.2(l) of the WMCP FTAA giving the contractor the right to mortgage and
encumber the mineral products extracted may have been a result of conditions imposed
by creditor-banks to secure the loan obligations of WMCP. Banks lend also upon the
security of encumbrances on goods produced, which can be easily sold and converted
into cash and applied to the repayment of loans. Thus, Clause 10.2(l) is not something
out of the ordinary. Neither is it objectionable, because even though the contractor is
allowed to mortgage or encumber the mineral end-products themselves, the contractor
is not thereby relieved of its obligation to pay the government its basic and additional
shares in the net mining revenue. The contractor’s ability to mortgage the minerals
does not negate the State’s right to receive its share of net mining revenues.

Clause 10.2(k) which gives the contractor authority “to change its equity structure at any
time,” means that WMCP, which was then 100 percent foreign owned, could permit
Filipino equity ownership. Moreover, what is important is that the contractor, regardless
of its ownership, is always in a position to render the services required under the FTAA,
under the direction and control of the government.

Clauses 10.4(e) and (i) bind government to allow amendments to the FTAA if required
by banks and other financial institutions as part of the conditions of new lendings. There
is nothing objectionable here, since Clause 10.4(e) also provides that such financing
arrangements should in no event reduce the contractor’s obligations or the
government’s rights under the FTAA. Clause 10.4(i) provides that government shall
“favourably consider” any request for amendments of this agreement necessary for the
contractor to successfully obtain financing. There is no renunciation of control, as the
proviso does not say that government shall automatically grant any such request. Also,
it is up to the contractor to prove the need for the requested changes. The government
always has the final say on whether to approve or disapprove such requests.
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In fine, the FTAA provisions do not reduce or abdicate State control.

No Surrender of
Financial Benefits

The second paragraph of Section 81 of RA 7942 has been denounced for allegedly
limiting the State’s share in FTAAs with foreign contractors to just taxes, fees and duties,
and depriving the State of a share in the after-tax income of the enterprise. However,
the inclusion of the phrase “among other things” in the second paragraph of Section 81
clearly and unmistakably reveals the legislative intent to have the State collect more
than just the usual taxes, duties and fees.

Thus, DAO 99-56, the “Guidelines Establishing the Fiscal Regime of Financial or
Technical Assistance Agreements,” spells out the financial benefits government will
receive from an FTAA, as consisting of not only a basic government share, comprised
of all direct taxes, fees and royalties, as well as other payments made by the contractor
during the term of the FTAA, but also an additional government share, being a share
in the earnings or cash flows of the mining enterprise, so as to achieve a fifty-fifty
sharing of net benefits from mining between the government and the contractor.

The additional government share is computed using one of three (3) options or
schemes detailed in DAO 99-56, viz., (1) the fifty-fifty sharing of cumulative present
value of cash flows; (2) the excess profit-related additional government share; and (3)
the additional sharing based on the cumulative net mining revenue. Whichever option
or computation is used, the additional government share has nothing to do with taxes,
duties, fees or charges. The portion of revenues remaining after the deduction of the
basic and additional government shares is what goes to the contractor.

The basic government share and the additional government share do not yet take into
account the indirect taxes and other financial contributions of mining projects, which are
real and actual benefits enjoyed by the Filipino people; if these are taken into account,
total government share increases to 60 percent or higher (as much as 77 percent, and
89 percent in one instance) of the net present value of total benefits from the project.

The third or last paragraph of Section 81 of RA 7942 is slammed for deferring the
payment of the government share in FTAAs until after the contractor shall have
recovered its pre-operating expenses, exploration and development
expenditures. Allegedly, the collection of the State’s share is rendered uncertain, as
there is no time limit in RA 7942 for this grace period or recovery period. But although
RA 7942 did not limit the grace period, the concerned agencies (DENR and MGB) in
formulating the 1995 and 1996 Implementing Rules and Regulations provided that the
period of recovery, reckoned from the date of commercial operation, shall be for a period
not exceeding five years, or until the date of actual recovery, whichever comes earlier.

And since RA 7942 allegedly does not require government approval for the pre-
operating, exploration and development expenses of the foreign contractors, it is feared
that such expenses could be bloated to wipe out mining revenues anticipated for 10
years, with the result that the State’s share is zero for the first 10 years. However, the
argument is based on incorrect information.

Under Section 23 of RA 7942, the applicant for exploration permit is required to submit
a proposed work program for exploration, containing a yearly budget of proposed
expenditures, which the State passes upon and either approves or rejects; if approved,
the same will subsequently be recorded as pre-operating expenses that the contractor
will have to recoup over the grace period.

Under Section 24, when an exploration permittee files with the MGB a declaration of
mining project feasibility, it must submit a work program for development, with
corresponding budget, for approval by the Bureau, before government may grant an
FTAA or MPSA or other mineral agreements; again, government has the opportunity to
approve or reject the proposed work program and budgeted expenditures for
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development works, which will become the pre-operating and development costs that
will have to be recovered. Government is able to know ahead of time the amounts of
pre-operating and other expenses to be recovered, and the approximate period of time
needed therefor. The aforecited provisions have counterparts in Section 35, which
deals with the terms and conditions exclusively applicable to FTAAs. In sum, the third
or last paragraph of Section 81 of RA 7942 cannot be deemed defective.

Section 80 of RA 7942 allegedly limits the State’s share in a mineral production-sharing

agreement (MPSA) to just the excise tax on the mineral product, i.e., only 2 percent of
market value of the minerals. The colatilla in Section 84 reiterates the same limitation
in Section 80. However, these two provisions pertain only to MPSAs, and have no
application to FTAAs. These particular provisions do not come within the issues
defined by this Court. Hence, on due process grounds, no pronouncement can
be made in this case in respect of the constitutionality of Sections 80 and 84.

Section 112 is disparaged for reverting FTAAs and all mineral agreements to the old
“license, concession or lease” system, because it allegedly effectively reduces the
government share in FTAAs to just the 2 percent excise tax which pursuant to Section
80 comprises the government share in MPSAs. However, Section 112 likewise does
not come within the issues delineated by this Court, and was never touched upon by
the parties in their pleadings. Moreover, Section 112 may not properly apply to
FTAAs. The mining law obviously meant to treat FTAAs as a breed apart from mineral
agreements. There is absolutely no basis to believe that the law intends to exact from
FTAA contractors merely the same government share (i.e., the 2 percent excise tax)
that it apparently demands from contractors under the three forms of mineral
agreements.

While there is ground to believe that Sections 80, 84 and 112 are indeed
unconstitutional, they cannot be ruled upon here. In any event, they are separable;
thus, a later finding of nullity will not affect the rest of RA 7942.

In fine, the challenged provisions of RA 7942 cannot be said to surrender financial

benefits from an FTAA to the foreign contractors.

Moreover, there is no concrete basis for the view that, in FTAAs with a foreign contractor,
the State must receive at least 60 percent of the after-tax income from the exploitation
of its mineral resources, and that such share is the equivalent of the constitutional
requirement that at least 60 percent of the capital, and hence 60 percent of the income,
of mining companies should remain in Filipino hands. Even if the State is entitled to a
60 percent share from other mineral agreements (CPA, JVA and MPSA), that would not
create a parallel or analogous situation for FTAAs. We are dealing with an essentially
different equation. Here we have the old apples and oranges syndrome.

The Charter did not intend to fix an iron-clad rule of 60 percent share, applicable to all
situations, regardless of circumstances. There is no indication of such an intention on
the part of the framers. Moreover, the terms and conditions of petroleum FTAAs cannot
serve as standards for mineral mining FTAAs, because the technical and operational
requirements, cost structures and investment needs of off-shore petroleum
exploration and drilling companies do not have the remotest resemblance to
those of on-shore mining companies.

To take the position that government’s share must be not less than 60 percent of after-
tax income of FTAA contractors is nothing short of this Court dictating upon the
government. The State resultantly ends up losing control. To avoid compromising the
State’s full control and supervision over the exploitation of mineral resources, there must
be no attempt to impose a “minimum 60 percent” rule. It is sufficient that the State has
the power and means, should it so decide, to get a 60 percent share (or greater); and it
is not necessary that the State does so in every case.

Invalid Provisions of
the WMCP FTAA
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Section 7.9 of the WMCP FTAA clearly renders illusory the State’s 60 percent share of
WMCP’s revenues. Under Section 7.9, should WMCP’s foreign stockholders (who
originally owned 100 percent of the equity) sell 60 percent or more of their equity to a
Filipino citizen or corporation, the State loses its right to receive its share in net mining
revenues under Section 7.7, without any offsetting compensation to the State. And what
is given to the State in Section 7.7 is by mere tolerance of WMCP’s foreign stockholders,
who can at any time cut off the government’s entire share by simply selling 60 percent
of WMCP’s equity to a Philippine citizen or corporation.

In fact, the sale by WMCP’s foreign stockholder on January 23, 2001 of the entire
outstanding equity in WMCP to Sagittarius Mines, Inc., a domestic corporation at least
60 percent Filipino owned, can be deemed to have automatically triggered the operation
of Section 7.9 and removed the State’s right to receive its 60 percent share. Section
7.9 of the WMCP FTAA has effectively given away the State’s share without anything in
exchange.

Moreover, it constitutes unjust enrichment on the part of the local and foreign
stockholders in WMCP, because by the mere act of divestment, the local and foreign
stockholders get a windfall, as their share in the net mining revenues of WMCP is
automatically increased, without having to pay anything for it.

Being grossly disadvantageous to government and detrimental to the Filipino people,

as well as violative of public policy, Section 7.9 must therefore be stricken off as
invalid. The FTAA in question does not involve mere contractual rights but, being
impressed as it is with public interest, the contractual provisions and stipulations must
yield to the common good and the national interest. Since the offending provision is
very much separable from the rest of the FTAA, the deletion of Section 7.9 can be done
without affecting or requiring the invalidation of the entire WMCP FTAA itself.

Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing the sums spent
by government for the benefit of the contractor to be deductible from the State’s share
in net mining revenues, it results in benefiting the contractor twice over. This constitutes
unjust enrichment on the part of the contractor, at the expense of government. For
being grossly disadvantageous and prejudicial to government and contrary to public
policy, Section 7.8(e) must also be declared without effect. It may likewise be stricken
off without affecting the rest of the FTAA.

EPILOGUE

AFTER ALL IS SAID AND DONE, it is clear that there is unanimous agreement in the
Court upon the key principle that the State must exercise full control and supervision
over the exploration, development and utilization of mineral resources.

The crux of the controversy is the amount of discretion to be accorded the Executive
Department, particularly the President of the Republic, in respect of negotiations over
the terms of FTAAs, particularly when it comes to the government share of financial
benefits from FTAAs. The Court believes that it is not unconstitutional to allow a wide
degree of discretion to the Chief Executive, given the nature and complexity of such
agreements, the humongous amounts of capital and financing required for large-scale
mining operations, the complicated technology needed, and the intricacies of international
trade, coupled with the State’s need to maintain flexibility in its dealings, in order to preserve
and enhance our country’s competitiveness in world markets.

We are all, in one way or another, sorely affected by the recently reported scandals
involving corruption in high places, duplicity in the negotiation of multi-billion peso
government contracts, huge payoffs to government officials, and other malfeasances;
and perhaps, there is the desire to see some measures put in place to prevent further
abuse. However, dictating upon the President what minimum share to get from
an FTAA is not the solution. It sets a bad precedent since such a move
institutionalizes the very reduction if not deprivation of the State’s control. The remedy
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may be worse than the problem it was meant to address. In any event, provisions in
such future agreements which may be suspected to be grossly disadvantageous or
detrimental to government may be challenged in court, and the culprits haled before the
bar of justice.

Verily, under the doctrine of separation of powers and due respect for co-equal and
coordinate branches of government, this Court must restrain itself from intruding into
policy matters and must allow the President and Congress maximum discretion in using
the resources of our country and in securing the assistance of foreign groups to
eradicate the grinding poverty of our people and answer their cry for viable employment
opportunities in the country.

“The judiciary is loath to interfere with the due exercise by coequal branches of government
of their official functions.” As aptly spelled out seven decades ago by Justice George
Malcolm, “Just as the Supreme Court, as the guardian of constitutional rights, should not
sanction usurpations by any other department of government, so should it as strictly
confine its own sphere of influence to the powers expressly or by implication conferred
on it by the Organic Act.” Let the development of the mining industry be the responsibility
of the political branches of government. And let not this Court interfere inordinately and
unnecessarily.

The Constitution of the Philippines is the supreme law of the land. It is the repository of
all the aspirations and hopes of all the people. We fully sympathize with the plight of
Petitioner La Bugal B’laan and other tribal groups, and commend their efforts to uplift
their communities. However, we cannot justify the invalidation of an otherwise
constitutional statute along with its implementing rules, or the nullification of an
otherwise legal and binding FTAA contract.

We must never forget that it is not only our less privileged brethren in tribal and cultural
communities who deserve the attention of this Court; rather, all parties concerned --
including the State itself, the contractor (whether Filipino or foreign), and the vast
majority of our citizens -- equally deserve the protection of the law and of this Court. To
stress, the benefits to be derived by the State from mining activities must ultimately
serve the great majority of our fellow citizens. They have as much right and interest in
the proper and well-ordered development and utilization of the country’s mineral
resources as the petitioners.

Whether we consider the near term or take the longer view, we cannot overemphasize
the need for an appropriate balancing of interests and needs -- the need to develop
our stagnating mining industry and extract what NEDA Secretary Romulo Neri estimates
is some US$840 billion (approx. PhP47.04 trillion) worth of mineral wealth lying hidden
in the ground, in order to jumpstart our floundering economy on the one hand, and on
the other, the need to enhance our nationalistic aspirations, protect our indigenous
communities, and prevent irreversible ecological damage.

This Court cannot but be mindful that any decision rendered in this case will ultimately
impact not only the cultural communities which lodged the instant Petition, and not only
the larger community of the Filipino people now struggling to survive amidst a
fiscal/budgetary deficit, ever increasing prices of fuel, food, and essential commodities
and services, the shrinking value of the local currency, and a government hamstrung in
its delivery of basic services by a severe lack of resources, but also countless future
generations of Filipinos.

For this latter group of Filipinos yet to be born, their eventual access to education, health
care and basic services, their overall level of well-being, the very shape of their lives are
even now being determined and affected partly by the policies and directions being
adopted and implemented by government today. And in part by the this Resolution
rendered by this Court today.

Verily, the mineral wealth and natural resources of this country are meant to benefit not
merely a select group of people living in the areas locally affected by mining activities,
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but the entire Filipino nation, present and future, to whom the mineral wealth really
belong. This Court has therefore weighed carefully the rights and interests of all
concerned, and decided for the greater good of the greatest number. JUSTICE FOR
ALL, not just for some; JUSTICE FOR THE PRESENT AND THE FUTURE, not just for
the here and now.

WHEREFORE, the Court RESOLVES to GRANT the respondents’ and the intervenors’
Motions for Reconsideration; to REVERSE and SET ASIDE this Court’s January 27,
2004 Decision; to DISMISS the Petition; and to issue this new judgment declaring
CONSTITUTIONAL (1) Republic Act No. 7942 (the Philippine Mining Law), (2) its
Implementing Rules and Regulations contained in DENR Administrative Order (DAO)
No. 9640 -- insofar as they relate to financial and technical assistance agreements
referred to in paragraph 4 of Section 2 of Article XII of the Constitution; and (3) the
Financial and Technical Assistance Agreement (FTAA) dated March 30, 1995 executed
by the government and Western Mining Corporation Philippines Inc. (WMCP), except
Sections 7.8 and 7.9 of the subject FTAA which are hereby INVALIDATED for being
contrary to public policy and for being grossly disadvantageous to the government.

When it comes to mining disputes, the Panel of Arbitrators has jurisdiction to pass upon the nationality
of those applying for Mineral Production Sharing Agreements. This was decided upon by the
Supreme Court when it said:185

“We affirm the ruling of the CA in declaring that the POA has jurisdiction over the instant
case. The POA has jurisdiction to settle disputes over rights to mining areas which
definitely involve the petitions filed by Redmont against petitioners Narra, McArthur and
Tesoro. Redmont, by filing its petition against petitioners, is asserting the right of
Filipinos over mining areas in the Philippines against alleged foreign-owned mining
corporations. Such claim constitutes a “dispute” found in Sec. 77 of RA 7942:

Within thirty (30) days, after the submission of the case by the parties for the decision,
the panel shall have exclusive and original jurisdiction to hear and decide the following:

(a) Disputes involving rights to mining areas

(b) Disputes involving mineral agreements or permits

We held in Celestial Nickel Mining Exploration Corporation v. Macroasia Corp.:

The phrase “disputes involving rights to mining areas” refers to any adverse claim,
protest, or opposition to an application for mineral agreement. The POA therefore has
the jurisdiction to resolve any adverse claim, protest, or opposition to a pending
application for a mineral agreement filed with the concerned Regional Office of the MGB.
This is clear from Secs. 38 and 41 of the DENR AO 96-40, which provide:

Sec. 38.

xxxx

Within thirty (30) calendar days from the last date of publication/posting/radio
announcements, the authorized officer(s) of the concerned office(s) shall issue a
certification(s) that the publication/posting/radio announcement have been complied
with. Any adverse claim, protest, opposition shall be filed directly, within thirty (30)
calendar days from the last date of publication/posting/radio announcement, with the
concerned Regional Office or through any concerned PENRO or CENRO for filing in the
concerned Regional Office for purposes of its resolution by the Panel of Arbitrators
pursuant to the provisions of this Act and these implementing rules and regulations.
Upon final resolution of any adverse claim, protest or opposition, the Panel of Arbitrators
shall likewise issue a certification to that effect within five (5) working days from the date

185
Narra Nickel Mining and Development Corp., et. al. vs. Redmont Consolidated Mines Corp., G.R. No. 195580, January
28, 2015
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of finality of resolution thereof. Where there is no adverse claim, protest or opposition,

the Panel of Arbitrators shall likewise issue a Certification to that effect within five
working days therefrom.

Xxxx

No Mineral Agreement shall be approved unless the requirements under this Section
are fully complied with and any adverse claim/protest/opposition is finally resolved by
the Panel of Arbitrators.

Sec. 41.

xxxx

Within fifteen (15) working days form the receipt of the Certification issued by the Panel
of Arbitrators as provided in Section 38 hereof, the concerned Regional Director shall
initially evaluate the Mineral Agreement applications in areas outside Mineral
reservations. He/She shall thereafter endorse his/her findings to the Bureau for further
evaluation by the Director within fifteen (15) working days from receipt of forwarded
documents. Thereafter, the Director shall endorse the same to the secretary for
consideration/approval within fifteen working days from receipt of such endorsement.

In case of Mineral Agreement applications in areas with Mineral Reservations, within

fifteen (15) working days from receipt of the Certification issued by the Panel of
Arbitrators as provided for in Section 38 hereof, the same shall be evaluated and
endorsed by the Director to the Secretary for consideration/approval within fifteen days
from receipt of such endorsement.

It has been made clear from the aforecited provisions that the “disputes involving rights
to mining areas” under Sec. 77(a) specifically refer only to those disputes relative to the
applications for a mineral agreement or conferment of mining rights.

The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right
application is further elucidated by Secs. 219 and 43 of DENR AO 95-936. Xxx

It has been made clear from the aforecited provisions that the “disputes involving rights
to mining areas” under Sec. 77(a) specifically refer only to those disputes relative to the
applications for a mineral agreement or conferment of mining rights.

The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right
application is further elucidated by Secs. 219 and 43 of DENRO AO 95-936. Xxx

These provisions lead us to conclude that the power of the POA to resolve any adverse
claim, opposition, or protest relative to mining rights under Sec. 77(a) of RA 7942 is
confined only to adverse claims, conflicts and oppositions relating to applications for the
grant of mineral rights.

POA’s jurisdiction is confined only to resolutions of such adverse claims, conflicts and
oppositions and it has no authority to approve or reject said applications. Such power is
vested in the DENR Secretary upon recommendation of the MGB Director. Clearly,
POA’s jurisdiction over “disputes involving rights to mining areas” has nothing to do with
the cancellation of existing mineral agreements.”

In another case, the Court sustained the constitutionality of certain sections of the Local Government
Code and Republic Act No. 7076, otherwise known as the People’s Small-Scale Mining Act of 1991.

League of Provinces of the Philippines vs. Department of Environment and

Natural Resources
G.R No. 175368, April 11, 2013

Peralta, J., ponente

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xxx

On March 28, 1996, Golden Falcon Mineral Exploration Corporation (Golden Falcon)
filed with the DENR Mines and Geosciences Bureau Regional Office No. III (MGB R-III)
an Application for Financial and Technical Assistance Agreement (FTAA) covering an
area of 61,136 hectares situated in the Municipalities of San Miguel, San Ildefonso,
Norzagaray and San Jose del Monte, Bulacan.

On April 29, 1998, the MGB R-III issued an Order denying Golden Falcon's Application
for Financial and Technical Assistance Agreement for failure to secure area clearances
from the Forest Management Sector and Lands Management Sector of the DENR
Regional Office No. III.

On November 11, 1998, Golden Falcon filed an appeal with the DENR Mines and
Geosciences Bureau Central Office (MGB-Central Office), and sought reconsideration
of the Order dated April 29, 1998.

On February 10, 2004, while Golden Falcon's appeal was pending, Eduardo D.
Mercado, Benedicto S. Cruz, Gerardo R. Cruz and Liberato Sembrano filed with the
Provincial Environment and Natural Resources Office (PENRO) of Bulacan their
respective Applications for Quarry Permit (AQP), which covered the same area subject
of Golden Falcon's Application for Financial and Technical Assistance Agreement.

On July 16, 2004, the MGB-Central Office issued an Order denying Golden Falcon's
appeal and affirming the MGB R-III's Order dated April 29, 1998.

xxx

On August 8, 2005, MGB R-III Director Cabantog, who was the concurrent Chairman of
the PMRB, endorsed to the Provincial Governor of Bulacan, Governor Josefina M. dela
Cruz, the aforesaid Applications for Quarry Permit that had apparently been converted
to Applications for Small-Scale Mining Permit of Eduardo D. Mercado, Benedicto S.
Cruz, Gerardo R. Cruz and Lucila S. Valdez (formerly Liberato Sembrano).

On August 9, 2005, the PENRO of Bulacan issued four memoranda recommending to

Governor Dela Cruz the approval of the aforesaid Applications for Small-Scale Mining
Permit.

On August 10, 2005, Governor Dela Cruz issued the corresponding Small-Scale Mining
Permits in favor of Eduardo D. Mercado, Benedicto S. Cruz, Gerardo R. Cruz and Lucila
S. Valdez.

Subsequently, AMTC appealed to respondent DENR Secretary the grant of the

aforesaid Small-Scale Mining Permits, arguing that: (1) The PMRB of Bulacan erred in
giving due course to the Applications for Small-Scale Mining Permit without first
resolving its formal protest; (2) The areas covered by the Small-Scale Mining Permits
fall within the area covered by AMTC's valid prior Application for Exploration Permit; (3)
The Applications for Quarry Permit were illegally converted to Applications for Small-
Scale Mining Permit; (4) DENR-MGB Director Horacio C. Ramos' ruling that the subject
areas became open for mining location only on August 11, 2004 was controlling; (5) The
Small-Scale Mining Permits were null and void because they covered areas that were
never declared People's Small-Scale Mining Program sites as mandated by Section 4
of the People's Small-Scale Mining Act of 1991; and (6) Iron ore is not considered as
one of the quarry resources, as defined by Section 43 of the Philippine Mining Act of
1995, which could be subjects of an Application for Quarry Permit.
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On August 8, 2006, respondent DENR Secretary rendered a Decision in favor of AMTC.

xxx

Hence, petitioner League of Provinces filed this petition.

Petitioner is a duly organized league of local governments incorporated under R.A. No.
7160. Petitioner declares that it is composed of 81 provincial governments, including
the Province of Bulacan. It states that this is not an action of one province alone, but
the collective action of all provinces through the League, as a favorable ruling will not
only benefit one province, but all provinces and all local governments.

Petitioner raises these issues:

WHETHER OR NOT SECTION 17(B)(3)(III) OF THE, 1991 LOCAL GOVERNMENT

CODE AND SECTION 24 OF THE PEOPLE'S SMALL-SCALE MINING ACT OF 1991
ARE UNCONSTITUTIONAL FOR PROVIDING FOR EXECUTIVE CONTROL AND
INFRINGING UPON THE LOCAL AUTONOMY OF PROVINCES.

II

WHETHER OR NOT THE ACT OF RESPONDENT [DENR] IN NULLIFYING, VOIDING

AND CANCELLING THE SMALL-SCALE MINING PERMITS AMOUNTS TO
EXECUTIVE CONTROL, NOT MERELY SUPERVISION AND USURPS THE
DEVOLVED POWERS OF ALL PROVINCES.

To start, the Court finds that petitioner has legal standing to file this petition because it
is tasked under Section 504 of the Local Government Code of 1991 to promote local
autonomy at the provincial level; adopt measures for the promotion of the welfare of all
provinces and its officials and employees; and exercise such other powers and perform
such other duties and functions as the league may prescribe for the welfare of the
provinces.

xxx

In this case, petitioner admits that respondent DENR Secretary had the authority to
nullify the Small-Scale Mining Permits issued by the Provincial Governor of Bulacan, as
the DENR Secretary has control over the PMRB, and the implementation of the Small-
Scale Mining Program is subject to control by respondent DENR.

Control of the DENR/DENR Secretary over small-scale mining in the provinces is

granted by three statutes: (1) R.A. No. 7061 or The Local Government Code of 1991;
(2) R.A. No. 7076 or the People's Small Scale Mining Act of 1991; and (3) R.A. No.
7942, otherwise known as the Philippine Mining Act of 1995. The pertinent provisions
of law sought to be declared as unconstitutional by petitioner are as follows:

R.A. No. 7061 (The Local Government Code of 1991)

SEC. 17. Basic Services and Facilities. - (a) Local government units shall endeavor to
be self-reliant and shall continue exercising the powers and discharging the duties and
functions currently vested upon them. They shall also discharge the functions and
responsibilities of national agencies and offices devolved to them pursuant to this Code.
Local government units shall likewise exercise such other powers and discharge such
other functions and responsibilities as are necessary, appropriate, or incidental to
efficient and effective provision of the basic services and facilities enumerated herein.
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(b) Such basic services and facilities include, but are not limited to, the following:

xxxx

(3) For a Province:

xxxx

(iii) Pursuant to national policies and subject to supervision, control and review of the
DENR, enforcement of forestry laws limited to community-based forestry projects,
pollution control law, small-scale mining law, and other laws on the protection of the
environment; and mini-hydro electric projects for local purposes; x x x

R.A. No. 7076 (People's Small-Scale Mining Act of 1991)

Sec. 24. Provincial/City Mining Regulatory Board. - There is hereby created under the
direct supervision and control of the Secretary a provincial/city mining regulatory board,
herein called the Board, which shall be the implementing agency of the Department,
and shall exercise the following powers and functions, subject to review by the
Secretary:

(a) Declare and segregate existing gold-rush areas for small-scale mining;

(b) Reserve future gold and other mining areas for small-scale mining;

(c) Award contracts to small-scale miners;

(d) Formulate and implement rules and regulations related to small-scale mining;

(e) Settle disputes, conflicts or litigations over conflicting claims within a people’s small-
scale mining area, an area that is declared a small-mining; and

(f) Perform such other functions as may be necessary to achieve the goals and
objectives of this Act.

Petitioner contends that the aforecited laws and DENR Administrative Order No. 9640
(the Implementing Rules and Regulations of the Philippine Mining Act of 1995) did not
explicitly confer upon respondents DENR and the DENR Secretary the power to
reverse, abrogate, nullify, void, or cancel the permits issued by the Provincial Governor
or small-scale mining contracts entered into by the PMRB. The statutes are also silent
as to the power of respondent DENR Secretary to substitute his own judgment over that
of the Provincial Governor and the PMRB.

Moreover, petitioner contends that Section 17 (b)(3)(iii) of the Local Government Code
of 1991 and Section 24 of R.A. No. 7076, which confer upon respondents DENR and
the DENR Secretary the power of control are unconstitutional, as the Constitution states
that the President (and Executive Departments and her alter-egos) has the power of
supervision only, not control, over acts of the local government units, and grants the
local government units autonomy. xxx

Petitioner contends that the policy in the above-cited constitutional provision is mirrored
in the Local Government Code. xxx

Petitioner asserts that what is involved here is a devolved power.

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Under the Local Government Code of 1991, the power to regulate small-scale mining
has been devolved to all provinces. In the exercise of devolved powers, departmental
approval is not necessary.

Petitioner contends that if the provisions in Section 24 of R.A. No. 7076 and Section 17
(b)(3)(iii) of the Local Government Code of 1991 granting the power of control to the
DENR/DENR Secretary are not nullified, nothing would stop the DENR Secretary from
nullifying, voiding and canceling the small-scale mining permits that have been issued
by a Provincial Governor.

Petitioner submits that the statutory grant of power of control to respondents is

unconstitutional, as the Constitution only allows supervision over local governments and
proscribes control by the executive departments.

xxx

The petition lacks merit.

Paragraph 1 of Section 2, Article XII (National Economy and Patrimony) of the

Constitution provides that "the exploration, development and utilization of natural
resources shall be under the full control and supervision of the State."

Moreover, paragraph 3 of Section 2, Article XII of the Constitution provides that "the
Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens x x x."

Pursuant to Section 2, Article XII of the Constitution, R.A. No. 7076 or the People's
Small-Scale Mining Act of 1991, was enacted, establishing under Section 4 thereof a
People's Small-Scale Mining Program to be implemented by the DENR Secretary in
coordination with other concerned government agencies.

The People's Small-Scale Mining Act of 1991 defines "small-scale mining" as "refer[ring]
to mining activities, which rely heavily on manual labor using simple implement and
methods and do not use explosives or heavy mining equipment."

It should be pointed out that the Administrative Code of 198733 provides that the DENR
is, subject to law and higher authority, in charge of carrying out the State's constitutional
mandate, under Section 2, Article XII of the Constitution, to control and supervise the
exploration, development, utilization and conservation of the country's natural
resources. Hence, the enforcement of small-scale mining law in the provinces is made
subject to the supervision, control and review of the DENR under the Local Government
Code of 1991, while the People’s Small-Scale Mining Act of 1991 provides that the
People’s Small-Scale Mining Program is to be implemented by the DENR Secretary in
coordination with other concerned local government agencies.

Indeed, Section 4, Article X (Local Government) of the Constitution states that "[t]he
President of the Philippines shall exercise general supervision over local governments,"
and Section 25 of the Local Government Code reiterates the same. General supervision
by the President means no more than seeing to it that laws are faithfully executed or
that subordinate officers act within the law.

The Court has clarified that the constitutional guarantee of local autonomy in the
Constitution Art. X, Sec. 2 refers to the administrative autonomy of local government
units or, cast in more technical language, the decentralization of government authority. It
does not make local governments sovereign within the State. Administrative autonomy
may involve devolution of powers, but subject to limitations like following national
policies or standards, and those provided by the Local Government Code, as the
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structuring of local governments and the allocation of powers, responsibilities, and

resources among the different local government units and local officials have been
placed by the Constitution in the hands of Congress under Section 3, Article X of the
Constitution.

Section 3, Article X of the Constitution mandated Congress to "enact a local government

code which shall provide for a more responsive and accountable local government
structure instituted through a system of decentralization with effective mechanisms of
recall, initiative, and referendum, allocate among the different local government units
their powers, responsibilities, and resources, and provide for the qualifications, election,
appointment and removal, term, salaries, powers and functions and duties of local
officials, and all other matters relating to the organization and operation of the local
units."

Clearly, the Local Government Code did not fully devolve the enforcement of the small-
scale mining law to the provincial government, as its enforcement is subject to the
supervision, control and review of the DENR, which is in charge, subject to law and
higher authority, of carrying out the State's constitutional mandate to control and
supervise the exploration, development, utilization of the country's natural resources.

Section 17 (b)(3)(iii) of the Local Government Code of 1991 is in harmony with R.A. No.
7076 or the People's Small-Scale Mining Act of 1991, which established a People's
Small-Scale Mining Program to be implemented by the Secretary of the DENR. xxx

DENR Administrative Order No. 34, series of 1992, containing the Rules and
Regulations to implement R.A. No. 7076, provides:

SEC. 21. Administrative Supervision over the People's Small-Scale Mining Program. −
The following DENR officials shall exercise the following supervisory functions in the
implementation of the Program:

21.1 DENR Secretrary – direct supervision and control over the program and activities
of the small-scale miners within the people's small-scale mining area;

21.2 Director − the Director shall:

a. Recommend the depth or length of the tunnel or adit taking into account the: (1) size
of membership and capitalization of the cooperative; (2) size of mineralized areas; (3)
quantity of mineral deposits; (4) safety of miners; and (5) environmental impact and
other considerations;

b. Determine the right of small-scale miners to existing facilities in consultation with the
operator, claimowner, landowner or lessor of an affected area upon declaration of a
small-scale mining area;

c. Recommend to the Secretary the withdrawal of the status of the people's small-scale
mining area when it can no longer be feasibly operated on a small-scale basis; and

d. See to it that the small-scale mining contractors abide by small-scale mines safety
rules and regulations.

xxxx

SEC. 22. Provincial/City Mining Regulatory Board. − The Provincial/City Mining

Regulatory Board created under R.A. 7076 shall exercise the following powers and
functions, subject to review by the Secretary:
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22.1 Declares and segregates existing gold rush area for small-scale mining;

22.2 Reserves for the future, mineralized areas/mineral lands for people's small-scale
mining;

22.3 Awards contracts to small-scale miners’ cooperative;

22.4 Formulates and implements rules and regulations related to R.A. 7076;

22.5 Settles disputes, conflicts or litigations over conflicting claims within ninety (90)
days upon filing of protests or complaints; Provided, That any aggrieved party may
appeal within five (5) days from the Board's decision to the Secretary for final resolution
otherwise the same is considered final and executory; and

22.6 Performs such other functions as may be necessary to achieve the goals and
objectives of R.A. 7076.

SEC. 6. Declaration of People's Small-Scale Mining Areas. – The Board created under
R.A. 7076 shall have the authority to declare and set aside People's Small-Scale Mining
Areas in sites onshore suitable for small-scale mining operations subject to review by
the DENR Secretary thru the Director.

DENR Administrative Order No. 23, otherwise known as the Implementing Rules and
Regulations of R.A. No. 7942, otherwise known as the Philippine Mining Act of 1995,
adopted on August 15, 1995, provides under Section 123 thereof that small-scale
mining applications should be filed with the PMRB and the corresponding permits shall
be issued by the Provincial Governor, except small-scale mining applications within the
mineral reservations.

Thereafter, DENR Administrative Order No. 96-40, otherwise known as the Revised
Implementing Rules and Regulations of R.A. No. 7942, otherwise known as the
Philippine Mining Act of 1995, adopted on December 19, 1996, provides that
applications for Small-Scale Mining Permits shall be filed with the Provincial
Governor/City Mayor through the concerned Provincial/City Mining Regulatory Board
for areas outside the Mineral Reservations and with the Director though the Bureau for
areas within the Mineral Reservations. Moreover, it provides that Local Government
Units shall, in coordination with the Bureau/ Regional Offices and subject to valid and
existing mining rights, "approve applications for small-scale mining, sand and gravel,
quarry x x x and gravel permits not exceeding five (5) hectares

xxxx

The Court finds that the decision of the DENR Secretary was rendered in accordance
with the power of review granted to the DENR Secretary in the resolution of disputes,
which is provided for in Section 24 of R.A. No. 707651 and Section 22 of its
Implementing Rules and Regulations. It is noted that although AMTC filed a protest with
the PMRB regarding its superior and prior Application for Exploration Permit over the
Applications for Quarry Permit, which were converted to Small-Scale Mining Permits,
the PMRB did not resolve the same, but issued Resolution Nos. 05-08 to 05-11 on
August 8, 2005, resolving to submit to the Provincial Governor of Bulacan the
Applications for Small-Scale Mining Permits of Eduardo Mercado, Benedicto Cruz,
Lucila Valdez and Gerardo Cruz for the granting of the said permits. After the Provincial
Governor of Bulacan issued the Small-Scale Mining Permits on August 10, 2005, AMTC
appealed the Resolutions of the PMRB giving due course to the granting of the Small-
Scale Mining Permits by the Provincial Governor.
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Hence, the decision of the DENR Secretary, declaring that the Application for
Exploration Permit of AMTC was valid and may be given due course, and canceling the
Small-Scale Mining Permits issued by the Provincial Governor, emanated from the
power of review granted to the DENR Secretary under R.A. No. 7076 and its
Implementing Rules and Regulations. The DENR Secretary's power to review and,
therefore, decide, in this case, the issue on the validity of the issuance of the Small-
Scale Mining Permits by the Provincial Governor as recommended by the PMRB, is a
quasi-judicial function, which involves the determination of what the law is, and what the
legal rights of the contending parties are, with respect to the matter in controversy and,
on the basis thereof and the facts obtaining, the adjudication of their respective
rights. The DENR Secretary exercises quasi-judicial function under R.A. No. 7076 and
its Implementing Rules and Regulations to the extent necessary in settling disputes,
conflicts or litigations over conflicting claims. This quasi-judicial function of the DENR
Secretary can neither be equated with "substitution of judgment" of the Provincial
Governor in issuing Small-Scale Mining Permits nor "control" over the said act of the
Provincial Governor as it is a determination of the rights of AMTC over conflicting claims
based on the law.

In determining whether Section 17 (b)(3)(iii) of the Local Government Code of 1991 and
Section 24 of R.A. No. 7076 are unconstitutional, the Court has been guided by Beltran
v. The Secretary of Health, which held:

The fundamental criterion is that all reasonable doubts should be resolved in favor of
the constitutionality of a statute. Every law has in its favor the presumption of
constitutionality. For a law to be nullified, it must be shown that there is a clear and
unequivocal breach of the Constitution. The ground for nullity must be clear and beyond
reasonable doubt. Those who petition this Court to declare a law, or parts thereof,
unconstitutional must clearly establish the basis therefor. Otherwise, the petition must
fail.

In this case, the Court finds that the grounds raised by petitioner to challenge the
constitutionality of Section 17 (b )(3)(iii) of the Local Government Code of 1991 and
Section 24 'of R.A. No.7076 failed to overcome the constitutionality of the said
provisions of law.

WHEREFORE, the petition is DISMISSED for lack of merit.

8.3 Policy analysis (effectiveness of laws in addressing environmental problem)

8.3.1 Contribution of the mining industry to the economy

Mining operations bring jobs and infuse money into the local economy, and the mining sector
contributes to economic growth in general. Even so, is any positive number in terms of job generation
and economic growth always a good thing? How much incentive does the government give to the
mining sector, which should be deducted from the net benefits to the country and local people? How
much more (or less) can the government get if it considers alternative uses of the land? In other
words, are Filipinos (as a people) really better off with mining, and is the government getting the best
deal for its people? These are tough questions to answer because the researchers do not have the
complete picture, due to the lack of data and a framework to analyze benefits as a whole. But there
are known facts that can help in this analysis:

a. Contribution of mining sector to employment generation – According to the Mines and

Geosciences Bureau (MGB), the mining (and quarrying) sector’s contribution to national
total employment has always been below 1 percent (1%). Recent data has shown that it
has been 0.5% since 2008 until 2010. So far, for the first half of 2011, contribution has been
reported as 0.6% (in contrast to agriculture at 33% in 2011). All over the world, extractive
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mining is known as a low-employment generating activity. The Tampakan project, with

expected investments of $5.9 billion, will provide only 2,000 permanent jobs.

b. Contribution of mining industry to growth in other sectors – Habito186 observed that the
mining sector has relatively low labor-output ratios in terms of employment generation.
Labor compensation accounts for only 13.3% against an average of 20.7% in all sectors.
The sector has a backward linkage index of only 0.46, meaning there is relatively little input
from other domestic industries; even the forward linkage of 0.82 indicates that the sector is
below average compared to all other sectors in generating further domestic economic
activities. Minerals are being exported with little value-adding that could have generated
further employment and industry linkage.

c. Contribution of mining to economic growth – At the macro level, the contribution of mining
to GDP has remained in the single digits. As of 2010, it only contributed 1.0%, with a Gross
Value Added in Mining of PhP88.2 billion 187 , compared to the agricultural sector’s
contribution of 12% in 2010188. As for its contribution to total exports, export of minerals
and mineral products has averaged 4.5% in the last four years and reporting 4.3% for the
first half of 2011189. Total exports of non-metallic minerals’ share are even lower, hovering
around 0.4% for the past 4 years 190 compared to agriculture at 8% for 2011. The
manufacturing and service sector has always been the main driver of economic growth for
the country comprising of over 50% of GDP191.

However, the picture can be very different from the perspective of a project proponent. In
the Tampakan Copper-Gold Project, Sagittarius Mines, Inc. (SMI) estimates that the project
alone will contribute an additional 1% of national GDP, or an additional 10.4% of regional
GDP for Regions XI and XII. It is difficult to access data for relative contribution of existing
projects to local economic growth (at provincial and municipal levels), if data exists at all.

d. Inflow of foreign investments and outflow of profits – The figures are not readily accessible
to the public, but the government should be able to determine how much of the foreign
funds that come in actually remains in the country to generate more jobs and economic
activities. How quickly do the funds return to the foreign investors?
In M$

Year
Figure 1. Total Mining Investment including forecasts that include seven development
projects such as Tampakan Copper, Far Southeast Copper-Gold Project, Runruno Gold-
Molybdenum Project, Didipio Copper-Gold, Boyungan Gold Project, Sumitomo Nickel
Project and Kingking Copper Gold Project.192

186
Cielito Habito, An Agenda for High and Inclusive Growth in the Philippine, Asian Development Bank (2010).
187
Mines and Geosciences Bureau (2011).
188
Bureau of Agricultural Statistics (2011)
189
Mines and Geosciences Bureau (2011).
190
Id.
191
Asian Development Bank (2011).
192
Mines and Geosciences Bureau (2011).
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e. Revenues/taxes received by the government – The amounts of taxes, fees and royalties
from mining change from year to year and do not appear to show a trend.

Table 4. Taxes, Fees and Royalties from Mining193

2007 2008 2009 2010 1H 2011
Taxes, Fees and Royalties from
Mining
Fees, charges and royalties 774.0 557.4 369.2 800.6 383.8
collected by DENR-
MGB/LGUs
Excise Tax Collected by BIR 942.1 660.3 718.8 1,299.7
Taxes Collected by National 8,371.7 5,949.5 10,272.5 10,551.6
Government Agencies
Taxes and Fees Collected by 359.8 522.2 992.8 1,050.5 10.1
LGUs
Total 10,447.6 7,689.4 12,380.3 13,702.4 393.9
*data in million pesos

There are other factors to consider in how much the government actually gets. It would
seem that a tax holiday for Financial and Technical Assistance Agreements (FTAAs) and
the 2% limit of government (excise) tax on Mineral Production and Sharing Agreements
(MPSAs) translate to almost zero revenue for government. Bautista 194 estimated that
19.60% to 29.74% of mining revenue accrues to government tax collection. Action for
Economic Reforms195 calculated only a 7.5% effective tax rate in the industry (1997-2000).
AER also cited that the government loses an average of 32% of revenues annually (1999-
2004) because of incentive laws. Compared to other countries, the Philippines’ effective
tax rate is low. Deutsche Bank 196 reported that effective tax rate for minerals in other
countries are as follows: US (40%), Australia (38%), Brazil (38%), and Canada (23%).

In the Tampakan Project, SMI estimates that the project will produce a revenue stream of
up to US$37B (PhP1.85 trillion) over the life of the mine – US$7 billion will go to government
as taxes/duties/royalties and US$2 billion will go to local governments and host
communities. According to the Chamber of Mines, government already gets 41% of the
mining firm’s income before taxes, which is much higher compared to Africa (average
34.4%) or Latin America (average 39.5%).

f. Poverty incidence in mining areas – There are a few studies that appear to associate
poverty incidence with mining. It is difficult to make sweeping conclusions, but the data
shows that provinces hosting mining operations do not necessarily demonstrate
improvement in the lives of local people.

In a recent study, 197 the poverty incidence among individuals engaged in mining has
continued to increase, compared to workers in other sectors. In 2006, income poverty in
the sector was at 34.64 and by 2009 it increased to 48.71. The author also uses a
multidimensional poverty index (MPI) that captures various dimensions of poverty (see
Table 2). The mining sector also shows a high deprivation in health and education
compared to other industries (see Table 3).

Table 5. MPI, H, A and Income Poverty by Sector, 2006 and 2009

193
Id.
194
Mines and Geosciences Bureau (2011).
195
Action for Economic Reforms (2009)
196
Deutsche Bank (2010)
197
Arsenio Balicasan,What Has Really Happened to Poverty in the Philippines? New Measures, Evidence, and Policy
Implication, University of the Philippines School of Economics (Discussion Papers 14, 2011).
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Note: The table summarizes the estimates of multidimensional poverty index (MPI),
multidimensional headcount (H), and average deprivation intensity experienced by the
poor (A).

Table 6. Contributions of Dimensions per group

The 2003 small area poverty incidence of National Statistical Coordination Board (NSCB)
shows that Bataraza, Palawan, where Rio Tuba has been operating for thirty (30) years
has a poverty incidence that is twice the national rate, and is in the bottom 25% of
municipalities on poverty incidence.

Some may argue that at the project level, mining operations can have a significant impact
on the local community income from royalties and social benefits, which could lift families
out of poverty. For the Tampakan Project, SMI expects royalty payments and social
development contributions to reach US$800 million to host indigenous and local
communities.

There are no systematic studies to track the impact of the mining sector (as a whole or at
a project level) to improving the lives of local communities. It is important to measure this
economic impact especially after mining activities end.

g. Improvement of health and education services in mining areas – According to Bautista,198

a paltry 0.11% to 0.26% (with gold mines at 1.23%) of mining revenues go to community

198
Bautista (2009).
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development. How much of this goes to improving the health and education of local
communities? Since these services are the responsibility of government, it is also
important to know how much of the government’s share from mining revenues has been
put into improving basic services.

There are many reports of adverse health impacts associated with mining, both large- and
small-scale.199 These have shown poor health in communities mostly due to exposure to
high levels of mercury, specifically in areas of small-scale mining. Even granting that these
incidents are accidental or isolated instances, the health impacts of mining require
accurately accounting for the improvement of health services together with the dangers to
life and health.

The benefits that the country and local people can derive from mining have a limit in amount and in
time period. A visit to a mining operation typically shows new roads and access to transportation,
increased trade of goods and services supplied to the mining operations, even improved access to
health centers and schools. These added benefits might be provided by the mining operator or the
government, or made possible because of the presence of mining operations. Mining companies
claim that there are huge economic and social benefits during mining operations, although there are
no independent studies that measure the net benefits after accounting for the costs.

On the contrary, there is no dispute that there is little or no economic benefits after operations end.
The sustainability of the benefits from mining depends on how the benefits will be allocated among
the beneficiaries in the present and for the future. But, is there any municipality that shows
significantly better quality of life than neighboring municipalities after mining has left?

Based on available verifiable information, it can be argued that the contribution of mining to the
overall economy is small. The Philippine government does not appear to be getting the best deal for
the people, especially compared to other countries with mining industries, and most of the benefits
go to a very narrow set of beneficiaries. The researchers encourage the mining industry to provide
verifiable information on benefits that are not considered here.

8.3.2 Environmental and social costs

There are many documented experiences involving mining conflicts and issues that highlight the
risks of mining. The following cases are meant to illustrate some experiences, and are not intended
to show that mining activities only result in damages or conflicts.

Marcopper Mining

The following year after the Mining Act was signed into law, the country experienced one of its most
serious industrial pollution accidents. The incident involved the Marcopper Mining Corporation, the
largest mining company in Marinduque, which had been carrying out open-pit copper mining since
the 1970s. When the company finished one of its operations in Marinduque, it plugged the old pit
with concrete so that it could act as a disposal pond for mine waste. Seepage was then discovered
in August 1995. It then ruptured and caused discharged tailings into the Boac river system. This
resulted to the release of 1.6 million cubic meters of tailings along the river. Because of this, crops
and vegetables were destroyed and irrigation channels to rice fields were blocked. The United
Nations then declared the accident to be a major environmental disaster. It announced that aquatic
life, productivity and beneficial use of the rivers for domestic and agricultural purposes were totally
lost because of the sedimentation.200 The toxic spills caused flash floods that isolated five villages
with a population of 4,400 people. The government estimates that the toxic tailings waste caused the

199
Sakaon, (2003).
Drasch, et. al. (2001).
Appleton, et. al. (1999).
Bautista (2006).
200
Assessment mission conducted under the leadership of UNEP/Water Branch, United Nations Department of
Humanitarian Affairs, (March 10, 2011), http://www.reliefweb.int/ocha_ol/programs/response/unep/unep4.html (last visited
June 2012).
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residents to have levels of zinc and copper in their bodies that are beyond tolerable levels. Water
sources were also contaminated.

Rapu-Rapu Mining Tragedy

Lafayette Philippines, Inc. started mining in Rapu-Rapu, Albay on July 2005. It is a domestic
subsidiary of Lafayette Mining Ltd. of Australia. They are the true owners of the mine in Rapu-Rapu.
Four months later, there were two incidents of spilling of mine tailings. The first incident on October
11, 2005 was caused by a malfunctioning of a pumping unit that resulted into an overflow of tailings
into the open sea. On October 31, 2005, there were heavy rains that led to the overflowing of the
mine tailings of Lafayette. The company caused cyanide spill and fish-kills that paralyzed the
livelihood of the poor local communities in Rapu-Rapu and fishing and tourism in Sorsogon. Lafayette
denied the fish-kill and the Mines and Geosciences Bureau (MGB) supported it by exonerating
Lafayette from the blame. 201 The Department of Environment and Natural Resources (DENR)
ordered the company to pay P10.4 million in fines and penalties for the two mine spills for violating
the Clean Water Act. Michael Defensor, then Environment Secretary, explained that the fines were
justified at P200,000 per day for violations.202

South Cotabato Open-Pit Mining Ban

The provincial government of South Cotabato implemented an open-pit mining ban on July 2010
because of threats of pollution and damages to the water assets of South Cotabato which is crucial
to its largely agricultural economy.203 Open-pit mining method is said to be destructive in nature and
results to the denudation of forests. The implementing rules and regulations (IRR) were signed on
March 2011. Because of this, the Tampakan Copper-Gold Project of Australian-backed Sagittarius
Mines, Inc. (SMI) worth $5.9 billion of potential investment, might not push through. Stakeholders
like mining companies, chambers of commerce and the DENR have expressed opposition to the ban
saying that they could not supersede the Mining Act of 1995.204

Other provinces, like Zamboanga del Norte and Batangas, are now considering restrictions on mining
in light of the ban implemented by South Cotabato.205 But is this action efficient? Despite the ban,
illegal small-scale mining continues in South Cotabato.206

Palawan Mining

Palawan is famous for its natural resources, which have captivated many people. It is home to 40%
of the Philippines’ mangrove areas, 30% of the country’s coral reefs, 17 biodiversity areas, 2
UNESCO World Heritage Sites and 8 declared protected areas. One of its main attractions, the
Puerto Princesa Subterranean River Natural Park, is a candidate to be one of the new wonders of
the world. According to Puerto Princesa Mayor Hagedorn, the ecosystem of Palawan is fragile and
is prone to erosion.207 This is why mining should be banned. There is also legislation such as RA
7611 or the Strategic Environment Plan for Palawan that mandates that certain areas subject to
qualifications should be fully protected and kept free from human disruption. Despite this, mining
continues.

201
Mines and Communities Website, The Tragedy of Mining in Rapu-Rapu Island Ecosystem, Albay Province ( April 28,
2011), http://www.minesandcommunities.org/article.php?a=2309 (last visited June 2012).
202
Manila Bulletin, Fishermen Demand Pullout of Mining Firm from Albay (April 30, 2011)
http://www.mb.com.ph/node/57951 (last visited June 2012).
203
Philippine Daily Inquirer, South Cotabato Bans Open Pit Mining (April 20, 2011),
http://business.inquirer.net/money/topstories/view/20100701-278512/South-Cotabato-bans-open-pit-mining (last visited
June 2012).
204
Philippine Daily Inquirer, South Cotabato to Implement Open-pit Mining Ban Next Week
(April 20, 2011), http://business.inquirer.net/money/topstories/view/20100701-278512/South-Cotabato-bans-open-pit-
mining (last visited June 2012).
205
Intell Asia Website, More Philippine Provinces Considering Restrictions on Mining ( April 21, 2011),
http://www.intellasia.net/news/articles/resources/111321334_printer.shtml (last visited June 2012).
206
Business World Online, Illegal Small-Scale Mining Continues Despite Prohibition (April 30, 2011),
http://www.bworldonline.com/content.php?section=Nation&title=Illegal-small-scale-mining-continues-despite-
prohibition&id=30242 (last visited June 2012).
207
ABS-CBN News Online, Save Palawan Movement Launches No To Mining Campaign (April 30, 2011), http://www.abs-
cbnnews.com/-depth/02/03/11/save-palawan-movement-launches-no-mining-campaign-0 (last visited June 2012).
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At present, a campaign to collect 10 million signatures against mining in Palawan has already been
launched by multisectoral environmental coalition Save Palawan Movement in order to send a
message to the government. President Aquino has already ordered to stop the processing of new
mining applications in the province in response to the protest to stop mining in the area.

Compostela Valley Landslide

On April 22, 2011, Good Friday, a landslide occurred in the small mining community of Pangason-B,
Kingking village in Pantukan Compostela valley. It buried many homes, left eight dead and many
injured.208 Small miners in the area allegedly have violated not only the law on mining but also other
laws. They were reported to have been using explosives, mercury, and cyanide, which are all banned
by law in small mining activities.209 Residents were asked to move out and the government has
prepared to forcibly evacuate the families who refuse to leave. Because of this, calls for a moratorium
on all mining operations until an efficient monitoring and control system has emerged. A Catholic
bishop has expressed his opinion saying that the government should address the ‘loopholes’ in the
Mining Act of 1995.

8.4 Further discussion

8.4.1 Is responsible mining possible in the Philippines?

A simple operational answer is: responsible mining is complying with the laws that already take into
account its environmental, social, economic, cultural, and other impacts. However, this assumes
that the existing regulations are enough to safeguard the health of the environment and human
communities, and that these come with effective mechanisms of implementation.

Republic Act No. 7942 or the Philippine Mining Act or 1995 declares that all Philippine mineral
resources are owned by the State, which is responsible for the “rational exploration, development,
utilization and conservation [of mineral resources] through the combined efforts of government and
the private sector in order to enhance national growth in a way that effectively safeguards the
environment and protect the rights of affected communities. “The law mandates several
environmental and social work programs (i.e., the Environmental Work Program, the Environmental
Protection and Enhancement Program, the Final Mine Rehabilitation/Decommissioning Plan and the
Social Development and Management Program), as well as financial assurances (i.e., the Contingent
Liability and Rehabilitation Fund, Mine Rehabilitation Fund, and Mine Wastes and Tailings Reserve
Fund).

However, because of the unreliability and insufficiency of available monitoring data, it is still uncertain
whether these mechanisms are enough and whether they are enforced effectively. There is still no
definitive document from the government that clearly and specifically details the national expectation
for responsible mining. Does the legal framework take into account the uncertainties detailed above,
the uniqueness of Philippines as biodiversity-rich, the sensitivity of small islands, the situation in
populated mining areas, risks from extreme weather, and so on? Is compliance with the law enough?

Responsible mining can also be measured using basic principles developed and adopted by ethical
mining companies worldwide. The Philippine Chamber of Mines’ Compliance and Beyond: A
Guidebook on Corporate Social Responsibility for the Philippine Mining Industry is the most
comprehensive guidance on responsible mining in the country so far, which includes specific
suggestions on how to adhere to responsible mining at every stage of the mining cycle. The following
principles are the bases for the Guidebook:

208
Philippine Daily Inquirer, Three Out Of Eight Killed In Compostela Valley Landslide Identified (April 28, 2011),
http://globalnation.inquirer.net/viewpoints/viewpoints/view/20110426-333048/3-of-8-killed-in-Compostela-Valley-landslide-
identified (last visited June 2012).
209
Philippine Daily Inquirer, Suspension of Mining Urged; Death Toll Rises to 8 (April 28, 2011),
http://newsinfo.inquirer.net/inquirerheadlines/nation/view_article.php?article_id=332979 (last visited June 2012).
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• Protect the environment as a paramount consideration in all stages of mining and conduct
activities in a manner that will contribute to the broader goals of sustainable development.
• Protect the rights of affected communities, including the rights of indigenous cultural
communities. Engage in adequate and timely communication and consultation with them and
work for the improvement of the quality of their lives during and even after the life of the
mine.
• Safeguard the health and safety of mineworkers, local population, host and impact
communities, and address foreseeable health- and safety-related impacts associated with
mining over its full life cycle.
• Maintain a competent workforce that is committed to responsible mining and whose welfare
is advanced. Make sure that affected communities benefit from mining through employment,
whenever possible.
• Respect, protect, and promote human rights of those affected by mining and promote human
rights-sensitive security arrangements.
• Adopt responsible corporate governance and management principles that nurture trust and
promote company integrity by developing effective self-regulatory practices and
management systems and employing business practices that are ethical, transparent and
accountable.210

In the Philippines, a special concern for responsible mining is the identification of “no-go” areas.
Despite provisions in the law that identify areas closed to mining, field implementation has been
beset by conflicts. There is no clear-cut policy on mining in island ecosystems that are most
vulnerable to environmental and social impacts. The Expanded National Integrated Protected Areas
System (NIPAS) and SEP for Palawan laws should inform such a policy. In 2000, DENR issued
Administrative Order No. 83 on “Guidelines for the Management And Development of Small Islands,
Including Its Coastal Areas” but this regulation has not stopped the exploitation of mineral resources
in small islands and coastal areas. In 2010, DENR issued Administrative Order No. 2010-21, also
known as the Mining Act IRR. Both the Mining Act and its IRR have not yet been amended.

8.4.2 What operational conditions must be met to conduct responsible mining in the Philippines?

Responsible mining has to accurately assess and account for all relevant costs and benefits:

• The appropriate valuation mechanisms should be employed to ensure that the environmental
and social responsibilities are accounted for, and that the negative impacts are mitigated
and affected communities compensated.
• There must be a more comprehensive articulation of risk assessment for disaster
management, given that the Philippines is prone to geophysical disturbance and climate
change-induced hazards.
• Regulations on environmental impact studies should be reviewed to account for the value of
biodiversity and ethnodiversity significance.

Responsible mining has to respect no-go areas:

• There must be respect for the E-NIPAS and SEP for Palawan that declare areas closed to
mining.
• There must be respect for the right of local governments to close areas within their territorial
jurisdiction to mining operations as a precautionary measure, in the absence of credible
information on impacts and acceptable risks.
• Small island ecosystems should be excluded from mining. Agenda 21 of the United Nations
identifies small islands supporting small communities as special cases for environment and
development, being ecologically fragile and vulnerable. The ocean and coastal environment
of small islands of strategic importance and constitutes a valuable development resource.
Their small size, limited resources, geographic dispersion and isolation from markets, place
them at a disadvantage economically and prevent economies of scale.

210
Chamber of Mines (2010).
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Responsible mining has to respect the decision of local stakeholders, especially indigenous peoples:

• Inconsistencies in the implementation of FPIC raise serious doubts as to the validity of

community consent and benefit-sharing agreements.
• The right of IPs and local communities to say “no” should be respected and not taken as a
provisional decision subject to negotiation until communities finally say “yes.”

Small-scale mining should be held to the same high standards:

• Policies on small-scale mining should be revised to account for the same impacts as large-
scale mining:

8.4.3 What actions must the government take towards management of responsible mining?

The operational conditions for responsible mining must be matched with governance actions,
including:

• Defining a policy to get the best deal for the people –The country and local communities
apparently get little in terms of benefits from mining, compared to the returns that investors
get. The Philippine Development Plan (PDP) noted from an assessment report of a mining
project211 that the fair share of the government from mining has not been achieved due to
the existing incentive mechanism. The current fiscal incentives and taxation regime in mining
are inadequate and do not assume long-term national and local benefits in the extraction of
exhaustible resources. The government recently proposed the imposition of a 5% royalty
for the exploitation of select mineral reservations. This has been met with stiff opposition by
the mining industry. Comparative data on government benefits from mining are conflicting;
therefore the government must make further studies to firm up its negotiating position.

In the landmark case of La Bugal-B’laan Tribal Association vs. Ramos213, the Supreme Court
ruled that the Mining Act of 1995 was constitutional provided it was implemented in a manner
that truly benefited the country. The Court stated that the government retained control of
mineral resources in the country through regulation. Thus, if the government and society at
large do not benefit from the current mining revenue system, modifying that system is then
justified.

• Defining clear indicators for reforms – Clear and measurable indicators are needed to track
compliance and progress in reforms needed for responsible mining, including inclusiveness
of economic benefits, as well as social, cultural, and environmental safeguards. The
government needs to design and implement a systematic monitoring and evaluation (M & E)
process based on these indicators.

There should be an objective, third-party review of current operating mines to determine

compliance with responsible mining. A more comprehensive compilation of best practices
should also be prepared to equip the government, mining companies, and affected
communities with information to make rational decisions.

• Continuous capacity building – In order to support stable, rational decision-making, the

government must have the capacity to implement:

o Natural resources valuation;

o Options for benefit-sharing schemes at the national, local, and community level;
o Measuring local economic impact;
o Measuring impact on community values and culture;
o Establishing systematic monitoring and evaluation of environmental, social, and
economic impacts at all levels (project, local, and national); and
o A genuine and inclusive process of obtaining free and prior informed consent.

211
Rapu-Rapu
213
G.R. No. 127882 (2004) (Phil.).
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The Philippine Development Plan acknowledges that “government capacity for resource
management is wanting”214 and that “Ensuring the equitable and just distribution of benefits
from extracted mineral resources remains to be a challenge… Currently, there is no standard
resource and environment valuation. There is a need to have a cost-benefit analysis and
standard parameters that will consider all relevant values (including nonmarket values).”215

Risk assessment should also be prioritized. The Philippines is located in the Pacific Ring of
Fire. The same tectonic activity that makes it a prime location for economically valuable
metals also means that the country is prone to geophysical hazards such as earthquakes
and volcanic eruptions.

• Setting a clear action plan with a reasonable timetable and sufficient budget and personnel
support – The actions needed must be set in a clear, doable, time-bound, and adequately
funded action plan, so that all stakeholders can reasonably expect accomplishment of the
reform goals. The reforms are only as good as their implementation. Government has to
provide the manpower needed to implement the reforms both at national and local
government levels.

For decades, the shortcomings in governance have been side-stepped, and the government has
assumed that approval of mining operations can continue because capacity-building is taking place.
This is no longer acceptable. As shown above, with the inadequacies of regulation and capacity for
governance, the government has no rational basis for making decisions on mining.

CASE STUDY:
OCEANAGOLD IN NUEVA VIZCAYA

In June 2019, OceanaGold was allowed by the national administration to continue its operation even with an
expired financial and technical assistance agreement (FTAA) and a restraining order issued by the province of
Nueva Vizcaya. Even within Nueva Vizcaya, the Provincial Environment and Natural Resources Office, the PNP
Nueva Vizcaya Provincial Office, and the Municipal Government of Kasibu, Nueva Vizcaya, among others, have
called for the ceasing of OceanaGold’s operations, citing the Environment Code of Nueva Vizcaya and the Local
Government Code.

It is to be remembered that this is not the first time that OceanaGold has continued its operations despite orders.
In 2017, then-Philippine Secretary of Environment and Natural Resources Gina Lopez issued a suspension
order. In 2018, the Institute for Policy Studies released a report on the mining company, entitled “OceanaGold in
the Philippines: Ten Violations that Should Prompt Its Removal.” The report found that OceanaGold made
numerous violations not only of its FTAA but also of the national and provincial laws. It was also found out that
the presence of OceanaGold has led to the threatening of Nueva Vizcaya’s agriculture and fish supplies.

Source: https://ips-dc.org/report-oceanagold-in-the-philippines/

CASE STUDY:
PHILEX PADCAL MINE SPILL

August 2012, a massive mining spill that occurred in Philex Padcal mine located in Itogon, Benguet. The Philex
Mine Spill is considered as one of the "biggest mining disasters" in the Philippines by causing the release of 20.6
million tons of toxic mine tailings, ten times larger than the 1996 Marcopper mine disaster. Speculated to be
caused by irresponsible planning and mining, a breach occurred in the mine's tailings pond, spilling tons of
wastewater and sediments from the mining operations into Balog Creek, which leads to Agno River.

Previously categorized as class A rivers, the Balog Creek and Agno River became heavily polluted. An
environmental investigative mission declared the Balog Creek "biologically dead". The mine spill had turned the
creek gray, with the riverbed full of mud and the water brownish in color. There were no signs of frogs, dragonflies,

214
Philippine Development Plan 309
215
Philippine Development Plan 298
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aquatic plants or moss, and water was too murky to spot any fish. The water has also been contaminated with
heavy metals such as copper, zinc, arsenic, and cobalt, with copper 4.5 times higher than the allowable levels.
This affected the agricultural lands and local communities whose livelihood was based on the proper functioning
of the river. Fish catches were significantly reduced, productive lands were contaminated through the
contaminated irrigation waters from the rivers and artisanal mining by the river are now impossible anymore.
Water wells that serve as sources for drinking water were also contaminated. Communities who rely on the rivers
for shelter, food and other living necessities experienced headaches, chest pains, skin rashes, loose bowel
movement, and itchy sore throats.

These are only the immediate impacts. It has been estimated that the potential population that is directly and
indirectly affected by the spill ranges from 10,000 to 100,000. Some long term impacts may include genetic
contamination and other chronic diseases caused by exposure to high levels of heavy metals.

The day after the massive spill, Philex's mining operation has been suspended. The company has been fined P1
billion (23.6 million USD) due to violation of the 1995 Mining Act, and was demanded payments of P 188.6 million
(4.3 million USD) for environmental damages caused in violation of the Clean Water Act of 2004. Two years
after, on August 2014, the suspension was lifted by the government, for adequately handling the disaster and
paying the fines. In early 2015, further mineral resources were found in the Padcal mine, extending the mine's
life up to 2020.

Sources:

https://www.gmanetwork.com/news/news/nation/281988/philex-spill-biggest-mining-disaster-in-phl-surpassing-marcopper-
denr/story/
https://ejatlas.org/conflict/philex-padcal-mining-disaster-benguet-philippines
https://www.rappler.com/business/special-report/whymining/whymining-latest-stories/16579-it-s-final-philex-to-pay-fine-for-
padcal-leak
https://www.rappler.com/business/special-report/whymining/whymining-latest-stories/67507-philex-mining-padcal-
suspension-lifted
http://www.agham.org/sites/default/files/agham-downloadables/philex_full_report_2013.pdf

Mining’s Golden Mean

EAGLE EYES – Tony La Viña
10 May 2011, Manila Standard Today

Aristotle stands out as one of the most influential and appreciated Greek philosophers. In the menu of ideas in
moral philosophy, his concept of the "golden mean" is one of the most practical; it still as relevant now, nearly
2500 years after Aristotle first articulated it, as it was then: "Virtue is concerned with passions and actions, in
which excess is a form of failure, and so is defect, while the intermediate is praised and is a form of success;
and being praised and being successful are both characteristics of virtue. Therefore virtue is a kind of mean,
since, as we have seen, it aims at what is intermediate."

Applying Aristotle's golden mean to the challenge of mining in the Philippines, is a middle ground on mining
possible? Is there such a thing as responsible mining that conforms to sustainable development? Or is mining
always destructive of nature and communities? What is the golden mean in mining?

Metal arises from Earth in the Chinese wu xing cycle of elements. It is the instrument by which Water (the
succeeding element) is captured and harnessed, and Wood (the element opposed) is cut down into lumber.
Metal is therefore central to the development of civilization, as we saw in the Bronze and Iron Ages. Today, metal
is one of the most important economic resources, from the steel of skyscrapers and bridges, to the rare earth
metals used in semiconductors and electronics. Thus, ideally, mining is an important component of any national
economy as it brings hard currency, elicits investment, and generates jobs.

The situation in our country is, however, far from ideal. Weak governance institutions and corruption compromise
mining governance, with environmental, safety, and human rights regulations frequently ignored. Our mining
claims system is antiquated, allowing until July 2012 companies and individuals to lay mineral claims on large
swaths of Philippine territory, and unnecessarily giving the impression that all of the country is open for mining.

I believe that mining, and similar natural resources issues are best seen and resolved through the prism of
environmental and social justice. For the record, I am not against mining per se. I oppose mining that is
environmentally destructive, and a mining governance system that does not distribute benefits properly. The
latter is more important because if we solve the inequity of revenue distribution in mining, we can ensure that
enough resources are set aside to minimize its negative environmental and social impacts. This is true for both
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small-scale (which I also do not endorse unconditionally because of its environmental impacts and safety risks)
and large-scale mining.

The most important reform in mining governance is the proper distribution of powers, responsibilities, and income
from the extraction of mineral resources. Thus, indigenous peoples and local communities must have a voice in
the mining decisions and a big share of the revenue. Similarly, local governments should have a major say on
whether or not mining should be allowed within their territory, and must have a just share of the revenues. Where
there is conflict between national government and local governments, mediation is the only recourse.

Many in the industry will acknowledge the bad environmental legacy of mining, but they argue that responsible
mining is now possible. They point to global best practices in environmental management and addressing social
impacts which when employed properly make mining consistent with sustainable development. They are right.
However, there are places where mining should not be allowed, where the risk to important biological,
environmental and cultural resources are too serious and cannot be mitigated adequately. Palawan, given its
unique biological diversity and its potential for ecotourism, is such a place.

In El Filibusterismo, Jose Rizal’s anti-hero Simoun funded his attempt at insurgency using a chest of precious
stones. Padre Florentino, the friar to whom Simoun confessed as he was dying, took the chest, cursed as it was
being the inspiration and tool for corruption and hatred, and threw it into the Pacific Ocean, shouting: "May Nature
guard you in her deep abysses… When for some holy and sublime purpose man may need you, God will in his
wisdom draw you from the bosom of the waves. Meanwhile, there you will not work woe, you will not distort
justice, you will not foment avarice!”

Just like Simoun’s proverbial war chest, our rich mineral resources, in a country compromised by corruption and
insufficient governance, can only result in woe, distorted justice, and avarice. Just as steel must be tempered to
achieve its full strength and flexibility, mining governance requires important reforms before the mining industry
can be entrusted with the national treasure chest. When we achieve mining's golden mean, being endowed with
mineral resources will no longer be a curse causing conflict and environmental destruction but, finally, becomes,
as it should be, blessing and bounty from our Earth.

Ground Zero of Mining

EAGLE EYES – Tony La Viña
14 September 2010, Manila Standard Today

In many ways, Colorado is the ground zero of mining in the United States. As early as 1859, gold was
discovered in Colorado; in addition, coal, gypsum, limestone, silver, molybdenum, soda ash and sodium
bicarbonate have been and are mined there. According to the Colorado Mining Association, mining
contributes about $8 billion to the state’s economy. At the same time, mining in Colorado is not entirely
uncontroversial. The state is also known for its natural and scenic beauty, and tourism is one of its major
industries. In 2007 alone, it was reported that 28 million visitors visited the State and spent $9.8 billion. For
obvious reasons, mining is not necessarily compatible with tourism and at times hard choices had and have
to be made in Colorado as to what land use is preferred.

It is no different in the Philippines. While we are a highly mineralized country, with substantial mineral deposits
that are still unexploited, the country is both densely populated and environmentally stressed. I have walked
on, driven through, sailed around and have flown in most of our islands, and everywhere I see lots of people
in overstretched critical ecosystems and natural resources. Because of this, any mining decision will always
be in the context of land use conflicts that is then expressed politically, sometimes violently. Because of this,
mining cannot and never will be an easy nor fast decision in this country.

Today, in the Philippines, the ground zero of mining is Tampakan, South Cotabato, where the largest
untapped copper deposit in Southeast Asia can be found. Sagittarius Mines Incorporated (SMI), a company
majority-owned by global mining firm Xstrata Plc., has the legal right to develop the Tampakan deposit.
Already, the US$5-6 billion project has been delayed by a decade when the legality of the Mining Act of 1995
and in particular the Financial and Technical Assistance Agreement (FTAA) held by SMI was questioned
before and eventually upheld by the Supreme Court. With the legal case out of the way and the mining
feasibility done, what was left for SMI to do was to get an environmental clearance for the Tampakan project.

Unfortunately for the project, in June 25, 2010, then-outgoing governor of South Cotabato Daisy Fuentes
signed into law the province's Environmental Code. Passed by an overwhelming 9-1 vote in the provincial
legislature, arguably a strong manifestation of the will of the people of the province, the Code bans the use
of open-pit mining (the technology that will be used to extract the minerals from Tampakan).
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The legality of the South Cotabato Environmental Code has been assailed by critics who point out that the
Mining Act, which does not prohibit open-pit mining, should prevail over the provincial Environmental Code.
They argue that a national law is superior to a local ordinance. Under the Mining Act, the DENR (through the
Mines and Geosciences Bureau) is the primary agency responsible for the management and use of the
State's mineral resources and its Secretary is given the authority to enter into mineral agreements on behalf
of the government. On the other hand, under the Local Government Code (LGC), local government units are
authorized to come up with measures intended to protect the general welfare. With such a mandate, the
Sangguniang Panlalawigan (provincial legislature) can enact ordinances to protect the environment. In
addition, Section 27 of the LGC requires prior approval of the Sanggunian (council) concerned before any
national project, including mining projects, is implemented within their territorial jurisdiction.

How then can we move forward – on Tampakan specifically and on mining generally? The burden is
principally on the national government, which must now balance all legitimate interests. The DENR Secretary,
with the full support of the President, should establish a transparent, participatory and credible multi-
stakeholder negotiation and consensus-building process for this. Because it seems inevitable that this matter
will be taken to court, the parties could also take advantage of the provision in the new Rules of Procedure
for Environmental Cases, which allows of a “consent decree” – a judicially-approved settlement between the
parties that could stipulate the conditions under which the Tampakan project could proceed. This is certainly
a more viable and less costly (money and time wise) option compared to a protracted legal battle where the
outcome is far from certain.

Whether such a negotiation happens in a judicial or other context, I strongly suggest that independent third
party facilitators who have the trust of all the stakeholders assist them. In that process, the following
outcomes should be sought: the promotion of sustainable development; the encouragement of responsible
investments; a revenue sharing regime that is fair to host communities and to the country; the
uncompromising protection of the environment; and respect for local autonomy and indigenous peoples'
rights (most of the Tampakan mineral deposit is in the ancestral domain of indigenous peoples). While it is
likely that not all these outcomes will be achieved, if most or a majority of them are achieved, it would not be
so bad. Not perfect, not at all, but maybe good.

Mining E.O. Not Perfect, But Very Good

Tony La Viña and Alaya de Leon
11 July 2012, Rappler.com

Executive Order No. 79 lays down very clearly the roadmap on mining sector reforms, including guidelines
on environmental protection and responsible mining. The “Mining EO,” as it has come to be known, is a good
and progressive issuance that merits congratulations. This Aquino mining policy, as illustrated by the EO, is
not perfect, but good. In fact it is very good.

The EO is a definitive step in the right direction for the mineral industry, as it changes paradigms for the
better:

Section 1, providing additional areas closed to mining operations or “no-go” areas. While the Mining
Act (RA 7942) already provides for some no-go areas, including those prohibited under the National
Integrated Protected Areas System (NIPAS, RA 7586) – and which the EO reiterates – the Presidential
issuance provides 3 new categories of areas where mineral operations are prohibited:

⁃ Prime agricultural lands, in addition to lands covered by the Comprehensive Agrarian Reform Law,
including plantations and areas devoted to valuable crops, and strategic agriculture and fisheries
development zones and fish refuge and sanctuaries;

⁃ Tourism development areas, such as Puerto Princesa, San Vicente-El Nido-Taytay, and Southern
Palawan within the Palawan Tourism Cluster, and Camarines, Catanduanes, and Albay-Sorsogon-Masbate
within the Bicol Tourism Cluster, as per the National Tourism Development Plan; and

⁃ Other critical areas, island ecosystems, and impact areas of mining. This is a very powerful argument why
Mindoro, Sibuyan, Camiguin, Siquijor, Romblon and similar islands should be considered off limits to mining.

Section 4 imposing a moratorium on the grant of mineral agreements pending legislation on rational
revenue sharing for the industry. The imposition of this moratorium is based on the conclusion that the
current system does not favor equitable distribution of the benefits derived from mining. The invocation of
Section 1, Article XII of the 1987 Constitution in the EO’s preamble – a provision not usually invoked in the
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context of environmental protection and as such is revolutionary – says as much about the need to re-assess
and re-align the myriad advantages of our mineral wealt

This provision indicates that the President means business – invoking the said constitutional provision on “a
more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods
and services produced by the nation for the benefit of the people; an expanding productivity as the key to
raising the quality of life for all, especially the underprivileged; and that in the pursuit of these goals, all sectors
of the economy and all regions of the country shall be given optimum opportunity to develop.”

These all point to a clear intent to ensure that the Philippine mineral industry serves all citizens and not just
the interests of a few, that it benefits the majority and raises the quality of life for all.

'Revolutionary provisions'
In addition, the EO contains four other revolutionary provisions related to the management of mineral
agreements and revenues derived therefrom:

• Section 5 on the establishment of mineral reservations, setting aside potential and future mining areas
for strategic industries identified in the Philippine Development Plan and the National Industrialization
Plan, subject to consultation with all concerned stakeholders.

• Section 6 on competitive public bidding over mining rights and tenements including government-owned
and all expired tenements, for which the Mines and Geosciences Bureau shall not only prepare bid
packages and guidelines but also ensure that social acceptability for the project has been secured.

• Section 8 on the development of value-adding activities and downstream industries for the mineral
sector, which shall be laid out in a national program and road map to be formulated by relevant
government agencies, the mining industry, and other stakeholders.

• Section 14 on "Improving Transparency in the Industry by Joining the Extractive Industries

Transparency Initiative." To improve transparency, accountability, and governance in the sector, the
government shall support and commit participation in the Extractive Industries Transparency Initiative
(EITI). The DENR is mandated to ensure that mechanisms are established to operationalize the EITI in
the mining sector, in consultation and coordination with the mining industry and other concerned
stakeholders.

These provisions provide a paradigm shift in how the country’s mineral reserves and resources are treated
and exploited, which over the years seemed typified as a “come one, come all” system for investors. The
Mining EO sets initial steps for exercising more stringent controls on the utilization of mineral resources, the
grant of rights for their utilization, and the flow of revenues from such.

• Section 11, providing initial measures to improve the management and development of small-scale
mining (SSM). Strict attention to the extremely problematic and complex issue of managing small-scale
mining in the country is long overdue. This provision once and for all clarifies the statutes that govern
the industry, reiterates that SSM must be undertaken only within the confines of delineated Minahang
Bayan, and addresses the need for training and capacity building of SSM operators, among others.

Likewise, we praise the President for issuing specific directives to his Cabinet to immediately implement the
EO. We particularly laud the directive to the DENR to “Desist from processing mining applications in Palawan
and enhance the strict implementation and periodic review of the Strategic Environmental Plan for Palawan
with the Palawan Council for Sustainable Development.”

Directives to complete cultural mapping of indigenous peoples’ areas and address their concerns and
recognition of their rights, and to address the overlapping tasks and functions of departments involved in
mining, are also crucial points for implementation and respond to some of the most basic systemic
weaknesses of governing the mineral industry.

Some concerns

While we congratulate the President on an EO that departs from “business as usual” practices in the mineral
industry, we also express concern over Section 12 on the “consistency” of local ordinances with the
Constitution and national laws.
Admittedly, it is an improvement from an earlier iteration of the EO which referred to the “primacy” of national
over local legislation. However, a more appropriate term would have been “harmonization” between the 2,
because such assumes that local government units (LGUs) act in good faith and generally exercise their
power in accordance with national laws.
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Still, in spite of its language, Section 12 can be interpreted as allowing LGUs to impose restrictions on mineral
activities within their jurisdiction – including mining bans – if they are able to demonstrate that such legislation
is reasonable within the environmental, social, and economic circumstances surrounding a proposed project,
and as long as this is supported by risk assessments and evidence-based studies, and appropriate
consideration of the precautionary principle.

With EO 79, a new mining policy has been effectively put into place by a President who clearly means
business. The challenge now, as always whenever our country enacts or adopts progressive legislation and
policies, is implementation.

With the directives the President issued along side his EO, he is clearly also paying attention to what happens
now in the field. For that reason, we are hopeful.

Perhaps, finally, the “resource curse,” the truism that extractive industries like mining cause only poverty and
conflict, will be disproven in our country, and our mineral wealth will become as it should be – a bounty and
blessing for our people.

Good science, due process and mining

Tony La Viña
22 February 2017, Rappler.com

Aristotle’s concept of the "golden mean" is one of the most practical moral concepts I have encountered.
According to this ancient Greek philosopher, "Virtue is concerned with passions and actions, in which excess
is a form of failure, and so is defect, while the intermediate is praised and is a form of success; and being
praised and being successful are both characteristics of virtue. Therefore, virtue is a kind of mean, since, as
we have seen, it aims at what is intermediate."

As I wrote in one of my Eagle Eyes column 5 years ago Aristotle's golden mean is relevant to the challenge
of mining in the Philippine. In that article, I raise questions which many are again asking in the wake of
recent decisions by Secretary Gina Lopez: “Is a middle ground on mining possible? Is there such a thing as
responsible mining that conforms to sustainable development? Or is mining always destructive of nature and
communities? What is the golden mean in mining?”

Conditions for responsible mining

There is no disagreement that minerals are one of the most important economic resources, from the steel of
skyscrapers and bridges, to the rare-earth metals used in semiconductors and electronics. Mining is also an
important component of any national economy as it brings hard currency, elicits investment, and generates
jobs.

The situation in the Philippines is however far from ideal.

Weak governance institutions and corruption compromise mining governance, with environmental, safety,
and human rights regulations frequently ignored. Our mining claims system is also antiquated, allowing
companies and individuals to lay mineral claims on large swaths of Philippine territory and unnecessarily
giving the impression that all of the country is open for mining.

I have long advocated a more modern approach of the government – identifying the mineral resources and
bidding them out pro-actively rather than granting concessions on a first-to-claim basis.

For the record, I am not against mining per se. I oppose mining that is environmentally destructive and a
mining governance system that does not distribute benefits properly. The latter is more important because if
we solve the inequity of revenue distribution in mining, we can ensure that enough resources are set aside
to minimize its negative environmental and social impacts. This is true for both small-scale (which I also do
not endorse unconditionally because of its environmental impacts and safety risks) and large-scale mining.

Mining, and similar natural resources issues are best seen and resolved through the prism of environmental
and social justice. Hence, the most important reform in mining governance is the proper distribution of
powers, responsibilities, and income from the extraction of mineral resources.
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Thus, indigenous peoples and local communities must have a voice in the mining decisions and a big share
of the revenue. Similarly, local governments should have a major say on whether or not mining should be
allowed within their territory and must have a just share of the revenues. Where there is conflict between
national government and local governments, mediation is the only recourse.

No community or local government should be railroaded to accept mining. Opposition however must be based
on scientific grounds. For example, the claim that mining causes earthquakes has no scientific basis, although
irresponsible mining can increase the risks of both geological and climate disasters.

Mining’s contribution to economy

Mining operations bring jobs and infuse money into the local economy, and the mining sector contributes to
economic growth in general.

Even so, is any positive number in terms of job generation and economic growth always a good thing? How
much incentive does the government give to the mining sector, which should be deducted from the net
benefits to the country and local people? How much more (or less) can the government get if it considers
alternative uses of the land?

In other words, are Filipinos (as a people) really better off with mining, and is the government getting the best
deal for its people?

These are tough questions to answer due to the lack of data and a framework to analyze benefits as a whole.
But there are known facts that can help in this analysis. It does not help when supporters of mining exaggerate
the figures with inflated claims of job and economic losses.

As to the benefits that local people can derive from mining, mining companies rightly claim that there are
huge economic and social benefits during mining operations. Indeed, a mining operation can result in new
roads and access to transportation, increased trade of goods and services supplied to the mining operations,
and even improved access to health centers and schools. Some local governments rely only on mining tax
revenue to supplement their internal revenue allocation.

Unfortunately, we have no independent studies that give us accurate estimates of these benefits and that
weigh them against the environmental and social impacts of such operations. There is also an accusation
that most of the benefits of mining go to a very narrow set of beneficiaries.

If we are to enable responsible mining, changing the economics of the sector is a high priority. There is really
no debate about this and that new legislation is necessary.

Way forward: Good science, due process

Is a golden mean possible in mining?

Yes, but radical reforms in governance are necessary to get there. Those reforms must be based on good
science and grounded in due process that allows all affected parties and stake holders to argue their case
and present their views.

Good science means that we are able to make sure that the destructive impacts of mining are minimized, if
not avoided entirely. Many in the mining industry will acknowledge the bad environmental legacy of mining.
But they argue that responsible mining is now possible. They point to global best practices in environmental
management and addressing social impacts which, when employed properly, make mining consistent with
sustainable development.

They are right. However, there are places where mining should not be allowed, where the risk to important
biological, environmental and cultural resources are too serious and cannot be mitigated adequately.

Secretary Lopez and President Duterte are correct in asserting that watersheds, whether proclaimed or not,
must be absolutely no-go as well. These no-go areas should have been identified years ago; it is a big
disservice to the public if again the task is passed on to another body. Let those who want to mine carry the
burden of proving that mining should be allowed.

Due process must be followed in mining decisions.

Mining companies, local governments, indigenous peoples, affected communities, and even ordinary citizens
have rights that must be respected in the adoption of policies and in suspending and cancelling mining
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operations and agreements. Those rights are established by law and it does not take rocket science to
determine if government has complied or not with what is required. If due process was not followed, corrective
measures can be taken.

At the end of the day though, it’s the national interest that must prevail.

Is a golden mean possible in mining? The actions of Gina Lopez are taking us in the right direction. As a
society, we must build on that and go forward, not backslide, to a better mining governance system.
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Chapter Nine

Waste Management and Sanitation

FACTS AND FIGURES

According to the National Solid Waste Management Commission (NSWMC), the Philippines is generating
40,087.45 tons of waste per day as of 2016. The country's waste generation rate continuously rises each
year with the increase in population, improvement of living standards, economic growth, and industrialization.
This is most especially true in urbanized areas such as NCR who has at least 10% contribution to the total
waste generation of the country in 2010.

It is estimated that only 40% to 85% of the country’s total generated waste are being collected nationwide,
with Metro Manila having the highest collection rate, while most rural and poorer areas have limited to non-
existent services for waste collection. Uncollected wastes often end up as pollutant to many bodies of water
nationwide. As for the disposal of collected waste, open dumping remains the most common practice
nationwide. While the law requires the closure of existing open dumpsites and establishment of controlled
disposal facilities, there are still 403 existing open dumpsites and only 108 controlled dumpsites in the
country. Sanitary landfills, on the other hand, remain inaccessible for most local government units.

Multiple efforts are also being taken to recover or divert wastes from waste disposal facilities. As of 2016,
there are 9,882 materials-recovery facilities (MRF) nationwide and is successfully able to divert at least 46%
to 48% of solid wastes. Solid Waste Management (SWM) Boards are also being established per local
government unit to create and implement local SWM plans and ensure proper implementation of SWM
systems. As of 2017, there are 318 approved local SWM plans out of 1460 proposed.

Sources:

https://conference.surp.upd.edu.ph/downloads/ICURP%202018%20Downloads/SE07_Solid%20Waste%20Management
_SAPUAY.pdf
https://www.pna.gov.ph/articles/1021015
https://www.pna.gov.ph/articles/1071343
https://www.pna.gov.ph/articles/1071930
https://www.senate.gov.ph/publications/SEPO/AAG_Philippine%20Solid%20Wastes_Nov2017.pdf
https://nswmc.emb.gov.ph/wp-content/uploads/2016/07/NSWM-Strategy-2012-2016.pdf
https://nswmc.emb.gov.ph/wp-content/uploads/2016/06/Solid-Wastefinaldraft-12.29.15.pdf

9.1 Environmental situationer

In January 1999, respondents concerned residents of Manila Bay filed a complaint before the
Regional Trial Court (RTC) in Imus, Cavite against several government agencies, for the cleanup,
rehabilitation, and protection of the Manila Bay. The complaint alleged that the water quality of the
Manila Bay had fallen way below the allowable standards set by law, specifically Presidential Decree
(PD) No. 1152 or the Philippine Environment Code. 216 In their individual causes of action,
respondents alleged that the continued neglect of petitioner agencies in abating the pollution of the
Manila Bay constitutes a violation of, among others:

(1) Respondents’ constitutional right to life, health, and a balanced ecology;

(2) The Environment Code (PD 1152);
(3) The Pollution Control Law (PD 984);
(4) The Water Code (PD 1067);
(5) The Sanitation Code (PD 856);
(6) The Illegal Disposal of Wastes Decree (PD 825);
(7) The Marine Pollution Law (PD 979);
(8) Executive Order No. 192;
(9) The Toxic and Hazardous Wastes Law (Republic Act No. 6969);
(10) Civil Code provisions on nuisance and human relations;

216
MMDA v. Concerned Residents of Manila Bay, December 18, 2008
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(11) The Trust Doctrine and the Principle of Guardianship; and

(12) International Law.

The respondents, as plaintiffs, prayed that petitioners be ordered to clean up the Manila Bay and to
submit to the RTC a concerted concrete plan of action for such purpose.

In an attempt to dramatize the urgency of the need for petitioner-agencies to comply with their
statutory tasks, the Supreme Court cited the Asian Development Bank-commissioned study on the
garbage problem in Metro Manila.217 As there reported, the garbage crisis in the metropolitan area is
as alarming as it is shocking. Some highlights of the report are as follows:

1. As early as 2003, three land-filled dumpsites in Metro Manila - the Payatas,

Catmon and Rodriquez dumpsites - generate an alarming quantity of lead and
leachate or liquid run-off. Leachate are toxic liquids that flow along the surface
and seep into the earth and poison the surface and groundwater that are used
for drinking, aquatic life, and the environment.

2. The high level of fecal coliform confirms the presence of a large amount of human
waste in the dump sites and surrounding areas, which is presumably generated
by households that lack alternatives to sanitation. To say that Manila Bay needs
rehabilitation is an understatement.

3. Most of the deadly leachate, lead and other dangerous contaminants and possibly
strains of pathogens seeps untreated into ground water and runs into the
Marikina and Pasig River systems and Manila Bay.

Given the above perspective, it is good to note how difficult and daunting it is to clean up Manila Bay
from the abovementioned solid waste materials. Wastes of such nature are not present in the bay at
one particular point in time only but said wastes are continuously produced by their common sources.
In the language of the Supreme Court, “the cleanup and/or restoration of the Manila Bay is only an
aspect and the initial stage of the long-term solution. The preservation of the water quality of the bay
after the rehabilitation process is as important as the cleaning phase. It is imperative then that the
wastes and contaminants found in the rivers, inland bays, and other bodies of water be stopped from
reaching the Manila Bay. Otherwise, any cleanup effort would just be a futile, cosmetic exercise, for,
in no time at all, the Manila Bay water quality would again deteriorate below the ideal minimum
standards set by PD 1152, RA 9275, and other relevant laws.”

For this reason that the Supreme Court ultimately decided to impose a “continuing mandamus” upon
petitioner-agencies to periodically and regularly clean-up the Manila Bay. Under what our judicial
discipline describes as “continuing mandamus”, the Court may, under extraordinary circumstances,
issue directives with the end in view of ensuring that its decision would not be set to naught by
administrative inaction or indifference. For instance, in India, the doctrine of continuing mandamus
was used to enforce directives of the court to clean up the length of the Ganges River from industrial
and municipal pollution.

In ruling on the petition, the Supreme Court cited the landmark case of Oposa vs. Factora, the same
Court stated that the right to a balanced and healthful ecology need not even be written in the
Constitution for it is assumed, like other civil and political rights guaranteed in the Bill of Rights, to
exist from the inception of mankind and it is an issue of transcendental importance with
intergenerational implications. Thus, in analogy, the court in the present case ratiocinated that even
assuming the absence of a categorical legal provision specifically prodding petitioners to clean up
the bay, they and the men and women representing them cannot escape their obligation to future
generations of Filipinos to keep the waters of the Manila Bay clean and clear as humanly as possible.

9.2 Legal analysis (application of existing laws)

Special Laws and Legal Mandates

217
The results of which are embodied in the The Garbage Book.
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The special laws governing and the legal mandates of agencies applicable to the proper
management and disposal of solid wastes are as clear as spring-clean water. In the case of the
clean-up of Manila Bay, the Supreme Court cited some of those laws and legal mandates, which
included among others:

i. Sec. 3, Par. C, RA 7924 creating the Metro Manila Development Authority (MMDA)
which mandates:
Solid waste disposal and management which include formulation and implementation of
policies, standards, programs and projects for proper and sanitary waste disposal. It shall
likewise include the establishment and operation of sanitary land fill and related facilities
and the implementation of other alternative programs intended to reduce, reuse and
recycle solid waste.

ii. Sec. 19, RA 9275 or the Clean Water Act of 2004 which mandates the DENR to comply
with the following:
a) Prepare a National Water Quality Status report within twenty-four (24) months from the
effectivity of this Act: Provided, That the Department shall thereafter review or revise
and publish annually, or as the need arises, said report;
b) Prepare an Integrated Water Quality Management Framework within twelve
(12) months following the completion of the status report;
c) Prepare a ten (10) year Water Quality Management Area Action Plan within
12 months following the completion of the framework for each designated
water management area. Such action plan shall be reviewed by the water
quality management area governing board every five (5) years or as need
arises.

iii. Sec. 48 of RA 9003 or the Ecological Solid Waste Management Act of 2000 which
prohibits the following acts:

(1) Littering, throwing, dumping of waste matters in public places, such as roads,
sidewalks, canals, esteros or parks, and establishment, or causing or permitting the
same;

(2) Undertaking activities or operating, collecting or transporting equipment in violation

of sanitation operation and other requirements or permits set forth in established
pursuant;

(3) The open burning of solid waste;

(4) Causing or permitting the collection of non-segregated or unsorted wastes;

(5) Squatting in open dumps and landfills;

(6) Open dumping, burying of biodegradable or non-biodegradable materials in flood

prone areas;

(7) Unauthorized removal of recyclable material intended for collection by authorized

persons;

(8) The mixing of source-separated recyclable material with other solid waste in any
vehicle, box, container or receptacle used in solid waste collection or disposal;

(9) Establishment or operation of open dumps as enjoined in this Act, or closure of said
dumps in violation of Sec. 37;
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(10) The manufacture, distribution or use of non-environmentally acceptable packaging

materials;

(11) Importation of consumer products packaged in non-environmentally acceptable

materials;

(12) Importation of toxic wastes misrepresented as "recyclable" or "with recyclable

content";

(13) Transport and dumplog in bulk of collected domestic, industrial, commercial, and
institutional wastes in areas other than centers or facilities prescribe under this Act;

(14) Site preparation, construction, expansion or operation of waste management

facilities without an Environmental Compliance Certificate required pursuant to
Presidential Decree No. 1586 and this Act and not conforming with the land use plan of
the LGU;

(15) The construction of any establishment within two hundred (200) meters from open
dumps or controlled dumps, or sanitary landfill; and

(16) The construction or operation of landfills or any waste disposal facility on any
aquifer, groundwater reservoir, or watershed area and or any portions thereof.

iv. Sec. 4 of PD 601 or the Revised Coast Guard Law of 1974 which mandates the
Philippine Coast Guard to apprehend violators who:
a. discharge, dump x x x harmful substances from or out of any ship, vessel,
barge, or any other floating craft, or other man-made structures at sea, by any
method, means or manner, into or upon the territorial and inland navigable
waters of the Philippines;
b. throw, discharge or deposit, dump, or cause, suffer or procure to be thrown,
discharged, or deposited either from or out of any ship, barge, or other floating
craft or vessel of any kind, or from the shore, wharf, manufacturing
establishment, or mill of any kind, any refuse matter of any kind or description
whatever other than that flowing from streets and sewers and passing therefrom
in a liquid state into tributary of any navigable water from which the same shall
float or be washed into such navigable water; and
c. deposit x x x material of any kind in any place on the bank of any navigable
water or on the bank of any tributary of any navigable water, where the same
shall be liable to be washed into such navigable water, either by ordinary or high
tides, or by storms or floods, or otherwise, whereby navigation shall or may be
impeded or obstructed or increase the level of pollution of such water.

v. Secs. 17 and 20 of the Environment Code (PD 1152) which mandates the DENR to
perform the following duties:
Section 17. Upgrading of Water Quality.––Where the quality of water has
deteriorated to a degree where its state will adversely affect its best usage, the
government agencies concerned shall take such measures as may be
necessary to upgrade the quality of such water to meet the prescribed water
quality standards.
Section 20. Clean-up Operations. ––It shall be the responsibility of the polluter
to contain, remove and clean-up water pollution incidents at his own expense.
In case of his failure to do so, the government agencies concerned shall
undertake containment, removal and clean-up operations and expenses
incurred in said operations shall be charged against the persons and/or entities
responsible for such pollution.
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The special laws governing and the legal mandates of agencies applicable to the proper
management and disposal of solid wastes are as clear as spring-clean water. In the case of the
clean-up of Manila Bay, the Supreme Court cited some of those laws and legal mandates. In relation
to the above laws and legal mandates, the order of the Supreme Court to the government agencies
concerned with the clean-up, rehabilitation, and protection of the Manila Bay is quite simple. To quote
the said order:

“WHEREFORE, judgment is hereby rendered ordering the abovenamed defendant-

government agencies to clean up, rehabilitate, and preserve Manila Bay, and restore
and maintain its waters to SB level (Class B sea waters per Water Classification
Tables under DENR Administrative Order No. 34 [1990]) to make them fit for
swimming, skin-diving, and other forms of contact recreation. In particular:

a) Pursuant to Sec. 4 of EO 192, assigning the DENR as the primary agency

responsible for the conservation, management, development, and proper use of
the country’s environment and natural resources, and Sec. 19 of RA 9275,
designating the DENR as the primary government agency responsible for its
enforcement and implementation, the DENR is directed to fully implement its
Operational Plan for the Manila Bay Coastal Strategy for the rehabilitation,
restoration, and conservation of the Manila Bay at the earliest possible time. It
is ordered to call regular coordination meetings with concerned government
departments and agencies to ensure the successful implementation of the
aforesaid plan of action in accordance with its indicated completion schedules.

b) Pursuant to Title XII (Local Government) of the Administrative Code of 1987

and Sec. 25 of the Local Government Code of 1991, the DILG, in exercising the
President’s power of general supervision and its duty to promulgate guidelines
in establishing waste management programs under Sec. 43 of the Philippine
Environment Code (PD 1152), shall direct all LGUs in Metro Manila, Rizal,
Laguna, Cavite, Bulacan, Pampanga, and Bataan to inspect all factories,
commercial establishments, and private homes along the banks of the major
river systems in their respective areas of jurisdiction, such as but not limited to
the Pasig-Marikina-San Juan Rivers, the NCR (Parañaque-Zapote, Las Piñas)
Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the Meycauayan-
Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite)
River, the Laguna De Bay, and other minor rivers and waterways that eventually
discharge water into the Manila Bay; and the lands abutting the bay, to
determine whether they have wastewater treatment facilities or hygienic septic
tanks as prescribed by existing laws, ordinances, and rules and regulations. If
none be found, these LGUs shall be ordered to require non-complying
establishments and homes to set up said facilities or septic tanks within a
reasonable time to prevent industrial wastes, sewage water, and human wastes
from flowing into these rivers, waterways, esteros, and the Manila Bay, under
pain of closure or imposition of fines and other sanctions.

c) As mandated by Sec. 8 of RA 9275, the MWSS is directed to provide, install,

operate, and maintain the necessary adequate waste water treatment facilities
in Metro Manila, Rizal, and Cavite where needed at the earliest possible time.

d) Pursuant to RA 9275, the LWUA, through the local water districts and in
coordination with the DENR, is ordered to provide, install, operate, and maintain
sewerage and sanitation facilities and the efficient and safe collection, treatment,
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and disposal of sewage in the provinces of Laguna, Cavite, Bulacan, Pampanga,

and Bataan where needed at the earliest possible time.

e) Pursuant to Sec. 65 of RA 8550, the DA, through the BFAR, is ordered to

improve and restore the marine life of the Manila Bay. It is also directed to assist
the LGUs in Metro Manila, Rizal, Cavite, Laguna, Bulacan, Pampanga, and
Bataan in developing, using recognized methods, the fisheries and aquatic
resources in the Manila Bay.

f) The PCG, pursuant to Secs. 4 and 6 of PD 979, and the PNP Maritime Group,
in accordance with Sec. 124 of RA 8550, in coordination with each other, shall
apprehend violators of PD 979, RA 8550, and other existing laws and
regulations designed to prevent marine pollution in the Manila Bay.

g) Pursuant to Secs. 2 and 6-c of EO 513 and the International Convention for the
Prevention of Pollution from Ships, the PPA is ordered to immediately adopt
such measures to prevent the discharge and dumping of solid and liquid wastes
and other ship-generated wastes into the Manila Bay waters from vessels
docked at ports and apprehend the violators.

h) The MMDA, as the lead agency and implementor of programs and projects for
flood control projects and drainage services in Metro Manila, in coordination with
the DPWH, DILG, affected LGUs, PNP Maritime Group, Housing and Urban
Development Coordinating Council (HUDCC), and other agencies, shall
dismantle and remove all structures, constructions, and other encroachments
established or built in violation of RA 7279, and other applicable laws along the
Pasig-Marikina-San Juan Rivers, the NCR (Parañaque-Zapote, Las Piñas)
Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, and connecting
waterways and esteros in Metro Manila. The DPWH, as the principal
implementor of programs and projects for flood control services in the rest of the
country more particularly in Bulacan, Bataan, Pampanga, Cavite, and Laguna,
in coordination with the DILG, affected LGUs, PNP Maritime Group, HUDCC,
and other concerned government agencies, shall remove and demolish all
structures, constructions, and other encroachments built in breach of RA 7279
and other applicable laws along the Meycauayan-Marilao-Obando (Bulacan)
Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay,
and other rivers, connecting waterways, and esteros that discharge wastewater
into the Manila Bay. In addition, the MMDA is ordered to establish, operate, and
maintain a sanitary landfill, as prescribed by RA 9003, within a period of one (1)
year from finality of this Decision. On matters within its territorial jurisdiction and
in connection with the discharge of its duties on the maintenance of sanitary
landfills and like undertakings, it is also ordered to cause the apprehension and
filing of the appropriate criminal cases against violators of the respective penal
provisions of RA 9003, Sec. 27 of RA 9275 (the Clean Water Act), and other
existing laws on pollution.

i) The DOH shall, as directed by Art. 76 of PD 1067 and Sec. 8 of RA 9275, within
one (1) year from finality of this Decision, determine if all licensed septic and
sludge companies have the proper facilities for the treatment and disposal of
fecal sludge and sewage coming from septic tanks. The DOH shall give the
companies, if found to be non-complying, a reasonable time within which to set
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up the necessary facilities under pain of cancellation of its environmental

sanitation clearance.

j) Pursuant to Sec. 53 of PD 1152, Sec. 118 of RA 8550, and Sec. 56 of RA 9003,

the DepEd shall integrate lessons on pollution prevention, waste management,
environmental protection, and like subjects in the school curricula of all levels to
inculcate in the minds and hearts of students and, through them, their parents
and friends, the importance of their duty toward achieving and maintaining a
balanced and healthful ecosystem in the Manila Bay and the entire Philippine
archipelago.

k) The DBM shall consider incorporating an adequate budget in the General

Appropriations Act of 2010 and succeeding years to cover the expenses relating
to the cleanup, restoration, and preservation of the water quality of the Manila
Bay, in line with the country’s development objective to attain economic growth
in a manner consistent with the protection, preservation, and revival of our
marine waters.

l) The heads of petitioners-agencies MMDA, DENR, DepEd, DOH, DA, DPWH,

DBM, PCG, PNP Maritime Group, DILG, and also of MWSS, LWUA, and PPA,
in line with the principle of “continuing mandamus,” shall, from finality of this
Decision, each submit to the Court a quarterly progressive report of the activities
undertaken in accordance with this Decision.”

In addition and as already discussed in the book, early in 2019, Administrative Order No. 16 was
signed which created the “Manila Bay Task Force” whose main thrust is the faster “rehabilitation and
restoration of the coastal and marine ecosystem of the Manila Bay.”

The most recent Supreme Court pronouncement on waste management is Republic of the
Philippines vs. N. Dela Merced & Sons, which discussed that Sec. 28 of Republic Act No. 9275

Republic of the Philippines vs. N. Dela Merced & Sons, Inc.

G.R. No. 201501, January 22, 2018

Sereno, CJ, ponente

The Guadalupe Commercial Complex is a commercial building owned and operated by

Dela Merced & Sons. Situated alongside the Pasig River, the complex operates a wet
market and houses eateries or kitchenettes in the same building.

On 13 July 2006, the Environmental Management Bureau-National Capital Region

(EMB-NCR) of the DENR inspected the Guadalupe Commercial Complex. The
inspection team found that Dela Merced & Sons had violated the following: 1) Section
1 of DENR Administrative Order No. 2004-26 for operating air pollution source
installations (generator set) without a permit to operate; and 2) Section 27(i) of R.A.
9275 for operating a facility that discharged regulated water pollutants without a
discharge permit.

Thus, the EMB-NCR served a notice of violation (NOV) dated 28 August 2006 upon
Dela Merced & Sons, stating the charges and ordering the latter to comply with the
requirements.

On 11 October 2006, however, the EMB-NCR conducted another inspection of the

Guadalupe Commercial Complex to monitor Dela Merced & Sons' compliance with R.A.
8749 (The Clean Air Act of 1999) and R.A. 9275, as well as their respective
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Implementing Rules and Regulations (IRRs ). The inspection team collected effluent
sample from the facility, and the results of the laboratory tests showed that the sample
collected failed to conform to the DENR Effluent Standards.

Consequently, on 6 February 2007, the DENR Secretary, upon the recommendation of

the EMB-NCR, issued a cease and desist order (CDO) to Dela Merced & Sons for
violation of R.A. 9275 and the IRR thereof. In the same Order, the company was
informed that no temporary lifting order (TLO) shall be issued in its favor, unless it would
submit the documents required under the law.

xxx

On 30 June 2011, the CA rendered a Decision affirming the assailed Orders of the
DENR-PAB, except as to the imposable fine which was reduced to ₱2.63 million.
According to the appellate court, the fine should be reduced in view of the EMB-NCR's
unreasonable delay in complying with the order to conduct an effluent sampling of Dela
Merced & Sons' Wastewater Treatment Facility

xxx

We deny Dela Merced & Sons' petition, but grant that of the DENR-PAB.

Dela Merced & Sons was Not Denied Due Process

xxx

As for the inspection, the EMB-NCR was only performing its mandated duty under R.A.
9275 and the IRR thereof when it inspected the premises of the Guadalupe Commercial
Complex. Clearly, the EMB had legal authority when it conducted the inspection.

No Exemption from Compliance with Environmental Laws, Even if Issued a CNC

Dela Merced & Sons contends that it was exempt from complying with the
environmental requirements of R.A. 9275 because it was issued a CNC.

This argument deserves scant consideration.

As explained in Special People, Inc. Foundation v. Canda, the CNC is a certification

issued by the EMB certifying that a project is not covered by the Environmental Impact
Statement (EIS) System and that the project proponent is not required to secure an
Environmental Compliance Certificate. The EIS System was established pursuant to
P.O. No. 1151, which required all entities to submit an EIS for projects that would have
a significant effect on the environment.

In 1981, Proclamation No. 2146 was issued, enumerating the areas and types of
projects that are environmentally critical and within the scope of the EIS System. The
areas and projects not included in the enumeration were considered non-critical to the
environment and thus, were entitled to a CNC.

This Court notes that the Guadalupe Commercial Complex is not included in the list of
environmentally critical projects or areas under Proclamation No. 2146. As an
environmentally non-critical project, it is not covered by the EIS System and,
consequently, a CNC was rightly issued in its favor.
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Nevertheless, the CNC only exempts Dela Merced & Sons from securing an
Environmental Compliance Certificate. It does not exempt it from complying with other
environmental laws. Section 5 of P.O. 1586 is clear on this matter.

xxx

The Constitutionality of Section 28 of R.A. 9275 Was Not Properly Questioned

Another main contention of Dela Merced & Sons is that Section 28 of R.A. 9275 violates
Section 19 (1), Article III of the Constitution, because the former section provides for the
imposition of excessive fines.

We note at the outset that Dela Merced & Sons' attempt to assail the constitutionality of
Sec. 28 of R.A. 9275 constitutes a collateral attack. This is contrary to the rule that
issues of constitutionality must be pleaded directly. Unless a law is annulled in a direct
proceeding, the legal presumption of the law's validity remains.

Nevertheless, even if the issue of constitutionality was properly presented, Dela Merced
& Sons still failed to satisfy the fourth requisite for this Court to undertake a judicial
review. Specifically, the issue of constitutionality of Sec. 28 of R.A. 9275 is not the lis
mota of this case.

xxx

The Fine Imposed Is Not Excessive Under the Constitution

Even if We were to rule on the constitutionality of Sec. 28 of R.A. 9275 despite the
procedural lapses, Dela Merced & Sons' petition would still be denied.

At the outset, Dela Merced & Sons' invocation of Article III, Section 19(1) of the
Constitution is erroneous. The constitutional prohibition on the imposition of excessive
fines applies only to criminal prosecutions. In contrast, this case involves an
administrative proceeding and, contrary to the supposition of Dela Merced & Sons, the
fine imposed is not a criminal penalty. Hence, the proscription under Article III, Section
19 is inapplicable to this case.

Clearly, the legislature saw the need to protect and conserve our water resources. To
this end, it formulated rules with concomitant penalties to ensure compliance with the
law. We will not interfere with its wisdom in drafting the law, especially since the
presumption of its constitutionality has not been overturned.

The Fine imposed by the DENR-PAB was Erroneously Reduced by the CA

xxx

Based on the foregoing, it was improper for the CA to indicate the date of issuance of
the TLO as the end of the period of violation. As pointed out by the PAB, Dela Merced
& Sons merely submitted documentary evidence to convince the former of the
company's sincere intention to comply with the DENR standards. Hence, the grant of
the request for the issuance of a TLO cannot be equated with compliance or proof that
the company's effluent has already passed the standards.

Any delay in conducting the influent and effluent sampling of the Water Treatment
Facility cannot be characterized as unreasonable, especially since the period of
sampling was well within the 150-day period provided in the TLO. Consequently, the
amount of fine imposed by DENR-PAB must be upheld.
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A Final Note

The importance of water resources for our existence cannot be overstated. These
resources are vital not only for our individual well-being, but also for the survival of
society as a whole. Yet, we have continued to abuse them, as if they were inexhaustible.

Pollution has been a perennial problem affecting our water resources. In his
sponsorship speech for the Clean Water Bill, one senator cited the Pasig River to
illustrate this point. He said, "[i]f we were to present a body of water that typifies the
chronic water pollution problem in the country, nothing leads us closer than the
notoriously polluted Pasig River. x x x Pasig River is considered biologically dead x x x.
[It] is just one of the bodies of water that has been severely prostituted." This is the same
river to which the Guadalupe Commercial Complex has discharged its wastewater.

Our legislators saw the need for a concerted effort of the government and society to
abate, control, and prevent the pollution of our country's water resources. Hence,
the Clean Water Act was enacted in the hope that "this vital measure will offer the future
generation an abundant supply of potable water, clean rivers to swim [in], and a better
access to safe water for their daily use."

All of us benefit from clean water, and we are all responsible for its preservation. Dela
Merced & Sons is no exception. Thus, we should all do our part in the protection and
conservation of our water resources. As the authors of the Clean Water Act have
reminded us, we must use our water wisely, for it is the selfsame prosperity we ought
to hand down to our children.

WHEREFORE, premises considered, the Petition in G.R. No. 201501 is

GRANTED, while that in G.R. No. 201658 is DENIED.

9.3 Policy analysis (effectiveness of laws in addressing environmental problem)

Compliance with the Supreme Court Order

Despite the clarity of the legal mandates and the simplicity of the orders of the Supreme Court to the
government agencies concerned, compliance to said legal mandates and court orders is almost
impossible, even though strides are being made to address the issue. To illustrate, with respect to
point-source pollutants or pollutants originating from a single, identifiable source, such as a discharge
pipe from a factory or sewage plant, the said agencies lacks the capacity, as well as the facility to
enforce said legal mandates and court orders.

The various types of point-source pollutants found in waters are as varied as the types of business,
industry, agricultural, and urban sources that produce them. Commercial and industrial businesses
use hazardous materials in manufacturing or maintenance, and then discharge various wastes from
their operations. The raw materials and wastes may include pollutants such as solvents, petroleum
products (such as oil and gasoline), or heavy metals. Point sources of pollution from agriculture may
include animal feeding operations, animal waste treatment lagoons, or storage, handling, mixing,
and cleaning areas for pesticides, fertilizers, and petroleum. Municipal point sources might include
wastewater treatment plants, landfills, utility stations, motor pools, and fleet maintenance facilities.

Basing on the scientific nature of point-source pollutants, it seems that in order to eradicate the same,
a highly-sophisticated form of technology is required and apparently, the agencies mandated to
clean-up the Manila Bay do not have the necessary resources in order to effectively comply with the
duties imposed on them by the law and by the court. To minimize and even worse, to completely
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erase pollution in the bay is a task that would certainly take a long period of time and is absolutely
not something which can be done overnight.

On the other hand, as regards nonpoint-source pollutants or those which do not originate from a
single, direct source, regulation of the same is as impossible as it is daunting. Nonpoint-source
pollution occurs as water moves across the land or through the ground and picks up natural and
human-made pollutants, which can then be deposited in lakes, rivers, wetlands, coastal waters, and
even groundwater. The water that carries nonpoint-source pollution may originate from natural
processes such as rainfall or snowmelt, or from human activities such as crop irrigation or lawn
maintenance. Nonpoint-source pollution is usually found spread out throughout a large area. It is
often difficult to trace the exact origin of these pollutants because they result from a wide variety of
human activities on the land as well as natural characteristics of the soil, climate, and topography.
The most common nonpoint-source pollutants are sediments, nutrients, microorganisms and toxics.
Sediment can degrade water quality by contaminating drinking water supplies or silting in spawning
grounds for fish.218

Preventing and controlling nonpoint-source pollution is primarily accomplished through regulation

under special laws and voluntary watershed protection efforts of certain environment groups. Best
management practices and pollution prevention can be applied both in the national and in the local
level to reduce and prevent nonpoint-source pollution. Some activities are state responsibilities,
perhaps, such as ensuring that public lands are properly managed to reduce soil erosion, or
developing legislation to govern chemical use. Many other regulatory approaches may be best
handled locally, through the Local Government Units (LGUs), such as by zoning or erosion-control
ordinances.

Each citizen can play an important role by being active in the community, learning more about the
local watershed, practicing conservation, and by preventing pollution in homes, yards, and
neighborhoods. But all these recommended approaches are still extremely difficult to enforce due to
the lack of facilities and manpower on the part of the government agencies concerned. Theoretically,
these suggested approaches are very promising and are impressed with great merit but at the end
of the day, it still boils down to the implementation part and if no enforcement or implementation is
done, legislation of ways and means to eradicate pollution would merely be an exercise in futility.

As was mentioned in a previous chapter, one of the solutions for the problem of water pollution
coming from industrial sources is the application of “effluent standards”. Effluent standards refer to
any legal restriction or limitation on quantities, rates, and/or concentrations or any combination
thereof, of physical, chemical, or biological parameters of effluent, which a person or point source is
allowed to discharge into a body of water. The use of these standards is already being practiced in
many jurisdictions all over the world, including the Philippines. In fact, the DENR, by virtue of
Department Administrative Order 2008-20, has set effluent standards to be followed by individuals
and entities in order to minimize the pollutants that are discharged into bodies of water in the country.

However, the employment of effluent standards must not be viewed in isolation. The particular
circumstances of every case must be taken into consideration before these standards can be
properly applied. The size, location, and carrying capacity of a specific body of water must be
considered before it can be decided that the application of effluent standards achieves its desired
objective. In addition, the number of existing factories, industrial facilities, and other sources of
pollution must also be looked into. Otherwise, the application would be futile and water pollution will
not be mitigated. For instance, if there are many factories surrounding a certain lake, even if all the
discharges made by these factories are within the prescribed standards, the receiving body of water
may still end up heavily polluted.

218
Polluted Runoff: Nonpoint Source Pollution. U.S. Environmental Protection Agency, Office of Water,
http://www.epa.gov/OWOW/NPS/ (last visited June 2012).
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Apart from the application of effluent standards, another way of resolving the problem of water
pollution according to experts is the application of “ambient standards” or such standards which
regulate the allowable amount of materials, as a concentration of pollutants, in water. The standard
is set to protect against anticipated adverse effects on human health or welfare, wildlife, or the
environment, with a margin of safety in the case of human health. However, same as in the case of
effluent standards, the problem with the application of ambient standards is the fact that even if
pollution in the bay can be eradicated at the soonest possible time, it is still unknown how long said
bay can recover and be brought to its original state prior to the pollution. As a result, even with the
best efforts on the part of the government agencies concerned, it is still unknown to them if and when
they can comply with the Supreme Court order.

9.4 Further discussion

The Philippine Legal Framework on Solid Waste Management

The legal and institutional framework that we have in our jurisdiction, which is supposed to work its
way around the problems of pollution and improper waste management, is viewed by several
environmentalists, lawyers, and scholars alike as overly complicated as it tries (and thereby fails) to
address an even more complex environmental problem. The complexity of the problem is brought
about by various “unknowns,” which the legal and institutional frameworks have not succeeded in
resolving. These “unknowns” include the carrying capacity of the body of water, the specific sources
of pollution, and the particular technological means applicable.

The special laws concerned with proper waste management and the eradication of pollution are in
need of more detailed and more specific provisions on how to unearth such unknowns. While it is
true that it is the duty of the implementing agencies to properly inform themselves of whatever is not
sufficiently provided by the statute because theoretically, said agencies have the technical knowhow
and the expertise for the effective enforcement of the provisions of the special laws mandating them,
there is still an apparent need of a solution that is based on reasonable science. In other words, in
order for these special laws to be properly implemented, the same must be backed up with long
years of scientific research and study.

How Culture Affects the Environment

The existence of practices that trigger pollution and the improper management of wastes is greatly
impacted by the specific culture and behavior of a community. For instance, Marawi City, a
predominantly Muslim city at the heart of Lanao del Sur in Mindanao, was declared by the DENR as
one of the dirtiest and most polluted cities in the Philippines. The question now before us is this:
despite the 99% Muslim population of Marawi City (Muslims being believed to be very conscious of
personal cleanliness and hygiene), why is it still so dirty? In order to address this question, we should
probe into the cultural and economic background of Marawi as a city.

Marawi City lies along Lake Lanao, Mindanao’s largest freshwater lake. Years of unchecked human
and industrial activity in that area have resulted in poor water quality, diminished aquatic resources,
increased health risks etc. A 2007 study undertaken by the city LGU reported Marawi’s volume of
waste generation at 68,400 kilos per day, almost 70% of which is biodegradable. Most lake dwelling
communities depend on this freshwater body for food and income, not to mention recreation. There
are also reports of harmful algae blooms (HABs), which appear as discolorations in the water. These
are caused by excess of nutrients (phosphorous, carbon or nitrogen) from agricultural and industrial
activity, and can have serious health consequences once they enter the food chain.219 Moreover, the
economy of Marawi City is largely based on agriculture, trading and exporting. Most industries in the
city are agriculture-oriented. They include rice and corn, hollow block manufacturing, goldsmithing,
and saw milling. Hence, there’s no wondering why the city is heavily polluted.

219
Philippine Environmental Governance Project Website, Marawi City, www.ecogov.com/marawicity (last visited June
2012).
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However, as a step in institutionalizing efforts to address waste management problems in Mindanao,

Marawi City’s Muslim religious sector, through the Ulama, has committed to act in support of the local
government’s Integrated Solid Waste Management program in the context of a solid waste
management (SWM) orientation specially conducted for the group last June 2009. The SWM
orientation for Muslim religious leaders was initiated by the City Government of Marawi and the
Philippine Environmental Governance Project (EcoGov), a project of the U.S. Agency for
International Development (USAID) in partnership with the Department of Environment and Natural
Resources (DENR). Over 50 leaders from the ranks of the Aleem, Aleema, and the city local
government participated in this event, which highlighted principles of Islamic environmental
management, as culled from the environmental sourcebook Al Khalifa (The Steward).

Al Khalifa promotes environmental management in Muslim communities, and has been endorsed by
the Assembly of the Darul Ifta of the Philippines. It delves into the religious consciousness of Muslims
in preaching that maintaining ecological balance is a duty of each Muslim, being God’s khalifa
(steward) on Earth. “We should be including waste management in the topics of our weekly radio
program for women, in the khutba (sermon during the Friday congregational prayer), and broadcast
this to the children of our madrasah (Arabic schools),” Aleema Rocaya S. Guinal told other leaders
present. The Muslim religious leaders gained an appreciation of proper waste management
practices, such as waste segregation, composting, and reuse of materials. For the first time, concrete
steps to these practices were demonstrated in their midst, which boosted their eagerness to share
firsthand information to their community members and to initiate small-scale SWM programs in
mosques and madrasah.

In order to arrive at a sensible conclusion, let us look at several Muslim principles, as embodied in
the Koran, and see how these relate to the Muslims’ view on the protection of the environment. Take
this excerpt for example:

And you certainly know already the first form of creation: why then do you not celebrate
His praises?
See you the seed that you sow in the ground?
Is it you that cause it to grow, or are We the cause?
Were it our will, We could crumble it to dry powder, and you would be left in wonderment,
[Saying], “We are indeed left with debts [for nothing];
“Indeed are we shut out [of the fruits of our labour].”
See you the water which you drink?
Do you bring it down [in rain] from the cloud or do We?
Were it our will, We could make it salt [and unpalatable]; then why do you not give
thanks?
See you the fire which you kindle?
Is it you who grow the tree which feeds the fire, or do We grow it?
It is We Who make it a means to remind [you of Us], and an article of comfort and
convenience for the denizens of deserts.
Then celebrate with praises the name of your Sustainer, the Supreme!

According to Yusuf Ali the message conveyed in this verse is the core of Revelation; it explains the
Hereafter: All things were created by God; are maintained by Him; and will go back to Him. But the
point of special interest to man is that man will also be brought back to God and is answerable to
Him, and to Him alone. He further says that the concept of Divine unity, as was represented in the
above verse, is the basis and essence of Islam. Divine unity is apparent in the unity of humanity and
of nature. God’s vice-regents on the earth, the holders of His trust, are therefore primarily responsible
for preserving the unity of creatures, the integral wholeness of the world, the flora and fauna, and
wildlife and natural environment. Thus, “unity”, “trust”, and “responsibility” are the three basic
concepts of Islam. These principles are at the same time the chief pillars of the Islamic environmental
ethic. They form also the fundamental values taught by the Qur’an. Thus, when we read the Qur’an’s
verses about the earth, we find that they suggest strongly that it is for man a peaceful place, which
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he should take heed of. Thus, the Qur’an draws our attention to nature and to the events that occur
in it.220

Let us also look at this other verse:

For that We pour forth water in abundance,

And We split the earth in fragments,
And produce therein corn,
And grapes and nutritious plants,
And olives and dates,
And enclosed gardens, dense with lofty trees,
And fruits and fodder —
For use and convenience to you and your cattle.

According to Dr. Ibrahim Ozdemir, in his interpretation of the above verse the earth is also important
with regard to the concept of mutual relations. Human beings are created from two of its elements:
earth and water. Thus, if man becomes alienated from the earth, he becomes alienated from his very
nature. He is not the lord and ruler of the earth; he is a humble member of it. The superior qualities
and faculties he possesses require not that he irresponsibly consumes and destroys its beauties and
resources, but that he acts in awareness of his great responsibility towards them.221

As regards cleanliness, Islam indeed considers cleanliness to be one of the fundamentals of belief.
It thus makes a direct connection between belief and cleanliness. It is for this reason that throughout
the ages cleanliness has been one of the Muslims’ most striking characteristics. In one chapter of
the Koran, Prophet Muhammad said: “Cleanliness is half of belief.” Some of the earliest verses
revealed to him by God were:

O you wrapped up [in a mantle]!

Arise and deliver your warning!
And your Sustainer magnify!
And your garments keep free from stain!
And all abomination shun!

It may be noted here that by requiring the cleanliness of clothes, on the one hand physical cleanliness
is being emphasized, and by demanding that “abomination” is shunned, on the other moral and
spiritual purity are being underlined. Thus, in Islam, physical and moral and spiritual cleanliness form
an indivisible whole. Muslims should neglect neither the cleanliness of their surroundings, houses,
the roads they use, and parks and gardens, nor any sort of moral and spiritual cleanliness.

It is clear then that Muslims are obliged to always be clean in every respect, both physically and
spiritually. According to Ozdemir, a Muslim who pays attention to physical cleanliness, that is, who
keeps his body, house, and surroundings clean, will not neglect the purity of his heart and spirit and
his moral purity. It is common knowledge that the most important condition for protecting ourselves
against illness is being clean and living in a clean environment. According to Prophet Muhammad,
what preventive medicine tells us is nothing different to this. As the hereunder verse says:

God loves those who turn to Him constantly and He loves those who keep themselves pure
and clean.

Taking all the abovementioned principles into account, accompanied by efforts on the part of the
local government, Marawi City is possibly on its way to a cleaner and safer future.

220
Ibrahim Ozdemir, Ph. D., An Islamic Appraoch to the Environment, available at: www.crescentlife.com/islamicapproach
(last visited June 2012).
221
Id.
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The Acceptability of Technological Fixes

The Philippines has employed numerous means and has accepted various technological fixes that
aim to promote proper waste management and sanitation. Most of these means and technological
fixes were first introduced in other parts of the globe and now they have made their way into our
country. An example of these is the “ecological sanitation system urine diverting dry toilet” (UDDT)
or “eco-san bowls” for short, which was a project started in 2003 by Center for Advanced Philippine
Studies (CAPS). This was a poverty alleviation program under the Millennium Development Goal
(MDG) whose objective was to propagate eco-san in areas where water supply is a problem. The
eco-san bowls, widely used in China, Mexico, Nepal, South Africa and Sweden, hit the Philippines
to replace the flush-type toilets and to “prevent pollution and disease caused by human excreta.”222

Dan Lapid, executive director of CAPS, said the eco-san approach is very simple. It is a waste
segregation principle anchored on the “don't mix” approach which is applied on human waste. The
eco-san bowl has two holes that separate the urine from the human excreta. Once fell on the ground,
these go into two separate containers. The excreta and the urine are then transferred on designated
storage areas. There is no need for a household to build a septic tank, as supply of ash is required
to cover the excreta.

Based on the findings of CAPS, the human excreta can be stored from 6 to 12 months while the
urine, high in nitrogen, phosphorous and potassium (NPK) and with proper mix of water, at four
weeks before it can be applied one month before harvest time.“But not all would welcome the eco-
san approach,” averred Dan Lapid, enumerating the required preparations leading to it.

On top of all, are rigid series of orientation for the beneficiaries and local government officials. The
seminars are focused on changes in attitude, sanitation habits and views regarding human excreta.
Lapid said everyone has gotten used to the 'flush-and-forget' style that the eco-san may not be a
welcome thing. He stressed that a major component of the orientation is to develop a change in
attitude toward one’s human excreta. At that time, Lapid reported the eco-san success story of San
Fernando City, La Union. Mayor Mary Jane Ortega initiated eco-san to her constituents after she
learned of it through files of winning non-government organization projects.

The mayor, known for her pro-environment stand, inquired about the project and asked CAPS to
bring in some eco-san bowls to the city. She said she would install them in areas where communities
are not dependent on water supply.

Intensive seminars ensued after the mayor’s inquiry and by the end of the orientation, four hundred
(400) eco-san bowls were installed in the city's urban poor and coastal areas. Lapid recalled the
people’s initial reaction was rejection. “They were not used to the smell of human excreta. Thus, they
all wanted led to avoid the toilets which were delivered in their areas.” But governance in San
Fernando was something this city was proud of. Its locals have that sprinkling of complete trust on
their mayor that did not take long to shed their apprehensions on the new approach.223

However, commercial toilet bowl manufacturers are not enthusiastic in making eco-san bowls even
if it was stressed that this would be on top of the standards. The random interviews with standard
bowl manufacturers stressed only one thing – absence of niche market in the urban areas. It did not
help to say that they would be pushing for advocacy to help the environment, as preoccupation was
solely on revenues.

Another means currently employed in the Philippines in order to alleviate the problems caused by
improper management and disposal of solid wastes is waste segregation. Segregation of wastes is
done by separating one’s trash into biodegradable and non-biodegradable, thus, in effect, there will
be two garbage bins which would contain the segregated trash. Creative modifications have also
been done on the simple segregation into biodegradable and non-biodegradable. Some institutions
would classify trash into three categories, namely, paper, plastics, and cans. Others would categorize

222
Maria Congee Gomez, Eco-San Toilet Bowls Make Its Mark in the Philippines (2009).
223
Id.
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them into recyclables and non-recyclables. No matter what system of segregation is employed, the
important thing is that the objective of proper waste management is achieved.

Local Government Units in Metro Manila have already employed waste segregation in their garbage
collection systems. In Quezon City, for example, Mayor Herbert Bautista orders QC residents to
segregate their trash first as a prerequisite before the garbage collector gets them. In this manner,
people are forced to properly segregate the garbage they produce; otherwise, their homes will be
filled with uncollected trash. If there is one underlying problem in the employment of waste
segregation is the fact that even though the trash are segregated at the first instance, i.e., in the
homes, offices, commercial establishments, these segregated trash sometimes still get commingled
with each other when they reach the dumpsite. Whenever this happens, the purpose of waste
segregation is defeated.

Another means of disposing solid wastes which is widely practiced in the Philippines but is frowned
upon by most environmentalists is backyard burning. Backyard burning occurs when people burn
household trash on their own property. Typical household trash burned consists of items that would
typically be sent to a landfill or recycled. This includes paper, cardboard, food scraps, plastics, yard
trimmings, and leaves. Burning can occur in a burn barrel, usually a 55-gallon drum, a homemade
burn box, wood stove, outdoor boiler, or open pit. In the past, the trash burned by residents,
especially those in rural areas, consisted mainly of paper and wood. The makeup of trash has
changed within the past 50 years and now includes coated paper, plastics, and other materials
manufactured by humans.

The reason why backyard burning is not widely-accepted by environmentalists, as well as by a

substantial number of citizens, is quite obvious. It is because backyard burning can emit pollutants
such as hazardous air pollutants (HAPs), particle pollution, and volatile organic compounds (VOCs).
These pollutants can contribute to health problems that may affect homeowners, their families, their
neighbors, and the community. While national and local regulations limit the amount of backyard
burning, dangerous releases of HAPs can occur if a homeowner does not comply with these
regulations. Burning trash produces many pollutants, including dioxins, formaldehyde and
hexachlorobenzene.

Regulation of Open Dumpsites

Last September 6, 2011, DENR Secretary Ramon Paje announced that four hundred thirty-five (435)
local government units (LGUs) around the country continue to maintain open and controlled
dumpsites. In a statement, Paje said that the DENR is already working with the Office of the
Ombudsman and the Department of Interior and Local Government (DILG) to make sure that these
LGUs would comply with Republic Act 9003 or the Ecological Solid Waste Management Act, which
set the deadline for the closure of open and controlled dumpsites in 2004. “We are already working
closely with DILG and the Ombudsman to resolve this issue of low, if not noncompliance of local
chief executives, to the requirements of the Ecological Solid Waste Management Act,” Paje explained
to members of Ecowaste Coalition, which staged a protest at the DENR office in Quezon City
yesterday.

The coalition, which pushes for the 3Rs – reduce, reuse and recycle – in waste management, is
calling for the immediate closure and rehabilitation of all dumpsites in the country.This came in the
wake of the deadly collapse of an open dumpsite in Baguio City at the height of Typhoon "Mina,"
which left several people dead and displaced.Paje said that the DENR has already issued final
notices to the 435 LGUs and the Office of the Ombudsman has initially issued subpoena duces tecum
to the LGUs. He said that the twin moves are “a step closer to filing administrative charges against
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noncompliant LGU officials under RA 7160 or the Local Government Code, and send out a signal to
those who continue to ignore the risks to their own constituents’ health and property.”224

An “open dumpsite” is a land disposal site at which solid wastes are disposed of in a manner that
does not protect the environment, is susceptible to open burning, and is exposed to the elements,
disease vectors and scavengers. These unplanned heaps of uncovered wastes, often burning and
surrounded by pools of stagnated polluted water, rat and fly infestations with domestic animals
roaming freely and families of scavengers picking through the wastes is not only an eyesore but a
great environmental hazard. As a default strategy for municipal solid waste management, open
dumps involve indiscriminate disposal of waste and limited measures to control operations, including
those related to the environmental impacts of landfills. Very often, open dumping sites are swamp
lands or low-lying areas with the wastes being used for reclamation. Liners are rarely used and little
consideration is given to the water table and groundwater pollution and/or gas migration.

Problems of shortage of cover, lack of leachate collection and treatment, inadequate compaction,
poor site design, and many scavengers working at the site are common. The high percentage of
organics, combined with much plastic, which forms layers when compacted, contributes to the build-
up of methane gases at dumps. Fires often break out and workers are made ill by the gases. In cities
where plastic shopping bags are used to put out wastes for collection, waste pickers sometimes set
refuse on fire in order to recover valuable inorganic items. Spontaneous fires also break out in dumps.
This greatly adds to the air pollution from dumps. The roads leading to dumps and those on dumps
themselves are often elementary, becoming impassable in the wet season. Since most large dumps
have hundreds of extra workers in the form of waste pickers, and the municipal workers are not
provided with protective gloves, the health risks at dumps are much higher than in sanitary landfills
in industrialized countries. These workers are exposed to risks from human feces, slaughterhouse
wastes, landfill gases, toxic dust, infectious biomedical wastes, snakes, scorpions, broken glass, and
explosions. Thus, these dump sites are essentially uncontrolled, creating considerable health, safety,
and environmental problems.

Solid waste management services in most of the Countries comes a poor third in municipal priorities,
after water supply and health services. However they are under pressure from their own legislation
to move away from the current disposal practices of open dumping to sanitary landfilling. Such a
change is unlikely to occur in the nearest future due to limitations on finance, shortage of technical
resources and lack of institutional arrangements. 225 It is advisable to have small incremental
improvements in landfill design and operation rather than an attempt to make a single large
technological leap. This approach should also match the affordability and sustainability
considerations.

Making Money Out of Trash

On July 2000, tragedy literally befell a slum community in Payatas, Quezon City when a hill of
garbage overlooking the area caved in, killing two hundred eighteen (218) people and leaving three
hundred (300) families homeless. Despite this, many people still consider Payatas as a land of
opportunities, especially those who make money out of scavenging and selling trash. Every day,
before dawn breaks over Quezon City, a small army of human scavengers make their way from the
nasty slums they call home to the gates of the city’s biggest garbage dump. Armed with headlamps
and wicker baskets they make the slow walk to the top of the Payatas dumpsite. Rising some 30 to
40 meters (98 to 131 feet) from the valley floor the mound of garbage covers 10 hectares and takes
in sweeping views of the surrounding countryside.226 It also overlooks the old Payatas dumpsite,
which was closed at the end of 2000 because of the landslide.

224
Philippine Star, 435 Lgus Operating Dumpsites Face Sanctions (Sept. 6, 2011), www.philstar.com/lgu-opendumpsite
(last visited June 2012).
225
Michael Pugh, Landfill Technology in Developing Countries, Waste Management 58-59 (1999).
226
Karl Wilson, A Mountain of Opportunity for Payatas Scavengers, Manila Times (March 6, 2006).
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Just after four in the morning, the first trucks start to arrive carrying their precious cargo, which will
be picked over by teams of scavengers looking for anything they can recycle. Over the next 17 hours
some 430 to 450 garbage trucks will deposit an estimated 1,200 tons of garbage at the site. For the
30,000 residents who live around the garbage-mountain it is their only source of income. The teams
of scavengers who pick over each truckload of refuse are lucky if they make one hundred pesos a
day for their efforts. Down in the slums cottage industries thrive as thousands of people, including
children, sort through baskets brought down from the mound. Rusted inner springs from discarded
mattresses are used as fences around shacks made from scrap pieces of wood and iron sheeting.
The fences are used to dry paper and plastic for recycling.

Foam rubber is washed and dried before being glued in strips to make mattresses. Covers are made
for around P12 each and the finished product sold in local markets for P100 or more. A broken
concrete bridge crosses a narrow river where boys wash plastic in putrid water. It is dried and bundled
up and sold for recycling. In one yard are piles of discarded backpacks that will be washed, repaired
and later sold in markets in the poorer districts of Metro Manila. Drinking water is brought in by truck
daily and sold to residents and some dwellings have electricity.227

In 1993, the Vincentian Missionaries Social Development Foundation, under the leadership of Father
Norberto Carcellar and the late Brother Oquet Anayan, started a Savings and Credit Program for the
scavengers of the Payatas dumpsite. At that time, the dump occupied only five of its present 20
hectares. The Foundation’s program catered mainly to women, using a modified Grameen Bank
approach that emphasized savings rather than outside funding as a source of capital. The
Foundation organized the borrowers into a people’s organization, the Lupang Pangako Urban Poor
Association, Inc. (LUPAI), registered in June 1997 with the Securities and Exchange Commission of
the Philippines.228 From an initial seed capital of one hundred thousand pesos (PhP100,000; around
US$ 2,000), donated by a government charity agency in 1993, LUPAI now manages around PhP15
million (US$ 300,000) in savings accounts for its 7,000 members. Today, many LUPAI members
engage in microenterprises that provide goods and services to the scavengers and other residents
of the area surrounding the dumpsite.

Another charity group which has installed livelihood projects in Payatas is the Mother Ignacia
National Social Apostolate Center (MINSAC). There are two (2) operating projects which were
opened by MINSAC in the area: the Basahan Project and the Sewing Project.229 In order to make
these projects sustainable, a strategy called “subcontracting” was used. Subcontracting is done when
a company (called contractor) places an order of other companies (called subcontractor) for the
production of parts, and components to be incorporated into a product to be sold by the contractor.
Hence, with this strategy, the sewers and Basahan workers do the labor and they are being paid for
it. In a few months of operation, these projects already created an impact on the families who are
being involved in the operation. According to them, the amount that they are earning from the projects
somehow helps them in sustaining the families’ basic needs. Also because of it their skills in sewing
and making different rugs are humanizing. They are not just earning but they are also learning.

CASE STUDY:
WASTE IMPORTATION - CANADIAN GARBAGE SAGA

In 2013 to early 2014, over a hundred shipping containers were shipped in batches from Vancouver, Canada to
Manila, Philippines. Mislabeled as recyclable plastics, the shipping containers contained household wastes such
as plastic bottles and bags, newspapers and used adult diapers.

Various local and diplomatic protests were made to return the garbage back to Canada on the basis that it is in
violation of the Basel Convention where both Philippines and Canada are signatories of. Initially, Canada refused

227
Id.
228
Eugenio Gonzales, From Wastes to Assets: The Scavengers of Payatas (2003).
229
Eugenio Gonzales, From Wastes to Assets: The Scavengers of Payatas (2003).
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to retrieve the trash due to technicalities of the Basel Convention, the involvement of private companies and
bureaucracy. Later on, the Philippine government has been advised to explore other (locally available) options
to process the shipment.

In the 2015 Asia-Pacific Economic Cooperation (APEC) summit, the Canadian government expressed that it
does not have any authority to compel the private company involved to take responsibilities of the garbage
shipments and that the incident has exposed loopholes within their legislation. November 2017, during the 31st
Association of Southeast Asian Nations (ASEAN) Summit and Related Summits, Canadian Prime Minister Justin
Trudeau expressed that the aforementioned legal barriers have already been addressed to "theoretically" retrieve
the trash. In both incidences, no commitments were made to remove the garbage out of the Philippines.

On the other hand, 26 of the container vans have already been dumped at a landfill in Capas, Tarlac, despite
numerous protests made by local environmental groups. No further updates were heard until November 2018
when a technical working group composed of representatives from DOJ, DENR, DFA, and BOC, were formed to
resolve the issue with the Canadian Government.

On May 31, 2019, after 6 years of moldering, the "Canadian Garbage Saga" finally comes to an end as the 69
remaining shipping containers of trash were sent back to Canada to finally be disposed of at a waste-to-energy
facility in Vancouver.

With the end of the Canadian garbage saga, it is hoped that this incident will never happen again. But these
activities is a global issue and are common in many developing or under developed countries, specifically in
Southeast Asia. Environmental activists believe that there are many other undetected illicit shipments of garbage
throughout the country. In 2019 alone, custom officials have already intercepted several waste shipments from
Australia, Hong Kong and South Korea. Although some were repatriated, these shipments will continue unless
it is ensured that the Basel amendment is enforced or there is a total ban on waste imports.
-----

Sources:

https://www.rappler.com/newsbreak/iq/188654-timeline-canada-garbage-philippines
https://www.rappler.com/science-nature/environment/99904-lawmakers-probe-canada-garbage-tarlac
https://www.philstar.com/opinion/2019/01/15/1885131/garbage-in-garbage-out
https://www.npr.org/2019/05/31/728611992/sordid-chapter-ends-as-philippines-sends-back-canada-s-trash
https://news.abs-cbn.com/news/05/31/19/canada-trash-loaded-onto-ship-to-depart-friday-sbma
https://www.latimes.com/world/la-fg-asia-plastic-waste-20190617-story.html
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Chapter Ten

Industrial Pollution

FACTS AND FIGURES

It has been identified that the industrial sector is one of the key sources of pollutants for various bodies of water
in the Philippines. Although its percent contribution (15%) is smaller than domestic (48%) and agricultural (37%)
sources, it is often the most hazardous out of the three categories as it usually contains high concentrations of
toxic chemicals, heavy metals, and organic pollutants.
It is approximated that there are 25 million cubic meters of acid/alkaline liquid, 2,000 cubic meters of solvents,
22,000 tons of heavy metals and other infectious, biological or intractable wastes that are directly disposed in
bodies of water in Metro Manila area alone.

There are very limited hazardous waste treatment facilities in the country as there are only 129 registered
Treatment, Storage and Disposal (TSD) facilities as of 2019. Due to this limitation, there are approximately
50,000 tons of stored hazardous waste in the country. In most cases, these are often needed to be exported for
treatment, recovery, and disposal.

Air pollution is another major environmental problem in Metro Manila. In 2014, there is an average of 89
micrograms per Normal cubic meters (μg/Nm3) of Total Suspended Particulate (TSP) nationwide. While Metro
Manila has an average of 118 μg/Nm3 of TSP, 90% of which comes from mobile sources due to serious traffic
congestion Manila suffers from on a daily basis. Long exposure to high levels of concentration of air pollutants
may cause respiratory diseases such as bronchitis, asthma and other related diseases.

Sources:

https://www.greenpeace.org/archive-philippines/Global/seasia/report/2007/10/the-state-of-water-in-the-phil.pdf
https://web.archive.org/web/20100815101306/http://www.un.org/cyberschoolbus/habitat/profiles/manila.asp
https://web.archive.org/web/20051203095144/http://www.cleanairnet.org/caiasia/1412/article-58903.html

10.1 Environmental situationer

A few years ago, DENR ordered the temporary closure of a certain recycling plant in Quezon
Province on suspicion that the plant operators were dumping toxic and hazardous wastes into the
surrounding land and water bodies. Inside the compound, DENR inspectors discovered numerous
steel and plastic drums piled on top of each other, plastic square bins containing various kinds of
toxic wastes and stacks of contaminated rags. Moreover, in one area of the plant premises, workers
wearing gas masks were seen putting hardened chemical waste in a sack filled with sawdust and
sand. The closure of the plant was prompted by the admission of a certain persons who were caught
dumping toxic wastes in several sites in the province. They admitted that the wastes originated from
the said recycling plant’s compound.

According to the persons caught, the drums were being given to them for free by a person who works
at the plant, upon condition that they will be the one to get rid of its contents. The couple said they
accepted the offer because of financial opportunities after they were assured that the drum contents
will not harm them as long as they were buried under the ground. Some of the wastes, according to
the couple, were even buried by them in their own backyard. The couple further disclosed that once
they dispose of the drum contents, they sell the steel drum, which weighs 18 kg. each at PhP18 per
kg. The plastic drums cost PhP250 up to PhP500 each when empty. The couple claimed innocence
when informed that what they had been doing was against the law. The plant officials, on the other
hand, denied being associated with the couple, as well as the latter’s allegations against their
company.

The dumps were found littered with hundreds of plastic and steel drums containing different kinds of
toxic chemical waste, some of them spilling out into creeks and farms. The chemicals were being
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discharged into the dumping ground and then covered when full. Some of the containers have labels
that read “hazardous waste” and have skull and bone signs on them.

10.2 Legal analysis (application of existing laws)

In order to completely understand the policy of the State against substances and wastes that are
harmful to health and the environment, R.A. 6969 defines for us what “hazardous substances” and
“hazardous wastes” are. According to the law, “hazardous substances” shall refer to substances
which present either:

(1) short-term acute hazards, such as acute toxicity by ingestion, inhalation or skin absorption,
corrosivity or other skin or eye contact hazards or the risk of fire or explosion; or
(2) long-term environmental hazards, including chronic toxicity upon repeated exposure,
carcinogenicity (which may in some cases result from acute exposure but with a long latent period),
resistance to detoxification process such a biodegradation, the potential to pollute underground or
surface waters, or aesthetically objectionable properties such as offensive odors.

On the other hand, “hazardous wastes” shall be defined as substances that are without any safe
commercial, industrial, agricultural or economic usage and are shipped, transported or brought from
the country of origin for dumping or disposal into or in transit through any part of the territory of the
Philippines. The term “hazardous wastes” shall also refer to by-products, side-products, process
residues, spent reaction media, contaminated plant or equipment or other substances from
manufacturing operations, and as consumer discards of manufacture products.

Based on the definitions provided by the law, the adverse effects of these substances and wastes
both to human health and the environment are undeniable.

Rights and Obligations Created

A number of rights and obligations are created by the R.A. with respect to specific persons and/or
entities concerned. As to manufacturers, processors, or importers of ‘new’ chemical substances or
mixtures, before such chemical substance or mixture can be manufactured, processed, or imported
for the first time, the following information shall be submitted: the name of the chemical substance or
mixture, its chemical identity and molecular structure, proposed categories of use, an estimate of the
amount to be manufactured, processed or imported; processing and disposal thereof, and any test
data related to health and environmental effects which the manufacturers, processors or importers
have. However, if such substances or mixtures are to be produced in small quantities solely for
experimental or research and developmental purposes and are to exist temporarily and which have
no human or environmental exposure such as those which exist as a result of chemical reaction in
the manufacture or processing of a mixture of another chemical substance, their manufacturers,
processors, or importers shall be exempt from the abovementioned submission.

Manufacturers, processors, or importers shall also be required to have their chemical substances or
mixtures tested and shall shoulder the costs of such testing upon finding by the DENR: (1) of a reason
to believe that the chemical substances or mixture may present an unreasonable risk to health or the
environment or there may be substantial human or environmental exposure thereto; and (2) that
there is insufficient data and experience for determining or predicting the health and environmental
effects of the chemical substance and the testing of the chemical substance or mixture is necessary
to develop such data.

With respect to the public in general, it shall have the right of access to records, reports, or information
concerning chemical substances and mixtures including safety data submitted, data on emission or
discharge into the environment, and such documents shall be available for inspection or reproduction
during normal business hours. However, the DENR may consider a record, report or information or
particular portions thereof confidential and may not be made public when such would divulge trade
secrets, production or sales figures or methods, production or processes unique to such
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manufacturer, processor or distributor, or would otherwise tend to affect adversely the competitive
position of such manufacturer, processor or distributor.

In addition to the obligations created by the law as mentioned in the preceding paragraphs, Sec. 13
of the Act explicitly prohibits the following acts: (a) to knowingly use a chemical substance or mixture
which is imported, manufactured, processed or distributed in violation of the Act or its implementing
rules and regulations or orders; (b) failure or refusal to submit reports, notices or other information,
access to records, as required by the Act, or permit inspection of establishment where chemicals are
manufactured, processed, stored or otherwise held; (c) failure or refusal to comply with the pre-
manufacture and pre-importation requirements; and (d) to cause, aid or facilitate, directly or indirectly,
in the storage, importation, or bringing into Philippine territory, including its maritime economic zones,
even in transit, either by means of land, air or sea transportation or otherwise keeping in storage any
amount of hazardous and nuclear wastes in any part of the Philippines.

Penal Provisions

According to Sec. 14 of the Act, the penalty for any person who violates Sec. 13 (a), (b), and (c) is
imprisonment of six (6) months and one day to six (6) years and one day and a fine ranging from Six
hundred pesos (PhP600.00) to Four thousand pesos (PhP4,000.00) and such person shall not be
covered by the Probation Law. If the offender is a foreigner, he or she shall be deported and barred
from any subsequent entry into the Philippines after serving his or her sentence. In case the violation
was committed by a partnership, corporation, association or any juridical person, the partner,
president, director or manager who shall consent to or shall knowingly tolerate such violation shall
be directly liable and responsible for the act of the employee and shall be criminally liable as a co-
principal. If the offender is a government official or employee, he or she shall, in addition to the
abovementioned penalties, be deemed automatically dismissed from office and permanently
disqualified from holding any elective or appointive position.

On the other hand, the penalty of imprisonment of twelve (12) years and one day to twenty (20)
years, shall be imposed upon any person who shall violate section 13 (d) of the Act. If the offender
is a foreigner, he or she shall be deported and barred from any subsequent entry into the Philippines
after serving his or her sentence. In the case of corporations or other associations, the penalties
mentioned in the few preceding paragraphs shall be imposed upon the managing partner, president
or chief executive in addition to an exemplary damage of at least Five hundred thousand pesos
(PhP500,000.00). If it is a foreign firm, the director and all officers of such foreign firm shall be barred
from entry into the Philippines, in addition to the cancellation of its license to do business in the
Philippines. If the offender is a government official, the same rule set forth in the preceding paragraph
shall apply.

Furthermore, the law states that every penalty imposed for the unlawful importation, entry, transport,
manufacture, processing, sale or distribution of chemical substances or mixtures into or within the
Philippines shall carry with it the confiscation and forfeiture in favor of the Government of the
proceeds of the unlawful act and instruments, tools or other improvements including vehicles, sea
vessels, and aircrafts used in or with which the offense was committed. Chemical substances so
confiscated and forfeited by the Government at its option shall be turned over to the Department of
Environment and Natural resources for safekeeping and proper disposal.

In addition, the person or firm responsible or connected with the bringing or importation into the
country of hazardous or nuclear wastes shall be under obligation to transport or send back said
prohibited wastes. Any and all means of transportation, including all facilities and appurtenances that
may have been used in transporting to or in the storage in the Philippines of any significant amount
of hazardous or nuclear wastes shall at the option of the government be forfeited in its favor.

Administrative Accountability
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Moreover, in all cases of violations of the Act, it shall be within the authority of the DENR Secretary
to impose an administrative fine of not less than PhP10,000 but not more than PhP50,000 upon any
person or entity found guilty thereof.

10.3 Policy analysis (effectiveness of laws in addressing environmental problem)

General Powers and Responsibilities of the DENR

R.A. 6969 expressly enumerates the functions, powers, and responsibilities of the DENR in relation
to the regulation and control of hazardous substances and wastes. Pursuant to one of the Act’s
general objectives, first among DENR’s responsibilities is to keep an updated inventory of chemicals
that are presently being manufactured or used, indicating, among others, their existing and possible
uses, quality, test data, names of firms manufacturing or using them, and such other information as
the Secretary may consider relevant to the protection of health and the environment. Such
responsibility is in consonance with one of the fundamental aims of the law, which is to identify the
respective liabilities of persons and entities who shall act in violation of its provisions and to impose
upon them specific obligations relative to the management and control of hazardous substances and
wastes. Moreover, it shall be within the powers of the DENR to require chemical substances and
mixtures that present unreasonable risk or injury to health or to the environment to be tested before
they are manufactured or imported for the first time, as well as chemical substances that are already
being manufactured, and to evaluate the characteristics of such chemicals after they are tested to
determine their toxicity and the extent of their implications on health and the environment.

It shall also be the function of the DENR to conduct inspection of any establishment in which
chemicals are manufactured, processed, stored or held before or after their commercial distribution
and to make recommendations to the proper authorities concerned, upon finding of particular
irregularities in the course of the activities in which these establishments are usually engaged.
Another power vested in the DENR by the Act is the authority to enter into contracts and make grants
for research, development, and monitoring of chemical substances and mixtures, in pursuance of the
Act’s long-term objective, which is to be able to achieve advancements in research and study for the
purpose of saving the environment from possible destruction and to protect the people’s health and
general welfare. It shall also be well within the DENR’s authority to confiscate or impound chemicals
found not falling within said acts cannot be enjoined except after the chemicals have been impounded
and to monitor and prevent the entry, even in transit, of hazardous wastes and their disposal into the
country. Furthermore, it shall be the corollary duty of the DENR to disseminate information and
conduct educational awareness campaigns on the effects of chemical substances, mixtures and
wastes on health and environment, which is once again in accordance with one of the Act’s general
objectives, which is to educate the public about the hazards and risks brought by toxic substances.

In addition, the Implementing Rules and Regulations of RA 6969 (DENR Administrative Order No.
1992-29) provides that the Secretary of DENR may validly delegate his powers and functions and/or
appoint an Environmental Protection Officer. The Secretary shall have the power to amend or revoke
said delegated authorities.

Functions of Other Concerned Agencies

The law also grants the DENR the right to call on any department, bureau, office, agency, state
university or college, and other instrumentalities of the government for assistance in the form of
personnel, facilities, and other resources as the need arises in the discharge of its functions. As a
matter of fact, the law creates an “Inter-Agency Technical Advisory Council” attached to the DENR
which shall be composed of the DENR Secretary as head of the Council and officials of other
government agencies as members. Among these officials are the Secretary of Health, Secretary of
Science and Technology, Secretary of National Defense, Secretary of Trade and Industry, Secretary
of Foreign Affairs, and Secretary of Labor and Employment. The basic functions of the Council
include assisting the DENR in the preparation and updating of the inventory of chemical substances
and mixtures that fall within the coverage of the Act and conducting the preliminary evaluation of the
characteristics of chemical substances and mixtures to determine their toxicity and effects on health
and the environment and make the necessary recommendations to the DENR.
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10.4 The Clean Air Act

The Clean Air Act, or Republic Act no. 8749, expressly recognized certain rights of citizens with a
significant pronouncement to the right to breathe clean air. It has also identified the sources of
pollution and provided for their emission standards.
SEC. 4. Recognition of Rights. - Pursuant to the above-declared principles, the
following rights of citizens are hereby sought to be recognized and the State shall seek
to guarantee their enjoyment:
[a] The right to breathe clean air;
[b] The right to utilize and enjoy all natural resources according to the principles of
sustainable development;
[c] The right to participate in the formulation, planning, implementation and monitoring
of environmental policies and programs and in the decision-making process;
[d] The right to participate in the decision-making process concerning development
policies, plans and programs projects or activities that may have adverse impact on the
environment and public health;
[e] The right to be informed of the nature and extent of the potential hazard of any
activity, undertaking or project and to be served timely notice of any significant rise in
the level of pollution and the accidental or deliberate
release into the atmosphere of harmful or hazardous substances;
[f] The right of access to public records which a citizen may need to exercise his or her
rights effectively under this Act;
[g] The right to bring action in court or quasi-judicial bodies to enjoin all activities in
violation of environmental laws and regulations, to compel the rehabilitation and
cleanup of affected area, and to seek the imposition of penal sanctions against violators
of environmental laws; and
[h] The right to bring action in court for compensation of personal damages resulting
from the adverse environmental and public health impact of a project or activity.
xxx
SEC. 5. Definitions.- As used in this Act:
a) “Air pollutant” means any matter found in the atmosphere other than oxygen,
nitrogen, water vapor, carbon dioxide, and the inert gases in their natural or normal
concentrations, that is detrimental to health or the environment, which includes, but not
limited to smoke, dust, soot, cinders, fly ash, solid particles of any kind, gases, fumes,
chemical mists, steam and radioactive substances;
b) “Air pollution” means any alteration of the physical, chemical and biological
properties of the atmospheric air, or any discharge thereto of any liquid, gaseous or
solid substances that will or is likely to create or to render the air resources of the
country harmful, detrimental, or injurious to public health, safety or welfare or which will
adversely affect their utilization for domestic, commercial, industrial, agricultural,
recreational, or other legitimate purposes;
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f) “Department” means the Department of Environment and Natural Resources;
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SEC. 16. Permits.- Consistent with the provisions of this Act, the Department shall have
the authority to issue permits as it may determine necessary for the prevention and
abatement of air pollution.
Said permits shall cover emission limitations for the regulated air pollutants to help
attain and maintain the ambient air quality standards. These permits shall serve as
management tools for the LGUs in the development of their action plan.
SEC. 17. Emission Quotas.- The Department may allow each regional industrial center
that is designated as special airshed to allocate emission quotas to pollution sources
within its jurisdiction that qualify under an environmental impact assessment system
programmatic compliance program pursuant to the implementing rules and regulations
of Presidential Decree No. 1586.
SEC. 18. Financial Liability for Environmental Rehabilitation.- As part of the
environmental management plan attached to the environmental compliance certificate
pursuant to Presidential Decree No. 1586 and rules and regulations set therefor, the
Department shall require program and project proponents to put up financial guarantee
mechanisms to finance the needs for emergency response, clean-up rehabilitation of
areas that may be damaged during the program or project’s actual implementation.
Liability for damages shall continue even after the termination of a program or project,
where such damages are clearly attributable to that program or project and for a definite
period to be determined by the Department and incorporated into the environmental
compliance certificate.
Financial liability instruments may be in the form a trust fund, environmental insurance,
surety bonds, letters of credit, as well as self-insurance. The choice of the guarantee
instruments shall furnish the Department with evidence of availment of such
instruments.
xxx
SEC. 19. Pollution From Stationary Sources.- The Department shall, within two (2)
years from the effectivity of this Act, and every two (2) years thereafter, review, or as
the need therefore arises, revise and publish emission standards, to further improve
the emission standards for stationary sources of air pollution. Such emission standards
shall be based on mass rate of emission for all stationary source of air pollution based
on internationally accepted standards, but not be limited to, nor be less stringent than
such standards and with the standards set forth in this section. The standards,
whichever is applicable, shall be the limit on the acceptable level of pollutants emitted
from a stationary source for the protection of the public’s health and welfare.
xxx
Pursuant to Sec. 8 of this Act, the Department shall prepare a detailed action plan
setting the emission standards or standards of performance for any stationary source
the procedure for testing emissions for each type of pollutant, and the procedure for
enforcement of said standards.
Existing industries, which are proven to exceed emission rates established by the
Department in consultation with stakeholders, after a thorough, credible and
transparent measurement process shall be allowed a grace period of eighteen (18)
months for the establishment of an environmental management system and the
installation of an appropriate air pollution control device: Provided, That an extension
of not more than twelve (12) months may be allowed by the Department on meritorious
grounds.
SEC. 20. Ban on Incineration.- Incineration, hereby defined as the burning of municipal,
biomedical and hazardous waste, which process emits poisonous and toxic fumes is
hereby prohibited; Provided, however, That the prohibition shall not apply to traditional
small-scale method of community/neighborhood sanitation “siga”, traditional,
agricultural, cultural, health, and food preparation and crematoria; Provided, further,
That existing incinerators dealing with a biomedical wastes shall be out within three (3)
years after the effectivity of this Act; Provided, finally, that in the interim, such units shall
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be limited to the burning of pathological and infectious wastes, and subject to close
monitoring by the Department.
Local government units are hereby mandated to promote, encourage and implement in
their respective jurisdiction a comprehensive ecological waste management that
includes waste segregation, recycling and composting.
With due concern on the effects of climate change, the Department shall promote the
use of state-of-the-art, environmentally-sound and safe non-burn technologies for the
handling, treatment, thermal destruction, utilization, and disposal of sorted, unrecycled,
uncomposted, biomedical and hazardous wastes.
xxx
SEC. 21. Pollution from Motor Vehicles.- a) The DOTC shall implement the emission
standards for motor vehicles set pursuant to and as provided in this Act. To further
improve the emission standards, the Department shall review, revise and publish the
standards every two (2) years, or as the need arises. It shall consider the maximum
limits for all major pollutants to ensure substantial improvement in air quality for the
health, safety and welfare of the general public.
xxx
b) The Department, in collaboration with the DOTC, DTI and LGUs, shall develop an
action plan for the control and management of air pollution from motor vehicles
consistent with the Integrated Air Quality Framework. The DOTC shall enforce
compliance with the emission standards for motor vehicles set by the Department. The
DOTC may deputize other law enforcement agencies and LGUs for this purpose. To
this end, the DOTC shall have the power to:
[1] Inspect and monitor the emissions of motor vehicles;
[2] Prohibit or enjoin the use of motor vehicles or a class of motor vehicles in any area
or street at specified times; and
[3] Authorize private testing emission testing centers duly accredited by the DTI.
c) The DOTC, together with the DTI and the Department, shall establish the procedures
for the inspection of motor vehicles and the testing of their emissions for the purpose
of determining the concentration and/or rate of pollutants discharged by said sources.
d) In order to ensure the substantial reduction of emissions from motor vehicles, the
Department of Trade and Industry (DTI), together with the DOTC and the Department
shall formulate and implement a national motor vehicle inspection and maintenance
program that will promote efficient and safe operation of all motor vehicles. In this
regard, the DTI shall develop and implement standards and procedures for the
certification of training
institutions, instructors and facilities and the licensing of qualified private service
centers and their technicians as prerequisite for performing the testing, servicing, repair
and the required adjustment to the vehicle emission system. The DTI shall likewise
prescribe regulations requiring the disclosure of odometer readings and the use of
tamper-resistant odometers for all motor vehicles including tamper-resistant fuel
management systems for the effective implementation of the inspection and
maintenance program.
SEC. 22. Regulation of All Motor Vehicles and Engines.- Any imported new or locally-
assembled new motor vehicle shall not be registered unless it complies with the
emission standards set pursuant to this Act, as evidenced by a Certificate of Conformity
(COC) issued by the Department.
Any imported new motor vehicle engine shall not be introduced into commerce, sold or
used unless it
complies with emission standards set pursuant to this Act.
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Any imported used motor vehicle or rebuilt motor vehicle using new or used engines,
major parts or
components shall not be registered unless it complies with the emission standards.
In case of non-compliance, the importer or consignee may be allowed to modify or
rebuild the vehicular engine so it will be in compliance with applicable emission
standards.
No motor vehicle registration (MVR) shall be issued unless such motor vehicle passes
the emission testing requirement promulgated in accordance with this Act. Such testing
shall be conducted by the DOTC or its authorized inspection centers within sixty (60)
days prior to date of registration.
The DTI shall promulgate the necessary regulations prescribing the useful life of
vehicles and engines including devices in order to ensure that such vehicles will
conform to the emissions which they were certified to meet. These regulations shall
include provisions for ensuring the durability of emission devices.
SEC. 23. Second-Hand Motor Vehicle Engines.- Any imported second-hand motor
vehicle engine shall not be introduced into commerce, sold or used unless it complies
with emission standards set pursuant to this Act.
xxx
SEC. 24. Pollution from smoking.- Smoking inside a public building or an enclosed
public place including public vehicles and other means of transport or in any enclosed
area outside of one’s private residence, private place of work or any duly designated
smoking area is hereby prohibited under this Act. This provision shall be implemented
by the LGUs.
SEC. 25. Pollution from other mobile sources.- The Department, in coordination with
appropriate agencies, shall formulate and establish the necessary standards for all
mobile sources other than those referred to in Sec. 21 of this Act. The imposition of the
appropriate fines and penalties from these sources for any violation of emission
standards shall be under the jurisdiction of the DOTC.
xxx
SEC. 26. Fuels and Additives.- Pursuant to the Air Quality Framework to be established
under Section 7 of this Act, the Department of Energy (DOE), co-chaired by the
Department of Environment and Natural Resources (DENR), in consultation with the
Bureau of Product Standards (BPS) of the DTI, the DOST, the representatives of the
fuel and automotive industries, academe and the consumers shall set the specifications
for all types of fuel and fuel-related products, to improve fuel composition for increased
efficiency and reduced emissions: Provided, however, that the specifications for all
types of fuel and fuel-related products set-forth pursuant to this
section shall be adopted by the BPS as Philippine National Standards (PNS).
The DOE shall also specify the allowable content of additives in all types of fuels and
fuel-related products. Such standards shall be based primarily on threshold levels of
health and research studies. On the basis of such specifications, the DOE shall likewise
limit the content or begin that phase-out of additives in all types of fuels and fuel-related
products as it may deem necessary. Other agencies involved in the performance of this
function shall be required to coordinate with the DOE and transfer all documents and
information necessary for the implementation of this provision.
Consistent with the provisions of the preceding paragraphs under this section, it is
declared that:
a) not later than eighteen (18) months after the effectivity of this Act, no person shall
manufacture, import, sell, supply, offer for sale, dispense, transport or introduce into
commerce unleaded premium gasoline fuel which has an anti-knock index (AKI) of not
less that 87.5 and Reid vapor pressure of not more than 9 psi. Within six (6) months
after the effectivity of this Act, unleaded gasoline fuel shall contain aromatics not to
exceed forty-five percent (45%) by volume and benzene not to exceed four percent
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(4%) by volume; Provided, that by year 2003, unleaded gasoline fuel should contain
aromatics not to exceed thirty-five percent (35%) by volume and benzene not to exceed
two percent (2%) by volume;
b) not later than eighteen (18) months after the effectivity of this Act, no person shall
manufacture, import, sell, supply, offer for sale, dispense, transport or introduce into
commerce automotive diesel fuel which contains a concentration of sulfur in excess of
0.20% by weight with a cetane number of index of not less than forty-eight (48):
Provided, That by year 2004, content of said sulfur shall be 0.05% by weight; and
c) not later than eighteen (18) months after the effectivity of this Act, no Person shall
manufacture, import, sell, supply, offer for sale, dispense, transport or introduce into
commerce industrial diesel fuel which contains a concentration of sulfur in excess of
0.30% (by weight).
Every two (2) years thereafter or as the need arises, the specifications of unleaded
gasoline and of automotive and industrial diesel fuels shall be reviewed and revised for
further improvement in formulation and in accordance with the provisions of this Act.
The fuels characterized above shall be commercially available. Likewise, the same
shall be the reference fuels for emission and testing procedures to be established in
accordance with the provisions of this Act.
Any proposed additive shall not in any way increase emissions of any of the regulated
gases which shall include, but not limited to carbon monoxide, hydrocarbons, and
oxides of nitrogen and particulate matter, in order to be approved and certified by the
Department.
SEC. 27. Regulation of Fuels and Fuel Additives.- The DOE, in coordination with the
Department and the BPS, shall regulate the use of any fuel or fuel additive. No
manufacturer, processor or trader of any fuel or additive may import, sell, offer for sale,
or introduce into commerce such fuel for additive unless the same has been
registered with the DOE. Prior to registration, the manufacturer, processor or trader
shall provide the DOE with the following relevant information:
a) Product identity and composition to determine the potential health effects of such
fuel additives;
b) Description of the analytical technique that can be used to detect and measure the
additive in any fuel;
c) Recommended range of concentration; and
d) Purpose in the use of the fuel and additive.
XXX
SEC. 34. Lead Agency.- The Department, unless otherwise provided herein, shall be
the primary government agency responsible for the implementation and enforcement
of this Act. To be more effective in this regard, The Department’s Environmental
Management Bureau (EMB) shall be converted from a staff bureau to a line bureau for
a period of no more than two (2) years, unless a separate, comprehensive
environmental management agency is created.

In the case of Henares vs. LTFRB, the Supreme Court held that the Clean Air Act is a general
mandate and a comprehensive air quality management policy and program, which does not impose
on Public Utility Vehicles the use of any particular kind of fuel.

HENARES vs. Land Transportation Franchising and Regulatory Board

G.R. No. 158290. October 23, 2006

Quisumbing, J, ponente

Petitioners challenge this Court to issue a writ of mandamus commanding respondents

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Land Transportation Franchising and Regulatory Board (LTFRB) and the Department
of Transportation and Communications (DOTC) to require public utility vehicles (PUVs)
to use compressed natural gas (CNG) as alternative fuel.

Citing statistics from the Metro Manila Transportation and Traffic Situation Study of
1996, the Environmental Management Bureau (EMB) of the National Capital Region, a
study of the Asian Development Bank, 3 the Manila Observatory and the Department of
Environment and Natural Resources (DENR) on the high growth and low turnover in
vehicle ownership in the Philippines, including diesel-powered vehicles, two-stroke
engine powered motorcycles and their concomitant emission of air pollutants,
petitioners attempt to present a compelling case for judicial action against the bane of
air pollution and related environmental hazards.

Petitioners allege that the particulate matters (PM) — complex mixtures of dust, dirt,
smoke, and liquid droplets, varying in sizes and compositions emitted into the air from
various engine combustions — have caused detrimental effects on health, productivity,
infrastructure and the overall quality of life. Petitioners particularly cite the effects of
certain fuel emissions from engine combustion when these react to other pollutants. For
instance, petitioners aver, with hydrocarbons, oxide of nitrogen (NOx) creates smog;
with sulfur dioxide, it creates acid rain; and with ammonia, moisture and other
compounds, it reacts to form nitric acid and harmful nitrates. Fuel emissions also cause
retardation and leaf bleaching in plants. According to petitioner, another emission,
carbon monoxide (CO), when not completely burned but emitted into the atmosphere
and then inhaled can disrupt the necessary oxygen in blood. With prolonged exposure,
CO affects the nervous system and can be lethal to people with weak hearts.

Petitioners add that although much of the new power generated in the country will use
natural gas while a number of oil and coal-fired fuel stations are being phased-out, still
with the projected doubling of power generation over the next 10 years, and with the
continuing high demand for motor vehicles, the energy and transport sectors are likely
to remain the major sources of harmful emissions. Petitioners refer us to the study of
the Philippine Environment Monitor 2002, stating that in four of the country's major cities,
Metro Manila, Davao, Cebu and Baguio, the exposure to PM10, a finer PM which can
penetrate deep into the lungs causing serious health problems, is estimated at over
US$430 million. The study also reports that the emissions of PMs have caused the
following:
• Over 2,000 people die prematurely. This loss is valued at about US$140 million.
• Over 9,000 people suffer from chronic bronchitis, which is valued at about US$120
million.
• Nearly 51 million cases of respiratory symptom days in Metro Manila (averaging twice
a year in Davao and Cebu, and five to six times in Metro Manila and Baguio), costs
about US$170 million. This is a 70 percent increase, over a decade, when compared
with the findings of a similar study done in 1992 for Metro Manila, which reported 33
million cases.

Petitioners likewise cite the University of the Philippines' studies in 1990-91 and 1994
showing that vehicular emissions in Metro Manila have resulted to the prevalence of
chronic obstructive pulmonary diseases (COPD); that pulmonary tuberculosis is highest
among jeepney drivers; and there is a 4.8 to 27.5 percent prevalence of respiratory
symptoms among school children and 15.8 to 40.6 percent among child vendors. The
studies also revealed that the children in Metro Manila showed more compromised
pulmonary function than their rural counterparts. Petitioners infer that these are mostly
due to the emissions of PUVs.

To counter the aforementioned detrimental effects of emissions from PUVs, petitioners

propose the use of CNG. According to petitioners, CNG is a natural gas comprised
mostly of methane which although containing small amounts of propane and butane, is
colorless and odorless and considered the cleanest fossil fuel because it produces
much less pollutants than coal and petroleum; produces up to 90 percent less CO
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compared to gasoline and diesel fuel; reduces NOx emissions by 50 percent and cuts
hydrocarbon emissions by half; emits 60 percent less PMs; and releases virtually no
sulfur dioxide. Although, according to petitioners, the only drawback of CNG is that it
produces more methane, one of the gases blamed for global warming.

Asserting their right to clean air, petitioners contend that the bases for their petition for
a writ of mandamus to order the LTFRB to require PUVs to use CNG as an alternative
fuel, lie in Section 16, Article II of the 1987 Constitution, our ruling in Oposa v. Factoran,
Jr., and Section 4 of Republic Act No. 8749 otherwise known as the "Philippine Clean
Air Act of 1999."

xxx

According to petitioners, Section 16, 21 Article II of the 1987 Constitution is the policy
statement that bestows on the people the right to breathe clean air in a healthy
environment. This policy is enunciated in Oposa. The implementation of this policy is
articulated in Rep. Act No. 8749. These, according to petitioners, are the bases for their
standing to file the instant petition. They aver that when there is an omission by the
government to safeguard a right, in this case their right to clean air, then, the citizens
can resort to and exhaust all remedies to challenge this omission by the government.
This, they say, is embodied in Section 4 of Rep. Act No. 8749.

Petitioners insist that since it is the LTFRB and the DOTC that are the government
agencies clothed with power to regulate and control motor vehicles, particularly PUVs,
and with the same agencies' awareness and knowledge that the PUVs emit dangerous
levels of air pollutants, then, the responsibility to see that these are curbed falls under
respondents' functions and a writ of mandamus should issue against them.

xxx

Now, as to petitioners' standing. There is no dispute that petitioners have standing to

bring their case before this Court. Even respondents do not question their standing. This
petition focuses on one fundamental legal right of petitioners, their right to clean air.
Moreover, as held previously, a party's standing before this Court is a procedural
technicality which may, in the exercise of the Court's discretion, be set aside in view of
the importance of the issue raised. We brush aside this issue of technicality under the
principle of the transcendental importance to the public, especially so if these cases
demand that they be settled promptly.

Undeniably, the right to clean air not only is an issue of paramount importance to
petitioners for it concerns the air they breathe, but it is also impressed with public
interest. The consequences of the counter-productive and retrogressive effects of a
neglected environment due to emissions of motor vehicles immeasurably affect the well-
being of petitioners. On these considerations, the legal standing of the petitioners
deserves recognition.

xxx

In this petition the legal right which is sought to be recognized and enforced hinges on
a constitutional and a statutory policy already articulated in operational terms, e.g. in
Rep. Act No. 8749, the Philippine Clean Air Act of 1999. Paragraph (a), Section 21 of
the Act specifically provides that when PUVs are concerned, the responsibility of
implementing the policy falls on respondent DOTC. It provides as follows:

SEC 21. Pollution from Motor Vehicles. — a) The DOTC shall implement the emission
standards for motor vehicles set pursuant to and as provided in this Act. To further
improve the emission standards, the Department [DENR] shall review, revise and
publish the standards every two (2) years, or as the need arises. It shall consider the
maximum limits for all major pollutants to ensure substantial improvement in air quality
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for the health, safety and welfare of the general public.

Paragraph (b) states:

b) The Department [DENR] in collaboration with the DOTC, DTI and LGUs, shall
develop an action plan for the control and management of air pollution from motor
vehicles consistent with the Integrated Air Quality Framework . . . (Emphasis supplied.)

There is no dispute that under the Clean Air Act it is the DENR that is tasked to set the
emission standards for fuel use and the task of developing an action plan. As far as
motor vehicles are concerned, it devolves upon the DOTC and the line agency whose
mandate is to oversee that motor vehicles prepare an action plan and implement the
emission standards for motor vehicles, namely the LTFRB.

xxx

Petitioners invoke the provisions of the Constitution and the Clean Air Act in their prayer
for issuance of a writ of mandamus commanding the respondents to require PUVs to
use CNG as an alternative fuel. Although both are general mandates that do not
specifically enjoin the use of any kind of fuel, particularly the use of CNG, there is an
executive order implementing a program on the use of CNG by public vehicles.
Executive Order No. 290, entitled Implementing the Natural Gas Vehicle Program for
Public Transport (NGVPPT), took effect on February 24, 2004. The program
recognized, among others, natural gas as a clean burning alternative fuel for vehicle
which has the potential to produce substantially lower pollutants; and the Malampaya
Gas-to-Power Project as representing the beginning of the natural gas industry of the
Philippines. Paragraph 1.2, Section 1 of E.O. No. 290 cites as one of its objectives, the
use of CNG as a clean alternative fuel for transport. Furthermore, one of the
components of the program is the development of CNG refueling stations and all related
facilities in strategic locations in the country to serve the needs of CNG-powered PUVs.
Section 3 of E.O. No. 290, consistent with E.O. No. 66, series of 2002, designated the
DOE as the lead agency (a) in developing the natural gas industry of the country with
the DENR, through the EMB and (b) in formulating emission standards for CNG. Most
significantly, par. 4.5, Section 4 tasks the DOTC, working with the DOE, to develop an
implementation plan for "a gradual shift to CNG fuel utilization in PUVs and promote
NGVs [natural gas vehicles] in Metro Manila and Luzon through the issuance of
directives/orders providing preferential franchises in present day major routes and
exclusive franchises to NGVs in newly opened routes. . ." A thorough reading of the
executive order assures us that implementation for a cleaner environment is being
addressed. To a certain extent, the instant petition had been mooted by the issuance of
E.O. No. 290.

Regrettably, however, the plain, speedy and adequate remedy herein sought by
petitioners, i.e., a writ of mandamus commanding the respondents to require PUVs to
use CNG, is unavailing. Mandamus is available only to compel the doing of an act
specifically enjoined by law as a duty. Here, there is no law that mandates the
respondents LTFRB and the DOTC to order owners of motor vehicles to use CNG. At
most the LTFRB has been tasked by E.O. No. 290 in par. 4.5 (ii), Section 4 "to grant
preferential and exclusive Certificates of Public Convenience (CPC) or franchises to
operators of NGVs based on the results of the DOTC surveys."

xxx

In the same manner that we have associated the fundamental right to a balanced and
healthful ecology with the twin concepts of "inter-generational responsibility" and "inter-
generational justice" in Oposa, where we upheld the right of future Filipinos to prevent
the destruction of the rainforests, so do we recognize, in this petition, the right of
petitioners and the future generation to clean air. In Oposa we said that if the right to a
balanced and healthful ecology is now explicitly found in the Constitution even if the
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right is "assumed to exist from the inception of humankind. . . it is because of the well-
founded fear of its framers [of the Constitution] that unless the rights to a balanced and
healthful ecology and to health are mandated as state policies by the Constitution itself,
thereby highlighting their continuing importance and imposing upon the state a solemn
obligation to preserve the first and protect and advance the second, the day would not
be too far when all else would be lost not only for the present generation, but also for
those to come. . ."

It is the firm belief of this Court that in this case, it is timely to reaffirm the premium we
have placed on the protection of the environment in the landmark case of Oposa. Yet,
as serious as the statistics are on air pollution, with the present fuels deemed toxic as
they are to the environment, as fatal as these pollutants are to the health of the citizens,
and urgently requiring resort to drastic measures to reduce air pollutants emitted by
motor vehicles, we must admit in particular that petitioners are unable to pinpoint the
law that imposes an indubitable legal duty on respondents that will justify a grant of the
writ of mandamus compelling the use of CNG for public utility vehicles. It appears to us
that more properly, the legislature should provide first the specific statutory remedy to
the complex environmental problems bared by herein petitioners before any judicial
recourse by mandamus is taken.

WHEREFORE, the petition for the issuance of a writ of mandamus is DISMISSED for
lack of merit.

In MMDA vs. Jancom, the Supreme Court upheld the Court of Appeals ruling that the Clean Air Act
only prohibits “burning processes which emit poisonous and toxic fumes.”

MMDA vs. JANCOM Environmental Corporation

G.R. No. 147465. January 30, 2002

Melo, J ponente

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Civil
Procedure filed by petitioner Metropolitan Manila Development Authority (MMDA),
seeking to reverse and set aside the November 13, 2000 decision of the Court of Appeals
declaring valid and perfected the waste management contract entered into by the
Republic of the Philippines, represented by the Secretary of National Resources and the
Executive Committee to oversee the build-operate-transfer implementation of solid waste
management projects, and JANCOM Environmental Corporation.

xxx

In 1994, then President Fidel V. Ramos issued Presidential Memorandum Order No. 202
creating the Executive Committee (EXECOM) to oversee the BOT implementation of
solid waste management projects, headed by the Chairman of the MMDA and the
Cabinet Officer for Regional Development-National Capital Region (CORD-NCR). The
EXECOM was to oversee and develop waste-to-energy projects for the waste disposal
sites in San Mateo, Rizal and Carmona, Cavite under the build-operate-transfer (BOT)
scheme. The terms of reference for the waste-to-energy projects provided that its
proponents should have the capability to establish municipal solid waste thermal plants
using incineration technology. This type of technology was selected because of its
alleged advantages of greatly reduced waste volume, prolongation of the service life of
the disposal site, and generation of electricity.

xxx

During the second bid conference, the bid proposals of First Philippines for the Carmona
site and JANCOM for the San Mateo site were found to be complete and responsive.
Consequently, on February 12, 1997, JANCOM and First Philippines were declared the
winning bidders, respectively, for the San Mateo and the Carmona projects.
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xxx

Moreover, if after a perfected and binding contract has been executed between the
parties, it occurs to one of them to allege some defect therein as reason for annulling it,
the alleged defect must be conclusively proven, since the validity and the fulfillment of
contracts cannot be left to the will of one of the contracting parties. In the case at bar, the
reasons cited by MMDA for not pushing through with the subject contract were: 1) the
passage of the Clean Air Act, which allegedly bans incineration; 2) the closure of the San
Mateo landfill site; and 3) the costly tipping fee. These reasons are bereft of merit.

Once again, we make reference to the insightful declarations of the Court of Appeals:
Sec. 20 of the Clean Air Act pertinently reads:
SECTION 20. Ban on Incineration. — Incineration, hereby defined as the burning of
municipal, bio-chemical and hazardous wastes, which process emits poisonous and toxic
fumes, is hereby prohibited . . ."

Section 20 does not absolutely prohibit incineration as a mode of waste disposal; rather
only those burning processes which emit poisonous and toxic fumes are banned.

xxx

WHEREFORE, premises considered, the petition is hereby DISMISSED for lack of merit
and the decision of the Court of Appeals in CA-G.R. SP No. 59021 dated November 13,
2001 AFFIRMED. No costs.

Invoking the right of citizens to breathe clean air as recognized by Republic Act No. 8749 otherwise
known as the Clean Air Act, the Philippine Medical Association has declared its intention to bring a
P1-Billion class suit against the Secretary of the Department of Transportation and Communications
for the Department’s failure to abate the numerous smoke-belching vehicles from plying the streets
of Metro Manila, which have greatly contributed to the deteriorating air quality in the city which pose
a serious danger to the lives of the residents.230 In 2018, the “Health Care for Cleaner Air Alliance”
was launched, which was led by the Health Care without Harm group. The alliance was created to
formalize the discussions to push for the implementation of laws against air pollutants.

While air quality is still a problem in Metro Manila, other cities in the country as enumerated below
have already pushed forward to make this issue a thing of the past:

1. Puerto Princesa, Palawan – With the objective of decreasing the city’s hydrocarbon and
carbon monoxide emissions, the local government implemented the “50-50 scheme” which
reduced by half the number of public utility tricycles operating in the city.231
2. San Fernando City, La Union – The local government implemented an upgrading program for
public utility tricycles previously running on 2-stroke cycle engines to 4-stroke cycle engines
by offering incentive schemes to the affected sector, e.g. interest free loans, to reduce air
pollution.232
3. Marikina City, Metro Manila – The local government is promoting biking as an alternative mode
of transportation within the city by allotting bike lanes in its streets and highways to reduce
emissions from vehicles.233

10.5 The Clean Water Act

230
Sheila Crisostomo, PMA eyes P1-billion class suit vs DOTC chief, in Philippine Star (April 11, 2012),
http://www2.philstar.com/nation/top-stories/794110/pma-eyes-p1-billion-class-suit-vs-dotc-chief.
231
Clean Air Quality Tool Kit for Local Governments: Case Studies, 135-138 (USAID Project)
http://cleanairinitiative.org/portal/node/4716
232
Id, at140.
233
Id.,at 143.
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According to the Environmental Management Bureau (EMB), as early as 1996 51% of our country’s
rivers still met the standards for their most beneficial use, leaving the rest polluted from domestic,
industrial and agricultural sources. Studies say that domestic wastewater is the principal cause of
organic pollution (at 48%) in our water bodies. According to a World Bank report, Metro Manila is
second to the lowest in sewer connections among major cities in Asia. Furthermore, 31% of all
illnesses in the country are attributed to polluted waters.234

On the basis of these facts, the Philippine Clean Water Act of 2004, or Republic Act No. 9275 was
passed, which aim is to protect the country’s water bodies from pollution from land-based sources.
It provides for a comprehensive and integrated strategy to prevent and minimize pollution through a
multi-sectoral and participatory approach involving all stakeholders. In Section 2, it specifically states
that RA 9275 aims to pursue a policy of economic growth in a manner consistent with the protection,
preservation and revival of the quality of our fresh, brackish and marine water.

President Gloria Macapagal-Arroyo approved the Clean Water Act on March 2, 2004, and it took
effect on May 6, 2004. The Implementing Rules and Regulations (IRR) of the Act were approved by
the Secretary of the DENR on May 16, 2005 and took effect on June 10, 2005.

The Act applies to water quality management in all water bodies. It primarily applies to the abatement
and control of pollution from land-based sources, although the water quality standards and
regulations and the civil liability and penal provisions under the Act shall be enforced irrespective of
sources of pollution.235

Management of Water Quality

The Department of Environment and Natural Resources, in coordination with the National Water
Resources Board (NWRB), is tasked to designate certain areas as water quality management areas.
These management areas should have similar hydrological, hydrogeological, meteorological or
geographic conditions. A governing board, composed of mayors and governors of member LGUs,
as well as representatives of relevant national government agencies, NGOs, water utility sector and
the business sector, is to govern the management areas.

The governing boards are tasked with formulating strategies to coordinate policies necessary for the
Act’s effective implementation. Each management area is required to form a multi-sectoral group to
establish and effect water quality surveillance and monitoring network. The group is required to
submit its recommendation and report to the chairman of the governing board.236

Obligations Created

DENR

The primary duty of the DENR is to act as the overall lead agency to implement and enforce the
Clean Water Act.237 This included the preparation of a National Water Quality Status Report, an
Integrated Water Quality Management Framework, and a 10-year Water Quality Management Area
Action Plan. The Action Plan is to be reviewed by the water quality management area governing
board every five years, or as the need arises.238 Aside from designating water management areas
pursuant to Section 5, the DENR is also tasked to designate water bodies where specific pollutants
from either natural or man-made source have already exceeded water quality guidelines as non-
attainment areas for the exceeded pollutants.239 It tasked with preparing and implementing a program
that will not allow new sources of exceeded water pollutant in non-attainment areas without a
corresponding reduction in discharges from existing sources.

234
Environmental Management Bureau (2012), http://emb.gov.ph/eeid/cwa-english.htm
235
Rep. Act 9275, § 3 (Phil.).
236
Rep. Act 9275, § 5 (Phil.).
237
Rep. Act 9275, § 19 (Phil.).
238
Rep. Act 9275, § 19(b) (Phil.).
239
Rep. Act 9275, § 6 (Phil.).
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Within two years from the effectivity of the Act, the DENR was to revise and publish a list of categories
of industry sector for which effluent standards were provided for each significant wastewater
parameter per industry sector,240 and to implement a wastewater charge system in all management
areas.241 The Department was likewise given the authority to grant discharge permits to owners or
operators of facilities that discharge regulated effluents.242

The DENR, in coordination with the DOST and other concerned agencies and academic institutions,
is required by the Act to establish a national research and development program for the prevention
and control of water pollution.243

DPWH

Under the Clean Water Act, the DPWH is tasked to prepare a national program on sewerage and
septage management, which shall include a priority listing of sewerage, septage and combined
sewerage-septage projects for LGUs based on population density and growth, degradation of water
resources, topography, geology, vegetation, programs/projects for the rehabilitation of existing
facilities.244

LGUs

The Act requires LGUs to appropriate the necessary land, and road right of way for the construction
of the sewage and/or septage treatment facilities. They may also raise funds to subsidize the
necessary expenses for the operation and maintenance of sewerage treatment or septage facility
servicing their area of jurisdiction.245

DOH

The DOH shall formulate guidelines and standards for the collection, treatment and disposal of
sewage including guidelines for the establishment and operation of centralized sewage system.246 It
shall also be responsible for the promulgation, revision and enforcement of drinking water quality
standards.247

Philippine Coast Guard

The Philippine Coast Guard, in coordination with the DA and the DENR is responsible for enforcing
water quality standards in marine waters, specifically from offshore sources.248

MWSS, LWUA and other urban water utilities

They are responsible for the provision of sewerage and sanitation facilities and the efficient and safe
collection, treatment and disposal of sewage within their area of jurisdiction.249

DA

The DA, under the Act, was to develop guidelines for re-use of wastewater for irrigation and other
agricultural purposes and for the prevention, control and abatement of pollution from agricultural and
aquaculture activities.250

240
Rep. Act 9275, § 12 (Phil.).
241
Rep. Act 9275, § 13 (Phil.).
242
Rep. Act 9275, § 14 (Phil.).
243
Rep. Act 9275, § 24 (Phil.).
244
Rep. Act 9275, § 7 (Phil.).
245
Rep. Act 9275, § 7 (Phil.).
246
Rep. Act 9275, § 8 (Phil.).
247
Rep. Act 9275, § 22(d) (Phil.).
248
Rep. Act 9275, § 22(a) (Phil.).
249
Rep. Act 9275, § 22(b) (Phil.).
250
Rep. Act 9275, § 22(c) (Phil.).
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The BFAR, under the DA, was determined to be primarily responsible for the prevention and control
of water pollution for the development, management and conservation of the fisheries and aquatic
resources.251

DOST

The DOST was to prepare a program for evaluation, verification, development and public
dissemination of pollution prevention and cleaner production technologies.252

DepEd, CHED, DILG and PIA

They are tasked to assist and coordinate with the DENR in the preparation and implementation of a
comprehensive and continuing public education and information program pursuant to the objectives
of the Act.253

National Water Quality Management Fund

A water quality management fund administered by the DENR was established by the Clean Water
Act to be used for the purposes specified in Section 9. Donations, endowments and grants in the
form of contributions to the national government under the Act are exempt from donor’s taxes and
all other taxes, charges or fees imposed by the government, and are to be deducted from the gross
income of the donor for income tax purposes.254

Area Water Quality Management Fund

The area water quality management fund was established under the Clean Water Act for the
maintenance and upkeep of the water bodies in a water quality management area. It is to be used
for (1) the grant of rewards and incentives to entities whose effluent discharges are better than the
water quality criteria of the target classification of the receiving body of water, (2) loans for
acquisitions and repairs of facilities to reduce quantity and improve quality of wastewater discharges,
and (3) regular maintenance of the water bodies within the management area.255

Establishment of Wastewater Charge System

The Clean Water Act features a wastewater charge system in all management areas. The system is
established on the basis of payment to the government for discharging wastewater into the water
bodies.256 The fee shall be based on the net waste load using the following formula, which is to be
applied to all industrial and commercial wastewaters: 257

WDF = Ln x R

Where R = rate per kilogram (Php/kg) initially fixed at P5.00 per kilogram for priority pollutant
parameter

Ln = net waste load (kg/year)

Permits are required from owners and operators that discharge regulated effluents. The discharge
permit is therefore the legal authorization by the DENR to discharge wastewater,258 and shall specify
the quantity and quality of effluent that the said facilities are allowed to discharge into a particular
water body, along with the compliance schedule and monitoring requirement.

251
Rep. Act 9275, § 22(c) (Phil.).
252
Rep. Act 9275, § 22(e) (Phil.).
253
Rep. Act 9275, § 22(f) (Phil.).
254
Rep. Act 9275, § 9 (Phil.).
255
Rep. Act 9275, § 10 (Phil.).
256
Rep. Act 9275, § 13 (Phil.).
257
DAO 2005-10, § 13.1 (Phil.).
258
Rep. Act 9275, § 14 (Phil.).
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Clean-Up Operations

Any person who pollutes, or caused the pollution of, water bodies in excess of the applicable and
prevailing standards shall be responsible to contain, remove and clean up any pollution incident at
his own expense, to the extent that the same water bodies have been rendered unfit for utilization
and beneficial use. However, in the event of a polluter’s failure to immediately undertake necessary
emergency clean up operations, the DENR shall conduct containment, removal and clean up
operations. The expenses incurred by the DENR, however, shall be reimbursed by the person/s
found to have caused such pollution, after liability has been properly determined in accordance with
the Clean Water Act.259

Incentives and Rewards

Rewards shall be given to individuals, private organizations and entities that have undertaken
outstanding and innovative projects, technologies, processes and techniques or activities in water
quality management. These rewards shall be taken from the Water Quality Management Fund.260
Incentives are given to encourage LGUs, water districts, enterprises, or private entities, and
individuals to develop or undertake an effective water quality management or actively participate in
any program geared towards the promotion thereof. Incentives may be non-fiscal, such as the
inclusion in the Investments Priority Plan or fiscal such as tax and duty exemption on imported capital
equipment, tax credit on domestic capital equipment, or tax and duty exemption of donations,
legacies and gifts. Government financial institutions such as the Development Bank of the
Philippines, Land Bank of the Philippines, Government Service Insurance System and such other
government institutions accord high priority to extend financial services to LGUs, WDs, enterprises
or private entities engaged in sewage collection and treatment facilities. Lastly, cities and
municipalities that establish or operate sewerage facilities may be entitled to receive grants for the
purpose of developing technical capabilities.261

Penal Provisions

Actions prohibited by the Clean Water Act are provided in Section 27 to the said law. Some of these
include discharging, depositing or causing to be deposited material of any kind directly or indirectly
into water bodies, which could cause water pollution. Section 28 provides for fines, damages and
penalties to any person who commits any of the prohibited acts. The Secretary of the DENR, upon
recommendation of the PAB, shall impose fines not less than P10,000 or more than P200,000 for
every day of violation. Failure to undertake clean up operations, willfully or through gross negligence,
shall be punished by imprisonment of not less than two years and not more than four years, and a
fine not less than P50,000 and not more than P100,000 per day for each day of violation. Such
failure or refusal that results in serious injury or loss of life and/or irreversible water contamination of
surface, ground, coastal and marine water shall be punished with imprisonment of not less than six
years and one day and not more than twelve years, and a fine of P500,000 per day for each day
during which the omission and/or contamination continues. In case of gross violations of the Act, the
PAB shall issue a resolution recommending that the proper government agencies file criminal
charges against the violators.262

Local government officials shall be subject to administrative sanctions in case of failure to comply
with their action plan in accordance with the relevant provisions of the Local Government Code.263

10.6 Further discussion

For years now, the problems posed by hazardous substances and wastes have been one of the
priority concerns of the Philippine government. This is likely due to the quickly growing number of
transnational companies, as well as local firms, that generate waste considered hazardous to health
and the environment. The Philippines, like any Third World country, is not properly equipped in terms

259
Rep. Act 9275, § 16 (Phil.).
260
Rep. Act 9275, § 25 (Phil.).
261
Rep. Act 9275, § 26 (Phil.).
262
Rep. Act 9275, § 28 (Phil.).
263
Rep. Act 9275, § 29 (Phil.).
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of machinery and technical expertise to deal with these substances, although steps are being done
to define the regulatory and enforcement responsibilities of various government agencies. The
agency that probably has the most important role in the management and control of these substances
and wastes is the Department of Environment and Natural Resources (DENR).

Toxic waste is waste material that can cause death or injury to living creatures. Often used
interchangeably with the term “hazardous waste,” it spreads very easily and can contaminate land,
air, and water. It encompasses any form of discarded material that can pose a long-term risk to
health or the environment. As with most environmental problems, toxic waste began to be a
significant issue during the industrial revolution. It is usually the product of industry or commerce, but
also comes from residential use (e.g. cleaning products, cosmetics, lawn care products), agriculture
(e.g. chemical fertilizers, pesticides), the military (nuclear weapons testing, chemical warfare),
medical facilities (e.g. pharmaceuticals), radioactive sources, and light industry, such as dry cleaning
establishments. Toxic waste comes in many forms, such as liquid, solid, or sludge, and it contains
chemicals, heavy metals, radioisotopes, dangerous pathogens, or other toxins.

The Philippines’ Situation

The pressure brought about by rapid population growth, combined with inadequate environmental
sanitation facilities have resulted in the generation of severe negative impacts in the Philippines and
other countries in Southeast Asia. Furthermore, excessive exploitation of natural resources at
present poses a great threat for future generations. Disposal of waste into the environment by the
escalating number of industries has caused the rapid increase in pollution not only in the Philippines,
but in other parts of the globe as well. Disposal of various non-biodegradable chemical and
hazardous wastes is making most of the water resources in the country unsuitable for use, creating
the need for expensive advanced treatment, and most of the land unfit for cultivation and crop
production. The end results of these activities are environmental degradation and health hazards.
Industrialized countries are most probably responsible for this rapid depletion of resources and
environmental degradation by virtue of waste exportation, which is explicitly prohibited by certain
local legislations and international agreements.

In a study conducted by Greenpeace of Southeast Asian Countries in 1994 264 one of the most
significant hazardous waste problems in the Philippines is the small-scale nature of the majority of
the industrial facilities, and inadequate space available for on-site storage of hazardous wastes. Most
of these industries are located in municipal areas, so they deposit their wastes in streets and MSW
containers, and discharge wastewater into drains and sewer pipes. There is always a dangerous
threat to the aquatic life by the wastewater discharged into rivers, as well as, the pollution of land, if
irrigated with such water. Moreover, seepage of leachate and percolation of surface water into
ground can cause groundwater pollution.

According to the website of the Basel Action Network (BAN), most countries in Southeast Asia are
faced with financial problems thereby impeding the effective implementation of pollution control
systems, especially in the case of small-scale industries in Hong Kong, Malaysia, Papua New
Guinea, and the Philippines, which prefer to shut down their business operations rather than installing
individual hazardous waste treatment facilities.265 Even though the treatment equipment is installed
by large-scale multinational industries, they are not operated properly as reported by some
government agencies of Thailand and the Philippines.266 Most of these industries are always having
problems with the facilities like finance, technical, and infrastructure to deal with these waste
problems. Total treatment or disposal is not implemented in most of the provinces, cities and
municipalities in the country. Although a couple of incineration plants are installed for hazardous
waste treatment, they are not sufficient, and most of the said hazardous wastes are disposed into
unsecured landfill. In the Philippines, hazardous wastes are collected from industries located in
Manila and dumped in neighboring rural areas such as Rizal and Batangas.267

264
Greenpeace (1994).
265
Ban.org, http://www.ban.org/philippines.
266
Id.
267
A Survey of Environmental Markets in 16 Asia-Pacific Countries and Territories, SGS-Environmental Information Unit,
Bangkok, Thailand (1996).
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The adverse effects of improper management and control of hazardous wastes is something that the
Philippine Government is greatly concerned about. Various types and quantities of wastes are
produced in the country, and the specific pieces of information regarding which are not properly
documented. Domestic industrial activities and transportation of hazardous wastes from developed
countries are two of the main sources of the profound difficulty in handling and controlling hazardous
substances and wastes that are dangerous to human health and the environment.268 Furthermore,
the absence of strict enforcement, experienced manpower, and lack of public awareness are also
relevant issues which the government needs to address.

In addition to the continuous increase in the number of industries in the country is the growing burden
for the government to control and manage it. Existence of small-scale industries, scattered profile of
industrial development, and unavailability of actual data on the volume and characteristics of
hazardous wastes from industries are significant areas of concern as well. Nevertheless, effective
information dissemination in order to properly instill awareness among the public is the most
important factor that should be taken into consideration by the Philippine Government, to be able to
correctly identify the genuine problems brought about by the generation of hazardous substances
and wastes and eventually create feasible solutions to such problems.

Moreover, in 1996, Greenpeace investigations showed that the Philippines was becoming a leading
destination of hazardous wastes coming mostly from industrialized countries. In particular, used lead
acid batteries (ULABs), considered as hazardous waste by the international community, were being
imported into the country using the guise of recycling.

According to Greenpeace, hazardous waste recycling in developing countries can be characterized

as either sham or dirty recycling. Sham recycling takes place when exports claimed to be for recycling
are actually merely dumped in the receiving country after minimum or zero processing. This is
especially difficult in third world countries like the Philippines. Even the so-called state-of-the-art
hazardous waste recycling operations being supported and funded by the Philippine government are
some of the worst polluters Greenpeace has investigated.269 These facilities often pollute far more
than a disposal facility would. Not only do these operations pollute the environment with toxic
emissions, they often create residual hazardous wastes, which are more toxic than the original
wastes.

Despite a supposed national ban on the entry of toxic and hazardous wastes into the country, and
despite being an active party to the Basel Convention which aims to halt the transboundary
movement of hazardous and toxic wastes for dumping and recycling purposes, the Philippines in the
mid-1990s became one of the leading destinations of scrap lead acid batteries from industrialized
nations like Australia, Canada, United Kingdom, Germany and the United States.270

CASE STUDY:
MARILAO-MEYCAUAYAN-OBANDO RIVER SYSTEM

In 2007, the Marilao-Meycauayan-Obando River System (MMORS) has been reported as one of the world's top
ten most polluted places by a New York-based environmental watchdog - Blacksmith Institute.

Although it is a source of drinking and agricultural water supplies for the 250,000 people in Bulacan, industrial
wastes are haphazardly being dumped into the river system. Wastes from tanneries, metal refineries, smelting
and municipal dumpsites are directly being disposed into the river system, contaminating it with heavy metals
such as Hexavalent chromium and other industrial emissions. It also polluted by agricultural by-products,
sewage, and municipal solid wastes.

Due to the high concentrations of pollutants, the MMORS has placed in the same league as places like Chernobyl
in Ukraine as well as Tianying and Lanfin towns in China. The river is biologically dead and is continuously posing

268
Earth Summit, United Nations, http://www.un.org/esa/earthsummit.
269
Greenpeace (2003).
270
Greenpeace (1996).
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threats to the health of the local population. Its effluents have also affected local fishing areas, affecting fresh
and marine water resources.

Considerable efforts were made by the local government to address the pollution in the MMORS however,
environmental groups claimed that the rehabilitation efforts to save the river system were all wasted. This is due
to the inability of the local government to stop the use and discharge of hazardous and domestic wastes into the
river, rendering all clean-up efforts useless. In addition, the rehabilitation plans did not include the development
of concrete measures to protect and prevent future contamination of the river.

The MMORS is also one of the main waterways that drain into Manila Bay that adds to its pollution levels. 15
establishments along the MMORS that were found to be directly dumping untreated wastewater into the river
were served cease-and-desist orders. Establishments involved were leather craft makers and tanneries, smelting
plants, restaurants, bakeries, industrial firms, detergent manufacturers and fishponds. Their drain pipes were
plugged with concrete to prevent any other wastewater discharge into the river. 13 establishments that were
operating without and ECC were also served closure notices while 14 others underwent septic tank siphoning.
All of which were in support for the rehabilitation of Manila Bay.
Sources:

V.Freddie, “Bulacan jumpstarts river system rehabilitiation”, Manila Bulletin, 19 May 2017.
https://www.gmanetwork.com/news/news/regions/61154/marilao-meycauayan-listed-among-world-s-dirtiest/story/
https://newsinfo.inquirer.net/9799/marilao-river-rehab-wasted%E2%80%93greenpeace
https://newsinfo.inquirer.net/779761/govt-plans-to-spend-p2b-to-dredge-toxic-river
https://newsinfo.inquirer.net/1080620/more-firms-closed-over-bay-pollution

A Breath of Fresh Air

EAGLE EYES – Tony La Viña
24 May 2011, Manila Standard Today

Of all the natural resources available to human beings, air is arguably the most free and accessible, the most
public and common of goods. While lumber, ores and oil must be harvested, mined or refined; while water must
be filtered and purified before being fit for consumption; and while crops and livestock must be grown; air is
simply breathed. And, of all the natural resources on earth, air is the one we use the most—for we must breathe
every day we live.

Yet perhaps because air is so common a good, like all common goods, it suffers from overuse and abuse. Ever
since the Industrial Revolution, air pollution has worsened everywhere, sparing very few places. A large portion
of the problem, especially in the cities, comes from vehicular exhaust. Up to 90 percent of urban pollution can
come from cars and trucks. This problem is compounded by the gridlock of rush hour, which leaves vehicles
stuck in traffic or in slow speeds, all the while still burning gas and releasing pollutants. This is an all-too-common
sight along EDSA or in the densest parts of the metropolis. Finally—and this is a problem very familiar to
Manileños—there are cars, jeepneys, and trucks with poorly-maintained engines, or without proper catalytic
converters, belching unsightly smoke, often times right into the face of following vehicles, or pedestrians
alongside the road.

Pollution is not just caused by cars, however, and whether in major cities or the province, industries have
increasingly become the source of pollution. Poor and insufficient enforcement can lead to industries setting up
shop in the provinces without regard for environmental compliance, dispensing with required air and water
pollution controls in order to drive down costs and increase profits. In the end, the provincial poor, so often “out
of sight, out of mind” from policy-makers, have to endure the same threats to their health that city folk face walking
down EDSA. Precisely because of their poverty and distance from sufficient health care, the rural poor are even
more vulnerable to lung diseases.

Innovative thinking is necessary to head off this threat to Philippine health. Perhaps a happy coincidence, in
Western astrology, the classical element of Air is identified with the mind, logic, invention, and innovation.

Technology is a key factor in the fight against air pollution: hybrid vehicles and electric cars to reduce dependence
on fossil fuels, and air pollution scrubbers for industrial smokestacks that strip exhaust gases of particulate matter
and toxic chemicals. The problem with technology is that it is often expensive—a hybrid Honda Civic, for
example, costs significantly more than a regular Civic. It is not impossible, however, to envision some
government support and incentives to help shift the Philippines industries and transport systems green-ward:
increasing the use of more environmentally-friendly biofuels or renewable energy sources, subsidies for hybrid
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and electric vehicles, encouraging foreign companies and even rich countries to sponsor air-friendly projects like
reforestation or renewable energy.

Specific to traffic as the largest source of air pollution, one of the best solutions is encouraging public
transportation and carpools. Sadly, our public transport systems often are a sources of air pollution themselves,
especially smoke-belching “colorum” buses. So far, the cleanest option in Metro Manila is the MRT-LRT system,
and it is sadly overtaxed. Makati has experimented with electrical “eJeepneys,” and this should be encouraged
elsewhere in the metropolis. In this regard, I urge the Metropolitan Manila Development Authority to fast-track
the implementation of a Bus Rapid Transit (BRT) system, starting perhaps with Commonwealth Avenue. BRT is
an innovative, flexible, high capacity, more cost-effective public transportation solution that utilizes buses or
specialized vehicles on roadways or dedicated lanes to quickly and efficiently transport commuters to their
destinations.

The State and our society must integrate sustainable development ideas into urban planning, as well as
economic development. We can make it so that land developers, by law, must provide areas for public-use “urban
forests” or parks whenever they undertake a large-scale project like a mall or a high-rise (as it stands, one usually
only sees this in subdivision-based land development in the suburbs, or high-profile apartment construction, both
of which almost are the exclusive province of the wealthy). City planning and renewal must also be executed,
from the start, with efficient road networks and public transport systems to reduce gridlock and dependence on
private vehicles.

The government, especially at the local level, should regulate which kinds of industries can operate in the country.
The need for economic development and job creation cannot be an excuse to be lax on environmental standards.
Violators must be shuttered and penalized for endangering public health. Beefing up the enforcement arms of
the Department of Environment and Natural Resources (DENR), as well as taking advantage of new,
environmentally-friendly Supreme Court rules such as the Writ of Kalikasan, are the best tools the state has to
defend the right to clean air. In exchange, we must seek out and entice those businesses that are willing to
implement pollution control measures into their processes, and even help or sponsor the country’s efforts to
restore the environment. We should also look to substitute crude, polluting industries with lucrative agricultural
or ecotourism jobs for the rural poor, providing them employment options that are better economically and health-
wise.

A combination of incentives and innovative policies can go a long way towards clearing up our air, and ensuring
our children can breathe freely in the future. Above everything else however, consistent, uncompromising and
effective enforcement is the most essential ingredient in the fight against air pollution. Enforcing once for all The
Clean Air Act, a law passed more than ten years ago – now that’s a breath of fresh air.

Poison in Bulacan
EAGLE EYES – Tony La Viña
01 February 2011, Manila Standard Today

Air and water pollution in the country is a worsening problem. Manila, for example, has been reported as the
4th most polluted city in the world. If you think, however, that pollution is a concern exclusive to Metro
Manilans, think again. We are becoming more aware of the ill effects of pollution that are beginning to be felt
even in the provinces. A particular tire pyrolysis facility somewhere in Bulacan is a case in point.

In 2009, a waste oil processing plant was granted an Environmental Compliance Certificate (ECC) from the
Department of Environment and Natural Resources (DENR) but soon after, the ECC was amended so the
facility could conduct tire pyrolysis or the extraction of oil using scrap/waste rubber tires as raw materials.
Tire pyrolysis, when done properly by investing in the right equipment and proper diligence, is arguably a
safe technology, despite the toxic products produced. However, in this case, the technology was clearly
inadequate and crude. If one visited the premises of the facility, as I personally did, it would be obvious that
it was being operated without regard for the safety for its workers and surrounding residents. The building
was decrepit, the fence improperly built, and carbonaceous waste from operations could be seen everywhere.
Recently, patched-up improvements were done to give the semblance of good housekeeping. Even after
upgrades, the facility remains unreliable. It was appalling, how the government could have even allowed the
operation of what was clearly an inadequately funded and backyard – probably fly-by-night – operation, which
had such serious environmental and health impacts.

The hazardous operations resulted in excessive discharge of wastewater and airborne pollutants that polluted
its surroundings and caused health problems to nearby residents, ranging from allergic reactions and
pneumonia to other respiratory ailments. Neurological symptoms such as headaches, dizziness and nausea
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have been reported as well. Long-term effects could include cancer and similar death-threatening illnesses.
These serious health effects are corroborated by an independent report from the Blacksmith Institute which
states that “[r]esidents living near xxx commonly experience difficulty in breathing every time the
establishment is operating. This is because of the black smoke coming from the company's smoke stack.
According to one of the residents, they usually stay inside their house because they can't stand the smoke
coming from the burning of tires. Inhaling the smoke also causes [headaches] and chest pain due to
coughing.”

After unfavorable media exposure and after complaints from affected residents, the Pollution Adjudication
Board (PAB) issued, in December 2009, a Cease and Desist Order (CDO) against the company for failure to
pass the DENR Effluent Standards in terms of oil and grease. The company, however, intentionally defied
the Order and continued to operate. After several attempts, the DENR successfully padlocked the facility on
February 8, 2010. Then-acting DENR Secretary Eleazar Quinto himself led the operations to close the plant
and was quoted as saying "[t]his [closure] is a (sic) work done by a community against a firm that has no
regard for the community and the environment. We made several attempts to enter this firm but we failed.
This firm operates in a guerrilla-style manner, a hit-and-run type."

Unfortunately, a Temporary Lift Order (TLO) for 15 days was granted to the facility on May 2010. A TLO is
normally allowed so that a previously closed facility can be tested on whether its operations have begun to
comply with the law. In this case, however, given the serious health impacts of the pollution, the Pollution
Adjudication Board should never have issued a TLO. Another Acting DENR Secretary, Horace Ramos, had
to order the Regional Office (Region 3) of the Environmental Management Bureau (EMB) to again close down
the facility. When DENR Secretary Ramon Paje assumed office, he too supported the affected residents and
the facility was to remain closed. In fact, in late 2010, the DENR cancelled the ECC it previously granted and,
during the Christmas season, for the first time in many months, the affected residents were able to breathe
good and clean air.

Unfortunately, a happy ending is not yet certain, as the tire pyrolysis facility has reapplied for an ECC. To my
surprise and dismay, because it is illegal (as it could circumvent the incineration ban in the Clean Air Act)
and against all common sense, there is a possibility that the concerned EMB Regional Office might issue
such an ECC. This is so in spite of all the documentation that affected residents have provided the authorities
on the environmental and health impacts of the facility. These impacts will not be prevented even after recent
upgrades and in spite of the environmental record of the facility, as well as its continued cavalier approach
to the pollution it causes (e.g., the facility operated for so long without a pollution control officer and its present
PCO is not even an engineer and instead is an "expert" in government relations.)

Tire pyrolysis facilities similar to the one in Bulacan should not be allowed. Such similar facilities in that
province and elsewhere in the Philippines should be closed down. Their technology does not stand up to
standard technical requirements of environmental and health safety. The records of these facilities in
implementing mitigation measures are usually very bad. The legal standard the EMB/DENR should use is
the Precautionary Principle, a rule of evidence that the Supreme Court applies to environmental cases. Where
there is serious health and environmental impacts, even when there is scientific uncertainty, the possibility
alone of serious harm happening is enough reason to close down these facilities. Precaution is also sufficient
reason as to why the DENR cannot allow this particular facility that emits poison in Bulacan to reopen.

The future of coal-fired power plants

Tony La Viña and Lawrence Ang
27 November 2015, Rappler.com

How does coal fit into the country’s energy and development equation? Our policy brief “Striking a Balance:
Coal-Fired Power Plants in the Philippines Energy Future,” launched in a forum at the Ateneo School of
Government (ASoG) last Tuesday, November 24, is aimed at jumpstarting a robust discussion on the viability
of coal fired-power plants (CFPPs) in meeting the country’s energy needs and development goals by
exploring its economic, environmental, health, social and technological dynamics.

The Ateneo School of Government developed this policy brief with an aim to unpack the issues surrounding
the controversial subject with the objective of also sparking further dialogue on the matter. An interdisciplinary
group of technical, legal and policy experts (Jennifer Ramos, Cecilia Guiao, Jethro Hipe, James Esguerra
and Mike Guiguio) co-authored the policy brief with us and wrote its complementary supplemental papers.
Complementing our efforts, a high level group of reviewers from government, NGOs, and academe reviewed
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the draft brief and gave suggestions on how to improve it. As far we know, this is the first time that such a
holistic study has been attempted on this issue.

The study came amid an already heated debate on the relevance and benefits of sourcing energy from
CFPPs especially as some European countries pledged to have them phased out in the next decade to
reduce carbon emissions and mitigate climate change. There are those from the energy industry, however,
who said that it will not be sensible to dismiss CFPPs as a practicable energy of source altogether for the
country especially as it targets an increase in investments and a decrease in poverty. An unstable energy
situation could affect the operations of all income-generating sectors and have a pronounced impact on the
economy of a country that is targeting a gross domestic product growth rate of 7% annually.

What we intended to do with this policy brief is to explore the salience of each perspective. By conducting
primary and secondary research, using both international and local studies for reference as well as gathering
information and perspectives through focus group discussions, we were able to come up with key findings
that help provide a multifaceted appreciation of the issue.

These are the study’s touch points:

Coal-fired power plants have a significant role in meeting the country’s baseload energy
requirements. However, given the current listing of the Department of Energy on committed and
indicative coal-fired power plants – assuming they are all completed and built – the Philippines would
already exceed the baseload requirement for 2030

According to the Department of Energy (DOE), the Philippines would need 13,167 megawatts (MW) of
additional power capacity by 2030, 8, 548 (MW) of which are to be generated from baseload power plants.
Coal, which is both indigenous and could be imported, appears to be a reliable source of baseload power
because aside from its availability, CFPPs could also be built anywhere in the country as long as there is
available water supply. Natural gas is only available in Luzon while nuclear energy is not considered an option
given the disasters that have happened in nuclear power plants in Fukushima, Japan and in Chernobyl.
Geothermal energy is also one of the main sources of baseload energy particularly in Luzon and Visayas,
but its supply is limited as it cannot be imported, unlike coal, which is also available in Australia, Indonesia
and Russia to name a few.

Data from DOE would show, however, that committed and indicative CFPPs could already provide 11,992
MW, if all plants become operational. This is more than enough to meet the country’s baseload energy
requirements of 8,400 MW as specified in the Philippine Energy Plan (PEP) and has even already exceeded
the 11,400 MW – out of the required 13, 167 MW – that is open for private investment.

Coal is only economically feasible for the baseload, however and is not poised to meet mid-merit and peaking
energy needs. It is therefore important to highlight that since coal’s role is confined to the baseload and that
the projections even point to having a potential oversupply, there should be bigger and better efforts for
creating mechanisms and investing on technologies that would minimize the health, environmental and social
costs of coal.

Given its host of by-products (solid wastes, emissions and discharges) and taking into account the
effectiveness and availability of pollution control technologies, CFPPs are not the best option based
on a strict environmental perspective

CFPPs produce considerable amount of greenhouse gas emissions, which contribute to climate change. It
also uses lots of water to turn turbines and cool thermoelectric plants, emit air pollutants, produces leachate
and generates ash.

CFPPs could be retrofitted, however, to increase efficiency. There are also “clean coal” technologies that
could be adopted such as such as supercritical and ultra-supercritical integrated gasification combined cycle
combined cycle fluidized bed combustion, which could lower emissions. The Sual Power Station in Lingayen,
Pangasinan, reportedly uses similar technologies in compliance with standards of World Bank and the
Department of Environment and Natural Resources.
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The question is, are these technologies enough to suppress coal’s damaging impacts on the environment?
What could be expected is a reduction in the stressors and byproducts, but as compared with other sources
of energy such as natural gas and geothermal, coal stands out as a massive pollutant.

Based on scientific literature, there is evidence that CFPPs have health and social impacts; however,
there is a lack of peer-reviewed local studies to systematically guide industry practice and policy
decisions.

CFPPs produce a host of hazardous air pollutants particularly in the combustion stage. The effects of these
pollutants on health could be short-term and long-term and affect respiratory, cardiovascular and neurological
systems. The US Environmental Protection Agency and the American Lung Association has identified these
pollutants and their specific impacts on health. Examples include uranium and radium, which are both
carcinogenic and could impair the lungs.

There is a lack of local studies and documented cases of the health impacts of CFPPs, however. Local health
workers in host communities also do not have the capacity to trace and monitor illnesses that could have
been caused by pollutants from CFPPs.

Another significant concern that has not been documented well includes the credibility of the consultations
done by CFPP operators with host communities. There have been allegations of companies deceiving people
about the nature of the power plants and local government officials getting bribed in exchange of their
approval of the CFPP operations. These are again, anecdotal and it would necessitate a thorough,
independent investigation to assess if host communities have sincerely given their consent to the operation
of CFPPs in their areas.

Access and disclosure of information on the payment and use of compensation funds from the companies
such as electricity, development and livelihood funds as well as reforestation, watershed management, health
or environment funds must also be improved.

The current policy approach for energy in the Philippines is geared solely towards available, reliable
and affordable supply rather than genuine energy security consistent with sustainable development
– in spite of the fact that our body of energy laws are among the most progressive in the developed
world.

Policies on energy security in the country are more skewed in favor of energy supply and distribution and
only consider the sector’s health and social impacts as externalities. The main concern is to meet the demand,
but there is no conscientious assessment of how a certain energy option could affect the other aspects of
development. This shows the need for further interagency coordination between DOE, DENR, Department
of Health and the National Economic Development Authority.

The Electric Power Industry Reform Act has called for “environment-friendly, indigenous and low-cost
sources of energy” but the preference has been geared towards the “low-cost” consideration because the
consequences on health and social aspects have not been thoroughly determined and measured for the
longest time.

The government has to address this especially as it has submitted its Intended Nationally Determined
Contributions (INDCs) to the UN Framework Convention on Climate Change where it said that it would reduce
its GHG emissions by 70 percent given international assistance and has also committed to meet the UN
Sustainable Development Goals.

Continue the conversation

The next batch of leaders and lawmakers should map a policy direction that pushes for the compatibility of
energy objectives with those of our commitments to improve also the health and environmental sectors – and
this necessitates moving away from the predominant bias of Philippine energy policy towards “technology
neutrality.” Furthermore, the new generation of leaders should meaningfully engage industry as partners in
the shift towards a truly competitive energy sector that is not only driven by cost alone but by clear priorities
towards facilitating energy security in service of sustainable development.

We also recommend that a gold standard be adopted in the assessment, approval and evaluation of CFPP
proposals and operations. A life cycle assessment of the coal value chain is essential to informing this gold
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standard as well as the conduct of cost and benefit analysis and scientific validation of health and
environmental impacts.

There are alternatives to coal and this is evidenced by the pace in which new technologies are being
developed to be more “flexible” to serve as baseload energy sources including renewables, but their utilization
would require leveling the playing field of energy planning in the immediate future. The role of coal must be
capped in the energy mix and an enabling environment must be provided to electrify the private sector in
exploring other cleaner and greener energy sources for the mid-merit and peaking needs, while also
potentially supporting baseload power needs.

The energy – no pun intended - from the stakeholders that attended our policy forum on coal on Nov. 24
showed a need to continue the conversation on coal. Some government and nongovernment actors shared
their current efforts on developing a more strategic and comprehensive assessment of the environmental,
health and social costs of coal. There is also a resounding call to internalize these costs so that the private
sector and the government will be more guided on its energy planning and investment decisions.

Let's have a rigorous dialogue on coal and let’s keep it going so that we could finally strike the balance we
are aiming for in achieving sustainable development.
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Chapter Eleven

Climate Change and Disaster Risk Reduction and Management

FACTS AND FIGURES

If human activities are the main drivers for environmental degradation and biodiversity decline, then climate
change is another direct driver that amplifies the impacts of other drivers of change in nature.

In 2018, the Intergovernmental Panel on Climate Change (IPCC) released a special report on the impacts of
global warming of 1.5 °C above pre-industrial levels. It is estimated, at current rates, global warming is likely
to reach 1.5 °C between 2030 and 2052. The impacts of this warming include, but are not limited to: rise of
sea levels, species loss and extinction, increase in ocean temperature as well as the associated increase in
ocean acidity and decrease in ocean oxygen levels, increase in climate-related risks to health, security and
economic growth, and among others.

But the greater challenge is limiting the warming to 1.5 °C as the estimated anthropogenic global warming is
continuously increasing to 2.0 °C due to past and ongoing emissions. Although climate risks for natural and
human systems are higher for global warming of 1.5 °C than at present, it is still significantly lower than the
risks estimated when warming reaches 2.0 °C. This 0.5 °C difference can mean significant differences in the
impacts of global warming between 1.5 °C and 2.0 °C, such as:
• 23% difference in global population that is exposed to extreme heat,
• 0.1-meter difference in sea level rise,
• 50% to 66% less in expected species loss of vertebrates, plants, and insects,
• 30% difference in the decline of coral reefs, and
• 50% less decline in marine fisheries.
In addition, climate change impacts on sustainable development, eradication of poverty and reducing
inequalities would also be significantly decreased if global warming were limited to 1.5 °C rather than 2.0 °C.

To keep global warming at 1.5 °C, far-reaching transformative changes in energy, land, urban and
infrastructure, and industrial systems are needed. In exchange, adaptation needs are significantly lower and
a wider range of adaptation options are more available. Mitigation and adaptation measures are also
maximized while trade-offs are minimized.

In April 2016, the Philippines singed the Paris Climate Agreement. In this agreement, the country has
committed to continuously cascade climate change mitigation and adaptation actions in all levels and to
invest in climate-resilient local economies. The Philippines also committed to pursuing value-adding
strategies to ensure the provision of ecosystem services and green growth to address pollution and
environmental degradation.

Climate change is a global problem that requires a global response, but national and local solutions are
needed for mitigation and adaptation. Every individual from all sectors will need to strengthen their action
without delay. Although these actions may seem insignificant, every little action can collectively mitigate the
impacts of climate change.

-----

Sources:

IPCC, 2018: Summary for Policymakers. In: Global Warming of 1.5°C. An IPCC Special Report on the impacts of global
warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context
of strengthening the global response to the threat of climate change, sustainable development, and efforts to
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W.
Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T.
Maycock, M. Tignor, and T. Waterfield (eds.)]. In Press.
IPBES. 2019. Global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-
Policy Platform on Biodiversity and Ecosystem Services. E. S. Brondizio, J. Settele, S. Díaz, and H. T. Ngo (editors).
IPBES Secretariat, Bonn, Germany.
https://www.officialgazette.gov.ph/2016/04/27/ph-sign-paris-climate-agreement/
https://www.un.org/sustainabledevelopment/wp-content/uploads/2016/04/PhilippinesE.pdf
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11.1 Environmental situationer

Recently, tragedy has struck many places as super-typhoons ravaged the provinces. PAG-ASA
traditionally measures typhoon intensity by the strength of the winds, however, recent typhoons that
caused extreme damages were not only due to strong winds but more of intense rainfall over a short
period. The steep slopes in many areas collapsed under heavy rains, causing massive landslides
that destroyed farms and homes. The rivers overflowed and the torrents flooded the towns in the
lowlands with devastating results. Debris, including cut logs, was swept down the river into the sea.
The townspeople in the lowlands blamed the upland dwellers for illegal logging and deforestation
that resulted in the flood and loss of lives and property.

Climate change is a global phenomenon. While the Philippines engages in activities that affect the
climate, regulating our actions alone is not enough. It takes global action to make an impact. In
Volume Two we look at the United Nations Framework Convention on Climate Change (UNFCCC)
as a global action to address the issue. On the other hand, preparing for and responding to the
impacts of climate change is a domestic challenge.

Since the solution to the environmental problem requires concerted global action, the topic on climate
change is discussed in more detail in Volume Two. Domestically, the Philippines has crafted forward-
looking and comprehensive laws to address climate change and its impacts. Internationally, the
Philippines has ratified the Paris Agreement in 2017, which is aimed to address the adverse effects
of climate change.

Climate Change Act

Republic Act 9729 (2009)

SEC . 2. Declaration of Policy. – It is the policy of the State to afford full protection and
the advancement of the right of the people to a healthful ecology in accord with the
rhythm and harmony of nature. In this light, the State has adopted the Philippine Agenda
21 framework which espouses sustainable development, to fulfill human needs while
maintaining the quality of the natural environment for current and future generations.

Towards this end, the State adopts the principle of protecting the climate system for the
benefit of humankind, on the basis of climate justice or common but differentiated
responsibilities and the Precautionary Principle to guide decision-making in climate risk
management. As a party to the United Nations Framework Convention on Climate
Change, the State adopts the ultimate objective of the Convention which is the
stabilization of greenhouse gas concentrations in the atmosphere at a level that would
prevent dangerous anthropogenic interference with the climate system which should be
achieved within a time frame sufficient to allow ecosystems to adapt naturally to climate
change, to ensure that food production is not threatened and to enable economic
development to proceed in a sustainable manner. As a party to the Hyogo Framework
for Action, the State likewise adopts the strategic goals in order to build national and
local resilience to climate change-related disasters.

Recognizing the vulnerability of the Philippine archipelago and its local communities,
particularly the poor, women, and children, to potential dangerous consequences of
climate change such as rising seas, changing landscapes, increasing frequency and/or
severity of droughts, fires, floods and storms, climate-related illnesses and diseases,
damage to ecosystems, biodiversity loss that affect the country’s environment, culture,
and economy, the State shall cooperate with the global community in the resolution of
climate change issues, including disaster risk reduction. It shall be the policy of the State
to enjoin the participation of national and local governments, businesses,
nongovernment organizations, local communities and the public to prevent and reduce
the adverse impacts of climate change and, at the same time, maximize the benefits of
climate change. It shall also be the policy of the State to incorporate a gender-sensitive,
pro-children and pro-poor perspective in all climate change and renewable energy
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efforts, plans and programs. In view thereof, the State shall strengthen, integrate,
consolidate and institutionalize government initiatives to achieve coordination in the
implementation of plans and programs to address climate change in the context of
sustainable development.

Further recognizing that climate change and disaster risk reduction are closely
interrelated and effective disaster risk reduction will enhance climate change adaptive
capacity, the State shall integrate disaster risk reduction into climate change programs
and initiatives.

Cognizant of the need to ensure that national and subnational government policies,
plans, programs and projects are founded upon sound environmental considerations
and the principle of sustainable development, it is hereby declared the policy of the
State to systematically integrate the concept of climate change in various phases of
policy formulation, development plans, poverty reduction strategies and other
development tools and techniques by all agencies and instrumentalities of the
government.

Philippine Disaster Risk Reduction and Management Act

Republic Act No. 10121 (2010)

Sec. 2. Declaration of Policy. – It shall be the policy of the State to:

(a) Uphold the people’s constitutional rights to life and property by addressing the
root causes of vulnerabilities to disasters, strengthening the country’s institutional
capacity for disaster risk reduction and management and building the resilience
of local communities to disasters including climate change impacts;
(b) Adhere to and adopt the universal norms, principles, and standards of
humanitarian assistance and the global effort on risk reduction as concrete
expression of the country’s commitment to overcome human sufferings due to
recurring disasters;
(c) Incorporate internationally accepted principles of disaster risk management in the
creation and implementation of national, regional and local sustainable
development and poverty reduction strategies, policies, plans and budgets;
(d) Adopt a disaster risk reduction and management approach that is holistic,
comprehensive, integrated, and proactive in lessening the socio-economic and
environmental impacts of disasters including climate change, and promotes the
involvement and participation of all sectors and all stakeholders concerned, at all
levels, especially the local community;
(e) Develop, promote, and implement a comprehensive National Disaster Risk
Reduction and Management Plan (NDRRMP) that aims to strengthen the
capacity of the National Government and the local government units (LGUs),
together with partner stakeholders, to build the disaster resilience of communities,
and to institutionalize arrangements and measures for reducing disaster risks,
including projected climate risks, and enhancing disaster preparedness and
response capabilities at all levels;
(f) Adopt and implement a coherent, comprehensive, integrated, efficient and
responsive disaster risk reduction program incorporated in the development plan
at various levels of government adhering to the principles of good governance
such as transparency and accountability within the context of poverty alleviation
and environmental protection;
(g) Mainstream disaster risk reduction and climate change in development
processes such as policy formulation, socio-economic development planning,
budgeting, and governance, particularly in the areas of environment, agriculture,
water, energy, health, education, poverty reduction, land-use and urban planning,
and public infrastructure and housing, among others;
(h) Institutionalize the policies, structures, coordination mechanisms and programs
with continuing budget appropriation on disaster risk reduction from national
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down to local levels towards building a disaster-resilient nation and communities;

xxx
xxx

Sec. 16. Declaration of State of Calamity. – The National Council shall recommend to
the President of the Philippines the declaration of a cluster of barangays, municipalities,
cities, provinces, and regions under a state of calamity, and the lifting thereof, based on
the criteria set by the National Council. The President’s declaration may warrant
international humanitarian assistance as deemed necessary.

The declaration and lifting of the state of calamity may also be issued by the local
sanggunian, upon the recommendation of the LDRRMC, based on the results of the
damage assessment and needs analysis.

SEC. 17. Remedial Measures. – The declaration of a state of calamity shall make
mandatory the immediate undertaking of the following remedial measures by the
member-agencies concerned as defined in this Act:

(a) Imposition of price ceiling on basic necessities and prime commodities by the
President upon the recommendation of the implementing agency as provided for
under Republic Act No. 7581, otherwise known as the Price Act, or the National
Price Coordinating Council;
(b) Monitoring, prevention and control by the Local Price Coordination Council of
overpricing/profiteering and hoarding of prime commodities, medicines and
petroleum products;
(c) Programming/reprogramming of funds for the repair and safety upgrading of public
infrastructures and facilities; and
(d) Granting of no-interest loans by government financing or lending institutions to the
most affected section of the population through their cooperatives or people’s
organizations.

SEC. 18. Mechanism for International Humanitarian Assistance. –

(a) The importation and donation of food, clothing, medicine and equipment for relief
and recovery and other disaster management and recovery-related supplies is
hereby authorized in accordance with Sec. 105 of the Tariff and Customs Code
of the Philippines, as amended, and the prevailing provisions of the General
Appropriations Act covering national internal revenue taxes and import duties of
national and local government agencies; and
(b) Importations and donation under this Section shall be considered as importation
by and/or donation to the NDRRMC, subject to the approval of the Office of the
President.

SEC. 19. Prohibited Acts. – Any person, group or corporation who commits any of the
following prohibited acts shall be held liable and be subjected to the penalties as
prescribed in Section 20 of this Act:

(a) Dereliction of duties, which lead to destruction, loss of lives, critical damage of
facilities and misuse of funds;
(b) Preventing the entry and distribution of relief goods in disaster-stricken areas,
including appropriate technology, tools, equipment, accessories, disaster
teams/experts;
(c) Buying, for consumption or resale, from disaster relief agencies any relief goods,
equipment or other aid commodities which are intended for distribution to disaster
affected communities;
(d) Buying, for consumption or resale, from the recipient disaster affected persons
any relief goods, equipment or other aid commodities received by them;
(e) Selling of relief goods, equipment or other aid commodities which are intended
for distribution to disaster victim;
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(f) Forcibly seizing relief goods, equipment or other aid commodities intended for or
consigned to a specific group of victims or relief agency;
(g) Diverting or misdelivery of relief goods, equipment or other aid commodities to
persons other than the rightful recipient or consignee;
(h) Accepting, possessing, using or disposing relief goods, equipment or other aid
commodities not intended for nor consigned to him/her;
(i) Misrepresenting the source of relief goods, equipment or other aid commodities
by:
(1) Either covering, replacing or defacing the labels of the containers to make it
appear that the goods, equipment or other aid commodities came from
another agency or persons;
(2) Repacking the goods, equipment or other aid commodities into containers
with different markings to make it appear that the goods, came from another
agency or persons or was released upon the instance of a particular agency
or persons;
(3) Making false verbal claim that the goods, equipment or other aid commodity
in its untampered original containers actually came from another agency or
persons or was released upon the instance or a particular agency or persons;
(j) Substituting or replacing relief goods, equipment or other aid commodities with
the same items or inferior/cheaper quality;
(k) Illegal solicitations by persons or organizations representing others as defined in
the standards and guidelines set by the NDRRMC;
(l) Deliberate use of false or inflated data in support of the request for funding, relief
goods, equipment or other aid commodities for emergency assistance or
livelihood projects; and
(m) Tampering with or stealing hazard monitoring and disaster preparedness
equipment and paraphernalia.
xxx

Sec. 21. Local Disaster Risk Reduction and Management Fund (LDRRMF). – The
present Local Calamity Fund shall henceforth be known as the Local Disaster Risk
Reduction and Management Fund (LDRRMF). Not less than five percent (5%) of the
estimated revenue from regular sources shall be set aside as the LDRRMF to support
disaster risk management activities such as, but not limited to, pre-disaster
preparedness programs including training, purchasing life-saving rescue equipment,
supplies and medicines, for post-disaster activities, and for the payment of premiums
on calamity insurance. The LDRRMC shall monitor and evaluate the use and
disbursement of LDRRMF based on the LDRRMP as incorporated in the local
development plans and annual work and financial plan. Upon the recommendation of
the LDRRMO and approval of the sanggunian concerned, the LDRRMC may transfer
the said fund to support disaster risk reduction work of other LDRRMCs which are
declared under state of calamity.

Of the amount appropriated for LDRRMF, thirty percent (30%) shall be allocated as
Quick Response Fund (QRF) or stand-by fund for relief and recovery programs in order
that situation and living conditions of people in communities or areas stricken by
disasters, calamities, epidemics, or complex emergencies, may be normalized as
quickly as possible.

Unexpended LDRRMF shall accrue to a special trust fund solely for the purpose of
supporting disaster risk reduction and management activities of the LDRRMCs within
the next five (5) years. Any such amount still not fully utilized after five (5) years shall
revert back to the general fund and will be available for other social services to be
identified by the local sanggunian.

SEC. 22. National Disaster Risk Management and Recovery Fund. –

a. The present Calamity Fund appropriated under the annual General Appropriations
Act shall henceforth be known as the National Disaster Risk Reduction and
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Management Fund (NDRRM Fund) and it shall be used for disaster risk reduction
or mitigation, prevention and preparedness activities such as but not limited to
training of personnel, procurement of equipment, and capital expenditures. It can
also be utilized for relief, recovery, reconstruction and other work or services in
connection with natural or human-induced calamities, which may occur during the
budget year or those that occurred in the past two (2) years from the budget year.
b. The specific amount of the NDRRM Fund and the appropriate recipient agencies
and/or LGUs shall be determined upon approval of the President of the
Philippines in accordance with the favorable recommendation of the NDRRMC.
c. Of the amount appropriated for NDRRM Fund, thirty percent (30%) shall be
allocated as Quick Response Fund (QRF) or stand-by fund for relief and recovery
programs in order that situation and living conditions of people in communities or
areas stricken by disasters, calamities, epidemics, or complex emergencies, may
be normalized as quickly as possible.
d. All departments/agencies and LGUs that are allocated with DRRM fund shall
submit to the NDRRMC their monthly statements on the utilization of DRRM funds
and make an accounting thereof in accordance with existing accounting and
auditing rules.
e. All departments, bureaus, offices and agencies of the Government are hereby
authorized to use a portion of their appropriations to implement projects designed
to address DRRM activities in accordance with the guidelines to be issued by the
NDRRMC in coordination with the DBM.

11.2 Further discussion

What is climate change?271

Climate Change is defined in the United Nations Framework Convention on Climate Change
(UNFCCC) as “a change of climate that is attributed directly or indirectly to human activity that alters
the composition of the global atmosphere and that is in addition to natural climate variability observed
over comparable time periods.”272 Although referred to by many as global warming, many scientists
are said to prefer use of the term climate change due to the fact that while the Earth, on average,
warms up, a few regions may begin to slightly cool.273

The general warming of the climate system has been declared to be unequivocal, evidenced by
increases in the temperature of the air and the ocean. The Fourth Assessment Report of the
Intergovernmental Panel on Climate Change (IPCC) released in 2007 states that the years 1995 to
2006 have been the “warmest years in the instrumental record of global surface temperatures.”274
The melting of snow and ice has sped up and become more widespread, causing the global average
sea level to rise. Scientists project a warming of approximately 0.2 degrees Celsius per decade,
although should concentrations of greenhouse gases (GHGs) and aerosols be kept consistent with
year 2000 emission levels, the rise in temperature could be reduced to 0.1 degrees Celsius instead.
All in all, the global average temperature is likely to rise from around 1.1 to 6.4 degrees Celsius by
2080 to 2090, relative to 1980 to 1999 temperatures.275 For this reason, the Conference of Parties
21 in 2015 held in Paris, France, focused on finding a solution to combat climate change by creating
a legally binding and universal agreement on climate. The Paris Agreement aims to hold the increase
in global average temperature levels to well below two degrees Celsius above pre-industrial levels
and, if possible, limit the same to 1.5 degrees Celsius. As of May 2019, 195 Parties have signed the
Agreement, and 185 Parties have ratified the same. According to the IPCC, there will be a number
of climate change impacts that could be avoided by limiting global warming to 1.5 degrees Celsius.
For instance, global sea level rise will considerably be lower, the likelihood of an Arctic Ocean free

271
“Climate Change: Issues, Problems and Challenges in the Philippines” by Antonio G.M. La Viña & Cecilia Therese T.
Guiao, 3 August 2012, unpublished.
272
United Nations Framework Convention On Climate Change (UNFCCC), http://unfccc.int/2860.php (last visited June
2012)
273
Robert Henson, The Rough Guide to Climate Change 6 (2008).
274
Leonard S. Bernstein, Climate Change 2007: Synthesis Report, in Intergovernmental Panel on Climate Change 30A
(2007).
275
Leonard S. Bernstein, Climate Change 2007: Synthesis Report, in Intergovernmental Panel on Climate Change 12
(2007).
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of sea ice in the summer would only be once per century compared to at least once per decade with
a 2 degree Celsius increase, and the decline of coral reefs can be abated, among others.

Report of the Intergovernmental Panel on Climate Change (2007)276

• Warming of the climate system is unequivocal, as is now evident from observations of

increases in global average air and ocean temperatures, widespread melting of snow and ice
and rising global average sea level

• Global GHG emissions due to human activities have grown since pre-industrial times, with
an increase of 70% between 1970 and 2004

• Global atmospheric concentrations of CO2, methane (CH4) and nitrous oxide (N2O) have
increased markedly as a result of human activities since 1750 and now far exceed pre-
industrial values determined from ice cores spanning many thousands of years.

• Most of the observed increase in global average temperatures since the mid-20th century is
very likely due to the observed increase in anthropogenic GHG concentrations. It is likely that
there has been significant anthropogenic warming over the past 50 years averaged over each
continent (except Antarctica)

Does climate change cause super-typhoons?

Studies have shown that an abrupt change in typhoon count in the vicinity of Taiwan occurred in the
year 2000. According to an article written by Tu, Chou and Chu, “[o]n average, 3.3 typhoons per
year have been noted before 2000 (1970–99), with the rate increasing to 5.7 typhoons per year since
2000 (2000–06). This abrupt change is consistent with a northward shift of the typhoon track over
the western North Pacific–East Asian region and an increase of typhoon frequency over the Taiwan–
East China Sea region. The northward shift of the typhoon track tends to be associated with typhoon-
enhancing environmental conditions over the western North Pacific, namely, the weakening of the
western North Pacific subtropical high, the strengthening of the Asian summer monsoon trough, and
the enhanced positive vorticity anomalies in the lower troposphere. Based on observational analysis
and model simulations, warm sea surface temperature anomalies over the equatorial western and
central Pacific appear to be a major factor contributing to a northward-shifted typhoon track.”277

In the Philippines, the Manila Observatory in 2012 identified Typhoon Sendong as an “extreme
weather event,” especially considering the amount of total accumulated rainfall in one day.
Precipitation associated with this typhoon much higher than normal; PAGASA Lumbia Station data
signified a total of 180mm of rainfall in Cagayan de Oro City in one day – 63mm more than the
117mm monthly average based on 1977-2005 data.

Tropical cyclones are known to hit Mindanao far less frequently than Luzon and Visayas. From 1883
to 1900, there was an average of one typhoon a year in the region, although in the past 15 years
only six typhoons passed through Mindanao. Data from the Joint Typhoon Warning Center (JTWC)
shows that there is roughly only one typhoon that goes through Mindanao every 10 years in the
month of December.

As it is, it is very difficult to attribute one extreme event to climate change – a definite conclusion as
to whether or not Sendong is brought about by climate change therefore cannot be made. Attribution

276
Leonard S. Bernstein, Climate Change 2007: Synthesis Report, in Intergovernmental Panel on Climate Change 30A
(2007).
277
Tu, Chou and Chu. 2009. The Abrupt Shift of Typhoon Activity in the Vicinity of Taiwan and Its Association with Western
North Pacific–East Asian Climate Change. Journal of Climate 22: 3617-3628
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is a complex topic that the IPCC is still addressing, although the scientific consensus is that extreme
weather events are going to become more commonplace with climate change.

CASE STUDY:
PHILIPPINES’ WORST STORM – SUPER TYPHOON YOLANDA

On November 2013, the strongest and most disastrous tropical cyclone made landfall in the Philippines -
Typhoon Haiyan, also known as Typhoon Yolanda. It has affected over 3 million families or 16 million persons,
placing the provinces of Aklan, Capiz, Cebu, Iloilo, Leyte, Palawan and Samar under a state of national calamity.
Casualties were estimated to a total of 1,061 missing reports, 6,300 death reports, 28,688 injuries, and total
damage of 89.5 billion pesos and estimated losses of 42.7 billion pesos.

There were multiple factors as to why Typhoon Yolanda is so lethal. First, although the Philippines often
experience tropical storms, previous typhoons often make landfall on the northern island of the country where
there are geographical advantages (such as mountain ranges) to weaken the storm and lessen its impacts. But
the Tacloban City, a city that has been directly hit by Yolanda, is a low lying island and is lacking geographical
advantages to serve as protection from threats brought by Yolanda such as storm surges. Secondly, the typhoon
warnings were inadequate and jargons such as "storm surges" served as a barrier for the locals to take serious
and immediate actions leading to evacuation failure. Lastly, areas hit by Yolanda are mostly poor and
marginalized communities

The Philippines is already one of the most disaster-prone countries in the world due to its geographical location
and high exposure to natural disasters. Although are still no clear conclusion about the attribution of super
typhoons and climate change, the occurrence of Yolanda seemed to strengthen the consensus that extreme
weather events are going to become more common due to climate change. This has already been thought of in
2012 with the landfall of Typhoon Sendong. It is not difficult to expect that our country will be experiencing
typhoons that are equally or more intense than Typhoon Yolanda and it is certainly worth the effort to do our best
to prepare for the worst.

-----

Sources:

http://ndrrmc.gov.ph/attachments/article/1329/FINAL_REPORT_re_Effects_of_Typhoon_YOLANDA_%28HAIYAN%29_06-
09NOV2013.pdf
https://news.abs-cbn.com/news/11/05/18/why-super-typhoon-yolanda-was-so-deadly
https://www.theguardian.com/world/2013/nov/12/typhoon-haiyan-climate-change-blame-philippines
http://science.time.com/2013/11/11/climate-change-didnt-cause-supertyphoon-haiyan-but-the-storm-is-still-a-reason-to-fight-
warming/
https://www.officialgazette.gov.ph/2013/11/11/proclamation-no-682-s-2013/

[OPINION] Urgently needed: Department for disaster resilience and climate change
Tony La Viña and Kristoffer Berse
09 September 2018, Rappler.com

After supposedly going through 6 technical working group meetings and 11 regional consultations involving more
than 1,000 local government units, the proposed Salceda bill consolidated 34 bills and 4 resolutions filed within
the House of Representatives since last year. The department is initially patterned after the US Department of
Homeland Security which put under one roof at least 22 agencies, including the Federal Emergency Management
Agency. The proposed agency is touted to be even ahead of FEMA in as far as instituting resiliency as a core
mandate is concerned.

There are a number of good, radical changes in the proposed Department of Disaster Resilience (DDR). First
and foremost, the integration of agencies involved in disaster risk reduction and climate change under one roof
is the right way to go. The transfer and harmonization of the powers and functions of agencies and offices such
as the Office of Civil Defense (OCD) of the Department of National Defense (DND), Climate Change Office of
the Climate Change Commission (CCC), the Mines and Geosciences Bureau of the Department of Environment
and Natural Resources (DENR), the Health Emergency Management Bureau of the Department of Health (DOH),
the Disaster Response Assistance and Management Bureau of the Department of Social Welfare and
Development (DSWD), and the Bureau of Fire Protection (BFP) of the Department of the Interior and Local
Government (DILG) are logical and necessary from an organizational perspective.
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The move to bring Phivolcs and PAGASA from the Department of Science and Technology (DOST) to the new
department also signals a closer integration of science and technology in all aspects of disaster risk reduction,
not just in early warning and hazard assessment. This will also mean the end of extraordinary mechanisms that
we have to resort to in every reconstruction phase through the creation of ad hoc task forces.

The conscious mainstreaming of the BFP in disaster work is a good idea as it provides the needed surge capacity
at the local level. For so long, the fire sector has been on the sidelines of disaster response in the country as we
tend to rely more on the police and armed forces for support in times of disasters. In other countries like Taiwan
and the US, fire personnel – not the security forces – are the go-to first responders during emergencies and
disasters. On its own, the BFP is already expanding its wings and has big plans to further bolster its own capability
in handling more than just fire-related emergencies. Nevertheless, while it would be sensible for the BFP to
remain with the DILG as it implements its own reforms, moving it as a core unit of DDR could fast-track and
ensure harmonization of its upgrading efforts with those of other agencies envisioned to be part of the disaster
agency.

Another laudable feature in the proposed bill is the centralized administration of the Quick Response Funds
currently allocated to multiple national government agencies. The increase in share of pre-disaster funding from
national and local funds for DRRM, now to be called the National or Local Disaster Resilience Fund, is responsive
to the paradigm shift that we have been advocating for so long. The increase from 5% to 7% of the Local Disaster
Resilience Fund, as well as the creation of a Disaster Resilience Support Fund for 3rd to 6th class LGUs, should
help localities address disasters more holistically.

The current bill, of course, is not perfect in its current form. We suggest that Congress do not start from scratch
and begin with the findings and recommendations of the nationwide consultations with various groups involved
in NDRRMC operations that took place in 2015-2016. That effort, led by NDRRMC Executive Director and
Defense Undersecretary Alexander Pama, was done to prepare for the formal "sunset review" of Republic Act
No. 10121.

In establishing a new department, Congress needs to be extra careful to avoid creating a bloated and highly-
bureaucratic agency. Measures need to be in place to ensure that only qualified staff will be carried over to the
new department and that the organization's structure is streamlined for efficient and effective operations. The
national government can take this opportunity to review and resolve long-standing staffing issues in the different
agencies that are proposed to be unified under the DDR.

It goes without saying that Congress must be strategic in deciding which existing agencies should be integrated
into the new department. For example, we must thoroughly discuss the pros and cons of transferring
PAGASA and the MGB to the new department. We do not want the unintended consequence of having the
mandate of these agencies, which goes beyond disaster resilience, affected by such a move. Are there other
options short of removing them respectively from the DOST and the DENR? Top officials and rank and file from
the affected agencies must certainly be consulted so all bases are covered. This move is particularly important
for the country's weather agency which has been actively beefing up its capacity since the passage of the
PAGASA Modernization Act (RA 10692) in 2015.

The merger of the NDRRMC and CCC, as the highest policymaking and advisory body for disaster risk reduction
and management and climate change, respectively, is necessary. These institutions have been managed
separately, undertaking activities that should have been integrated from the beginning. The consolidation of
NDRRMC and CCC as one executive body is timely especially since climate change, as the President has
recently acknowledged, is fast becoming a "day-to-day problem" that affects us all in different ways. Now is the
perfect time to make this institutional convergence happen officially to ensure dedicated focus, unity of vision,
and coordinated action in addressing both major disasters and slow-onset climate change impacts (e.g.,
increasing temperature).

Similar to PAGASA and the MGB, the officials and personnel of the CCC should be consulted, among others, to
also identify mandates that might be affected by this change. Mitigation regulatory responsibilities should now
be completely returned mainly to the DENR but with the energy, transportation, and agriculture departments
playing important roles. The negotiation mandate of the CCC should now be returned to the Department of
Foreign Affairs (DFA) working with all agencies but with the secretary of the new department as the minister in
charge for purposes of official meetings.

One good outcome of this proposal is to have one clear line of accountability, with one cabinet secretary that will
now be in charge of both disasters and climate change. It was not effective to have the President, who is very
busy, to chair the NDRRMC and CCC. He still of course will have control over the new department as head of
the executive branch.
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On the financial side, the Peoples' Survival Fund should be included in discussion on funding resilience. By finally
integrating disaster risk reduction planning and climate change adaptation, new sources of funding could be
identified for resilience projects. This includes the Green Climate Fund where money is available for both
mitigation and adaptation.

At any rate, the good news is that the budget requirement for the creation of the department, which has hampered
efforts in the past, has already been cleared with the committee on appropriations in the House. We hope that it
gets to pass the legislative mill soon so we could finally face the threat of disasters and climate change as a
united front. Until then, we could just keep on hoping that future disasters will not be strong enough to overwhelm
the capacity of our LGUs.

We have been calling for the new department for 5 years now, even before the 2013 Yolanda disaster. It would
be fitting that we finally get this done on the fifth anniversary of that terrible event.

The next two articles were written after the Philippines attended the Conference of Paris (COP) 24
in Paris where the Paris Agreement, the historic and global initiative to curb the effects of climate
change, was first introduced and signed. In 2017, the Philippines ratified the Agreement:

Part 1: The Philippines at its best at Paris climate talks

Tony La Viña and Purple Romero
31 December 2015, Rappler.com

Reports of deaths and damages from the two most recent typhoons (Onyok and Nona) that devastated the
Philippines have raised the urgency of understanding how the new global climate agreement can particularly
help Filipinos address disasters. We have noted how typhoons seemed to have always marked the UN climate
change negotiations, with super typhoon Yolanda, one of the strongest storms to make landfall in history,
hitting the country in 2013 while the climate change talks were happening then in Warsaw, Poland. In 2014, the
negotiations transpired while typhoon Ruby was also battering Manila; thankfully, there were fewer casualties
then, but one life lost is one too many.

Recognizing the eerie coincidence, Sec. Emmanuel de Guzman, vice chair of the Climate Change Commission
and also head of the Philippine delegation, started his final plenary speech recalling this: “For each of the past
4 years, at this time when we come for annual climate meetings, as our Earth spins to another end and another
beginning of her voyage around the sun, a powerful typhoon visited the Philippines, carving out an immense
swathe of devastation, deprivation and death of many of our countrymen, persistently and rudely reminding us
of the significance of our role and the urgency of mission in this Conference of the Parties.”
He went on to describe how, for the Philippines, climate change means sorrowful catalogues of casualty and
fatality; the countless voices of the homeless and the grieving – their very tears and screams carried to us by
the winds and waves that blew their homes away. Secretary de Guzman pointed out also how "victim" is
inadequate to capture the loss and damage visited upon us as each body counted “has a name and an age –
is workmate or lover, neighbor or friend, son or daughter, father or mother:

Now typhoons Nona and Onyok came days after 195 countries – including the Philippines – adopted the
climate change deal in the 21st Conference of Parties (COP21) in Paris, France. What difference does it make
now though that we already have a legally binding climate change deal? How could this agreement concretely
impact the lives of people from the countries and communities most vulnerable to climate change? What did
we fight for and win in the Paris conference?

United front

The Philippine delegation to Paris was ably led first by President Aquino who spoke at the leader’s summit and
opened a big meeting of the Climate Vulnerable Forum on the first day of the conference. Aside from his
presence being a big morale booster for the delegation, we considered Aquino’s two speeches as additional
instructions for us, and as articulating our priorities for the two weeks of negotiations.

When the President left, leadership fell upon Secretary de Guzman whose stewardship of Team Philippines
was visionary and exemplary. Servant leadership, dedication, discipline and adaptive management
characterized Secretary de Guzman’s work in Paris. The result was a cohesive and united Team Philippines.

Aside from Secretary de Guzman, the presence of Environment Secretary Ramon Paje and Secretary Neric
Acosta, presidential adviser on climate change, were also helpful, as we needed as many senior officials as
possible for various engagements. Having several undersecretaries and assistant secretaries take on specific
responsibilities made tasks lighter for everyone. Among others, we personally worked with Environment
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Antonio G.M.La Viña, JSD

Undersecretary Jonas Leones, Assistant Secretary Joy Goco of the Climate Change Commission,
Transportation Assistant Secretary Regina Ramos, and Science Assistant Secretary Raymond Liboro on
several negotiation issues that required their expertise.

Our diplomats, let by Assistant Secretary and now Ambassador to New Zealand Gary Domingo, were also very
competent and conscientious. We felt very assured that the country was represented in Paris by a sterling
group of Foreign Service officers. It felt like going to battle and you had everything covered.

Critical also to our success in Paris was the presence of senior officials and technical experts from the Climate
Change Commission, Office of the President, National Economic and Development Authority, PAGASA, and
the Departments of Agriculture, Environment and Natural Resources, Transportation and Communication,
Science and Technology, Finance, and Energy. We personally witnessed how our colleagues from government
worked very hard to advocate our issues.

It would be fair to say that the Philippine delegation was enriched, its capacities substantially enhanced, by the
inclusion of civil society advisers and experts from academe in its ranks. Indeed, some of us from civil society
and the academe have been following and participating in these negotiations for many years and provided
solid intelligence on what was happening, as well as strategic advice on what interventions would work best to
promote Philippine interests. If in the future, civil society presence in climate change negotiations were
challenged, Paris is the best illustration of why such presence is good, even essential for our interests.

Part 2: The Philippines’ influence on the Paris Agreement

Tony La Viña and Purple Romero
31 December 2015, Rappler.com

Our interests since the beginning of the climate change negotiations in 1990 has remained constant: how to
make sure that the threat of climate change is averted and its worst impacts does not affect us; and how to
ensure that the global mitigation interventions to address climate change benefit our sustainable development
and not hinder it.

Hence, the Philippine delegation pushed for certain points and fought against some – what we call our red lines
– in the Paris agreement because they will affect our capacity to face climate change in specific ways. We
crafted our position on mitigation, human rights, adaptation, loss and damage, technology transfer, finance,
and capacity building with a vision on how their inclusion in the historic climate change deal would be captured
in real programs and policies to be implemented on the ground.

Limiting global temperature to 1.5 degrees Celsius

The Philippines, as chair of the Climate Vulnerable Forum, an advocacy alliance of 43 developing, middle-
economy and small island states, has campaigned for the temperature cap of 1.5 degree-Celsius goal since
COP20 in Lima, Peru. In Paris, we did herculean work to achieve this goal and our efforts paid off as 112
countries eventually supported it, with France and Germany joining the call by the penultimate day of the
conference.

On the last day, the Philippines also joined the High Ambition Coalition, led by the Marshall Islands, which was
composed of more than 100 developed and developing nations and included the United States, Brazil,
Canada, and Australia, countries very big carbon footprints. The coalition also aimed to having the long-term
mitigation goal of below 1.5 degrees Celsius.

As Secretary Emmanuel de Guzman told the Vatican delegation during our bilateral meeting with them, the
difference between 2 and 1.5 degrees is the number of small islands all over the world (including some of our
islands) and the millions of people that live in them that will have to be sacrificed with the higher threshold. A 2
degrees Celsius increase also means severe impacts on the agriculture and food security of many poor
countries in Africa, Asia, and Latin America. Mountains and deserts will be especially impacted as well.

Article 2.a of the Paris agreement now states that countries will “hold the increase in the global average
temperature to well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the
temperature increase to 1.5 degrees Celsius above pre-industrial levels.” This is an important victory for the
Philippines and other vulnerable countries. Going to Paris, we would have thought we had a 25% probability of
achieving this language. After the first week, we thought we had a 50% probability of success. In the last two
days, confirmed especially by a bilateral meeting with Saudi Arabia where they signaled that a compromise
was acceptable, we knew that the victory was secured.
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Antonio G.M.La Viña, JSD

5-year review of mitigation commitments

How could greenhouse gas mitigation be made effective enough to limit global temperature to 1.5 degrees
Celsius? Countries have pledged, through their Intended Nationally Determined Contributions (INDC), to lower
their emissions through measures that they themselves specified in consideration of their own national
priorities and socioeconomic circumstances. As of now, 185 countries have officially submitted their INDCs,
with Venezuela adding their own to the list soon. The Philippines, for its part, aimed for a 70% carbon emission
reduction by 2030 in its INDC, given substantive and adequate support from developed countries.

The Philippines agrees that much needs to be done to keep the temperature below dangerous levels. That’s
why we supported a 5 year-review provision for the mitigation commitments. The adequacy of the pledges will
be gauged in a global stocktaking to do be first done in 2023, or 3 years after the Paris agreement takes effect
in 2020, and every 5 years thereafter. Countries anytime though could raise the ambition in their commitments,
as stipulated in Article 4.11 of the agreement, and we urge them to do so in a way that will enable them to also
attain equitable and sustainable development.
It is true that the current commitments will still lead to a 2.7 degrees Celsius increase in temperature. That is
not acceptable. But this review mechanism agreed to in Paris and built regularly into the agreement is its
saving grace. If we do it right, by the second or third cycle, we could be on track to the 1.5 degrees goal.

Support is critical

We need funds not only to mitigate greenhouse gas emissions, but also to adapt to the effects of climate
change, which could range from longer, drier spells to intense, more frequent rainfall. These events have
potential pronounced impacts on the income of farmers and fisher folk as the former would have a more
difficult time growing their crops, while it would be dangerous and too risky for the latter to brave stormy seas.
Their decreased production could then harm food security and aggravate poverty.

Communities that also live in locations that are exposed to multiple hazards such as strong winds and storm
surges would also have to be relocated. These would entail funds, but the financial assistance should not come
in the form of loans. Alicia Ilaga, director of the Climate Change Office at the Department of Agriculture, said it
well when she pointed out that countries already vulnerable to the effects of climate change such as the
Philippines should not bear the burden of having to be mired in debt for funding that have been supposedly
designed to help them.

Our adaptation team, led by Ilaga, worked hard to make sure that the funds would be grants-based.
Complementing their efforts was the work of the finance team, which supported the inclusion of a provision in
the climate change deal that aims to achieve a balance between mitigation and adaptation in the allotment of
climate finance. The technology transfer team, on the other hand, pushed for the provision of funds for all
stages of technology cycle so as to guarantee that the support will not just be given for research and
development but also implementation.

On support issues, the Philippines worked closely with colleagues from the Group of 77 and China (G77), the
coalition of developing countries led in Paris by South Africa. In the negotiations on finance, the G77 group was
led expertly by veteran negotiator Bernaditas Muller, a Philippine national.

Loss and damage

Not all challenges posed by climate change could be adapted to, however. This is why we need to address
loss and damage separately. It is one big win for us and other vulnerable countries that the Paris agreement
contained a whole article (Article 8) about it. Unlike in prior decisions by the Conference of Parties, developing
countries succeeded in delinking loss and damage from adaptation.

Article 8.4 states that countries would cooperate and facilitate to enhance understanding, support and action in
the areas of early warning systems, emergency preparedness, risk insurance and facilities and resilience of
communities, livelihoods and ecosystems, among others.

We first fought for the recognition of loss and damage in COP19 in Warsaw under the headship of then
Commissioner Naderev ‘Yeb’ Saño (truly a global hero whose courageous acts as a government official and a
pilgrim for climate will long remembered). Now that it is considered as a separate area of global priority from
adaptation, it feels like we’ve come full circle, but we also agree that steps are yet to be taken for it to be fully
translated to concrete measures.

Big victory for human rights and ecosystems integrity

Venezuelan Ambassador Claudia Salerno, who headed the coordination group for the Preamble, said that the
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Antonio G.M.La Viña, JSD

preamble captures not only environmental concerns but also social, economic and cultural considerations as
well. We couldn’t agree more. The preamble strongly pushes for countries to “respect, promote and consider
their respective obligations on human rights” with particular reference to rights of indigenous peoples, subjects
that the Philippines has fought for to be recognized in the agreement. As early as Lima, we have raised why
the Paris agreement must be anchored on human rights, something that has been lacking in its predecessor,
the Kyoto Protocol.

Like the 1.5 goal, it did not seem likely on the eve of the Paris talks that we would get human rights language
into the agreement. Building a coalition around this issue was critical and we worked on that the whole year
long with Mexico, Chile and a handful of countries. By the first week of Paris, it was clear that most countries
have come around to support the language we needed and by Thursday, coincidentally December 10 when
human rights day is celebrated worldwide, we were sure that human rights would finally be integrated into a
climate change agreement.

There is a reason why we wanted to emphasize this link between human rights and climate change. We will
better understand why we are doing what we are doing – we want this agreement to be successful because we
– including farmers, young people, survivors of disasters not just in the Philippines but in other countries – all of
us, including the one reading this – have the right to a cleaner, greener world, and so do the generations to
come.

Similar but less controversial to human rights was the Philippine leadership and advocacy of the inclusion of
language ecosystems integrity in the Paris Agreement. We successfully argued that climate change was not
just a carbon agreement but that its impacts and the impacts of mitigation interventions have serious
consequences on ecosystems, natural resources, and biological diversity.

Paris and multilateral processes

Governments are not the only actors on climate change. Peoples and communities can and must work
together to do something more and to get governments and the private sector to be more ambitious. But the
way forward for that is not through a consensus based process, which is what multilateral processes are all
about. Consensus means everyone, or mostly everyone, must agree. That’s a very high bar and because of
that compromises have to be made.

The big question for us these past few years is whether we should even have these multilateral processes at
all as they can be complex and unwieldy. Paris was a strong and loud confirmation for such processes. Without
them, both small and the least powerful nations will have no say at all on global decisions. If you were a
negotiator from those countries, as we were, It was very clear that we able to have a big footprint on the
agreement, that we shaped it as much as the biggest players.

This influence in the Paris negotiations did not of course materialize from nowhere. From the early years of the
climate negotiations, we were always a strong player as evidenced by our contribution as a country to the
shaping of the Kyoto Protocol. In more recent years, we have also been looked up to for our leadership on
forest and land use issues as well as for the role we played from 2011-2013 in catalyzing the coalition of Like
Minded Developing Countries (LMDC). Although we did a pivot in 2014 and left LMDC, the success of this
group in preserving the development space of developing countries will benefit us as well. Philippine national
Vicente Yu, who works for the South Centre, played a critical role supporting the LMDC and we benefitted as
well from his advice in the final stages of the Paris negotiations.

If global climate change politics were reduced to bilateral or regional relationships, only the big emitters and
those with deep pockets would have a say. Who wants that?

While we believe Paris is the maximum and limit of what governments as a collective can agree on now, the
Agreement is still not adequate to address climate change effectively. But while it is imperfect, the Paris
Agreement is not bad; it is certainty not a least common denominator agreement where people leave the
conference unhappy and depressed.

Those of us in Le Bourget the evening of December 12, 2015, were genuinely happy with what we have
achieved but we were also acutely aware that the hard work must continue in the years ahead. But for a few
minutes, if possible some hours, days or even a few weeks, we can rest and say – “Well done, for now at least,
well done.”