Cases NATRES Batch1

7/17/2019 Cases NATRES Batch1

http://slidepdf.com/reader/full/cases-natres-batch1 1/113

335 Phil. 82

SECOND DIVISION

[ G.R. No. 122156, February 03, 1997 ]

!NI"! #RINCE $O%E", #E%I%IONER, VS. GOVERNEN% SERVICE INS&R!NCE S'S%E, !NI"! $O%E" COR#OR!%ION,COI%%EE ON #RIV!%I(!%ION !ND OFFICE OF %$E GOVERNEN% COR#OR!%E CO&NSE", RES#ONDEN%S.

D E C I S I O N

)E""OSI""O, *.+

The Filipino First Policy enshrined in the 1987 Constitution, i.e., in the grant of rights, priileges, and concessions coering the nationalecono!y and patri!ony, the "tate shall gie preference to #ualified Filipinos,$1% is ino&ed 'y petitioner in its 'id to ac#uire 51( of theshares of the )anila *otel Corporation +)*C -hich o-ns the historic )anila *otel. pposing, respondents !aintain that the proisionis not self/e0ecuting 'ut re#uires an i!ple!enting legislation for its enforce!ent. Corollarily, they as& -hether the 51( shares for! parof the national econo!y and patri!ony coered 'y the protectie !antle of the Constitution.

The controersy arose -hen respondent oern!ent "erice nsurance "yste! +"", pursuant to the priatiation progra! of thePhilippine oern!ent under Procla!ation 4o. 5 dated 8 6ece!'er 198, decided to sell through pu'lic 'idding 3( to 51( of the

issued and outstanding shares of respondent )*C. The -inning 'idder, or the eentual strategic partner, is to proide !anage!ente0pertise and:or an international !ar&eting:reseration syste!, and financial support to strengthen the profita'ility and perfor!ance ofthe )anila *otel.$2% n a close 'idding held on 18 "epte!'er 1995 only t-o +2 'idders participated; petitioner )anila Prince *otelCorporation, a Filipino corporation, -hich offered to 'uy 51( of the )*C or 15,3, shares at P<1.58 per share, and =enong>erhad, a )alaysian fir!, -ith TT/"heraton as its hotel operator, -hich 'id for the sa!e nu!'er of shares at P<<. per share, orP2.<2 !ore than the 'id of petitioner.

Pertinent proisions of the 'idding rules prepared 'y respondent "" state /

. ?@?CAT4 F T*? 4?C?""B= C4T=BCT" DT* "":)*C /

1. The *ighest >idder !ust co!ply -ith the conditions set forth 'elo- 'y cto'er 23, 1995 +reset to 4oe!'er 3, 1995 or the *ighest

>idder -ill lose the right to purchase the >loc& of "hares and "" -ill instead offer the >loc& of "hares to the other Eualified >idders;

a. The *ighest >idder !ust negotiate and e0ecute -ith the "":)*C the )anage!ent Contract, nternational )ar&eting:=eseration"yste! Contract or other type of contract specified 'y the *ighest >idder in its strategic plan for the )anila *otel 0 0 0 0

'. The *ighest >idder !ust e0ecute the "toc& Purchase and "ale Bgree!ent -ith "" 0 0 0 0

. 6?CGB=BT4 F T*? D444 >66?=:"T=BT?C PB=T4?= /

The *ighest >idder -ill 'e declared the Dinning >idder:"trategic Partner after the follo-ing conditions are !et;

a. ?0ecution of the necessary contracts -ith "":)*C not later than cto'er 23, 1995 +reset to 4oe!'er 3, 1995H and

'. =e#uisite approals fro! the "":)*C and CP +Co!!ittee on Priatiation: CC +ffice of the oern!ent CorporateCounsel are o'tained.$3%

Pending the declaration of =enong >erhard as the -inning 'idder:strategic partner and the e0ecution of the necessary contracts,petitioner in a letter to respondent "" dated 28 "epte!'er 1995 !atched the 'id price of P<<. per share tendered 'y =enong>erhad.$<% n a su'se#uent letter dated 1 cto'er 1995 petitioner sent a !anagerIs chec& issued 'y Philtrust >an& for Thirty/three)illion Pesos +P33,,. as >id "ecurity to !atch the 'id of the )alaysian roup, )essrs. =enong >erhad 0 0 0 0 $5% -hichrespondent "" refused to accept.

n 17 cto'er 1995, perhaps apprehensie that respondent "" has disregarded the tender of the !atching 'id and that the sale of



51( of the )*C !ay 'e hastened 'y respondent "" and consu!!ated -ith =enong >erhad, petitioner ca!e to this Court onprohi'ition and !anda!us. n 18 cto'er 1995 the Court issued a te!porary restraining order enJoining respondents fro! perfectingand consu!!ating the sale to the )alaysian fir!.

n 1 "epte!'er 199 the instant case -as accepted 'y the Court ?n >anc after it -as referred to it 'y the First 6iision. The case -as then set for oral argu!ents -ith for!er Chief Kustice ?nri#ue ). Fernando and Fr. Koa#uin . >ernas, ".K., as amici curiae.

n the !ain, petitioner ino&es "ec. 1, second par., Brt. @, of the 1987 Constitution and su'!its that the )anila *otel has 'eenidentified -ith the Filipino nation and has practically 'eco!e a historical !onu!ent -hich reflects the i'rancy of Philippine heritage

and culture. t is a proud legacy of an earlier generation of Filipinos -ho 'elieed in the no'ility and sacredness of independence andits po-er and capacity to release the full potential of the Filipino people. To all intents and purposes, it has 'eco!e a part of thenational patri!ony.$% Petitioner also argues that since 51( of the shares of the )*C carries -ith it the o-nership of the 'usiness of thehotel -hich is o-ned 'y respondent "", a goern!ent/o-ned and controlled corporation, the hotel 'usiness of respondent ""'eing a part of the touris! industry is un#uestiona'ly a part of the national econo!y. Thus, any transaction inoling 51( of the sharesof stoc& of the )*C is clearly coered 'y the ter! national econo!y, to -hich "ec. 1, second par., Brt. @, 1987 Constitution, applies.$7%

t is also the thesis of petitioner that since )anila *otel is part of the national patri!ony and its 'usiness also un#uestiona'ly part of thenational econo!y petitioner should 'e preferred after it has !atched the 'id offer of the )alaysian fir!. For the 'idding rules !andatethat if for any reason, the *ighest >idder cannot 'e a-arded the >loc& of "hares, "" !ay offer this to the other Eualified >iddersthat hae alidly su'!itted 'ids proided that these Eualified >idders are -illing to !atch the highest 'id in ter!s of price per share. $8%

=espondents e0cept. They !aintain that; First, "ec. 1, second par., Brt. @, of the 1987 Constitution is !erely a state!ent of principleand policy since it is not a self/e0ecuting proision and re#uires i!ple!enting legislation+s 0 0 0 0 Thus, for the said proision tooperate, there !ust 'e e0isting la-s to lay do-n conditions under -hich 'usiness !ay 'e done.$9%

"econd, granting that this proision is self/e0ecuting, )anila *otel does not fall under the ter! national patri!ony -hich only refers tolands of the pu'lic do!ain, -aters, !inerals, coal, petroleu! and other !ineral oils, all forces of potential energy, fisheries, forests orti!'er, -ildlife, flora and fauna and all !arine -ealth in its territorial sea, and e0clusie !arine one as cited in the first and secondparagraphs of "ec. 2, Brt. @, 1987 Constitution. Bccording to respondents, -hile petitioner spea&s of the guests -ho hae slept in thehotel and the eents that hae transpired therein -hich !a&e the hotel historic, these alone do not !a&e the hotel fall under thepatri!ony of the nation. Dhat is !ore, the !andate of the Constitution is addressed to the "tate, not to respondent "" -hichpossesses a personality of its o-n separate and distinct fro! the Philippines as a "tate.

Third, granting that the )anila *otel for!s part of the national patri!ony, the constitutional proision ino&ed is still inapplica'le since -hat is 'eing sold is only 51( of the outstanding shares of the corporation, not the hotel 'uilding nor the land upon -hich the 'uildingstands. Certainly, 51( of the e#uity of the )*C cannot 'e considered part of the national patri!ony. )oreoer, if the disposition of theshares of the )*C is really contrary to the Constitution, petitioner should hae #uestioned it right fro! the 'eginning and not after ithad lost in the 'idding.

Fourth, the reliance 'y petitioner on par. L., su'par. K. 1., of the 'idding rules -hich proides that if for any reason, the *ighest >iddercannot 'e a-arded the >loc& of "hares, "" !ay offer this to the other Eualified >idders that hae alidly su'!itted 'ids proidedthat these Eualified >idders are -illing to !atch the highest 'id in ter!s of price per share, is !isplaced. =espondents postulate thatthe priilege of su'!itting a !atching 'id has not yet arisen since it only ta&es place if for any reason, the *ighest >idder cannot 'ea-arded the >loc& of "hares. Thus the su'!ission 'y petitioner of a !atching 'id is pre!ature since =enong >erhad could still ery

-ell 'e a-arded the 'loc& of shares and the condition giing rise to the e0ercise of the priilege to su'!it a !atching 'id had not yetta&en place.

Finally, the prayer for prohi'ition grounded on grae a'use of discretion should fail since respondent "" did not e0ercise itsdiscretion in a capricious, -hi!sical !anner, and if eer it did a'use its discretion it -as not so patent and gross as to a!ount to aneasion of a positie duty or a irtual refusal to perfor! a duty enJoined 'y la-. "i!ilarly, the petition for !anda!us should fail aspetitioner has no clear legal right to -hat it de!ands and respondents do not hae an i!peratie duty to perfor! the act re#uired ofthe! 'y petitioner.

De no- resole. B constitution is a syste! of funda!ental la-s for the goernance and ad!inistration of a nation. t is supre!e,i!perious, a'solute and unaltera'le e0cept 'y the authority fro! -hich it e!anates. t has 'een defined as the funda!ental and



para!ount la- of the nation.$1% t prescri'es the per!anent fra!e-or& of a syste! of goern!ent, assigns to the different depart!entstheir respectie po-ers and duties, and esta'lishes certain fi0ed principles on -hich goern!ent is founded. The funda!entalconception in other -ords is that it is a supre!e la- to -hich all other la-s !ust confor! and in accordance -ith -hich all priaterights !ust 'e deter!ined and all pu'lic authority ad!inistered.$11% Ander the doctrine of constitutional supre!acy, if a la- or contractiolates any nor! of the constitution that la- or contract -hether pro!ulgated 'y the legislatie or 'y the e0ecutie 'ranch or enteredinto 'y priate persons for priate purposes is null and oid and -ithout any force and effect. Thus, since the Constitution is thefunda!ental, para!ount and supre!e la- of the nation, it is dee!ed -ritten in eery statute and contract.

Bd!ittedly, so!e constitutions are !erely declarations of policies and principles. Their proisions co!!and the legislature to enact

la-s and carry out the purposes of the fra!ers -ho !erely esta'lish an outline of goern!ent proiding for the different depart!ents othe goern!ental !achinery and securing certain funda!ental and inaliena'le rights of citiens.$12% B proision -hich lays do-n ageneral principle, such as those found in Brt. of the 1987 Constitution, is usually not self/e0ecuting. >ut a proision -hich is co!pletein itself and 'eco!es operatie -ithout the aid of supple!entary or ena'ling legislation, or that -hich supplies sufficient rule 'y !eansof -hich the right it grants !ay 'e enJoyed or protected, is self/e0ecuting. Thus a constitutional proision is self/e0ecuting if the natureand e0tent of the right conferred and the lia'ility i!posed are fi0ed 'y the constitution itself, so that they can 'e deter!ined 'y ane0a!ination and construction of its ter!s, and there is no language indicating that the su'Ject is referred to the legislature for action.$13%

Bs against constitutions of the past, !odern constitutions hae 'een generally drafted upon a different principle and hae often 'eco!ein effect e0tensie codes of la-s intended to operate directly upon the people in a !anner si!ilar to that of statutory enact!ents, andthe function of constitutional conentions has eoled into one !ore li&e that of a legislatie 'ody. *ence, unless it is e0presslyproided that a legislatie act is necessary to enforce a constitutional !andate, the presu!ption no- is that all proisions of the

constitution are self/e0ecuting. f the constitutional proisions are treated as re#uiring legislation instead of self/e0ecuting, thelegislature -ould hae the po-er to ignore and practically nullify the !andate of the funda!ental la-.$1<% This can 'e cataclys!ic. Thatis -hy the preailing ie- is, as it has al-ays 'een, that /

0 0 0 0 in case of dou't, the Constitution should 'e considered self/e0ecuting rather than non/self/e0ecuting 0 0 0 0 Anless the contraryis clearly intended, the proisions of the Constitution should 'e considered self/e0ecuting, as a contrary rule -ould gie the legislaturediscretion to deter!ine -hen, or -hether, they shall 'e effectie. These proisions -ould 'e su'ordinated to the -ill of the la-!a&ing'ody, -hich could !a&e the! entirely !eaningless 'y si!ply refusing to pass the needed i!ple!enting statute.$15%

=espondents argue that "ec. 1, second par., Brt. @, of the 1987 Constitution is clearly not self/e0ecuting, as they #uote fro!discussions on the floor of the 198 Constitutional Co!!ission /)=. =6=. )ada! President, a! as&ing this #uestion as the Chair!an of the Co!!ittee on "tyle. f the -ording ofP=?F?=?4C? is gien to EABGF?6 FGP4", can it 'e understood as a preference to #ualified Filipinos is/a/is Filipinos -ho

are not #ualified. "o, -hy do -e not !a&e it clearM To #ualified Filipinos as against aliensM

T*? P=?"6?4T. Dhat is the #uestion of Co!!issioner =odrigoM s it to re!oe the -ord EABGF?6M

)=. =6=. 4o, no, 'ut say definitely T EABGF?6 FGP4" as against -ho!M Bs against aliens or oer aliens M

)=. 4GG?6. )ada! President, thin& that is understood. De use the -ord EABGF?6 'ecause the e0isting la-s or prospectiela-s -ill al-ays lay do-n conditions under -hich 'usiness !ay 'e done. For e0a!ple, #ualifications on capital, #ualifications on thesetting up of other financial structures, et cetera +underscoring supplied 'y respondents.

)=. =6=. t is Just a !atter of style.

)=. 4GG?6. es.$1%

Euite apparently, "ec. 1, second par., of Brt @ is couched in such a -ay as not to !a&e it appear that it is non/self/e0ecuting 'utsi!ply for purposes of style. >ut, certainly, the legislature is not precluded fro! enacting further la-s to enforce the constitutionalproision so long as the conte!plated statute s#uares -ith the Constitution. )inor details !ay 'e left to the legislature -ithouti!pairing the self/e0ecuting nature of constitutional proisions.

n self/e0ecuting constitutional proisions, the legislature !ay still enact legislation to facilitate the e0ercise of po-ers directly granted'y the constitution, further the operation of such a proision, prescri'e a practice to 'e used for its enforce!ent, proide a conenientre!edy for the protection of the rights secured or the deter!ination thereof, or place reasona'le safeguards around the e0ercise of theright. The !ere fact that legislation !ay supple!ent and add to or prescri'e a penalty for the iolation of a self/e0ecuting constitutionalproision does not render such a proision ineffectie in the a'sence of such legislation. The o!ission fro! a constitution of any



e0press proision for a re!edy for enforcing a right or lia'ility is not necessarily an indication that it -as not intended to 'e self/e0ecuting. The rule is that a self/e0ecuting proision of the constitution does not necessarily e0haust legislatie po-er on the su'Ject,'ut any legislation !ust 'e in har!ony -ith the constitution, further the e0ercise of constitutional right and !a&e it !ore aaila'le.$17%

"u'se#uent legislation ho-eer does not necessarily !ean that the su'Ject constitutional proision is not, 'y itself, fully enforcea'le.

=espondents also argue that the non/self/e0ecuting nature of "ec. 1, second par., of Brt. @ is i!plied fro! the tenor of the first andthird paragraphs of the sa!e section -hich undou'tedly are not self/e0ecuting.$18% The argu!ent is fla-ed. f the first and thirdparagraphs are not self/e0ecuting 'ecause Congress is still to enact !easures to encourage the for!ation and operation of enterprisesfully o-ned 'y Filipinos, as in the first paragraph, and the "tate still needs legislation to regulate and e0ercise authority oer foreign

inest!ents -ithin its national Jurisdiction, as in the third paragraph, then a fortiori, 'y the sa!e logic, the second paragraph can only'e self/e0ecuting as it does not 'y its language re#uire any legislation in order to gie preference to #ualified Filipinos in the grant ofrights, priileges and concessions coering the national econo!y and patri!ony. B constitutional proision !ay 'e self/e0ecuting in onepart and non/self/e0ecuting in another.$19%

?en the cases cited 'y respondents holding that certain constitutional proisions are !erely state!ents of principles and policies, -hich are 'asically not self/e0ecuting and only placed in the Constitution as !oral incenties to legislation, not as Judicially enforcea'lerights / are si!ply not in point. >asco . Philippine B!use!ents and a!ing Corporation$2% spea&s of constitutional proisions onpersonal dignity,$21% the sanctity of fa!ily life,$22% the ital role of the youth in nation/'uilding,$23% the pro!otion of social Justice, $2<% and thealues of education.$25% Tolentino . "ecretary of Finance $2% refers to constitutional proisions on social Justice and hu!an rights $27% andon education.$28% Gastly, ilos'ayan, nc. . )orato$29% cites proisions on the pro!otion of general -elfare,$3% the sanctity of fa!ily life,$31% the ital role of the youth in nation/'uilding$32% and the pro!otion of total hu!an li'eration and deelop!ent.$33% B reading of these

proisions indeed clearly sho-s that they are not Judicially enforcea'le constitutional rights 'ut !erely guidelines for legislation. Theery ter!s of the proisions !anifest that they are only principles upon -hich legislations !ust 'e 'ased. =es ipsa loquitur.

n the other hand, "ec. 1, second par., Brt. @ of the 1987 Constitution is a !andatory, positie co!!and -hich is co!plete in itselfand -hich needs no further guidelines or i!ple!enting la-s or rules for its enforce!ent. Fro! its ery -ords the proision does notre#uire any legislation to put it in operation. t is per se Judicially enforcea'le. Dhen our Constitution !andates that $i%n the grant ofrights, priileges, and concessions coering national econo!y and patri!ony, the "tate shall gie preference to #ualified Filipinos, it!eans Just that / #ualified Filipinos shall 'e preferred. Bnd -hen our Constitution declares that a right e0ists in certain specifiedcircu!stances an action !ay 'e !aintained to enforce such right not-ithstanding the a'sence of any legislation on the su'JectHconse#uently, if there is no statute especially enacted to enforce such constitutional right, such right enforces itself 'y its o-n inherentpotency and puissance, and fro! -hich all legislations !ust ta&e their 'earings. Dhere there is a right there is a re!edy. A'i Jus i'ire!ediu!.

Bs regards our national patri!ony, a !e!'er of the 198 Constitutional Co!!ission$3<% e0plains /

The patri!ony of the 4ation that should 'e consered and deeloped refers not only to our rich natural resources 'ut also to thecultural heritage of our race. t also refers to our intelligence in arts, sciences and letters. Therefore, -e should deelop not only ourlands, forests, !ines and other natural resources 'ut also the !ental a'ility or faculty of our people.

De agree. n its plain and ordinary !eaning, the ter! patri!ony pertains to heritage.$35% Dhen the Constitution spea&s of nationalpatri!ony, it refers not only to the natural resources of the Philippines, as the Constitution could hae ery -ell used the ter! naturalresources, 'ut also to the cultural heritage of the Filipinos.

)anila *otel has 'eco!e a land!ar& / a liing testi!onial of Philippine heritage. Dhile it -as restrictiely an B!erican hotel -hen itfirst opened in 1912, it i!!ediately eoled to 'e truly Filipino. For!erly a concourse for the elite, it has since then 'eco!e the enueof arious significant eents -hich hae shaped Philippine history. t -as called the Cultural Center of the 193Is. t -as the site of thefestiities during the inauguration of the Philippine Co!!on-ealth. 6u''ed as the fficial uest *ouse of the Philippine oern!ent itplays host to dignitaries and official isitors -ho are accorded the traditional Philippine hospitality.$3%

The history of the hotel has 'een chronicled in the 'oo& The )anila *otel; The *eart and )e!ory of a City.$37% 6uring Dorld Dar thehotel -as conerted 'y the Kapanese )ilitary Bd!inistration into a !ilitary head#uarters. Dhen the B!erican forces returned torecapture )anila the hotel -as selected 'y the Kapanese together -ith ntra!uros as the t-o +2 places for their final stand. Thereafter,in the 195Is and 19Is, the hotel 'eca!e the center of political actiities, playing host to al!ost eery political conention. n 197 thehotel reopened after a renoation and reaped nu!erous international recognitions, an ac&no-ledg!ent of the Filipino talent and



ingenuity. n 198 the hotel -as the site of a failed coup d’ etat -here an aspirant for ice/president -as proclai!ed President of thePhilippine =epu'lic.

For !ore than eight +8 decades )anila *otel has 'ore !ute -itness to the triu!phs and failures, loes and frustrations of the Filipinosits e0istence is i!pressed -ith pu'lic interestH its o-n historicity associated -ith our struggle for soereignty, independence andnationhood. Lerily, )anila *otel has 'eco!e part of our national econo!y and patri!ony. For sure, 51( of the e#uity of the )*Cco!es -ithin the purie- of the constitutional shelter for it co!prises the !aJority and controlling stoc&, so that anyone -ho ac#uires oro-ns the 51( -ill hae actual control and !anage!ent of the hotel. n this instance, 51( of the )*C cannot 'e disassociated fro!the hotel and the land on -hich the hotel edifice stands. Conse#uently, -e cannot sustain respondentsI clai! that the Filipino First

Policy proision is not applica'le since -hat is 'eing sold is only 51( of the outstanding shares of the corporation, not the *otel'uilding nor the land upon -hich the 'uilding stands.$38%

The argu!ent is pure sophistry. The ter! #ualified Filipinos as used in our Constitution also includes corporations at least ( of -hich is o-ned 'y Filipinos. This is ery clear fro! the proceedings of the 198 Constitutional Co!!ission /

T*? P=?"6?4T. Co!!issioner 6aide is recognied.

)=. 6BL6?. -ould li&e to introduce an a!end!ent to the 4olledo a!end!ent. Bnd the a!end!ent -ould consist in su'stituting the -ords EABGF?6 FGP4" -ith the follo-ing; CTN?4" F T*? P*GPP4?" = C=P=BT4" = B""CBT4"D*"? CBPTBG = C4T=GG4 "TC " D*GG D4?6 > "AC* CTN?4".

0 0 0 0

)=. )4"6. )ada! President, apparently the proponent is agreea'le, 'ut -e hae to raise a #uestion. "uppose it is a corporationthat is 8/percent Filipino, do -e not gie it preferenceM

)=. 6BL6?. The 4olledo a!end!ent -ould refer to an indiidual Filipino. Dhat a'out a corporation -holly o-ned 'y FilipinocitiensM

)=. )4"6. Bt least percent, )ada! President.

)=. 6BL6?. s that the intentionM

)=. )4"6. es, 'ecause, in fact, -e -ould 'e li!iting it if -e say that the preference should only 'e 1/percent Filipino.

)=. 6BL6?. -ant to get that !eaning clear 'ecause EABGF?6 FGP4" !ay refer only to indiiduals and not to Juridicalpersonalities or entities.

)=. )4"6. De agree, )ada! President. $39%

0 0 0 0

)=. =6=. >efore -e ote, !ay re#uest that the a!end!ent 'e read again.

)=. 4GG?6. The a!end!ent -ill read; 4 T*? =B4T F =*T", P=LG??" B46 C4C?""4" CL?=4 T*?

4BT4BG ?C4) B46 PBT=)4, T*? "TBT? "*BGG L? P=?F?=?4C? T EABGF?6 FGP4". Bnd the -ordFilipinos here, as intended 'y the proponents, -ill include not only indiidual Filipinos 'ut also Filipino/controlled entities or entitiesfully/controlled 'y Filipinos.$<%

The phrase preference to #ualified Filipinos -as e0plained thus /

)=. FN. )ada! President, -ould li&e to re#uest Co!!issioner 4olledo to please restate his a!end!ent so that can as& a#uestion.

)=. 4GG?6. 4 T*? =B4T F =*T", P=LG??" B46 C4C?""4" CL?=4 T*? 4BT4BG ?C4) B46PBT=)4, T*? "TBT? "*BGG L? P=?F?=?4C? T EABGF?6 FGP4".



)=. FN. n connection -ith that a!end!ent, if a foreign enterprise is #ualified and a Filipino enterprise is also #ualified, -ill theFilipino enterprise still 'e gien a preferenceM

)=. 4GG?6. 'iously.

)=. FN. f the foreigner is !ore #ualified in so!e aspects than the Filipino enterprise, -ill the Filipino still 'e preferredM

)=. 4GG?6. The ans-er is yes.

)=. FN. Than& you.$<1%

?0pounding further on the Filipino First Policy proision Co!!issioner 4olledo continues O

)=. 4GG?6. es, )ada! President. nstead of )A"T, it -ill 'e "*BGG / T*? "TBT? "*BGG L? P=?F?=?4C? TEABGF?6 FGP4". This e!'odies the so/called Filipino First policy. That !eans that Filipinos should 'e gien preference in thegrant of concessions, priileges and rights coering the national patri!ony.$<2%

The e0change of ie-s in the sessions of the Constitutional Co!!ission regarding the su'Ject proision -as still further clarified 'yCo!!issioner 4olledo$<3%

Paragraph 2 of "ection 1 e0plicitly !andates the Pro/Filipino 'ias in all econo!ic concerns. t is 'etter &no-n as the FGP4

F="T Policy 0 0 0 0 This proision -as neer found in preious Constitutions 0 0 0 0

The ter! #ualified Filipinos si!ply !eans that preference shall 'e gien to those citiens -ho can !a&e a ia'le contri'ution to theco!!on good, 'ecause of credi'le co!petence and efficiency. t certainly does 4T !andate the pa!pering and preferentialtreat!ent to Filipino citiens or organiations that are inco!petent or inefficient, since such an indiscri!inate preference -ould 'ecounterproductie and ini!ical to the co!!on good.

n the granting of econo!ic rights, priileges, and concessions, -hen a choice has to 'e !ade 'et-een a #ualified foreigner and a#ualified Filipino, the latter shall 'e chosen oer the for!er.Gastly, the -ord #ualified is also deter!ina'le. Petitioner -as so considered 'y respondent "" and selected as one of the #ualified'idders. t -as pre/#ualified 'y respondent "" in accordance -ith its o-n guidelines so that the sole inference here is that petitionerhas 'een found to 'e possessed of proen !anage!ent e0pertise in the hotel industry, or it has significant e#uity o-nership in another

hotel co!pany, or it has an oerall !anage!ent and !ar&eting proficiency to successfully operate the )anila *otel.$<<%

The penchant to try to -hittle a-ay the !andate of the Constitution 'y arguing that the su'Ject proision is not self/e0ecutory andre#uires i!ple!enting legislation is #uite distur'ing. The atte!pt to iolate a clear constitutional proision / 'y the goern!ent itself / isonly too distressing. To adopt such a line of reasoning is to renounce the duty to ensure faithfulness to the Constitution. For, een so!eof the proisions of the Constitution -hich eidently need i!ple!enting legislation hae Juridical life of their o-n and can 'e the sourceof a Judicial re!edy. De cannot si!ply afford the goern!ent a defense that arises out of the failure to enact further ena'ling,i!ple!enting or guiding legislation. n fine, the discourse of Fr. Koa#uin . >ernas, ".K., on constitutional goern!ent is apt /

The e0ecutie depart!ent has a constitutional duty to i!ple!ent la-s, including the Constitution, een 'efore Congress acts / proidedthat there are discoera'le legal standards for e0ecutie action. Dhen the e0ecutie acts, it !ust 'e guided 'y its o-n understandingof the constitutional co!!and and of applica'le la-s. The responsi'ility for reading and understanding the Constitution and the la-s is

not the sole prerogatie of Congress. f it -ere, the e0ecutie -ould hae to as& Congress, or perhaps the Court, for an interpretationeery ti!e the e0ecutie is confronted 'y a constitutional co!!and. That is not ho- constitutional goern!ent operates. $<5%

=espondents further argue that the constitutional proision is addressed to the "tate, not to respondent "" -hich 'y itself possessesa separate and distinct personality. This argu!ent again is at 'est specious. t is undisputed that the sale of 51( of the )*C could only'e carried out -ith the prior approal of the "tate acting through respondent Co!!ittee on Priatiation. Bs correctly pointed out 'y Fr.Koa#uin . >ernas, ".K., this fact alone !a&es the sale of the assets of respondents "" and )*C a state action. n constitutional

Jurisprudence, the acts of persons distinct fro! the goern!ent are considered state action coered 'y the Constitution +1 -hen theactiity it engages in is a pu'lic functionH +2 -hen the goern!ent is so significantly inoled -ith the priate actor as to !a&e thegoern!ent responsi'le for his actionH and, +3 -hen the goern!ent has approed or authoried the action. t is eident that the act ofrespondent "" in selling 51( of its share in respondent )*C co!es under the second and third categories of state action. Dithoutdou't therefore the transaction, although entered into 'y respondent "", is in fact a transaction of the "tate and therefore su'Ject to



the constitutional co!!and.$<%

Dhen the Constitution addresses the "tate it refers not only to the people 'ut also to the goern!ent as ele!ents of the "tate. Bfter allgoern!ent is co!posed of three +3 diisions of po-er / legislatie, e0ecutie and Judicial. Bccordingly, a constitutional !andatedirected to the "tate is correspondingly directed to the three +3 'ranches of goern!ent. t is undenia'le that in this case the su'Jectconstitutional inJunction is addressed a!ong others to the ?0ecutie 6epart!ent and respondent "", a goern!ent instru!entalityderiing its authority fro! the "tate.

t should 'e stressed that -hile the )alaysian fir! offered the higher 'id it is not yet the -inning 'idder. The 'idding rules e0pressly

proide that the highest 'idder shall only 'e declared the -inning 'idder after it has negotiated and e0ecuted the necessary contracts,and secured the re#uisite approals. "ince the Filipino First Policy proision of the Constitution 'esto-s preference on #ualifiedFilipinos the !ere tending of the highest 'id is not an assurance that the highest 'idder -ill 'e declared the -inning 'idder. =esultantly,respondents are not 'ound to !a&e the a-ard yet, nor are they under o'ligation to enter into one -ith the highest 'idder. For inchoosing the a-ardee respondents are !andated to a'ide 'y the dictates of the 1987 Constitution the proisions of -hich arepresu!ed to 'e &no-n to all the 'idders and other interested parties.

Bdhering to the doctrine of constitutional supre!acy, the su'Ject constitutional proision is, as it should 'e, i!pliedly -ritten in the'idding rules issued 'y respondent "", lest the 'idding rules 'e nullified for 'eing iolatie of the Constitution. t is a 'asic principlein constitutional la- that all la-s and contracts !ust confor! -ith the funda!ental la- of the land. Those -hich iolate the Constitutionlose their reason for 'eing.

Paragraph L. K. 1 of the 'idding rules proides that $i%f for any reason the *ighest >idder cannot 'e a-arded the >loc& of "hares, ""!ay offer this to other Eualified >idders that hae alidly su'!itted 'ids proided that these Eualified >idders are -illing to !atch thehighest 'id in ter!s of price per share.$<7% Certainly, the constitutional !andate itself is reason enough not to a-ard the 'loc& of sharesi!!ediately to the foreign 'idder not-ithstanding its su'!ission of a higher, or een the highest, 'id. n fact, -e cannot conceie of astronger reason than the constitutional inJunction itself.

n the instant case, -here a foreign fir! su'!its the highest 'id in a pu'lic 'idding concerning the grant of rights, priileges andconcessions coering the national econo!y and patri!ony, there'y e0ceeding the 'id of a Filipino, there is no #uestion that the Filipino

-ill hae to 'e allo-ed to !atch the 'id of the foreign entity. Bnd if the Filipino !atches the 'id of a foreign fir! the a-ard should go tothe Filipino. t !ust 'e so if -e are to gie life and !eaning to the Filipino First Policy proision of the 1987 Constitution. For, -hile this!ay neither 'e e0pressly stated nor conte!plated in the 'idding rules, the constitutional fiat is o!nipresent to 'e si!ply disregarded.To ignore it -ould 'e to sanction a perilous s&irting of the 'asic la-.

This Court does not discount the apprehension that this policy !ay discourage foreign inestors. >ut the Constitution and la-s of thePhilippines are understood to 'e al-ays open to pu'lic scrutiny. These are gien factors -hich inestors !ust consider -hen enturinginto 'usiness in a foreign Jurisdiction. Bny person therefore desiring to do 'usiness in the Philippines or -ith any of its agencies orinstru!entalities is presu!ed to &no- his rights and o'ligations under the Constitution and the la-s of the foru!.

The argu!ent of respondents that petitioner is no- estopped fro! #uestioning the sale to =enong >erhad since petitioner -as -ella-are fro! the 'eginning that a foreigner could participate in the 'idding is !eritless. Andou'tedly, Filipinos and foreigners ali&e -ereinited to the 'idding. >ut foreigners !ay 'e a-arded the sale only if no Filipino #ualifies, or if the #ualified Filipino fails to !atch thehighest 'id tendered 'y the foreign entity. n the case 'efore us, -hile petitioner -as already preferred at the inception of the 'idding'ecause of the constitutional !andate, petitioner had not yet !atched the 'id offered 'y =enong >erhad. Thus it did not hae the rightor personality then to co!pel respondent "" to accept its earlier 'id. =ightly, only after it had !atched the 'id of the foreign fir! and

the apparent disregard 'y respondent "" of petitionerIs !atching 'id did the latter hae a cause of action.

>esides, there is no ti!e fra!e for ino&ing the constitutional safeguard unless perhaps the a-ard has 'een finally !ade. To insist onselling the )anila *otel to foreigners -hen there is a Filipino group -illing to !atch the 'id of the foreign group is to insist thatgoern!ent 'e treated as any other ordinary !ar&et player, and 'ound 'y its !ista&es or gross errors of Judg!ent, regardless of theconse#uences to the Filipino people. The !isco!prehension of the Constitution is regretta'le. Thus -e -ould rather re!edy theindiscretion -hile there is still an opportunity to do so than let the goern!ent deelop the ha'it of forgetting that the Constitution laysdo-n the 'asic conditions and para!eters for its actions.

"ince petitioner has already !atched the 'id price tendered 'y =enong >erhad pursuant to the 'idding rules, respondent "" is left -ith no alternatie 'ut to a-ard to petitioner the 'loc& of shares of )*C and to e0ecute the necessary agree!ents and docu!ents to



effect the sale in accordance not only -ith the 'idding guidelines and procedures 'ut -ith the Constitution as -ell. The refusal ofrespondent "" to e0ecute the corresponding docu!ents -ith petitioner as proided in the 'idding rules after the latter has !atchedthe 'id of the )alaysian fir! clearly constitutes grae a'use of discretion.

The Filipino First Policy is a product of Philippine nationalis!. t is e!'odied in the 1987 Constitution not !erely to 'e used as aguideline for future legislation 'ut pri!arily to 'e enforcedH so !ust it 'e enforced. This Court as the ulti!ate guardian of theConstitution -ill neer shun, under any reasona'le circu!stance, the duty of upholding the !aJesty of the Constitution -hich it istas&ed to defend. t is -orth e!phasiing that it is not the intention of this Court to i!pede and di!inish, !uch less under!ine, theinflu0 of foreign inest!ents. Far fro! it, the Court encourages and -elco!es !ore 'usiness opportunities 'ut ao-edly sanctions the

preference for Filipinos -heneer such preference is ordained 'y the Constitution. The position of the Court on this !atter could haenot 'een !ore appropriately articulated 'y Chief Kustice 4arasa /

Bs scrupulously as it has tried to o'sere that it is not its function to su'stitute its Judg!ent for that of the legislature or the e0ecutiea'out the -isdo! and feasi'ility of legislation econo!ic in nature, the "upre!e Court has not 'een spared criticis! for decisionsperceied as o'stacles to econo!ic progress and deelop!ent 0 0 0 0 in connection -ith a te!porary inJunction issued 'y the CourtIsFirst 6iision against the sale of the )anila *otel to a )alaysian Fir! and its partner, certain state!ents -ere pu'lished in a !aJordaily to the effect that that inJunction again de!onstrates that the Philippine legal syste! can 'e a !aJor o'stacle to doing 'usinesshere.

Get it 'e stated for the record once again that -hile it is no 'usiness of the Court to interene in contracts of the &ind referred to or setitself up as the Judge of -hether they are ia'le or attaina'le, it is its 'ounden duty to !a&e sure that they do not iolate the

Constitution or the la-s, or are not adopted or i!ple!ented -ith grae a'use of discretion a!ounting to lac& or e0cess of Jurisdiction. t -ill neer shir& that duty, no !atter ho- 'uffeted 'y -inds of unfair and ill/infor!ed criticis!.$<8%

Priatiation of a 'usiness asset for purposes of enhancing its 'usiness ia'ility and preenting further losses, regardless of thecharacter of the asset, should not ta&e precedence oer non/!aterial alues. B co!!ercial, nay een a 'udgetary, o'Jectie should not'e pursued at the e0pense of national pride and dignity. For the Constitution enshrines higher and no'ler non/!aterial alues. ndeed,the Court -ill al-ays defer to the Constitution in the proper goernance of a free societyH after all, there is nothing so sacrosanct in anyecono!ic policy as to dra- itself 'eyond Judicial reie- -hen the Constitution is inoled.$<9%

4ationalis! is inherent in the ery concept of the Philippines 'eing a de!ocratic and repu'lican state, -ith soereignty residing in theFilipino people and fro! -ho! all goern!ent authority e!anates. n nationalis!, the happiness and -elfare of the people !ust 'e thegoal. The nation/state can hae no higher purpose. Bny interpretation of any constitutional proision !ust adhere to such 'asic

concept. Protection of foreign inest!ents, -hile laudi'le, is !erely a policy. t cannot oerride the de!ands of nationalis!.$5%

The )anila *otel or, for that !atter, 51( of the )*C, is not Just any co!!odity to 'e sold to the highest 'idder solely for the sa&e ofpriatiation. De are not tal&ing a'out an ordinary piece of property in a co!!ercial district. De are tal&ing a'out a historic relic thathas hosted !any of the !ost i!portant eents in the short history of the Philippines as a nation. De are tal&ing a'out a hotel -hereheads of states -ould prefer to 'e housed as a strong !anifestation of their desire to cloa& the dignity of the highest state function totheir official isits to the Philippines. Thus the )anila *otel has played and continues to play a significant role as an authentic repositoryof t-entieth century Philippine history and culture. n this sense, it has 'eco!e truly a reflection of the Filipino soul / a place -ith ahistory of grandeurH a !ost historical setting that has played a part in the shaping of a country.$51%

This Court cannot e0tract rhy!e nor reason fro! the deter!ined efforts of respondents to sell the historical land!ar& / this rand ld6a!e of hotels in Bsia / to a total stranger. For, indeed, the coneyance of this epic e0ponent of the Filipino psyche to alien hands

cannot 'e less than !ephistophelian for it is, in -hateer !anner ie-ed, a erita'le alienation of a nationIs soul for so!e pieces offoreign siler. Bnd so -e as&; Dhat adantage, -hich cannot 'e e#ually dra-n fro! a #ualified Filipino, can 'e gained 'y the Filipinos i)anila *otel / and all that it stands for / is sold to a non/FilipinoM *o- !uch of national pride -ill anish if the nationIs cultural heritageis entrusted to a foreign entityM n the other hand, ho- !uch dignity -ill 'e presered and realied if the national patri!ony is safe&eptin the hands of a #ualified, ealous and -ell/!eaning FilipinoM This is the plain and si!ple !eaning of the Filipino First Policy proisionof the Philippine Constitution. Bnd this Court, heeding the clarion call of the Constitution and accepting the duty of 'eing the elderly

-atch!an of the nation, -ill continue to respect and protect the sanctity of the Constitution.

D*?=?F=?, respondents L?=4)?4T "?=LC? 4"A=B4C? ""T?), )B4GB *T?G C=P=BT4, C))TT?? 4P=LBTNBT4 and FFC? F T*? L?=4)?4T C=P=BT? CA4"?G are directed to C?B"? and 6?""T fro! selling51( of the shares of the )anila *otel Corporation to =?44 >?=*B6, and to BCC?PT the !atching 'id of petitioner )B4GB



P=4C? *T?G C=P=BT4 to purchase the su'Ject 51( of the shares of the )anila *otel Corporation at P<<. per share andthereafter to e0ecute the necessary agree!ents and docu!ents to effect the sale, to issue the necessary clearances and to do suchother acts and deeds as !ay 'e necessary for the purpose." =6?=?6.

Regalado, Davide, Jr., Romero, Kapunan, Francisco, and Hermosisima, Jr., JJ, concur.4arasa, C.K., +Chair!an, and Melo, J ., Joins J.Puno in his dissent.Padilla, J., see concurring opinion.Vitug, J., see separate concurring opinion

Mendoza, J.,see concurring opinionorres, J., -ith separate opinionPuno, J., see dissent.Pangani!an J., -ith separate dissenting opinion.



.=. 4o. 1183

EN )!NC

[ G.R. No. 10103, *u-y 30, 1993 ]

*&!N !N%ONIO, !NN! ROS!RIO !ND *OSE !"FONSO, !"" S&RN!ED O#OS!, INORS, !ND RE#RESEN%ED )' %$EIR#!REN%S !N%ONIO !ND RI(!"IN! O#OS!, RO)ER%! NICO"E S!DI&!, INOR, RE#RESEN%ED )' $ER #!REN%S, C!"VIN

!ND RO)ER%! S!DI&!, C!R"O, !!ND! S!"&D !ND #!%RIS$!, !"" S&RN!ED F"ORES, INORS !ND RE#RESEN%ED)' %$EIR #!REN%S ENRICO !ND NID! F"ORES, GI!NIN! DI%! R. FOR%&N, INOR, RE#RESEN%ED )' $ER #!REN%SSIGFRID !ND DO"ORES FOR%&N, GEORGE II !ND !. CONCE#CION, !"" S&RN!ED IS!, INORS !ND RE#RESEN%ED

)' %$EIR #!REN%S GEORGE !ND 'R! IS!, )EN*!IN !"!N V. #ESIG!N, INOR, RE#RESEN%ED )' $IS #!REN%S!N%ONIO !ND !"ICE #ESIG!N, *OVIE !RIE !"F!RO, INOR, RE#RESEN%ED )' $ER #!REN%S *OSE !ND !RI!VIO"E%! !"F!RO, !RI! CONCE#CION %. C!S%RO, INOR, RE#RESEN%ED )' $ER #!REN%S FREDENI" !ND *!NEC!S%RO, *O$!NN! DES!#!R!DO, INOR, RE#RESEN%ED )' $ER #!REN%S *OSE !ND !NGE"! DES!#!R!DO,

C!R"O *O!&IN %. N!RV!S!, INOR, RE#RESEN%ED )' $IS #!REN%S GREGORIO II !ND CRIS%INE C$!RI%' N!RV!S!,!. !RG!RI%!, *ES&S IGN!CIO, !. !NGE"! !ND !RIE G!)RIE""E, !"" S&RN!ED S!EN(, INORS,

RE#RESEN%ED )' %$EIR #!REN%S RO)ER%O !ND !&ROR! S!EN(, /RIS%INE, !R' E""EN, !', GO"D! !R%$E !NDD!VID I!N, !"" S&RN!ED /ING, INORS, RE#RESEN%ED )' %$EIR #!REN%S !RIO !ND $!'DEE /ING, D!VID,

FR!NCISCO !ND %$ERESE VIC%ORI!, !"" S&RN!ED ENDRIG!, INORS, RE#RESEN%ED )' %$EIR #!REN%S )!"%!(!R

!ND %ERESI%! ENDRIG!, *OSE !. !ND REGIN! !., !"" S&RN!ED !)!'!, INORS, RE#RESEN%ED )' %$EIR#!REN%S !N%ONIO !ND !RIC! !)!'!, !RI"IN, !RIO, *R. !ND !RIE%%E, !"" S&RN!ED C!RD!!, INORS,RE#RESEN%ED )' %$EIR #!REN%S !RIO !ND "IN! C!RD!!, C"!RISS!, !NN !RIE, N!GE" !ND IEE "'N, !""

S&RN!ED O#OS!, INORS !ND RE#RESEN%ED )' %$EIR #!REN%S RIC!RDO !ND !RISS! O#OS!, #$I"I# *OSE#$,S%E#$EN *O$N !ND IS!I!$ *!ES, !"" S&RN!ED &I#I%, INORS, RE#RESEN%ED )' %$EIR #!REN%S *OSE !

!ND VI"I &I#I%, )&G$! CIE"O, CRIS!N%O, !NN!, D!NIE" !ND FR!NCISCO, !"" S&RN!ED )I)!", INORS,RE#RESEN%ED )' %$EIR #!REN%S FR!NCISCO, *R. !ND I"!GROS )I)!", !ND %$E #$I"I##INE ECO"OGIC!"NE%OR/, INC., #E%I%IONERS, VS. %$E $ONOR!)"E F&"GENCIO S. F!C%OR!N, *R., IN $IS C!#!CI%' !S %$E

SECRE%!R' OF %$E DE#!R%EN% OF ENVIRONEN% !ND N!%&R!" RESO&RCES, !ND %$E $ONOR!)"E ERI)ER%O &.ROS!RIO, #RESIDING *&DGE OF %$E R%C, !/!%I, )R!NC$ 66, RES#ONDEN%S.

D E C I S I O N

D!VIDE, *R., *.+

n a 'roader sense, this petition 'ears upon the right of Filipinos to a 'alanced and healthful ecology -hich the petitioners dra!aticallyassociate -ith the t-in concepts of inter/generational responsi'ility and inter/generational Justice. "pecifically, it touches on theissue of -hether the said petitioners hae a cause of action to preent the !isappropriation or i!pair!ent of Philippine rainforestsand arrest the una'ated he!orrhage of the countryQs ital life/support syste!s and continued rape of )other ?arth.

The controersy has its genesis in Ciil Case 4o. 9/777 -hich -as filed 'efore >ranch +)a&ati, )etro )anila of the =egional TrialCourt +=TC, 4ational Capital Kudicial =egion. The principal plaintiffs therein, no- the principal petitioners, are all !inors dulyrepresented and Joined 'y their respectie parents. !pleaded as an additional plaintiff is the Philippine ?cological 4et-or&, nc.+P?4, a do!estic, non/stoc& and non/profit corporation organied for the purpose of, inter alia, engaging in concerted action geared

for the protection of our eniron!ent and natural resources. The original defendant -as the *onora'le Fulgencio ". Factoran, Kr., then"ecretary of the 6epart!ent of ?niron!ent and 4atural =esources +6?4=. *is su'stitution in this petition 'y the ne- "ecretary, the*onora'le Bngel C. Blcala, -as su'se#uently ordered upon proper !otion 'y the petitioners.$1% The co!plaint$2% -as instituted as ata0payersI class suit$3% and alleges that the plaintiffs are all citiens of the =epu'lic of the Philippines, ta0payers, and entitled to the full'enefit, use and enJoy!ent of the natural resource treasure that is the countryQs irgin tropical rainforests. The sa!e -as filed forthe!seles and others -ho are e#ually concerned a'out the preseration of said resource 'ut are so nu!erous that it is i!practica'le

[

[2]

[3]



to 'ring the! all 'efore the Court. The !inors further asseerate that they represent their generation as -ell as generations yetun'orn.$<% Conse#uently, it is prayed for that Judg!ent 'e rendered;

0 0 0 ordering defendant, his agents, representaties and other persons acting in his 'ehalf to //

+1 Cancel all e0isting ti!'er license agree!ents in the countryH

+2 Cease and desist fro! receiing, accepting, processing, rene-ing or approing ne- ti!'er license agree!ents.

and granting the plaintiffs 0 0 0 such other reliefs Just and e#uita'le under the pre!ises.$5%

The co!plaint starts off -ith the general aer!ents that the Philippine archipelago of 7,1 islands has a land area of thirty !illion+3,, hectares and is endo-ed -ith rich, lush and erdant rainforests in -hich aried, rare and uni#ue species of flora andfauna !ay 'e foundH these rainforests contain a genetic, 'iological and che!ical pool -hich is irreplacea'leH they are also the ha'itatof indigenous Philippine cultures -hich hae e0isted, endured and flourished since ti!e i!!e!orialH scientific eidence reeals that inorder to !aintain a 'alanced and healthful ecology, the countryQs land area should 'e utilied on the 'asis of a ratio of fifty/four per cent+5<( for forest coer and forty/si0 per cent +<( for agricultural, residential, industrial, co!!ercial and other usesH the distortion anddistur'ance of this 'alance as a conse#uence of deforestation hae resulted in a host of eniron!ental tragedies, such as +a -atershortages resulting fro! the drying up of the -ater ta'le, other-ise &no-n as the a#uifer, as -ell as of riers, 'roo&s and strea!s, +'saliniation of the -ater ta'le as a result of the intrusion therein of salt -ater, incontroerti'le e0a!ples of -hich !ay 'e found in the

island of Ce'u and the )unicipality of >acoor, Caite, +c !assie erosion and the conse#uential loss of soil fertility and agriculturalproductiity, -ith the olu!e of soil eroded esti!ated at one 'illion +1,,, cu'ic !eters per annu! // appro0i!ately the sieof the entire island of Catanduanes, +d the endangering and e0tinction of the countryQs uni#ue, rare and aried flora and fauna, +e thedistur'ance and dislocation of cultural co!!unities, including the disappearance of the FilipinoQs indigenous cultures, +f the siltation ofriers and sea'eds and conse#uential destruction of corals and other a#uatic life leading to a critical reduction in !arine resourceproductiity, +g recurrent spells of drought as is presently e0perienced 'y the entire country, +h increasing elocity of typhoon -inds

-hich result fro! the a'sence of -ind'rea&ers, +i the flooding of lo-lands and agricultural plains arising fro! the a'sence of thea'sor'ent !echanis! of forests, +J the siltation and shortening of the lifespan of !ulti/'illion peso da!s constructed and operated forthe purpose of supplying -ater for do!estic uses, irrigation and the generation of electric po-er, and +& the reduction of the earthQscapacity to process car'on dio0ide gases -hich has led to perple0ing and catastrophic cli!atic changes such as the pheno!enon ofglo'al -ar!ing, other-ise &no-n as the greenhouse effect.

Plaintiffs further assert that the aderse and detri!ental conse#uences of continued deforestation are so capa'le of un#uestiona'lede!onstration that the sa!e !ay 'e su'!itted as a !atter of Judicial notice. This not-ithstanding, they e0pressed their intention topresent e0pert -itnesses as -ell as docu!entary, photographic and fil! eidence in the course of the trial.

Bs their cause of action, they specifically allege that;

CBA"? F BCT47.Plaintiffs replead 'y reference the foregoing allegations.8. T-enty/fie +25 years ago, the Philippines had so!e si0teen +1 !illion hectares of rainforests constituting roughly 53( ofthe countryQs land !ass.9. "atellite i!ages ta&en in 1987 reeal that there re!ained no !ore than 1.2 !illion hectares of said rainforests or four per cent+<.( of the countryQs land area.

1. )ore recent sureys reeal that a !ere 85, hectares of irgin old/gro-th rainforests are left, 'arely 2.8( of the entireland !ass of the Philippine archipelago and a'out 3. !illion hectares of i!!ature and unecono!ical secondary gro-th forests.11. Pu'lic records reeal that defendantQs predecessors hae granted ti!'er license agree!ents +RTGBQs,I to arious corporationsto cut the aggregate area of 3.89 !illion hectares for co!!ercial logging purposes.B copy of the TGB holders and the corresponding areas coered is hereto attached as Bnne0 RBI.12. Bt the present rate of deforestation, i.e. a'out 2, hectares per annu! or 25 hectares per annu! or 25 hectares per hour// nightti!e, "aturdays, "undays and holidays included // the Philippines -ill 'e 'ereft of forest resources after the end of this ensuingdecade, if not earlier.

[4]

[5]



13. The aderse effects, disastrous conse#uences, serious inJury and irrepara'le da!age of this continued trend of deforestationto the plaintiff !inorsI generation and to generations yet un'orn are eident and incontroerti'le. Bs a !atter of fact, the eniron!entalda!ages enu!erated in paragraph hereof are already 'eing felt, e0perienced and suffered 'y the generation of plaintiff adults.1<. The continued allo-ance 'y defendant of TGB holders to cut and deforest the re!aining forest stands -ill -or& great da!ageand irrepara'le inJury to plaintiffs // especially plaintiff !inors and their successors // -ho !ay neer see, use, 'enefit fro! and enJoythis rare and uni#ue natural resource treasure.This act of defendant constitutes a !isappropriation and:or i!pair!ent of the natural resource property he holds in trust for the 'enefitof plaintiff !inors and succeeding generations.15. Plaintiffs hae a clear and constitutional right to a 'alanced and healthful ecology and are entitled to protection 'y the "tate in

its capacity as the parens patriae.1. Plaintiffs hae e0hausted all ad!inistratie re!edies -ith the defendantQs office. n )arch 2, 199, plaintiffs sered upondefendant a final de!and to cancel all logging per!its in the country.B copy of the plaintiffsI letter dated )arch 1, 199 is hereto attached as Bnne0 R>I.17. 6efendant, ho-eer, fails and refuses to cancel the e0isting TGBQs, to the continuing serious da!age and e0tre!e preJudice ofplaintiffs.18. The continued failure and refusal 'y defendant to cancel the TGBQs is an act iolatie of the rights of plaintiffs, especiallyplaintiff !inors -ho !ay 'e left -ith a country that is desertified +sic, 'are, 'arren and deoid of the -onderful flora, fauna andindigenous cultures -hich the Philippines has 'een a'undantly 'lessed -ith.19. 6efendantQs refusal to cancel the afore!entioned TGBQs is !anifestly contrary to the pu'lic policy enunciated in the Philippine?niron!ental Policy -hich, in pertinent part, states that it is the policy of the "tate //

R+a to create, deelop, !aintain and i!proe conditions under -hich !an and nature can thrie in productie andenJoya'le har!ony -ith each otherH

R+' to fulfill the social, econo!ic and other re#uire!ents of present and future generations of Filipinos andH

R+c to ensure the attain!ent of an eniron!ental #uality that is conducie to a life of dignity and -ell/'eingI. +P.6.1151, Kune 1977

2. Further!ore, defendantQs continued refusal to cancel the afore!entioned TGBQs is contradictory to the Constitutional policy ofthe "tate to //

a. effect Ra !ore e#uita'le distri'ution of opportunities, inco!e and -ealthI and Q!a&e full and efficient use ofnatural resources +sic.Q +"ection 1, Brticle @ of the ConstitutionH

'. Rprotect the nationQs !arine -ealth.Q +"ection 2, i'idH

c. Rconsere and pro!ote the nationQs cultural heritage and resources +sic.I +"ection 1<, Brticle @L, id.H

d. Rprotect and adance the right of the people to a 'alanced and healthful ecology in accord -ith the rhyth! andhar!ony of nature.I +"ection 1, Brticle , id..

21. Finally, defendantQs act is contrary to the highest la- of hu!an&ind // the natural la- // and iolatie of plaintiffsQ right to self/preseration and perpetuation.

22. There is no other plain, speedy and ade#uate re!edy in la- other than the instant action to arrest the una'ated he!orrhageof the countryQs ital life/support syste!s and continued rape of )other ?arth.$%

n 22 Kune 199, the original defendant, "ecretary Factoran, Kr., filed a )otion to 6is!iss the co!plaint 'ased on t-o +2 grounds,na!ely; +1 the plaintiffs hae no cause of action against hi! and +2 the issue raised 'y the plaintiffs is a political #uestion -hichproperly pertains to the legislatie or e0ecutie 'ranches of oern!ent. n their 12 Kuly 199 pposition to the )otion, the petitioners!aintain that +1 the co!plaint sho-s a clear and un!ista&a'le cause of action, +2 the !otion is dilatory and +3 the action presents a

Justicia'le #uestion as it inoles the defendantQs a'use of discretion.

[6]



n 18 Kuly 1991, respondent Kudge issued an order granting the afore!entioned !otion to dis!iss.$7% n the said order, not only -asthe defendantQs clai! // that the co!plaint states no cause of action against hi! and that it raises a political #uestion // sustained, therespondent Kudge further ruled that the granting of the reliefs prayed for -ould result in the i!pair!ent of contracts -hich is prohi'ited'y the funda!ental la- of the land.

Plaintiffs thus filed the instant special ciil action for certiorari under =ule 5 of the =eised =ules of Court and as& this Court to rescindand set aside the dis!issal order on the ground that the respondent Kudge graely a'used his discretion in dis!issing the action.Bgain, the parents of the plaintiffs/!inors not only represent their children, 'ut hae also Joined the latter in this case.$8%

n 1< )ay 1992, De resoled to gie due course to the petition and re#uired the parties to su'!it their respectie )e!oranda afterthe ffice of the "olicitor eneral +" filed a Co!!ent in 'ehalf of the respondents and the petitioners filed a reply thereto.

Petitioners contend that the co!plaint clearly and un!ista&a'ly states a cause of action as it contains sufficient allegations concerningtheir right to a sound eniron!ent 'ased on Brticles 19, 2 and 21 of the Ciil Code +*u!an =elations, "ection < of ?0ecutie rder+?.. 4o. 192 creating the 6?4=, "ection 3 of Presidential 6ecree +P.6. 4o. 1151 +Philippine ?niron!ental Policy, "ection 1,Brticle of the 1987 Constitution recogniing the right of the people to a 'alanced and healthful ecology, the concept of generationalgenocide in Cri!inal Ga- and the concept of !anQs inaliena'le right to self/preseration and self/perpetuation e!'odied in natural la-.Petitioners li&e-ise rely on the respondentQs correlatie o'ligation, per "ection < of ?.. 4o. 192, to safeguard the peopleQs right to ahealthful eniron!ent.

t is further clai!ed that the issue of the respondent "ecretaryQs alleged grae a'use of discretion in granting Ti!'er GicenseBgree!ents +TGBs to coer !ore areas for logging than -hat is aaila'le inoles a Judicial #uestion.

Bnent the inocation 'y the respondent Kudge of the ConstitutionQs non/i!pair!ent clause, petitioners !aintain that the sa!e does notapply in this case 'ecause TGBs are not contracts. They li&e-ise su'!it that een if TGBs !ay 'e considered protected 'y the saidclause, it is -ell settled that they !ay still 'e reo&ed 'y the "tate -hen pu'lic interest so re#uires.

n the other hand, the respondents aer that the petitioners failed to allege in their co!plaint a specific legal right iolated 'y therespondent "ecretary for -hich any relief is proided 'y la-. They see nothing in the co!plaint 'ut ague and ne'ulous allegationsconcerning an eniron!ental right -hich supposedly entitles the petitioners to the protection 'y the state in its capacity as parens

patriae. "uch allegations, according to the!, do not reeal a alid cause of action. They then reiterate the theory that the #uestion of -hether logging should 'e per!itted in the country is a political #uestion -hich should 'e properly addressed to the e0ecutie or

legislatie 'ranches of oern!ent. They therefore assert that the petitionersI recourse is not to file an action in court, 'ut to lo''y'efore Congress for the passage of a 'ill that -ould 'an logging totally.

Bs to the !atter of the cancellation of the TGBs, respondents su'!it that the sa!e cannot 'e done 'y the "tate -ithout due process ofla-. nce issued, a TGB re!ains effectie for a certain period of ti!e // usually for t-enty/fie +25 years. 6uring its effectiity, the sa!ecan neither 'e reised nor cancelled unless the holder has 'een found, after due notice and hearing, to hae iolated the ter!s of theagree!ent or other forestry la-s and regulations. PetitionersI proposition to hae all the TGBs indiscri!inately cancelled -ithout there#uisite hearing -ould 'e iolatie of the re#uire!ents of due process.

>efore going any further, De !ust first focus on so!e procedural !atters. Petitioners instituted Ciil Case 4o. 9/777 as a class suit.The original defendant and the present respondents did not ta&e issue -ith this !atter. 4eertheless, De here'y rule that the said ciilcase is indeed a class suit. The su'Ject !atter of the co!plaint is of co!!on and general interest not Just to seeral, 'ut to all citiens

of the Philippines. Conse#uently, since the parties are so nu!erous, it 'eco!es i!practica'le, if not totally i!possi'le, to 'ring all ofthe! 'efore the court. De li&e-ise declare that the plaintiffs therein are nu!erous and representatie enough to ensure the fullprotection of all concerned interests. *ence, all the re#uisites for the filing of a alid class suit under "ection 12, =ule 3 of the =eised=ules of Court are present 'oth in the said ciil case and in the instant petition, the latter 'eing 'ut an incident to the for!er.

This case, ho-eer, has a special and noel ele!ent. Petitioners !inors assert that they represent their generation as -ell asgenerations yet un'orn. De find no difficulty in ruling that they can, for the!seles, for others of their generation and for the succeedinggenerations, file class suit. Their personality to sue in 'ehalf of the succeeding generations can only 'e 'ased on the concept ofintergenerational responsi'ility insofar as the right to a 'alanced and healthful ecology is concerned. "uch a right, as hereinafter

[

[



e0pounded, considers the rhyth! and har!ony of nature. 4ature !eans the created -orld in its entirety.$9% "uch rhyth! and har!onyindispensa'ly include, inter alia, the Judicious disposition, utiliation, !anage!ent, rene-al and conseration of the countryQs forest,!ineral, land, -aters, fisheries, -ildlife, off/shore areas and other natural resources to the end that their e0ploration, deelop!ent andutiliation 'e e#uita'ly accessi'le to the present as -ell as future generations. $1% 4eedless to say, eery generation has a responsi'ilityto the ne0t to presere that rhyth! and har!ony for the full enJoy!ent of a 'alanced and healthful ecology. Put a little differently, the!inorsQ assertion of their right to a sound eniron!ent constitutes, at the sa!e ti!e, the perfor!ance of their o'ligation to ensure theprotection of that right for the generations to co!e.

The locus standi of the petitioners haing thus 'een addressed, De shall no- proceed to the !erits of the petition.

Bfter a careful perusal of the co!plaint in #uestion and a !eticulous consideration and ealuation of the issues raised and argu!entsadduced 'y the parties, De do not hesitate to find for the petitioners and rule against the respondent KudgeQs challenged order forhaing 'een issued -ith grae a'use of discretion a!ounting to lac& of Jurisdiction. The pertinent portions of the said order read asfollo-s;

0 0 0

Bfter a careful and circu!spect ealuation of the Co!plaint, the Court cannot help 'ut agree -ith the defendant. For although -e'eliee that plaintiffs hae 'ut the no'lest of all intentions, it +sic fell short of alleging, -ith sufficient definiteness, a specific legal rightthey are see&ing to enforce and protect, or a specific legal -rong they are see&ing to preent and redress +"ec. 1, =ule 2, ==C.

Further!ore, the Court notes that the Co!plaint is replete -ith ague assu!ptions and ague conclusions 'ased on unerified data. nfine, plaintiffs fail to state a cause of action in its Co!plaint against the herein defendant.

Further!ore, the Court fir!ly 'eliees that the !atter 'efore it, 'eing i!pressed -ith political color and inoling a !atter of pu'licpolicy, !ay not 'e ta&en cogniance of 'y this Court -ithout doing iolence to the sacred principle of Q"eparation of Po-ersQ of thethree +3 co/e#ual 'ranches of the oern!ent.

The Court is li&e-ise of the i!pression that it cannot, no !atter ho- -e stretch our Jurisdiction, grant the reliefs prayed for 'y theplaintiffs, i.e., to cancel all e0isting ti!'er license agree!ents in the country and to cease and desist fro! receiing, accepting,processing rene-ing or approing ne- ti!'er license agree!ents. For to do other-ise -ould a!ount to Qi!pair!ent of contractsQa'hored +sic 'y the funda!ental la-.$11%

De do not agree -ith the trial courtQs conclusion that the plaintiffs failed to allege -ith sufficient definiteness a specific legal rightinoled or a specific legal -rong co!!itted, and that the co!plaint is replete -ith ague assu!ptions and conclusions 'ased onunerified data. B reading of the co!plaint itself 'elies these conclusions.

The co!plaint focuses on one specific funda!ental legal right // the right to a 'alanced and healthful ecology -hich, for the first ti!e inour nationQs constitutional history, is sole!nly incorporated in the funda!ental la-. "ection 1, Brticle of the 1987 Constitutione0plicitly proides;

"?C. 1. The "tate shall protect and adance the right of the people to a 'alanced and healthful ecology in accord -ith the rhyth!and har!ony of nature.

This right unites -ith the right to health -hich is proided for in the preceding section of the sa!e article;

"?C. 15. The "tate shall protect and pro!ote the right to health of the people and instill health consciousness a!ong the!.

Dhile the right to a 'alanced and healthful ecology is to 'e found under the 6eclaration of Principles and "tate Policies and not underthe >ill of =ights, it does not follo- that it is less i!portant than any of the ciil and political rights enu!erated in the latter. "uch a right'elongs to a different category of rights altogether for it concerns nothing less than self/preseration and self/perpetuation // aptly andfittingly stressed 'y the petitioners // the adance!ent of -hich !ay een 'e said to predate all goern!ents and constitutions. Bs a

[9]

[10]

[11]



!atter of fact, these 'asic rights need not een 'e -ritten in the Constitution for they are assu!ed to e0ist fro! the inception ofhu!an&ind. f they are no- e0plicitly !entioned in the funda!ental charter, it is 'ecause of the -ell/founded fear of its fra!ers thatunless the rights to a 'alanced and healthful ecology and to health are !andated as state policies 'y the Constitution itself, there'yhighlighting their continuing i!portance and i!posing upon the state a sole!n o'ligation to presere the first and protect and adancethe second, the day -ould not 'e too far -hen all else -ould 'e lost not only for the present generation, 'ut also for those to co!e //generations -hich stand to inherit nothing 'ut parched earth incapa'le of sustaining life.

The right to a 'alanced and healthful ecology carries -ith it the correlatie duty to refrain fro! i!pairing the eniron!ent. 6uring thede'ates on this right in one of the plenary sessions of the 198 Constitutional Co!!ission, the follo-ing e0change transpired 'et-eenCo!!issioner Dilfrido Lillacorta and Co!!issioner Bdolfo Bcuna -ho sponsored the section in #uestion;

)=. LGGBC=TB;6oes this section !andate the "tate to proide sanctions against all for!s of pollution // air, -ater and noise pollutionM)=. BNCA4B;es, )ada! President. The right to healthful +sic eniron!ent necessarily carries -ith it the correlatie duty of not i!pairing the sa!eand, therefore, sanctions !ay 'e proided for i!pair!ent of eniron!ental 'alance.$12%

The said right i!plies, a!ong !any other things, the Judicious !anage!ent and conseration of the countryQs forests. Dithout suchforests, the ecological or eniron!ental 'alance -ould 'e irreersi'ly disrupted.

Confor!a'ly -ith the enunciated right to a 'alanced and healthful ecology and the right to health, as -ell as the other relatedproisions of the Constitution concerning the conseration, deelop!ent and utiliation of the countryQs natural resources,$13% thenPresident Coraon C. B#uino pro!ulgated on 1 Kune 1987 ?.. 4o. 192, $1<% "ection < of -hich e0pressly !andates that the6epart!ent of ?niron!ent and 4atural =esources shall 'e the pri!ary goern!ent agency responsi'le for the conseration,!anage!ent, deelop!ent and proper use of the countryQs eniron!ent and natural resources, specifically forest and graing lands,!ineral resources, including those in reseration and -atershed areas, and lands of the pu'lic do!ain, as -ell as the licensing andregulation of all natural resources as !ay 'e proided for 'y la- in order to ensure e#uita'le sharing of the 'enefits deried therefro!for the -elfare of the present and future generations of Filipinos. "ection 3 thereof !a&es the follo-ing state!ent of policy;

"?C. 3. Declaration o" Polic# . // t is here'y declared the policy of the "tate to ensure the sustaina'le use, deelop!ent,!anage!ent, rene-al, and conseration of the countryQs forest, !ineral, land, off/shore areas and other natural resources, includingthe protection and enhance!ent of the #uality of the eniron!ent, and e#uita'le access of the different seg!ents of the population to

the deelop!ent and use of the countryQs natural resources, not only for the present generation 'ut for future generations as -ell. t isalso the policy of the state to recognie and apply a true alue syste! including social and eniron!ental cost i!plications relatie totheir utiliation, deelop!ent and conseration of our natural resources.

This policy declaration is su'stantially re/stated in Title @L, >oo& L of the Bd!inistratie Code of 1987,$15% specifically in "ection 1thereof -hich reads;

"?C. 1. Declaration o" Polic# . // +1 The "tate shall ensure, for the 'enefit of the Filipino people, the full e0ploration and deelop!entas -ell as the Judicious disposition, utiliation, !anage!ent, rene-al and conseration of the countryQs forest, !ineral, land, -aters,fisheries, -ildlife, off/shore areas and other natural resources, consistent -ith the necessity of !aintaining a sound ecological 'alanceand protecting and enhancing the #uality of the eniron!ent and the o'Jectie of !a&ing the e0ploration, deelop!ent and utiliation ofsuch natural resources e#uita'ly accessi'le to the different seg!ents of the present as -ell as future generations.

+2 The "tate shall li&e-ise recognie and apply a true alue syste! that ta&es into account social and eniron!ental cost i!plicationsrelatie to the utiliation, deelop!ent and conseration of our natural resources.

[12]

[13]

[14]

[



The a'oe proision stresses the necessity of !aintaining a sound ecological 'alance and protecting and enhancing the #uality of theeniron!ent. "ection 2 of the sa!e Title, on the other hand, specifically spea&s of the !andate of the 6?4=H ho-eer, it !a&esparticular reference to the fact of the agencyQs 'eing su'Ject to la- and higher authority. "aid section proides;

"?C. 2. Mandate. // +1 The 6epart!ent of ?niron!ent and 4atural =esources shall 'e pri!arily responsi'le for the i!ple!entationof the foregoing policy.

+2 t shall, su'Ject to la- and higher authority, 'e in charge of carrying out the "tateQs constitutional !andate to control and superisethe e0ploration, deelop!ent, utiliation, and conseration of the countryQs natural resources.

>oth ?.. 4o. 192 and the Bd!inistratie Code of 1987 hae set the o'Jecties -hich -ill sere as the 'ases for policy for!ulation, andhae defined the po-ers and functions of the 6?4=.

t !ay, ho-eer, 'e recalled that een 'efore the ratification of the 1987 Constitution, specific statutes already paid special attention tothe eniron!ental right of the present and future generations. n Kune 1977, P.6. 4o. 1151 +Philippine ?niron!ental Policy andP.6. 4o. 1152 +Philippine ?niron!ent Code -ere issued. The for!er declared a continuing policy of the "tate +a to create, deelop,!aintain and i!proe conditions under -hich !an and nature can thrie in productie and enJoya'le har!ony -ith each other, +' tofulfil the social, econo!ic and other re#uire!ents of present and future generations of Filipinos, and +c to insure the attain!ent of aneniron!ental #uality that is conducie to a life of dignity and -ell/'eing.$1% Bs its goal, it spea&s of the responsi'ilities of eachgeneration as trustee and guardian of the eniron!ent for succeeding generations.$17% The latter statute, on the other hand, gae flesh

to the said policy.

Thus, the right of the petitioners +and all those they represent to a 'alanced and healthful ecology is as clear as the 6?4=Qs duty //under its !andate and 'y irtue of its po-ers and functions under ?.. 4o. 192 and the Bd!inistratie Code of 1987 // to protect andadance the said right.

B denial or iolation of that right 'y the other -ho has the correlatie duty or o'ligation to respect or protect the sa!e gies rise to acause of action. Petitioners !aintain that the granting of the TGBs, -hich they clai! -as done -ith grae a'use of discretion, iolatedtheir right to a 'alanced and healthful ecologyH hence, the full protection thereof re#uires that no further TGBs should 'e rene-ed orgranted.

B cause of action is defined as;

0 0 0 an act or o!ission of one party in iolation of the legal right or rights of the otherH and its essential ele!ents are legal right of theplaintiff, correlatie o'ligation of the defendant, and act or o!ission of the defendant in iolation of said legal right. $18%

t is settled in this Jurisdiction that in a !otion to dis!iss 'ased on the ground that the co!plaint fails to state a cause of action, $19% the#uestion su'!itted to the court for resolution inoles the sufficiency of the facts alleged in the co!plaint itself. 4o other !atter should'e consideredH further!ore, the truth or falsity of the said allegations is 'eside the point for the truth thereof is dee!ed hypotheticallyad!itted. The only issue to 'e resoled in such a case is; ad!itting such alleged facts to 'e true, !ay the court render a alid Judg!enin accordance -ith the prayer in the co!plaintM$2% n Militante vs. $drosolano,$21% this Court laid do-n the rule that the Judiciary shoulde0ercise the ut!ost care and circu!spection in passing upon a !otion to dis!iss on the ground of the a'sence thereof $cause ofaction% lest, 'y its failure to !anifest a correct appreciation of the facts alleged and dee!ed hypothetically ad!itted, -hat the la- grantsor recognies is effectiely nullified. f that happens, there is a 'lot on the legal order. The la- itself stands in disrepute.

Bfter a careful e0a!ination of the petitionersQ co!plaint, De find the state!ents under the introductory affir!atie allegations, as -ellas the specific aer!ents under the su's/heading CBA"? F BCT4, to 'e ade#uate enough to sho-, prima "acie, the clai!ediolation of their rights. n the 'asis thereof, they !ay thus 'e granted, -holly of partly, the reliefs prayed for. t 'ears stressing,

[16]

[17]

[18]

[

[20]

[21]



ho-eer, that insofar as the cancellation of the TGBs is concerned, there is the need to i!plead, as party defendants, the granteesthereof for they are indispensa'le parties.

The foregoing considered, Ciil Case 4o. 9/777 cannot 'e said to raise a political #uestion. Policy for!ulation or deter!ination 'y thee0ecutie or legislatie 'ranches of oern!ent is not s#uarely put in issue. Dhat is principally inoled is the enforce!ent of a rightvis%a%vis policies already for!ulated and e0pressed in legislation. t !ust, nonetheless, 'e e!phasied that the political #uestiondoctrine is no longer the insur!ounta'le o'stacle to the e0ercise of Judicial po-er or the i!penetra'le shield that protects e0ecutieand legislatie actions fro! Judicial in#uiry or reie-. The second paragraph of section 1, Brticle L of the Constitution states that;

Kudicial po-er includes the duty of the courts of Justice to settle actual controersies inoling rights -hich are legally de!anda'le andenforcea'le, and to deter!ine -hether or not there has 'een a grae a'use of discretion a!ounting to lac& or e0cess of Jurisdiction onthe part of any 'ranch or instru!entality of the oern!ent.

Co!!enting on this proision in his 'oo&, Philippine Political Ga-,$22% )r. Kustice sagani B. Cru, a distinguished !e!'er of his Court,says;

The first part of the authority represents the traditional concept of Judicial po-er, inoling the settle!ent of conflicting rights asconferred 'y la-. The second part of the authority represents a 'roadening of Judicial po-er to ena'le the courts of Justice to reie-

-hat -as 'efore for'idden territory, to -it, the discretion of the political depart!ents of the goern!ent.

Bs -orded, the ne- proision ests in the Judiciary, and particularly the "upre!e Court, the po-er to rule upon een the -isdo! of thedecisions of the e0ecutie and the legislature and to declare their acts inalid for lac& or e0cess of Jurisdiction 'ecause tainted -ithgrae a'use of discretion. The catch, of course, is the !eaning of Rgrae a'use of discretion,I -hich is a ery elastic phrase that cane0pand or contract according to the disposition of the Judiciary.

n Daza vs. &ingson,$23% )r. Kustice Cru, no- spea&ing for this Court, noted;

n the case no- 'efore us, the Jurisdictional o'Jection 'eco!es een less tena'le and decisie. The reason is that, een if -e -ere toassu!e that the issue presented 'efore us -as political in nature, -e -ould still not 'e precluded fro! resoling it under the e0panded

Jurisdiction conferred upon us that no- coers, in proper cases, een the political #uestion. Brticle L, "ection 1, of the Constitutionclearly proides; 0 0 0.

The last ground ino&ed 'y the trial court in dis!issing the co!plaint is the non/i!pair!ent of contracts clause found in theConstitution. The court a quo declared that;

The Court is li&e-ise of the i!pression that it cannot, no !atter ho- -e stretch our Jurisdiction, grant the reliefs prayed for 'y theplaintiffs, i.e., to cancel all e0isting ti!'er license agree!ents in the country and to cease and desist fro! receiing, accepting,processing, rene-ing or approing ne- ti!'er license agree!ents. For to do other-ise -ould a!ount to Qi!pair!ent of contractsQa'hored +sic 'y the funda!ental la-.$2<%

De are not persuaded at allH on the contrary, De are a!aed, if not shoc&ed, 'y such a s-eeping pronounce!ent. n the first place,the respondent "ecretary did not, for o'ious reasons, een ino&e in his !otion to dis!iss the non/i!pair!ent clause. f he had doneso, he -ould hae acted -ith ut!ost infidelity to the oern!ent 'y proiding undue and un-arranted 'enefits and adantages to theti!'er license holders 'ecause he -ould hae foreer 'ound the oern!ent to strictly respect the said licenses according to their

ter!s and conditions regardless of changes in policy and the de!ands of pu'lic interest and -elfare. *e -as a-are that as correctlypointed out 'y the petitioners, into eery ti!'er license !ust 'e read "ection 2 of the Forestry =efor! Code +P.6. 4o. 75 -hichproides;

0 0 0 Provided , That -hen the national interest so re#uires, the President !ay a!end, !odify, replace or rescind any contract,concession, per!it, licenses or any other for! of priilege granted herein 0 0 0.

[

[

[24]



4eedless to say, all licenses !ay thus 'e reo&ed or rescinded 'y e0ecutie action. t is not a contract, property or a property rightprotected 'y the due process clause of the Constitution. n an vs. Director o" Forestr# ,$25% this Court held;

0 0 0 B ti!'er license is an instru!ent 'y -hich the "tate regulates the utiliation and disposition of forest resources to the end thatpu'lic -elfare is pro!oted. B ti!'er license is not a contract -ithin the purie- of the due process clauseH it is only a license orpriilege, -hich can 'e alidly -ithdra-n -heneer dictated 'y pu'lic interest or pu'lic -elfare as in this case.

RB license is !erely a per!it or priilege to do -hat other-ise -ould 'e unla-ful, and is not a contract 'et-een the authority, federal,state, or !unicipal, granting it and the person to -ho! it is grantedH neither is it property or a property right, nor does it create a estedrightH nor is it ta0ationI +37 C.K. 18. Thus, this Court held that the granting of license does not create irreoca'le rights, neither is itproperty or property rights +People s. ng Tin, 5< .. 757. 0 0 0

De reiterated this pronounce!ent in Felipe 'smael, Jr. ( )o., *nc. vs. Deput# $+ecutive &ecretar# ;$2%

0 0 0Ti!'er licenses, per!its and license agree!ents are the principal instru!ents 'y -hich the "tate regulates the utiliation anddisposition of forest resources to the end that pu'lic -elfare is pro!oted. Bnd it can hardly 'e gainsaid that they !erely eidence apriilege granted 'y the "tate to #ualified entities, and do not est in the latter a per!anent or irreoca'le right to the particularconcession area and the forest products therein. They !ay 'e alidly a!ended, !odified, replaced or rescinded 'y the Chief ?0ecutie

-hen national interests so re#uire. Thus, they are not dee!ed contracts -ithin the purie- of the due process of la- clause $&ee "ections 3+ee and 2 of Pres. 6ecree 4o. 75, as a!ended. lso, Tan . 6irector of Forestry, .=. 4o. G/2<5<8, cto'er 27, 1983,

125 "C=B 32%.

"ince ti!'er licenses are not contracts, the non/i!pair!ent clause, -hich reads;

"?C. 1. 4o la- i!pairing the o'ligation of contracts shall 'e passed.$27%

cannot 'e ino&ed.

n the second place, een if it is to 'e assu!ed that the sa!e are contracts, the instant case does not inole a la- or een ane0ecutie issuance declaring the cancellation or !odification of e0isting ti!'er licenses. *ence, the non/i!pair!ent clause cannot asyet 'e ino&ed. 4eertheless, granting further that a la- has actually 'een passed !andating cancellations or !odifications, the sa!ecannot still 'e stig!atied as a iolation of the non/i!pair!ent clause. This is 'ecause 'y its ery nature and purpose, such a la-

could hae only 'een passed in the e0ercise of the police po-er of the state for the purpose of adancing the right of the people to a'alanced and healthful ecology, pro!oting their health and enhancing the general -elfare. n !e vs. Foster -eeler )orp.,$28% thisCourt stated;

The freedo! of contract, under our syste! of goern!ent, is not !eant to 'e a'solute. The sa!e is understood to 'e su'Ject toreasona'le legislatie regulation ai!ed at the pro!otion of pu'lic health, !oral, safety and -elfare. n other -ords, the constitutionalguaranty of non/i!pair!ent of o'ligations of contract is li!ited 'y the e0ercise of the police po-er of the "tate, in the interest of pu'lichealth, safety, !oral and general -elfare.

The reason for this is e!phatically set forth in /e!ia vs. /e0 'or1 ,$29% #uoted in Pilippine merican 2i"e *nsurance )o. vs. uditor3eneral ,$3% to -it;

IAnder our for! of goern!ent the use of property and the !a&ing of contracts are nor!ally !atters of priate and not of pu'licconcern. The general rule is that 'oth shall 'e free of goern!ental interference. >ut neither property rights nor contract rights area'soluteH for goern!ent cannot e0ist if the citien !ay at -ill use his property to the detri!ent of his fello-s, or e0ercise his freedo! ocontract to -or& the! har!. ?#ually funda!ental -ith the priate right is that of the pu'lic to regulate it in the co!!on interest.I

[

[

[27]

[

[

[30]



n short, the non/i!pair!ent clause !ust yield to the police po-er of the state.$31%

Finally, it is difficult to i!agine, as the trial court did, ho- the non/i!pair!ent clause could apply -ith respect to the prayer to enJoin therespondent "ecretary fro! receiing, accepting, processing, rene-ing or approing ne- ti!'er licenses for, sae in cases of rene-al,no contract -ould hae as of yet e0isted in the other instances. )oreoer, -ith respect to rene-al, the holder is not entitled to it as a!atter of right.

$EREFORE, 'eing i!pressed -ith !erit, the instant Petition is here'y =B4T?6, and the challenged rder of respondent Kudge of18 Kuly 1991 dis!issing Ciil Case 4o. 9/777 is here'y set aside. The petitioners !ay therefore a!end their co!plaint to i!plead asdefendants the holders or grantees of the #uestioned ti!'er license agree!ents.

4o pronounce!ent as to costs.

SO ORDERED.

)ruz, Padilla, 4idin, 3ri5o%quino, Regalado, Romero, /ocon, 4ellosillo, Melo, and 6uiason, JJ., concur.Feliciano, J., see separate opinion concurring in the result./arvasa, ).J., Puno, and Vitug, JJ., no part.

[



3<3 Phil. 7

EN )!NC

[ G.R. No. 11029, !uu4 21, 1997 ]

!"FREDO %!NO, )!"DOERO %!NO, D!NI"O %!NO, RO&!"DO %!NO, %EOCENES IDE""O, !NGE" DE ES!, E&"OGIO%REOC$!, FE"I#E ONGONION, *R., !NDRES "INI*!N, RO)ER% "I, VIRGINI! "I, FE"ION DE ES!, GENEROSO

!R!GON, %EODORICO !NDRE, RO&"O DE" ROS!RIO, C$O"I%O !NDRE, ERIC/ ON%!NO, !NDRES O"IV!, VI%%ORIOS!"V!DOR, "EO#O"DO !R!GON, R!F!E" RI)!, !"E*!NDRO "EONI"!, *OSE D!!CIN%O, R!IRO !N!EG, R&)EN!RG!%E, RO)ER%O RE'ES, D!NI"O #!NG!R&%!N, NOE GO"#!N, ES%!NIS"!O ROERO, NIC!NOR DOINGO,

RO"D!N %!)!NG, #!NG!NI)!N, !DRI!NO %!)!NG, FREDDIE S!C!!', IG&E" %RIOC$!, #!CENCIO "!)!)I%,#!)"O $. O#!D, CE"ES%INO !. !)!NO, !""!N !"OD!", )I""' D. )!R%O"!', !")INO D. "I&E, E"C$OR *. "!'SON

E"!NI !!N%E, C"!RO E. '!%OC, ERGE"DO ). )!"DEO, EDG!R . !"!SE% !., *OSE"I%O !N!EG, "I)ER!%O!NDR!D!, *R., RO)ER%O )ERR', RON!"D VI""!N&EV!, ED&!RDO V!"ORI!, I"DREDO ENDO(!, N!#O"EON

)!)!NG!, RO)ER%O %!DE#!, R&)EN !SING&!, SI"VERIO G!)O, *ERR' ROERO, D!VID #!NG!G!R&%!N, D!NIE"#!NGG!R&%!N, ROEO !G!IN, FERN!NDO E&I(, DI%O "E&I(, RONI"O ODER!)"E, )ENEDIC%O %ORRES, ROSI%O !.V!"DE(, CRESENCIO !. S!'!NG, NICOEDES S. !COS%!, ERENEO !. SEG!RINO, *R., I"DREDO !. R!&%O, DIOSD!DO!. !COS%!, )ONIF!CIO G. SISO, %!CIO !"&)!, D!NIE" ). )!%ER(!", E"ISEO ')!E(, DIOSD!DO E. $!NC$IC, EDDIEESC!"IC!S, E"E!(!R ). )!%ER(!", DOIN!DOR $!"IC$IC, ROOSEVE"% RISO!N, RO)ER% C. ERC!DER, %IRSO

!RESG!DO, D!NIE" C$!VE(, D!NI"O C$!VE(, VIC%OR VI""!ROE", ERNES%O C. '!)!NE(, !R!NDO %. S!N%I""!N,R&D' S. S!N%I""!N, *OD*EN I"&S%RISIO, NES%OR S!"!NGRON, !")ER%O S!"!NGRON, ROGER ". RO!S,FR!NCISCO %. !N%IC!NO, #!S%OR S!"!NGRON, )IENVENIDO S!N%I""!N, GI")&EN! "!DD', FIDE" )EN*!IN

*OVE"I%O )E"G!NO, $ONE' #!RIO", !N%ONIO S!"!NGRON, NIC!SIO S!"!NGRON, 8 !IR"INE S$I##ERS !SSOCI!%IONOF #!"!!N, #E%I%IONERS, VS. GOV. S!"V!DOR #. SOCR!%ES, E)ERS OF S!NGG&NI!N #!N"!"!IG!N OF

#!"!!N, N!E"', VICEGOVERNOR *OE" %. RE'ES, *OSE D. (!)!"!, ROS!"INO R. !COS%!, *OSE"I%O !. C!D"!ON,!NDRES R. )!!CO, NE"SON #. #ENE'R!, CI#RI!NO C. )!RRO!, C"!RO E. ORDIN!RIO, ERNES%O !. ""!C&N,

RODO"FO C. F"ORDE"I(!, GI")ER% S. )!!CO, INS%ON G. !R(!G!, N!#O"EON F. ORDONE( !ND GI" #. !COS%!, CI%'!'OR ED!RD $!GEDORN, E)ERS OF S!NGG&NI!NG #!N"&NGSOD NG #&ER%O #RINCES!, !"" E)ERS OF)!N%!' D!G!%, E)ERS OF #$I"I##INE N!%ION!" #O"ICE OF #!"!!N, #ROVINCI!" !ND CI%' #ROSEC&%ORS OF#!"!!N !ND #&ER%O #RINCES! CI%', !ND !"" *&DGES OF #!"!!N, REGION!", &NICI#!" !ND E%RO#O"I%!N,

RES#ONDEN%S.

D E C I S I O N

D!VIDE, *R., *.+

Petitioners caption their petition as one for Certiorari, nJunction Dith Preli!inary )andatory nJunction,-ith Prayer for Te!porary=estraining rder and pray that this Court; +1 declare as unconstitutional; +a rdinance 4o. 15/92, dated 15 6ece!'er 1992, of the"angguniang Panlungsod of Puerto PrincesaH +' ffice rder 4o. 23, "eries of 1993, dated 22 Kanuary 1993, issued 'y Bcting City)ayor B!ado G. Gucero of Puerto Princesa CityH and +c =esolution 4o. 33, rdinance 4o. 2, "eries of 1993, dated 19 Fe'ruary 1993,of the "angguniang Panlala-igan of Pala-anH +2 enJoin the enforce!ent thereofH and +3 restrain respondents Proincial and CityProsecutors of Pala-an and Puerto Princesa City and Kudges of =egional Trial Courts, )etropolitan Trial Courts$1% and )unicipal CircuitTrial Courts in Pala-an fro! assu!ing Jurisdiction oer and hearing cases concerning the iolation of the rdinances and of the ffice

rder.

)ore appropriately, the petition is, and shall 'e treated as, a special ciil action for certiorari and prohi'ition.

The follo-ing is petitionersI su!!ary of the factual antecedents giing rise to the petition;1. n 6ece!'er 15, 1992, the "angguniang Panlungsod ng Puerto Princesa City enacted rdinance 4o. 15/92 -hich too& effecton Kanuary 1, 1993 entitled; B4 =64B4C? >B444 T*? "*P)?4T F BGG GL? F"* B46 G>"T?= AT"6? PA?=TP=4C?"B CT F=) KB4AB= 1, 1993 T KB4AB= 1, 1998 B46 P=L64 ?@?)PT4", P?4BGT?" B46 F= T*?=PA=P"?" T*?=?F, the full te0t of -hich reads as follo-s;"ection 1. itle o" te 7rdinance. / This rdinance is entitled; B4 =64B4C? >B444 T*? "*P)?4T F BGG GL? F"* B46G>"T?= AT"6? PA?=T P=4C?"B CT F=) KB4AB= 1, 1993 T KB4AB= 1, 1998 B46 P=L64 ?@?)PT4",



P?4BGT?" B46 F= T*?= PA=P"?" T*?=?F.

"ection 2. Purpose, &cope and )overage. / To effectiely free our City "ea Daters fro! Cyanide and other 'no0ious su'stance, andshall coer all persons and:or entities operating -ithin and outside the City of Puerto Princesa -ho is are $sic% directly or indirectly in the'usiness or ship!ent of lie fish and lo'ster outside the City.

"ection 3. De"inition o" terms. / For purpose of this rdinance the follo-ing are here'y defined;

B. "?B >B"" / B &ind of fish under the fa!ily of Centropo!idae, 'etter &no-n as BPB*BPH

>. CBTF"* / B &ind of fish under the fa!ily of Plotosidae, 'etter &no-n as *T/*TH

C. )A6F"* / B &ind of fish under the fa!ily of rphicaphalisae 'etter &no-n as 6BGB

6. BGG GL? F"* / Bll alie, 'reathing not necessarily !oing of all specie$s% use for food and for a#uariu! purposes.

?. GL? G>"T?= / "eeral relatiely, large !arine crustaceans of the genus *o!arus that are alie and 'reathing not necessarily!oing.

"ection <. t shall 'e unla-ful $for% any person or any 'usiness enterprise or co!pany to ship out fro! Puerto Princesa City to any pointof destination either ia aircraft or seacraft of any lie fish and lo'ster e0cept "?B >B"", CBTF"*, )A6F"*, B46 )GF"* F=?"

"ection 5. Penalt# )lause. / Bny person:s and or 'usiness entity iolating this rdinance shall 'e penalied -ith a fine of not !ore thanP5,. or i!prison!ent of not !ore than t-ele +12 !onths, cancellation of their per!it to do 'usiness in the City of PuertoPrincesa or all of the herein stated penalties, upon the discretion of the court.

"ection . f the o-ner and:or operator of the esta'lish!ent found ilating the proisions of this ordinance is a corporation or apartnership, the penalty prescri'ed in "ection 5 hereof shall 'e i!posed upon its president and:or eneral )anager or )anagingPartner and:or )anager, as the case !ay'e $sic%.

"ection 7. Bny e0isting ordinance or any proision of any ordinance inconsistent to $sic% this ordinance is dee!ed repealed.

"ection 8. This rdinance shall ta&e effect on Kanuary 1, 1993.

" =6?=?6.

000

2. To i!ple!ent said city ordinance, then Bcting City )ayor B!ado G. Gucero issued ffice rder 4o. 23, "eries of 1993 datedKanuary 22, 1993 -hich reads as follo-s;

n the interest of pu'lic serice and for purposes of City rdinance 4o. P6<2/1</7<, other-ise &no-n as RB4 =64B4C?=?EA=4 B4 P?="4 ?4B?6 = 4T?464 T ?4B? 4 B4 >A"4?"", T=B6?, CCAPBT4, CBGG4 =P=F?""4 = *BL4 4 *" P""?""4 B4 F T*? B=TCG?" F= D*C* B P?=)T " =?EA=?6 T >? *B6, T>TB4 F="T B )B=I" P?=)T and City rdinance 4o. 15/92, B4 =64B4C? >B444 T*? "*P)?4T F BGG GL?

F"* B46 G>"T?= AT"6? PA?=T P=4C?"B CT F=) KB4AB= 1, 1993 T KB4AB= 1, 1998, you are here'yauthoried and directed to chec& or conduct necessary inspections on cargoes containing lie fish and lo'ster 'eing shipped out fro!the Puerto Princesa Birport, Puerto Princesa Dharf or at any port -ithin the Jurisdiction of the City to any point of destinations $sic%either ia aircraft or seacraft.

The purpose of the inspection is to ascertain -hether the shipper possessed the re#uired )ayorIs Per!it issued 'y this ffice and theship!ent is coered 'y inoice or clearance issued 'y the local office of the >ureau of Fisheries and B#uatic =esources and as toco!pliance -ith all other e0isting rules and regulations on the !atter.

Bny cargo containing lie fish and lo'ster -ithout the re#uired docu!ents as stated herein !ust 'e held for proper disposition.



n the pursuit of this rder, you are here'y authoried to coordinate -ith the PBG )anager, the PPB )anager, the local P4P "tationand other offices concerned for the needed support and cooperation. Further, that the usual courtesy and diplo!acy !ust 'e o'seredat all ti!es in the conduct of the inspection.

Please 'e guided accordingly.

000

3. n Fe'ruary 19, 1993, the "angguniang Panlala-igan, Proincial oern!ent of Pala-an enacted =esolution 4o. 33 entitled; B

=?"GAT4 P=*>T4 T*? CBTC*4, BT*?=4, P""?""4, >A4, "?GG4 B46 "*P)?4T F GL? )B=4?C=BG 6D?GG4 BEABTC =B4")", T DT; FB)G; "CB=6B? +)B)?4, ?P4? P*?GA" FB"CBTA" +"A4.C=)G?PT?" BGTL?G" +PB4T*?= = "?4=TB, G>"T?= >?GD 2 =B)" B46 "PBD44, T=B6BC4B B"+TBG>, P4CTB6B )B=B=T?F?=B +)T*?= P?B=G, "T?=", B4T CGB)" B46 T*?= "P?C?", P?4B?A")464 +T?= P=BD4/>=??6?= "N? = )T*?=, ?P4?P*?GA" "AGGA" +G>B = =??4 =AP?= B46FB)G; >BG"T6B? +T=PCBG BEAB=A) F"*?" F= B P?=6 FL? +5 ?B=" 4 B46 C)4 F=) PBGBDB4DBT?=", the full te0t of -hich reads as follo-s;

D*?=?B", scientific and factual researches $sic% and studies disclose that only fie +5 percent of the corals of our proince re!ain to'e in e0cellent condition as $a% ha'itat of !arine coral d-elling a#uatic organis!sH

D*?=?B", it cannot 'e gainsaid that the destruction and deastation of the corals of our proince -ere principally due to illegal fishing

actiities li&e dyna!ite fishing, sodiu! cyanide fishing, use of other o'no0ious su'stances and other related actiitiesH

D*?=?B", there is an i!peratie and urgent need to protect and presere the e0istence of the re!aining e0cellent corals and allo-the deastated ones to reinigorate and regenerate the!seles into itality -ithin the span of fie +5 yearsH

D*?=?B", "ec. <8, Par. 1, "u'/Par. L of the $sic% =.B. 71 other-ise &no-n as the Gocal oern!ent Code of 1991 e!po-ersthe "angguniang Panlala-igan to protect the eniron!ent and i!pose appropriate penalties $upon% acts -hich endanger theeniron!ent such as dyna!ite fishing and other for!s of destructie fishing, a!ong others.

4D, T*?=?F=?, on !otion 'y aga-ad 4elson P. Peneyra and upon unani!ous decision of all the !e!'ers presentH

>e it resoled as it is here'y resoled, to approe =esolution 4o. 33, "eries of 1993 of the "angguniang Panlala-igan and to enact

rdinance 4o. 2 for the purpose, to -it;

=64B4C? 4. 2

"eries of 1993

>? T =6B4?6 > T*? "B4A4B4 PB4GBGBDB4 4 "?""4 B""?)>G?6;

"ection 1. TTG? / This rdinance shall 'e &no-n as an rdinance Prohi'iting the catching, gathering, possessing, 'uying, selling andship!ent of lie !arine coral d-elling a#uatic organis!s, to -it; 1. Fa!ily; "caridae +)a!eng, 2. ?pinephelus Fasciatus +"uno, 3.Cro!ileptes altielis +Panther or "enorita, lo'ster 'elo- 2 gra!s and spa-ning, <. Tridacna igas +Ta&lo'o, 5. Pinctada)argaretefera +)other Pearl, ysters, iant Cla!s and other species, . Penaeus )onodon +Tiger Pra-n/'reeder sie or !other, 7.

?pinephelus "uillus +Go'a or reen rouper and 8. Fa!ily; >alistidae +Topical B#uariu! Fishes for a period of fie +5 years in andco!ing fro! Pala-an Daters.

"ection . P=?G)4B= C4"6?=BT4"

1. "ec. 2/B +=ep. Bct 71. t is here'y declared, the policy of the state that the territorial and political su'diisions of the "tate shallenJoy genuine and !eaningful local autono!y to ena'le the! to attain their fullest deelop!ent as self reliant co!!unities and !a&ethe! !ore effectie partners in the attain!ent of national goals. To-ard this end, the "tate shall proide for $a% !ore responsie andaccounta'le local goern!ent structure instituted through a syste! of decentraliation -here'y local goern!ent units shall 'e gien!ore po-ers, authority, responsi'ilities and resources.



2. "ec. 5/B +=.B. 71. Bny proision on a po-er of $a% local oern!ent Anit shall 'e li'eraly interpreted in its faor, and in case ofdou't, any #uestion thereon shall 'e resoled in faor of deolution of po-ers and of the lo-er goern!ent units. Bny fair andreasona'le dou'ts as to the e0istence of the po-er shall 'e interpreted in faor of the Gocal oern!ent Anit concerned.

3. "ec. 5/C +=.B. 71. The general -elfare proisions in this Code shall 'e li'erally interpreted to gie !ore po-ers to localgoern!ent units in accelerating econo!ic deelop!ent and upgrading the #uality of life for the people in the co!!unity.

<. "ec. 1 +=.B. 71. eneral Delfare. / ?ery local goern!ent unit shall e0ercise the po-ers e0pressly granted, those necessarilyi!plied therefro!, as -ell as po-ers necessary, appropriate, or incidental for its efficient and effectie goernanceH and those -hich are

essential to the pro!otion of the general -elfare.

"ection . 6?CGB=BT4 F PGC. / t is here'y declared to 'e the policy of the Proince of Pala-an to protect and consere the!arine resources of Pala-an not only for the greatest good of the !aJority of the present generation 'ut -ith $the% proper perspectieand consideration of $sic% their prosperity, and to attain this end, the "angguniang Panlala-igan henceforth declares that is $sic% shall 'eunla-ful for any person or any 'usiness entity to engage in catching, gathering, possessing, 'uying, selling and ship!ent of lie !arinecoral d-elling a#uatic organis!s as enu!erated in "ection 1 hereof in and co!ing out of Pala-an Daters for a period of fie +5 yearsH

"ection L. P?4BGT CGBA"?. / Bny person and:or 'usiness entity iolating this rdinance shall 'e penalied -ith a fine of not !orethan Fie Thousand Pesos +P5,., Philippine Currency, and:or i!prison!ent of si0 + !onths to t-ele +12 !onths andconfiscation and forfeiture of paraphernalias $sic% and e#uip!ent in faor of the goern!ent at the discretion of the CourtH

"ection L. "?PB=B>GT CGBA"?. / f for any reason, a "ection or proision of this rdinance shall 'e held as unconditional $sic% orinalid, it shall not affect the other proisions hereof.

"ection L. =?P?BG4 CGBA"?. / Bny e0isting rdinance or a proision of any ordinance inconsistent here-ith is dee!ed !odified,a!ended or repealed.

"ection L. ?FF?CTLT. / This rdinance shall ta&e effect ten +1 days after its pu'lication.

" =6B4?6.

000

<. The respondents i!ple!ented the said ordinances, Bnne0es B and C hereof there'y depriing all the fisher!en of the -holeproince of Pala-an and the City of Puerto Princesa of their only !eans of lielihood and the petitioners Birline "hippers Bssociation ofPala-an and other !arine !erchants fro! perfor!ing their la-ful occupation and tradeH

5. Petitioners Blfredo Tano, >aldo!ero Tano, Teocenes )idello, Bngel de )esa, ?ulogio Tre!ocha, and Felipe ngonion, Kr. -ereeen charged cri!inally under cri!inal case no. 93/5/C in the 1st )unicipal Circuit Trial Court of Cuyo/Bgutaya/)agsaysay, anoriginal car'on copy of the cri!inal co!plaint dated Bpril 12, 1993 is hereto attached as Bnne0 6H -hile 0ero0 copies are attached asBnne0 6 to the copies of the petitionH

. Petitioners =o'ert Gi! and Lirginia Gi!, on the other hand, -ere charged 'y the respondent P4P -ith the respondent CityProsecutor of Puerto Princesa City, a 0ero0 copy of the co!plaint is hereto attached as Bnne0 ?H

Dithout see&ing redress fro! the concerned local goern!ent units, prosecutorIs office and courts, petitioners directly ino&ed ouroriginal Jurisdiction 'y filing this petition on < Kune 1993. n su!, petitioners contend that;

First, the rdinances depried the! of due process of la-, their lielihood, and unduly restricted the! fro! the practice of their trade, iniolation of "ection 2, Brticle @ and "ections 2 and 7 of Brticle @ of the 1987 Constitution.

"econd, ffice rder 4o. 23 contained no regulation nor condition under -hich the )ayorIs per!it could 'e granted or deniedH in other -ords, the )ayor had the a'solute authority to deter!ine -hether or not to issue per!it.

Third, as rdinance 4o. 2 of the Proince of Pala-an altogether prohi'ited the catching, gathering, possession, 'uying, selling andshipping of lie !arine coral d-elling organis!s, -ithout any distinction -hether it -as caught or gathered through la-ful fishing



!ethod, the rdinance too& a-ay the right of petitioners/fisher!en to earn their lielihood in la-ful -aysH and insofar as petitioners/!e!'ers of Birline "hippers Bssociation are concerned, they -ere unduly preented fro! pursuing their ocation and entering intocontracts -hich are proper, necessary, and essential to carry out their 'usiness endeaors to a successful conclusion.

Finally, as rdinance 4o. 2 of the "angguniang Panlala-igan is null and oid, the cri!inal cases 'ased thereon against petitionersTano and the others hae to 'e dis!issed.

n the =esolution of 15 Kune 1993 -e re#uired respondents to co!!ent on the petition, and furnished the ffice of the "olicitoreneral -ith a copy thereof.

n their co!!ent filed on 13 Bugust 1993, pu'lic respondents oernor "ocrates and )e!'ers of the "angguniang Panlala-igan ofPala-an defended the alidity of rdinance 4o.2, "eries of 1993, as a alid e0ercise of the Proincial oern!entIs po-er under thegeneral -elfare clause +"ection 1 of the Gocal oern!ent Code of 1991 $hereafter, GC%, and its specific po-er to protect theeniron!ent and i!pose appropriate penalties for acts -hich endanger the eniron!ent, such as dyna!ite fishing and other for!s ofdestructie fishing under "ection <<7 +a +1 +i, "ection <58 +a +1 +i, and "ection <8 +a +1 +i, of the GC. They clai!ed that inthe e0ercise of such po-ers, the Proince of Pala-an had the right and responsi'iltyS to insure that the re!aining coral reefs, -herefish d-ells $sic%, -ithin its territory re!ain healthy for the future generation. The rdinance, they further asserted, coered only lie!arine coral d-elling a#uatic organis!s -hich -ere enu!erated in the ordinance and e0cluded other &inds of lie !arine a#uaticorganis!s not d-elling in coral reefsH 'esides the prohi'ition -as for only fie +5 years to protect and presere the pristine coral andallo- those da!aged to regenerate.

Bfore!entioned respondents li&e-ise !aintained that there -as no iolation of due process and e#ual protection clauses of theConstitution. Bs to the for!er, pu'lic hearings -ere conducted 'efore the enact!ent of the rdinance -hich, undou'tedly, had a la-fulpurpose and e!ployed reasona'le !eansH -hile as to the latter, a su'stantial distinction e0isted 'et-een a fisher!an -ho catcheslie fish -ith the intention of selling it lie, and a fisher!an -ho catches lie fish -ith no intention at all of selling it lie, i.e., the for!eruses sodiu! cyanide -hile the latter does not. Further, the rdinance applied e#ually to all those 'elonging to one class.

n 25 cto'er 1993 petitioners filed an Argent Plea for the !!ediate ssuance of a Te!porary =estraining rder clai!ing that despitethe pendency of this case, >ranch 5 of the =egional Trial Court of Pala-an -as 'ent on proceeding -ith Cri!inal Case 4o. 11223against petitioners 6anilo Tano, Blfredo Tano, ?ulogio Tre!ocha, =o!ualdo Tano, >aldo!ero Tano, Bndres Ge!ihan and Bngel de)esa for iolation of rdinance 4o. 2 of the "angguniang Panlala-igan of Pala-an. Bcting on said plea, -e issued on 11 4oe!'er1993 a te!porary restraining order directing Kudge Bngel )iclat of said court to cease and desist fro! proceeding -ith the arraign!entand pre/trial of Cri!inal Case 4o. 11223.

n 12 Kuly 199<, -e e0cused the ffice of the "olicitor eneral fro! filing a co!!ent, considering that as clai!ed 'y said office in its)anifestation of 28 Kune 199<, respondents -ere already represented 'y counsel.

The rest of the respondents did not file any co!!ent on the petition.

n the resolution of 15 "epte!'er 199<, -e resoled to consider the co!!ent on the petition as the Bns-er, gae due course to thepetition and re#uired the parties to su'!it their respectie !e!oranda.$2%

n 22 Bpril 1997 -e ordered i!pleaded as party respondents the 6epart!ent of Bgriculture and the >ureau of Fisheries and B#uatic=esources and re#uired the ffice of the "olicitor eneral to co!!ent on their 'ehalf. >ut in light of the latterIs !otion of 9 Kuly 1997for an e0tension of ti!e to file the co!!ent -hich -ould only result in further delay, -e dispensed -ith said co!!ent.

Bfter due deli'eration on the pleadings filed, -e resoled to dis!iss this petition for -ant of !erit, on 22 Kuly 1997, and assigned it tothe ponente for the -riting of the opinion of the Court.

There are actually t-o sets of petitioners in this case. The first is co!posed of Blfredo Tano, >aldo!ero Tano, 6anilo Tano, =o!ualdoTano, Teocenes )idello, Bngel de )esa, ?ulogio Tre!ocha, Felipe ngonion, Kr., Bndres GiniJan, and Feli!on de )esa, -ho -erecri!inally charged -ith iolating "angguniang Panlala-igan =esolution 4o. 33 and rdinance 4o. 2, "eries of 1993, of the Proince ofPala-an, in Cri!inal Case 4o. 93/5/C of the 1st )unicipal Circuit Trial Court +)CTC of Pala-anH$3% and =o'ert Gi! and Lirginia Gi!

-ho -ere charged -ith iolating City rdinance 4o. 15/92 of Puerto Princesa City and rdinance 4o. 2, "eries of 1993, of the



Proince of Pala-an 'efore the ffice of the City Prosecutor of Puerto Princesa.$<% Bll of the!, -ith the e0ception of Teocenes )idello,Felipe ngonion, Kr., Feli!on de )esa, =o'ert Gi! and Lirginia Gi!, are li&e-ise the accused in Cri!inal Case 4o. 11223 for theiolation of rdinance 4o. 2 of the "angguniang Panlala-igan of Pala-an, pending 'efore >ranch 5 of the =egional Trial Court ofPala-an.$5%

The second set of petitioners is co!posed of the rest of the petitioners nu!'ering seenty/seen +77, all of -ho!, e0cept the Birline"hippers Bssociation of Pala-an // an alleged priate association of seeral !arine !erchants // are natural persons -ho clai! to 'efisher!en.

The pri!ary interest of the first set of petitioners is, of course, to preent the prosecution, trial and deter!ination of the cri!inal casesuntil the constitutionality or legality of the rdinances they allegedly iolated shall hae 'een resoled. The second set of petitioners!erely clai! that they 'eing fisher!en or !arine !erchants, they -ould 'e adersely affected 'y the ordinances.

Bs to the first set of petitioners, this special ciil for certiorari !ust fail on the ground of pre!aturity a!ounting to a lac& of cause ofaction. There is no sho-ing that the said petitioners, as the accused in the cri!inal cases, hae filed !otions to #uash the infor!ationstherein and that the sa!e -ere denied. The ground aaila'le for such !otions is that the facts charged therein do not constitute anoffense 'ecause the ordinances in #uestion are unconstitutional.$% t cannot then 'e said that the lo-er courts acted -ithout or ine0cess of Jurisdiction or -ith grae a'use of discretion to Justify recourse to the e0traordinary re!edy of certiorari or prohi'ition. t !ustfurther 'e stressed that een if the petitioners did file !otions to #uash, the denial thereof -ould not forth-ith gie rise to a cause ofaction under =ule 5 of the =ules of Court. The general rule is that -here a !otion to #uash is denied, the re!edy therefro! is notcertiorari, 'ut for the party aggrieed there'y to go to trial -ithout preJudice to reiterating special defenses inoled in said !otion, and

if, after trial on the !erits of aderse decision is rendered, to appeal therefro! in the !anner authoried 'y la-.$7% Bnd , een -here inan e0ceptional circu!stance such denial !ay 'e the su'Ject of a special ciil action for certiorari, a !otion for reconsideration !usthae to 'e filed to allo- the court concerned an opportunity to correct its errors, unless such !otion !ay 'e dispensed -ith 'ecause ofe0isting e0ceptional circu!stances.$8% Finally, een if a !otion for reconsideration has 'een filed and denied, the re!edy under =ule 5is still unaaila'le a'sent any sho-ing of the grounds proided for in "ection 1 thereof.$9% For o'ious reasons, the petition at 'ar doesnot, and could not hae , alleged any of such grounds.

Bs to the second set of petitioners, the instant petition is o'iously one for 6?CGB=BT= =?G?F, i.e., for a declaration that therdinances in #uestion are a nullity ... for 'eing unconstitutional.$1% Bs such, their petition !ust li&e-ise fail, as this Court is notpossessed of original Jurisdiction oer petitions for declaratory relief een if only #uestions of la- are inoled,$11% it 'eing settled that theCourt !erely e0ercises appellate Jurisdiction oer such petitions.$12%

?en granting arguendo that the first set of petitioners hae a cause of action ripe for the e0traordinary -rit of certiorari, there is here aclear disregard of the hierarchy of courts, and no special and i!portant reason or e0ceptional or co!pelling circu!stance has 'eenadduced -hy direct recourse to us should 'e allo-ed. Dhile -e hae concurrent Jurisdiction -ith =egional Trial courts and -ith theCourt of Bppeals to issue -rits of certiorari, prohi'ition, !anda!us, #uo -arranto, ha'eas corpus and inJunction, such concurrencegies petitioners no unrestricted freedo! of choice of court foru!, so -e held in People . Cuares!a;$13%

This concurrence of Jurisdiction is notS to 'e ta&en as according to parties see&ing any of the -rits an a'solute unrestrained freedo!of choice of the court to -hich application therefor -ill 'e directed. There is after all hierarchy of courts. That hierarchy is deter!inatieof the enue of appeals, and should also sere as a general deter!inant of the appropriate foru! for petitions for the e0traordinary

-rits. B 'eco!ing regard for that Judicial hierarchy !ost certainly indicates that petitions for the issuance of e0traordinary -rits against

first leel +inferior courts should 'e filed -ith the =egional Trial Court, and those against the latter, -ith the Court of Bppeals. B directinocation of the "upre!e CourtIs original Jurisdiction to issue these -rits should 'e allo-ed only -hen there are special and i!portantreasons therefor, clearly and specifically set out in the petition. This is esta'lished policy. t is a policy necessary to preent inordinatede!ands upon the CourtIs ti!e and attention -hich are 'etter deoted to those !atters -ithin its e0clusie Jurisdiction, and to preentfurther oer/cro-ding of the CourtIs doc&etS.

The Court feels the need to reaffir! that policy at this ti!e, and to enJoin strict adherence thereto in the light of -hat it perceies to 'e agro-ing tendency on the part of litigants and la-yers to hae their applications for the so/called e0traordinary -rits, and so!eti!eseen their appeals, passed upon and adJudicated directly and i!!ediately 'y the highest tri'unal of the landS.



n "antiago . Las#ue,$1<% this Court forcefully e0pressed that the propensity of litigants and la-yers to disregard the hierarchy of courts!ust 'e put to a halt, not only 'ecause of the i!position upon the precious ti!e of this Court, 'ut also 'ecause of the ineita'le andresultant delay, intended or other-ise, in the adJudication of the case -hich often has to 'e re!anded or referred to the lo-er court, theproper foru! under the rules of procedure, or as 'etter e#uipped to resole the issues since this Court is not a trier of facts. Dereiterated the Judicial policy that this Court -ill not entertain direct resort to it unless the redress desired cannot 'e o'tained in theappropriate courts or -here e0ceptional and co!pelling circu!stances Justify aail!ent of a re!edy -ithin and calling for the e0erciseof $its% pri!ary Jurisdiction.

4ot-ithstanding the foregoing procedural o'stacles against the first set of petitioners, -e opt to resole this case on its !eritsconsidering that the lifeti!e of the challenged rdinances is a'out to end. rdinance 4o. 15/92 of the City of Puerto Princesa iseffectie only up to 1 Kanuary 1998, -hile rdinance 4o. 2 of the Proince of Pala-an, enacted on 19 Fe'ruary 1993, is effectie foronly fie +5 years. >esides, these rdinances -ere undou'tedly enacted in the e0ercise of po-ers under the ne- GC relatie to theprotection and preseration of the eniron!ent and are thus noel and of para!ount i!portance. 4o further delay then !ay 'e allo-edin the resolution of the issues raised.

t is of course settled that la-s +including ordinances enacted 'y local goern!ent units enJoy the presu!ption of constitutionality.$15% Tooerthro- this presu!ption, there !ust 'e a clear and une#uiocal 'reach of the Constitution, not !erely a dou'tful or argu!entatiecontradiction. n short, the conflict -ith the Constitution !ust 'e sho-n 'eyond reasona'le dou't.$1% Dhere dou't e0ists, een if -ellfounded, there can 'e no finding of unconstitutionality. To dou't is to sustain.$17%

Bfter a scrunity of the challenged rdinances and the proisions of the Constitution petitioners clai! to hae 'een iolated, -e findpetitionersI contentions 'aseless and so hold that the for!er do not suffer fro! any infir!ity, 'oth under the Constitution and applica'lela-s.

Petitioners specifically point to "ection 2, Brticle @ and "ections 2 and 7, Brticle @ of the Constitution as haing 'een transgressed'y the rdinances.

The pertinent portion of "ection 2 of Brticle @ reads;

"?C. 2. 0 0 0

The "tate shall protect the nationQs !arine -ealth in its archipelagic -aters, territorial sea, and e0clusie econo!ic one, and resereits use and enJoy!ent e0clusiely to Filipino citiens.

The Congress !ay, 'y la-, allo- s!all/scale utiliation of natural resources 'y Filipino citiens, as -ell as cooperatie fish far!ing, -ith priority to su'sistence fisher!en and fish-or&ers in riers, la&es, 'ays, and lagoons.

"ections 2 and 7 of Brticle @ proide;

"ec. 2. The pro!otion of social Justice shall include the co!!it!ent to create econo!ic opportunities 'ased on freedo! of initiatieand self/reliance.

000

"?C. 7. The "tate shall protect the rights of su'sistence fisher!en, especially of local co!!unities, to the preferential use of theco!!unal !arine and fishing resources, 'oth inland and offshore. t shall proide support to such fisher!en through appropriatetechnology and research, ade#uate financial, production, and !ar&eting assistance, and other serices. The "tate shall also protect,deelop, and consere such resources. The protection shall e0tend to offshore fishing grounds of su'sistence fisher!en againstforeign intrusion. Fish-or&ers shall receie a Just share fro! their la'or in the utiliation of !arine and fishing resources.

There is a'solutely no sho-ing that any of the petitioners #ualifies as a su'sistence or !arginal fisher!an. n their petition, petitionerBirline "hippers Bssociation of Pala-an is descri'ed as a priate association co!posed of )arine )erchantsH petitioners =o'ert Gi!and Lirginia Gi!, as !erchantsH -hile the rest of the petitioners clai! to 'e fisher!en, -ithout any #ualification, ho-eer, as to their



status.

"ince the Constitution does not specifically proide a definition of the ter!s su'sistence or !arginal fisher!en,$18% they should 'econstrued in their general and ordinary sense. B !arginal fisher!an is an indiidual engaged in fishing -hose !argin of return orre-ard in his harest of fish as !easured 'y e0isting price leels is 'arely sufficient to yield a profit or coer the cost of gathering thefish,$19% -hile a su'sistence fisher!an is one -hose catch yields 'ut the irreduci'le !ini!u! for his lielihood.$2% "ection 131+p of theGC +=.B. 4o. 71 defines a !arginal far!er or fisher!an as an indiidual engaged in su'sistence far!ing or fishing -hich shall 'eli!ited to the sale, 'arter or e0change of agricultural or !arine products produced 'y hi!self and his i!!ediate fa!ily. t 'earsrepeating that nothing in the record supports a finding that any petitioner falls -ithin these definitions.

>esides, "ection 2 of Brticle @ ai!s pri!arily not to 'esto- any right to su'sistence fisher!en, 'ut to lay stress on the duty of the"tate to protect the nationIs !arine -ealth. Dhat the proision !erely recognies is that the "tate !ay allo-, 'y la-, cooperatie fishfar!ing, -ith priority to su'sistence fisher!en and fish-or&ers in riers, la&es, 'ays, and lagoons. ur surey of the statute 'oo&sreeals that the only proision of la- -hich spea&s of the preferential right of !arginal fisher!en is "ection 1<9 of the GC of 1991

-hich pertinently proides;

"?C. 1<9. Fiser# Rentals, Fees and )arges. // 0 0 0

+' The sangguniang 'ayan !ay;

+1 rant fishery priileges to erect fish corrals, oyster, !ussels or other a#uatic 'eds or 'angus fry areas, -ithin a definite one of the

!unicipal -aters, as deter!ined 'y it; Proided, ho-eer, That duly registered organiations and cooperaties of !arginal fisher!enshall hae preferential right to such fishery priileges ....

n a Koint Bd!inistratie rder 4o. 3, dated 25 Bpril 199, the "ecretary of the 6epart!ent of Bgriculture and the "ecretary of the6epart!ent of nterior and Gocal oern!ent prescri'ed the guidelines on the preferential treat!ent of s!all fisherfol& relatie to thefishery right !entioned in "ection 1<9. This case, ho-eer, does not inole such fishery right.

Bnent "ection 7 of Brticle @, it spea&s not only of the use of co!!unal !arine and fishing resources, 'ut of their protection,deelop!ent, and conseration. Bs hereafter sho-n, the ordinances in #uestion are !eant precisely to protect and consere our!arine resources to the end that their enJoy!ent 'y the people !ay 'e guaranteed not only for the present generation, 'ut also for thegenerations to co!e.

The so/called preferential right of su'sistence or !arginal fisher!en to the use of !arine resources is not at all a'solute. naccordance -ith the =egalian 6octrine, !arine resources 'elong to the "tate, and, pursuant to the first paragraph of "ection 2, Brticle@ of the Constitution, their e0ploration, deelop!ent and utiliation ... shall 'e under the full control and superision of the "tate.)oreoer, their !andated protection, deelop!ent, and conseration as necessarily recognied 'y the fra!ers of the Constitution,i!ply certain restrictions on -hateer right of enJoy!ent there !ay 'e in faor of anyone. Thus, as to the curtail!ent of the preferentialtreat!ent of !arginal fisher!an, the follo-ing e0change 'et-een Co!!issioner Francisco =odrigo and Co!!issioner Kose F.".>engon, Kr., too& place at the plenary session of the Constitutional Co!!ission;

)=. =6=;

Get us discuss the i!ple!entation of this 'ecause -ould not raise the hopes of our people, and after-ards fail in the i!ple!entation.

*o- -ill this 'e i!ple!entedM Dill there 'e a licensing or giing of per!its so that goern!ent officials -ill &no- that one is really a!arginal fisher!anM r if police!an say that a person is not a !arginal fisher!an, he can sho- his per!it, to proe that indeed he isone.

)=. >?4N4;

Certainly, there -ill 'e so!e !ode of licensing insofar as this is concerned and this particular #uestion could 'e tac&led -hen -ediscuss the Brticle on Gocal oern!ents // -hether -e -ill leae to the local goern!ents or to Congress on ho- these things -ill 'ei!ple!ented. >ut certainly, thin& our Congress!en and our local officials -ill not 'e 'ereft of ideas on ho- to i!ple!ent this!andate.



0 0 0

)=. =6=;

"o, once one is licensed as a !arginal fisher!an, he can go any-here in the Philippines and fish in any fishing grounds.

)=. >?4N4;

"u'Ject to -hateer rules and regulations and local la-s that !ay 'e passed, !ay 'e e0isting or -ill 'e passed.$21% +underscoring

supplied for e!phasis.

Dhat !ust li&e-ise 'e 'orne in !ind is the state policy enshrined in the Constitution regarding the duty of the "tate to protect andadance the right of the people to a 'alanced and healthful ecology in accord -ith the rhyth! and har!ony of nature.$22% n this score,in posa . Factoran,$23% this Court declared;

Dhile the right to 'alanced and healthful ecology is to 'e found under the 6eclaration of Principles the "tate Policies and not under the>ill of =ights, it does not follo- that it is less i!portant than any of the ciil and political rights enu!erated in the latter. "uch a right'elongs to a different category of rights altogether for it concerns nothing less than self/preseration and self/perpetuation / aptly andfittingly stressed 'y the petitioners / the adance!ent of -hich !ay een 'e said to predate all goern!ents and constitutions. Bs a!atter of fact, these 'asic rights need not een 'e -ritten in the Constitution for they are assu!ed to e0ist fro! the inception of

hu!an&ind. f they are no- e0plicitly !entioned in the funda!ental charter, it is 'ecause of the -ell/founded fear of its fra!ers thatunless the rights to a 'alanced and healthful ecology and to health are !andated as state policies 'y the Constitution itself, there'yhighlighting their continuing i!portance and i!posing upon the state a sole!n o'ligation to presere the first and protect and adancethe second , the day -ould not 'e too far -hen all else -ould 'e lost not only for the present generation, 'ut also for those to co!e /generations -hich stand to inherit nothing 'ut parched earth incapa'le of sustaining life.

The right to a 'alanced and healthful ecology carries -ith it a correlatie duty to refrain fro! i!pairing the eniron!ent ...

The GC proisions ino&ed 'y priate respondents !erely see& to gie flesh and 'lood to the right of the people to a 'alanced andhealthful ecology. n fact, the eneral Delfare Clause, e0pressly !entions this right;

"?C. 1. 3eneral -el"are.// ?ery local goern!ent unit shall e0ercise the po-ers e0pressly granted, those necessarily i!pliedtherefro!, as -ell as po-ers necessary, appropriate, or incidental for its efficient and effectie goernance, and those -hich areessential to the pro!otion of the general -elfare. Dithin their respectie territorial Jurisdictions, local goern!ent units shall ensure andsupport, a!ong other things, the preseration and enrich!ent of culture, pro!ote health and safety, enhance the right of the people toa 'alanced ecology, encourage and support the deelop!ent of appropriate and self/reliant scientific and technological capa'ilities,i!proe pu'lic !orals, enhance econo!ic prosperity and social Justice, pro!ote full e!ploy!ent a!ong their residents, !aintainpeace and order, and presere the co!fort and conenience of their inha'itants. +underscoring supplied.

)oreoer, "ection 5+c of the GC e0plicitly !andates that the general -elfare proisions of the GC shall 'e li'erally interpreted togie !ore po-ers to the local goern!ent units in accelerating econo!ic deelop!ent and upgrading the #uality of life for the peopleof the co!!unity.

The GC ests !unicipalities -ith the po-er to grant fishery priileges in !unicipal -aters and to i!pose rentals, fees or chargesthereforH to penalie, 'y appropriate ordinances, the use of e0plosies, no0ious or poisonous su'stances, electricity, !uro/a!i, andother deleterious !ethods of fishingH and to prosecute any iolation of the proisions of applica'le fishery la-s.$2<% Further, thesangguniang 'ayan, the sangguniang panlungsod and the sangguniang panlala-igan are directed to enact ordinances for the general

-elfare of the !unicipality and its inha'itants, -hich shall include, inter alia, ordinances that $p%rotect the eniron!ent and i!poseappropriate penalties for acts -hich endanger the eniron!ent such as dyna!ite fishing and other for!s of destructie fishing ... andsuch other actiities -hich result in pollution, acceleration of eutrophication of riers and la&es or of ecological i!'alance. $25%

Finally, the centerpiece of GC is the syste! of decentraliation$2% as e0pressly !andated 'y the Constitution.$27% ndispensa'le theretois deolution and the GC e0pressly proides that $a%ny proision on a po-er of a local goern!ent unit shall 'e li'erally interpreted in



its faor, and in case of dou't, any #uestion thereon shall 'e resoled in faor of deolution of po-ers and of the lo-er localgoern!ent unit. Bny fair and reasona'le dou't as to the e0istence of the po-er shall 'e interpreted in faor of the local goern!entunit concerned,$28% 6eolution refers to the act 'y -hich the 4ational oern!ent confers po-er and authority upon the arious localgoern!ent units to perfor! specific functions and responsi'ilities.$29%

ne of the deoled po-ers enu!erated in the section of the GC on deolution is the enforce!ent of fishery la-s in !unicipal -atersincluding the conseration of !angroes. $3% This necessarily includes enact!ent of ordinances to effectiely carry out such fishery la-s

-ithin the !unicipal -aters.

The ter! !unicipal -aters, in turn, include not only strea!s, la&es, and tidal -aters -ithin the !unicipality, not 'eing the su'Ject ofpriate o-nership and not co!prised -ithin the national par&s, pu'lic forest, ti!'er lands, forest reseres, or fishery reseres, 'ut also!arine -aters included 'et-een t-o lines dra-n perpendicularly to the general coastline fro! points -here the 'oundary lines of the!unicipality or city touch the sea at lo- tide and a third line parallel -ith the general coastline and fifteen &ilo!eters fro! it.$31% AnderP.6. 4o. 7<, the !arine -aters included in !unicipal -aters is li!ited to three nautical !iles fro! the general coastline using thea'oe perpendicular lines and a third parallel line.

These fishery la-s -hich local goern!ent units !ay enforce under "ection 17+', +2, +i in !unicipal -aters include; +1 P.6. 4o.7<H +2 P.6. 4o. 115 -hich, inter alia, authories the esta'lish!ent of a closed season in any Philippine -ater if necessary forconseration or ecological purposesH +3 P.6. 4o. 1219 -hich proides for the e0ploration, e0ploitation, utiliation, and conseration ofcoral resourcesH +< =.B. 4o. 5<7<, as a!ended 'y >.P. >lg. 58, -hich !a&es it unla-ful for any person, association, or corporation tocatch or cause to 'e caught, sell, offer to sell, purchase, or hae in possession any of the fish specie called go'iidae or ipon during

closed seasonH and +5 =.B. 4o. <51 -hich prohi'its and punishes electrofishing, as -ell as arious issuances of the >FB=.

To those specifically deoled insofar as the control and regulation of fishing in !unicipal -aters and the protection of its !arineeniron!ent are concerned, !ust 'e added the follo-ing;

1. ssuance of per!its to construct fish cages -ithin !unicipal -atersH

2. ssuance of per!its to gather a#uariu! fishes -ithin !unicipal -atersH

3. ssuance of per!its to gather &apis shells -ithin !unicipal -atersH

<. ssuance of per!its to gather:culture shelled !ollus&s -ithin !unicipal -atersH

5. ssuance of licenses to esta'lish sea-eed far!s -ithin !unicipal -atersH

. ssuance of licenses to esta'lish culture pearls -ithin !unicipal -atersH

7. ssuance of au0iliary inoice to transport fish and fishery productsH and

8. ?sta'lish!ent of closed season in !unicipal -aters.

These functions are coered in the )e!orandu! of Bgree!ent of 5 Bpril 199< 'et-een the 6epart!ent of Bgriculture and the6epart!ent of nterior and Gocal oern!ent.

n light then of the principles of decentraliation and deolution enshrined in the GC and the po-ers granted to local goern!ent unitsunder "ection 1 +the eneral Delfare Clause, and under "ections 1<9, <<7 +a +1 +i, <58 +a +1 +i and <8 +a +1 +i, -hichun#uestiona'ly inole the e0ercise of police po-er, the alidity of the #uestioned rdinances cannot 'e dou'ted.

Parenthetically, -e -ish to add that these rdinances find full support under =.B. 4o. 711, other-ise &no-n as the "trategic?niron!ental Plan +"?P for Pala-an Bct, approed on 19 Kuly 1992. This statute adopts a co!prehensie fra!e-or& for thesustaina'le deelop!ent of Pala-an co!pati'le -ith protecting and enhancing the natural resources and endangered eniron!ent ofthe proince, -hich shall sere to guide the local goern!ent of Pala-an and the goern!ent agencies concerned in the for!ulationand i!ple!entation of plans, progra!s and proJects affecting said proince. $32%

Bt this ti!e then, it -ould 'e appropriate to deter!ine the relation 'et-een the assailed rdinances and the aforesaid po-ers of the



"angguniang Panlungsod of the City of Puerto Princesa and the "angguniang Panlala-igan of the Proince of Pala-an to protect theeniron!ent. To 'egin, -e ascertain the purpose of the rdinances as set forth in the state!ent of purposes or declaration of policies#uoted earlier.

t is clear to the Court that 'oth rdinances hae t-o principal o'Jecties or purposes; +1 to esta'lish a closed season for the speciesof fish or a#uatic ani!als coered therein for a period of fie years, and +2 to protect the corals of the !arine -aters of the City ofPuerto Princesa and the Proince of Pala-an fro! further destruction due to illegal fishing actiities.

The acco!plish!ent of the first o'Jectie is -ell -ithin the deoled po-er to enforce fishery la-s in !unicipal -aters, such as P.6. 4o

115, -hich allo-s the esta'lish!ent of closed seasons. The deolution of such po-er has 'een e0pressly confir!ed in the)e!orandu! of Bgree!ent of 5 Bpril 199< 'et-een the 6epart!ent of Bgriculture and the 6epart!ent of nterior and Gocaloern!ent.

The realiation of the second o'Jectie falls -ithin 'oth the general -elfare clause of the GC and the e0press !andate thereunder tocities and proinces to protect the eniron!ent and i!pose appropriate penalties for acts -hich endanger the eniron!ent.$33%

The destruction of the coral reefs results in serious, if not irrepara'le, ecological i!'alance, for coral reefs are a!ong the natureIs life/support syste!s.$3<% They collect, retain, and recycle nutrients for adJacent nearshore areas such as !angroes, seagrass 'eds, andreef flatsH proide food for !arine plants and ani!alsH and sere as a protectie shelter for a#uatic organis!s. $35% t is said that$e%cologically, the reefs are to the oceans -hat forests are to continents; they are shelter and 'reeding grounds for fish and plantspecies that -ill disappear -ithout the!.$3%

The prohi'ition against catching lie fish ste!s, in part, fro! the !odern pheno!enon of lie/fish trade -hich entails the catching of so/called e0otic tropical species of fish not only for a#uariu! use in the Dest, 'ut also for the !ar&et for lie 'an#uet fish $-hich% isirtually insatia'le in eer !ore affluent Bsia.$37% These e0otic species are coral/d-ellers, and fisher!en catch the! 'y diing in shallo-

-ater -ith corraline ha'itats and s#uirting sodiu! cyanide poison at passing fish directly or onto coral creicesH once affected the fishare i!!o'ilied $!erely stunned% and then scooped 'y hand.$38% The dier then surfaces and du!ps his catch into a su'!erged netattached to the s&iff . T-enty !inutes later, the fish can s-i! nor!ally. >ac& on shore, they are placed in holding pens, and -ithin a fe-

-ee&s, they e0pel the cyanide fro! their syste! and are ready to 'e hauled. Then they are placed in salt-ater tan&s or pac&aged inplastic 'ags filled -ith sea-ater for ship!ent 'y air freight to !aJor !ar&ets for lie food fish.$39% Dhile the fish are !eant to surie, theopposite holds true for their for!er ho!e as $a%fter the fisher!an s#uirts the cyanide, the first thing to perish is the reef algae, on -hichfish feed. 6ays later, the liing coral starts to e0pire. "oon the reef loses its function as ha'itat for the fish, -hich eat 'oth the algae andinerte'rates that cling to the coral. The reef 'eco!es an under-ater graeyard, its s&eletal re!ains 'rittle, 'leached of all color and

ulnera'le to erosion fro! the pounding of the -aes.$<% t has 'een found that cyanide fishing &ills !ost hard and soft corals -ithinthree !onths of repeated application.$<1%

The ne0us then 'et-een the actiities 'arred 'y rdinance 4o. 15/92 of the City of Puerto Princesa and the prohi'ited acts proided inrdinance 4o. 2, "eries of 1993 of the Proince of Pala-an, on one hand, and the use of sodiu! cyanide, on the other, is painfullyo'ious. n su!, the pu'lic purpose and reasona'leness of the rdinances !ay not then 'e controerted.

Bs to ffice rder 4o. 23, "eries of 1993, issued 'y Bcting City )ayor B!ado G. Gucero of the City of Puerto Princesa, -e find nothingtherein iolatie of any constitutional or statutory proision. The rder refers to the i!ple!entation of the challenged ordinance and isnot the )ayorIs Per!it.

The dissenting opinion of )r. Kustice Kosue 4. >ellosillo relies upon the lac& of authority on the part of the "angguniang Panlungsod of

Puerto Princesa to enact rdinance 4o. 15, "eries of 1992, on the theory that the su'Ject thereof is -ithin the Jurisdiction andresponsi'ility of the >ureau of Fisheries and B#uatic =esources +>FB= under P.6. 4o. 7<, other-ise &no-n as the Fisheries 6ecreeof 1975H and that, in any eent, the rdinance is unenforcea'le for lac& of approal 'y the "ecretary of the 6epart!ent of 4atural=esources +64=, li&e-ise in accordance -ith P.6. 4o. 7<.

The !aJority is una'le to acco!!odate this ie-. The Jurisdiction and responsi'ility of the >FB= under P. 6. no. 7<, oer the!anage!ent, conseration, deelop!ent, protection, utiliation and disposition of all fishery and a#uatic resources of the country is notall/enco!passing. First, "ection < thereof e0cludes fro! such Jurisdiction and responsi'ility !unicipal -aters, -hich shall 'e under the!unicipal or city goern!ent concerned, e0cept insofar as fishpens and sea-eed culture in !unicipal in !unicipal centers areconcerned. This section proides, ho-eer, that all !unicipal or city ordinances and resolutions affecting fishing and fisheries and anydisposition thereunder shall 'e su'!itted to the "ecretary of the 6epart!ent of 4atural =esources for appropriate action and shall



hae full force and effect only upon his approal.$<2%

"econd, it !ust at once 'e pointed out that the >FB= is no longer under the 6epart!ent of 4atural =esources +no- 6epart!ent of?niron!ent and 4atural =esources. ?0ecutie rder 4o. 97 of 3 Kune 198< transferred the >FB= fro! the control and superisionof the )inister +for!erly "ecretary of 4atural =esources to the )inistry of Bgriculture and Food +)BF and conerted it into a !erestaff agency thereof, integrating its functions -ith the regional offices of the )BF.

n ?0ecutie rder 4o. 11 of 3 Kanuary 1987, -hich reorganied the )BF, the >FB= -as retained as an attached agency of the)BF. Bnd under the Bd!inistratie Code of 1987,$<3% the >FB= is placed under the Title concerning the 6epart!ent of Bgriculture.$<<%

Therefore, it is incorrect to say that the challenged rdinance of the City of Puerto Princesa is inalid or unenforcea'le 'ecause it -asnot approed 'y the "ecretary of the 6?4=. f at all, the approal that should 'e sought -ould 'e that of the "ecretary of the6epart!ent of Bgriculture +not 6?4= of !unicipal ordinances affecting fishing and fisheries in !unicipal -aters has 'een dispensed

-ith in ie- of the follo-ing reasons;

+1 "ection 53< +=epealing Clause of the GC e0pressly repeals or a!ends "ection 1 and 29 of P.6. 4o. 7<$<5% insofar thatthey are inconsistent -ith the proisions of the GC.

+2 Bs discussed earlier, under the general -elfare clause of the GC, local goern!ent units hae the po-er, inter alia, toenact ordinances to enhance the right of the people to a 'alanced ecology. t li&e-ise specifically ests !unicipalities -ith the po-er togrant fishery priileges in !unicipal -aters, and i!pose rentals, fees or charges thereforH to penalie, 'y appropriate ordinances, the

use of e0plosies, no0ious or poisonous su'stances, electricity, !uro/a!i, and other deleterious !ethods of fishingH and to prosecuteother !ethods of fishingH and to prosecute any iolation of the proisions of applica'le fishing la-s.$<% Finally, it i!poses upon thesangguniang 'ayan, the sangguniang panlungsod, and the sangguniang panlala-igan the duty to enact ordinances to $p%rotect theeniron!ent and i!pose appropriate penalties for acts -hich endanger the eniron!ent such as dyna!ite fishing and other for!s ofdestructie fishingS and such other actiities -hich result in pollution, acceleration of eutrophication of riers and la&es or of ecologicali!'alance.$<7%

n closing, -e co!!end the "angguniang Panlungsod of the City of Puerto Princesa and "angguniang Panlala-igan of the Proince oPala-an for e0ercising the re#uisite political -ill to enact urgently needed legislation to protect and enhance the !arine eniron!ent,there'y sharing in the herculean tas& of arresting the tide of ecological destruction. De hope that other local goern!ent units shallno- 'e roused fro! their lethargy and adopt a !ore igilant stand in the 'attle against the deci!ation of our legacy to futuregenerations. Bt this ti!e, the repercussions of any further delay in their response !ay proe disastrous, if not, irreersi'le.

$EREFORE, the instant petition is DISISSED for lac& of !erit and the te!porary restraining order issued on 11 4oe!'er 1993 is"IF%ED.

4o pronounce!ent as to costs.SO ORDERED.

/arvasa, ).J., Padilla, Vitug, Pangani!an, and orres, Jr., JJ., concur.Romero, Melo, Puno, and Francisco, JJ., 8oined te ponencias o" Justices Davide and Mendoza. 4ellosillo, J., see dissenting opinion.Kapunan and Hermosisima, Jr., JJ., Join Kustice >ellosillo in his dissenting opinion.)endoa, see concurring opinion.Regalado, J., on official leae.



23 Phil. 59

?4 >B4C

$ .=. 4o. 732, 6ece!'er 29, 198 %

T*? 6=?CT= F GB46", P?TT4?=, L". 4T?=)?6BT? BPP?GGBT? CA=T B46 BC)? PGD6 L?4??= C. 4C.,

=?"P46?4T".

6 ? C " 4

N!RV!S!, *.+

The 6irector of Gands has 'rought this appeal 'y certiorari fro! a Judg!ent of the nter!ediate Bppellate Court affir!ing a decision of

the Court of First nstance of sa'ela, -hich ordered registration in faor of Bc!e Ply-ood Leneer Co., nc. of fie parcels of land

!easuring <81, 39 s#uare !eters, !ore or less, ac#uired 'y it fro! )ariano and Bcer nfiel, !e!'ers of the 6u!agat tri'e.

The registration proceedings -ere for confir!ation of title under "ection <8 of Co!!on-ealth Bct 4o. 1<1 +The Pu'lic Gand Bct, as

a!endedH and the appealed Judg!ent su!s up the findings of the trial court in said proceedings in this -ise;

1. That Bc!e Ply-ood Leneer Co. nc., represented 'y )r. =odolfo 4aario is a corporation duly organied in accordance -iththe la-s of the =epu'lic of the Philippines and registered -ith the "ecurities and ?0change Co!!ission on 6ece!'er 23,1959H

2. That Bc!e Ply-ood Leneer Co. nc., represented 'y )r. =odolfo 4aario can ac#uire real properties pursuant to theproisions of the Brticles of ncorporation particularly on the proision of its secondary purposes +paragraph +9, ?0hi'it Q)/1QH

3. That the land su'Ject of the Gand =egistration proceeding -as ancestrally ac#uired 'y Bc!e Ply-ood Leneer Co., nc., oncto'er 29, 192, fro! )ariano nfiel and Bcer nfiel, 'oth !e!'ers of the 6u!agat tri'e and as such are cultural !inoritiesH

<. That the constitution of the =epu'lic of the Philippines of 1935 is applica'le as the sale too& place on cto'er 29, 192H

5. That the possession of the nfiels oer the land relin#uished or sold to Bc!e Ply-ood Leneer Co., nc., dates 'ac& 'efore thePhilippines -as discoered 'y )agellan as the ancestors of the nfiels hae possessed and occupied the land fro! generation

to generation until the sa!e ca!e into the possession of )ariano nfiel and Bcer nfielH

. That the possession of the applicant Bc!e Ply-ood Leneer Co., nc., is continuous, aderse and pu'lic fro! 192 to thepresent and tac&ing the possession of the nfiels -ho -ere granted fro! -ho! the applicant 'ought said land on cto'er 29,192, hence the possession is already considered fro! ti!e i!!e!orialH

7. That the land sought to 'e registered is a priate land pursuant to the proisions of =epu'lic Bct 4o. 3872 granting a'soluteo-nership to !e!'ers of the non/Christian Tri'es on land occupied 'y the! or their ancestral lands, -hether -ith thealiena'le or disposa'le pu'lic land or -ithin the pu'lic do!ainH

8. That applicant Bc!e Ply-ood Leneer Co. nc., has introduced !ore than Forty/Fie )illion +P<5,,. Pesos -orthof i!proe!ents, said i!proe!ents -ere seen 'y the Court during its ocular inestigation of the land sought to 'e registered

on "epte!'er 18, 1982H

9. That the o-nership and possession of the land sought to 'e registered 'y the applicant -as duly recognied 'y thegoern!ent -hen the )unicipal fficials of )aconacon, sa'ela, hae negotiated for the donation of the to-nsite fro! Bc!ePly-ood Leneer Co., nc., and this negotiation ca!e to reality -hen the >oard of 6irectors of the Bc!e Ply-ood LeneerCo., nc., had donated a part of the land 'ought 'y the Co!pany fro! the nfiels for the to-nsite of )aconacon, sa'ela +?0h.Q4Q on 4oe!'er 15, 1979, and -hich donation -as accepted 'y the )unicipal oern!ent of )aconacon, sa'ela +?0h. Q4/1Q, during their special session on 4oe!'er 22, 1979.

The 6irector of Gands ta&es no issue -ith any of these findings e0cept as to the applica'ility of the 1935 Constitution to the !atter at

hand. Concerning this, he asserts that, the registration proceedings haing 'een co!!enced only on Kuly 17, 1981, or long after the



1973 Constitution had gone into effect, the latter is the correctly applica'le la-H and since section 11 of its Brticle @L prohi'its priate

corporations or associations fro! holding aliena'le lands of the pu'lic do!ain, e0cept 'y lease not to e0ceed 1, hectares +a

prohi'ition not found in the 1935 Constitution -hich -as in force in 192 -hen Bc!e purchased the lands in #uestion fro! the nfiels,

it -as reersi'le error to decree registration in faor of Bc!e.

"ection <8, paragraphs +' and +c, of Co!!on-ealth Bct 4o. 1<1, as a!ended, reads;

"?C. <8. The follo-ing descri'ed citiens of the Philippines, occupying lands of the pu'lic do!ain or clai!ing to o-n any such lands

or an interest therein, 'ut -hose titles hae not 'een perfected or co!pleted, !ay apply to the Court of First nstance of the proince

-here the land is located for confir!ation of their clai!s, and the issuance of a certificate of title therefor, under the Gand =egistrationBct, to -it;

000 000 000

+' Those -ho 'y the!seles or through their predecessors/in/interest hae 'een in open, continuous, e0clusie and notorious

possession and occupation of agricultural lands of the pu'lic do!ain, under a !ona "ide clai! of ac#uisition or o-nership, for at least

thirty years i!!ediately preceding the filing of the application for confir!ation of title e0cept -hen preented 'y -ar or "orce ma8eure.

These shall 'e conclusiely presu!ed to nae perfor!ed all the conditions essential to a oern!ent grant and shall 'e entitled to a

certificate of title under the proisions of this chapter.

+c )e!'ers of the 4ational Cultural !inorities -ho 'y the!seles or through their predecessors/in/interest hae 'een in open,

continuous, e0clusie and notorious possession and occupation of lands of the pu'lic do!ain suita'le to agriculture, -hether

disposa'le or not, under a !ona "ide clai! of o-nership for at least 3 years shall 'e entitled to the rights granted in su'section +'

hereof.

The Petition for =eie- does not dispute // indeed, in ie- of the #uoted findings of the trial court -hich -ere cited and affir!ed 'y the

nter!ediate Bppellate Court, it can no longer controert 'efore this Court // the fact that )ariano and Bcer nfiel, fro! -ha! Bc!e

purchased the lands in #uestion on cto'er 29, 192, are !e!'ers of the national cultural !inorities -ho had, 'y the!seles and

through their progenitors, possessed and occupied those lands since ti!e i!!e!orial, or for !ore than the re#uired 3/year period

and -ere, 'y reason thereof, entitled to e0ercise the right granted in "ection <8 of the Pu'lic Gand Bct to hae their title Judicially

confir!ed. 4or is there any pretension that Bc!e, as the successor/in/interest of the nfiels, is dis#ualified to ac#uire and register

o-nership of said lands under any proision of the 1973 Constitution other than "ection 11 of its Brticle @L already referred to.

ien the foregoing, the #uestion 'efore this Court is -hether or not the title that the nfiels had transferred to Bc!e in 192 could 'econfir!ed in faor of the latter in proceedings instituted 'y it in 1981 -hen the 1973 Constitution -as already in effect, haing in !ind

the prohi'ition therein against priate corporations holding lands of the pu'lic do!ain e0cept in lease not e0ceeding 1, hectares.

The #uestion turns upon a deter!ination of the character of the lands at the ti!e of institution of the registration proceedings in 1981.

f they -ere then still part of the pu'lic do!ain, it !ust 'e ans-ered in the negatie. f, on the other hand, they -ere then already

priate lands, the constitutional prohi'ition against their ac#uisition 'y priate corporations or associations o'iously does not apply.

n this regard, attention has 'een inited to Manila $lectric )ompan# vs. )astro%4artolome, et al ,$1% -here a si!ilar set of facts

preailed. n that case, )anila ?lectric Co!pany, a do!estic corporation !ore than ( of the capital stoc& of -hich is Filipino/o-ned

had purchased in 19<7 t-o lots in Tanay, =ial fro! the Pi#uing spouses. The lots had 'een possessed 'y the endors and, 'efore

the!, 'y their predecessor/in/interest, li!pia =a!os, since prior to the out'rea& of the Pacific Dar in 19<1. n 6ece!'er 1, 197,)eralco applied to the Court of First nstance of =ial, )a&ati >ranch, for confir!ation of title to said lots. The court, assu!ing that the

lots -ere pu'lic land, dis!issed the application on the ground that )eralco, a Juridical person, -as not #ualified to apply for registration

under "ection <8+' of the Pu'lic Gand Bct -hich allo-s only Filipino citiens or natural persons to apply for Judicial confir!ation of

i!perfect titles to pu'lic land. )eralco appealed, and a !aJority of this Court upheld the dis!issal. t -as held that;

0 0 0, the said land is still pu'lic land. t -ould cease to 'e pu'lic land only upon the issuance of the certificate of title to any Filipino

citien clai!ing it under section <8+'. >ecause it is still pu'lic land and the )eralco, as a Juridical person, is dis#ualified to apply for its

registration under section <8+', )eralcoQs application cannot 'e gien due course or has to 'e dis!issed.

000 000 000



Finally, it !ay 'e o'sered that the constitutional prohi'ition !a&es no distinction 'et-een +on the one hand aliena'le agricultural

pu'lic lands as to -hich no occupant has an i!perfect title and +on the other hand aliena'le lands of the pu'lic do!ain as to -hich an

occupant has an i!perfect title su'Ject to Judicial confir!ation.

"ince section 11 of Brticle @L does not distinguish, -e should not !a&e any distinction or #ualification. The prohi'ition applies to

aliena'le pu'lic lands as to -hich a Torrens title !ay 'e secured under section <8+'. The proceeding under section <8+'

Qpresupposes that the land is pu'licQ +Mindanao vs. Director o" 2ands, G/19535, Kuly 3, 197, 2 "C=B <1, <<.

The present Chief Kustice entered a igorous dissent, tracing the line of cases 'eginning -ith Carino in 199$2%

thru &usi in 1925$3%

do-nto *erico in 198$<%, -hich deeloped, affir!ed and reaffir!ed the doctrine that open, e0clusie and undisputed possession of aliena'le

pu'lic land for the period prescri'ed 'y la- creates the legal fiction -here'y the land, upon co!pletion of the re#uisite period ipso Jure

and -ithout the need of Judicial or other sanction, ceases to 'e pu'lic land and 'eco!es priate property. That said dissent e0pressed

-hat is the 'etter // and, indeed, the correct, ie- // 'eco!es eident fro! a consideration of so!e of the principal rulings cited therein

The !ain the!e -as gien 'irth, so to spea&, in Carino, inoling the 6ecree:=egulations of Kune 25, 188 for adJust!ent of royal

lands -rongfully occupied 'y priate indiiduals in the Philippine slands. t -as ruled that;

t is true that the language of articles < and 5 $5% attri'utes title to those Q-ho !ay proeQ possession for the necessary ti!e and -e do

not oerloo& the argu!ent that this !eans !ay proe in registration proceedings. t !ay 'e that an ?nglish coneyancer -ould hae

reco!!ended an application under the foregoing decree, 'ut certainly it -as not calculated to coney to the !ind of an gorot chief the

notion that ancient fa!ily possessions -ere in danger, if he had read eery -ord of it. The -ords Q!ay proeQ +acrediten, as -ell or

'etter, in ie- of the other proisions, !ight 'e ta&en to !ean -hen called upon to do so in any litigation. There are indications that

registration -as e0pected fro! all, 'ut none sufficient to sho- that, for -ant of it, o-nership actually gained -ould 'e lost. The effect o

the proof, -hereer !ade, -as not to confer title, 'ut si!ply to esta'lish it, as already conferred 'y the decree, if not 'y earlier la-. 0 0

0.

That ruling assu!ed a !ore doctrinal character 'ecause e0pressed in !ore categorical language, in "usi;

0 0 0. n faor of Lalentin "usi, there is, !oreoer, the presu!ption Juris et de Jure esta'lished in paragraph +' of section <5 of Bct 4o

287<, a!ending Bct 4o. 92, that all the necessary re#uire!ents for a grant 'y the oern!ent -ere co!plied -ith, for he has 'een in

actual and physical possession, personally and through his predecessors, of an agricultural land of the pu'lic do!ain openly,

continuously, e0clusiely and pu'licly since Kuly 2, 198<, -ith a right to a certificate of title to said land under the proisions of Chapter

L of said Bct. "o that -hen Bngela =aon applied for the grant in her faor, Lalentin "usi ad alread# acquired, !# operation o" la0

not onl# a rigt to a grant, !ut a grant o" te 3overnment, "or it is not necessar# tat a certi"icate o" title sould !e issued in order tat

said grant ma# !e sanctioned te courts, an application tere"or is su""icient, under proisions of section <7 of Bct 4o. 287<. f 'y alegal fiction, Lalentin "usi had ac#uired the land in #uestion 'y a grant of the "tate, it had already ceased to 'e of the pu'lic do!ain

and had 'eco!e priate property, at least 'y presu!ption, of Lalentin "usi, 'eyond the control of the 6irector of Gands. Conse#uently,

in selling the land in #uestion of Bngela =aon, the 6irector of Gands disposed of a land oer -hich he had no longer any title or

control, and the sale thus !ade -as oid and of no effect, and Bngela =aon did not there'y ac#uire any right. $%

"ucceeding cases, of -hich only sane need 'e !entioned, li&e 2acaste vs. Director o" 2ands$7%, )esina s. Lda. de "ona $8%, Manarpac

vs. )a!anatuan$9%, Miguel vs. )ourt o" ppeals$1% and Herico vs. Dar, supra, 'y ino&ing and affir!ing the "usi doctrine hae fir!ly

rooted it in Jurisprudence.

Herico, in particular, appears to 'e s#uarely affir!atie;$11%

0 0 0. "econdly, under the proisions of =epu'lic Bct 4o. 19<2, -hich the respondent Court held to 'e inapplica'le to the petitionerQs

case, -ith the latterQs proen occupation and cultiation for !ore than 3 years since 191<, 'y hi!self and 'y his predecessors/in/interest, title oer the land has ested on petitioner so as to segregate the land fro! the !ass of pu'lic land. Thereafter, it is no longer

disposa'le under the Pu'lic Gand Bct as 'y free patent. 0 0 0.

000 000 000

Bs interpreted in seeral cases, -hen the conditions as specified in the foregoing proision are co!plied -ith, the possessor is dee!ed

to hae ac#uired, !# operation o" la0, a right to a grant, a goern!ent grant, -ithout the necessity of a certificate of title 'eing issued.

The land, therefore, ceases to 'e of the pu'lic do!ain and 'eyond the authority of the 6irector of Gands to dispose of. The application

for confir!ation is !ere for!ality, the lac& of -hich does not affect the legal sufficiency of the title as -ould 'e eidenced 'y the patent

and the Torrens title to 'e issued upon the strength of said patent. $12%



4othing can !ore clearly de!onstrate the logical ineita'ility of considering possession of pu'lic land -hich is of the character and

duration prescri'ed 'y statute as the e#uialent of an e0press grant fro! the "tate than the dictu! of the statute itself $13% that the

possessor+s 0 0 0 shall 'e conclusiely presu!ed to hae perfor!ed all the conditions essential to a oern!ent grant and shall 'e

entitled to a certificate of title 0 0 0. 4o proof 'eing ad!issi'le to oerco!e a conclusie presu!ption, confir!ation proceedings -ould,

in truth 'e little !ore than a for!ality, at the !ost li!ited to ascertaining -hether the possession clai!ed is of the re#uired character

and length of ti!eH and registration thereunder -ould not confer title, 'ut si!ply recognie a title already ested. The proceedings

-ould not originally conert the land fro! pu'lic to priate land, 'ut only confir! such a conersion already affected 'y operation of la-

fro! the !o!ent the re#uired period of possession 'eca!e co!plete. Bs -as so -ell put in )arino, 0 0 0 +T here are indications that

registration -as e0pected fro! all, 'ut none sufficient to sho- that, for -ant of it, o-nership actually gained -ould 'e lost. The effect othe proof, -hereer !ade, -as not to confer title, 'ut si!ply to esta'lish it, as already conferred 'y the decree, if not 'y earlier la-.

f it is accepted // as it !ust 'e // that the land -as already priate land to -hich the nfiels had a legally sufficient and transfera'le title

on cto'er 29, 192 -hen Bc!e ac#uired it fro! said o-ners, it !ust also 'e conceded that Bc!e had a perfect right to !a&e such

ac#uisition, there 'eing nothing in the 1935 Constitution then in force +or, for that !atter, in the 1973 Constitution -hich ca!e into effec

later prohi'iting corporations fro! ac#uiring and o-ning priate lands.

?en on the proposition that the land re!ained technically pu'lic land, despite i!!e!orial possession of the nfiels and their

ancestors, until title in their faor -as actually confir!ed in appropriate proceedings under the Pu'lic Gand Bct, there can 'e no serious

#uestion of Bc!eQs right to ac#uire the land at the ti!e it did, there also 'eing nothing in the 1935 Constitution that !ight 'e construed

to prohi'it corporations fro! purchasing or ac#uiring interests in pu'lic land to -hich the endor had already ac#uired that type of so/

called inco!plete or i!perfect title. The only li!itation then e0tant -as that corporations could not ac#uire, hold or lease pu'lic

agricultural lands in e0cess of 1,2< hectares. The purely accidental circu!stance that confir!ation proceedings -ere 'rought under

the aegis of the 1973 Constitution -hich for'ids corporations fro! o-ning lands of the pu'lic do!ain cannot defeat a right already

ested 'efore that la- ca!e into effect, or inalidate transactions then perfectly alid and proper. This Court has already held, in

analogous circu!stances, that the Constitution cannot i!pair ested rights.

De hold that the said constitutional prohi'ition$1<% has no retroactie application to the sales application of >iUan 6eelop!ent Co., nc.

'ecause it had already ac#uired a ested right to the land applied for at the ti!e the 1973 Constitution too& effect.

That Lested right has to 'e respected. t could not 'e a'rogated 'y the ne- Constitution, "ection 2, Brticle @ of the 1935 Constitution

allo-s priate corporations to purchase pu'lic agricultural lands not e0ceeding one thousand and t-enty/four hectares. PetitionerQ

prohi'ition action is 'arred 'y the doctrine of ested rights in constitutional la-.

000 000 000

The due process clause prohi'its the annihilation of ested rights. QB state !ay not i!pair ested rights 'y legislatie enact!ent, 'y the

enact!ent or 'y the su'se#uent repeal of a !unicipal ordinance, or 'y a change in the constitution of the "tate, e0cept in a legiti!ate

e0ercise of the police po-erQ +1 C.K.". 1177/78.

000 000 000

n the instant case, it is incontesta'le that prior to the effectiity of the 1973 Constitution the right of the corporation to purchase the

land in #uestion had 'eco!e fi0ed and esta'lished and -as no longer open to dou't or controersy.

ts co!pliance -ith the re#uire!ents of the Pu'lic Gand Ga- for the issuance of a patent had the effect of segregating the said landfro! the pu'lic do!ain. The corporationQs right to o'tain a patent for the land is protected 'y la-. t cannot 'e depried of that right

-ithout due process +Director o" 2ands vs. ), 123 Phil. 919.$15%

The fact, therefore, that the confir!ation proceedings -ere instituted 'y Bc!e in its o-n na!e !ust 'e regarded as si!ply another

accidental circu!stance, productie of a defect hardly !ore than procedural and in no-ise affecting the su'stance and !erits of the

right of o-nership sought to 'e confir!ed in said proceedings, there 'eing no dou't of Bc!eQs entitle!ent to the land. Bs it is

un#uestiona'le that in the light of the undispute facts, the nfiels, under either the 1935 or the 1973 Constitution, could hae had title in

the!seles confir!ed and registered, only a rigid su'serience to the letter of the la- -ould deny the sa!e 'enefit to their la-ful

successor/in/interest 'y alid coneyance -hich iolates no constitutional !andate.



The Court, in the light of the foregoing, is of the ie-, and so holds, that the !aJority ruling in )eralco !ust 'e reconsidered and no

longer dee!ed to 'e 'inding precedent. The correct rule, as enunciated in the line of cases already referred to, is that aliena'le pu'lic

land held 'y a possessor, personally or through his predecessors/in/interest, openly, continuously and e0clusiely for the prescri'ed

statutory period +3 years under The Pu'lic Gand Bct, as a!ended is conerted to priate property 'y the !ere lapse or co!pletion of

said period, ipso Jure. Follo-ing that rule and on the 'asis of the undisputed facts, the land su'Ject of this appeal -as already priate

property at the ti!e it -as ac#uired fro! the nfiels 'y Bc!e. Bc!e there'y ac#uired a registra'le title, there 'eing at the tine no

prohi'ition against said corporationQs holding or o-ning priate land. The o'Jection that, as a Juridical person, Bc!e is not #ualified to

apply for Judicial confir!ation of title under section <8+' of the Pu'lic Gand Bct is technical, rather than su'stantial and, again, finds its

ans-er in the dissent in Meralco9. To uphold respondent JudgeQs denial of )eralcoQs application on the technicality that the Pu'lic Gand Bct allo-s only citiens of the

Philippines -ho are natural persons to apply for confir!ation of theft title -ould 'e i!practical and -ould Just gie rise to !ultiplicity of

court actions. Bssu!ing that there -as a technical error in not haing filed the application for registration in the na!e of the Piguing

spouses as the original o-ners and endors, still it is conceded that there is no prohi'ition against their sale of the land to the applicant

)eralco and neither is there any prohi'ition against the application 'eing refiled -ith retroactie effect in the na!e of the original

o-ners and endors +as such natural persons -ith the end result of their application 'eing granted, 'ecause of their indisputa'le

ac#uisition of o-nership 'y operation of la- and the conclusie presu!ption therein proided in their faor. t should not 'e necessary

to go through all the rituals at the great cost of refiling of all such applications in their na!es and adding to the oercro-ded court

doc&ets -hen the Court can after all these years dispose of it here and no-. +"ee Francisco vs. )it# o" Davao

The ends of Justice -ould 'est 'e sered, therefore, 'y considering the applications for confir!ation as a!ended to confor! to the

eidence, i.e. as filed in the na!es of the original persons -ho as natural persons are duly #ualified to apply for for!al confir!ation of

the title that they had ac#uired 'y conclusie presu!ption and !andate of the Pu'lic Gand Bct and -ho thereafter duly sold to the

herein corporations +'oth ad!ittedly Filipino corporations duly #ualified to hold and o-n priate lands and granting the applications for

confir!ation of title to the priate lands so ac#uired and sold or e0changed.

There is also nothing to preent Bc!e fro! reconeying the lands to the nfiels and the latter fro! the!seles applying for confir!ation

of title and, after issuance of the certificate:s of title in their na!es, deeding the lands 'ac& to Bc!e. >ut this -ould 'e !erely indulging

in e!pty charades, -hereas the sa!e result is !ore efficaciously and speedily o'tained, -ith no preJudice to anyone, 'y a li'eral

application of the rule on a!end!ent to confor! to the eidence suggested in the dissent in Meralco.

Dhile this opinion see!ingly reerses an earlier ruling of co!paratiely recent intage, in a real sense, it 'rea&s no precedent, 'ut only

reaffir!s and re/esta'lishes, as it -ere, doctrines the soundness of -hich has passed the test of searching e0a!ination and in#uiry in

!any past cases. ndeed, it is -orth noting that the !aJority opinion, as -ell as the concurring opinions of Chief Kustice Fernando andKustice B'ad "antos, in )eralco rested chiefly on the proposition that the petitioner therein, a Juridical person, -as dis#ualified fro!

applying for confir!ation of an i!perfect title to pu'lic land under "ection <8+' of the Pu'lic Gand Bct. =eference to the 1973

Constitution and its Brticle @L, "ection 11, -as only tangential, li!ited to a 'rief paragraph in the !ain opinion, and !ay, in that

conte0t, 'e considered as essentially o!iter. Meralco, in short, decided no constitutional #uestion.

$EREFORE, there 'eing no reersi'le error in the appealed Judg!ent of the nter!ediate Bppellate Court, the sa!e is here'y

affir!ed, -ithout costs in this instance.

SO ORDERED.

Feria, 'ap, Fernan, lampa#, )ruz, Paras, and Feliciano, JJ., concur.eean1ee, ).J., filed a concurring opinion.

Melencio%Herrera J., see dissent.

3utierrez, Jr., J., reiterates his concurrence in Meralco v. )astro%4artolome, and dissents here.



193 Phil. 251

"?C46 6L"4

$ .=. 4os. G/<93</3, Kuly 25, 1981 %

>?4KB)4 L. AB4 B46 4BTL6B6 *. AB4H BA=?G >. *EAB4B B46 PB"T=B . *EAB4B, P?TT4?=", L".

FG)?4 C. 4TB4B= B46 C=BN4 >. 4TB4B=H C=B B44 >. 4TB4B=, C=B GA >. 4TB4B=, FG =?= >.

4TB4B=, P=LBT? =?"P46?4T", B46 *4. KA6? "?= BP"TG, EA?N4 CT CA=T F F="T 4"TB4C?,

>=B4C* @L, EA?N4 CT, =?"P46?4T.

6 ? C " 4

)!RREDO, *.+

Petition filed on Kanuary 15, 1979 for certiorari and mandamus see&ing the setting aside of the decision and the t-o orders su'se#uent

thereto of respondent Judge dated Bugust 2, 1975 and 4oe!'er 1<, 1978 and 6ece!'er 27, 1978, respectiely, as acts co!!itted

in grae a'use of discretion, the co!pro!ise agree!ent on -hich said decision -as 'ased 'eing allegedly in contraention of the

Constitution and the Pu'lic Gand Bct, hence the e0ecution thereof under the t-o #uestioned su'se#uent orders had no legal 'asis.

The e0act nature of the petition and the releant antecedents !ay perhaps 'e stated !ore co!prehensiely 'y #uoting fro! the

petition itself +o!itting the anne0es !entioned therein the follo-ing;

2.1. This is a petition for certiorari , assailing as grae a'use of discretion, tanta!ount to a Jurisdictional error, the order of the

respondent Kudge in refusing to nullify a co!pro!ise agree!ent that iolates the Pu'lic Gand Bct +Co!. Bct 1<1 and the 1973

Constitution, and in ordering the e0ecution of Judg!ent 'ased thereon, rendered in three related cases 'et-een the petitioners and

priate respondents.

3. Bntecedents

3.1. n 6ece!'er 5, 197<, three related co!plaints, successiely doc&eted -ere instituted 'efore the CF of Eueon City, as follo-s;

a "pouses >enJa!in L. uiang and 4atiidad *i#uiana/uiang, Plaintiffs, s. Filo!eno C. intanar, defendant, Ciil

Case 4o. E/19572H

' "pouses >enJa!in L. uiang and 4atiidad *i#uiana/uiang, Plaintiffs, s. "pouses Filo!eno C. intanar and

Coraon >. intanarH their children; Cora Bnn, Cora Gou and Fil =oger, all surna!ed intanar, defendants, Ciil

Case 4o. E/19573H

c "pouses Burelio and Pastora *i#uiana and spouses >enJa!in and 4atiidad uiang, Plaintiffs, s. Filo!eno C.

intanar, 6efendant, Ciil Case 4o. E/1957<H

n the first co!plaint +Ciil Case 4o. E/19572, plaintiffs sought certain su!s of !oney and an accounting fro! defendant in his

!anage!ent of the for!erQs 21 hectares of coconut lands in "an =o#ue, "ta. )aria, 6aao del "ur.

n the second and third co!plaints +Ciil Case 4os. E/19573 and E/1957<, plaintiffs sought the rescission +-ith da!ages of the

sales of their lands in faor of defendants due to the failure of the latter to pay the install!ents on the agreed price.

These three co!plaints are reproduced together -ith attach!ents as Bnne0es QBQ, Q>Q and QCQ hereof.3. 2. n Bugust 2, 1975, the parties in these three cases, consolidated in the sala of respondent Kudge, Jointly !oed for a decision

'ased on a QCo!pro!ise Bgree!entQ su'stantially stipulating as follo-s;

+a The uiangs and the *i#uianas, upon signing of the co!pro!ise shall e0ecute a deed of a'solute sale in faor of

the intanars, coering t-o parcels of land +Gots >/3 and >/< of CT 4o. 12281, =egister of 6eeds of 6aao,

coering an area of <8 hectares.

+' The intanars shall pay the uiangs and the *i#uianas P1,. -ithin 9 days fro! the e0ecution of the

deed of a'solute sale a'oe !entioned and if the intanars fail to pay that su! -ithin that 9/day period, they



shall forfeit all their rights, interests and clai!s to Gots >/1 and >/2, CT 4o. 12281, and Got B/2 and B/3, CT

4o. P/1<5, =egister of 6eeds of 6aao.

+c Apon pay!ent 'y the intanars of P1,., the uiangs and the *i#uianas shall e0ecute a deed of a'solute

sale oer Gots 4os. >/1 and >/2, CT 4o. 12281, consisting of <8 hectares, and oer Gots B/2 and B/3, CT

4o. 1<5, consisting of 5 hectares.

+d The intanars shall pay the uiangs and the *i#uianas P7,. -ithin days fro! date of the e0ecution of

the deed of a'solute sale !entioned in the i!!ediately preceding paragraph, and the su! of P5,. -ithin3 days fro! the pay!ent of P7,.. f the intanars do not pay 'oth a!ounts in their respectie due

dates, the intanars forfeit all their rights, interests and clai!s oer Gots >/1 and >/2, CT 4o. 12281 and Got B/

2, CT P/1<5, and shall reconey the three parcels so forfeited.

+e The intanars agree to annotate at the 'ac& of the titles coering Gots >/1 and >/2 and Gots B/2 and B/3, this

co!pro!ise agree!ent as a lien or encu!'rance.

+f The Bgree!ent shall supersede all other agree!ents, contracts to sell and other docu!ents pertaining to the lots

in #uestion.

3.3. n the sa!e day, the respondent Kudge pro!ulgated a 'rief decision approing the co!pro!ise agree!ent -hich -as !adean integral part thereof. The coering decision is attached as Bnne0 Q6Q, -hile the Joint !otion for decision 'ased on co!pro!ise

agree!ent is attached as Bnne0 Q?Q hereof.

3.<. "o!eti!e on Bugust 17, 1978, priate respondents +defendants intanars 'elo- filed a petition +Bnne0 QFQ for e0ecution of the

Judg!ent 'y co!pro!ise at the sa!e ti!e praying that petitioners 'e declared in conte!pt of court. Blleging pay!ent to petitioners

+the uiangs and *i#uianas of the total su! of P2<,. pursuant to the co!pro!ise agree!ent, respondents co!plained a'out

the failure of the petitioners to e0ecute in their faor, the deeds of coneyance to Gots 4os. >/1 and >/2 of CT 12281 and Gots 4os. B

2 and B/3 of CT 4o. 1<5, =egister of 6eeds of 6aao.

3.5. n "epte!'er 25, 1978, petitioners opposed respondentsQ petition for conte!pt and e0ecution and filed a detailed and lengthy

opposition +Bnne0 QQ, e!'odying a counter/!otion QTo 6eclare the Co!pro!ise Bgree!ent Loid as to "aleQ. n essence, petitioners

contend that the co!pro!ise decreed the sale to the intanars of si0 lots -ith a co!'ined area of 1< hectares originally coered 'y

sales patents ac#uired through purchase 'y petitioners fro! the goern!ent, conse#uently iolating the !a0i!u! li!it of 2< hectares

that an indiidual !ay ac#uire 'y purchase under "ection 11 of Brticle @L of the 1973 Constitution, ta&en in relation to the Pu'lic Gand

Bct +Co!. Bct 1<1. Bt the ti!e of the e0ecution of the co!pro!ise agree!ent, petitioners -ere not a-are that priate respondents

-ere already holders of 29 hectares of pu'lic land ac#uired 'efore the effectiity of the ne- Constitution in 1973. Bt any rate, the total

area that the co!pro!ise agree!ent ceded in faor of respondents -ere grossly e0cessie of the legal li!its a'oe !entioned. f

construed as a sale, the co!pro!ise -as a nullity, 'ut ta&en as a lease, since priate respondents had already ta&en possession of the

lands and 'enefitted i!!ensely fro! their produce, the co!pro!ise -as perfectly alid and legal 'ecause the 1973 Constitution allo-s

an indiidual to lease 5 hectares of aliena'le pu'lic lands. Lie-ing the co!pro!ise as a lease -ould !a&e the a!ounts paid 'y

respondents to petitioners, rentals or reasona'le da!ages for the use and occupancy of the lands.

Bt the sa!e ti!e, petitioners sought for a post/Judg!ent hearing to entilate factual issues arising fro! their opposition and counter/

!otion.

3.. n 4oe!'er 1<, 1978, the respondent Kudge issued an order +Bnne0 Q*Q; +a denying the petitionersQ counter/!otion to declare

the co!pro!ise agree!ent oid as to saleH +' ordered the issuance of a -rit of e0ecution and +c denying respondentsQ petition forconte!pt.

3.7. n 4oe!'er 2<, 1978, petitioners filed a )otion for =econsideration +attached as Bnne0 QQ of the rder of 4oe!'er 1<, 1978,

insofar as that portion -here the respondent Kudge refused to nullify the co!pro!ise agree!ent as a sale.

3.8. 6uring the hearing of this !otion on 6ece!'er 5, 1978, the parties agreed to su'!it a supple!ental !e!orandu! of authorities

to 'uttress their respectie positions. n 6ece!'er 2, 1978, petitioners su'!itted their !e!orandu! of authorities -hich is attached

hereto as Bnne0 QKQ.

3.9. =espondents did not su'!it any !e!orandu!, or in any eent, petitioners did not receie a copy of such !e!orandu!. n

6ece!'er 27, 1978, respondent Kudge denied for lac& of !erit, petitionersQ )otion for =econsideration. +Bnne0 QQ. +Pp. 2/, Petition,

pp. 5/9, =ecord.



n Fe'ruary 2, 1979, De re#uired respondents to co!!ent on the petition, issuing at the sa!e ti!e a restraining order against the

i!ple!entation of the i!pugned order of e0ecution. Blthough filed ten +1 days 'eyond the period gien 'y the Court, De

neertheless accepted respondentsQ co!!ent, considering that the !ain issue raised 'y petitioners is a noel one, in the sense that it

is predicated on the theory that a Judg!ent 'y co!pro!ise, -hich 'eco!es final and e0ecutory upon approal 'y the court, !ay still 'e

set aside, three +3 years later and after it had 'een partially co!plied -ith 'y 'oth parties, upon the ground that the agree!ent, it is

contended, iolates the Constitution and the Pu'lic Gand Bct, hence contrary to pu'lic policy of the Philippines. Petitioners !aintain the

affir!atie, contending that -hen the purpose of setting aside a Judicial co!pro!ise is to pursue and i!ple!ent a funda!ental state

policy e!'odied in no less than the Constitution, the ordinary re!edies for relief and periods therefor do not apply.

n the other hand, priate respondents posit in their 'elated co!!ent that;

Priate =espondents, 'y counsel, respectfully su'!it the follo-ing co!!ent;

1. n the Petition

1.1. n line -ith the decision of this court in the case of =)AGB )B>BG?, et al., Petitioners s. *on. ")PGC ). BPBG", et

al., =espondents, +.=. 4o. G/<9<2, Fe'. , 1979 petitioners should hae seasona'ly !oed for the setting aside of the co!pro!ise

and the Judg!ent 'ased upon it. n that case this court said;

QTo 'e entitled to appeal fro! Judg!ent approing a co!pro!ise, a party !ust !oe not only to set aside the Judg!ent, 'ut also to

annul or set +aside the co!pro!ise itself on the ground of fraud, !ista&e or duress itiating his consent to the co!pro!ise .... to set itaside under =ule 38 of the =ules of Court, the petition for relief !ust 'e filed -ithin si0 !onths fro! the date Judg!ent -as entered . . .

Q +supra

1.2. The Judg!ent 'ased on co!pro!ise in these three cases -as entered on 2 Bugust 1975, on the sa!e date that the co!pro!ise

agree!ent -as signed and su'!itted, so that petitioners should 'e presu!ed to hae &no-ledge a'out it on said date also.

Petitioners had, therefore, up to 2 Fe'ruary 19 7 -ithin -hich to file their petition for relief.

1.3. n 22 "epte!'er 1975, or Just a'out 32 days after the Judg!ent on co!pro!ise -as entered, petitioner uiang -rote a Qfour

page letterQ to the Gand =egistration Co!!issioner, already #uestioning the legality of the sales under the co!pro!ise agree!ent on

e0actly the rationale he adances no-.

1.<. The Co!!issioner of G=C replied to petitioner uiang on 29 "epte!'er 1975 +seen days later confir!ing and agreeing in so

!any -ords -ith the latterQs 'elief that "ection 122 of CB 1<1 -as 'eing iolated 'y the i!ple!entation of the co!pro!ise agree!ent.

1.5. Fro! the foregoing, it is clear that petitioners had !ore than a!ple ti!e -ithin -hich to see& relief fro! the lo-er courtQs Judg!en

on co!pro!ise. They deli'erately neglected to do this. nstead, leading the priate respondents on to co!plying -ith the co!pro!ise

petitioners receied the pay!ents of the priate respondents in the follo-ing a!ounts;

P 1,. on 19 4oe!'er 1975

7,. on 23 )arch 197

5,. on 21 Bpril 197

1.. Petitioner uiang, haing thus ac#uired the -here-ithal, thereafter traeled e0tensiely a'road, returning ho!e so!eti!e in

"epte!'er of cto'er of 1977. n any case, upon his arrial, he -rote respondent Btty. Filo!eno intanar a letter dated cto'er 9,1977 infor!ing the latter that he, petitioner uiang, and his fa!ily -ill neer sign the deeds of sale for the re!aining lots +>/1, >/2, B/2

and B/3H that the transfer of lots >/3 and >/< -ere oid, and inferentially threatening intar -ith cri!inal prosecution for a state!ent in

an affidait acco!panying the transfer of Gots >/3 and >/<. Btty. uiang further de!anded the return of Gots >/3 and >/< -ithout

offering to return one centao of the pay!ents he receied.

1.7. ?en then the petitioners raised the #uestion of legality of the co!pro!ise agree!ent and the Judg!ent in earnest only -hen the

priate respondents -ere constrained to !oe for court interention 'y -ay of an order of e0ecution on 18 Bugust 1978.

1.8. Dhat all the foregoing citation of eents lead to is that under the doctrine laid do-n in the case aforecited, petitioners hae 'y thei

studied neglect, foreclosed entitle!ent to appeal 'y certiorari , there haing 'een all along Qplain, speedy and ade#uate re!edy in the

ordinary course of la-Q +"ec. 1 =ule 5, =ules of Court. +Pp. 19/171, =ecord.



Bs 'ac&ground for the resolution of the a'oe conflicting clai!s of the parties. De !ay #uote hereunder fro! the petition -hat appear

to 'e the specific releant facts 'earing on the #uestion of -hether or not there is indeed any pu'lic policy iolated in the co!pro!ise

agree!ent in issue as -ould Justify its nullification and setting aside, not-ithstanding the ti!e that has elapsed 'efore the supposed

unconstitutionality thereof -as raised, particularly in the light of "ection 3 of =ule 38 of the =ules of Court on Petitions for =elief, -hich

fi0es the period for possi'le setting aside of a Judg!ent at only si0ty + days fro! the ti!e the party concerned learns of the Judg!ent

and not later than si0 !onths or 18 days after it has 'eco!e final and e0ecutory, and 'esides, the fact that said Judicial co!pro!ise

had already 'een partially co!plied -ith 'y the parties, petitioners haing actually e0ecuted and deliered to respondents the

corresponding deeds of sale coering t-o of the contested lots +Gots >/3 and >/< coered 'y CT 12881, such that -hat is pending

only for the co!plete consu!!ation of the agree!ent is the e0ecution 'y petitioners, the uiangs and *i#uianas, of the deeds of saleoer four !ore lots coered 'y said agree!ent. Bccording to the petition +o!itting the attach!ents !entioned therein, and there is no

serious denial thereof in priate respondentsQ co!!ents;

Pertinent Factual )ilieu =e/"tated

+a *istory of Peti tioner sQ Gands /

1. The si0 parcels of land totalling 1< hectares -ere originally part of the pu'lic do!ain. They -ere leased 'y the Philippine

oern!ent in faor of audencio C. *i#uiana, deceased predecessor in interest of the petitioners. The lease -as coered 'y Gease

Bpplication 4o. 2<39 +?/2<<, coering a'out 35 hectares of land situated in 6aao del "ur, for 25 years pursuant to Bct 287<.

2. Apon the death of audencio C. *i#uiana, his -ife, Pascuala Lda. de *i#uiana, o'tained an approal for the rene-al of the lease.B certified copy of the lease issued 'y then 6irector Kose P. 6ans of the >ureau of Gands -as a!ong the attach!ents in petitionersQ

Counter/)otion +Bnne0 QQ in the court 'elo-.

3. Pascuala Lda. de *i#uiana her land sureyed and su'diided into four lots, to -it; Gots B, >, C and 6, -ith the corresponding su'/

diision plan Psd/3<219 approed 'y the 6irector of Gands on Fe'ruary 21, 1952.

<. Gater, the -ido- and her children filed sales applications -ith the >ureau of Gands to purchase these su'diided lots; +a the sales

application of the -ido- for Got C -as recorded as 4o. L/15H +' the sales application 'y 4atiidad *i#uiana uiang for Got > -as

recorded as 4o. L/157H +c Burelio *i#uiana for Got B, as Bpplication 4o. 21H and +d Kulia *i#uiana for Got 6.

5. n Bpril 29, 1959, "ales Patent 4o. 2521 -as issued to 4atiidad *i#uiana uiang for an area of 11 hectares, < acres and 1<

centares, e!'raced 'y riginal Certificate of Title 4o. P/12281 dated Kune 12, 1959. This torrens title -as a!ong the attach!ents of

petitionersQ counter/!otion +Bnne0 QQ.

. n )arch 1, 19, "ales Patent 4o. 318 -as issued to Burelio L. *i#uiana, coered 'y riginal Certificate of Title 4o. P/1<5

dated Bpril 22, 19<.

7. 4atiidad *. uiang su'se#uently su'diided her Got > into fie +5 lots, -hich ca!e to 'e &no-n as Gots >/1, >/2, >/3 and >/<,

all -ith 2< hectares each, or a total of 9 hectares, and Got >/5, -ith an area of 1<.<13, or a grand total of 11.<13 hectares.

8. Burelio L. *i#uiana, -ho got Got B, also su'diided the sa!e lot into three +3 lots, -hich ca!e to 'e &no-n as Gots B/1 +.182

hectares, Got B/2 +25 hectares and Got B/3 +25 hectares !a&ing a grand total of 11.182 hectares coered 'y "u'diision Plan Psd/

1382<.

9. The si0 lots coered 'y the co!pro!ise agree!ent 'et-een the parties refer to the < out of the 5 lots into -hich original Got > -as

su'diided 'y 4atiidad *i#uiana uiang, and 2 out of the 3 lots of the original Got B su'diided 'y Burelio *i#uiana. The first four lots

hae an area of 9 hectares +2< hectares each -hile the t-o lots hae an aggregate area of 5 hectares +25 hectares each. Thus the

total area of the lots su'Ject of the co!pro!ise agree!ent -as 1< hectares of originally pu'lic lands.

+' Bctions Ta&en 'y Petitioners /

n confor!ity -ith the Co!pro!ise Bgree!ent, the petitioners i!!ediately e0ecuted a deed of sale oer Gots >/3 and >/<, in faor of

the priate respondents +see attach!ent B of Bnne0 QQ. 4ot-ithstanding co!pletion of the staggered pay!ents for the other lots,

petitioners could not 'ring the!seles to e0ecute the deeds for their coneyance 'ecause 'y then, they -ere seied 'y serious

!isgiings concerning the legality of the co!pro!ise agree!ent.

Dhat triggered the #uest for legal opinions 'y the petitioners, -as the discoery that at the ti!e of the co!pro!ise agree!ent, priate

respondents did not disclose that they had already ac#uired 29 hectares of aliena'le pu'lic lands.

n "epte!'er 22, 1975, a four/page letter -as addressed 'y petitioner uiang to the Gand =egistration Co!!issioner +see

attach!ent F of Bnne0 QQ concerning the legality of a transfer of lands originally ac#uired through sales patent, in e0cess of the



!a0i!u! of 2< hectares i!posed 'y the 4e- Constitution. n reply, the Co!!issioner of the Gand =egistration Co!!ission stated

that the docu!ent of transfer -as already an acco!plished fact and 'ears the i!pri!atur of the Court, and that since priate

respondents +the intanars had e0ecuted an affidait//-hich incidentally -as false and -hich 'eca!e the 'asis of a cri!inal charge

for perJury 'efore the FiscalQs ffice of 6aao del "ur//the Co!!issioner -as constrained to gie due course to the registration of the

sale +Bttach!ent B of Bnne0 QQ.

n cto'er 9, 1977, petitioner uiang -rote a letter to respondent intanar +see Bttach!ent * of Bnne0 QQ e0plaining his reasons

-hy he could not e0ecute a deed of coneyance of the re!aining four lots su'Ject of the co!pro!ise agree!ent. Petitioner proposed

reconeyance and certain repay!ents in lieu of the co!pro!ise agree!ent to aoid the har!ful effects of escheat. >ut intanar

ignored the deadline set 'y uiang for acceptance of the counterproposals.To pressure intanar, uiang filed a cri!inal case for forgery and iolation of the Constitution 'efore the FiscalQs ffice of 6aao del

"ur. Anfortunately, the Fiscal dis!issed the charge on the ground that the lands so transferred -ere already priate agricultural lands,

and there is no li!it under the la- for the ac#uisition 'y purchase of these lands. +"ee other attach!ent of Bnne0 QQ.

n Kuly 12, 1978, the Gegal 6iision of the >ureau of Gands, replying to petitioner uiang, gae the follo-ing pertinent opinions;

a. Q0 0 0 Bfter a pu'lic land has 'een titled under the proisions of the Pu'lic Gand Bct +Co!!on-ealth Bct 4o. 1<1,

as a!ended, the sa!e, for all legal intents and purposes, 'eco!es a priate agricultural land su'Ject, ho-eer, to

the restrictions contained in "ection 29, 118, 119, 121 and 122 of the said Bct.Q

'. Q0 0 0 "i!ply stated, an indiidual cannot ac#uire either 'y sale, transfer, assign!ent or lease, lands originally

ac#uired under the free patent, ho!estead, or indiidual sale proisions of Co!!on-ealth Bct 4o. 1<1 if the total

area of such ac#uisition added to his present landholdings e0ceeds one hundred forty/four hectares. 0 0 0.Q

c. Q0 0 0 t !ust follo- as a !atter of course that since Kanuary 17, 1973 -hen the 4e- Constitution -ent into force,

the !a0i!u! area of patented or titled land that an indiidual can ac#uire is only such as -ill not e0ceed t-enty/

four +2< hectares including his present landholdings. Dith these pre!ises, it is our considered opinion that the

!a0i!u! area that an indiidual could ac#uire under Brticle 122 of Co!!on-ealth Bct 4o. 1<1, as a!ended, has

'een a!ended or reduced to 2< hectares as proided for under "ection 11, Brticle @L, of the 1973 Constitution.Q

+This letter is e!'odied in Bttach!ents and /1 to Bnne0 QQ..

Bgain, on "epte!'er 2, 1978, the 6irector of Gands -rote petitioner uiang, e0pressing the opinion that hus'and and -ife are

considered as one person for purposes of i!ple!enting "ec. 122 of C.B. 1<1, and the !a0i!u! area of 1<< hectares -hich can 'e

ac#uired 'y an indiidual under the sa!e proision of the Pu'lic Gand Bct, has 'een reduced to only 2< hectares 'y irtue of the 4e-

Constitution. The letter of 6irector Casanoa appears as Bttach!ent * to Bnne0 QQ of this Petition. +Pp. 1/1< of Petition

n the light of the foregoing pre!ises, the legal and constitutional issues De hae to resole are the follo-ing;

1. 6oes "ection , Brticle @L of the 1973 Constitution of the Philippines, reading;

"ec. 11. The 4ational Bsse!'ly, ta&ing into account conseration, ecological, and deelop!ental re#uire!ents of the natural

resources, shall deter!ine 'y la- the sie of lands of the pu'lic do!ain -hich !ay 'e deeloped, held or ac#uired 'y, or leased to, any

#ualified indiidual, corporation, or association, and the conditions therefor. 4o Priate corporation or association !ay hold aliena'le

lands of the pu'lic do!ain e0cept 'y lease not to e0ceed one thousand hectares in areaH nor !ay any citien hold such lands 'y lease

in e0cess of fie hundred hectares or ac#uire 'y purchase or ho!estead in e0cess of t-enty/four hectares. 4o priate corporation or

association !ay hold 'y lease, concession, license, or per!it, ti!'er or forest lands and other ti!'er or forest resources in e0cess of

one hundred thousand hectaresH ho-eer, such area !ay 'e increased 'y the 4ational Bsse!'ly upon reco!!endation of the4ational ?cono!ic and 6eelop!ent Buthority.

constitute an a!end!ent of "ection 122 of Co!!on-ealth Bct 1<1, the Pu'lic Gand Bct proiding that;

?0cept in cases of hereditary succession, no land or any portion hereof originally ac#uired under the free patent, ho!estead, or

indiidual sale proisions of this Bct, or any per!anent i!proe!ent thereon 'e leased to such indiidual, -hen the area of such land,

added to that of his o-n, shall e0ceed one hundred and forty/four hectares, any transfer, assign!ent, or lease !ade in iolation hereof

shall 'e null and oid.

in the sense that after the Constitution too& effect on Kanuary 17, 1973, any transfer or assign!ent of lands, already alidly in the

hands of priate indiiduals and haing areas allo-ed 'y said proision, +not in e0cess of 1<< hectares 'ut ac#uired 'y the! under



free patent, ho!estead, or indiidual sale proisions of the Bct, the area that !ay 'e transferred or assigned such holder to another

person can no longer e0ceed t-enty/four +2< hectaresM

2. Bssu!ing the affir!atie of the foregoing proposition, 'ut considering, on the other hand, that the parties had entered into the

agree!ent in good faith as the !eans of settling a!ica'ly the three Juridical suits +enu!erated in the petition a!ong the!,

and that the approal of the court thereof had under the rules already long 'eco!e final, as in fact, it had already 'een

partially e0ecuted in 1975, is it still legally possi'le to hae the sa!e declared a nullity and 'e set aside as prayed for in an

opposition filed in 1978 to a !otion for its e0ecutionM

3. t is a conceded fact that -hen they entered into the co!pro!ise agree!ent in dispute, priate respondents, the intanar

spouses, -ere already the o-ners and had already the title in their na!es of a lot of 29 hectares ac#uired under the Pu'lic

Gand BctH no-, -hat is the effect of such fact upon the alidity of the co!pro!ise agree!ent, considering the prohi'ition

contained in the sa!e "ection 122 against transfer or assign!ent to persons already o-ning areas of lands, -hich if added

to -hat is to 'e transferred or assigned to the! -ould e0ceed the li!it proided thereinM

Bfter !ature deli'eration and consideration of pertinent principles of statutory and constitutional construction together -ith -hat

appears to 'e the o'ious intent and o'Jectie of the legal and constitutional proisions releant to the a'oe issue, De encounter no

difficulty at all in holding that, as contended 'y petitioners, "ection 122 of the Pu'lic Gand Bct has 'een a!ended 'y no less than"ection 11, Brticle @L of the 1973 Constitution of the Philippines 'y reducing correspondingly the areas of the disposa'le pu'lic lands

!entioned therein.

n their co!!ent as -ell as in their !e!orandu!, ho-eer, priate respondent insists +1 that there is no causatie lin&, as they put

it, 'et-een the li!itation of areas in the Constitution and the li!itation of areas in the Pu'lic Gand Bct. They argue that -hereas under

the 1935 Constitution, the pertinent proision -as that;

"ec. 2. 4o priate corporation or association !ay ac#uire, lease or hold pu'lic agricultural lands in e0cess of one thousand and

t-enty four hectares, nor !ay an indiidual ac#uire such lands 'y purchase in e0cess of one hundred and forty four hectares or 'y

lease in e0cess of one thousand and t-enty four hectares or 'y ho!estead in e0cess of t-enty four hectaresS. +"ec. 2, Brticle @ of

the 1935 Constitution

the li!it to leasa'le lands -as 1,2< hectares, "ection 122 of the Pu'lic Gand Bct set the li!it to only 1<< hectares and +2 that the

li!itation of purchasa'le areas under the Bct is also 1<< hectares -as a !ere unintended coincidence.

Clearly, such contention suffers fro! the fla- &no-n in logic as non/se#uitur. There -as nothing -rong for the legislature to proide for

a li!itation, as to leasa'le lands, less than that fi0ed in the Constitution. n fact, the cited constitutional proision itself opens -ith the

state!ent that +the 4ational Bsse!'ly, ta&ing into account conseration, ecological, and deelop!ental re#uire!ents of the natural


#ualified indiidual, corporation, or association, and the conditions therefor. The so/called causatie lin& -ould indeed not hae

e0isted, had the Congress e0ceeded -hat the Charter allo-ed.

The argu!ent a'out unintended coincidence in the li!it of purchasa'le areas is too speculatie, een puerile, to re#uire any

refutation. Dhat to As is clear and o'ious is that -hen the Constitution fi0es a li!it of the area of pu'lic lands that can 'e ac#uired'y purchase 'y an indiidual, it follo-s as a !atter of logic that such is also the !a0i!u! area of land originating fro! the pu'lic

do!ain that can 'e transferred to hi!. True, lands once ac#uired fro! the goern!ent under the Bct do 'eco!e priate property, as

priate respondent argues, 'ut for reasons of pu'lic policy and interest i!plicit in "ection 122 itself, such priate o-nership is su'Ject to

the li!itations stated therein. Proof of the strictness of the policy is that the prohi'ition or inJunction is auto!atically e!'odied in the

Torrens Title issued to the purchaser. Bll such titles pertinently read in part thus;

=4BG C?=TFCBT? F TTG?



T *BL? B46 T *G6 the said tract of land, -ith the appurtenances thereunto of right 'elonging unto the said VVVVVVVVV and to

his heir and heirs and assigns foreer, su'Ject to the proisions of "ections 121, 122 and 12< of Co!!on -ealth Bct 4o. 1<1 as

a!ended. +Anderlinings supplied for e!phasis

T=B4"F?= C?=TFCBT? F TTG?

T " *?=?> C?=TF?6 that certain land situated in the VVVVVVVVVV, !ore particularly 'ounded and descri'ed as follo-s;

is registered in accordance -ith the proisions of "ection 122 of the Gand =egistration Bct in the na!e of;

su'Ject to the proisions of the said Gand =egistration Bct and the Pu'lic Gand Bct, as -ell as to those of the )ining Ga-s, if the land is

!ineral, and su'Ject further to such conditions contained in the original title and !ay 'e su'sisting. +Anderlinings supplied for

e!phasis +Pp. 277/278, =ecord.t is ur considered opinion, and De so hold, consistently -ith the ie- of the Gegal 6iision of the >ureau of Gands cited 'y petitioners

in their petition +p. 1< that after the ratification of the Philippine Constitution of 1973 on Kanuary 17, 1973, the !a0i!u! area of land

ac#uired fro! the disposa'le pu'lic do!ain that can 'e transferred or assigned to another party 'y the original patentee, purchaser or

ho!esteader 'eca!e 2< hectares +instead of the 1<< hectares under the 1935 Constitution, there'y reducing correspondingly the

1<</hectare li!itation set in "ection 122 to only 2< hectares. De here'y adopt as ur o-n the su'se#uent opinion of the 6irector of

Gands #uoted not only in the petition, as already stated, 'ut also in petitionersQ )otion ?0/Parte for ?arliest 6ecision of the B'oe/

?ntitled Case dated cto'er 7, 198;

The first #uery is -hether pu'lic lands -hich hae already 'een titled or patented under the ho!estead sales or indiidual sale or free

patent proision of Pu'lic Gand Bct are to 'e considered Qpriate agricultural lands.Q Bfter a pu'lic land has 'een titled under the

proisions of the Pu'lic Gand Bct +Co!!on-ealth Bct 4o. 1<1, as a!ended the sa!e for all legal intents and purposes, 'eco!es a

priate agricultural land su'Ject, ho-eer, to the restrictions contained in "ection 29, 118, 119, 121 and 122 of the said Bct.

our second #uery states -hether Brticle 122 of Co!!on-ealth Bct 4o. 1<1 as a!ended coers a situation -herein parcels of pu'lic

lands ac#uired 'y an indiidual, -hich after collation e0ceed 1<< hectares -hich hae already long 'een patented under ho!estead,

indiidual sale or free patent proisions thereof could 'e o-ned or possessed 'y hi! legally. ur reply to the a'oe is in the

affir!atie. The pertinent proision of "ection 122 of the Pu'lic Gand Bct proides;

Q?0cept in cases of hereditary succession, no land or any portion thereof originally ac#uired under the free patent, ho!estead, or

indiidual sale proisions of this act, or any per!anent i!proe!ent on such land shall 'e transferred or assigned to any indiidual, nor

shall such land or any per!anent i!proe!ent thereon 'e leased to such indiidual, -hen the area of said land, added to that of his

o-n, shall e0ceed one hundred and forty/four hectares. Bny transfer, assign!ent or lease in iolation hereof shall 'e null and oid.Q

The afore#uoted proision constitutes one li!itation on the transfer or lease of lands titled under the proisions of the Pu'lic Gand Bct.

"i!ply stated, an indiidual cannot ac#uire either 'y sale, transfer, assign!ent or lease, lands originally ac#uired under the free patentho!estead, or indiidual sale proisions of Co!!on-ealth Bct 4o. 1<1 if the total area of such ac#uisition added to his present

landholdings e0ceed one hundred forty/four hectares. To construe the proision other-ise -ould render nugatory the rationale or

philosophy -hich underlined such a restriction -hich is to preent the concentration of large tracts of lands in the hands of a single

indiidual. There is only one recognied e0ception to this and that is -hen the transfer or assign!ent is 'y !eans of hereditary

succession in -hich eent the area li!itation contained in "ection 122 -ill not apply.

Bs regards your third #uestion on -hether the !a0i!u! area that an indiidual could ac#uire under "ection 122 of Co!!on-ealth

Bct 4o. 1<1, as a!ended has 'een a!ended fro! 1<< to 2< hectares, our reply thereto is in the affir!atie.

t -ill 'e stated as a preli!inary pre!ise that the 'asis of the 1<< hectare li!it proided for in "ection 122 of the Pu'lic Gand Bct is the

area stated in "ection 22 of the sa!e Bct -hich is also one hundred forty/four hectares. The area li!its set forth in these t-o sections

of the act are 'ased on the constitutional li!it contained in the 1935 Philippine Constitution. "ince the 4e- +1973 Constitution in its

"ection <, Brticle @L has chosen to reduce the original area that an indiidual can purchase fro! one hundred forty/four +1<< tot-enty four +2< hectares, it !ust follo- as a !atter of course that since Kanuary 17, 1973, -hen the 4e- Constitution -ent into full

force, the !a0i!u! area of patented or titled land that an indiidual can ac#uire is only such as/-ill not e0ceed t-enty/four +2<

hectares including his present landholdings. Dith these pre!ises, it is our considered opinion that the !a0i!u! area that an indiidua

could ac#uire under Brticle 122 of Co!!on-ealth Bct 4o. 1<1, as a!ended, has 'een a!ended or reduced to 2< hectares as proided

for under "ection 11, Brticle @L of the 19 73 Constitution. +Bnne0 of Bnne0 of the petition.



*aing the foregoing conclusion in ie-, !ay the Judicial co!pro!ise in #uestion in the instant cases 'e declared null and oid or at

least reduced as to the area therein referred to to only 2< hectares, considering the peculiar factual !ilieu e0tant in the recordM

This #uestion is not as si!ple as it see!s. t inoles 'oth adJectie and su'stantie points that hae to 'e carefully -eighed and

scrutinied in order to arrie at a legal and Just conclusion.

/ B /

Dith respect to its re!edial or procedural la- aspect, it is 'eyond dispute that the order approing the co!pro!ise agree!ent of theparties herein 'eca!e i!!ediately final and e0ecutory upon its pro!ulgation on Bugust 2, 1975, so !uch so that deeds of sale

coering t-o lots +Gots >/3 and >/< of CT 4o. 12281 of the =egistry of 6eeds of 6aao -ere e0ecuted and deliered 'y the uiangs

to priate respondents the ne0t day, Bugust 21, 1975. 4either a !otion for reconsideration of said order nor a petition for relief

therefro! -as filed -ithin their respectie due periods fi0ed 'y the =ules. Bccording to the petition itself, on the dates agreed upon,

priate respondents paid petitioners as each install!ent fell due, the total su! of P2<,.. +This figure is not ad!itted 'y priate

respondents.

t -as only on Bugust 17, 1978 that, as far as the trial court -as concerned, the ru!'lings of a grae controersy 'et-een the parties

'egan to 'e heard, for on said date, priate respondents filed -ith said court, the follo-ing;

P?TT4 T 6?CGB=? PB=T 4 C4T?)PT B46 F= ?@?CAT4

6?F?46B4T", 'y undersigned counsel, respectfully allege;

1. That the parties hereto entered into a co!pro!ise agree!ent entitled QK4T )T4 F= B 6?C"4 >B"?6 4 B

C)P=)"?Q on Bugust 2, 1975, -hich -as approed and !ade the 'asis for a decision of the court ter!inating these cases.

2. That in co!pliance -ith their underta&ings delineated in paragraphs 2 and < of aforecited co!pro!ise agree!ent, defendants

hae faithfully paid the plaintiffs the total a!ount of T-o *undred and Forty Thousand Pesos +P2<,. -ell -ithin the agreed

li!iting dates, -hich pay!ents represented full and co!plete satisfaction of the a!ounts due the plaintiffs under the agree!ent.

3. That despite co!pliance 'y the defendants of their part of the agree!ent, plaintiffs hae failed, and despite repeated de!ands,

hae refused and up to this date continue to fail and refuse to e0ecute the deeds of coneyance to Gots 4os. >/1 and >/2 of .C.T. 4o.

12281 and Gots 4os. B/2 and B/3 of .C.T. 4o. 1<5, -hich actions they pro!ised and undertoo& to do under paragraph 3 of the

co!pro!ise agree!ent.

<. That the pay!ents !ade 'y the defendant to plaintiffs -ere duly and ti!ely reported to this *onora'le Court.

5. That the approal of the Court of the co!pro!ise agree!ent had the effect of conerting the actions agreed upon therein into

specific orders of the court that they 'e so e0ecuted.

. That under "ec. 1 of the rules, the plaintiffs haing refused to co!ply -ith the order of the court, the court !ay direct either that

the coneyance 'e done 'y so!e other person at the cost of the diso'edient party or enter Judg!ent diesting title fro! the plaintiffs

and esting sa!e -ith the defendants.

D*?=?F=?, it is !ost respectfully prayed that;

1. Plaintiffs after 'eing afforded a chance to 'e heard 'y hi!self or counsel 'e declared in conte!pt of this *onora'le Court,

i!posing upon said defendant such penalty as this court !ay dee! Just and proper.

2. That plaintiffs 'e diested of title to Gots 4os. >/1 and >/2 and Gots 4os. B/2 and B/3, esting said titles -ith defendants as follo-s

>/1 to C=B/B44 >. 4TB4B=

>/2 to C=B/GA >. 4TB4B=

B/2 to FG)?4 C. 4TB4B=

B/3 to FG/=?= >. 4TB4B=

Eueon City, 17 Bugust 1978.

+"gd. PBT?=4 P. T=46B6

Counsel for the 6efendants



< 12th Be., Cu'ao, E. C.

+Bnne0 F, pp. 2/<, =ecord.

To this petition, petitioners filed an 18/page opposition -hich, at the cost of e0tending this opinion, De -ill #uote, for the sa&e of a

deeper insight into the respectie positions of the parties is/a/is the issues De are resoling;

PP"T4

+To 6efendantsQ Petition To 6eclare

Party n Conte!pt Bnd For ?0ecution

DT* )T4 T 6?CGB=? C)P=)"?

B=??)?4T L6 B" T "BG?

C)? 4D plaintiffs in the three +3 a'oe/captioned ciil cases, thru their undersigned counsels, and ans-ering defendantsQ

P?TT4 T 6?CGB=? PB=T 4 C4T?)PT B46 F= ?@?CAT4 dated 17 Bugust 1978, !ost respectfully interpose the

instant pposition 6?44 or B6)TT4 the !aterial allegations thereof as follo-s;

Plaintiffs B6)T the allegations found in paragraphs 1 and 2 of the petition regarding the fact of presentation 'y the parties hereto of a

so/called Co!pro!ise Bgree!ent 'et-een the parties hereto and its su'se#uent approal 'y this *onora'le Court and also in so far

as the sa!e alleges pay!ent to plaintiffs 'y defendant/endees Filo!eno C. intanar and Coraon >. intanar of the a!ounts

proided therein. Plaintiffs, ho-eer, 6?4, for reasons found else-here in this pleading, the rest of the allegations thereof insofar as

they i!pute upon plaintiffs the o'ligation to e0ecute a deed of coneyance oer the si0 + parcels of land su'Ject !atter of the three +3

a'oe/entitled cases, or insofar as they insinuate that such pay!ents represent consideration for the sale of such land. The reason for

this is plainOthat any such sale -ould 'e prohi'ited under the proisions of Co!!on-ealth Bct 4o. 1<1, &no-n other-ise as the Pu'lic

Gand Bct, in correlation -ith the 1973 Constitution, -hich prohi'it the ac#uisition 'y any citien of the Philippines of any lands of the

pu'lic do!ain in e0cess of t-enty four +2< hectares.

Plaintiffs 6?4 paragraph 3 of the petition of defendants insofar as the sa!e allege Qco!plianceQ only on the part of defendants of

their alleged o'ligations under the so/called Co!pro!ise Bgree!ent and failure and refusal on the part of plaintiffs to e0ecute certain

Qactions they pro!ised and undertoo& to doQ as indicating a lac& of candor if not a gross !isrepresentation of facts 'efore this

*onora'le Court. The fact is that as early as Bugust 21, 1975, or the day follo-ing the Bugust 2, 1975 date of the Co!pro!ise

Bgree!ent and 6ecision of this Court approing the sa!e, plaintiffs/spouses >enJa!in L. uiang and 4atiidad *. uiang, in

co!pliance -ith and o'edience to such 6ecision, i!!ediately e0ecuted a 6eed of B'solute "ale in faor of defendants/spouses

Filo!eno C. intanar and Coraon >. intanar oer Gots Q>/3Q and Q>/<Q +coered 'y "ales Patent 4o. 2521 and riginal Certificate of

Title 4o. 12281 of the =egister of 6eeds of 6aao in the na!e of plaintiffs/spouses >enaJ!in L. uiang and 4atiidad *. uiang, -ith

the result that the latter/!entioned office caused cancellation of the certificate :s of title in the na!es of said plaintiff/spouses and

entered t-o +2 ne- certificates of title in the na!es of defendant/spouses.@ero0 copy of the 6eed of B'solute "ale of plaintiffs/spouses as endors dated Bugust 21, 1975 -hich also 'ear the signature of

defendant Filo!eno C. intanar as Lendee is hereto attached, !ar&ed Bnne0 QBQ, and !ade an integral part of this pposition.

)uch as it is plaintiffsQ sincere desire to co!ply -ith the re!ainder of -hat is incu!'ent upon the! as proided in the afore!entioned

Co!pro!ise Bgree!ent, the sa!e cannot, ho-eer, 'e done -ith i!punity since, as -ill 'e fully discussed else-here in this pleading,

such an act is prohi'ited 'y the la- and the Constitution and therefore legally i!possi'le of acco!plish!ent.



Plaintiffs 6?4 the allegations of paragraph < of the petition for lac& of &no-ledge sufficient to for! a 'elief as to the truth thereof at

the ti!e of preparation of this pleading.

L

Plaintiffs C4C?6? in principle the legal conclusion e0pressed in paragraph 5 of the petition 'ut 6?4 its applica'ility to the cases at

'ar for reasons already outlined else-here in this pleading.

L

Plaintiffs hypothetically B6)T the legal conclusion e0pressed in paragraph of the petition, 'ut 6?4 such allegations therein insofar

as they insinuate plaintiffs contu!aciously refused to co!ply -ith Qthe order of the CourtQ. Bs plaintiffs shall endeaor to e0plain herein,

eer since their e0ecution of the 6eed of "ale, Bnne0 QBQ, plaintiffs hae 'een actually ta&ing tedious, painful and ti!e/consu!ing

efforts and steps if only to deter!ine once and for all -hether they are really 'ound to e0ecute the deeds and acts proided for in the

Co!pro!ise Bgree!ent. Bs things hae turned out, plaintiffs hae no- 'eco!e !ore than eer coninced that such acts as are

proposed 'y defendants/spouses run counter to pu'lic policy, thus pro!pting plaintiffs to e0ercise restraint in the !atter. f this 'e

interpreted as a refusal to co!ply -ith the re!ainder of -hat is allegedly incu!'ent upon the!, such refusal is, ho-eer, Justified, forto direct plaintiffs to do other-ise -ould 'e to co!!and the! to iolate the funda!ental la- of the land, so!ething that neither the

plaintiffs nor this Court cannot 'e priy to.

FBCTABG >BC=A46 F T*? GT"

"A>K?CT / )BTT?= F T*? C)P=)"?

B=??)?4T

For the purposes of o'taining a fuller and !ore co!prehensie understanding of the plaintiffsQ stand as outlined in the pleading at 'ar,

plaintiffs hae dee!ed it essential and releant to trace and 'ring forth to the attention of the *onora'le Court the origins of the si0 +

lots su'Ject/!atter of the co!pro!ise agree!ent presented in the three +3 a'oe/captioned ciil cases.

The said si0 + lots originally for!ed part of that larger parcel of land -hich 'eca!e the su'Ject/!atter of an earlier contract of lease

e0ecuted and granted 'y the oern!ent of the Philippine slands as Gessor, in faor of BA6?4C C. *EAB4B +no- deceased,

as Gessee, under Gease Bpplication 4o. 2<39 +?/2<<, coering a parcel of land situated in )alita +no- "ta. )aria 6aao del "ur, -ith

an area of 35.59 hectares for a period of 25 years fro! Kanuary 21, 1927 +or until Kanuary 2, 1952 under the proisions of Bct 4o

287<.

Bfter the Gessee died so!eti!e in the year 19<2, and upon petition of PB"CABGB L. L6B. 6? *EAB4B as suriing -ife of

BA6?4C C. *EAB4B, the contract of lease affecting said 35/hectare parcel of land -as e0tended 'y !eans of an rder of

=econstitution and =ene-al of Gease Contract dated Fe'ruary 21, 195 for another period of 25 years fro! and including Kanuary 2,

1952, said application and e0tension granted 'eing recorded under the na!e of PB"CABGB L. L6B. 6? *EAB4B as Gessee.

Certified copy of the afore!entioned rder of =econstitution and =ene-al of Gease Contract issued 'y then 6irector of Gands Kose P.

6ans is hereto attached, !ar&ed Bnne0 Q>Q, and !ade an integral part of this pleading.>y authority of the ffice of the >ureau of Gands secured, and as per GesseeQs re#uest, the area coered under the a'oe/!entioned

lease application -as su'diided into four +< lots, &no-n as Gots QBQ, Q>Q, QCQ and Q6Q, -ith the corresponding su'diision plan prepared,

identified as Psd/3<219, approed 'y the 6irector of Gands on Fe'ruary 21, 1952.

n Kanuary 2, 1951, the Gessee re#uested the segregation of Gots QBQ, Q>Q and Q6Q of said su'diision plan Psd/3<219 re#uesting that

she +Gessee 'e allo-ed to purchase Got QCQ thereof, that her daughter 4BTL6B6 *. AB4 'e allo-ed to purchase Got Q>Q, that her

son BA=?G *EAB4B 'e allo-ed to purchase Got QBQ and that Got Q6Q 'e allocated to KAGB *EAB4B.

Bfter due inestigation conducted 'y the >ureau of Gands, on )arch 31, 1953 the "ales Bpplication of PB"CABGB L. L6B. 6?

*EAB4B for Got QCQ of the 35/hectare land coered under Psd/3<219 -as accepted and recorded as "ales Bpplication 4o. L/15.

The "ales Bpplication filed 'y 4BTL6B6 *. AB4 for Got Q>Q -as li&e-ise accepted and recorded as "ales Bpplication 4o. L/



157. BA=?G L. *EAB4B and KAGB *EAB4B -ere li&e-ise gien opportunity to file their corresponding "ales Bpplication

coering Gots QBQ and Q6Q, respectiely.

Bll the foregoing appear in an rder issued 'y then 6irector of Gands Noilo Castrillo dated )arch 31, 1953, certified copy of -hich is

hereto attached, !ar&ed Bnne0 QCQ, and !ade an integral part of this pleading.

"u'se#uently, and pursuant to such rder, BA=?G L. *EAB4B duly filed "ales Bpplication on Got QBQ corresponding to hi!, -hich

'eca!e &no-n and recorded as "ales Bpplication 4o. 21.

n Bpril 29, 1959, 4BTL6B6 *. AB4 -as issued "ales Patent 4o. 2521 on her "ales Bpplication 4o. L/157 coering an area

of 11 hectares < acres and 1< centares 'y authority of the President of the Philippines, pursuant to -hich riginal Certificate of Title

4o. P/12281 dated Kune 12, 1959 -as issued 'y the =egister of 6eeds for the Proince of 6aao. @ero0 copy of said Certificate ofTitle is attached, !ar&ed Bnne0 Q6Q, and !ade integral part of this pposition -ith )otion.

n )arch 1, 19<, BA=?G L. *EAB4B -as also issued "ales Patent 4o. 318 on his "ales Bpplication 4o. L/21 'y authority

of the President of the Philippines, pursuant to -hich riginal Certificate of Title 4o. P/1<5 dated Bpril 22, 19< -as issued 'y the

=egister of 6eeds for the Proince of 6aao. @ero0 copy of said certificate of title is hereto attached, !ar&ed Bnne0 Q?Q and !ade an

integral part of this pposition and )otion.

4BTL6B6 *. AB4 then duly re#uested for su'diision of her land Got Q>Q +"ales Patent 4o. 2521 and . C. T. 4o. P/12281 into

fie +5 lots, -hich ca!e to 'e &no-n as Gots Q>/1Q, Q>/2Q, Q>/3Q and Q>/<Q -ith 2< hectares each, or an aggregate area of 9 hectares and

Got Q>/5Q -ith an area of 1<,<13 hectares, or a total area of 11.<13 hectares, under "u'diision Plan +G=C Psd/137751, approed

'y the Co!!issioner of Gand =egistration on )arch 2, 1971.

BA=?G L. *EAB4B -ho -as a-arded Got QBQ of Psd/3<219 +"ales Patent 4o. 318 and .C.T. 4o. P/1<5 also effected

su'diision the sa!e into three +3 lots, &no-n respectiely as Gots QB/1Q -ith an area of .182 hectares, Got QB/2Q -ith an area of 25

hectares, and Got QB/3Q -ith an area of 25 hectares, or a total area of 11.182 hectares, coered under "u'diision Plan +G=C Psd/

13828< approed 'y the Co!!issioner of Gand =egistration on Bpril 5, 1971.

n fine, the four +< lots +out of the 5 lots a-arded to 4BTL6B6 *. AB4 under "ales Patent 4o. 2521 &no-n as Gots Q>/1Q, Q>/2Q,

Q>/3Q and Q>/<Q hae areas of 2< hectares each, or an aggragate area of 9 hectares, -hile the t-o +2 lots inoled in the cases at 'ar

+out of the 3 lots a-arded to BA=?G L. *EAB4B under "ales Patent 4o. 318 &no-n as Gots QB/2Q and QB/3Q hae areas of 25

hectares each, or an aggregate area of 5 hectares. The total area of the si0 + lots -hich hae 'eco!e su'Ject/!atter of the

co!pro!ise agree!ent, the decision approing the sa!e, and presently, plaintiffsQ pleading at 'ar, is therefore 1< hectares of land

originally of the pu'lic do!ain, or pu'lic agricultural lands, ac#uired 'y the afore/na!ed plaintiffs 'y purchase fro! the oern!ent of

the Philippine slands.

C)P=)"? B=??)?4T L6 B46

PGB4TFF"Q ?B=4?"T ?FF=T" ?@?=T?6

4 6?T?=)44 T*?= =*T" B46

>GBT4" T*?=?A46?= CT?6

Lis/a/is the petition see&ing to declare and hold plaintiffs lia'le for conte!pt of this *onora'le Court, plaintiffs hae dee!ed it -ise to

incorporate in this pleading a 'rief state!ent of the seeral tedious, ti!e/consu!ing and earnest steps ta&en 'y the! in sustained

efforts to see& once and for all clarification of the la- on the !atter -ith the end in ie- of co!plying -ith -hateer o'ligations they

!ay hae assu!ed under the co!pro!ise agree!ent, to -it;

1. n "epte!'er 22, 1975 and cto'er 1<, 1975, or around a !onth after plaintiffs/spouses signed the 6eed of B'solute "ale, Bnne0QBQ of this pleading, the uiang BleJo Ga- ffices as counsel of plaintiffs in the a'oe/entitled cases, haing serious dou'ts as to the

legality and propriety of the 6eed of "ale, Bnne0 QBQ of this pleading, 'eca!e pro!pted to address t-o +2 letters to the Co!!issioner

of Gand =egistration, )anila, therein !a&ing the follo-ing #uery;

QDhether your 6aao ffice can refuse to accept for registration a 6eed of "ale -hich 'y e0press proision of the docu!ent -ill 'e

iolatie of "ection 122 as a!ended 'y Co!!on-ealth Bct 15 and further a!ended 'y section 11 of Brticle 1< of the ne-

Constitution.Q

Copy of said letter of #uery of plaintiffsQ counsel is hereto attached, !ar&ed as Bnne0es QFQ and QF/1Q, and !ade integral parts of this

pleading.



2. n a co!!unication addressed to plaintiffsQ counsel dated cto'er 17, 1977, Co!!issioner regorio >ilog, Kr. of the Gand

=egistration Co!!ission, replying to the a'oe/!entioned #uery, stated a!ong other things, the follo-ing;

QThe =egister of 6eeds should co!ply -ith the la-. *o-eer, the !atter of registration of the deed of sale in #uestion -hich -as

e0ecuted in co!pliance -ith the decision of the Court of First nstance of Eueon City, including the issuance of the corresponding

transfer certificates of title 'eing a fait acco!pli, this Co!!ission feels it not proper to render an opinion. )oreoer, according to your

earlier letter the deed of sale -as registered Qupon presentation of an affidait of o-nership 'y Btty. Filo!eno intanar that he and his

-ife are holders of land not !ore than that allo-ed 'y the ConstitutionQ -hich gies the i!pression that the docu!ent is registra'le.Q

Copy of said reply letter of the G=C Co!!issioner is hereto attached, !ar&ed as Bnne0 QCQ, and !ade an integral part of this pleading.

3. n cto'er 9, 1977, plaintiff >enJa!in L. uiang addressed a letter to defendant Filo!eno C. intanar, receied 'y the latter on

cto'er 11, 1977H -herein plaintiff endeaored to e0plain in detail the reasons -hy, despite earnest efforts e0erted on his part -ith the

end in ie- of i!ple!enting the Co!pro!ise Bgree!ent and 6ecision of this *onora'le Court afore!entioned, plaintiffs could not

'ring the!seles to sign the draft of a 6eed of "ale presented 'y defendants to plaintiffs thru the latterQs counsel oer the re!aining

four +< lots su'Ject/!atter of the cases at 'ar. n such letter, plaintiff instead proposed another a!ica'le settle!ent !ore in

accordance -ith the proisions of the la- and the Constitution, therein giing defendants up to 4oe!'er 3, 1977 -ithin -hich to

signify their stand or other-ise e0press their ie-s. "alient points ta&en up in said letter;

+a That the proposed 6eed of "ale is not in accordance -ith the Co!pro!ise Bgree!ent approed 'y the Court

since the said Co!pro!ise Bgree!ent has for its endee for the re!aining < lots the "pouses Filo!eno C.

intanar and Coraon >. intanar, -hereas the proposed 6eed of "ale has for its endees Fil/=oger +oer Got

Q>/2Q Cora/Bnn +oer Got QB/2Q and Cora Gou +oer Got QB/3Q all surna!ed intanarH

+' That the proposed 6eed of "ale, once signed 'y plaintiffs to coney Got Q>/1Q +containing 2< hectares in faor of

Coraon >. intanar, -ill constitute a direct iolation or infringe!ent of the 2</hectare !a0i!u! li!it or area of

pu'lic land that the la- proides any citien of the Philippines could ac#uire under the 1973 Constitution of the

Philippines, considering that 'y the ti!e of effectiity of said Constitution, Coraon >. intanar -as the

registered o-ner of 29.7751 hectares originally ac#uired 'y ho!estead under the Pu'lic Gand BctH

+c That on account of the foregoing considerations, plaintiffs therefore proposed another a!ica'le settle!ent of the

case !ore in accord -ith the ne- Constitution and the la-H

+d That defendant Filo!eno C. intanar -as re#uested to state his position on plaintiffsQ said proposal 'y or on

4oe!'er 3, 1977, to aoid further Court or ad!inistratie actions.

Copies of the afore!entioned letter of plaintiff dated cto'er 9, 1977 and the proposed 6eed of B'solute "ale are hereto attached,

!ar&ed respectiely as Bnne0es Q*Q and Q*/1Q and !ade integral parts of this pleading.

<. -ing to failure on the part of defendant Filo!eno C. intanar as addressee to issue any reply or state!ent to the proposals of

plaintiff >enJa!in L. uiang contained in his letter Bnne0 Q*Q, the latter 'eca!e constrained to file a cri!inal co!plaint -ith the ffice of

the Proincial Fiscal of 6aao del "ur charging defendant Filo!eno C. intanar as respondent -ith iolation of the Constitution and the

=eised Penal CodeH copies of said co!plaint together -ith its supporting affidaits of co!plainantQs -itnesses are hereto attached,

!ar&ed respectiely as Bnne0es QQ, Q/1Q, Q/2Q and Q/3Q, and !ade integral parts of this pleadingH

5. n Kuly 5, 1978, "pecial Counsel Pacifico B. Lillalu as nestigating Fiscal issued an rder su!!oning 'oth co!plainant

>enJa!in L. uiang and respondent Filo!eno C. intanar to appear at his office at 6igos, 6aao del "ur, on Bugust 3, 1978, at 3;p.!., for clarificatory #uestions on the facts and circu!stances of the a'oe/!entioned cri!inal co!plaint in relation to "ection 122 of

Co!!on-ealth Bct 1<1H copy of the aforesaid rder of "pecial Counsel Lillalu is hereto attached, !ar&ed as Bnne0 QKQ, and !ade

integral part of this ppositionH

. n Kuly 12, 1978, the Gegal 6iision, >ureau of Gands, in response to a letter containing a legal #uery posed 'y plaintiff >enJa!in

L. uiang, issued an opinion on the follo-ing points 'y !eans of the instant pleading presented 'efore this *onora'le Court, pertinent

portions #uoted for purposes of e!phasis as follo-s;



a. Q0 0 0 Bfter a pu'lic land has 'een titled under the proisions of the Pu'lic Gand Bct +Co!!on-ealth Bct 4o. 1<1,

as a!ended, the sa!e, for all legal intents and purposes, 'eco!es a priate agricultural land su'Ject, ho-eer, to

the restrictions contained in "ection 29, 118, 119, 121 and 122 of the said Bct.Q

'. Q0 0 0 "i!ply stated, an indiidual cannot ac#uire either 'y sale, transfer, assign!ent or lease, lands originally

ac#uired under the free patent, ho!estead, or indiidual sale proisions of Co!!on-ealth Bct 4o. 1<1 if the total

area of such ac#uisition added to his present landholdings e0ceeds one hundred forty/four hectares. 0 0 0.Q

c. Q0 0 0 t !ust follo- as a !atter of course that since Kanuary 17, 1973 -hen the 4e- Constitution -ent into fullforce, the !a0i!u! area of patented or titled land that an indiidual can ac#uire is only such as -ill not e0ceed

t-enty/four +2< hectares including his present landholdings. Dith these pre!ises, it is our considered opinion that

the !a0i!u! area that an indiidual could ac#uire under Brticle 122 of Co!!on-ealth Bct 4o. 1<1, as a!ended,

has 'een a!ended or reduced to 2< hectares as proided for under "ection 11, Brticle @L, of the 1973

Constitution.Q

Copies of the letter of plaintiff uiang dated Kuly 1, 1978 and the pinion rendered 'y the Gegal 6epart!ent, >ureau of Gands, dated

Kuly 12, 1978 are attached, !ar&ed respectiely as Bnne0es QQ and Q/1Q and !ade integral parts of this pleadingH

7. n the scheduled Bugust 3, 1978 hearing date, co!plainant and respondent 'oth appeared 'efore nestigating Fiscal Lillalu and

in such hearing the follo-ing facts and points -ere clarified, esta'lished and:or ad!itted 'y the parties therein, to -it;

a. That respondent Filo!eno C. intanar, in addition to the 29 hectares ac#uired 'y hi! through ho!estead patent, isin actual possession of an additional 1< hectares of land originally ac#uired under "ales Patent fro! the

goern!ent under the proisions of the Pu'lic Gand BctH

'. That of this !entioned 1< hectares of land, 2 lots -ith an area of 2< hectares each, or a total of <8 hectares, -ere

already transferred and registered -ith the office of the =egister of 6eeds of 6aao del "ur in the na!e of

respondent Filo!eno C. intanar 'y irtue of a 6eed of "aleH

c. That respondent intanar ad!itted haing e0ecuted an affidait on "epte!'er 1, 1975 in -hich respondent stated,

a!ong other things, the follo-ing;

QThat, 'oth !y -ife and donQt possess lands !ore than -hat the constitution or the la- authories.Q

d. That said affidait -as actually presented so!eti!e in "epte!'er 1975 'y respondent intanar -ith the =egister

of 6eeds of 6aao del "ur in co!pliance -ith registration re#uire!ents of that office preparatory to effecting

registration of such 6eed of "ale, cancelling the su'sisting certificate of title in the na!es of co!plainant and his

spouse as Lendors, and effecting transfer of title to his na!e +respondent as LendeeH

e. That co!plainant duly furnished the nestigating Fiscal and respondent intanar -ith the pinion rendered 'y the

Gegal 6iision, >ureau of Gands, dated Kuly 12, 1978, copy already attached and !ar&ed Bnne0 QQ of this

pleading, pertinent portion #uoted as follo-s;

QBs regards your third #uestion on -hether the !a0i!u! area that an indiidual could ac#uire under section 122 of Co!!on-ealth Bct

4o. 1<1, as a!ended, has 'een a!ended fro! 1<< to 2< hectares our reply is in the affir!atie S0 0 0.Q

Copy of the afore!entioned affidait e0ecuted 'y respondent intanar 'earing date of "epte!'er 1, 1975 is hereto attached, !ar&ed

as Bnne0 QGQ and !ade an integral part of this pposition.

8. Apon another letter #uery addressed 'y plaintiff >enJa!in L. uiang to the Chief, Gegal 6epart!ent, >ureau of Gands, copy

furnished the Gand )anage!ent 6iision of that >ureau anent the issue of -hether in the interpretation of section 122 of

Co!!on-ealth Bct 4o. 1<1 as a!ended 'y section 11, Brticle @L of the 1973 Constitution, hus'and and -ife are to 'e considered as

one person or single citien, the Chief, Gegal 6iision, >ureau of Gands, replied, a!ong others, in this -ise;



QFor the purpose of ascertaining the !a0i!u! acreage of t-enty/four +2< hectares of patented lands originally coered 'y a sales

patent under section 122 of Co!!on-ealth Bct 1<1, as a!ended 'y the 1973 Constitution that any Filipino citien could ac#uire or

possess including his present landholdings, hus'and and -ife are to 'e considered as a single citien.Q

@ero0 copies of said plaintiffQs letter #uery dated "epte!'er 1<, 1978 and the reply letter of the Chief, Gegal 6iision, >ureau of Gands

dated "epte!'er 19, 1978 are hereto attached, !ar&ed respectiely as Bnne0es Q)Q and Q)/1Q and !ade integral parts of this pleadingH

9. n t-o +2 su'stantial issues coered in the foregoing cited opinions issued 'y the Gegal 6iision, >ureau of Gands, a

co!!unication incorporating the latest state!ent of official policy of that >ureau has eoled in the for! of a recent letter addressed to

plaintiff uiang, su'stantial portions #uoted as follo-s;4 D*?T*?= *A">B46 B46 DF? B=? T >? C4"6?=?6 B" 4G 4? P?="4 F= PA=P"? F )PG?)?4T4

"?C. 122 F C.B. 1<1;

Qn reply to your letter dated "epte!'er 1<, 1978 re#uesting infor!ation regarding the interpretation, is 'ased on the legal principle that

a legally !arried couple is considered as only one person and property ac#uired 'y the! during their !arriage 'elongs to the conJugal

partnership.Q

4 T*? )B@)A) B=?B F PA>GC GB46" T*BT CB4 >? BCEA=?6 > B CTN?4 F T*? P*GPP4?";

Qt is also the policy of this ffice that the !a0i!u! area that can 'e ac#uired 'y an indiidual under the sa!e "ection has 'een

accordingly reduced fro! 1<< to 2< hectares in line -ith the proision of the 4e- Constitution reducing the area that can 'e purchased

'y an indiidual to only 2< hectares.Q

Copy of such co!!unication issued 'y 6irector of Gands =a!on 4. Casanoa dated "epte!'er 2, 1978 is attached, !ar&ed Bnne0

Q4Q and !ade integral part of this pleading.

6"CA""4 B46 B=A)?4T

Co!!on-ealth Bct 4o. 1<1, &no-n as Pu'lic Gand Bct, proides;

Q"ec. 122. / ?0cept in cases of hereditary succession, no land or any portion thereof originally ac#uired under the free patent,

ho!estead, or indiidual sale proisions of this act, or any per!anent i!proe!ent on such land shall 'e transferred or assigned to

any indiidual, nor shall such land or any per!anent i!proe!ent thereon 'e leased to such indiidual -hen the area of said land,

added to that of his o-n, shall e0ceed one hundred and fortyMfour hectares. Bny transfer, assign!ent or lease in iolation hereof shall

'e null and oid.Q +Anderscoring ours.

The 1973 Constitution of the Philippines proides in its B=TCG? @L the follo-ing, to -it;

Q"ec. 11. The 4ational Bsse!'ly, ta&ing into account conseration, ecological, and deelop!ental re#uire!ents of the natural


indiidual, corporation, or association, and the conditions therefor. 4o priate corporation or association !ay hold aliena'le lands of

the pu'lic do!ain e0cept 'y lease not to e0ceed one thousand hectares in areaH nor !ay any citien hold such lands 'y lease in

e0cess of fie hundred hectares or ac#uire 'y purchase or ho!estead in e0cess of t-enty/four hectares. 4o priate corporation or

association !ay hold 'y lease, concession, license, or per!it ti!'er or forest lands and other ti!'er or forest resources in e0cess of

one hundred thousand hectaresH ho-eer, such area !ay 'e increased 'y the 4ational Bsse!'ly upon reco!!endation of the

4ational ?cono!ic and 6eelop!ent Buthority.Q +Anderscoring ours.

C4L?B4C? LGBTL? F C4"TTAT4BG

P=*>T4

=elief sought 'y !eans of

petition at 'ar contrary to

ter!s of co!pro!ise



agree!entVVVVVVVV V

B perusal of the Co!pro!ise Bgree!ent entered into 'et-een the parties and approed 'y the Court in its 6ecision -ill sho- that the

supposed endees of the si0 + lots su'Ject thereof are none other than the spouses Filo!eno C. intanar and Coraon >. intanarH

yet in their proposed 6eed of "ale, reiterated once !ore in another -ay thru their petition at 'ar, defendants de!and fro! plaintiffs

under pain of conte!pt the e0ecution in their faor of the necessary deed of coneyance oer the re!aining four +< lots, &no-n as

Gots Q>/1Q and Q>/2Q coered 'y "ales Patent 2521 and .C.T. 4o. 12281, and Gots QB/2Q and QB/3Q coered 'y "ales Patent 318 and

.C.T. 4o. 1<5. This is plain fro! a co!parison of the proposed endees specified 'y defendants in their petition at 'ar -ith those

!entioned in their proposed 6eed of "ale, Bnne0 Q*/1Q, thus;

Petition Bt >ar

Got Q>/1Q to Coraon >. intanar Got Q>/1Q to Coraon >. intanar

Got Q>/2Q to Coraon >. intanar Got Q>/2Q to Fil/=oger intanar

Got QB/2Q to Filo!eno C. intanar Got QB/2Q to Cora/Bnn >. intanar

Got QB/3Q to Fil/=oger >. intanar Got QB/3Q to Cora/Gou >. intanar

Bs to the e0ecution of a 6eed of "ale 'y plaintiff faor of defendant Filo!eno C. intanar oer Got QB/2Q -ith an area of 25 hectares,

plaintiffs respectfully su'!it that this Just cannot 'e legally done for such -ould 'e iolatie of the aforestated "ection 122 of

Co!!on-ealth Bct 4o. 1<1, as a!ended, in correlation -ith the proisions of "ection 11, Brticle @L, 1973 Constitution of the

Philippines, -hich too& effect Kanuary 17, 1973. The !a0i!u! area of pu'lic land that under the Constitution could 'e ac#uired, either

'y sale, transfer or assign!ent after such date 'y any citien of the Philippines, including said defendant, is 2< hectares, including all

his present landholdings.

"a!e is true -ith respect to any coneyance proposed to 'e !ade in the proposed 6eed of "ale in faor of defendant Coraon >.

intanar oer Got Q>/1Q -ith an area of 2< hectares -hich, as earlier contended, -ill li&e-ise 'e null and oid for 'eing iolatie of

"ection 11, Brticle @L of the 1973 Constitution, a!ending "ection 122 of C.B. 4o. 1<1. Bnd -ith !ore reason since, as ad!itted 'y

defendant intanar as respondent 'efore the 6aao "pecial Counsel, upon the effectie date of the 1973 Constitution he and his -ife

-ere already the!seles holders of 29 hectares of land of the pu'lic do!ain originally granted to the! thru a ho!estead patent. Bnd

follo-ing the pinions or state!ents respectiely rendered 'y the Chief, Gegal 6iision, as -ell as the 6irector of the >ureau of Gands,

Bnne0es Q)/1Q and Q4Q, defendants/spouses are, for purposes of the Pu'lic Gand Bct, to 'e considered as a Qsingle citienQ or as Qonly

one personQ, such that they are 'oth 'arred fro! ac#uiring 'y sale or ho!estead een a single s#uare !eter !ore of pu'lic land.

Bnd it is plain fro! paragraphs 2, < and 5 of the Co!pro!ise Bgree!ent that the "pouses intanar as defendants are the only

intended endees of Gots Q>/1Q, Q>/2Q, QB/2Q and QB/3Q. Gi&e-ise plain it is that defendants Cora/Bnn, Cora/Gou, and Fil/=oger, allsurna!ed intanar, as e#ually interested parties to the petition at 'ar, 'y haing also affi0ed their respectie signatures to the

Co!pro!ise Bgree!ent, hae e0pressly -aied -hateer rights they !ay hae oer any of the lots su'Ject/!atter of the three +3

cases at 'ar. "uch e0press -aier is found in par. of said co!pro!ise agree!ent, pertinent portion #uoted as follo-s;

Q. That this Co!pro!ise Bgree!ent here'y supersedes all other agree!ents, contracts to sell and other

docu!ents pertaining to the lots in #uestion.Q

Co!pro!ise Bgree!ent Loid

nsofar as sa!e proides for

sale to defendants/spouses

intanar VVVVVVVV V

Bs stated earlier, the Co!pro!ise Bgree!ent proides for a sale 'y plaintiffs to defendants/spouses intanar of si0 + lots -hich hae

a total area of 1< hectares of lands coered 'y "ales Patents originally ac#uired 'y indiidual purchase 'y plaintiffs fro! the

goern!ent 'efore the effectiity of the 1973 Constitution.

Follo-ing the !andate of "ec. 122 of C.B. 1<1 -hich proides that QBny transfer, assign!ent or lease in iolation hereof shall 'e null

and oidQ, it ineita'ly follo-s that the co!pro!ise agree!ent, insofar as it re#uires the doing of a prohi'ited act, such as a sale in



faor of certain dis#ualified persons, is null and oid. Bnd any decision approing the sa!e !ust li&e-ise, and necessarily so, 'e,

considered null, follo-ing the pronounce!ent of the "upre!e Court in one case;

QB oid Judg!ent or order is in legal effect no Judg!ent or order.Q +Paredes . )oya, 1 "C=B 52.

Thus it is plain that e0ecution !ay not issue 'ased upon a oid co!pro!ise agree!ent, een if the sa!e 'ears approal 'y the court,

on account of -ant of Jurisdiction.

6ue to the foregoing reasons, plaintiff/spouses Burelio L. *i#uiana and Pastora . *i#uiana si!ilarly contend and su'!it that they,

too, cannot 'e co!pelled to e0ecute the 6eed of "ale de!anded of the! 'y defendants 'y !eans of the petition at 'ar.

Plaintiffs under the circu!/

stances not lia'le for conte!pt

Bssu!ing as contended 'y counsel for defendants in their petition at 'ar, -ithout, ho-eer, conceding as true, that plaintiffs hae

unJustly diso'eyed the decision of this *onora'le Court co!!anding the e0ecution of certain deeds of coneyance of real property in

faor of defendants/!oants as proided in the co!pro!ise agree!ent, yet plaintiffs su'!it that such act or o!ission on their part

should not necessarily render the! lia'le for conte!pt. 6efendants/!oants hae not sho-n in any !anner -hateer that plaintiffs

and only plaintiffs can perfor! the acts 'eing insisted upon, to the e0clusion of all others. ur "upre!e Court has had occasion toe0plain -hen a diso'edient party is not lia'le for conte!pt in those cases -here the court itself !ay direct that the specific act or acts

su'Ject of the order 'e done 'y so!e designated person, thus;

Q"ection 9, =ule 39, in connection -ith "ection 7 of =ule 71, proides that if a person is re#uired 'y a Judg!ent or order of the court to

perfor! any other act than pay!ent of !oney or sale or deliery of real or personal property, and said person diso'eys said Judg!ent

or order -hile it is yet in his po-er to perfor! it, he !ay 'e punished for conte!pt and i!prison!ent until he perfor!s said order. The

proision is applica'le only to specific acts -hich the party or person !ust personally do, 'ecause his personal #ualification and

circu!stances hae 'een ta&en into consideration in accordance -ith the proision of Brticle 111 of the Ciil Code. >ut if a Judg!ent

directs a party to e0ecute a coneyance of land or to delier deeds or other docu!ents or to perfor! specific acts -hich !ay 'e

perfor!ed 'y so!e other persons or in so!e other -ays proided for 'y la- -ith the sa!e effect as in the present case, section 1 not

section 9 of =ule 39 appliesH and under the proision of said section 1 the court !ay direct the act to 'e done at the cost of the

diso'edient party 'y so!e other person appointed or designated 'y the court and the act -hen so done shall hae the effect as if done

'y the party hi!self.Q +Anderscoring ours.

C)P=)"? B=??)?4T T*A* L6

B" B "BG? )B ?T >? AP*?G6 B" B G?B"?

Bs the parties are -ell a-are, the su'Ject/!atter of the Co!pro!ise Bgree!ent and decision in the three +3 a'oe/captioned ciil

cases concerns certain titled or patented lands of the pu'lic do!ain originally ac#uired fro! the goern!ent -hich hae a total area of

1< hectares. t appearing that defendants/spouses -ere already holders of so!e 29 hectares of pu'lic land ac#uired 'efore the

effectie date of the 1973 Philippine Constitution, they are, ho-eer, 'arred or inhi'ited fro! ac#uiring 'y sale, transfer or assign!ent

een one single s#uare !eter of the 1< hectares of land su'Ject of the co!pro!ise agree!ent in the a'oe/entitled cases. n ie- ofthis state of affairs, plaintiffs enture to as&; n ie- of their haing already receied the a!ount of P22,. fro! defendants

pursuant to a oid co!pro!ise agree!ent, ho- could the ends of la- and Justice 'e sered, in all fairness to the defendantsM t is

respectfully su'!itted that the only la-ful, constitutional and logical -ay to gie effect to the o'ligations and situation generated 'y the

co!pro!ise agree!ent is this; to consider or treat the sa!e as a lease contract or agree!ent, -ith the a!ounts paid 'y defendants

treated as lease rentals or adances to plaintiffs under a continuing lease.

n this connection it !ay 'e recalled that plaintiffs/spouses and defendants/spouses Filo!eno C. intanar and Coraon >. intanar

originally had in !ind the possession 'y the latter of the si0 + lots su'Ject !atter of the co!pro!ise agree!ent in concept of lease.

These are indicated or sho-n 'y the follo-ing;



a. n 6ece!'er <, 1972 plaintiffs "pouses uiang and defendant Coraon >. intanar, acting for her children Cora/Bnn, Cora/Gou,

Fil/=oger and herself, -ith the !arital consent of her hus'and Filo!eno C. intanar, also defendant in the a'oe/entitled cases,

e0ecuted an Bgree!ent f Purchase Bnd "ale oer Gots Q>/1Q, Q>/2Q, Q>/3Q and Q>/<Q in #uestion -ith the follo-ing resolutory proision;

Q5. That failure of the endees to pay the second and third install!ents as they fail due, shall cause the cancellation of

this agree!ent 0 0 0 and -hateer i!proe!ents introduced 'y the endees on said lots shall 'e considered renta

and li#uidated da!ages;Q +Anderscoring ours.

+Please see Bnne0 QBQ of the Co!plaint in Ciil Case 4o. E/19573

n Kanuary 3, 1973, plaintiffs/spouses Burelio L. *i#uiana and Pastora . *i#uiana and defendant Filo!eno C. intanar alsoe0ecuted an Bgree!ent of Purchase and "ale oer Gots QB/2Q and QB/3Q -hich, a!ong others, contained the follo-ing conditions;

Q3. That the >A?= shall ta&e possession of the property as a G?""= until the entire purchase price is paid, for said

property is leased 'y Btty. )rs. >enJa!in L. uiang up to 6ece!'er 31, 1973 fro! the "?GG?=".

5. That in case the >uyer shall fail to pay t-o consecutie install!ents due, all rights and interests of the said >uyer in

and to the a'oe/!entioned property shall ipso facto, cease and ter!inate and all pay!ents !ade 'y hi! prior to

said default 'e dee!ed forfeited and -aied in faor of the "?GG?=" in settle!ent of rents and li#uidated

da!ages.Q +Anderscoring ours.

+Please see copy of said Bgree!ent f Purchase and "ale already attached as Bnne0 QBQ of the Co!plaint in Ciil Case 4o. E/1957<

Plaintiffs filed the a'oe/captioned Ciil Cases 4os. E/19573 and E/1957< against defendants for the enforce!ent of the a'oe/!entioned resolutory conditions or penal proisions of the a'oe/!entioned Bgree!ents of Purchase and "ale 'y the ter!s of -hich

said agree!ents -ere dee!ed cancelled, -ith all install!ents paid to plaintiffs considered pay!ents of rentals and da!ages,

defendants haing failed to pay the specified install!ents as they fell due.

Bs to -hat -ill 'e the reasona'le rentals of the said si0 + lots su'Ject !atter of said cases and the co!pro!ise agree!ent, plaintiffs

respectfully su'!itted that this 'e fi0ed at the stipulated seenty percent +7( of the gross produce or inco!e of the lands, !inus

pay!ents already adanced to plaintiffs, considering the intention of the parties as indicated in their !anage!ent contract dated

Fe'ruary 15, 1973 -hich concerns lands adJoining the si0 + lots herein. +Please see copy of )anage!ent Contract, copy attached as

Bnne0 QBQ to the Co!plaint in Ciil Case 4o. E/19572.

The pay!ents !ade to plaintiffs in concept of the purchase price under the co!pro!ise agree!ent 'y defendants Filo!eno C.

intanar and Coraon >. intanar in the total a!ount of P22,. can and !ay 'e treated instead as pay!ent of reasona'le

rentals for the use and occupancy 'y defendants of the si0 + lots su'Ject !atter of said agree!ent, together -ith all preious a!ounts

paid since Fe'ruary 15, 1973, considering that defendants hae since such date ad!ittedly 'een and continue to re!ain in e0clusie

possession thereof up to this ery day. f course, this -ould 'e understood as su'Ject to the reseration on the part of plaintiffs of the

right to de!and an accounting of the produce handled 'y defendants during such period.

Preli!inary *earing ?ssential

n ie- of the foregoing situation, this *onora'le Court !ay, sere the ends of Justice 'y directing the holding of a preli!inary hearing

to ascertain -hether or not the co!pro!ise agree!ent is oid, or -hether the sa!e su'sist to 'ind the contracting parties insofar as

concerns a lease of the lots coered 'y it. This course of action is suggested in ie- of the pronounce!ent of the *onora'le "upre!e

Court in 'oleon . "ison, 5 Phil. 281, -here it held;

QB Kudge of Court, -hich sets aside a Judg!ent rendered upon the consent of parties and 'ased on a co!pro!ise entered into 'y

the!, -hich -as conerted into such Judg!ent, cannot !odify nor reerse it -ithout the consent of said parties, or -ithout first haingdeclared in an incidental preli!inary hearing, that such co!pro!ise is itiated 'y any of the grounds for nullity enu!erated in Brt. 1817

of the Ciil Code.Q +Anderscoring ours.

"ection 11, Brticle @L of the 1973 Constitution aforecited allo-s a citien of the Philippines to ac#uire 'y lease up to fie hundred

+5 hectares of lands of the pu'lic do!ain. Follo-ing the opinions rendered 'y the Gegal 6epart!ent, >ureau of Gands, Bnne0es Q/

1Q and Q)Q, 'y !plication "ection 122 of C.B. 4o. 1<1 is dee!ed a!ended 'y the 4e- Constitution in the sense that the ne- !a0i!u!

li!it as to the area of lands of the pu'lic do!ain that could 'e ac#uired under lease 'y an indiidual has 'een increased fro! the

original li!it of 1<< hectares to 5 hectares as of the present.

# R ! ' E R



D*?=?F=?, in ie- of all the foregoing considerations, plaintiffs in the three +3 a'oe/captioned ciil cases !ost respectfully pray

of this *onora'le Court that;

QQ1. The petition of defendants, insofar as it see&s to hae plaintiffs as respondents declared in conte!pt of court or diested of title

oer Gots Q>/1Q, Q>/2Q, QB/2Q and QB/3Q 'e 6?4?6 for lac& of !eritH

2. Plaintiffs 'e declared as 'eing relieed and freed fro! the duty and responsi'ility of e0ecuting any deed of sale in faor of

defendants under the co!pro!ise agree!ent and decision of this *onora'le Court 'oth dated Bugust 2, 1975H

3. The 6eed of B'solute "ale, Bnne0 QBQ of this pleading, 'e declared null and oidH

<. 6efendants/spouses Filo!eno C. intanar and Coraon >. intanar 'e ordered to e0ecute, i!!ediately and -ithout unnecessary

delay, a 6eed of =e/coneyance oer the t-o +2 lots su'Ject/!atter thereof, &no-n as Gots Q>/3Q and Q>/<Q, in faor of plaintiffs/spouses>enJa!in L. uiang and 4atiidad *. uiangH

4 T*? BGT?=4BTL?, plaintiffs as respondents !ost respectfully pray that a preli!inary hearing 'e conducted for the purpose of

deter!ining -hether the co!pro!ise agree!ent dated Bugust 2, 1973 as affir!ed 'y the decision of this *onora'le Court of sa!e

date is alid and enforcea'le either as a sale, or as a lease, or oid a' initio and thereafter, the corresponding order or decision 'e

rendered confor!a'ly -ith la- and Justice.

"uch other reliefs and re!edies as !ay 'e considered Just, e#uita'le, proper and constitutional in the pre!ises are li&e-ise prayed

for.

Eueon City SS

Eueon City, Philippines, "epte!'er 23, 1978.

AB4 P=)CB" GBD FFC?"

<3 6etroit "t., Eueon City

>y;

+"gd. >?4KB)4 L. AB4

and

+"gd. KAB4 B.>. P=)CB"

Bttorneys for the Plaintiffs

+Bnne0 , pp. 5/82, =ecord

Considering the foregoing #uoted respectie pleadings of the parties, -hat co!es out as the 'asic #uestion De are called upon to

resole is -hether or not the co!pro!ise agree!ent in dispute -as oid a' initio. Bnd De do not hesitate to say that the ans-er to

that #uestion is definitely in the affir!atie or ?".

?arlier, in resoling the first issue 'et-een the parties, as for!ulated 'y As, De ca!e to the ineita'le conclusion that "ection 122 of

the Pu'lic Gand Bct has 'een a!ended 'y the 1973 Constitution 'y reducing the area of land ac#uired under the Bct that could 'etransferred 'y any purchaser, patentee or ho!esteader to only 2< hectares instead of the 1<< hectares allo-ed under the 1935

Constitution. 4o-, the co!pro!ise agree!ent, e0ecuted on Bugust 2, 1975 and here in dispute, proides for the transfer of a total of

1< hectares. t ineita'ly follo-s then that said co!pro!ise agree!ent contraenes not only a statute 'ut the funda!ental la- of the

land. Bdding to its 'eing contrary to la-, -hich undou'tedly is also coered 'y the pu'lic policy e0pressed in the Constitution, is the

fact that priate respondents, the intanars, already o-ned at the ti!e of the agree!ent a lot of 29 hectares -hich they had ac#uired

also fro! the goern!ent pursuant to the Pu'lic Gand Bct. "uch 'eing the situation, it is incontesta'le that under Paragraph +1 of

Brticle 1<9 of the Ciil Code said agree!ent is ine0istent and oid fro! the 'eginning since its o'Ject or purpose is contrary to la- /

/ / or pu'lic policy.

t is of no conse#uence, pursuant to the sa!e article, that petitioners, the uiang spouses, e0ecuted on Bugust 21, 1975, apparently in

ratification of the i!pugned agree!ent, the deeds of sale coering the t-o lots already referred to and that petitioners actually receiedin part or in -hole the !oney consideration stipulated therein, for according to the sa!e Brticle 1<9, contracts conte!plated therein,

as the one De are dealing -ith, cannot 'e ratified nor the defense of its illegality 'e -aied. 4either is it !aterial, !uch less decisie,

that petitioners had not earlier Judicially !oed to hae the sa!e annulled or set aside. Ander Brticle 1<1 of the Ciil Code, +the

action or defense for declaration of the ine0istence of a contract does not prescri'e.

n this connection, that is, as to the apparent delay in petitionersQ inocation of the ine0istence or nullity of the agree!ent oft referred to

a'oe, it is 'ut !eet to !ention here, as so!e-hat of an added e#uita'le consideration in faor of petitioners, that as related in their

opposition #uoted a'oe, they realied or at least 'egan to hae apprehensions a'out the alidity of -hat they had done practically

'efore the in& -ith -hich they signed the agree!ent had dried. This is conceded, al'eit not in so !any -ords, 'y priate respondents



in their !e!orandu! +p. 1<. ndeed, in an effort to hae his !isgiings erified, as early as "epte!'er 22, 1975, petitioner >enJa!in

uiang -rote the Co!!issioner of Gand =egistration relatie thereto. Anfortunately for petitioners, in caalier fashion, the

Co!!issioner !erely considered that the registration of the t-o deeds of sale coering Gots >/3 and >/<, CT 12281 -as already a

fait acco!pli and li&e Pontius Pilate si!ply -ashed his hands off the !atter.$1% 4ot contented -ith such official indifference to a !atter of

constitutional i!portance, petitioners sought redress fro! the ffice of the President and the 6epart!ent +no- )inistry of Kustice and

lastly, the 6irector of Gands, -ho as already related earlier gae the opinion faora'le to petitioners, -hich De hae earlier #uoted

herein approingly. Petitioners een -ent to the e0tent of filing a charge of perJury against respondents on account of their o'iously

false affidait su'!itted to the =egister of 6eeds denying in effect the indisputa'le fact that they -ere already then the o-ners of !ore

than 2< hectares of land ac#uired under the Pu'lic Gand Bct. "uch cri!inal prosecution is still pending reie- in the )inistry of Kustice

4ota'le, if not ad!ira'le, indeed, -as the continuous, consistent and unrelenting effort of petitioners to rectify a constitutional !isstep

they had ta&en in rather hastily entering into the #uestioned co!pro!ise. That it !ay 'e said that they !ight hae thought at the ti!e

that it -as a fair 'argain does not in la- !ini!ie the undenia'le inalidity and contraention of pu'lic policy inoled in their act. To

'e sure, De can 'eliee that a Judg!ent herein faora'le to petitioners !ay result in !aterial 'enefits to the!, 'ut such pro'a'le

contingency is !erely incidental and should not 'lur ur eyes in any degree to the !atter of constitutional policy De are s-orn to

pursue and i!ple!ent.

/ > /

Bt this point, inas!uch as priate respondents hae ta&en the Judicial initiatie to try to enforce the agree!ent in dispute, or, in the -ords of petitioners Ju!ped the gun on the! 'y filing a !otion for e0ecution, of necessity, De hae to go into the application in these

instant cases of the proisions, principles and Jurisprudence regarding the doctrine De !ight 'riefly refer to as that of in pari delicto.

To start -ith, petitioners ino&e not only Brticle 1<1 of the Ciil Code 'ut also the ruling of this Court in the leading case of Philippine

>an&ing Corporation s. Gui "he, 21 "C=B 52 in support of their contention that the rule of in pari delicto is inapplica'le to these cases

and, therefore, they !ay recoer the a'oe/!entioned t-o lots, Gots >/3 and >/<, CT 12281. Brticle 1<1 proides;

B=T. 1<1. Dhen the agree!ent is not illegal per se 'ut is !erely prohi'ited, and the prohi'ition 'y the la- is designed for the

protection of the plaintiff, he !ay, if pu'lic policy is there'y enhanced, recoer -hat he has paid or deliered.

This article, it is i!peratie to note, allo-s recoery of -hat has 'een paid or deliered pursuant to an ine0istent contract only -hen the

agree!ent +1 is not illegal per se 'ut !erely prohi'itedH +2 the prohi'ition is for the protection of the plaintiffs and +3 if pu'lic policy is

enhanced there'y. "u'stantially, De !ay say, -ithout the need of #uoting therefro!, the foregoing postulation is -hat -as applied 'y

As in the Philippine >an&ing case.

=eferring to the situation no- 'efore As, there can 'e no dou't that upholding the petitioners -ould enhance the pu'lic policy

e0pressed in the Constitution of li!iting transfers of property ac#uired fro! the goern!ent to only 2< hectares as -ell as that i!plicit

in the proision of the Pu'lic Gand Bct prohi'iting any citien fro! ac#uiring 'y purchase or ho!estead disposa'le pu'lic lands in

e0cess of t-enty/four +2< hectares. t !ay also 'e said that these li!itations or prohi'itions are intended for the protection of the

actual landholder or transferor or endor/to/'e 'ecause it safeguards hi!, for one thing, against 'eing !ore or less induced under

certain circu!stances to part -ith his holding thru i!portunings or other insiduous deices or sche!es and, for another thing, he is

ena'led to -or& -ith peace of !ind on his land and utilie the sa!e for the purposes for -hich he had ac#uired it.

n regard to the re#uire!ent that the agree!ent !ust not 'e illegal per se, it !ight 'e contended that ur holding that the co!pro!iseunder consideration is contrary to pu'lic policy re!oes the recoery of the t-o deliered lots and the further non/enforce!ent of the

i!pugned orders of the trial court fro! the application of Brticle 1<1. De hold it is not so. Bny act in iolation of the li!itations and

prohi'itions herein inoled is !alu! prohi'itu!, not !alu! in se. Bn act or contract that is illegal per se is one that 'y uniersally

recognied standards is inherently or 'y its ery nature 'ad, i!proper, i!!oral or contrary to good conscience. n the other hand,

-hat is contrary to pu'lic policy !ay not 'e necessarily uniersally so, for pu'lic policy, li&e pu'lic interest, -hether e0pressed in a

Constitution or in any statute or official declaration of the duly constituted authorities or einced fro! the situation or circu!stances of

the ti!e concerned, is so!ething dictated 'y the conditions o'taining -ithin each country or nation. ndeed, in respect to the ery

!atter under discussion, na!ely, the li!itation and control of the disposition of lands of the pu'lic do!ain, eery goern!ent in the

-orld can hae its o-n distinct policy suita'le and peculiar to its internal interest, including the history !ores, custo!s and traditions of

http://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/24528#_ftn1





the people thereof. For instance, the proisions of our Constitution and our la-s coering such !atter and the others relatie to the

conseration of our natural resources e0clusiely for us, Filipinos, are easily distinguisha'le fro! those of the Constitutions and la-s of

the Anited "tates, =ussia, ?ngland, "ingapore, )alaysia, etc., etc. Thus, the Juridical concept of -hat is illegal per se cannot 'e

necessarily e#uated -ith -hat is contrary to pu'lic policy in all instances. n the cases at 'ar, the disputed co!pro!ise agree!ent is

contrary to the pu'lic policy e!'odied in our Constitution and the Pu'lic Gand Bct as a!ended 'y the for!er since Kanuary 17, 1973,

'ut it is not illegal per se. "uch !ay not 'e the case in other countries.

Conse#uently, nothing o'Jectiona'le, Juridically spea&ing, lies in the -ay to haing the prayer of petitioners granted. "ince they are not

in ter!s of the in pari delicto doctrine and under the facts of these cases, the once trying to enforce an agree!ent contrary to the pu'licpolicy of our Charter and our la-s, such circu!stance that they are the ones resisting the inocation of said doctrine is -hat !a&es

their posture !ore legally tena'le. Bs already stated earlier, under Brticle 1<1 of the Ciil Code, the action or defense for the

declaration of ine0istence of a contract does not prescri'e Just as under Brticle 1<9, +neither can the right to set up such defense of

illegality 'e -aied. Fro! -hich it is clearly i!plicit that one against -ho! the doctrine is ino&ed !ay deny its application -hether he

'e plaintiff or defendant, or the !oant or oppositor. *ere, priate respondents are the !oants for enforce!ent. De hold that as

oppositors to such !otion, petitioners are in the right in putting up the defense that the agree!ent and orders sought to 'e enforced

are contrary to pu'lic policy and that the said agree!ent is not illegal per se, hence, Brticle 1<1 affords relief to the!.

/ C O

*aing arried at the foregoing conclusions, it follo-s necessarily that the fact that priate respondents cannot deny that on Bugust 2,1975, they -ere already the holders of a torrens title oer 29 hectares of land ac#uired 'y the! 'y irtue of the Pu'lic Gand Bct fro!

disposa'le lands of the pu'lic do!ain, is a total 'ar to the enforce!ent of the orders they are see&ing, and this is the reason -hy De

cannot Just reduce the 1< hectares under litigation to only 2< hectares, -hich -ould hae 'een legally possi'le, if priate respondents

situation -ere other-ise. >ut a'le counsel for priate respondents -ould try to sae their case 'y initing our attention to the fact that

the original contracts of coneyance 'et-een the parties -ere entered into prior to Kanuary 17, 1973. 4o !atter. Those contracts are

not the ones inoled here. Dhat is here in #uestion is the co!pro!ise agree!ent of Bugust 2, 1975 -hich precisely and pointedly

proides that the Bgree!ent shall supersede all other agree!ents, contracts to sell and other docu!ents pertaining to the lots in

#uestion, for -hich reason the only parties/in/interest to the instant proceeding hae 'eco!e e0clusiely herein petitioners and

respondents and none others, particularly, the children of the intanars, not-ithstanding their haing 'een parties in Ciil Case 4o. E/

19573 of the trial court, as original purchasers.

/ 6 /

Petitioners suggest that to aoid entire inalidity of the #uestioned agree!ent, it 'e construed !erely as a lease. De are loath to follo-

the suggestion for the si!ple reason that it is Juridically dou'tful ho- a contract -orded in the clearest tenor as one of transfer or

coneyance of the title or o-nership of the property concerned itself could 'e construed as !erely a lease thereof. De 'eliee and so

hold that it -ould 'e si!plest and 'est to let the natural conse#uence of the constitutional inalidity, -hich De here declare, of the

co!pro!ise agree!ent and of the decision 'ased thereon as -ell as the su'se#uent orders of e0ecution of such decision 'e allo-ed

to follo- its natural course. >y this is !eant that; +1 the priate respondents, the intanar spouses shall reconey to petitioners, the

uiang spouses, the t-o lots, Gots >/3 and >/< preiously coered 'y CT 12281 -ithout any co!pensation 'ut solely 'y irtue of this

Judg!entH +2 the petitioners shall retain the re!aining lots, Gots >/1 and >/2 coered also 'y CT 12281 and Gots B/2 and B/3coered 'y CT 1<5, -ithout any o'ligation to coney the sa!e to priate respondents, or, to put it the other -ay, priate

respondents !ay not co!pel the petitioners or any of the!, Judicially or other-ise to coney to the! +priate respondents !uch less

to any of the latterQs children any of the lots or lands afore!entionedH and +3 instead of considering -hateer priate respondents hae

paid not only under the contracts here'y inalidated 'ut also under the original transaction 'et-een the parties, the sa!e should 'e

dee!ed as da!ages due petitioners for their ina'ility to hae possession of the lands herein inoled up to the ti!e the Judg!ent

herein is co!plied -ith, at the rate of Fifty Thousand +P5,. Pesos a year fro! Bugust 2, 1975.

n this connection, the petition alleges that only P2<,. hae 'een paid 'y priate respondents, al'eit a higher figure is aguely

alleged in the later pleadings of petitioners, and petitioners esti!ate the rentals, if De should accept the theory of lease proposed 'y



the!, to 'e P73,. up to the present. De are not inclined to accept those figures. De are !ore i!pressed 'y the allegation on

page 3 of priate respondentsQ !e!orandu! that they hae fully paid the P22,. consideration stipulated in the co!pro!ise in

addition to P13,. they had already preiously paid under the contracts that 'eca!e the su'Ject of the three cases that -ere

precisely atte!pted to 'e co!pro!ised on Bugust 2, 1975. De are also inclined to accept as !ore reasona'le the P5,.

esti!ate !ade 'y priate respondents of the net yearly yield of the lands in dispute.

Dith the foregoing ie- De hae ta&en of these cases no- 'efore As, De see no need to resole the other issues discussed 'y the

parties in their !e!oranda and !otions.

$EREFORE, Judg!ent is here'y rendered granting the herein petition and declaring the rights of the parties to 'e as they are stated

a'oe in the paragraph preceding the penulti!ate one of the a'oe opinion. Costs against priate respondents. t is so ordered.

)oncepcion, Jr., Fernandez, and De )astro, JJ., concur.

!ad &antos, J., separate opinion concurring in the result.

quino, J., did not ta&e part.



< Phil. 9<

?4 >B4C

$ .=. 4o. 135385, 6ece!'er , 2 %

"BB4 C=AN B46 C?"B= ?A=PB, P?TT4?=", L". "?C=?TB= F ?4L=4)?4T B46 4BTA=BG =?"A=C?",

"?C=?TB= F >A6?T B46 )B4B?)?4T B46 C*B=)B4 B46 C))""4?=" F T*? 4BT4BG C))""4 4

46?4A" P?PG?", =?"P46?4T".

*4. KAB4 ) .FGBL?=, *4. P4CB4 >?44B?4, >BB4 B"CB==BB, ?6TB) )B4"BB4B4, >B"G DB46B,?L?G4 6A4AB4, B) TAB", BGF=?) CB=PB4, G>?=BT B. B>4, )BT?=46B6 ). CGB", 4B=C"B ).

6BGAP4?", >B =B)/C44? "BTA=4, >B? )G)/>?BT=N T. B>B"BGB, 6BTA >BGTA4TA4/B4T4 6.

GA)B464, 6BTA )B4TA)ABD T?F"T "B>B"BG?", 6BTA ?6ABB=6 >B46B, 6BTA K?G A4B6, 6BTA =B)4

>BBB4, T)AB K"? B4, T)AB )BCB= 6. "BGBCB, T)AB ?6D4 >. ?464, 6BTA "B*B)P4 )BGB4BD L,

6BTA >?4 P?46B CB>4, >B 4B4BP4B/GNB "BDB, >B 4B 6BB/)?G46B ". =?)A46, >B T4B4*BB

*?G4TB T. PB4B4, 6BTA )BBPABD B6G4 G. "BDB, 6BTA )BA6BBD/C="P?4 "BDB, LC )BB, GA=6?"

6. B)", G>?=T P. *B4, T?=?"B B"PB=, )B4A?G ". 4BGB4, )B =BC? G. =4, ="?)B=? . P?, >?4T

CB=4, K"?P* KA6? CB=B4T?", G4?TT? CB=B4T?"/LLBG, GB4G? "?A46, "BTA= ". >A4B, CB=G4

6)AGT, B46=?" )?46=4, G?PG6 B>AB4, L=G CB?TB4, C4C*TB . 6?"CBB, G?L ?"T?L?",

6?TT? . ?"T?L?N, =6GF C. BAGB=, )BA= LBG4?", P?P? *. BT4, F?GB T. 6BL, P?=F?CT >. A4"B

DBGT?= 4. T)G, )B4A?G T. "?G?4, "CB= 6BGA4*B, =C . "AGBTB4, =BFF )BG46B, BGF=?6 B>GGB4",

K?""? B46GB>, )=GB46 *. )B4AG4TB", "B)? "BTA=4, =)? B. G46B*B, =?G ". )B4"B4/CBB4,

PBEAT ". G?"?", FGP? . "BDB, *?=)4B ". "BDB, KAGA" ". "BDB, G?4B=6B "BDB, K)) AA>,

"BGLB6= T4"4, L?4B4C BPB4, )B64 )BG6, "A) )BG6, 4?4?4 )BG6, )B4BTB64 BAA"T

6B4, K"?P*4? ). BG>?", )=?4 )BG6, )B= )B4CBG, F?GB 6B)G4, "BG)? P. "B=NB, F?GP? P.

>B4, "B)) "BG4A4B4, B4T4 6. ?)>B, 4=)B )BPB4"B4", =)? "BGB, "=., K?="4 P. ?=B6B,

=?4BT T. >B4, K=., "B=4 )B"BG4, "G?6B6 ). ?=B=6B, ?GNB>?T* G. )?46, )=B4T? ". TDB4, 6B4G ).

)BGA6B, )4=" )B=C?G )BG6, =?P=?"?4T?6 > *?= FBT*?= C=4?G )BG6, )B=C?G4 ). GB6=B,

=?P=?"?4T?6 > *?= FBT*?= )4C 6. GB6=B, K?44G4 )BG6, =?P=?"?4T?6 > *?= FBT*?= T4 )BG6, B=?G

). ?LB4?G"TB, =?P=?"?4T?6 > *?= )T*?= G4B >BG>A?4B, ?6DB=6 ). ?)A, "=., "A"B4 >GB4, 46, PAGB

>BT >QGBB4 T=>BG FB=)?=Q" B""CBT4, 4T?=/P?PG?Q" ?@C*B4?, 4C. B46 =??4 F=A)/D?"T?=4 L"BB"

4T?=L?4=".

C))""4 4 *A)B4 =*T", 4T?=L?4=.

BGB*B4 46?4A" P?PG? B46 *B=>4 FA46BT4 F= T*? C4"?=LBT4 F 4BTA=BG =?"A=C?", 4C.,

4T?=L?4=.

=?"GAT4

#ER C&RI!+

Petitioners sagani Cru and Cesar ?uropa 'rought this suit for prohi'ition and !anda!us as citiens and ta0payers, assailing the

constitutionality of certain proisions of =epu'lic Bct 4o. 8371 +=.B. 8371, other-ise &no-n as the ndigenous Peoples =ights Bct of

1997 +P=B, and its !ple!enting =ules and =egulations +!ple!enting =ules.

n its resolution of "epte!'er 29, 1998, the Court re#uired respondents to co!!ent.$1% n co!pliance, respondents Chairperson and

Co!!issioners of the 4ational Co!!ission on ndigenous Peoples +4CP, the goern!ent agency created under the P=B to

i!ple!ent its proisions, filed on cto'er 13, 1998 their Co!!ent to the Petition, in -hich they defend the constitutionality of the P=B

and pray that the petition 'e dis!issed for lac& of !erit.

n cto'er 19, 1998, respondents "ecretary of the 6epart!ent of ?niron!ent and 4atural =esources +6?4= and "ecretary of the

6epart!ent of >udget and )anage!ent +6>) filed through the "olicitor eneral a consolidated Co!!ent. The "olicitor eneral is o

the ie- that the P=B is partly unconstitutional on the ground that it grants o-nership oer natural resources to indigenous peoples



and prays that the petition 'e granted in part.

n 4oe!'er 1, 1998, a group of interenors, co!posed of "en. Kuan Flaier, one of the authors of the P=B, )r. Ponciano

>ennagen, a !e!'er of the 198 Constitutional Co!!ission, and the leaders and !e!'ers of 112 groups of indigenous peoples

+Flaier, et. al, filed their )otion for Geae to nterene. They Join the 4CP in defending the constitutionality of P=B and praying for

the dis!issal of the petition.

n )arch 22, 1999, the Co!!ission on *u!an =ights +C*= li&e-ise filed a )otion to nterene and:or to Bppear as B!icus Curiae.

The C*= asserts that P=B is an e0pression of the principle of parens patriae and that the "tate has the responsi'ility to protect andguarantee the rights of those -ho are at a serious disadantage li&e indigenous peoples. For this reason it prays that the petition 'e

dis!issed.

n )arch 23, 1999, another group, co!posed of the &alahan ndigenous People and the *ari'on Foundation for the Conseration of

4atural =esources, nc. +*ari'on, et al., filed a !otion to nterene -ith attached Co!!ent/in/nterention. They agree -ith the 4CP

and Flaier, et al. that P=B is consistent -ith the Constitution and pray that the petition for prohi'ition and !anda!us 'e dis!issed.

The !otions for interention of the aforesaid groups and organiations -ere granted.

ral argu!ents -ere heard on Bpril 13, 1999. Thereafter, the parties and interenors filed their respectie !e!oranda in -hich they

reiterate the argu!ents adduced in their earlier pleadings and during the hearing.

Petitioners assail the constitutionality of the follo-ing proisions of the P=B and its !ple!enting =ules on the ground that they

a!ount to an unla-ful depriation of the "tateQs o-nership oer lands of the pu'lic do!ain as -ell as !inerals and other natural

resources therein, in iolation of the regalian doctrine e!'odied in "ection 2, Brticle @ of the Constitution;

+1 "ection 3+a -hich defines the e0tent and coerage of ancestral do!ains, and "ection 3+' -hich, in turn, defines

ancestral landsH

+2 "ection 5, in relation to section 3+a, -hich proides that ancestral do!ains including inaliena'le pu'lic lands, 'odies of

-ater, !ineral and other resources found -ithin ancestral do!ains are priate 'ut co!!unity property of the indigenous

peoplesH

+3 "ection in relation to section 3+a and 3+' -hich defines the co!position of ancestral do!ains and ancestral landsH

+< "ection 7 -hich recognies and enu!erates the rights of the indigenous peoples oer the ancestral do!ainsH

+5 "ection 8 -hich recognies and enu!erates the rights of the indigenous peoples oer the ancestral landsH

+ "ection 57 -hich proides for priority rights of the indigenous peoples in the haresting, e0traction, deelop!ent ore0ploration of !inerals and other natural resources -ithin the areas clai!ed to 'e their ancestral do!ains, and the right

to enter into agree!ents -ith nonindigenous peoples for the deelop!ent and utiliation of natural resources therein for a

period not e0ceeding 25 years, rene-a'le for not !ore than 25 yearsH and

+7 "ection 58 -hich gies the indigenous peoples the responsi'ility to !aintain, deelop, protect and consere the ancestral

do!ains and portions thereof -hich are found to 'e necessary for critical -atersheds, !angroes, -ildlife sanctuaries,

-ilderness, protected areas, forest coer or reforestation.$2%

Petitioners also content that, 'y proiding for an all/enco!passing definition of ancestral do!ains and ancestral lands -hich !ight



een include priate lands found -ithin said areas, "ections 3+a and 3+' iolate the rights of priate lando-ners.$3%

n addition, petitioners #uestion the proisions of the P=B defining the po-ers and Jurisdiction of the 4CP and !a&ing custo!ary la-

applica'le to the settle!ent of disputes inoling ancestral do!ains and ancestral lands on the ground that these proisions iolate the

due process clause of the Constitution.$<% These proisions are;

+1 "ections 51 to 53 and 59 -hich detail the process of delineation and recognition of ancestral do!ains and -hich est on

the 4CP the sole authority to delineate ancestral do!ains and ancestral landsH

+2 "ection 52$i% -hich proides that upon certification 'y the 4CP that a particular area is an ancestral do!ain and upon

notification to the follo-ing officials, na!ely, the "ecretary of ?niron!ent and 4atural =esources, "ecretary of nterior

and Gocal oern!ents, "ecretary of Kustice and Co!!issioner of the 4ational 6eelop!ent Corporation, the

Jurisdiction of said officials oer said area ter!inatesH

+3 "ection 3 -hich proides the custo!ary la-, traditions and practices of indigenous peoples shall 'e applied first -ith

respect to property rights, clai!s of o-nership, hereditary succession and settle!ent of land disputes, and that any dou't

or a!'iguity in the interpretation thereof shall 'e resoled in faor of the indigenous peoplesH

+< "ection 5 -hich states that custo!ary la-s and practices shall 'e used to resole disputes inoling indigenous

peoplesH and

+5 "ection -hich ests on the 4CP the Jurisdiction oer all clai!s and disputes inoling rights of the indigenous

peoples.$5%

Finally, petitioners assail the alidity of =ule L, Part , "ection 1 of the 4CP Bd!inistratie rder 4o. 1, series of 1998, -hich

proides that the ad!inistratie relationship of the 4CP to the ffice of the President is characteried as a lateral 'ut autono!ous

relationship for purposes of policy and progra! coordination. They contend that said =ule infringes upon the PresidentQs po-er of

control oer e0ecutie depart!ents under "ection 17, Brticle L of the Constitution.$%

Petitioners pray for the follo-ing;

+1 B declaration that "ections 3, 5, , 7, 8, 52$%, 57, 58, 59, 3, 5 and and other related proisions of =.B. 8371 are

unconstitutional and inalidH

+2 The issuance of a -rit of prohi'ition directing the Chairperson and Co!!issioners of the 4CP to cease and desist fro!

i!ple!enting the assailed proisions of =.B. 8371 and its !ple!enting =ulesH

+3 The issuance of a -rit of prohi'ition directing the "ecretary of the 6epart!ent of ?niron!ent and 4atural =esources to

cease and desist fro! i!ple!enting 6epart!ent of ?niron!ent and 4atural =esources Circular 4o. 2, series of 1998H

+< The issuance of a -rit of prohi'ition directing the "ecretary of >udget and )anage!ent to cease and desist fro!

dis'ursing pu'lic funds for the i!ple!entation of the assailed proisions of =.B. 8371H and

+5 The issuance of a -rit of !anda!us co!!anding the "ecretary of ?niron!ent and 4atural =esources to co!ply -ith

his duty of carrying out the "tateQs constitutional !andate to control and superise the e0ploration, deelop!ent,

utiliation and conseration of Philippine natural resources. $7%



Bfter due deli'eration on the petition, the !e!'ers of the Court oted as follo-s;

"een +7 oted to dis!iss the petition. Kustice apunan filed an opinion, -hich the Chief Kustice and Kustices >ellosillo, Euisu!'ing,

and "antiago Join, sustaining the alidity of the challenged proisions of =.B. 8371. Kustice Puno also filed a separate opinion

sustaining all challenged proisions of the la- -ith the e0ception of "ection 1, Part , =ule of 4CP Bd!inistratie rder 4o. 1,

series of 1998, the =ules and =egulations !ple!enting the P=B, and "ection 57 of the P=B -hich he contends should 'e

interpreted as dealing -ith the large/scale e0ploitation of natural resources and should 'e read in conJunction -ith "ection 2, Brticle @

of the 1987 Constitution. n the other hand, Kustice )endoa oted to dis!iss the petition solely on the ground that it does not raise a Justicia'le controersy and petitioners do not hae standing to #uestion the constitutionality of =.B. 8371.

"een +7 other !e!'ers of the Court oted to grant the petition. Kustice Pangani'an filed a separate opinion e0pressing the ie- that

"ections 3 +a+', 5, , 7 +a+', 8, and related proisions of =.B. 8371 are unconstitutional. *e reseres Judg!ent on the

constitutionality of "ections 58, 59, 5, and of the la-, -hich he 'eliees !ust a-ait the filing of specific cases 'y those -hose

rights !ay hae 'een iolated 'y the P=B. Kustice Litug also filed a separate opinion e0pressing the ie- that "ections 3+a, 7, and

57 of =.B. 8371 are unconstitutional. Kustices )elo, Pardo, >uena, onaga/=eyes, and 6e Geon Join in the separate opinions of

Kustices Pangani'an and Litug.

Bs the otes -ere e#ually diided +7 to 7 and the necessary !aJority -as not o'tained, the case -as redeli'erated upon. *o-eer,

after redeli'eration, the oting re!ained the sa!e. Bccordingly, pursuant to =ule 5, "ection 7 of the =ules of Ciil Procedure, the

petition is 6")""?6.

Bttached hereto and !ade integral parts thereof are the separate opinions of Kustices Puno, Litug, apunan, )endoa, and

Pangani'an.

" =6?=?6.

Davide, Jr., ).J., 4ellosillo, Melo, 6uisum!ing, Pardo, 4uena, 3onzaga%Re#es, 'nares%&antiago, and De 2eon, Jr., JJ., concur.

Puno, Vitug, Kapunan, Mendoza and Pangani!an JJ., see separate opinion



271 Phil. 89

FIRS% DIVISION$ .=. 4o. 7<833, Kanuary 21, 1991%

%$O!S C. C$EES!N, #E%I%IONER, VS. IN%EREDI!%E !##E""!%E CO&R% !ND ES%E"I%! #!DI""!, RES#ONDEN%S.

D E C I S I O N

4B=LB"B, K.;

This appeal concerns the atte!pt 'y an B!erican citien +petitioner Tho!as Chees!an to annul // for lac& of consent on his part // the

sale 'y his Filipino -ife +Criselda of a residential lot and 'uilding to ?stelita Padilla, also a Filipino.

Tho!as Chees!an and Criselda P. Chees!an -ere !arried on 6ece!'er <, 197 'ut hae 'een separated since Fe'ruary 15, 1981.

$1%

n Kune <, 197<, a 6eed of "ale and Transfer of Possessory =ights -as e0ecuted 'y Br!ando Bltares coneying a parcel of

unregistered land and the house thereon +at 4o. 7 4eptune "treet, ordon *eights, longapo City in faor of Criselda P. Chees!an,

of legal age, Filipino citien, !arried to Tho!as Chees!an, and residing at Got 4o. 1, >l&. 8, Filtration =oad, "ta. =ita, longapo City

WW.$2% Tho!as Chees!an, although a-are of the deed, did not o'Ject to the transfer 'eing !ade only to his -ife.$3%

Thereafter // and again -ith the &no-ledge of Tho!as Chees!an and also -ithout any protest 'y hi! // ta0 declarations for the

property purchased -ere issued in the na!e only of Criselda Chees!anH and Criselda assu!ed e0clusie !anage!ent and

ad!inistration of said property, leasing it to tenants.$<% n Kuly 1, 1981, Criselda Chees!an sold the property to ?stelita ). Padilla,

-ithout the &no-ledge or consent of Tho!as Chees!an.$5% The deed descri'ed Criselda as 'eing . . . . of legal age, !arried to an

B!erican citien,WW.$%

Thirty days later, or on Kuly 31, 1981, Tho!as Chees!an 'rought suit in the Court of First nstance at longapo City against his -ife,

Criselda, and ?stelita Padilla, praying for the annul!ent of the sale on the ground that the transaction had 'een e0ecuted -ithout his

&no-ledge and consent.$7% Bn ans-er -as filed in the na!es of 'oth defendants, alleging that +1 the property sold -as paraphernal,

haing 'een purchased 'y Criselda -ith funds e0clusiely 'elonging to her +her o-n separate !oneyH +2 Tho!as Chees!an, 'eing

an B!erican, -as dis#ualified to hae any interest or right of o-nership in the landH and +3 ?stelita Padilla -as a 'uyer in good faith.$8%

6uring the pre/trial conference, the parties agreed upon certain facts -hich -ere su'se#uently set out in a pre/trial rder dated

cto'er 22, 1981,$9% as follo-s;

1. >oth parties recognie the e0istence of the 6eed of "ale oer the residential house located at 4o. 7 ranada "t., ordon

*eights, longapo City, -hich -as ac#uired fro! Br!ando Bltares on Kune <, 197< and sold 'y defendant Criselda Chees!an to

?stelita Padilla on Kuly 12, 1981H and

2. That the transaction regarding the transfer of their property too& place during the e0istence of their !arriage as the couple -ere

!arried on 6ece!'er <, 197 and the #uestioned property -as ac#uired so!eti!e on Kune <, 197<.

The action resulted in a Judg!ent dated Kune 2<, 1982,$1% declaring oid a' initio the sale e0ecuted 'y Criselda Chees!an in faor of

?stelita ). Padilla, and ordering the deliery of the property to Tho!as Chees!an as ad!inistrator of the conJugal partnership

property, and the pay!ent to hi! of P5,. as attorneyQs fees and e0penses of litigation.$11%

The Judg!ent -as ho-eer set aside as regards ?stelita Padilla on a petition for relief filed 'y the latter, grounded on fraud, !ista&e

and:or e0cusa'le negligence -hich had seriously i!paired her right to present her case ade#uately.$12% Bfter the petition for relief

fro! Judg!ent -as gien due course, according to petitioner, a ne- Judge presided oer the case.$13%

?stelita Padilla filed a supple!ental pleading on 6ece!'er 2, 1982 as her o-n ans-er to the co!plaint, and a !otion for su!!ary

Judg!ent on )ay 17, 1983. Blthough there -as initial opposition 'y Tho!as Chees!an to the !otion, the parties ulti!ately agreed on



the rendition 'y the court of a su!!ary Judg!ent after entering into a stipulation of facts, at the hearing of the !otion on Kune 21,

1983, the stipulation 'eing of the follo-ing tenor;$1<%

+1 that the property in #uestion -as 'ought during the e0istence of the !arriage 'et-een the plaintiff and the defendant Criselda P.

Chees!anH

+2 that the property 'ought during the !arriage -as registered in the na!e of Criselda Chees!an and that the 6eed of "ale and

Transfer of Possessory =ights e0ecuted 'y the for!er o-ner/endor Br!ando Bltares in faor of Criselda Chees!an !ade no !ention

of the plaintiffH

+3 that the property, su'Ject of the proceedings, -as sold 'y defendant Criselda Chees!an in faor of the other defendant ?stelita

). Padilla, -ithout the -ritten consent of the plaintiff.

'iously upon the theory that no genuine issue e0isted any longer and there -as hence no need of a trial, the parties haing in fact

su'!itted, as also stipulated, their respectie !e!oranda each praying for a faora'le erdict, the Trial Court$15% rendered a

"u!!ary Kudg!ent dated Bugust 3, 1982 declaring the sale e0ecuted 'y WW Criselda Chees!an in faor of WW ?stelita Padilla to 'e

alid, dis!issing Tho!as Chees!anQs co!plaint and ordering hi! to i!!ediately turn oer the possession of the house and lot

su'Ject of WW +the case to WW ?stelita Padilla WW.$1%

The Trial Court found that /

1 the eidence on record satisfactorily oerca!e the disputa'le presu!ption in Brticle 1 of the Ciil Code // that all property of the

!arriage 'elongs to the conJugal partnership unless it 'e proed that it pertains e0clusiely to the hus'and or to the -ife // and that

the i!!oa'le in #uestion -as in truth CriseldaQs paraphernal propertyH

2 that !oreoer, said legal presu!ption in Brticle 1 could not apply inas!uch as the hus'and/plaintiff is an B!erican citien and

therefore dis#ualified under the Constitution to ac#uire and o-n real propertiesH and

3 that the e0ercise 'y Criselda of e0clusie acts of do!inion -ith the &no-ledge of her hus'and had led WW ?stelita Padilla to

'eliee that the properties -ere the e0clusie properties of Criselda Chees!an and on the faith of such a 'elief she 'ought the

properties fro! her and for alue, and therefore, Tho!as Chees!an -as, under Brticle 1<73 of the Ciil Code, estopped to i!pugn

the transfer to ?stelita Padilla.

Tho!as Chees!an appealed to the nter!ediate Bppellate Court. There he assailed the Trial Court acts +1 of granting ?stelita

PadillaQs petition for relief, and its resolution of !atters not su'Ject of said petitionH +2 of declaring alid the sale to ?stelita Padilla

despite the lac& of consent thereto 'y hi!, and the presu!ption of the conJugal character of the property in #uestion pursuant to Brticle

1 of the Ciil CodeH +3 of disregarding the Judg!ent of Kune 2<, 1982 -hich, not haing 'een set aside as against Criselda

Chees!an, continued to 'e 'inding on herH and +< of !a&ing findings of fact not supported 'y eidence. Bll of these contentions -ere

found to 'e -ithout !erit 'y the Bppellate Tri'unal -hich, on Kanuary 7, 198, pro!ulgated a decision +erroneously deno!inated,

=eport$17% affir!ing the "u!!ary Kudg!ent co!plained of, haing found no reersi'le error therein.

nce !ore, Tho!as Chees!an aailed of the re!edy of appeal, this ti!e to this Court. *ere, he argues that it -as reersi'le error for

the nter!ediate Bppellate Court /

1 to find that the presu!ption that the property in #uestion is conJugal in accordance -ith Brticle 1 had 'een satisfactorily oerco!e

'y ?stelita PadillaH$18%

2 to rule that ?stelita Padilla -as a purchaser of said property in good faith, it appearing;

a that the deed 'y -hich the property -as coneyed to Criselda Chees!an descri'ed her as !arried to Tho!as C. Chees!an, as

-ell as the deed 'y -hich the property -as later coneyed to ?stelita Padilla 'y Criselda Chees!an also descri'ed her as !arried to

an B!erican citien, and 'oth said descriptions had thus placed ?stelita on &no-ledge of the conJugal nature of the propertyH and



' that further!ore, ?stelita had ad!itted to stating in the deed 'y -hich she ac#uired the property a price !uch lo-er than that

actually paid in order to aoid pay!ent of !ore o'ligation to the goern!entH$19%

3 to decline to declare that the eidence did not -arrant the grant of ?stelita PadillaIs petition for relief on the ground of fraud, !ista&e

and:or e0cusa'le negligenceH$2%

< to hold that Tho!as Chees!an had -aied his o'Jection to ?stelitaQs petition for relief 'y failing to appeal fro! the order granting

the sa!eH

5 to accord to ?stelita Padilla a relief other than that she had specifically prayed for in her petition for relief, i.e., the restoration of the

purchase price -hich ?stelita allegedly paid to CriseldaH$21% and

to fail to declare that Tho!as Chees!anQs citienship is not a 'ar to his action to recoer the lot and house for the conJugal

partnership.$22%

"uch conclusions as that +1 fraud, !ista&e or e0cusa'le negligence e0isted in the pre!ises Justifying relief to ?stelita Padilla under

=ule 38 of the =ules of Court, or +2 that Criselda Chees!an had used !oney she had 'rought into her !arriage to Tho!as

Chees!an to purchase the lot and house in #uestion, or +3 that ?stelita Padilla 'elieed in good faith that Criselda Chees!an -as the

e0clusie o-ner of the property that she +?stelita intended to and did in fact 'uy // deried fro! the eidence adduced 'y the parties,

the facts set out in the pleadings or other-ise appearing on record // are conclusions or findings of fact. Bs distinguished fro! a

#uestion of la- // -hich e0ists -hen the dou't or difference arises as to -hat the la- is on a certain state of facts // there is a

#uestion of fact -hen the dou't or difference arises as to the truth or the falsehood of alleged factsH$23% or -hen the #uery

necessarily inites cali'ration of the -hole eidence considering !ainly the credi'ility of -itnesses, e0istence and releancy of specific

surrounding circu!stances, their relationH to each other and to the -hole and the pro'a'ilities of the situation.$2<%

4o-, it is a0io!atic that only #uestions of la-, distinctly set forth, !ay 'e raised in a petition for the reie- on certiorari of a decision of

the Court of Bppeals presented to this Court.$25% Bs eeryone &no-s or ought to &no-, the appellate Jurisdiction of this Court is li!ited

to reie-ing errors of la-, accepting as conclusie the factual findings of the lo-er court upon its o-n assess!ent of the eidence.$2%

The creation of the Court of Bppeals -as precisely intended to ta&e a-ay fro! the "upre!e Court the -or& of e0a!ining the eidence,

and confine its tas& to the deter!ination of #uestions -hich do not call for the reading and study of transcripts containing the testi!ony

of -itnesses.$27% The rule of conclusieness of the factual findings or conclusions of the Court of Bppeals is, to 'e sure, su'Ject to

certain e0ceptions,$28% none of -hich ho-eer o'tains in the case at 'ar.

t is note-orthy that 'oth the Trial Court and the nter!ediate Bppellate Court reached the sa!e conclusions on the three +3 factual

!atters a'oe set forth, after assess!ent of the eidence and deter!ination of the pro'atie alue thereof. >oth Courts found that the

facts on record ade#uately proed fraud, !ista&e or e0cusa'le negligence 'y -hich ?stelita PadillaQs rights had 'een su'stantially

i!pairedH that the funds used 'y Criselda Chees!an -as !oney she had earned and saed prior to her !arriage to Tho!as

Chees!an, and that ?stelita Padilla did 'eliee in good faith that Criselda Chees!an -as the sole o-ner of the property in #uestion.

Conse#uently, these deter!inations of fact -ill not 'e here distur'ed, this Court haing 'een cited to no reason for doing so.

These considerations dispose of the first three +3 points that petitioner Chees!an see&s to !a&e in this appeal. They also !a&e

unnecessary an e0tended discussion of the other issues raised 'y hi!. Bs to the!, it should suffice to restate certain funda!ental

propositions.

Bn order of a Court of First nstance +no- =egional Trial Court granting a petition for relief under =ule 38 is interlocutory and is not

appeala'le. *ence, the failure of the party -ho opposed the petition to appeal fro! said order, or his participation in the proceedings

su'se#uently had, cannot 'e construed as a -aier of his o'Jection to the petition for relief so as to preclude his raising the sa!e

#uestion on an appeal fro! the Judg!ent on the !erits of the !ain case. "uch a party need not repeat his o'Jections to the petition for

relief, or perfor! any act thereafter +e.g., ta&e for!al e0ception in order to presere his right to #uestion the sa!e eentually, on

appeal, it 'eing sufficient for this purpose that he has !ade of record the action -hich he desires the court to ta&e or his o'Jection to

the action of the court and his grounds therefor.$29%



Bgain, the prayer in a petition for relief fro! Judg!ent under =ule 38 is not necessarily the sa!e prayer in the petitionerQs co!plaint,

ans-er or other 'asic pleading. This should 'e o'ious. ?#ually o'ious is that once a petition for relief is granted and the Judg!ent

su'Ject thereof set aside, and further proceedings are thereafter had, the Court in its Judg!ent on the !erits !ay properly grant the

relief sought in the petitionerQs 'asic pleadings, although different fro! that stated in his petition for relief.

Finally, the funda!ental la- prohi'its the sale to aliens of residential land. "ection 1<, Brticle @L of the 1973 Constitution ordains that,

"ae in cases of hereditary succession, no priate land shall 'e transferred or coneyed e0cept to indiiduals, corporations, or

associations #ualified to ac#uire or hold lands of the pu'lic do!ain.$3% Petitioner Tho!as Chees!an -as, of course, charged -ith

&no-ledge of this prohi'ition. Thus, assu!ing that it -as his intention that the lot in #uestion 'e purchased 'y hi! and his -ife, heac#uired no right -hateer oer the property 'y irtue of that purchaseH and in atte!pting to ac#uire a right or interest in land,

icariously and clandestinely, he &no-ingly iolated the ConstitutionH the sale as to hi! -as null and oid.$31% n any eent, he had and

has no capacity or personality to #uestion the su'se#uent sale of the sa!e property 'y his -ife on the theory that in so doing he is

!erely e0ercising the prerogatie of a hus'and in respect of conJugal property. To sustain such a theory -ould per!it indirect

controersion of the constitutional prohi'ition. f the property -ere to 'e declared conJugal, this -ould accord to the alien hus'and a

not insu'stantial interest and right oer land, as he -ould then hae a decisie ote as to its transfer or disposition. This is a right that

the Constitution does not per!it hi! to hae.

Bs already o'sered, the finding that his -ife had used her o-n !oney to purchase the property cannot, and -ill not, at this stage of

the proceedings 'e reie-ed and oerturned. >ut een if it -ere a fact that said -ife had used conJugal funds to !a&e the ac#uisition,

the considerations Just set out !ilitate, on high constitutional grounds, against his recoering and holding the property so ac#uired, or

any part thereof. Bnd -hether in such an eent, he !ay recoer fro! his -ife any share of the !oney used for the purchase or charge

her -ith unauthoried disposition or e0penditure of conJugal funds is not no- in#uired intoH that -ould 'e, in the pre!ises, a purely

acade!ic e0ercise. Bn e#ually decisie consideration is that ?stelita Padilla is a purchaser in good faith, 'oth the Trial Court and the

Bppellate Court haing found that Chees!anQs o-n conduct had led her to 'eliee the property to 'e e0clusie property of the latterQs

-ife, freely disposa'le 'y her -ithout his consent or interention. Bn innocent 'uyer for alue, she is entitled to the protection of the

la- in her purchase, particularly as against Chees!an, -ho -ould assert rights to the property denied hi! 'y 'oth letter and spirit of

the Constitution itself.

D*?=?F=?, the appealed decision is BFF=)?6, -ith costs against petitioner.

" =6?=?6.

Cru, ancayco, riUo/B#uino, and )edialdea, KK., concur.



371 Phil. 523

%$IRD DIVISION$ .=. 4o. 133<7, Bugust 17, 1999%

$EIRS OF "OREN(O '!#, N!E"' S!""' S&N '!#, !RG!RE% '!#&' !ND !N&E" '!#, #E%I%IONERS, VS. %$E$ONOR!)"E CO&R% OF !##E!"S, R!ON '!# !ND )EN*!IN '!#, RES#ONDEN%S.

D E C I S I O N

LTA, K.;

Dhat in essence petitioners see& is the enforce!ent of an alleged trust agree!ent 'et-een Goreno ap, no- deceased, and his

'rothers =a!on and >enJa!in, herein co/respondents, coering a piece of land and its i!proe!ent. The case and factual settings

found 'y the Court of Bppeals do not appear to deiate significantly fro! that priorly !ade 'y the trial court.

"o!eti!e in Fe'ruary 19, =a!on ap purchased a parcel of land situated at 123 +for!erly 75 >atanes "treet, alas, Eueon City,

coered 'y Transfer Certificate of Title 4o. 821:T/<1<, fro! the spouses Carlos and Kosefina 4ery. The lot -as thereupon registered

in the na!e of =a!on ap under Transfer Certificate of Title 4o. 12132H forth-ith, he also declared the property in his na!e for ta0

purposes and paid the real estate ta0es due thereon fro! 19 to 1992. n 197, =a!on ap constructed a t-o storey 3/door

apart!ent 'uilding for the use of the ap fa!ily. ne/fifth +1:5 of the cost of the construction -as defrayed 'y =a!on ap -hile the

rest -as shouldered 'y Chua )ia, the !other of Goreno, >enJa!in and =a!on. Apon its co!pletion, the i!proe!ent -as declared

for real estate ta0 purposes in the na!e of Goreno ap in deference to the -ishes of the old -o!an.

Goreno ap died on 11 Kuly 197. B fe- !onths later, his heirs +herein petitioners left their fa!ily d-elling in Gucena City to reside

per!anently in )anila. =a!on ap allo-ed petitioners to use one unit of the apart!ent 'uilding.

n 18 )arch 1992, =a!on ap sold the land and his share of the 3/door apart!ent to his 'rother, his herein co/respondent >enJa!in

ap, for the su! of P337,5. pursuant to a 6eed of "ale, recorded on een date in the )e!orandu! of ?ncu!'rances of the title

to said property. Transfer Certificate of Title 4o. 732 -as in due ti!e issued in the na!e of >enJa!in ap.

The controersy started -hen herein petitioners, 'y a letter of 8 Kune 1992, adised respondents of the for!erQs clai! of o-nershipoer the property and de!anded that respondents e0ecute the proper deed necessary to transfer the title to the!. Bt a'out the sa!e

ti!e, petitioners filed a case for eJect!ent against one of the 'onafide tenants of the property.

n 29 Kuly 1992, respondents filed an action -ith the =egional Trial Court +=TC of Eueon City, doc&eted Ciil Case 4o. E/92/

12899, for #uieting of title against petitioners. n their ans-er, petitioners aerred that so!eti!e in 19 the spouses Carlos and

Kosefina 4ery offered to sell the disputed parcel of land to their predecessor/in/interest, Goreno ap, for the su! of P15,.. "ince

Goreno and his -ife "ally ap -ere at that ti!e Chinese citiens, Goreno re#uested his 'rother =a!on to allo- the use of the latterQs

na!e in the purchase, registration, and declaration for ta0 purposes of the su'Ject lot to -hich =a!on ap consented. t -as agreed

that the property -ould re!ain registered in the na!e of =a!on ap until such ti!e as Goreno -ould hae ac#uired Philippine

citienship 'ut that, should Goreno predecease, the lot -ould then 'e transferred to GorenoQs heirs upon the latterQs naturaliation.

Petitioners contended that it -as Goreno -ho had caused the construction of the 3/door apart!ent on the property, !erely entrustingthe !oney therefor to =a!on ap. The death of Goreno in 197 pro!pted petitioners to !oe in and occupy the apart!ent and the

lot, -ithout any o'Jection fro! =a!on and >enJa!in, although the latter -ere allo-ed to stay in the pre!ises since they had no other

place to lie in. n 1991, petitioners ac#uired Philippine citienship and, forth-ith, they re#uested =a!on ap to hae the title to the lot

transferred to their na!es 'ut to their chagrin they discoered that =a!on had sold the lot to his co/respondent >enJa!in.

Bssessing the eidence 'efore it, the trial court found for the respondents and adJudged >enJa!in ap to 'e the true and la-ful o-ner

of the disputed property.

n appeal, the Court of Bppeals affir!ed the decision of the trial court and de'un&ed the clai! of petitioners that =a!on ap -as

!erely so used as a du!!y 'y Goreno ap. iing full -eight and credit to the 6eed of "ale e0ecuted 'y the 4ery spouses in faor of



=a!on ap, the appellate court stressed that to oerco!e the presu!ption of regularity in the e0ecution of a pu'lic docu!ent, the

eidence to the contrary should 'e clear and conincing een as it -as e#ually incu!'ent upon petitioners to sho- that the su'se#uen

sale of the property to >enJa!in had only 'een si!ulated and fictitious. The appellate court, ho-eer, deleted the a-ard of attorneyQs

fees in faor of respondents for, in its ie-, it -as not ade#uately sho-n that petitioners had acted in 'ad faith in pursuing their case.

Petitioners are no- 'efore this Court see&ing a reersal of the decision of the Court of Bppeals and contending that/

T*? =?"P46?4T CA=T F BPP?BG" C))TT?6 =?L?=">G? ?=== D*?4 T *G6" T*BT 6?F?46B4T"/

BPP?GGB4T" FBT*?=, G=?4N BP, >?4 C*4?"? CB4 4T ?4T?= 4T B T=A"T B=??)?4T B46 T*? ?@"T?4C?

F B T=A"T B=??)?4T CB4 4T >? P=L?4 >?4 C*4?"?.

T*? =?"P46?4T CA=T F BPP?BG" C))TT?6 =?L?=">G? ?=== D*?4 T *G6" T*BT T*? FBGA=? T

"*D D=TT?4 T=A"T B=??)?4T =?46?=" T*? BGG??6 B=??)?4T A4?4F=C?B>G? > 4T C4"6?=4 T*?

"B)? B" 4? A46?= )PG?6 T=A"T.

T*? =?"P46?4T CA=T F BPP?BG" C))TT?6 =?L?=">G? ?=== D*?4 T *G6" T*BT PB=G ?L6?4C?

B46:= "TBTAT? F F=BA6" BPPG?6 4 T*? CB"? BT >B=.

L

T*? =?"P46?4T CA=T F BPP?BG" C))TT?6 =?L?=">G? ?=== D*?4 T *G6" T*BT BPP?GGB4T" *BL?

T =?FAT? T*? 6??6 F "BG? ?@?CAT?6 > T*? 4?= "PA"?" 4 FBL= F =B)4 BP > CG?B= B46

C4L4C4 ?L6?4C? 4TDT*"TB464 B6)""4 F T*? "B6 6??6 F "BG?.

L

T*? =?"P46?4T CA=T F BPP?BG" C))TT?6 =?L?=">G? ?=== D*?4 T 66 4T C4"6?= T*BT 4 T=A"T

T*? TTG? " 4 T*? 4B)? F T*? T=A"T?? B46 4T 4 T*? 4B)? F T*? 4B?6 D4?=.

L

T*? =?"P46?4T CA=T F BPP?BG" ?==?6 D*?4 T *G6" T*BT =B)4 BP CB4 4T >? B 6A)) F G=?4N

BP >?4 BG?4 B46 6"EABGF?6 T D4 =?BG P=P?=T.

L

T*? =?"P46?4T CA=T F BPP?BG" ?==?6 4 4T 6?CGB=4 T*? TTG? 4 T*? 4B)? F =B)4 BP L6>?4 BCEA=?6 B" 6A)).

L

T*BT =?"P46?4T CA=T F BPP?BG" C))TT?6 =?L?=">G? ?=== D*?4 T =AG?6 T*BT >?4KB)4 BP *B"

P""?""4 F BPB=T)?4T A4T 123 G?D"? D4?="*P P?="4BG P=P?=T?" T*?=?4 4 T*? >B"" F T*?

4L?4T= F T*? "*?=FF F T*? CA=T B EA > DB F B "A>"?EA?4T )B46BT= 4KA4CT4 D*C* DB"

6?4?6.$1%

The Court finds no !erit in the appeal.



To 'egin -ith, a 'rief discussion on the trust relation 'et-een t-o parties could 'e helpful. B trust !ay either 'e e0press or i!plied.$2%

?0press trusts are those -hich are created 'y the direct and positie acts of the parties, 'y so!e -riting or deed, or -ill, or 'y -ords

eincing an intention to create a trust.$3% !plied trusts are those -hich, -ithout 'eing e0press, are deduci'le fro! the nature of the

transaction as !atters of intent or, independently of the particular intention of the parties, as 'eing superinduced on the transaction 'y

operation of la- 'asically 'y reason of e#uity.$<% These species of i!plied trust are ordinarily su'diided into resulting and constructie

trusts.$5% B resulting trust is one that arises 'y i!plication of la- and presu!ed al-ays to hae 'een conte!plated 'y the parties, the

intention as to -hich can 'e found in the nature of their transaction although not e0pressed in a deed or instru!ent of coneyance.$%

=esulting trusts are 'ased on the e#uita'le doctrine that it is the !ore alua'le consideration than the legal title that deter!ines thee#uita'le interest in property.$7% Apon the other hand, a constructie trust is a trust not created 'y any -ord or phrase, either e0pressly

or i!pliedly, eincing a direct intention to create a trust, 'ut one that arises in order to satisfy the de!ands of Justice. t does not co!e

a'out 'y agree!ent or intention 'ut in !ain 'y operation of la-$8% construed against one -ho, 'y fraud, duress or a'use of confidence,

o'tains or holds the legal right to property -hich he ought not, in e#uity and good conscience, to hold.$9%

ne 'asic distinction 'et-een an i!plied trust and an e0press trust is that -hile the for!er !ay 'e esta'lished 'y parol eidence, the

latter cannot. ?en then, in order to esta'lish an i!plied trust in real property 'y parol eidence, the proof should 'e as fully conincing

as if the acts giing rise to the trust o'ligation are proen 'y an authentic docu!ent.$1% Bn i!plied trust, in fine, cannot 'e esta'lished

upon ague and inconclusie proof.$11%

Anfortunately for petitioners, the issues they su'!it in the case at 'ar 'oil do-n to the appreciation of the eidence presented. The

Court of Bppeals, sustaining the court a #uo, has found the eidence su'!itted 'y petitioners to 'e utterly -anting,$12% consisting

!ainly of the self/sering testi!ony of "ally ap. "he herself ad!itted that the 'usiness esta'lish!ent of her hus'and Goreno -as

raed 'y fire in 19< that -ould so!eho- place to dou't the clai! that he indeed had the !eans to purchase the su'Ject land a'out

t-o years later fro! the 4ery spouses. Apon the other hand, =a!on ap -as 'y then an accountant -ith apparent !eans to 'uy the

property hi!self. Bt all eents, findings of fact 'y the Court of Bppeals, particularly -hen consistent -ith those !ade 'y the trial court,

should desere ut!ost regard -hen not deoid of eidentiary support. 4o cogent reason had 'een sho-n 'y petitioners for the Court

to no- hold other-ise.

4ot to 'e dis!issed, further!ore, is the long standing and 'road doctrine of clean hands that -ill not allo- the creation or the use of a

Juridical relation, a trust -hether e0press or i!plied included, to perpetrate fraud or tolerate 'ad faith nor to su'ert, directly or

indirectly, the la-. The trust agree!ent 'et-een =a!on and Goreno, if indeed e0tant, -ould hae 'een in contraention of, in fact, the

funda!ental la-. Then "ection 5, Brticle @, of the 1935 Constitution has proided that /

"ae in cases of hereditary succession, no priate agricultural land shall 'e transferred or assigned e0cept to indiiduals,

corporations, or associations #ualified to ac#uire or hold lands of the pu'lic do!ain in the Philippines.

The !andate has also 'een adopted in "ection 1<, Brticle @L, of the 1973 Constitution and no- reiterated under "ection 7, Brticle @,

of the 1987 Constitution. B trust or a proision in the ter!s of a trust -ould 'e inalid if the enforce!ent of the trust or proision is

against the la- een though its perfor!ance does not inole the co!!ission of a cri!inal or tortuous act. t li&e-ise !ust follo- that

-hat the parties are not allo-ed to do e0pressly is one that they also !ay not do i!pliedly as, for instance, in the guise of a resulting

trust.$13%

The foregoing dis#uisition renders unnecessary the resolution of the incidental issues raised in the petition.

D*?=?F=?, the instant petition is 6?4?6, and the decision of the respondent Court of Bppeals of 8 Kanuary 1998 in C.B./.=.

CL 4o. <838 is BFF=)?6. Costs against petitioners.

" =6?=?6.

)elo, +Chair!an, Pangani'an, and Purisi!a, KK., concur.

onaga/=eyes, K., no partH !e!'er of the Court of Bppeals 6iision that rendered the decision.



199 Phil. 2

FIRS% DIVISION$ .=. 4o. G/33<8, Bpril 1, 1982 %

E#IF!NI! S!RSOS! VD!. DE )!RSO)I! !ND #!CI%! . V!""!R, #E%I%IONERS, VS. VIC%ORI!NO %. C&ENCO,RES#ONDEN%.

D E C I S I O N

)?G?4C/*?==?=B, K.;

?pifania "arsosa Lda. de >arso'ia and Pacita D. Lallar, 6efendants/appellees, declaring Lictoriano T. Cuenco +no- the respondent

as the a'solute o-ner of the coconut land in #uestion.

"ought to 'e reie-ed herein is the Judg!ent, dated Bugust 18, 197, of the Court of Bppeals,$1% rendered in CB/.=. 4o. <1318/=,

entitled Lictoriano T. Cuenco, Plaintiff/appellant, ersus

The lot in controersy is a one/half portion +on the northern side of t-o adJoining parcels of coconut land located at >arrio

)ancapagao, "agay, Ca!iguin, )isa!is riental +no- Ca!iguin proince, -ith an area of 29,15 s#uare !eters, !ore or less.$2%

The entire land -as o-ned preiously 'y a certain Geocadia >alisado, -ho had sold it to the spouses Patricio >arso'ia +no- deceased

and ?pifania "arsosa, one of the petitioners herein. They are Filipino citiens.

n "epte!'er 5, 193, ?pifania "arsosa, then a -ido-, sold the land in controersy to a Chinese, ng ing Po, for the su! of

P1,5. +?0hi'it >. ng ing Po too& actual possession and enJoyed the fruits thereof.

n Bugust 5, 191, ng ing Po sold the litigated property to Lictoriano T. Cuenco +respondent herein, a naturalied Filipino, for the

su! of P5,. +?0hi'it B. =espondent i!!ediately too& actual possession and harested the fruits therefro!.

n )arch , 192, ?pifania usurped the controerted property, and on Kuly 2, 192, ?pifania +through her only daughter and child,

?!eteria >arso'ia, sold a one/half +1:2 portion of the land in #uestion to Pacita D. Lallar, the other petitioner herein +?0hi'it 2.?pifania clai!ed that it -as not her intention to sell the land to ng ing Po and that she signed the docu!ent of sale !erely to

eidence her inde'tedness to the latter in the a!ount of P1,5.. ?pifania has 'een in possession eer since e0cept for the portion

sold to the other petitioner Pacita.

n "epte!'er 19, 192, respondent filed a Forci'le ?ntry case against ?pifania 'efore the )unicipal Court of "agay, Ca!iguin. The

case -as dis!issed for lac& of Jurisdiction since, as the la-s then stood, the #uestion of possession could not 'e properly deter!ined

-ithout first settling that of o-nership.

n 6ece!'er 27, 19, respondent instituted 'efore the Court of First nstance of )isa!is riental a Co!plaint for recoery of

possession and o-nership of the litigated land, against ?pifania and Pacita Lallar +hereinafter referred to si!ply as petitioners.

n their Bns-er 'elo-, petitioners insisted that they -ere the o-ners and possessors of the litigated landH that its sale to ng ing Po, a

Chinese, -as ine0istent and:or oid a' initioH and that the deed of sale 'et-een the! -as only an eidence of ?pifaniaQs inde'tedness

to ng ing Po.

The trial Court rendered Judg!ent;

1. 6is!issing the co!plaint -ith costs against plaintiff +respondent hereinH

2. 6eclaring the t-o 6eeds of "ale, ?0hi'its B and >, respectiely, ine0istent and oid fro! the 'eginningH and



3. 6eclaring defendant Pacita D. Lallar as the la-ful o-ner and possessor of the portion of land she 'ought fro! ?!eteria

>arso'ia +pp. 57, 7, =ecord.$3%

n appeal, the Court of Bppeals reersed the afore!entioned 6ecision and decreed instead that respondent -as the o-ner of the

litigated property, thus;

0 0 0.

n ie- of all the foregoing considerations, the Judg!ent appealed fro! is here'y reersed. n lieu thereof, -e render Judg!ent;

+a 6eclaring the plaintiff/appellant Lictoriano T. Cuenco the a'solute o-ner of the land in #uestion, -ith the right of possession

thereofH

+' rdering the defendants/appellees to restore the possession of said land to the plaintiffH

+c 6is!issing the defendantsQ counterclai!H

+d Conde!ning the defendants to pay to the plaintiff the su! of P1,. representing the latterQs share fro! the sale of copra

-hich he failed to receie since )arch, 192 -hen he -as depried of his possession oer the land, and -hich defendants illegally

appropriated it to their o-n use and 'enefit, plus legal interest fro! the filing of the co!plaint until fully paidH plus P2,.

representing e0penses and attorneyQs feesH

+e "entencing the defendants to pay the costs.

" =6?=?6.$<%

Follo-ing the denial of their )otion for =econsideration, petitioners filed the instant Petition for =eie- on Certiorari -ith this Court on

Kanuary 21, 1971. Petitioners clai! that the Court of Bppeals erred;

. 0 0 0 -hen it reersed the Judg!ent of the trial court declaring petitioner Pacita D. Lallar as the la-ful possessor and o-ner of

the portion of land she purchased fro! ?!eteria >arso'ia, not a party to this case, there 'eing no eidence against her.

. 0 0 0 -hen it included petitioner Pacita D. Lallar to pay P1,., -ith legal interest fro! the filing of the co!plaint,

representing respondentQs share in the harest and to pay the costs, there 'eing no eidence against her.

. 0 0 0 -hen it conde!ned petitioners to pay P2,. representing e0penses and attorneyQs fees, there 'eing no factual, legal

and e#uita'le Justification.

L. 0 0 0 in not applying the rule on pari delicto to the facts of the case or the doctrine enunciated 0 0 0 in the case of Philippine

>an&ing Corporation s. Gui "he, G/17587, "epte!'er 12, 197, to 0 0 0 Petitioner ?pifania "arsosa Lda. de >arso'ia.

L. 0 0 0 in denying, for lac& of sufficient !erits, petitionersQ !otion for rehearing or reconsideration of its decision.$5%

Bs the facts stand, a parcel of coconut land -as sold 'y its Filipino o-ner, petitioner ?pifania, to a Chinese, ng ing Po, and 'y the

latter to a naturalied Filipino, respondent herein. n the !eanti!e, the Filipino o-ner had unilaterally repudiated the sale she had

!ade to the Chinese and had resold the property to another Filipino. The 'asic issue is; Dho is the rightful o-ner of the propertyM

There should 'e no #uestion that the sale of the land in #uestion in 193 'y ?pifania to ng ing Po -as ine0istent and oid fro! the

'eginning +Brt. 1<9 $7%, Ciil Code $% 'ecause it -as a contract e0ecuted against the !andatory proision of the 1935 Constitution,

-hich is an e0pression of pu'lic policy to consere lands for the Filipinos. "aid proision reads;

"ae in cases of hereditary succession, no priate agricultural land shall 'e transferred or assigned e0cept to indiiduals,

corporations, or associations, #ualified to ac#uire or hold lands of the pu'lic do!ain.$7%



*ad this 'een a suit 'et-een ?pifania and ng ing Po, she could hae 'een declared entitled to the litigated land on the 'asis, as

clai!ed, of the ruling in Philippine >an&ing Corporation s. Gui "he,$8% reading;

0 0 0 For another thing, and this is not only cogent 'ut also i!portant. Brticle 1<1 of the Ciil Code proides as an e0ception to the

rule on pari delicto that -hen the agree!ent is not illegal per se 'ut is !erely prohi'ited, and the prohi'ition 'y the la- is designed for

the protection of the plaintiff, he !ay, if pu'lic policy is there'y enhanced, recoer -hat he has sold or deliered. 0 0 0

>ut the factual set/up has changed. The litigated property is no- in the hands of a naturalied Filipino. t is no longer o-ned 'y adis#ualified endee. =espondent, as a naturalied citien, -as constitutionally #ualified to o-n the su'Ject property. There -ould 'e

no !ore pu'lic policy to 'e sered in allo-ing petitioner ?pifania to recoer the land as it is already in the hands of a #ualified person.

Bpplying 'y analogy the ruling of this Court in Las#ue s. iap and Gi "eng iap "ons;$9%

0 0 0 if the 'an on aliens fro! ac#uiring not only agricultural 'ut also ur'an lands, as construed 'y this Court in the rien&o case, is

to presere the nationQs lands for future generations of Filipinos, that ai! or purpose -ould not 'e th-arted 'ut achieed 'y !a&ing

la-ful the ac#uisition of real estate 'y aliens -ho 'eca!e Filipino citiens 'y naturaliation.

Dhile, strictly spea&ing, ng ing Po, priate respondentQs endor, had no rights of o-nership to trans!it, it is li&e-ise inescapa'le tha

petitioner ?pifania had slept on her rights for 2 years fro! 193 to 192. >y her long inaction or inescusa'le neglect, she should 'e

held 'arred fro! asserting her clai! to the litigated property +"otto s. Tees, 8 "C=B 157 $1978%.

Gaches has 'een defined as the failure or neglect, for an unreasona'le and une0plained length of ti!e, to do that -hich 'y

e0ercising due diligence could or should hae 'een done earlierH it is negligence or o!ission to assert a right -ithin a reasona'le ti!e,

-arranting a presu!ption that the party entitled to assert it either has a'andoned it or declined to assert it. +TiJa!, et al. s.

"i'onghanoy, et al., 4o. G/21<5, Bpril 15, 198, 23 "C=B 29, 35. +cited in "otto s. Tees, 8 "C=B 15< $1978%.

=espondent, therefore, !ust 'e declared to 'e the rightful o-ner of the property.

The a-ard of actual da!ages in respondentQs faor of P1,., as -ell as of attorneyQs fees and e0penses of litigation of P2,.

is Justified. =espondent -as depried of the possession of his land and the enJoy!ent of its fruits fro! )arch, 192. The Court of

Bppeals fi0ed respondentQs share of the sale of copra at P1,. for eight years at four +< harests a year. The accuracy of this

finding has not 'een disputed.

*o-eer, -e find !erit in the assigned error that petitioner, Pacita Lallar, should not 'e held also lia'le for actual da!ages to

respondent. n the a'sence of contrary proof, she, too, !ust 'e considered as a endee in good faith of petitioner ?pifania.

The a-ard of attorneyQs fees and litigation e0penses in the su! of P2,. in respondentQs faor is in order considering that 'oth

petitioners co!pelled respondent to litigate for the protection of his interests. )oreoer, the a!ount is reasona'le.$1%

D*?=?F=?, e0cept for that portion holding petitioner, Pacita D. Lallar, also lia'le for da!ages of P1,., the appealed

Judg!ent is here'y affir!ed.

Costs against petitioners." =6?=?6.

Teehan&ee, Bcting C.K., +Chair!an, )a&asiar, Fernande, uerrero, and Plana, KK., concur.



<18 Phil. 793

FIRS% DIVISION$ .=. 4o. 128195, cto'er 3, 21 %

E"I(!)E%$ "EE !ND #!CI%! '& "EE, $ON. *&DGE *OSE D. !"OVER!, #RESIDING *&DGE, REGION!" %RI!" CO&R%,)R!NC$ 17, RO!S CI%', %$E REGIS%ER OF DEEDS OF RO!S CI%', #E%I%IONERS, VS. RE#&)"IC OF %$E #$I"I##INES,

RE#RESEN%ED )' %$E DIREC%OR OF "!NDS !ND %$E !DINIS%R!%OR, "!ND REGIS%R!%ION !&%$ORI%' !ND %$E

$ON. CO&R% OF !##E!"S, RES#ONDEN%S.

D E C I S I O N

PB=6, K.;

The case under consideration is a petition for reie- on certiorari of the decision$1% of the Court of Bppeals nullifying that of the

=egional Trial Court, =o0as City, in =econstitution Case 4o. =/1928,$2% pertaining to Got 398, Capi Cadastre, coered 'y riginal

Certificate of Title 4o. 3389.

"o!eti!e in )arch 193, =afael, Car!en, Francisco, Kr., =a!on, Gourdes, )ercedes, Concepcion, )ariano, Kose, Goreto, )anuel,

=ial and Ki!!y, all surna!ed 6inglasan sold to Gee Giong, a Chinese citien, a parcel of land -ith an appro0i!ate area of 1,31

s#uare !eters, designated as Got 398 and coered 'y riginal Certificate of Title 4o. 3389, situated at the corner of =o0as Benue and

Paia "treet, =o0as City.$3%

*o-eer, in 19<8, the for!er o-ners filed -ith the Court of First nstance, Capi an action against the heirs of Gee Giong for annul!ent

of sale and recoery of land.$<% The plaintiffs assailed the alidity of the sale 'ecause of the constitutional prohi'ition against aliens

ac#uiring o-nership of priate agricultural land, including residential, co!!ercial or industrial land. =e'uffed in the trial court and the

Court of Bppeals, plaintiffs appealed to the "upre!e Court. n Kune 27, 195, the "upre!e Court ruled thus;

... granting the sale to 'e null and oid and can not gie title to the endee, it does not necessarily follo- therefro! that the title

re!ained in the endor, -ho had also iolated the constitutional prohi'ition, or that he +endor has the right to recoer the title of -hich

he has diested hi!self 'y his act in ignoring the prohi'ition. n such contingency another principle of la- sets in to 'ar the e#ually

guilty endor fro! recoering the title -hich he had oluntarily coneyed for a consideration, that of pari delicto.$5%

n Kuly 1, 198, the sa!e for!er o-ners =afael B. 6inglasan, together -ith Francisco, Car!en, =a!on, Gourdes, )ercedes,

Concepcion, )ariano, Kose, Goreto, =ial, Ki!!y, and Kesse 6inglasan filed -ith the Court of First nstance, Capi an action for

recoery of the sa!e parcel of land.$% Citing the case of Philippine >an&ing Corporation . Gui "he,$7% they su'!itted that the sale to

Gee Giong -as null and oid for 'eing iolatie of the Constitution. n "epte!'er 23, 198, the heirs of Gee Giong filed -ith the trial

court a !otion to dis!iss the case on the ground of res Judicata.$8% n cto'er 1, 198, and 4oe!'er 9, 198, the trial court denied

the !otion.$9% The heirs of Gee Giong eleated the case to the "upre!e Court 'y petition for certiorari. n Bpril 22, 1977, the "upre!e

Court annulled the orders of the trial court and directed it to dis!iss the case, holding that the suit -as 'arred 'y res Judicata.$1%

n "epte!'er 7, 1993, ?lia'eth )anuel/Gee and Pacita u Gee filed -ith the =egional Trial Court, =o0as City a petition forreconstitution of title of Got 4o. 398 of the Capi Cadastre, for!erly coered 'y riginal Certificate of Title 4o. 3389 of the =egister of

6eeds of =o0as City.$11% Petitioners alleged that they -ere the -ido-s of the deceased Gee >ing *oo and Gee >un Ting, -ho -ere the

heirs of Gee Giong, the o-ner of the lot. Gee Giong died intestate in Fe'ruary 19<<. n Kune 3, 19<7, Gee GiongQs -ido-, Bng Chia,

and his t-o sons, Gee >un Ting and Gee >ing *o, e0ecuted an e0tra/Judicial settle!ent of the estate of Gee Giong, adJudicating to

the!seles the su'Ject parcel of land.$12% Petitioner ?lia'eth Gee ac#uired her share in Got 4o. 398 through an e0tra/Judicial

settle!ent and donation e0ecuted in her faor 'y her deceased hus'and Gee >ing *oo. Petitioner Pacita u Gee ac#uired her share in

the sa!e lot 'y succession fro! her deceased hus'and Gee >un Ting, as eidenced 'y a deed of e0tra/Judicial settle!ent.$13%



Preiously, on 6ece!'er 9, 19<8, the =egister of 6eeds, Capi, "alador Lillalu, issued a certification that a transfer certificate of title

oer the property -as issued in the na!e of Gee Giong.$1<% *o-eer, the records of the =egister of 6eeds, =o0as City -ere 'urned

during the -ar. Thus, as heretofore stated, on "epte!'er 7, 198, petitioners filed a petition for reconstitution of title.

n Kune 1, 199<, the =egional Trial Court, =o0as City, >ranch 17, ordered the reconstitution of the lost or destroyed certificate of title

in the na!e of Gee Giong on the 'asis of an approed plan and technical description.$15% The dispositie portion of the trial courtQs

decision reads thus;

D*?=?F=?, in reiteration, the =egister of 6eeds for the City of =o0as is ordered to reconstitute the lost or destroyed certificateof title in the na!e of Gee Giong, deceased, of =o0as City, -ith all the conditions stated in paragraph 2 of this decision. This decision

shall 'eco!e final after the lapse of thirty +3 days fro! receipt 'y the =egister of 6eeds and 'y the Co!!issioner of G=B of a notice

of such Judg!ent -ithout any appeal haing 'een filed 'y any of such officials.

" =6?=?6.

ien at =o0as City, Philippines,

Kune 1, 199<.

K"? . BGL?=B

Kudge$1%

n Bugust 18, 199<, the Cler& of Court, =egional Trial Court, =o0as City, >ranch 17 issued an ?ntry of Kudg!ent.$17%

n Kanuary 25, 1995, the "olicitor eneral filed -ith the Court of Bppeals a petition for annul!ent of Judg!ent in =econstitution Case

4o. 1928, alleging that the =egional Trial Court, =o0as City had no Jurisdiction oer the case.$18% The "olicitor eneral contended that

the petitioners -ere not the proper parties in the reconstitution of title, since their predecessor/in/interest Gee Giong did not ac#uire title

to the lot 'ecause he -as a Chinese citien and -as constitutionally not #ualified to o-n the su'Ject land.

n Bpril 3, 199, the Court of Bppeals pro!ulgated its decision declaring the Judg!ent of reconstitution oid.$19%

n )ay 2<, 199, ?lia'eth )anuel/Gee and Pacita u Gee filed -ith the Court of Bppeals a !otion for reconsideration of the decision.

$2% n Fe'ruary 18, 1997, the Court of Bppeals denied the !otion.$21%

*ence, this petition.$22%

Petitioners su'!itted that the "olicitor eneral -as estopped fro! see&ing annul!ent of the Judg!ent of reconstitution after failing to

o'Ject during the reconstitution proceedings 'efore the trial court, despite due notice. Petitioners alleged that the "olicitor eneral

!erely acted on the re#uest of priate and politically po-erful indiiduals -ho -ished to capitalie on the pri!e location of the su'Ject

land.

Petitioners e!phasied that the o-nership of the land had 'een settled in t-o preious cases of the "upre!e Court, -here the Courtruled in faor of their predecessor/in/interest, Gee Giong. Petitioners also pointed out that they ac#uired o-nership of the land through

actual possession of the lot and their consistent pay!ent of ta0es oer the land for !ore than si0ty years.

n the other hand, the "olicitor eneral su'!itted that the decision in the reconstitution case -as oidH other-ise, it -ould a!ount to

circu!enting the constitutional proscription against aliens ac#uiring o-nership of priate or pu'lic agricultural lands.

De grant the petition.



The reconstitution of a certificate of title denotes restoration in the original for! and condition of a lost or destroyed instru!ent attesting

the title of a person to a piece of land.$23% The purpose of the reconstitution of title is to hae, after o'sering the procedures prescri'ed

'y la-, the title reproduced in e0actly the sa!e -ay it has 'een -hen the loss or destruction occurred.$2<%

n this case, petitioners sought a reconstitution of title in the na!e of Gee Giong, alleging that the transfer certificate of title issued to hi!

-as lost or destroyed during Dorld Dar . Bll the docu!ents recorded and issued 'y the =egister of 6eeds, Capi, -hich include the

transfer certificate of title issued in the na!e of Gee Giong, -ere all destroyed during the -ar. The fact that the original of the transfer

certificate of title -as not in the files of the ffice of the =egister of 6eeds did not i!ply that a transfer certificate of title had not 'een

issued.$25% n the trial court proceedings, petitioners presented eidence proing the sale of the land fro! the 6inglasans to Gee Giongand the latterQs su'se#uent possession of the property in the concept of o-ner. Thus, the trial court, after e0a!ining all the eidence

'efore it, ordered the reconstitution of title in the na!e of Gee Giong.

*o-eer, there is a #uestion as to -hether Gee Giong has the #ualification to o-n land in the Philippines.

The sale of the land in #uestion -as consu!!ated so!eti!e in )arch 193, during the effectiity of the 1935 Constitution. Ander the

1935 Constitution,$2% aliens could not ac#uire priate agricultural lands, sae in cases of hereditary succession.$27% Thus, Gee Giong, a

Chinese citien, -as dis#ualified to ac#uire the land in #uestion.$28%

The fact that the Court did not annul the sale of the land to an alien did not alidate the transaction, for it -as still contrary to the

constitutional proscription against aliens ac#uiring lands of the pu'lic or priate do!ain. *o-eer, the proper party to assail the illegality

of the transaction -as not the parties to the transaction.$29% n sales of real estate to aliens incapa'le of holding title thereto 'y irtue

of the proisions of the Constitution 'oth the endor and the endee are dee!ed to hae co!!itted the constitutional iolation and

'eing thus in pari delicto the courts -ill not afford protection to either party.$3% The proper party to assail the sale is the "olicitor

eneral. This -as -hat -as done in this case -hen the "olicitor eneral initiated an action for annul!ent of Judg!ent of reconstitution

of title. Dhile it too& the =epu'lic !ore than si0ty years to assert itself, it is not 'arred fro! initiating such action. Prescription neer

lies against the "tate.$31%

Blthough o-nership of the land cannot reert to the original sellers, 'ecause of the doctrine of pari delicto, the "olicitor eneral !ay

initiate an action for reersion or escheat of the land to the "tate, su'Ject to other defenses, as hereafter set forth.$32%

n this case, su'se#uent circu!stances !ilitate against escheat proceedings 'ecause the land is no- in the hands of Filipinos. The

original endee, Gee Giong, has since died and the land has 'een inherited 'y his heirs and su'se#uently their heirs, petitioners herein.Petitioners are Filipino citiens, a fact the "olicitor eneral does not dispute.

The constitutional proscription on alien o-nership of lands of the pu'lic or priate do!ain -as intended to protect lands fro! falling in

the hands of non/Filipinos. n this case, ho-eer, there -ould 'e no !ore pu'lic policy iolated since the land is in the hands of

Filipinos #ualified to ac#uire and o-n such land. f land is inalidly transferred to an alien -ho su'se#uently 'eco!es a citien or

transfers it to a citien, the fla- in the original transaction is considered cured and the title of the transferee is rendered alid.$33% Thus

the su'se#uent transfer of the property to #ualified Filipinos !ay no longer 'e i!pugned on the 'asis of the inalidity of the initial

transfer.$3<% The o'Jectie of the constitutional proision to &eep our lands in Filipino hands has 'een achieed.

ncidentally, it !ust 'e !entioned that reconstitution of the original certificate of title !ust 'e 'ased on an o-nerQs duplicate, secondary

eidence thereof, or other alid sources of the title to 'e reconstituted.$35% n this case, reconstitution -as 'ased on the plan andtechnical description approed 'y the Gand =egistration Buthority.$3% This renders the order of reconstitution oid for lac& of factual

support.$37% B Judg!ent -ith a'solutely nothing to support it is oid.$38%

Bs earlier !entioned, a reconstitution of title is the re/issuance of a ne- certificate of title lost or destroyed in its original for! and

condition.$39% t does not pass upon the o-nership of the land coered 'y the lost or destroyed title.$<% Bny change in the o-nership of

the property !ust 'e the su'Ject of a separate suit.$<1% Thus, although petitioners are in possession of the land, a separate proceeding

is necessary to thresh out the issue of o-nership of the land.



D*?=?F=?, the Court =?L?="?" and "?T" B"6? the decision of the Court of Bppeals in CB/. =. "P 4o. 327<. n lieu thereof

the Court sets aside the order of reconstitution of title in =econstitution Case 4o. =/1928, =egional Trial Court, =o0as City, and

dis!isses the petition, -ithout preJudice.

4o costs.

" =6?=?6.

6aide, Kr., C.K., +Chair!an, Puno, and nares/"antiago, KK., concur.apunan, K., on official leae.



21< Phil. 8

FIRS% DIVISION$ .=. 4o. G/3195, Bpril 3, 198< %

FI"OEN! GERON! DE C!S%RO, #E%I%IONER, VS. *O!&IN %ENG &EEN %!N, %!N %ENG )IO, DO"ORES %!N, ROS!RIO%!N $&! ING, !ND %O O. $I!#, RES#ONDEN%S.

D E C I S I O N

PGB4B, K.;

=eie- on certiorari of the order of the for!er Court of First nstance of "orsogon dis!issing petitionerQs action for annul!ent of

contract -ith da!ages.

n 1938, petitioner Filo!ena erona de Castro sold a 1,258 s#. !. residential lot in >ulan, "orsogon to Tan Tai, a Chinese. n 195,

Tan Tai died leaing herein respondents / his -ido-, To . *iap, and children Koa#uin Teng Eueen Tan, Tan Teng >io, 6olores Tan and

=osario Tan *ua ng.

>efore the death of Tan Tai or on Bugust 11, 195, one of his sons, Koa#uin, 'eca!e a naturalied Filipino. "i0 years after Tan TaiQs

death, or on 4oe!'er 18, 192, his heirs e0ecuted an e0tra/Judicial settle!ent of estate -ith sale, -here'y the disputed lot in its

entirety -as alloted to Koa#uin.

n Kuly 15, 198, petitioner co!!enced suit against the heirs of Tan Tai for annul!ent of the sale for alleged iolation of the 1935

Constitution prohi'iting the sale of land to aliens.

?0cept for respondent Tan Teng >io -ho filed an ans-er to the co!plaint, respondents !oed to dis!iss the co!plaint on the grounds

of +a lac& of cause of action, the plaintiff 'eing in pari delicto -ith the endee, and the land 'eing already o-ned 'y a Philippine citien

+' lachesH and +c ac#uisitie prescription.

er the opposition of petitioner, the court a #uo dis!issed the co!plaint, sustaining the first t-o grounds ino&ed 'y the !oants. t is

this order of dis!issal that is no- the su'Ject of this reie-.

The assailed order !ust 'e sustained.

ndependently of the doctrine of pari delicto, the petitioner cannot hae the sale annulled and recoer the lot she herself has sold. Dhile

the endee -as an alien at the ti!e of the sale, the land has since 'eco!e the property of respondent Koa#uin Teng, a naturalied

Philippine citien, -ho is constitutionally #ualified to o-n land.

...The litigated property is no- in the hands of a naturalied Filipino. t is no longer o-ned 'y a dis#ualified endee. =espondent, as a

naturalied citien, -as constitutionally #ualified to o-n the su'Ject property. There -ould 'e no !ore pu'lic policy to 'e sered in

allo-ing petitioner ?pifania to recoer the land as it is already in the hands of a #ualified person. Bpplying 'y analogy the ruling of this

Court in Las#ue s. iap and Gi "eng iap "ons;

Q0 0 0 if the 'an on aliens fro! ac#uiring not only agricultural 'ut also ur'an lands, as construed 'y this Court in the rien&o case, is

to presere the nationQs lands for future generations of Filipinos, that ai! or purpose -ould not 'e th-arted 'ut achieed 'y !a&ing

la-ful the ac#uisition of real estate 'y aliens -ho 'eca!e Filipino citiens 'y naturaliation.Q +"arsosa Lda. de >arso'ia s. Cuenco,

113 "C=B 5<7, at 553.

Gaches also !ilitates against petitionerQs cause. "he sold the disputed lot in 1938. "he instituted the action to annul the sale only on

Kuly 15, 198. Dhat the Court said in the cited "arsosa case applies -ith e#ual force to the petitioner.



... it is li&e-ise inescapa'le that petitioner ?pifania had slept on her rights for 2 years fro! 193 to 192. >y her long inaction or

ine0cusa'le neglect, she should 'e held 'arred fro! asserting her clai! to the litigated property +"otto s. Tees, 8 "C=B 157

$1978%.

QGaches has 'een defined as the failure or neglect, for an unreasona'le and une0plained length of ti!e, to do that -hich 'y e0ercising

due diligence could or should hae 'een done earlierH it is negligence or o!ission to assert a right -ithin a reasona'le ti!e, -arranting

a presu!ption that the party entitled to assert it either has a'andoned it or declined to assert it. +TiJa!, et al. s. "i'onghanoy, et al.,

4o. G/21<5, Bpril 15, 198, 23 "C=B 29, 35.Q +cited in "otto s. Tees, 8 "C=B 15< $1978%.

=espondent, therefore, !ust 'e declared to 'e the rightful o-ner of the property. +p. 553.

D*?=?F=?, the appealed order is affir!ed. Costs against petitioner.

" =6?=?6.

Teehan&ee, +Chair!an, )elencio/*errera, =eloa, utierre, Kr., and 6e la Fuente, KK., concur.



25 Phil. 17<

%$IRD DIVISION$ .=. 4o. 75<2, 4oe!'er 29, 1988 %

RE#&)"IC OF %$E #$I"I##INES, #E%I%IONER, VS. IN%EREDI!%E !##E""!%E CO&R%, RO!N C!%$O"IC )IS$O# OF"&CEN!, RE#RESEN%ED )' SGR. *OSE %. S!NC$E(, !ND REGION!" %RI!" CO&R%, )R!NC$ "III, "&CEN! CI%',

RES#ONDEN%S.

D E C I S I O N

>64, K.;

This is an appeal fro! the 1 decisionW of the F="T CLG CB"?" 6L"4 of the then nter!ediate Bppellate Court dated )ay 13,

198, in BC .=. 4o. 1<1 entitled the =)B4 CBT*GC >"*P of Gucena, represented 'y )sgr. Kose T. "anche, applicant/

appellee s. =epu'lic of the Philippines, et al., ppositors/appellants, affir!ing the decisionWW of the then Court of F="T 4"TB4C? of

Eueon, 9th Kudicial 6istrict, >ranch 1, dated 4oe!'er <, 198 in Gand =egistration Case 4o. 4/11 entitled the =)B4

CBT*GC >"*P of Gucena, represented 'y )sgr. Kose T. "anche, applicant s. the 6irector of Gands and the 6irector, >ureau of

Forest 6eelop!ent, oppositors, ordering the registration of title to the parcel of land designated, as lots 1, 2 and 3 of plan P"6/58

and its technical descriptions, and the parcel of land descri'ed in plan P"A/112592 and its technical description, together -ith

-hateer i!proe!ents e0isting thereon, in the na!e of the =)B4 CBT*GC >"*P of Gucena and 2 its resolution dated Kune

19, 198, denying appellantQs )otion for =econsideration for lac& of !erit.

The factual 'ac&ground of the case as found 'y the nter!ediate Bppellate Court are as follo-s;

n Fe'ruary 2, 1979, the =)B4 CBT*GC >"*P of Gucena, represented 'y )sgr. Kose T. "anche, filed an application for

confir!ation of title to four +< parcels of land. Three of said parcels, deno!inated as Gots 1, 2 and 3, respectiely, of plan P"A/58,

are situated in >arrio )asin, )unicipality of Candelaria, Eueon Proince. The fourth parcels under Plan P"A/112592 is located in

>arrio >ucal +Taguan, sa!e !unicipality and proince. Bs 'asis for the application, the applicant clai!ed title to the arious properties

through either purchase or donation dating as far 'ac& as 1928.

The legal re#uire!ents of pu'lication and posting -ere duly co!plied -ith, as -as the serice of copies of notice of initial hearing onthe proper goern!ent officials.

n 'ehalf of the 6irector of Gands and the 6irector of the >ureau of Forest 6eelop!ent, the "olicitor eneral filed an pposition on

Bpril 2, 1979, alleging therein a!ong others, that the applicant did not hae an i!perfect title or title in fee si!ple to the parcel of land

'eing applied for.

Bt the initial hearing held on 4oe!'er 13, 1979, only the Proincial Fiscal in representation of the "olicitor eneral appeared to

interpose personal o'Jection to the application. *ence, an rder of eneral 6efault against the -hole -orld -as issued 'y the Court a

#uo e0cept for the 6irector of Gands and the 6irector of the >ureau of Forest 6eelop!ent.

The preli!inaries dispensed -ith, the applicant then introduced its proofs in support of the petition, su!!ed up 'y the lo-er court asfollo-s;

Dith respect to Gots 1, 2, and 3, plan P"A/58;

Gots 1, 2 and 3 of plan P"A/58 respectiely containing an area of 18,977, ,91 and 1,221 s#uare !eters, are adJoining lots

are situated in the >arrio of )asin, )unicipality of Candelaria, Proince of Eueon +for!erly Taya'as +?0hi'its F, F/1, F/2 and F/3.

"aid lots -ere sureyed for the =o!an Catholic Church on 4oe!'er 3, 1928 +?0hi'it P/5 and the surey plan approed on cto'er

2, 1929 +?0hi'it F/.



Got 1 -as ac#uired 'y the =o!an Catholic Church thru =e. Father =ay!undo ?s#uenet 'y purchase fro! the spouses Btanacio

ranso and )aria Coronado on cto'er 2, 1928 +?0hi'its , /1, portion of Got 2 also 'y purchase thru =e. Father =ay!undo

?s#uenet fro! the spouses >enito )ara!ot and Lenancia 6escaller on )ay 22, 199 +?0hi'its ), 4/1, -hile the re!aining portion of

Got 2 and Got 3 -ere already o-ned and possessed 'y the =o!an Catholic Church een prior to the surey of the said three lots in

1928.

=ecords of 'urial of the =o!an Catholic Church of Candelaria, Eueon sho-ed that een as early as 4oe!'er 1918, Got 3 has

already 'een utilied 'y the =o!an Catholic Church as its ce!etery in Candelaria, Eueon ?0hi'it 4, 4/1 to 4/5.

These three lots presently constituted the =o!an Catholic Church ce!etery in Candelaria, Eueon.

Gots 1, 2 and 3 are declared for ta0ation purposes in the na!e of the =o!an Catholic Church under Ta0 6eclaration 4os. 22/19/2/

79, 22/19/2/77 and 22/19/2/82 as Qce!etery siteQ +?0hi'its ", L and T.

Dith respect to the parcel of land descri'ed in plan P"A/112592;

This parcel of land situated in the 'arrio of >ucal +Taguan, )unicipality of Candelaria, Proince of Eueon +for!erly Taya'as and

!ore particularly descri'ed in plan P"A/112592 and its technical description -ith an area of 3,221 s#uare !eters +?0hi'it 1 -as

for!erly o-ned and possessed 'y the spouses Paulo . )acasaet and a'riela L. de )acasaet. "aid spouses, on Fe'ruary 2, 19<1,

donated this lot to the =o!an Catholic Church represented 'y =eerend Father =ay!undo ?s#uenet +?0hi'it K, K/1 to K/<. t -as

sureyed for the =o!an Catholic Church on Bug. 1, 19< as church site and the corresponding surey plan approed on Kan. 15,

19<1 +?0hi'its /1, /2, /3.

Preiously erected on this Got -as an old chapel -hich -as de!olished and ne- chapel no- stands in its place on the sa!e site.

For his part, the Fiscal in a )anifestation dated Kuly 22, 198, said Rthe "tate -ill not adduce eidence in support of its opposition and

-ill su'!it the instant case for decision.I

?aluating the applicantQs su'!itted proofs, the court a #uo concluded, on the 'asis of ac#uisitie prescription at the ery least, that the

for!er had ade#uately sho-n title to the parcels of land 'eing clai!ed.

"ince the ac#uisition of these four +< lots 'y the applicant, it has 'een in continuous possession and enJoy!ent thereof, and suchpossession, together -ith its predecessors/in/interest, coering a period of !ore than 52 years +at least fro! the date of the surey in

1928 -ith respect to lots 1 and 2, a'out 2 years -ith respect to lot 3, all of plan P"A/58H and !ore than 39 years -ith respect to

the fourth parcel descri'ed in plan P"A/112592 +at least fro! the date of the surey in 19< hae 'een open, pu'lic, continuous,

peaceful, aderse against the -hole -orld, and in the concept of o-ner.

Bccordingly, the court ordered the registration of the four parcels together -ith the i!proe!ents thereon Rin the na!e of the =)B4

CBT*GC >"*P F GAC?4B, 4C., a religious corporation sole duly registered and e0isting under the la-s of the =epu'lic of the

Philippines.

Bgainst this decision, the "olicitor eneral filed a )otion for =econsideration on the follo-ing grounds;

Brticle @L, "ection 11 of the 4e- Constitution +1973 dis#ualifies a priate corporation fro! ac#uiring aliena'le lands for the

pu'lic do!ain.

n the case at 'ar the application -as filed after the effectiity on the 4e- Constitution on Kanuary 17, 1973.

-hich -as denied 'y the lo-er court for lac& of !erit.

"till insisting on the alleged unconstitutionality of the registration +a point -hich, incidentally, the appellant neer raised in the lo-er

court prior to its )otion for =econsideration, the =epu'lic eleated this appeal. +=ollo, pp. 25/28



n )ay 13, 198, the First Ciil Cases 6iision of the nter!ediate Bppellate Court rendered its 6ecision the dispositie part of -hich

reads;

D*?=?F=?, finding the Judg!ent a #uo to 'e supported 'y la- and the eidence on record, the sa!e is here'y BFF=)?6. 4o

pronounce!ent as to costs.

" =6?=?6. +=ollo, p. 3

B reconsideration of the afore#uoted 6ecision -as sought 'y Bppellant =epu'lic of the Philippines, 'ut for lac& of !erit, its !otion forreconsideration -as denied on Kune 19, 198, 'y =esolution of the First Ciil Case 6iision, nter!ediate Bppellate Court -hich

resolution reads in full;

Considering appellant =epu'lic of the PhilippinesQ )otion for =econsideration filed on Kune <, 198H the Court =?"GL?6 to 6?4

the )otion for =econsideration for lac& of !erit, grounds raised therein haing all 'een considered in the decision. +=ollo, p. 31

*ence, this petition.

The follo-ing are the assigned errors raised 'y the petitioner in its petition;

1. The decision and the resolution in #uestion are contrary to la- and decisions of this *onora'le Court in )eralco s. Castro/

>artolo!e and =epu'lic, 11< "C=B 799 +pro!. Kune 29, 1982H =epu'lic s. Kudge Lillanuea and glesia ni Cristo 11< "C=B 875

Kune 29, 1982H and =epu'lic s. Kudge onong and glesia ni Cristo, 118 "C=B 729/733 +4oe!'er 25, 1982H 6irector of Gands s.

*er!osa . *er!anas, nc. 1<1 "C=B 21/25 +Kan. 7, 198.

2. The lands applied for registration -ere the su'Ject of a preious registration case -here a decree of registration -as already

issued.

3. =espondent corporation failed to esta'lish the identity of the lands applied for. +=ollo, pp. 1</15

The issue raised in this case inoles the #uestion of -hether the =o!an Catholic >ishop of Gucena, as a corporation sole is #ualified

to apply for confir!ation of its title to the four +< parcels of land su'Ject of this case.

Corollary thereto is the #uestion of -hether or not a corporation sole should 'e treated as an ordinary priate corporation, for purposes

of the application of Brt. @L, "ec. 11 of the 1973 Constitution.

Brticle @L, "ec. 11 of the 1973 Constitution, in part proides;

"ec. 11. 0 0 0. 4o priate corporation or association !ay hold aliena'le lands of the pu'lic do!ain e0cept 'y lease not to e0ceed

one thousand hectares in areaH nor !ay any citien hold such lands 'y lease in e0cess of fie hundred hectares 0 0 0 .

"ec. <8 of the Pu'lic Gand Bct, in part, proides;

"ec. <8. The follo-ing descri'ed citiens of the Philippines occupying lands of the pu'lic do!ain or clai!ing to o-n any such landsor an interest therein, 'ut -hose titles hae not 'een perfected or co!pleted, !ay apply to the Court of First nstance of the proince

-here the land is located for confir!ation of their clai!s and the issuance of a certificate of title therefor, under the Gand =egistration

Bct, to -it;

+a 0 0 0 0 0 0 0 0 0

+'

Those -ho 'y the!seles or through their predecessor/in/interest hae 'een in open, continuous, e0clusie, and notorious

possession and occupation of agricultural lands of the pu'lic do!ain under a 'ona fide clai! of ac#uisition of o-nership for at least

thirty years i!!ediately preceding the filing of the application for confir!ation of title e0cept -hen preented 'y -ar or force !aJeure.



These shall 'e conclusiely presu!ed to hae perfor!ed all the conditions essential to a oern!ent grant and shall 'e entitled to a

certificate of title under the proisions of this chapter.

+c 0 0 0 0 0 0 0 0 0.

n its )otion for =econsideration, petitioner contends that the =o!an Catholic >ishop of Gucena +priate respondent herein -hich is

ad!ittedly a corporation sole is dis#ualified to o-n and register its title oer the parcels of land inoled herein. +=ollo, p. <1

n its petition it li&e-ise argued that 'eing a Juridical entity, priate respondent cannot aail of the 'enefits of "ec. <8+' of the pu'licland la- -hich applies to FGP4 citiens or 4BTA=BG persons. n the other hand, priate respondent in its )?)=B46A)

espoused the contrary ie-.

There is no !erit in this petition.

The parties herein do not dispute that since the ac#uisition of the four +< lots 'y the applicant, it has 'een in continuous possession

and enJoy!ent thereof, and such possession, together -ith its predecessors/in/interest, coering a period of !ore than 52 years +at

least fro! the date of surey in 1928 -ith respect to lots 1 and 2, a'out 2 years -ith respect to lot 3, all of plan P"A/58H and !ore

than 39 years -ith respect to the fourth parcel descri'ed in plan P"A/112592 +at least fro! the date of the surey in 19< hae 'een

open, pu'lic, continuous, peaceful, aderse against the -hole -orld, and in the concept of o-ner.

>eing disputed 'efore this Court is the !atter of the applica'ility of Brt. @L "ec. 11 of the 1973 Constitution to the case at 'ar.

Petitioner argues that considering such constitutional prohi'ition, priate respondent is dis#ualified to o-n and register its title to the

lots in #uestion. Further, it argues that since the application for registration -as filed only on Fe'ruary 2, 1979, long after the 1973

Constitution too& effect on Kanuary 17, 1973, the application for registration and confir!ation of title is ineffectual 'ecause at the ti!e it

-as filed, priate corporation had 'een declared ineligi'le to ac#uire aliena'le lands of the pu'lic do!ain pursuant to Brt. @L, "ec. 11

of the said Constitution. +=ollo, p. <1

The #uestioned posed 'efore this Court has 'een settled in the case of 6=?CT= F GB46" s. nter!ediate Bppellate Court +1<

"C=B 59 $198% -hich reersed the ruling first enunciated in the 1982 case of )anila ?lectric Co. s. CB"T= >B=TG)?, +11<

"C=B 789 $1982% i!posing the constitutional 'an on pu'lic land ac#uisition 'y priate corporations -hich ruling -as declared

e!phatically as res Judicata on Kanuary 7, 198 in 6irector of Gands s. *er!anos y *er!anas de "ta. Cru de )ayo, nc., +1<1 "C=B21 $198%. n said case, +6irector of Gands . BC, supra, this Court stated that a deter!ination of the character of the lands at the ti!e

of institution of the registration proceedings !ust 'e !ade. f they -ere then still part of the pu'lic do!ain, it !ust 'e ans-ered in the

negatie.

f, on the other hand, they -ere already priate lands, the constitutional prohi'ition against their ac#uisition 'y priate corporation or

association o'iously does not apply. n affir!ing the 6ecision of the nter!ediate Bppellate Court in said case, this Court adopted the

igorous dissent of the then Kustice, later Chief Kustice Claudio Teehan&ee, tracing the line of cases 'eginning -ith CB=4,$1% in

199, thru "A",$2% in 1925, do-n to *?=C,$3% in 198, -hich deeloped, affir!ed and reaffir!ed the doctrine that open, e0clusie

and undisputed possession of aliena'le pu'lic land for the period prescri'ed 'y la- creates the legal fiction -here'y the land, upon

co!pletion of the re#uisite period ipso Jure and -ithout the need of Judicial or other sanction, ceases to 'e pu'lic land and 'eco!es

priate property. +6=?CT= F GB46" s. BC, supra, p. 518.


duration prescri'ed 'y statute as the e#uialent of an e0press grant fro! state than the dicti! of the statute itselfH$<% that the possessor

0 0 0 shall 'e conclusiely presu!ed to hae perfor!ed all the conditions essential to a oern!ent grant and shall 'e entitled to a

certificate of title 0 0 0 . 4o proof 'eing ad!issi'le to oerco!e a conclusie presu!ption, confiMMMM proceedings -ould, in truth 'e

little !ore than a for!ality, at the !ost li!ited to ascertaining -hether the possession clai!ed is of the re#uired character and length of

ti!e, and registration thereunder -ould not confer title, 'ut si!ply recognie a title already ested. The proceedings -ould not

=4BGG conert the land fro! pu'lic to priate land, 'ut only confir! such a conersion already effected 'y operation of la- fro!

the !o!ent the re#uired period of possession 'eca!e co!plete. Bs -as so -ell put in Carino, 0 0 0 There are indications that

registration -as e0pected fro! all, 'ut none sufficient to sho- that, for -ant of it, o-nership actually gained -ould 'e lost. The effect of



the proof, -hereer !ade, -as not to confer title, 'ut si!ply to esta'lish it, as already conferred 'y the decree, if not 'y earlier la-.

+6=?CT= F GB46" s. BC, supra, p. 52.

The open, continuous and e0clusie possession of the four lots 'y priate respondent can clearly 'e gleaned fro! the follo-ing facts

on record; Got 1 and portion of Got 2 -as ac#uired 'y purchase in 1928 and 1929, respectiely. The re!aining portion of lots 2 and 3

-as already o-ned and possessed 'y priate respondent een prior to the surey of said lots in 1928. n fact, records of 'urial of the

=o!an Catholic Church of Candelaria, Eueon sho-ed that as early as 1919, Got 3 has already 'een utilied 'y the =o!an Catholic

Church as its ce!etery. That at present, said three lots are utilied as the =o!an Catholic Church of Candelaria, Eueon. That said

lots are declared for ta0ation purposes in the na!e of the =o!an Catholic Church. The fourth parcel of land -as ac#uired 'y donationin 19<1 and sa!e lot is utilied as church site.

t !ust 'e e!phasied that the Court is not here saying that a corporation sole should 'e treated li&e an ordinary priate corporation.

n =o!an Catholic Bpostolic Bd!inistration of 6aao, nc. s. Gand =egistration Co!!ission, et al. +G/8<51, 6ece!'er 2, 1957, 12

Phil. 59, De articulated;

n soling the pro'le! thus su'!itted to our consideration, De can say the follo-ing; B corporation sole is a special for! of

corporation usually associated -ith the clergy. Conceied and introduced into the co!!on la- 'y sheer necessity, this legal creation

-hich -as referred to as Rthat unhappy frea& of ?nglish Ga-I -as designed to facilitate the e0ercise of the functions of o-nership

carried on 'y the clerics for and on 'ehalf of the church -hich -as regarded as the property o-ner +"ee 1 >ouierQs Ga- 6ictionary, p.

82/83.

B corporation sole consists of one person only, and his successors +-ho -ill al-ays 'e one at a ti!e, in so!e particular station,

-ho are incorporated 'y la- in order to gie the! so!e legal capacities and adantages, particularly that of perpetuity, -hich in their

natural persons they could not hae had. n this sense, the &ing is a sole corporationH so is a 'ishop, or deans, distinct fro! their

seeral chapters +=eid s. >arry, 93 Fla. 8<9, 112 "o. 8<.

Pertinent to this case is the proision of "ec. 113 >atas Pa!'ansa >lg. 8 -hich reads as follo-s;

"ec. 113. Bc#uisition and alienation of property. //Bny corporation sole !ay purchase and hold real estate and personal property for

its church, charita'le, 'eneolent or educational purposes, and !ay receie 'e#uests or gifts for such purposes. "uch corporation !ay

!ortgage or sell real property held 'y it upon o'taining an order for that purpose fro! the Court of First nstance of the proince -herethe property is situatedH 'ut 'efore the order is issued, proof !ust 'e !ade to the satisfaction of the Court that notice of the application

for leae to !ortgage or sell has 'een gien 'y pu'lication or other-ise in such !anner and for such ti!e as said court !ay hae

directed, and that it is to the interest of the corporation that leae to !ortgage or sell should 'e granted. The application for leae to

!ortgage or sell !ust 'e !ade 'y petition, duly erified 'y the chief arch'ishop, 'ishop, priest, !inister, ra''i or presiding elder acting

as corporation sole, and !ay 'e opposed 'y any !e!'er of the religious deno!ination, sect or church represented 'y the corporation

sole; Proided, That in cases -here the rules, regulations and discipline of the religious deno!ination, sect or church religious society

or order concerned represented 'y such corporation sole regulate the !ethod of ac#uiring, holding, selling and !ortgaging real estate

and personal property, such rules, regulations and discipline shall control and the interention of the courts shall not 'e necessary.

There is no dou't that a corporation sole 'y the nature of its incorporation is ested -ith the right to purchase and hold real estate and

personal property. t need not therefore 'e treated as an ordinary priate corporation 'ecause -hether or not it 'e so treated as such,the Constitutional proision inoled -ill, neertheless, 'e not applica'le.

n the light of the facts o'taining in this case and the ruling of this Court in 6irector of Gands s. BC, +supra, 513, the lands su'Ject of

this petition -ere already priate property at the ti!e the application for confir!ation of title -as filed in 1979. There is therefore no

cogent reason to distur' the findings of the appellate court.

D*?=?F=?, the petition is 6is!issed for lac& of !erit and the appealed decision and =esolution of the nter!ediate Bppellate Court

is here'y BFF=)?6.

" =6?=?6.



Fernan, C.K., utierre, Kr., Feliciano, and Cortes, KK., concur.



.=. 4o. 18998

EN )!NC$ .=. 4o. 18998, Bugust 2<, 199< %

RE#&)"IC OF %$E #$I"I##INES, #E%I%IONER, VS. %$E CO&R% OF !##E!"S !ND S#O&SES !RIO ). "!#I! !ND F"ORDE VEG!, RES#ONDEN%S.

D E C I S I O N

>64, K.;

Can a foreign national apply for registration of title oer a parcel of land -hich he ac#uired 'y purchase -hile still a citien of the

Philippines, fro! a endor -ho has co!plied -ith the re#uire!ents for registration under the Pu'lic Gand Bct +CB 1<1M

The =epu'lic -ould hae us rule on the negatie and as&s this Court to nullify the decision of the appellate court -hich affir!ed the

Judg!ent of the court a #uo in granting the application of respondent spouses for registration oer the lots in #uestion.

n Kune 17, 1978, respondent spouses 'ought Gots 3<7 and 3<8, Cad. s38/6, as their residence -ith a total area of 91.77 s#. !.

situated in "an Pa'lo City, fro! one Cristeta 6ao >elen +=ollo, p. <1. Bt the ti!e of the purchase, respondent spouses -ere then

natural/'orn Filipino citiens.

n Fe'ruary 5, 1987, the spouses filed an application for registration of title of the t-o +2 parcels of land 'efore the =egional Trial

Court of "an Pa'lo City, >ranch @@@. This ti!e, ho-eer, they -ere no longer Filipino citiens and hae opted to e!'race Canadian

citienship through naturaliation.

Bn opposition -as filed 'y the =epu'lic and after the parties hae presented their respectie eidence, the court a #uo rendered a

decision confir!ing priate respondentsQ title to the lots in #uestion, the dispositie portion of -hich reads as follo-s;

D*?=?F=?, in ie- of the foregoing, this Court here'y approes the said application and confir!s the title and possession of

herein applicants oer Gots 3<7 and 3<8, Bp/</3755 in the na!es of spouses )ario >. GapiUa and Flor de Lega, all of legal age,

Filipino citiens 'y 'irth 'ut no- Canadian citiens 'y naturaliation and residing at 1< B. )a'ini "treet, "an Pa'lo City and:or 21/117/12< "treet, ?d!onton, Bl'erta T5)/9, Canada.

nce this 6ecision 'eco!es final, let the corresponding decree of registration 'e issued. n the certificate of title to 'e issued, there

shall 'e annotated an ease!ent of .25 !eters road right/of/-ay.

" =6?=?6. +=ollo, p. 25

n appeal, respondent court affir!ed the decision of the trial court 'ased on the follo-ing ratiocination;

n the present case, it is undisputed that 'oth applicants -ere still Filipino citiens -hen they 'ought the land in controersy fro! its

for!er o-ner. For this reason, the prohi'ition against the ac#uisition of priate lands 'y aliens could not apply. n Justice and e#uity,they are the rightful o-ners of the su'Ject realty considering also that they had paid for it #uite a large su! of !oney. Their purpose in

initiating the instant action is !erely to confir! their title oer the land, for, as has 'een passed upon, they had 'een the o-ners of the

sa!e since 1978. t ought to 'e pointed out that registration is not a !ode of ac#uiring o-nership. The Torrens "yste! -as not

esta'lished as a !eans for the ac#uisition of title to priate land. t is intended !erely to confir! and register the title -hich one !ay

already hae +)unicipality of Lictorias s. Court of Bppeals, .=. 4o. G/31189, )arch 31, 1987. Dith particular reference to the !ain

issue at 'ar, the *igh Court has ruled that title and o-nership oer lands -ithin the !eaning and for the purposes of the constitutional

prohi'ition dates 'ac& to the ti!e of their purchase, not later. The fact that the applicants/appellees are not Filipino citiens no- cannot

'e ta&en against the! for they -ere not dis#ualified fro! ac#uiring the land in #uestion +>olloos s. u Tieng "u, .=. 4o. G/29<<2,

4oe!'er 11, 1987. +=ollo, pp. 27/28



?0pectedly, respondent courtQs disposition did not !erit petitionerQs approal, hence this present recourse, -hich -as 'elatedly filed.

rdinarily, this petition -ould hae 'een denied outright for haing 'een filed out of ti!e had it not 'een for the constitutional issue

presented therein.

Bt the outset, petitioner su'!its that priate respondents hae not ac#uired Canadian citienship through naturaliation to Justify the

registration thereof in their faor. t !aintains that een priately o-ned unregistered lands are presu!ed to 'e pu'lic lands under the

principle that lands of -hateer classification 'elong to the "tate under the =egalian doctrine. Thus, 'efore the issuance of the

certificate of title, the occupant is not in the Juridical sense the true o-ner of the land since it still pertains to the "tate. Petitioner furtherargued that it is only -hen the court adJudicates the land to the applicant for confir!ation of title -ould the land 'eco!e priately

o-ned land, for in the sa!e proceeding, the court !ay declare it pu'lic land, depending on the eidence.

Bs found 'y the trial court;

The eidence thus presented esta'lished that applicants, 'y the!seles and their predecessors/in/interest, had 'een in open,

pu'lic, peaceful, continuous, e0clusie and notorious possession and occupation of the t-o adJacent parcels of land applied for

registration of title under a 'ona/fide clai! of o-nership long 'efore Kune 12, 19<5. "uch 'eing the case, it is conclusiely presu!ed

that all the conditions essential to the confir!ation of their title oer the t-o adJacent parcels of land are sought to 'e registered hae

'een co!plied -ith there'y entitling the! to the issuance of the corresponding certificate of title pursuant to the proisions of

Presidential 6ecree 4o. 1529, other-ise &no-n as the Property =egistration 6ecree. +=ollo, p. 2

=espondent court echoed the court a #uoQs o'seration, thus;

The land sought to 'e registered has 'een declared to 'e -ithin the aliena'le and disposa'le one esta'lished 'y the >ureau of

Forest 6eelop!ent +?0hi'it RPI. The inestigation conducted 'y the >ureau of Gands, 4atural =esources 6istrict +L/2 reeals that

the disputed realty had 'een occupied 'y the applicants R-hose house of strong !aterials stands thereonIH that it had 'een declared for

ta0ation purposes in the na!e of applicants/spouses since 1979H that they ac#uired the sa!e 'y !eans of a pu'lic instru!ent entitled

Rasulatan ng >ilihang TuluyanI duly e0ecuted 'y the endor, Cristeta 6ao >elen, on Kune 17, 1978 +?0hi'its RI and QKQH and that

applicants and their predecessors in interest had 'een in possession of the land for !ore than 3 years prior to the filing of the

application for registration. >ut -hat is of great significance in the instant case is the circu!stance that at the ti!e the applicants

purchased the su'Ject lot in 1978, 'oth of the! -ere Filipino citiens such that -hen they filed their application for registration in 1987,

o-nership oer the land in dispute had already passed to the!. +=ollo, p., 27

The =epu'lic disagrees -ith the appellate courtQs concept of possession and argues;

17. The Court of Bppeals found that the land -as declared for ta0ation purposes in the na!e of respondent spouses only since

1979. *o-eer, ta0 declarations or realty ta0 pay!ents of property are not conclusie eidence of o-nership. +citing cases

18. Then again, the appellate court found that Qapplicants +respondents and their predecessors/in/interest had 'een in possession

of the land for !ore than 3 years prior to the filing of the application for registration.Q This is not, ho-eer, the sa!e as saying that

respondents hae 'een in possession Qsince Kune 12, 19<5.Q +P6 4o. 173, a!ending "ec. <8 $'%, CB 4o. 1<1H see also "ec. 1<, P6

4o. 1529. "o there is a oid in respondentsQ possession. They fall short of the re#uired possession since Kune 12, 19<5 or prior

thereto. Bnd, een if they needed only to proe thirty +3 years possession prior to the filing of their application +on Fe'ruary 5, 1987,they -ould still 'e short of the re#uired possession if the starting point is 1979 -hen, according to the Court of Bppeals, the land -as

declared for ta0ation purposes in their na!e. +=ollo, pp. 1</15

The argu!ent is !yopic, to say the least. Follo-ing the logic of petitioner, any transferee is thus foreclosed to apply for registration of

title oer a parcel of land not-ithstanding the fact that the transferor, or his predecessor/in/interest has 'een in open, notorious and

e0clusie possession thereof for thirty +3 years or !ore. This is not, ho-eer, -hat the la- proides.

Bs petitioner itself argues, "ection <8 of the Pu'lic Gand Bct +CB 1<1 reads;



"ec. <8. The follo-ing/descri'ed citiens of the Philippines, occupying lands of the pu'lic do!ain or clai!ing interest therein, 'ut

-hose titles hae not 'een perfected or co!pleted, !ay apply to the Court of First nstance +no- =egional Trial Court of the proince

-here the land is located for confir!ation of their clai!s and the issuance of a certificate of title therefor under the Gand =egistration

Bct, to -it;

0 0 0

+' Those -ho 'y the!seles or through their predecessors/in/interest hae 'een in open, continuous, e0clusie, and notorious

possession and occupation of agricultural lands of the pu'lic do!ain, under a 'ona fide clai! of ac#uisition or o-nership, for at leastthirty years i!!ediately preceding the filing of the application for confir!ation of title e0cept -hen preented 'y -ars or force !aJeure.

These shall 'e conclusiely presu!ed to hae perfor!ed all the conditions essential to a oern!ent grant and shall 'e entitled to a

certificate of title under the proisions of this chapter. +Anderscoring supplied

Bs a!ended 'y P6 173;

"ec. <. The proisions of "ection <8+' and "ection <8+c, Chapter L, of the Pu'lic Gand Bct are here'y a!ended in the sense

that these proisions shall apply only to aliena'le and disposa'le lands of the pu'lic do!ain -hich hae 'een in open, continuous,

e0clusie and notorious possession and occupation 'y the applicant hi!self or thru his predecessor/in/interest, under a 'ona fide clai!

of ac#uisition or o-nership, since Kune 12, 19<5.

t !ust 'e noted that -ith respect to possession and occupation of the aliena'le and disposa'le lands of the pu'lic do!ain, the la-

e!ploys the ter!s 'y the!seles, the applicant hi!self or through his predecessor/in/interest. Thus, it !atters not -hether the

endee:applicant has 'een in possession of the su'Ject property for only a day so long as the period and:or legal re#uire!ents for

confir!ation of title has 'een co!plied -ith 'y his predecessor/in/interest, the said period is tac&ed to his possession. n the case at

'ar, respondentsQ predecessors/in/interest hae 'een in open, continuous, e0clusie and notorious possession of the disputed land not

only since Kune 12, 19<5, 'ut een as early as 1937. Petitioner does not deny this e0cept that respondent spouses, in its perception,

-ere in possession of the land sought to 'e registered only in 1978 and therefore short of the re#uired length of ti!e. Bs aforesaid, the

disputed parcels of land -ere ac#uired 'y priate respondents through their predecessors/in/interest, -ho, in turn, hae 'een in open

and continued possession thereof since 1937. Priate respondents stepped into the shoes of their predecessors/in/interest and 'y

irtue thereof, ac#uired all the legal rights necessary to confir! -hat could other-ise 'e dee!ed as an i!perfect title.

Bt this Juncture, petitionerQs reliance in =epu'lic . Lillanuea +11< "C=B 875 $1982% deseres scant consideration. There, it -as heldthat 'efore the issuance of the certificate of title, the occupant is not in the Juridical sense the true o-ner of the land since it still pertains

to the "tate.

"uffice it to state that the ruling in =epu'lic . Lillanuea +supra, has already 'een a'andoned in the 198 case of 6irector of Gands .

nter!ediate Bppellate Court +1< "C=B 59H and reiterated in 6irector of Gands . glesia ni Cristo, 2 "C=B $1991% -here the

Court, through then Bssociate Kustice, no- Chief Kustice 4arasa, declared that;

+The -eight of authority is that open, e0clusie and undisputed possession of aliena'le pu'lic land for the period prescri'ed 'y la-

creates the legal fiction -here'y the land, upon co!pletion of the re#uisite period ipso Jure and -ithout the need of Judicial or other

sanction, ceases to 'e pu'lic land and 'eco!es priate property. 0 0 0

*erico in particular, appears to 'e s#uarely affir!atie;

0 0 0. "econdly, under the proisions of =epu'lic Bct 4o. 19<2, -hich the respondent Court held to 'e inapplica'le to the petitionerQs

case, -ith the latterQs proen occupation and cultiation for !ore than 3 years since 191<, 'y hi!self and 'y his predecessors/in/

interest, title oer the land has ested on petitioner so as to segregate the land fro! the !ass of pu'lic land. Thereafter, it is no longer

disposa'le under the Pu'lic Gand Bct as 'y free patent. 0 0 0

0 0 0



QBs interpreted in seeral cases, -hen the conditions as specified in the foregoing proision are co!plied -ith, the possessor is

dee!ed to hae ac#uired, 'y operation of la-, a right to a grant, a goern!ent grant, -ithout the necessity of a certificate of title 'eing

issued. The land, therefore, ceases to 'e of the pu'lic do!ain and 'eyond the authority of the 6irector of Gands to dispose of. The

application for confir!ation is !ere for!ality, the lac& of -hich does not affect the legal sufficiency of the title as -ould 'e eidenced 'y

the patent and the Torrens title to 'e issued upon the strength of said patent.Q


duration prescri'ed 'y the statute as the e#uialent of an e0press grant fro! the "tate than the dictu! of the statute itself +"ection <8

$'% that the possessor+s% X0 0 0 shall 'e conclusiely presu!ed to hae perfor!ed all the conditions essential to a oern!ent grantand shall 'e entitled to a certificate of title 0 0 0.I 4o proof 'eing ad!issi'le to oerco!e a conclusie presu!ption, confir!ation

proceedings -ould, in truth 'e little !ore than a for!ality, at the !ost li!ited to ascertaining -hether the possession clai!s is of the

re#uired character and length of ti!eH and registration thereunder -ould not confer title, 'ut si!ply recognie a title already ested. The

proceedings -ould not originally conert the land fro! pu'lic to priate land, 'ut only confir! such a conersion already affected 'y

operation of la- fro! the !o!ent the re#uired period of possession 'eca!e co!plete. Bs -as so -ell put in CariUo, R0 0 0 +There are

indications that registration -as e0pected fro! all, 'ut none sufficient to sho- that, for -ant of it, o-nership actually gained -ould 'e

lost. The effect of the proof, -hereer !ade, -as not to confer title, 'ut si!ply to esta'lish it, as already conferred 'y the decree, if not

'y earlier la-.Q +Anderscoring supplied

"u'se#uent cases hae he-ed to the a'oe pronounce!ent such that open, continuous and e0clusie possession for at least 3 years

of aliena'le pu'lic land ipso Jure conerts the sa!e to priate property +6irector of Gands . BC, 21< "C=B < $1992%H Pineda . CB,

183 "C=B 2 $199%. This !eans that occupation and cultiation for !ore than 3 years 'y an applicant and his predecessors/in/

interest, est title on such applicant so as to segregate the land fro! the !ass of pu'lic land +4ational Po-er Corporation . CB, 218

"C=B <1 $1993%.

The Pu'lic Gand Bct re#uires that the applicant !ust proe that +a the land is aliena'le pu'lic land and +' his possession, in the

concept a'oe stated, !ust 'e either since ti!e i!!e!orial or for the period prescri'ed in the Pu'lic Gand Bct +6irector of Gands .

>uyco, 21 "C=B 78 $1992%. Dhen the conditions set 'y la- are co!plied -ith, the possessor of the land, 'y operation of la-,

ac#uires a right to a grant, a goern!ent grant, -ithout the necessity of a certificate of title 'eing issued +4ational Po-er Corporation .

CB, supra. Bs such, the land ceases to 'e a part of the pu'lic do!ain and goes 'eyond the authority of the 6irector of Gands to

dispose of.

n other -ords, the Torrens syste! -as not esta'lished as a !eans for the ac#uisition of title to priate land +)unicipality of Lictorias .CB, 1<9 "C=B 32 $1987%. t !erely confir!s, 'ut does not confer o-nership. Bs could 'e gleaned fro! the eidence adduced, priate

respondents -ere a'le to esta'lish the nature of possession of their predecessors/in/interest. ?idence -as offered to proe that their

predecessors/in/interest had paid ta0es on the su'Ject land and introduced i!proe!ents thereon +?0hi'its F to F9. B certified true

copy of the affidait e0ecuted 'y Cristeta 6ao and her sister "i!plicia -as also for!ally offered to proe that the su'Ject parcels of

land -ere inherited 'y endor Cristeta 6ao fro! her father Pedro 6ao -ith the confor!ity of her only sister "i!plicia +?0hi'it .

Gi&e-ise, a report fro! the >ureau of Gands -as presented in eidence together -ith a letter fro! the >ureau of Forest 6eelop!ent,

to proe that the #uestioned lots -ere part of the aliena'le and disposa'le one of the goern!ent and that no forestry interest -as

affected +CB = 4o. 28953, =ecords, p. 33.

n the !ain, petitioner see&s to defeat respondentsQ application for registration of title on the ground of foreign nationality. Bccordingly,

the ruling in 6irector of Gands . >uyco +supra supports petitionerQs thesis.

De disagree.

n >uyco, the applicants therein -ere li&e-ise foreign nationals 'ut -ere natural/'orn Filipino citiens at the ti!e of their supposed

ac#uisition of the property. >ut this is -here the si!ilarity ends. The applicants in >uyco sought to register a large tract of land under

the proisions of the Gand =egistration Bct, and in the alternatie, under the proisions of the Pu'lic Gand Bct. The land registration

court decided in faor of the applicants and -as affir!ed 'y the appellate court on appeal. The 6irector of Gands 'rought the !atter

'efore us on reie- and -e reersed.

This Court, spea&ing through Kustice 6aide, Kr., stated;



Bs could 'e gleaned fro! the eidence adduced, the priate respondents do not rely on fee si!ple o-nership 'ased on a "panish

grant or possessory infor!ation title under "ection 19 of the Gand =egistration BctH the priate respondents did not present any proof

that they or their predecessors/in/interest deried title fro! an old "panish grant such as +a the Rtitulo realI or royal grant +' the

Qconcession especialQ or special grantH +c the Qco!posicion con el estadoQ title or adJust!ent titleH +d the Qtitulo de co!praI or title 'y

purchaseH and +e the Rinfor!ation posesoriaQ or possessory infor!ation title, -hich could 'eco!e a Qtitulo gratuitoQ or a gratuitous title

+6irector of Forestry . )uUo, 23 "C=B 1183 $198%. The pri!ary 'asis of their clai! is possession, 'y the!seles and their

predecessors/in/interest, since ti!e i!!e!orial.

f indeed priate respondents and their predecessors hae 'een in possession since ti!e i!!e!orial, the rulings of 'oth courts

could 'e upheld for, as this Court stated in h Cho . 6irector of Gands +75 Phil. 89 $19<%;

Q0 0 0 Bll lands that -ere not ac#uired fro! the oern!ent, either 'y purchase or 'y grant, 'elong to the pu'lic do!ain. Bn e0ception

to the rule -ould 'e any land that should hae 'een in the possession of an occupant and of his predecessors in interest since ti!e

i!!e!orial, for such possession -ould Justify the presu!ption that the land had neer 'een part of the pu'lic do!ain or that if had

'een a priate property een 'efore the "panish con#uest +CariUo . nsular oern!ent, <1 Phil 935 $199%H 212 A.". <<9H 53 Ga-.

?d., 59< The applicant does not co!e under the e0ception, for the earliest possession of the lot 'y his first predecessor in interest

'egan in 188.I

X0 0 0 aliena'le pu'lic land held 'y a possessor, personally or through his predecessors/in/interest, openly, continuously and

e0clusiely for the prescri'ed statutory period +3 years under the Pu'lic Gand Bct, as a!ended is conerted to priate property 'y the

!ere lapse or co!pletion of said period, ipso Jure.Q +6irector of Gands . nter!ediate Bppellate Court, supra

it is o'ious fro! the foregoing rule that the applicant !ust proe that +a the land is aliena'le pu'lic land and +' his possession, in

the concept a'oe stated, !ust 'e either since ti!e i!!e!orial, as ruled in 'oth CariUo and "usi, or for the period prescri'ed in the

Pu'lic Gand Bct. Bs to the latter, this Court, in utierre *er!anos . Court of Bppeals +178 "C=B 37 $1989%, adopted the rule

enunciated 'y the Court of Bppeals, per then Bssociate Kustice *ugo =. utierre, Kr., 0 0 0, that an applicant for registration under

"ection <8 of the Pu'lic Gand Bct !ust secure a certification fro! the oern!ent that the lands -hich he clai!s to hae possessed as

o-ner for !ore than thirty +3 years are aliena'le and disposa'le. t is the 'urden of the applicant to proe its positie aer!ents.

n the instant case, priate respondents offered no eidence at all to proe that the property su'Ject of the application is an aliena'le

and disposa'le land. n the contrary, the entire property 0 0 0 -as pasture land +and therefore inaliena'le under the then 1973Constitution.

0 0 0 +Priate respondentsQ eidence !isera'ly failed to esta'lish their i!perfect title to the property in #uestion. Their allegation of

possession since ti!e i!!e!orial, 0 0 0, is patently 'aseless. 0 0 0 Dhen referring to possession, specifically Qi!!e!orial possession,

it !eans possession of -hich no !an liing has seen the 'eginning, and the e0istence of -hich he has learned for! his elders +"usi .

=aon, supra. "uch possession -as neer present in the case of priate respondents. 0 0 0

0 0 0, there does not een e0ist a reasona'le 'asis for the finding that the priate respondents and their predecessors/in/interest

possessed the land for !ore than eighty +8 years, 0 0 0.

0 0 0

To this CourtQs !ind, priate respondents failed to proe that +their predecessor/in/interest had possessed the property / allegedly

coered 'y Ta0 6eclaration 4o. 15853 and !ade the su'Ject of 'oth his last -ill and testa!ent and the proJect of partition of his estate

a!ong his heirs / in such !anner as to re!oe the sa!e fro! the pu'lic do!ain under the CariUo and "usi doctrines. Thus, +-hen the

predecessor/in/interest died on 31 )ay 1937, he trans!itted no right -hatsoeer, -ith respect to the said property, to his heirs. This

'eing the case, his possession cannot 'e tac&ed to that of the priate respondents for the latterQs 'enefit pursuant to "ection <8+' of

the Pu'lic Gand Bct, the alternatie ground relied upon in their application. 0 0 0

0 0 0



Considering that the priate respondents 'eca!e B!erican citiens 'efore such filing, it goes -ithout saying that they had ac#uired

no ested right, consisting of an i!perfect title, oer the property 'efore they lost their Philippine citienship. +Anderscoring supplied

Clearly, the applicants in >uyco -ere denied registration of title not !erely 'ecause they -ere B!erican citiens at the ti!e of their

application therefor. =espondents therein failed to proe possession of their predecessor/in/interest since ti!e i!!e!orial or

possession in such a !anner that the property has 'een segregated fro! pu'lic do!ainH such that at the ti!e of their application, as

B!erican citiens, they hae ac#uired no ested rights oer the parcel of land.

n the case at 'ar, priate respondents -ere undou'tedly natural/'orn Filipino citiens at the ti!e of the ac#uisition of the propertiesand 'y irtue thereof, ac#uired ested rights thereon, tac&ing in the process, the possession in the concept of o-ner and the prescri'ed

period of ti!e held 'y their predecessors/in/interest under the Pu'lic Gand Bct. n addition, priate respondents hae constructed a

house of strong !aterials on the contested property, no- occupied 'y respondent GapiUaQs !other.

>ut -hat should not 'e !issed in the disposition of this case is the fact that the Constitution itself allo-s priate respondents to register

the contested parcels of land in their faor. "ections 7 and 8 of Brticle @ of the Constitution contain the follo-ing pertinent proisions,

to -it;

"ec. 7. "ae in cases of hereditary succession, no priate lands shall 'e transferred or coneyed e0cept to indiiduals,

corporations, or associations #ualified to ac#uire or hold lands of the pu'lic do!ain.

"ec. 8. 4ot-ithstanding the proisions of "ection 7 of this Brticle, a natural/'orn citien of the Philippines -ho has lost his Philippine

citienship !ay 'e a transferee of priate lands, su'Ject to li!itations proided 'y la-. +Anderscoring supplied

"ection 8, Brticle @ of the 1987 Constitution a'oe #uoted is si!ilar to "ection 15, Brticle @L of the then 1973 Constitution -hich

reads;

"ec. 15. 4ot-ithstanding the proisions of "ection 1< of this Brticle, a natural/'orn citien of the Philippines -ho has lost his

citienship !ay 'e a transferee of priate land, for use 'y hi! as his residence, as the >atasang Pa!'ansa !ay proide.

Pursuant thereto, >atas Pa!'ansa >lg. 185 -as passed into la-, the releant proision of -hich proides;

"ec. 2. Bny natural/'orn citien of the Philippines -ho has lost his Philippine citienship and -ho has the legal capacity to enter intoa contract under Philippine la-s !ay 'e a transferee of a priate land up to a !a0i!u! area of one thousand s#uare !eters, in the

case of ur'an land, or one hectare in the case of rural land, to 'e used 'y hi! as his residence. n the case of !arried couples, one of

the! !ay aail of the priilege herein grantedH Proided, That if 'oth shall aail of the sa!e, the total area ac#uired shall not e0ceed

the !a0i!u! herein fi0ed.

n case the transferee already o-ns ur'an or rural lands for residential purposes, he shall still 'e entitled to 'e a transferee of an

additional ur'an or rural lands for residential purposes -hich, -hen added to those already o-ned 'y hi!, shall not e0ceed the

!a0i!u! areas herein authoried.

Fro! the adoption of the 1987 Constitution up to the present, no other la- has 'een passed 'y the legislature on the sa!e su'Ject.

Thus, -hat goerns the disposition of priate lands in faor of a natural/'orn Filipino citien -ho has lost his Philippine citienshipre!ains to 'e >P 185.

?en if priate respondents -ere already Canadian citiens at the ti!e they applied for registration of the properties in #uestion, said

properties as discussed a'oe -ere already priate landsH conse#uently, there could 'e no legal i!pedi!ent for the registration thereof

'y respondents in ie- of -hat the Constitution ordains. The parcels of land sought to 'e registered no longer for! part of the pu'lic

do!ain. They are already priate in character since priate respondentsQ predecessors/in/interest hae 'een in open, continuous and

e0clusie possession and occupation thereof under clai! of o-nership prior to Kune 12, 19<5 or since 1937. The la- proides that a

natural/'orn citien of the Philippines -ho has lost his Philippine citienship !ay 'e a transferee of a priate land up to a !a0i!u!

area of 1, s#.!., if ur'an, or one +1 hectare in case of rural land, to 'e used 'y hi! as his residence +>P 185.



t is undisputed that priate respondents, as endees of a priate land, -ere natural/'orn citiens of the Philippines. For the purpose of

transfer and:or ac#uisition of a parcel of residential land, it is not significant -hether priate respondents are no longer Filipino citiens

at the ti!e they purchased or registered the parcels of land in #uestion. Dhat is i!portant is that priate respondents -ere for!erly

natural/'orn citiens of the Philippines, and as transferees of a priate land, they could apply for registration in accordance -ith the

!andate of "ection 8, Brticle @ of the Constitution. Considering that priate respondents -ere a'le to proe the re#uisite period and

character of possession of their predecessors/in/interest oer the su'Ject lots, their application for registration of title !ust perforce 'e

approed.

The dissenting opinion, ho-eer, states that the re#uire!ents in >P 185, !ust also 'e co!plied -ith 'y priate respondents."pecifically, it refers to "ection , -hich proides;

"ec. . n addition to the re#uire!ents proided for in other la-s for the registration of titles to lands, no priate land shall 'e

transferred under this Bct, unless the transferee shall su'!it to the register of deeds of the proince or city -here the property is

located a s-orn state!ent sho-ing the date and place of his 'irthH the na!es and addresses of his parents, of his spouse and children

if anyH the area, the location and the !ode of ac#uisition of his landholdings in the Philippines, if anyH his intention to reside

per!anently in the PhilippinesH the date he lost his Philippine citienship and the country of -hich he is presently a citienH and such

other infor!ation as !ay 'e re#uired under "ection 8 of this Bct.

The Court is of the ie- that the re#uire!ents in "ec. of >P 185 do not apply in the instant case since said re#uire!ents are pri!arily

directed to the register of deeds 'efore -ho! co!pliance there-ith is to 'e su'!itted. 4o-here in the proision is it stated, !uch less

i!plied, that the re#uire!ents !ust li&e-ise 'e su'!itted 'efore the land registration court prior to the approal of an application for

registration of title. Bn application for registration of title 'efore a land registration court should not 'e confused -ith the issuance of a

certificate of title 'y the register of deeds. t is only -hen the Judg!ent of the land registration court approing the application for

registration has 'eco!e final that a decree of registration is issued. Bnd that is the ti!e -hen the re#uire!ents of "ec. , >P 185,

'efore the register of deeds should 'e co!plied -ith 'y the applicants. This decree of registration is the one that is su'!itted to the

office of the register of deeds for issuance of the certificate of title in faor of the applicant. Prior to the issuance of the decree of

registration, the register of deeds has no participation in the approal of the application for registration of title as the decree of

registration is yet to 'e issued.

D*?=?F=?, the petition is 6")""?6 and the decision appealed fro! is here'y BFF=)?6.

" =6?=?6.

4arasa, C.K., =egalado, =o!ero, >ellosillo, )elo, Euiason, Puno, Litug, apunan, and )endoa, KK., concur.

Feliciano, K., see concurring state!ent.

Padilla and 6aide, Kr., KK., Joins K. Cru in his dissenting opinion.



197 Phil. <7

SECOND DIVISION$ .=. 4o. G/27952, Fe'ruary 15, 1982 %

%ES%!%E ES%!%E OF *OSE E&GENIO R!IRE(, !RI! "&IS! #!"!CIOS, !DINIS%R!%RI, #E%I%IONER!##E""EE, VS.!RCE""E D. VD!. DE R!IRE(, E% !"., O##OSI%ORS, *ORGE !ND RO)ER%O R!IRE(, "EG!%EES, O##OSI%ORS

!##E""!N%S.

D E C I S I O N

B>B6 "B4T", K.;

The !ain issue in this appeal is the !anner of partitioning the testate estate of Kose ?ugenio =a!ire a!ong the principal

'eneficiaries, na!ely; his -ido- )arcelle 6e!oron de =a!ireH his t-o grandnephe-s =o'erto and Korge =a!ireH and his

co!panion Danda de Dro'les&i.

The tas& is not trou'le/free 'ecause the -ido- )arcelle is a French -ho lies in Paris, -hile the co!panion Danda is an Bustrian -ho

lies in "pain. )oreoer, the testator proided for su'stitutions.

Kose ?ugenio =a!ire, a Filipino national, died in "pain on 6ece!'er 11, 19<, -ith only his -ido- as co!pulsory heir. *is -ill -as

ad!itted to pro'ate 'y the Court of First nstance of )anila, >ranch @, on Kuly 27, 195. )aria Guisa Palacios -as appointed

ad!inistratri0 of the estate. n due ti!e she su'!itted an inentory of the estate as follo-s;

4L?4TB=

Ana se0ta parte +1: pro/indiisa de un terreno, con sus !eJoras y edificaciones, situado en la ?scolta,

)anila . . . . . . . . . . . . . . . . . . . . . . . . P 5,.

Ana se0ta parte +1: pro/indiisa de dos parcelas de terreno situadas en Bntipolo,

=ial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.3<

Cuatrocientos noenta y un +<91 acciones de la QCentral Bucarera de la CarlotaQ a P17. por accion . . . . . . . . . . . . . . . . . . . . . . . .

. . 8,3<7.

6ie !il ochocientos sei +1,8 acciones de la QCentral Guon )illing Co.Q, disuelta y en li#uidacion, a P.15 por accion . . . . . .

1,2.9

Cuenta de Bhorros en el Philippine Trust Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 35.73

TTBG. . . . . . . . . . . . . P 512,97.97

)?4";

6euda al >anco de las slas Filipinas, garantiada con prenda de las acciones de Ga Carlota . . . . . . . . P 5,.

LBG= GEA6 . . . . . . P57,97.97

The testa!entary dispositions are as follo-s;

B. / ?n nuda propiedad, a 6. =o'erto y 6. Korge =a!ire, a!'os !enores de edad, residentes en )anila, . F., calle Dright, 4o.

1818, )alate, hiJos de su so'rino 6. Kose )a. =a!ire, con sustitucion ulgar a faor de sus respectios descendientes, y, en su

defecto, con sustitucion ulgar reciproca entre a!'os.



?l precedente legado en nuda propiedad de la participacion indiisa de la finca "anta/Cru >uilding, lo ordena el testador a faor

de los legatarios no!'rados, en atencion a #ue dicha propiedad fue creacion del #uerido padre del otorgante y por ser a#uellos

continuadores del apellido =a!ire.

>./ en usufructo a sa'er; /

a. / ?n cuanto a una tercera parte, a faor de la esposa del testador, 6a. )arcelle =a!ire, do!iciliada en ? P?C, cale del

eneral allieni, 4o. 33, "eine, Francia, con sustitucion ulgar u fideico!isaria a faor de 6a. Danda de Dro'les&i, de Pal!a de)allorca, "on =apiUa, Benida de los =eyes 13,

'. / en cuanto a las dos terceras partes restantes, a faor de la no!'rada 6a. Danda de Dro'les&i, con sustitucion ulgar y

fideico!isaria, a sa'er; /

?n cuanto a la !itad de dichas dos terceras partes, a faor de 6. Kuan Pa'lo Kan&o-s&i, de "on =apiUa, Pal!a de )allorcaH y en

cuanto a la !itad restante, a faor de su so'rino, 6. *orace L. =a!ire, "an Guis >uilding, Florida "t. ?r!ita, )anila, .F.

B pesar de las sustituciones fideico!isarias precedente!ente ordinadas, las usufructuarias no!'radas conJunta!ente con los

nudo propietarios, podran en cual#uier !o!ento ender a tercero los 'ienes o'Jeto delegado, sin interencion alguna de los titulares

fideico!isarios.

n Kune 23, 19, the ad!inistratri0 su'!itted a proJect of partition as follo-s; the property of the deceased is to 'e diided into t-o

parts. ne part shall go to the -ido- en pleno do!inio in satisfaction of her legiti!eH the other part or free portion shall go to Korge

and =o'erto =a!ire en nuda propriedad. Further!ore, one third +1:3 of the free portion is charged -ith the -ido-Qs usufruct and

the re!aining t-o/third +2:3 -ith a usufruct in faor of Danda.

Korge and =o'erto opposed the proJect of partition on the grounds; +a that the proisions for ulgar su'stitution in faor of Danda de

Dro'les&i -ith respect to the -ido-Qs usufruct and in faor of Kuan Pa'lo Kan&o-s&i and *oracio L. =a!ire, -ith respect to DandaQs

usufruct are inalid 'ecause the first heirs +)arcelle and Danda suried the testatorH +' that the proisions for fideico!!issary

su'stitutions are also inalid 'ecause the first heirs are not related to the second heirs or su'stitutes -ithin the first degree, as proided

in Brticle 83 of the Ciil CodeH +c that the grant of a usufruct oer real property in the Philippines in faor of Danda Dro'les&i, -ho is

an alien, iolates "ection 5, Brticle @ of the Philippine ConstitutionH and that +d the proposed partition of the testatorQs interest in the"anta Cru +?scolta >uilding 'et-een the -ido- )arcelle, and the appellants, iolates the testatorQs e0press -ill to gie this property

to the!. 4onetheless, the lo-er court approed the proJect of partition in its order dated )ay 3, 197. t is this order -hich Korge and

=o'erto hae appealed to this Court.

1. The -ido-Qs legiti!e.

The appellantQs do not #uestion the legality of giing )arcelle one/half of the estate in full o-nership. They ad!it that the testatorQs

dispositions i!paired his -ido-Qs legiti!e. ndeed, under Brt. 9 of the Ciil Code f the only surior is the -ido- or -ido-er, she or

he shall 'e entitled to one/half of the hereditary estate. Bnd since )arcelle alone suried the deceased, she is entitled to one/half of

his estate oer -hich he could i!pose no 'urden, encu!'rance, condition or su'stitution of any &ind -hatsoeer. +Brt. 9<, par. 2, Cii

Code.

t is the one/third usufruct oer the free portion -hich the appellants #uestion and Justifia'ly so. t appears that the court a #uo

approed the usufruct in faor of )arcelle 'ecause the testa!ent proides for a usufruct in her faor of one/third of the estate. The

court a #uo erred for )arcelle -ho is entitled to one/half of the estate en pleno do!inio as her legiti!e and -hich is !ore than -hat

she is gien under the -ill is not entitled to hae any additional share in the estate. To gie )arcelle !ore than her legiti!e -ill run

counter to the testatorQs intention for as stated a'oe his dispositions een i!paired her legiti!e and tended to faor Danda.

2. The su'stitutions.



t !ay 'e useful to recall that "u'stitution is the appoint!ent of another heir so that he !ay enter into the inheritance in default of the

heir originally instituted. +Brt. 857, Ciil Code. Bnd that there are seeral &inds of su'stitutions, na!ely; si!ple or co!!on, 'rief or

co!pendious, reciprocal, and fideico!!issary. Brt. 858, Ciil Code. Bccording to Tolentino, Blthough the Code enu!erates four

classes, there are really only t-o principal classes of su'stitutions; the si!ple and the fideico!!issary. The others are !erely

ariations of these t-o. + Ciil Code, p. 185 $1973%.

The si!ple or ulgar is that proided in Brt. 859 of the Ciil Code -hich reads;

B=T. 859. The testator !ay designate one or !ore persons to su'stitute the heir or heirs instituted in case such heir or heirs shoulddie 'efore hi!, or should not -ish, or should 'e incapacitated to accept the inheritance.

B si!ple su'stitution, -ithout a state!ent of the cases to -hich it refers, shall co!prise the three !entioned in the preceding

paragraph, unless the testator has other-ise proided.

The fideico!!issary su'stitution is descri'ed in the Ciil Code as follo-s;

B=T. 83. B fideico!!issary su'stitution 'y irtue of -hich the fiduciary or first heir instituted is entrusted -ith the o'ligation to

presere and to trans!it to a second heir the -hole or part of inheritance, shall 'e alid and shall ta&e effect, proided such su'stitution

does not go 'eyond one degree fro! the heir originally instituted, and proided further that the fiduciary or first heir and the second heir

are liing at ti!e of the death of the testator.

t -ill 'e noted that the testator proided for a ulgar su'stitution in respect of the legacies of =o'erto and Korge =a!ire, the

appellants, thus; con sustitucion ulgar a faor de sus respectios descendientes, y, en su defecto, con su'stitucion ulgar reciproca

entre a!'os. The appellants do not #uestion the legality of the su'stitution so proided.

The appellants #uestion the sustitucion ulgar y fideico!isaria a faor de 6a. Danda de Dro'les&i in connection -ith the one/third

usufruct oer the estate gien to the -ido- )arcelle. *o-eer, this #uestion has 'eco!e !oot 'ecause as De hae ruled a'oe, the

-ido- is not entitled to any usufruct.

The appellants also #uestion the sustitucion ulgar y fideico!isaria in connection -ith DandaQs usufruct oer t-o/thirds of the estate

in faor of Kuan Pa'lo Kan&o-s&i and *orace L. =a!ire.

They allege that the su'stitution in its ulgar aspect is oid 'ecause Danda suried the testator or stated differently 'ecause she did

not predecease the testator. >ut dying 'efore the testator is not the only case for ulgar su'stitution for it also includes refusal or

incapacity to accept the inheritance as proided in Brt. 859 of the Ciil Code, supra. *ence, the ulgar su'stitution is alid.

Bs regards the su'stitution in its fideico!!issary aspect, the appellants are correct in their clai! that it is oid for the follo-ing reasons

+a The su'stitutes +Kuan Pa'lo Kan&o-s&i and *orace L. =a!ire are not related to Danda, the heir originally instituted. Brt. 83 of

the Ciil Code alidates a fideico!!issary su'stitution proided such su'stitution does not go 'eyond one degree fro! the heir

originally instituted.

Dhat is !eant 'y one degree fro! the first heir is e0plained 'y Tolentino as follo-s;

"caeola, )aura, and Traiesas construe QdegreeQ as designation, su'stitution, or trans!ission. The "upre!e Court of "pain has

decidedly adopted this construction. Fro! this point of ie-, there can 'e only one trans!ission or su'stitution, and the su'stitute need

not 'e related to the first heir. )anresa, )orell, and "anche =o!an, ho-eer, construe the -ord QdegreeQ as generation, and the

present Code has o'iously follo-ed this interpretation, 'y proiding that the su'stitution shall not go 'eyond one degree Qfro! the heir

originally instituted.Q The Code thus clearly indicates that the second heir !ust 'e related to and 'e one generation fro! the first heir.

Fro! this, it follo-s that the fideico!!issary can only 'e either a child or a parent of the first heir. These are the only relaties -ho

are one generation or degree fro! the fiduciary. +p. cit., pp. 193/19<.



+' There is no a'solute duty i!posed on Danda to trans!it the usufruct to the su'stitutes as re#uired 'y Brts. 85 and 87 of the Ciil

Code. n fact, the appellee ad!its that the testator contradicts the esta'lish!ent of a fideico!!issary su'stitution -hen he per!its the

properties su'Ject of the usufruct to 'e sold upon !utual agree!ent of the usufructuaries and the na&ed o-ners. +>rief, p. 2.

3. The usufruct of Danda.

The appellants clai! that the usufruct oer real properties of the estate in faor of Danda is oid 'ecause it iolates the constitutional

prohi'ition against the ac#uisition of lands 'y aliens.

The 1935 Constitution -hich is controlling proides as follo-s;

"?C. 5. "ae in cases of hereditary succession, no priate agricultural land shall 'e transferred or assigned e0cept to indiiduals,

corporations, or associations #ualified to ac#uire or hold lands of the pu'lic do!ain in the Philippines. +Brt. @.

The court a #uo upheld the alidity of the usufruct gien to Danda on the ground that the Constitution coers not only succession 'y

operation of la- 'ut also testa!entary succession. De are of the opinion that the Constitutional proision -hich ena'les aliens to

ac#uire priate lands does not e0tend to testa!entary succession for other-ise the prohi'ition -ill 'e for naught and !eaningless. Bny

alien -ould 'e a'le to circu!ent the prohi'ition 'y paying !oney to a Philippine lando-ner in e0change for a deise of a piece of

land.

This opinion not-ithstanding, De uphold the usufruct in faor of Danda 'ecause a usufruct, al'eit a real right, does not est title to the

land in the usufructuary and it is the esting of title to land in faor of aliens -hich is proscri'ed 'y the Constitution.

4 L?D F T*? F=?4, the estate of Kose ?ugenio =a!ire is here'y ordered distri'uted as follo-s;

ne/half +1:2 thereof to his -ido- as her legiti!eH

ne/half +1:2 thereof -hich is the free portion to =o'erto and Korge =a!ire in na&ed o-nership and the usufruct to Danda de

Dro'les&i -ith a si!ple su'stitution in faor of Kuan Pa'lo Kan&o-s&i and *orace L. =a!ire.

The distri'ution herein ordered supersedes that of the court a #uo. 4o special pronouce!ent as to costs.

" =6?=?6.

>arredo +Chair!an, Concepcion, Kr., 6e Castro, ?ricta, and ?scolin, KK., concur.

B#uino, K., no part.



2 Phil. <5

SECOND DIVISION$ .=. 4o. G/293, Bugust 2, 199 %

GREGORIO ""!N%INO !ND )E"IND! ""!N%INO !SSIS%ED )' $&S)!ND N!#O"EON )!R)!, #"!IN%IFFS !##E""!N%S,VS. CO "IONG C$ONG !"I!S *&!N O"IN!, DEFEND!N%!##E""EE.

D E C I S I O N

PB=B", K.;

This is an appeal perfected 'efore the effectiity of =epu'lic Bct 5<<, fro! the decisionW of the Court of First nstance of Catanduanes

in Ciil Case 4o. 11, to #uiet title -ith da!ages, entitled regorio Glantino, et al. s. Cong Giong Chong alias Kuan )olina,

dis!issing the co!plaint and declaring that the contract of lease entered into 'et-een the plaintiffs and the defendant alid and in

accordance -ith la-.

The facts of the case as su!!aried 'y the trial court are as follo-s;

Plaintiffs +petitioners herein aer that they are the o-ners of a co!!ercial/residential land situated in the !unicipality of Lirac,

Catanduanes, descri'ed in paragraph 2 of the co!plaint, -hich so!eti!e in 195< they leased to the defendant +priate respondent

-ho -as then a Chinese national and -ent 'y the na!e of Co Giong Chong for a period of thirteen +13 years for the su! of P,15.

for the -hole period. The defendant -as placed in possession of the property 'ut &no-ing that the period of the lease -ould end -ith

the year 197, petitioners re#uested priate respondent for a conference 'ut the latter did not honor the re#uest and instead he

infor!ed the petitioners that he had already constructed a co!!ercial 'uilding on the land -orth P5,.H that the lease contract

-as for a period of si0ty + years, counted fro! 195<H and that he is already a Filipino citien. The clai! of Chong ca!e as a surprise

to the Glantinos 'ecause they did not re!e!'er haing agreed to a si0ty/year lease agree!ent as that -ould irtually !a&e Chong the

o-ner of the realty -hich, as a Chinese national, he had no right to o-n and neither could he hae ac#uired such o-nership after

naturaliation su'se#uent to 195<. n 6ece!'er 1, 197, in order to aoid a court litigation the Glantinos once !ore inited Chong to

a conference a'out the !atter 'ut again Chong ignored the initation. +=ollo, p. <8H BppellantIs >rief, p. 12

*ence, on Kanuary 1, 198, the Glantinos filed their co!plaint to #uiet title -ith da!ages 'efore the Court of First nstance ofCatanduanes +=ollo, p. 12H =ecord on Bppeal, pp. 1/<.

Bfter Chong has filed an ans-er to the co!plaint and the Glantinos their reply, +=ollo, p. 12H =ecord on Bppeal, pp. 9/1 the trial court

set the case for pre/trial and trial for Bpril 2, 198 +=ollo, p. 12H =ecord on Bppeal, pp. 1/11.

Bt the pre/trial, 'oth parties agreed upon the identity of the land as descri'ed in the co!plaint. t -as !utually ad!itted that the

defendants original na!e -as Co Giong Chong -ho -as then a Chinese national in 195<, -hen he approached the plaintiffs and

offered to lease the land in #uestion. t -as also ad!itted 'y the counsel for the defendant that prior to the filing of the case, the

plaintiffs hae in fact inited the defendant to a conference a'out the !atter +=ollo, p. 12H =ecord on BppealH p. 1<.

ChongIs counsel produced the car'on original of the contract of lease entered into 'et-een Chong and the Glantinos and the e0istenceof the contract of lease as a pu'lic instru!ent -as ad!itted +=ollo, p. 12H =ecord on Bppeal, pp. 1</15.

t -as also ad!itted that Chong had in fact constructed a 'uilding of strong !aterials on the land -orth P<,. +=ollo, p. 12H

=ecord on Bppeal, p. 15H that Chong has 'eco!e a naturalied Filipino citien in 191 and that his na!e is no longer Co Giong Chong

'ut Kuan )olina +=ollo, p. 12H =ecord on Bppeal, p. 15.

n )ay 17, 198, the trial court rendered a 6ecision the dispositie portion of -hich reads;

D*?=?F=?, in ie- of the foregoing considerations, the Court finds the contract of lease entered into 'et-een the plaintiffs and

the defendant on cto'er 5, 195<, alid and in accordance -ith la- and the co!plaint is dis!issed -ith costs against the plaintiffs.



The Court, ho-eer, feels that there is no sufficient ground to a-ard !oral da!ages or attorneyIs fees as clai!ed 'y the defendant

'ecause the Court is fairly coninced that the institution of the suit sprung fro! an honest coniction on the part of the plaintiffs that on

account of the period fi0ed in the contract of lease and the fact that the defendant -as a Chinese national at the ti!e of its cele'ration

constituted alid grounds for annul!ent.

" =6?=?6. +=ollo, p. 12H =ecord on Bppeal, p. 2<.

Fro! this Judg!ent, plaintiffs appealed directly to this Court on a pure #uestion of la- +=ollo, p. 12H =ecord on Bppeal, pp. 2</25.

The plaintiffs/appellants filed their 'rief on )ay 2, 199 +=ollo, p. <8. The defendant/appellee filed his corresponding 'rief on Kuly 22,

199 +=ollo, p. 59.

The appellants raised the follo-ing assign!ent of errors;

T*? GD?= CA=T ?==?6 4 6?CGB=4 T*? C4T=BCT ?4T?=?6 4T > B46 >?TD??4 T*? BPP?GGB4T" B46

T*? 6?F?46B4T" 4 CT>?= 5, 195< LBG6H

T*? GD?= CA=T ?==?6 4 =?FA"4 T 6?CGB=? T*BT C4T=BCT 4T B G?B"?.

"tripping the case of irreleant allegations, the piotal issue in this case is -hether or not the contract of lease entered into 'y and

'et-een the petitioners including Lirgilio Glantino no- deceased and priate respondent on cto'er 5, 195< for a period of si0ty +

years is alid.

Petitioners contend that -hen the contract -hich is sought to 'e declared oid -as entered into 'y and 'et-een the parties, priate

respondent -as still a Chinese national +=ollo, p. <8H BppellantsI >rief, p. 2. *o-eer, petitioners also stated that they do not dispute

the right of priate respondent to hold the landholding in dispute under a contract of lease 'ut they cannot fatho! ho- Congress could

hae thought of a lease contract -hich shall 'e for an indefinite period and yet say that the period to 'e alid should not e0ceed 99years +=ollo, p. <8H BppellantsI >rief, p. <H Brticle 1<3 of the 4e- Ciil Code of the Philippines.

n the other hand, priate respondent argued that een though he -as still an alien -hen he entered into the contract of lease +on

cto'er 5, 195<, he -as not prohi'ited 'y la- to do so. n fact, prior to his 'eco!ing a naturalied Filipino citien in 191, the

appellants did not #uestion his right to enter into that contract so that the parties are in pari delicto. *e constructed a 'uilding on the

property -orth P<,. and prays that he 'e a-arded P3,. for !oral da!ages and P2,. for BttorneysI fees. +=ollo, p.

<8H BppellantsI >rief, p. 2.

The position of priate respondent is -ell ta&en.

The lo-er court correctly ruled that the defendant/appellee Chong had at the ti!e of the e0ecution of the contract, the right to hold 'ylease the property inoled in the case although at the ti!e of the e0ecution of the contract, he -as still a Chinese national +=ollo, p.

59H BppelleeIs >rief, pp. 1/11.

n the present case, it has 'een esta'lished that there is only one contract and there is no option to 'uy the leased property in faor of

Chong. There is nothing in the record, either in the lease contract or in the co!plaint itself, to indicate any sche!e to circu!ent the

constitutional prohi'ition. n the contrary, the Glantinos the!seles ad!it openly that right fro! the start and 'efore entering into the

contract, the Chong had !erely as&ed the! for a lease of the pre!ises to -hich they agreed. Bd!ittedly under the ter!s of the

contract there is nothing to preent the Glantinos fro! disposing of their title to the land to any #ualified party 'ut su'Ject to the rights of

the lessee Chong. 4either is there under the ter!s of the said contract to indicate that the o-nership of the Glantinos of the leased

pre!ises has 'een irtually transferred to the lessee +=ollo, p. 59H BppelleeIs >rief, p. 1<.



Ander the circu!stances, a lease to an alien for a reasona'le period is alid. "o is an option giing an alien the right to 'uy real

property on condition that he is granted Philippine citienship. Bliens are not co!pletely e0cluded 'y the Constitution fro! use of lands

for residential purposes. "ince their residence in the Philippines is te!porary, they !ay 'e granted te!porary rights such as a lease

contract -hich is not for'idden 'y the Constitution. "hould they desire to re!ain here foreer and share our fortune and !isfortune,

Filipino citienship is not i!possi'le to ac#uire +Philippine >an&ing Corporation s. Gui "he, 21 "C=B 52 +197H citing rien&o s.

=egister of 6eeds, 79 Phil. <1 +19<7.

The only instance -here a contract of lease !ay 'e considered inalid, is, if there are circu!stances attendant to its e0ecution, -hichare used as a sche!e to circu!ent the constitutional prohi'ition.

f an alien is gien not only a lease of, 'ut also an option to 'uy, a piece of land, 'y irtue of -hich the Filipino o-ner cannot sell or

other-ise dispose of his property, this to last for 5 years, then it 'eco!es clear that the arrange!ent is a irtual transfer of o-nership

-here'y the o-ner diests hi!self in stages not only of the right to enJoy the land +Jus possidendi, Jus utendi, Jus fruendi, and Jus

a'utendi// rights, the su! of -hich !a&e up o-nership. t is Just as if today the possession is transferred, to!orro- the use, the ne0t

day the disposition, and so on, until ulti!ately all the rights of -hich o-nership is !ade up are consolidated in an alien +Philippine

>an&ing Corporation s. Gui "he, 21 "C=B 52 +197.

Co!ing 'ac& to the case at 'ar, een assu!ing, arguendo, that the su'Ject contract is prohi'ited, the sa!e can no longer 'e

#uestioned presently upon the ac#uisition 'y the priate respondent of Filipino citienship. t -as held that sale of a residential land to

an alien -hich is no- in the hands of a naturalied Filipino citien is alid +6e Castro s. Tan, 129 "C=B 85 +198<.

B contract is the la- 'et-een the contracting parties, and -hen there is nothing in it -hich is contrary to la-, !orals, good custo!s,

pu'lic policy or pu'lic order, the alidity of the contract !ust 'e sustained +)ari!perio Co!pania 4aiera, ".B. s. Court of Bppeals,

15 "C=B 358 +1987.

The issue of the nature of the contract in the case at 'ar -as neer raised in the 'asic pleadings or in the pre/trial +=ollo, p. 59H

BppelleeIs >rief, p. 22.

t is too late to raise an issue on appeal in the "upre!e Court -hen it has not 'een raised in the lo-er court +?spadera s. Court of

Bppeals, 15 "C=B 3< +1988.

)oreoer, contracts -hich are not a!'iguous are to 'e interpreted according to their literal !eaning and should not 'e interpreted

'eyond their o'ious intend!ent +Plastic To-n Center Corporation s. 4G=C, 172 "C=B 58 +1989H *errera s. Petrophil Corp., 1<

"C=B 385 +198.

P=?)"?" C4"6?=?6, the decision appealed is here'y BFF=)?6 -ith costs against the plaintiffs/appelants.

" =6?=?6.

)elencio/*errera, +Chair!an, Padilla, and =egalado, KK., concur.

"ar!iento, K., on leae.



28 Phil. 78<

EN )!NC$ .=. 4o. 88<<, cto'er 18, 199 %

#$I"I##INE "ONG DIS%!NCE %E"E#$ONE CO.[#"D%], #E%I%IONER, VS. %$E N!%ION!" %E"ECO&NIC!%IONS COISSION !ND CE""CO, INC., :E#RESS

%E"ECO&NIC!%IONS CO., INC. [E%CI];, RES#ONDEN%S.

D E C I S I O N

)?G?4C/*?==?=B, K.;

Petitioner Philippine Gong 6istance Telephone Co!pany +PG6T assails, 'y -ay of Certiorari and Prohi'ition under =ule 5, t-o +2

rders of pu'lic respondent 4ational Teleco!!unications Co!!ission +4TC, na!ely, the rder of 12 6ece!'er, 1988 granting

priate respondent ?0press Teleco!!unications Co., nc. +?TC proisional authority to install, operate and !aintain a Cellular )o'ile

Telephone "yste! in )etro/)anila +Phase B in accordance -ith specified conditions, and the rder, dated 8 )ay 1988, denying

reconsideration.

n 22 Kune 1958, =ep. Bct 4o. 29, -as enacted, other-ise &no-n as Bn Bct ranting Feli0 Bl'erto and Co!pany, ncorporated, a

Franchise to ?sta'lish =adio "tations for 6o!estic and Transoceanic Teleco!!unications. Feli0 Bl'erto Co., nc. +FBC -as the

original corporate na!e, -hich -as changed to ?TC -ith the a!end!ent of the Brticles of ncorporation in 19<. )uch later,

C?GGC), nc. -as the na!e sought to 'e adopted 'efore the "ecurities and ?0change Co!!ission, 'ut this -as -ithdra-n and

a'andoned.

n 13 )ay 1987, alleging urgent pu'lic need, ?TC filed an application -ith pu'lic respondent 4TC +doc&eted as 4TC Case 4o. 87/39

for the issuance of a Certificate of Pu'lic Conenience and 4ecessity +CPC4 to construct, install, esta'lish, operate and !aintain a

Cellular )o'ile Telephone "yste! and an Blpha 4u!eric Paging "yste! in )etro )anila and in the "outhern Guon regions, -ith a

prayer for proisional authority to operate Phase B of its proposal -ithin )etro )anila.

PG6T filed an pposition -ith a )otion to 6is!iss, 'ased pri!arily on the follo-ing grounds; +1 ?TC is not capacitated or #ualified

under its legislatie franchise to operate a syste!/-ide telephone or net-or& of telephone serice such as the one proposed in itsapplicationH 2 ?TC lac&s the facilities needed and indispensa'le to the successful operation of the proposed cellular !o'ile telephone

syste!H +3 PG6T has itself a pending application -ith 4TC, Case 4o. 8/8, to install and operate a Cellular )o'ile Telephone "yste!

for do!estic and international serice not only in )anila 'ut also in the proinces and that under the prior operator or protection of

inest!ent doctrine, PG6T has the priority or preference in the operation of such sericeH and +< the proisional authority, if granted,

-ill result in needless, unecono!ical and har!ful duplication, a!ong others.

n an rder, dated 12 4oe!'er 1987, 4TC oerruled PG6TQs pposition and declared that =ep. Bct 4o. 29 +1958 should 'e

li'erally construed as to include a!ong the serices under said franchise the operation of a cellular !o'ile telephone serice.

n the sa!e rder, ?TC -as re#uired to su'!it the certificate of registration of its Brticles of ncorporation -ith the "ecurities and

?0change Co!!ission, the present capital and o-nership structure of the co!pany and such other eidence, oral or docu!entary, as!ay 'e necessary to proe its legal, financial and technical capa'ilities as -ell as the econo!ic Justifications to -arrant the setting up

of cellular !o'ile telephone and paging syste!s. The continuance of the hearings -as also directed.

Bfter ealuating the reconsideration sought 'y PG6T, the 4TC, in cto'er 1988, !aintained its ruling that li'erally construed,

applicantQs franchise carries -ith it the priilege to operate and !aintain a cellular !o'ile telephone serice.

n 12 6ece!'er 1988, 4TC issued the first challenged rder. pining that pu'lic interest, conenience and necessity further

de!and a second cellular !o'ile telephone serice proider and finds P=)B FBC? eidence sho-ing applicantQs legal, financial and

technical capa'ilities to proide a cellular !o'ile serice using the B)P" syste!, 4TC granted ?TC proisional authority to install,

operate and !aintain a cellular !o'ile telephone syste! initially in )etro )anila, Phase B only, su'Ject to the ter!s and conditions set



forth in the sa!e rder. ne of the conditions prescri'ed +Condition 4o. 5 -as that, -ithin ninety +9 days fro! date of the

acceptance 'y ?TC of the ter!s and conditions of the proisional authority, ?TC and PG6T shall enter into an interconnection

agree!ent for the proision of ade#uate interconnection facilities 'et-een applicantQs cellular !o'ile telephone s-itch and the pu'lic

s-itched telephone net-or& and shall Jointly su'!it such interconnection agree!ent to the Co!!ission for approal.

n a )otion to "et Bside the rder granting proisional authority, PG6T alleged essentially that the interconnection ordered -as in

iolation of due process and that the grant of proisional authority -as Jurisdictionally and procedurally infir!. n 8 )ay 1989, 4TC

denied reconsideration and set the date for continuation of the hearings on the !ain proceedings. This is the second #uestioned

rder.

PG6T urges us no- to annul the 4TC rders of 12 6ece!'er 1988 and 8 )ay 1989 and to order ?TC to desist fro!, suspend,

and:or discontinue any and all acts intended for its i!ple!entation.

n 15 Kune 1989, -e resoled to dis!iss the petition for its failure to co!ply fully -ith the re#uire!ents of Circular 4o. 1/88. Apon

satisfactory sho-ing, ho-eer, that there -as, in fact, such co!pliance, -e reconsidered the order, reinstated the Petition, and re#uired

the respondents 4TC and ?TC to su'!it their respectie Co!!ents.

n 27 Fe'ruary 199, -e issued a Te!porary =estraining rder enJoining 4TC to Cease and 6esist fro! all or any of its on/going

proceedings and ?TC fro! continuing any and all acts intended or related to or -hich -ill a!ount to the i!ple!entation:e0ecution of

its proisional authority. This -as upon PG6TQs urgent !anifestation that it had 'een sered an 4TC rder, dated 1< Fe'ruary 199,

directing i!!ediate co!pliance -ith its rder of 12 6ece!'er 1988, other-ise the Co!!ission shall 'e constrained to ta&e the

necessary !easures and 'ring to 'ear upon PG6T the full sanctions proided 'y la-.

De re#uired PG6T to post a 'ond of P5). t has co!plied, -ith the state!ent that it -as post+ing the sa!e on its agree!ent and:or

consent to hae the sa!e forfeited in faor of Priate =espondent ?TCl:C?GGC) should the instant Petition 'e dis!issed for lac& of

!erit. ?TC too& e0ception to the sufficiency of the 'ond considering its initial inest!ent of appro0i!ately P225), 'ut accepted the

forfeiture proferred.

?TC !oed to hae the T= lifted, -hich -e denied on )arch 199. De stated, ho-eer, that the inaugural cere!ony ?TC had

scheduled for that day could proceed, as the sa!e -as not coered 'y the T=.

PG6T relies on the follo-ing grounds for the issuance of the Drits prayed for;

1. =espondent 4TCQs su'Ject order effectiely licensed and:or authoried a corporate entity -ithout any franchise to operate a

pu'lic utility, legislatie or other-ise, to esta'lish and operate a teleco!!unications syste!.

2. The sa!e order alidated stoc& transactions of a pu'lic serice enterprise contrary to and:or in direct iolation of "ection 2+h

of the Pu'lic "erice Bct.

3. =espondent 4TC adJudicated in the sa!e order a controerted !atter that -as not heard at all in the proceedings under -hich

it -as pro!ulgated.

Bs correctly pointed out 'y respondents, this 'eing a special ciil action for Certiorari and Prohi'ition, -e only need deter!ine if 4TCacted -ithout Jurisdiction or -ith grae a'use of discretion a!ounting to lac& or e0cess of Jurisdiction in granting proisional authority to

?TC under the 4TC #uestioned rders of 12 6ece!'er 1988 and 8 )ay 1989.

The case -as set for oral argu!ent on 21 Bugust 199 -ith the parties directed to address, 'ut not li!ited to, the follo-ing issues; +1

the status and coerage of =ep. Bct 4o. 29 as a franchiseH +2 the transfer of shares of stoc& of a corporation holding a CPC4H and

+3 the principle and procedure of interconnection. The parties -ere thereafter re#uired to su'!it their respectie )e!oranda, -ith

-hich they hae co!plied.

De find no grae a'use of discretion on the part of 4TC, upon the follo-ing considerations;



1. 4TC Kurisdiction

There can 'e no #uestion that the 4TC is the regulatory agency of the national goern!ent -ith Jurisdiction oer all

teleco!!unications entities. t is legally clothed -ith authority and gien a!ple discretion to grant a proisional per!it or authority. n

fact, 4TC !ay, on its o-n initiatie, grant such relief een in the a'sence of a !otion fro! an applicant.

"ec. 3. Proisional =elief. / Apon the filing of an application, co!plaint or petition or at any stage thereafter, the >oard !ay grant

on !otion of the pleaders or on its o-n initiatie, the relief prayed for, 'ased on the pleading, together -ith the affidaits and supporting

docu!ents attached thereto, -ithout preJudice to a final decision after co!pletion of the hearing -hich shall 'e called -ithin thirty +3days fro! grant of authority as&ed for. +=ule 15, =ules of Practice and Procedure >efore the >oard of Co!!unications +no- 4TC.

Dhat the 4TC granted -as such a proisional authority, -ith a definite e0piry period of eighteen +18 !onths unless sooner rene-ed,

and -hich !ay 'e reo&ed, a!ended or reised 'y the 4TC. t is also li!ited to )etro )anila only. Dhat is !ore, the !ain

proceedings are clearly to continue as stated in the 4TC rder of 8 )ay 1989.

The proisional authority -as issued after due hearing, reception of eidence and ealuation thereof, -ith the hearings attended 'y

arious oppositors, including PG6T. t -as granted only after a pri!a facie sho-ing that ?TC has the necessary legal, financial and

technical capa'ilities and that pu'lic interest, conenience and necessity so de!anded.

PG6T argues, ho-eer, that a proisional authority is nothing short of a Certificate of Pu'lic Conenience and 4ecessity +CPC4 and

that it is !erely a distinction -ithout a difference. That is not so. >asic differences do e0ist, -hich need not 'e ela'orated on. Dhat

should 'e 'orne in !ind is that proisional authority -ould 'e !eaningless if the grantee -ere not allo-ed to operate. )oreoer, it is

clear fro! the ery rder of 12 6ece!'er 1988 itself that its scope is li!ited only to the first phase, out of four, of the proposed

nation-ide telephone syste!. The installation and operation of an alfa nu!eric paging syste! -as not authoried. The proisional

authority is not e0clusie. ts lifeti!e is li!ited and !ay 'e reo&ed 'y the 4TC at any ti!e in accordance -ith la-. The initial

e0penditure of P13) !ore or less, is rendered necessary een under a proisional authority to ena'le ?TC to proe its capa'ility.

Bnd as pointed out 'y the "olicitor eneral, on 'ehalf of the 4TC, if -hat had 'een granted -ere a CPC4, it -ould constitute a final

order or a-ard reie-a'le only 'y ordinary appeal to the Court of Bppeals pursuant to "ection 9+3 of >P >lg 129, and not 'y Certiorari

'efore this Court.

The final outco!e of the application rests -ithin the e0clusie prerogatie of the 4TC. Dhether or not a CPC4 -ould eentually issue

-ould depend on the eidence to 'e presented during the hearings still to 'e conducted, and only after a full ealuation of the proofthus presented.

2. The Coerage of ?TCQs Franchise

=ep. Bct 4o. 29 grants ?TC +for!erly FBC the right and priilege of constructing installing, esta'lishing and operating in the entire

Philippines radio stations for reception and trans!ission of !essages on radio stations in the foreign and do!estic pu'lic fi0ed point/to/

point and pu'lic 'ase, aeronautical and land !o'ile stations, 0 0 0 -ith the corresponding relay stations for the reception and

trans!ission of -ireless !essages on radiotelegraphy and:or radiotelephony 0 0 0. PG6T !aintains that the scope of the franchise is

li!ited to radio stations and e0cludes telephone serices such as the esta'lish!ent of the proposed Cellular )o'ile Telephone

"yste! +C)T". *o-eer, in its rder of 12 4oe!'er 1987, the 4TC construed the technical ter! radiotelephony li'erally as to

include the operation of a cellular !o'ile telephone syste!. t said;

n resoling the said issue, the Co!!ission ta&es into consideration the different definitions of the ter! radiotelephony. Bs defined

'y the 4e- nternational De'ster 6ictionary the ter! radiotelephony is defined as a telephony carried on 'y aid of radio-aes

-ithout connecting -ires. The nternational Teleco!!unications Anion +TA defines a radiotelephone call as a telephone call,

originating in or intended on all or part of its route oer the radio co!!unications channels of the !o'ile serice or of the !o'ile

satellite serice. Fro! the a'oe definitions, -hile under =epu'lic Bct 29 a syste!/-ide telephone or net-or& of telephone serice

'y !eans of connecting -ires !ay not hae 'een conte!plated, it can 'e construed li'erally that the operation of a cellular !o'ile

telephone serice -hich carries !essages, either oice or record, -ith the aid of radio-aes or a part of its route carried oer radio

co!!unication channels, is one included a!ong the serices under said franchise for -hich a certificate of pu'lic conenience and

necessity !ay 'e applied for.



The foregoing is the construction gien 'y an ad!inistratie agency possessed of the necessary special &no-ledge, e0pertise and

e0perience and deseres great -eight and respect +Bsturias "ugar Central, nc. . Co!!issioner of Custo!s, et al., G/19337,

"epte!'er 3, 199, 29 "C=B 17. t can only 'e set aside on proof of gross a'use of discretion, fraud, or error of la- +Tupas Gocal

Chapter 4o. 979 . 4G=C, et al., G/532/33, 4oe!'er 5, 1985, 139 "C=B <78. De discern none of those considerations sufficient

to -arrant Judicial interention.

3. The "tatus of ?TCQs Franchise

PG6T alleges that the ?TC franchise had lapsed into non/e0istence for failure of the franchise holder to 'egin and co!plete

construction of the radio syste! authoried under the franchise as e0plicitly re#uired in "ection < of its franchise, =ep. Bct 4o. 29.$1%

P6GT also ino&es Pres. 6ecree 4o. 3, enacted on 2 4oe!'er 1972, -hich legislates the !andatory cancellation or inalidation of

all franchises for the operation of co!!unications serices, -hich hae not 'een aailed of or used 'y the party or parties in -hose

na!e they -ere issued.

*o-eer, -hether or not ?TC, and 'efore it FBC, in contraention of its franchise, started the first of its radio teleco!!unication

stations -ithin t-o +2 years fro! the grant of its franchise and co!pleted the construction -ithin ten +1 years fro! said dateH and

-hether or not its franchise had re!ained unused fro! the ti!e of its issuance, are #uestions of fact 'eyond the proince of this Court,

'esides the -ell/settled procedural consideration that factual issues are not proper su'Jects of a special ciil action for Certiorari

+Central >an& of the Philippines s. Court of Bppeals, . =. 4o. <1859, 8 )arch 1989, 171 "C=B <9H gay s. ?scareal, . =. 4o.

<<189, 8 Fe'ruary 1985, 135 "C=B 78H Filipino )erchantQs nsurance Co., nc. s. nter!ediate Bppellate Court, . =. 4o. 71<, 27

Kune 1988, 12 "C=B 9. )oreoer, neither "ection <, =ep. Bct 4o. 29 nor Pres. 6ecree 4o. 3 should 'e construed as self/

e0ecuting in -or&ing a forfeiture. Franchise holders should 'e gien an opportunity to 'e heard, particularly so, -here as in this case,

?TC does not ad!it any 'reach, in consonance -ith the rudi!ents of fair play. Thus, the factual situation of this case differs fro! that

in Bngeles =y Co. s. City of Gos Bngeles +92 Pacific =eporter <9 cited 'y PG6T, -here the grantee therein ad!itted its failure to

co!plete the conditions of its franchise and yet insisted on a decree of forfeiture.

)ore i!portantly, PG6TIs allegation parta&es of a collateral attac& on a franchise +=ep. Bct 4o. 29, -hich is not allo-ed. B franchise

is a property right and cannot 'e reo&ed or forfeited -ithout due process of la-. The deter!ination of the right to the e0ercise of a

franchise, or -hether the right to enJoy such priilege has 'een forfeited 'y non/user, is !ore properly the su'Ject of the prerogatie

-rit of #uo -arranto, the right to assert -hich, as a rule, 'elongs to the "tate upon co!plaint or other-ise +"ections 1, 2 and 3, =ule

, =ules of Court,$2% the reason 'eing that the a'use of a franchise is a pu'lic -rong and not a priate inJury. B forfeiture of afranchise -ill hae to 'e declared in a direct proceeding for the purpose 'rought 'y the "tate 'ecause a franchise is granted 'y la-

and its unla-ful e0ercise is pri!arily a concern of oern!ent.

B ... franchise is S granted 'y la-, and its S unla-ful e0ercise is the concern pri!arily of the oern!ent. *ence, the latter as a

rule is the party called upon to 'ring the action for such S unla-ful e0ercise of ... franchise. +L/> L. F=B4C"C, 298 $193 ed.%,

citing Cru s. =a!os, 8< Phil. 22.

<. ?TCQs "toc& Transactions.

?TC ad!its that in 19<, the Bl'ertos, as original o-ners of !ore than <( of the outstanding capital stoc& sold their holdings to the

r'es. n 198, the Bl'ertos re/ac#uired the shares they had sold to the r'es. n 1987, the Bl'ertos sold !ore than <( of theirshares to *oracio alung. Thereafter, the present stoc&holders ac#uired their ?TC shares. )oreoer, in 19<, ?TC had increased its

capital stoc& fro! P<,. to P3,.H and in 1987, fro! P3,. to P<).

PG6T contends that the transfers in 1987 of the shares of stoc& to the ne- stoc&holders a!ount to a transfer of ?TCQs franchise, -hich

needs Congressional approal pursuant to =ep. Bct 4o. 29, and since such approal had not 'een o'tained, ?TCIs franchise had

'een inalidated. The proision relied on reads, in part, as follo-s;

"?CT4 1. The grantee shall not lease, transfer, grant the usufruct of, sell or assign this franchise nor the rights and priileges

ac#uired thereunder to any person, fir!, co!pany, corporation or other co!!ercial or legal entity nor !erge -ith any other person,

co!pany or corporation organied for the sa!e purpose, -ithout the approal of the Congress of the Philippines first had. 0 0 0.



t should 'e noted, ho-eer, that the foregoing proision is directed to the grantee of the franchise, -hich is the corporation itself, and

refers to a sale, lease, or assign!ent of that franchise. t does not include the transfer or sale of shares of stoc& of a corporation 'y the

latterQs stoc&holders.

The sale of shares of stoc& of a pu'lic utility is goerned 'y another la-, i.e., "ection 2+h of the Pu'lic "erice Bct +Co!!on-ealth

Bct 4o. 1<. Pursuant thereto, the Pu'lic "erice Co!!ission +no- the 4TC is the goern!ent agency ested -ith the authority to

approe the transfer of !ore than <( of the su'scri'ed capital stoc& of a teleco!!unications co!pany to a single transferee, thus;

"?C. 2. Bcts re#uiring the approal of the Co!!ission. "u'Ject to esta'lished li!itations and e0ceptions and saing proisions to

the contrary, it shall 'e unla-ful for any pu'lic serice or for the o-ner, lessee or operator thereof, -ithout the approal and

authoriation of the Co!!ission preiously had O

0 0 0

+h To sell or register in its 'oo&s the transfer or sale of shares of its capital stoc&, if the result of that sale in itself or in connection

-ith another preious sale, shall 'e to est in the transferee !ore than forty per centu! of the su'scri'ed capital, of said pu'lic serice

Bny transfer !ade in iolation of this proision shall 'e oid and of no effect and shall not 'e registered in the 'oo&s of the pu'lic

serice corporation. 4othing herein contained shall 'e construed to preent the holding of shares la-fully ac#uired. +Bs a!ended 'y

Co!. Bct 4o. <5<.

n other -ords, transfers of shares of a pu'lic utility corporation need only 4TC approal, not Congressional authoriation. Dhat

transpired in ?TC -ere a series of transfers of shares starting in 19< until 1987. The approal of the 4TC !ay 'e dee!ed to hae

'een !et -hen it authoried the issuance of the proisional authority to ?TC. There -as full disclosure 'efore the 4TC of the

transfers. n fact, the 4TC rder of 12 4oe!'er 1987 re#uired ?TC to su'!it its present capital and o-nership structure. Further,

?TC een filed a )otion 'efore the 4TC, dated 8 6ece!'er 1987, or !ore than a year prior to the grant of proisional authority,

see&ing approal of the increase in its capital stoc& fro! P3,. to P<), and the stoc& transfers !ade 'y its stoc&holders.

B distinction should 'e !ade 'et-een shares of stoc&, -hich are o-ned 'y stoc&holders, the sale of -hich re#uires only 4TC approal

and the franchise itself -hich is o-ned 'y the corporation as the grantee thereof, the sale or transfer of -hich re#uires Congressional

sanction. "ince stoc&holders o-n the shares of stoc&, they !ay dispose of the sa!e as they see fit. They !ay not, ho-eer, transfer

or assign the property of a corporation, li&e its franchise. n other -ords, een if the original stoc&holders had transferred their sharesto another group of shareholders, the franchise granted to the corporation su'sists as long as the corporation, as an entity, continues to

e0ist. The franchise is not there'y inalidated 'y the transfer of the shares. B corporation has a personality separate and distinct fro!

that of each stoc&holder. t has the right of continuity or perpetual succession +Corporation Code, "ec. 2.

To all appearances, the stoc& transfers -ere not Just for the purpose of ac#uiring the ?TC franchise, considering that, as heretofore

stated, a series of transfers -as inoled fro! 19< to 1987. Bnd, contrary to PG6TIs assertion, the franchise -as not the only

property of ?TC of !eaningful alue. The ero 'oo& alue of ?TC assets, as reflected in its 'alance sheet, -as plausi'ly e0plained

as due to the accu!ulated depreciation oer the years entered for accounting purposes and -as not reflectie of the actual alue that

those assets -ould co!!and in the !ar&et.

>ut again, -hether ?TC has offended against a proision of its franchise, or has su'Jected it to !isuse or a'use, !ay !ore properly'e in#uired into in #uo -arranto proceedings instituted 'y the "tate. t is the condition of eery franchise that it is su'Ject to

a!end!ent, alteration, or repeal -hen the co!!on good so re#uires +1987 Constitution, Brticle @, "ection 11.

5. The 4TC nterconnection rder

n the proisional authority granted 'y 4TC to ?TC, one of the conditions i!posed -as that the latter and PG6T -ere to enter into an

interconnection agree!ent to 'e Jointly su'!itted to 4TC for approal.

PG6T ehe!ently opposes interconnection -ith its o-n pu'lic s-itched telephone net-or&. t contends; that -hile PG6T -elco!es

interconnections in the furtherance of pu'lic interest, only parties -ho can esta'lish that they hae alid and su'sisting legislatie



franchises are entitled to apply for a CPC4 or proisional authority, a'sent -hich, 4TC has no Jurisdiction to grant the! the CPC4 or

interconnection -ith PG6TH that the 73 telephone syste!s operating all oer the Philippines hae a ia'ility and feasi'ility independent

of any interconnection -ith PG6TH that the 4TC is not e!po-ered to co!pel such a priate raid on PG6TQs legiti!ate inco!e arising

out of its gigantic inest!entH that it is not pu'lic interest, 'ut purely a priate and selfish interest -hich -ill 'e sered 'y an

interconnection under ?TCQs ter!sH and that to co!pel PG6T to interconnect !erely to gie ia'ility to a prospectie co!petitor,

-hich cannot stand on its o-n feet, cannot 'e Justified in the na!e of a non/e0istent pu'lic need +PG6T )e!orandu!, pp. <8 and 5

PG6T cannot Justifia'ly refuse to interconnect.

=ep. Bct 4o. 8<9, or the )unicipal Telephone Bct of 1989, approed on 8 Fe'ruary 199, !andates interconnection proiding as it

does that all do!estic teleco!!unications carriers or utilities 0 0 0 shall 'e interconnected to the pu'lic s-itch telephone net-or&.

"uch regulation of the use and o-nership of teleco!!unications syste!s is in the e0ercise of the plenary police po-er of the "tate for

the pro!otion of the general -elfare. The 1987 Constitution recognies the e0istence of that po-er -hen it proides;

"?C. . The use of property 'ears a social function, and all econo!ic agents shall contri'ute to the co!!on good. ndiiduals and

priate groups, including corporations, cooperaties, and si!ilar collectie organiations, shall hae the right to o-n, esta'lish, and

operate econo!ic enterprises, su'Ject to the duty of the "tate to pro!ote distri'utie Justice and to interene -hen the co!!on good

so de!ands +Brticle @.

The interconnection -hich has 'een re#uired of PG6T is a for! of interention -ith property rights dictated 'y the o'Jectie of

goern!ent to pro!ote the rapid e0pansion of teleco!!unications serices in all areas of the Philippines, 0 0 0 to !a0i!ie the use of

teleco!!unications facilities aaila'le, 0 0 0 in recognition of the ital role of co!!unications in nation 'uilding 0 0 0 and to ensure that

all users of the pu'lic teleco!!unications serice hae access to all other users of the serice -hereer they !ay 'e -ithin the

Philippines at an accepta'le standard of serice and at reasona'le cost +6TC Circular 4o. 9/2<8. Andou'tedly, the enco!passing

o'Jectie is the co!!on good. The 4TC, as the regulatory agency of the "tate, !erely e0ercised its delegated authority to regulate the

use of teleco!!unications net-or&s -hen it decreed interconnection.

The i!portance and e!phasis gien to interconnection dates 'ac& to )inistry Circular 4o. 82/81, dated 6ece!'er 1982, proiding;

"ec. 1. That the goern!ent encourages the proision and operation of pu'lic !o'ile telephone serice -ithin local su'/'ase

stations, particularly, in the highly co!!ercialied areasH

"ec. 5. That, in the eent the authority to operate said serice 'e granted to other applicants, other than the franchise holder, the

franchise operator shall 'e under o'ligation to enter into an agree!ent -ith the do!estic telephone net-or&, under an interconnection

agree!entH

6epart!ent of Transportation and Co!!unication +6TC Circular 4o. 87/188, issued in 1987, also decrees;

12. Bll pu'lic co!!unications carriers shall interconnect their facilities pursuant to co!paratiely efficient interconnection +C? as

defined 'y the 4TC in the interest of econo!ic efficiency.

The sharing of reenue -as an additional feature considered in 6TC Circular 4o. 9/2<8, dated 1< Kune 199, laying do-n the

Policy on nterconnection and =eenue "haring 'y Pu'lic Co!!unications Carriers, thus;

D*?=?B", it is the o'Jectie of goern!ent to pro!ote the rapid e0pansion of teleco!!unications serices in all areas of the

PhilippinesH

D*?=?B", there is a need to !a0i!ie the use of teleco!!unications facilities aaila'le and encourage inest!ent in

teleco!!unications infrastructure 'y suita'ly #ualified serice proidersH

D*?=?B", in recognition of the ital role of co!!unications in nation 'uilding, there is a need to ensure that all users of the pu'lic

teleco!!unications serice hae access to all other users of the serice -hereer they !ay 'e -ithin the Philippines at an accepta'le

standard of serice and at reasona'le cost.



D*?=?F=?, 0 0 0 the follo-ing 6epart!ent policies on interconnection and reenue sharing are here'y pro!ulgated;

1. Bll facilities offering pu'lic teleco!!unication serices shall 'e interconnected into the nation-ide teleco!!unications net-or&:s.

0 0 0 0 0 0 0 0 0

<. The interconnection of net-or&s shall 'e effected in a fair and non/discri!inatory !anner and -ithin the shortest ti!efra!e

practica'le.

5. The precise points of interface 'et-een serice operators shall 'e as defined 'y the 4TC, and the apportion!ent of costs and

diision of reenues resulting fro! interconnection of teleco!!unications net-or&s shall 'e as approed and:or prescri'ed 'y the

4TC.

0 0 0 0 0 0 0 0 0

"ince then, the 4TC, on 12 Kuly 199, issued )e!orandu! Circular 4o. 7/13/9 prescri'ing the =ules and =egulations oerning

the nterconnection of Gocal Telephone ?0changes and Pu'lic Calling ffices -ith the 4ation-ide Teleco!!unications 4et-or&:s, the

"haring of =eenue 6eried Therefro!, and for ther Purposes.

The 4TC order to interconnect allo-s the parties the!seles to discuss and agree upon the specific ter!s and conditions of the

interconnection agree!ent instead of the 4TC itself laying do-n the standards of interconnection -hich it can ery -ell i!pose. Thus i

is that PG6T cannot Justifia'ly clai! denial of due process. t has 'een heard. t -ill continue to 'e heard in the !ain proceedings. t

-ill surely 'e heard in the negotiations concerning the interconnection agree!ent.

Bs disclosed during the hearing, the interconnection sought 'y ?TC is 'y no !eans a parasitic dependence on PG6T. The ?TC

syste! can operate on its o-n een -ithout interconnection, 'ut it -ill 'e li!ited to its o-n su'scri'ers. Dhat interconnection see&s to

acco!plish is to ena'le the syste! to reach out to the greatest nu!'er of people possi'le in line -ith goern!ental policies laid do-n.

Cellular phones can access PG6T units and ice ersa in as -ide an area as attaina'le. Dith the 'roader reach, pu'lic interest and

conenience -ill 'e 'etter sered. To 'e sure, ?TC could proide no !ean co!petition +although PG6T !aintains that it has nothing

to fear fro! the innocuous interconnection, and eat into PG6TQs o-n toll reenue +crea! PG6T reenue, in its o-n -ords, 'ut all

for the eentual 'enefit of all that the syste! can reach.

. Alti!ate Considerations.

The decisie considerations are pu'lic need, pu'lic interest, and the co!!on good. Those -ere the oerriding factors -hich !otiated

4TC in granting proisional authority to ?TC. Brticle , "ection 2< of the 1987 Constitution, recognies the ital role of co!!unication

and infor!ation in nation 'uilding. t is li&e-ise a "tate policy to proide the eniron!ent for the e!ergence of co!!unications

structures suita'le to the 'alanced flo- of infor!ation into, out of, and across the country +Brticle @L, "ection 1, i'id.. B !odern and

dependa'le co!!unications net-or& rendering efficient and reasona'ly priced serices is also indispensa'le for accelerated econo!ic

recoery and deelop!ent. To these pu'lic and national interests, pu'lic utility co!panies !ust 'o- and yield.

6espite the fact that there is a irtual !onopoly of the telephone syste! in the country at present, serice is sadly inade#uate.Custo!er de!ands are hardly !et, -hether fi0ed or !o'ile. There is a unani!ous cry to hasten the deelop!ent of a !odern,

efficient, satisfactory and continuous teleco!!unications serice not only in )etro )anila 'ut throughout the archipelago. The need

therefor -as dra!atically e!phasied 'y the destructie earth#ua&e of 1 Kuly 199. t !ay 'e that users of the cellular !o'ile

telephone -ould initially 'e li!ited to a fe- and to highly co!!ercialied areas. *o-eer, it is a step in the right direction to-ards the

enhance!ent of the teleco!!unications infrastructure, the e0pansion of teleco!!unications serices in, hopefully, all areas of the

country, -ith chances of co!plete disruption of co!!unications !ini!ied. t -ill thus i!pact on the total deelop!ent of the countryQs

teleco!!unications syste!s and redound to the 'enefit of een those -ho !ay not 'e a'le to su'scri'e to ?TC.

Free co!petition in the industry !ay also proide the ans-er to a !uch/desired i!proe!ent in the #uality and deliery of this type of

pu'lic utility, to i!proed technology, fast and handy !o'ile serice, and reduced user dissatisfaction. Bfter all, neither PG6T nor any



other pu'lic utility has a constitutional right to a !onopoly position in ie- of the Constitutional proscription that no franchise certificate

or authoriation shall 'e e0clusie in character or shall last longer than fifty +5 years +i'id., "ection 11H Brticle @L, "ection 5, 1973

ConstitutionH Brticle @L, "ection 8, 1935 Constitution. Bdditionally, the "tate is e!po-ered to decide -hether pu'lic interest de!ands

that !onopolies 'e regulated or prohi'ited +1987 Constitution, Brticle @, "ection 19.

D*?=?F=?, finding no grae a'use of discretion, tanta!ount to lac& of or e0cess of Jurisdiction, on the part of the 4ational

Teleco!!unications Co!!ission in issuing its challenged rders of 12 6ece!'er 1988 and 8 )ay 1989 in 4TC Case 4o. 87/39, this

Petition is 6")""?6 for lac& of !erit. The Te!porary =estraining rder heretofore issued is GFT?6. The 'ond issued as a

condition for the issuance of said restraining rder is declared forfeited in faor of priate respondent ?0press Teleco!!unicationsCo., nc.

Costs against petitioner.

" =6?=?6.

Paras, Feliciano, Padilla, "ar!iento, Cortes, rino/B#uino, and =egalado, KK., concur.

Fernan, C.K. and 4arasa, K., Join K. utierre, Kr., and K. Cru in their separate dissenting opinion.

ancayco, >idin, and )edialdea, KK., Join K. utierre, Kr., in his dissenting opinion.



3<7 Phil. 1

EN )!NC$ .=. 4o. 12<3, 6ece!'er 3, 1997 %

FR!NCISCO S. %!%!D, #E%I%IONER, VS. %$E SECRE%!R' OF %$E DE#!R%EN% OF ENERG' !ND %$E SECRE%!R' OF%$E DE#!R%EN% OF FIN!NCE, RES#ONDEN%S.

$ .=. 4o. 12787 %

EDCE" C. "!G!N, *O/ER #. !RRO'O, ENRI&E G!RCI!, IG)ER%O %!!D!, F"!G $&!N RIG$%S FO&ND!%ION, INC.FREEDO FRO DE)% CO!"I%ION :FDC;, S!N"!/!S, #E%I%IONERS, VS. $ON. R&)EN %ORRES IN $IS C!#!CI%' !S %$EEEC&%IVE SECRE%!R', $ON. FR!NCISCO VIR!', IN $IS C!#!CI%' !S %$E SECRE%!R' OF ENERG', C!"%E

#$I"I##INES, INC., #E%RON COR#OR!%ION, !ND #I"I#IN!S S$E"" COR#OR!%ION, RES#ONDEN%S.

E!S%ERN #E%RO"E& COR#., SE!OI" #E%RO"E& COR#., S&)IC )!' DIS%RI)&%ION, INC., %!, INC., !ND D&)#$I"G!S, OV!N%SININ%ERVEN%ION.

R E S O " & % I O N

PA4, K.;

For resolution are; +1 the !otion for reconsideration filed 'y the pu'lic respondentsH and +2 the partial !otions for reconsideration filed

'y petitioner ?nri#ue T. arcia and the interenors.$1%

n their )otion for =econsideration, the pu'lic respondents contend;

?0ecutie rder 4o. 392 is not a !isapplication of =epu'lic Bct 4o. 818H

"ections 5+', and 9+' of =epu'lic Bct 4o. 818 do not contraene "ection 19, Brticle @ of the ConstitutionH and

"ections 5+', and 9+' of =.B. 4o. 818 do not per!eate the essence of the said la-H hence their nullity -ill not itiate the other

parts thereof.

n their !otion for =econsideration, the interenors argue;

2.1.1

The total nullification of =epu'lic Bct 4o. 818 restores the disproportionate adantage of the three 'ig oil fir!s Y Calte0, "hell and

Petron Y oer the s!all oil fir!sH

2.1.2

The total nullification of =epu'lic Bct. 4o. 818 disar!s the ne- entrants and seriously cripples their capacity to co!pete and

gro-H and

2.1.3

Alti!ately the total nullification of =epu'lic Bct 4o. 818 re!oes su'stantial, al'eit i!perfect, 'arriers to !onopolistic practices and

unfair co!petition and trade practices har!ful not only to !oant/interernors 'ut also to the pu'lic in general.



n his Partial )otion for =econsideration,$2% petitioner arcia prays that only the proisions of =.B. 4o. 818 on the <( tariff differential

predatory pricing and !ini!u! inentory 'e declared unconstitutional. *e cites the pernicious effects of a total declaration of

unconstitutionality of =.B. 4o. 818. *e aers that it is ery pro'le!atic 000 if Congress can fasttrac& an entirely ne- la-.

De find no !erit in the !otions for reconsideration and partial !otion for reconsideration.

De shall first resole pu'lic respondentsQ !otion for reconsideration. They insist that there -as no !isapplication of =epu'lic Bct. 4o.

818 -hen the ?0ecutie considered the depletion of the P"F in adancing the date of full deregulation of the do-nstrea! oil

industry. They urge that the consideration of this factor did not iolate the rule that e0ercise of delegated po-er !ust 'e done strictly inaccord -ith the standard proided in the la-. They contend that the rule prohi'its the ?0ecutie fro! su'tracting 'ut not fro! adding to

the standard set 'y Congress. This hair splitting is a sterile atte!pt to !a&e a distinction -hen there is no difference. The choice and

crafting of the standard to guide the e0ercise of delegated po-er is part of the la-!a&ing process and lies -ithin the e0clusie

Jurisdiction of Congress. The standard cannot 'e altered in any -ay 'y the ?0ecutie for the ?0ecutie cannot !odify the -ill of the

Gegislature. To 'e sure, pu'lic respondents do not cite any authority to support its strange thesis for there is none in our Jurisprudence.

The pu'lic respondents ne0t recycle their argu!ents that "ections 5+', and 9+' of =.B. 4o. 818 do not contraene "ection 19,

Brticle @ of the Constitution.$3% They reiterate that the <( tariff differential -ould encourage the construction of ne- refineries -hich

-ill 'enefit the country for they use Filipino la'or and goods. De hae reJected this su'!ission for a reality chec& -ill reeal that this

<( tariff differential gies a decisie edge to the e0isting oil co!panies een as it constitutes a su'stantial 'arrier to the entry of

prospectie players. De do not agree -ith the pu'lic respondents that there is no e!pirical eidence to support this ruling. n the recent

hearing of the "enate Co!!ittee on ?nergy chaired 'y "enator Freddie De'', it -as esta'lished that the <( tariff differential on crude

oil and refined petroleu! i!portation gies a 2/centao per liter adantage to three 'ig oil co!panies oer the ne- players. t -as

also found that said tariff differential seres as a protectie shield for the 'ig oil co!panies.$<% 4or do -e approe pu'lic respondentsQ

su'!ission that the entry of ne- players after deregulation is proof that the <( tariff differential is not a heay disincentie. Bcting as

the !outhpiece of the ne- players, pu'lic respondents een la!ent that unfortunately, the opportunity to get the ans-er right fro! the

QhorsesQ !outhQ eluded this *onora'le Court since none of the ne- players supposedly adersely affected 'y the assailed proisions

ca!e for-ard to oice their position.$5% They need not continue their la!entation. The ne- players represented 'y ?astern Petroleu!,

"eaoil Petroleu! Corporation, "u'ic >ay 6istri'ution, nc., TDB nc., and 6u'Phil as hae interened in the cases at 'ar and hae

spo&en for the!seles. n their !otion for interention, they !ade it crystal clear that it is not their intention 000 to see& the reersal of

the CourtQs nullification of the <( differential in "ection 5+' nor of the inentory re#uire!ent of "ection , nor of the prohi'ition of

predatory pricing in "ection 9+'.$% They stressed that they only protest the restoration of the 1( oil tariff differential under the Tariff

Code.$7% The horseQs !outh therefore authoritatiely tells us that the ne- players the!seles consider the <( tariff differential in =.B.4o. 818 as oppressie and should 'e nullified.

To gie their argu!ent a ne- spin, pu'lic respondents try to Justify the <( tariff differential on the ground that there is a su'stantial

difference 'et-een a refiner and an i!porter Just as there is difference 'et-een ra- !aterial and finished product. 'iously, the effort

is !ade to de!onstrate that the une#ual tariff does not iolate the e#ual protection clause of the Constitution. The effort only proes

that the pu'lic respondents are still loo&ing at the issue of tariff differential fro! -rong end of the telescope. ur 6ecision did not hold

that the <( tariff differential infringed the e#ual protection clause of the Constitution een as this -as contended 'y petitioner Tatad.$8%

=ather, -e held that said tariff differential su'stantially occluded the entry point of prospectie players in the do-nstrea! oil industry.

De further held that its ineita'le result is to e0clude fair and effectie co!petition and to enhance the !onopolistsQ a'ility to ta!per

-ith the !echanis! of a free !ar&et. This consideration is 'asic in anti/trust suits and cannot 'e eroded 'y 'ela'oring the inapplica'le

principle in ta0ation that different things can 'e ta0ed differently.

The pu'lic respondents tenaciously defend the alidity of the !ini!u! inentory re#uire!ent. They aer that the re#uire!ent -ill not

preJudice ne- players 000 during their first year of operation 'ecause they do not hae yet annual sales fro! -hich the re#uired

!ini!u! inentory !ay 'e deter!ined. Co!pliance -ith such re#uire!ent on their second and succeeding years of operation -ill not

'e difficult 'ecause the putting up of storage facilities in proportion to the olu!e of their 'usiness 'eco!es an ordinary and necessary

'usiness underta&ing Just as the case of i!porters of finished products in other industries.$9% The contention is an old one although it is

pureyed -ith a ne- lipstic&. The contention cannot conince for as -ell articulated 'y petitioner arcia, the prohi'itie cost of the

re#uired !ini!u! inentory -ill not 'e any less 'urdenso!e on the second, third, fourth, etc. years of operations. Anli&e !ost products

-hich can 'e i!ported and stored -ith facility, oil i!ports re#uire ocean receiing, storage facilities. cean receiing ter!inals are

already ery e0pensie, and to re#uire ne- players to put up !ore than they need is to co!pound and aggraate their costs, and



conse#uently their great disadantage is/a/is the >ig 3.$1% Bgain, the argu!ent on -hether the !ini!u! inentory re#uire!ent

seriously hurts the ne- players is 'est settled 'y hearing the ne- players the!seles. n their !otion for interention, they i!plicitly

confir!ed that the high cost of !eeting the inentory re#uire!ent has an inhi'iting effect in their operation and hence, they support the

ruling of this Court stri&ing it do-n as unconstitutional.

Pu'lic respondents still !aintain that the proision on predatory pricing does not offend the Constitution. Bgain, their argu!ent is not

fresh though e!'ellished -ith citations of cases in the Anited "tates sustaining the alidity of sales/'elo-/costs statutes.$11% B #uic&

loo& at these B!erican cases -ill sho- that they are inapplica'le. =.B. 4o. 818 has a different cast. Bs discussed, its proisions on

tariff differential and !ini!u! inentory erected high 'arriers to the entry of prospectie players een as they raised their ne- rialsQcosts, thus creating the clear danger that the deregulated !ar&et in the do-nstrea! oil industry -ill not operate under an at!osphere

of free and fair co!petition. t is certain that lac& of real co!petition -ill allo- the present oil oligopolists to dictate prices,$12% and can

entice the! to engage in predatory pricing to eli!inate rials. The fact that =.B. 4o. 818 prohi'its predatory pricing -ill not dissole

this clear danger. n truth, its definition of predatory pricing is too loose to 'e real deterrent. Thus, one of the la-Qs principal authors,

Congress!an 6ante . Tinga filed *.>. 4o. 157 -here he ac&no-ledged in its e0planatory note that the definition of predatory

pricing 000 needs to 'e tightened up particularly -ith respect to the definitie 'ench!ar& price and the specific anti/co!petitie intent.

The definition in the 'ill at hand -hich -as ta&en fro! the Breeda/Turner test in the Anited "tates on predatory pricing resoles the

#uestions. Follo-ing the !ore effectie Breeda/Turner test, Congress!an Tinga has proposed to redefine predatory pricing, i.;

Predatory pricing !eans selling or offering to sell any oil product at a price 'elo- the aerage aria'le cost for the purpose of

destroying co!petition, eli!inating a co!petitor or discouraging a co!petitor fro! entering the !ar&et.$13% n light of its loose

characteriation in =.B. 818 and the la-Qs anti/co!petitie proisions, -e held that the proision on predatory pricing is constitutionally

infir!ed for it can 'e -ielded !ore successfully 'y the oil oligopolists. ts cu!ulatie effect is to add to the arsenal of po-er of the

do!inant oil co!panies. For as structured, it has no !ore than the strength of a spider -e' Y it can catch the -ea& 'ut cannot catch

the strongH it can stop the s!all oil players 'ut cannot stop the 'ig oil players fro! engaging in predatory pricing.

Pu'lic respondents insist on their thesis that the cases at 'ar actually assail the -isdo! of =.B. 4o. 818 and that this Court should

refrain fro! e0a!ining the -isdo! of legislations. They contend that =.B. 4o. 818 inoles an econo!ic policy -hich this Court

cannot reie- for lac& of po-er and co!petence. To start -ith, no school of scholars can clai! any infalli'ility. *istorians -ith undefiled

learning hae chronicled$1<% oer the years the disgrace of !any econo!ists and the fall of one econo!ic dog!a after another. >e tha

as it !ay, the Court is a-are that the principle of separation of po-ers prohi'its the Judiciary fro! interferring -ith the policy setting

function of the legislature.$15% For this reason -e italicied in our 6ecision that the Court did not reie- the -isdo! of =.B. 4o. 818

'ut its co!pati'ility -ith the ConstitutionH the Court did not annul the ?cono!ic policy of deregulation 'ut itiated its aspects -hich

offended the constitutional !andate on fair co!petition. t is 'eyond de'ate that the po-er of Congress to enact la-s does not includethe right to pass unconstitutional la-s. n fine, the Court did not usurp the po-er of Congress to enact la-s 'ut !erely discharged its

'ounden duty to chec& the constitutionality of la-s -hen challenged in appropriate cases. ur 6ecision annulling =.B. 4o. 818 is

Justified 'y the principle of chec& and 'alance.

De hold that the po-er and o'ligation of this Court to pass upon the constitutionality of la-s cannot 'e defeated 'y the fact that the

challenged la- carries serious econo!ic i!plications. This Court has struc& do-n la-s a'ridging the political and ciil rights of our

people een if it has to offend the other !ore po-erful 'ranches of goern!ent. There is no reason -hy the Court cannot stri&e do-n

=.B. 4o. 818 that iolates the econo!ic rights of our people een if it has to 'ridle the li'erty of 'ig 'usiness -ithin reasona'le

'ounds. n Blalayan s. 4ational Po-er Corporation$1% the Court, spea&ing thru )r. Chief Kustice ?nri#ue ). Fernando, held;

2. 4or is petitioner any!ore successful in his plea for the nullification of the challenged proision on the ground of his 'eingdepried of the li'erty to contract -ithout due process of la-.

t is to 'e ad!itted of course that property rights find shelter in specific constitutional proisions, one of -hich is the due process

clause. t is e#ually certain that our funda!ental la- fra!ed at a ti!e of surging unrest and dissatisfaction, -hen there -as a fear

e0pressed in !any #uarters that a constitutional de!ocracy, in ie- of its co!!it!ent to the clai!s of property, -ould not 'e a'le to

cope effectiely -ith the pro'le!s of poerty and !isery that unfortunately afflict so !any of our people, is not suscepti'le to the

indict!ent that the goern!ent therein esta'lished is i!potent to ta&e the necessary re!edial !easures. The fra!ers sa- to that. The

-elfare state concept is not alien to the philosophy of our Constitution. t is i!plicit in #uite a fe- of its proisions. t suffices to !ention

t-o.



There is the clause on the pro!otion of social Justice to ensure the -ell/'eing and econo!ic security of all the people, as -ell as the

pledge of protection to la'or -ith the specific authority to regulate the relations 'et-een lando-ners and tenants and 'et-een la'or

and capital. This particularied reference to the rights of -or&ing !en -hether in industry and agriculture certainly cannot preclude

attention to and concern for the rights of consu!ers, -ho are the o'Jects of solicitude in the legislation no- co!plained of. The police

po-er as an attri'ute to pro!ote the co!!on -eal -ould 'e diluted considera'ly of its reach and effectieness if on the !ere plea that

the li'erty to contract -ould 'e restricted, the statute co!plained of !ay 'e characteried as a denial of due process. The right to

property cannot 'e pressed to such an unreasona'le e0tre!e.

t is understanda'le though -hy 'usiness enterprises, not unnaturally eincing lac& of enthusias! for police po-er legislation thataffect the! adersely and restrict their profits could predicate alleged iolation of their rights on the due process clause, -hich as

interpreted 'y the! is a 'ar to regulatory !easures. naria'ly, the response fro! this Court, fro! the ti!e the Constitution -as

enacted, has 'een far fro! sy!pathetic. Thus, during the Co!!on-ealth, -e sustained legislations proiding for collectie 'argaining,

security of tenure, !ini!u! -ages, co!pulsory ar'itration, and tenancy regulation. 4either did the o'Jections as to the alidity of

!easures regulating the issuance of securities and pu'lic serices preail.

The Constitution gae this Court the authority to stri&e do-n all la-s that iolate the Constitution.$17% t did not e0e!pt fro! the reach o

this authority la-s -ith econo!ic di!ension. B 2/2 ision -ill sho- that the grant 'y the Constitution to this Court of this all i!portant

po-er of reie- is -ritten -ithout any fine print.

The ne0t issue is -hether the Court should only declare as unconstitutional the proisions of =.B. 4o. 818 on <( tariff differential,

!ini!u! inentory and predatory pricing.

Positing the affir!atie ie-, petitioner arcia proffered the follo-ing argu!ents;

5. >egging the &ind indulgence and 'enign patience of the Court, -e hu!'ly su'!it that the unconstitutionality of the

afore!entioned proisions of =.B. 4o. 818 i!plies that the other proisions are constitutional. Thus, said constitutional proisions of

=.B. 4o. 818 !ay and can ery -ell 'e spared.

5.1 Dith the stri&ing do-n of Qulti!ately full deregulation,Q -e -ill si!ply go 'ac& to the transition period under =.B. 818 -hich -ill

continue until Congress enacts an a!endatory la- for the start of full oil deregulation in due ti!e, -hen free !ar&et forces are already

in place. n turn, the !onthly auto!atic price control !echanis! 'ased on "ingapore Posted Prices +"PP -ill 'e reied. The energy

=egulatory >oard +?=>, -hich still e0ists, -ould re/ac#uire Jurisdiction and -ould easily co!pute the !onthly price ceiling, 'ased on"PP, of each and eery petroleu! fuel product, effectie upon finality of this CourtQs faora'le resolution on this !otion for partial

reconsideration.

5.2 >est of all, the oil deregulation can continue uninterrupted -ithout the three other assailed proisions, na!ely, the <( tariff

differential, predatory pricing and !ini!u! inentory.

. De further hu!'ly su'!it that a faora'le resolution on this !otion for partial reconsideration -ould 'e consistent -ith pu'lic

interest.

.1 n conse#uence, ne- players that hae already co!e in can uninterruptedly continue their operations !ore co!petitiely and

'ullishly -ith an een playing field.

.2 Further, an een playing field -ill attract !any !ore ne- players to co!e in in a !uch shorter ti!e.

.3 Correspondingly, Congress does not any!ore hae to pass a ne- deregulation la-, thus it can i!!ediately concentrate on

Just a!ending =.B. 4o. 818 to a'olish the P"F, on the goern!entQs assu!ption that it is necessary to do so. Parenthetically, it is

neither correct nor fair for high goern!ent officials to criticie and 'la!e the *onora'le Court on the P"F, considering that said

P"F is not inherent in nor necessary to the transition period and !ay 'e re!oed at any ti!e.

.< n as !uch as =.B. 4o. 818 -ould continue to 'e in place +sans its unconstitutional proision, only the Co!prehensie Ta0

=efor! Pac&age +CT=P -ould 'e needed for the country to e0it fro! )F 'y 6ece!'er 1997.



7. The Court, in declaring the entire =.B. 4o. 818 unconstitutional, -as eidently e0pecting that Congress can fasttrac& the -riting

of a ne- la- on oil deregulation in accord -ith the Constitution +6ecision, p. 38. *o-eer, it is ery pro'le!atic, to say the least, if

Congress can fasttrac& an entirely ne- la-.

7.1 There is already li!ited ti!e for Congress to pass such a ne- la- 'efore it adJourns for the 1998 elections.

7.2 Bt the ery least, -hether or not Congress -ill 'e a'le to fasttrac& the enact!ent of a ne- oil deregulation la- consistent -ith

the *onora'le CourtQs ruling, -ould depend on !any unforseea'le and uncontrolla'le factors. Blready, seeral state!ents fro!legislators, senators and congress!en ali&e, say that the ne- la- can -ait 'ecause of other pending legislatie !atters, etc. ien the

realities of politics, especially -ith the 1998 presidential polls si0 !onths a-ay, it is not far/fetched that the general -elfare could 'e

sacrificed to gain political !ileage, thus further unduly delaying the enact!ent of a ne- oil deregulation la-.

8. Further!ore, if the entire =.B. 4o. 818 re!ains nullified as unconstitutional, the follo-ing pernicious effects -ill happen;

8.1 Antil the ne- oil deregulation la- is enacted, -e -ould hae to go 'ac& to the old la-. This !eans full regulation, i.e., higher

tariff differential of 1(, higher petroleu! product price ceilings 'ased on transfer prices of i!ported crude oil, and restrictions on the

i!portation of refined petroleu! products that -ould 'e allo-ed only if there are shortages, etc.

8.2 n conse#uence of the a'oe, the e0isting ne- players, -ould hae to totally stop their operations.

8.3 The e0isting ne- players -ould find the!seles in a 'ind on ho- to fulfill their contractual o'ligations, especially on their

deliery co!!it!ents of petroleu! fuel products. They -ill 'e in so!e sort of li!'o upon the nullification of the entire =.B. 4o. 818.

8.< The inest!ents that e0isting ne- players hae already !ade -ould 'eco!e idle and unproductie. Bll their planned

additional inest!ents -ould 'e put on hold.

8.5 4eedless to say, all this -ould translate into tre!endous losses for the!.

8. Bnd o'iously, prospectie ne- players cannot and -ill not co!e in.

8.7 n top of eerything, pu'lic interest -ill suffer. Firstly, the oil deregulation progra! -ill 'e delayed. "econdly, the prices ofpetroleu! products -ill 'e higher 'ecause of price ceilings 'ased on transfer prices of i!ported crude.

9. Dhen it passed =.B. 4o. 818, Congress proided a safeguard against the possi'ility that any of its proisions could 'e declared

unconstitutional, thus the separa'ility clause thereof, -hich the Court noted +6ecision, p. 29. De hu!'ly su'!it that this is another

reason to grant this !otion for partial reconsideration.

n his "upple!ent to Argent )otion for Partial =econsideration, petitioner arcia a!plified his contentions.

n a si!ilar refrain, the pu'lic respondents contend that the un!ista&a'le intention of Congress is to !a&e each and eery proision

of =.B. 4o. 818 independent and separa'le fro! one another. To 'olster this proposition, they cite the separa'ility clause of the la-

and the pending 'ills in Congress proposing to repeal said offensie proisions 'ut not the entire la- itself. They also recite theineita'le conse#uences of the declaration of unconstitutionality of =.B. 4o. 818 as follo-s;

1.

There -ill 'e 'igger price adJust!ents in petroleu! products due to +a the rei!position of the higher tariff rates for i!ported crude

oil and i!ported refined petroleu! products $1(/2(%, +' the uncertainty regarding =.B. 818<, or the il Tariff Ga-, -hich si!plified

ta0 ad!inistration 'y lo-ering the ta0 rates for socially/sensitie products such as GP, diesel, fuel oil and &erosene, and increasing

ta0 rates of gasoline products -hich are used !ostly 'y consu!ers -ho 'elong to the upper inco!e group, and +c the issue of -iping

out the deficit of P2. 'illion and creating a su'sidy fund in the il Price "ta'iliation FundH

2.



!porters, traders, and industrial end/users li&e the 4ational Po-er Corporation -ill 'e constrained to source their oil re#uire!ent

only fro! e0isting oil co!panies 'ecause of the higher tariff on i!ported refined petroleu! products and restrictions on such

i!portation that -ould 'e allo-ed only if there are shortagesH

3.

oern!ent control and regulation of all the actiities of the oil industry -ill discourage prospectie inestors and drie a-ay the

e0isting ne- playersH

<.Bll e0pansion and inest!ent progra!s of the oil co!panies and ne- players -ill 'e sheled indefinitelyH

5.

Petitions for price adJust!ent should 'e filed and approed 'y the ?=>.

Koining the chorus, the interenors contend that;

2.1.1 The total nullification of =epu'lic Bct 4o. 818 restores the disproportionate adantage of the three 'ig oil fir!s Y Calte0,

"hell and Petron Y oer the s!all oil fir!sH

2.1.2 The total nullification of =epu'lic Bct 4o. 818 disar!s the ne- entrants and seriously cripples their capacity to co!pete and

gro-H and

2.1.3 Alti!ately, the total nullification of =epu'lic Bct 4o. 818 re!oes su'stantial, al'eit i!perfect, 'arriers to !onopolistic

practices and unfair co!petition and trade practices har!ful not only to !oant/interenors 'ut also to the pu'lic in general.

The interenors further aer that under a regi!e of regulation, +1 the 'ig oil fir!s can 'loc& oil i!portation 'y s!all oil fir!sH +2 the 'ig

oil fir!s can 'loc& the e0pansion and gro-th of the s!all oil fir!s. They li&e-ise su'!it that the proisions on tariff differential,

!ini!u! inentory, predatory pricing are separa'le fro! the 'ody of =.B. 4o. 818 'ecause of its separa'ility clause. They also allege

that their separa'ility is further sho-n 'y the pending 'ills in the Congress -hich only see& the partial repeal of =.B. 4o. 818.

De shall first resole petitioner arciaQs linchpin contention that the full deregulation decreed 'y =.B. 4o. 818 to start at the end of

)arch 1997 is unconstitutional. For prescinding fro! this pre!ise, petitioner suggests that -e si!ply go 'ac& to the transition periodunder =.B. 4o. 818. Ander the transition period, price control -ill 'e reied through the auto!atic pricing !echanis! 'ased on

"ingapore Posted Prices. The ?nergy =egulatory >oard 000 -ould play a li!ited and !inisterial role of co!puting the !onthly price

ceiling of each and eery petroleu! fuel product, using the auto!atic pricing for!ula. Dhile the P"F -ould return, this coerage

-ould 'e li!ited to !onthly price increases in e0cess of P.5 per liter.

De are not i!pressed 'y petitioner arciaQs su'!ission. Petitioner has no 'asis in conde!ning as unconstitutional per se the date

fi0ed 'y Congress for the 'eginning of the full deregulation of the do-nstrea! oil industry. ur 6ecision !erely faulted the ?0ecutie

for factoring the depletion of P"F in adancing the date of full deregulation to Fe'ruary 1997. 4onetheless, the error of the ?0ecutie

is no- a non/issue for the full deregulation set 'y Congress itself at the end of )arch 1997 has already co!e to pass. )arch 1997 is

not an ar'itrary date. >y that date, the transition period has ended and it -as e0pected that the people -ould hae adJusted to the role

of !ar&et forces in shaping the prices of petroleu! and its products. The choice of )arch 1997 as the date of full deregulation is a Judge!ent of Congress and its Judg!ent call cannot 'e i!pugned 'y this Court.

De co!e to the su'!ission that the proisions on <( tariff differential, !ini!u! inentory and predatory pricing are separa'le fro! the

'ody of =.B. 4o. 818, and hence, should alone 'e declared as unconstitutional. n ta&ing this position, the !oants rely heaily on the

separa'ility proision of =.B. 4o. 818. De cannot affir! the !oants for to deter!ine -hether or not a particular proision is

separa'le, the courts should consider the intent of the legislature. t is true that !ost of the ti!e, such intent is e0pressed in a

separa'ility clause stating that the inalidity or unconstitutionality of any proision or section of the la- -ill not affect the alidity or

constitutionality of the re!ainder. 4onetheless, the separa'ility clause only creates a presu!ption that the act is seera'le. t is !erely

an aid in statutory construction. t is not ine0ora'le co!!and.$18% B separa'ility clause does not clothe the alid parts -ith i!!unity

fro! the inalidating effect the la- gies to the insepara'le 'lending of the 'ad -ith the good. The separa'ility clause cannot also 'e



applied if it -ill produce an a'surd result.$19% n su!, if the separation of the statute -ill defeat the intent of the legislature, separation

-ill not ta&e place despite the inclusion of a separa'ility clause in the la-.$2%

n the case of =epu'lic Bct 4o. 818, the unconstitutionality of the proisions on tariff differential, !ini!u! inentory and predatory

pricing cannot 'ut result in the unconstitutionality of the entire la- despite its separa'ility clause. These proisions cannot 'e struc&

do-n alone for they -ere the ones intended to carry out the policy of the la- e!'odied in "ection 2 thereof -hich reads;

"ec. 2. 6eclaration of Policy. Y t shall 'e the policy of the "tate to deregulate the do-nstrea! oil industry to foster a truly

co!petitie !ar&et -hich can 'etter achiee the social policy o'Jecties of fair prices and ade#uate, continuous supply ofeniron!entally/clean and high/#uality petroleu! products.

They actually set the stage for the regi!e of deregulation -here goern!ent -ill no longer interene in fi0ing the price of oil and the

operations of oil co!panies. t is conceded that the success of deregulation lies in a truly co!petitie !ar&et and there can 'e no

co!petitie !ar&et -ithout the easy entry and e0it of co!petitors. 4o less than President Fidel L. =a!os recognied this !atri0 -hen

he declared that the need is to 0 0 0 recast our la-s on trust, !onopolies, oligopolies, cartels and co!'inations inJurious to pu'lic

-elfare Y to restore co!petition -here it has disappeared and to presere it -here it still e0ists. n a -ord, -e need to perpetuate

co!petition as a syste! to regulate the econo!y and achiee glo'al product #uality.$21%

De held in our 6ecision that the proisions on <( tariff differential, !ini!u! inentory and predatory pricing are anti/co!petition, and

they are the &ey proisions of =.B. 4o. 818. Dithout these proisions in place, Congress could not hae deregulated the do-nstrea!

oil industry. Consider the <( tariff differential on crude oil and refined petroleu!. >efore =.B. 4o. 818,$22% there -as a ten/point

difference 'et-een the tariff i!posed on crude oil and that on refined petroleu!. "ection 5+' of =.B. 4o. 818 lo-ered the difference

to four 'y i!posing a 3( tariff on crude oil and a 7( tariff on refined petroleu!. De ruled, ho-eer, that this reduced tariff differential is

unconstitutional for it still posed a su'stantial 'arrier to the entry of ne- players and enhanced the !onopolistic po-er of the three

e0isting oil co!panies. The ruling that the <( differential is unconstitutional -ill unfortunately reie the 1( tariff differential of the

Tariff and Custo!s Code. The high 1( tariff differential -ill certainly gie a 'igger edge to the three e0isting oil co!panies, -ill for!

an insupera'le 'arrier to prospectie players, and -ill drie out of 'usiness the ne- players. Thus, there can 'e no #uestion that

Congress -ill not allo- deregulation if the tariff is 1( on crude oil and 2( on refined petroleu!. To decree the partial

unconstitutionality of =.B. 4o. 818 -ill 'ring a'out an a'surdity Y a fully deregulated do-nstrea! oil industry -here goern!ent is

i!potent to regulate run a-ay prices, -here the oil oligopolists can engage in carteliation -ithout co!petition, -here prospectie

players cannot co!e in, and -here ne- players -ill close shop.

De also reJect the argu!ent that the 'ills pending in Congress !erely see& to re!edy the partial defects of =.B. 4o. 818, and that this

is proof that =.B. 4o. 818 can 'e declared unconstitutional !inus its offensie proisions. De referred to the pending 'ills in Congress

in our 6ecision only to sho- that Congress itself is a-are of the arious defects of the la- and not to proe the insepara'ility of the

offending proisions fro! the 'ody of =.B. 4o. 818. To 'e sure, !oants een oerloo&ed the fact that resolutions hae 'een filed in

'oth *ouses of Congress calling for a total reie- of =.B. 4o. 818.

The !oants -arn that our 6ecision -ill thro- us 'ac& to the undesira'le regi!e of regulation. They e!phasie its pernicious

conse#uences Y the reial of the 1( tariff differential -hich -ill -ipe out the ne- players, the return of the P"F -hich is too

'urdenso!e to goern!ent, the unsatisfactory sche!e of price regulation 'y the ?=>, etc. To stress again, it is not the -ill of the Court

to return een te!porarily to the regi!e of regulation. f -e return to the regi!e of regulation, it is 'ecause it is the ineita'le

conse#uence of the enact!ent 'y Congress of an unconstitutional la-, =.B. 4o. 818. t is settled Jurispudence that the declaration ofa la- as unconstitutional reies the la-s that it has repealed. "tated other-ise, an unconstitutional la- returns us to the status #uo

ante and this return is 'eyond the po-er of the Court to stay. Ander our sche!e of goern!ent, ho-eer, the re!edy to preent the

reial of an un-anted status #uo ante lies -ith Congress. Congress can 'loc& the reial of the status #uo ante or stop its continuation

'y i!!ediately enacting the necessary re!edial legislation. De e!phasie that in the cases at 'ar, the Court did not conde!n the

econo!ic policy of deregulation as unconstitutional. t !erely held that as crafted, the la- runs counter to the constitutional proision

calling for fair co!petition.$23% Thus, there is no i!pedi!ent in re/enacting =.B. 4o. 818 !inus its proisions -hich are anti/

co!petition. The Court agrees that our return to the regi!e of regulation has pernicious conse#uences and it specially sy!phaties

-ith the interenors. >e that as it !ay, the Court is po-erless to preent this return Just as it is po-erless to repeal the 1( tariff

differential of the Tariff Code. t is Congress that can gie all these re!edies.$2<%



Petitioner arcia, ho-eer, inJects a non/legal argu!ent in his !otion for partial reconsideration. *e aers that gien the QrealitiesQ of

politics, especially -ith the 1998 presidential polls si0 !onths a-ay, it is not far/fetched that the general -elfare could 'e sacrificed to

gain political !ileage, thus further unduly delaying the enact!ent of a ne- oil deregulation la-. The short ans-er to petitioner arciaQs

argu!ent is that -hen the Court reie-s the constitutionality of a la-, it does not deal -ith the realities of politics nor does it dele into

the !ysticis! of politics. The Court has no partisan political theology for as an institution it is at 'est apolitical, and at -orse, politically

agnostic. n any eent, it should not ta&e a long ti!e for Congress to enact a ne- oil deregulation la- gien its interest for the -elfare o

our people. Petitioner arcia hi!self has 'een #uoted as saying that 0 0 0 -ith the CourtQs decision, it -ould no- 'e easy for

Congress to craft a ne- la-, considering that la-!a&ers -ill 'e guided 'y the CourtQs points.$25% ?en 'efore our 6ecision, 'ills

a!ending the offensie proisions of =.B. 4o. 818 hae already 'een filed in the Congress and under consideration 'y itsco!!ittees. "pea&er Kose de Lenecia has assured after a !eeting of the Gegislatie/?0ecutie Bdisory Council +G?6BC that;

suppose 'efore Christ!as, -e should 'e a'le to pass a ne- oil deregulation la-.$2% The Chief ?0ecutie hi!self has urged the

i!!ediate passage of a ne- and 'etter oil deregulation la-.$27%

Finally, pu'lic respondents raise the scarecro- argu!ent that our 6ecision -ill drie a-ay foreign inestors. n response to this official

repertoire, suffice to state that our 6ecision precisely leels the playing field for foreign inestors as against the three do!inant oil

oligopolist. 4o less than the influential Philippine Cha!'er of Co!!erce and ndustry -hose !otie is 'eyond #uestion, stated thru its

Bcting President Kai!e Gadao that 0 0 0 this 6ecision, in fact tells us that -e are for honest/to/goodness co!petition. ur 6ecision

should 'e a confidence/'ooster to foreign inestors for it assures the! of an effectie Judicial re!edy against an unconstitutional la-.

There is need to attract foreign inest!ent 'ut the policy has neer 'een foreign inest!ent at any cost. De cannot trade/in the

Constitution for foreign inest!ent. t is not econo!ic heresy to hold that that trade/in is not a fair e0change.

To recapitulate, our 6ecision declared =.B. 4o. 818 unconstitutional for three reasons; +1 it gae !ore po-er to an already po-erful

oil oligopolyH +2 it 'loc&ed the entry of effectie co!petitorsH and +3 it -ill sire an een !ore po-erful oligopoly -hose unchec&ed

po-er -ill preJudice the interest of the consu!ers and co!prise the general -elfare.

B -ea& and deeloping country li&e the Philippines cannot ris& do-nstrea! oil industry controlled 'y foreign oligopoly that can run riot.

il is our !ost socially sensitie co!!odity and for it to 'e under the control of a foreign oligopoly -ithout effectie co!petitors is a

clear and present danger. B foreign oil oligopoly can under!ine the security of the nationH it can e0ploit the econo!y if greed 'eco!es

it creedH it -ill hae the po-er to drie the Filipino to a prayerful pose. Ander a deregulated regi!e, the peopleQs only hope to chec& the

oer-hel!ing po-er of the foreign oil oligopoly lies on a !ar&et -here there is fair co!petition. Dith prescience, the Constitution

!andates the regulation of !onopolies and interdicts unfair co!petition. Thus, the Constitution proides a shield to the econo!ic rights

of our people, especially the poor. t is the unyielding duty of this Court to uphold the supre!acy of the Constitution not -ith a !ere -ish'one 'ut -ith a 'ac&'one that should neither 'end nor 'rea&.

4 L?D D*?=?F, the )otions for =econsideration of the pu'lic respondents and of the interenors as -ell as the Partial )otion for

=econsideration of petitioner ?nri#ue arcia are 6?4?6 for lac& of !erit

Documents

Cases NATRES Batch1