[G.R. No. 127882.
January 27, 2004] Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a temporary
LA BUGAL-BLAAN TRIBAL ASSOCIATION, INC., petitioners, vs. VICTOR O. RAMOS, SECRETARY,
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), HORACIO RAMOS,
DIRECTOR, MINES AND GEOSCIENCES BUREAU (MGB-DENR), RUBEN TORRES,
EXECUTIVE SECRETARY, and WMC (PHILIPPINES), INC. [4] respondents.
DECISION
CARPIO-MORALES, J.:
The present petition for mandamus and prohibition assails the constitutionality of Republic Act No.
7942,[5] otherwise known as the PHILIPPINE MINING ACT OF 1995, along with the Implementing Rules and
Regulations issued pursuant thereto, Department of Environment and Natural Resources (DENR)
Administrative Order 96-40, and of the Financial and Technical Assistance Agreement (FTAA) entered into
on March 30, 1995 by the Republic of the Philippines and WMC (Philippines), Inc. (WMCP), a corporation
organized under Philippine laws.
On July 25, 1987, then President Corazon C. Aquino issued Executive Order (E.O.) No.
279[6] authorizing the DENR Secretary to
accept, consider and evaluate proposals from foreign-owned corporations or foreign investors for contracts
or agreements involving either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, which, upon appropriate recommendation of the Secretary, the President may execute
with the foreign proponent. In entering into such proposals, the President shall consider the real
contributions to the economic growth and general welfare of the country that will be realized, as well as the
development and use of local scientific and technical resources that will be promoted by the proposed
contract or agreement. Until Congress shall determine otherwise, large-scale mining, for purpose of this
Section, shall mean those proposals for contracts or agreements for mineral resources exploration,
development, and utilization involving a committed capital investment in a single mining unit project of at
least Fifty Million Dollars in United States Currency (US $50,000,000.00).[7]
On March 3, 1995, then President Fidel V. Ramos approved R.A. No. 7942 to govern the exploration,
development, utilization and processing of all mineral resources. [8] R.A. No. 7942 defines the modes of
mineral agreements for mining operations,[9] outlines the procedure for their filing and
approval,[10] assignment/transfer[11] and withdrawal,[12] and fixes their terms.[13]Similar provisions govern
financial or technical assistance agreements.[14]
The law prescribes the qualifications of contractors [15] and grants them certain rights, including
timber,[16] water[17] and easement[18] rights, and the right to possess explosives.[19] Surface owners,
occupants, or concessionaires are forbidden from preventing holders of mining rights from entering private
lands and concession areas.[20] A procedure for the settlement of conflicts is likewise provided for. [21]
The Act restricts the conditions for exploration, [22] quarry[23] and other[24] permits. It regulates the
transport, sale and processing of minerals,[25] and promotes the development of mining communities,
science and mining technology,[26] and safety and environmental protection.[27]
The governments share in the agreements is spelled out and allocated,[28] taxes and fees are
imposed,[29] incentives granted.[30] Aside from penalizing certain acts,[31] the law likewise specifies grounds
for the cancellation, revocation and termination of agreements and permits. [32]
On April 9, 1995, 30 days following its publication on March 10, 1995 in Malaya and Manila Times, two
newspapers of general circulation, R.A. No. 7942 took effect.[33]
Shortly before the effectivity of R.A. No. 7942, however, or on March 30, 1995, the President entered
into an FTAA with WMCP covering 99,387 hectares of land in South Cotabato, Sultan Kudarat, Davao del
Sur and North Cotabato.[34]
On August 15, 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO)
No. 95-23, s. 1995, otherwise known as the Implementing Rules and Regulations of R.A. No. 7942. This was
later repealed by DAO No. 96-40, s. 1996 which was adopted on December 20, 1996.
On January 10, 1997, counsels for petitioners sent a letter to the DENR Secretary demanding that the
DENR stop the implementation of R.A. No. 7942 and DAO No. 96-40,[35] giving the DENR fifteen days from
receipt[36] to act thereon. The DENR, however, has yet to respond or act on petitioners letter.[37]
restraining order. They allege that at the time of the filing of the petition, 100 FTAA applications had already
been filed, covering an area of 8.4 million hectares,[38] 64 of which applications are by fully foreign-owned
corporations covering a total of 5.8 million hectares, and at least one by a fully foreign-owned mining
company over offshore areas.[39]
Petitioners claim that the DENR Secretary acted without or in excess of jurisdiction:
I
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it allows fully foreign owned corporations to explore, develop,
utilize and exploit mineral resources in a manner contrary to Section 2, paragraph 4, Article XII of the
Constitution;
II
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it allows the taking of private property without the determination
of public use and for just compensation;
III
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it violates Sec. 1, Art. III of the Constitution;
IV
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it allows enjoyment by foreign citizens as well as fully foreign
owned corporations of the nations marine wealth contrary to Section 2, paragraph 2 of Article XII of the
Constitution;
V
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it allows priority to foreign and fully foreign owned corporations
in the exploration, development and utilization of mineral resources contrary to Article XII of the Constitution;
VI
x x x in signing and promulgating DENR Administrative Order No. 96-40 implementing Republic Act No.
7942, the latter being unconstitutional in that it allows the inequitable sharing of wealth contrary to Sections
[sic] 1, paragraph 1, and Section 2, paragraph 4[,] [Article XII] of the Constitution;
VII
x x x in recommending approval of and implementing the Financial and Technical Assistance Agreement
between the President of the Republic of the Philippines and Western Mining Corporation Philippines Inc.
because the same is illegal and unconstitutional.[40]
They pray that the Court issue an order:
(a) Permanently enjoining respondents from acting on any application for Financial or Technical Assistance
Agreements;
(b) Declaring the Philippine Mining Act of 1995 or Republic Act No. 7942 as unconstitutional and null and
void;
(c) Declaring the Implementing Rules and Regulations of the Philippine Mining Act contained in DENR
Administrative Order No. 96-40 and all other similar administrative issuances as unconstitutional and null
and void; and
(d) Cancelling the Financial and Technical Assistance Agreement issued to Western Mining Philippines, Inc.
as unconstitutional, illegal and null and void.[41]
Impleaded as public respondents are Ruben Torres, the then Executive Secretary, Victor O. Ramos,
the then DENR Secretary, and Horacio Ramos, Director of the Mines and Geosciences Bureau of the
DENR. Also impleaded is private respondent WMCP, which entered into the assailed FTAA with the
Philippine Government. WMCP is owned by WMC Resources International Pty., Ltd. (WMC), a wholly
owned subsidiary of Western Mining Corporation Holdings Limited, a publicly listed major Australian
mining and exploration company.[42] By WMCPs information, it is a 100% owned subsidiary of WMC
LIMITED.[43]
 Respondents, aside from meeting petitioners contentions, argue that the requisites for judicial inquiry
have not been met and that the petition does not comply with the criteria for prohibition and
mandamus. Additionally, respondent WMCP argues that there has been a violation of the rule on hierarchy
of courts.
After petitioners filed their reply, this Court granted due course to the petition. The parties have since
filed their respective memoranda.
WMCP subsequently filed a Manifestation dated September 25, 2002 alleging that on January 23,
2001, WMC sold all its shares in WMCP to Sagittarius Mines, Inc. (Sagittarius), a corporation organized
under Philippine laws.[44] WMCP was subsequently renamed Tampakan Mineral Resources
Corporation.[45] WMCP claims that at least 60% of the equity of Sagittarius is owned by Filipinos and/or
Filipino-owned corporations while about 40% is owned by Indophil Resources NL, an Australian
company.[46] It further claims that by such sale and transfer of shares, WMCP has ceased to be connected in
any way with WMC.[47]
By virtue of such sale and transfer, the DENR Secretary, by Order of December 18, 2001, [48] approved
the transfer and registration of the subject FTAA from WMCP to Sagittarius. Said Order, however, was
appealed by Lepanto Consolidated Mining Co. (Lepanto) to the Office of the President which upheld it by
Decision of July 23, 2002.[49] Its motion for reconsideration having been denied by the Office of the President
by Resolution of November 12, 2002,[50] Lepanto filed a petition for review[51] before the Court of
Appeals. Incidentally, two other petitions for review related to the approval of the transfer and registration of
the FTAA to Sagittarius were recently resolved by this Court. [52]
It bears stressing that this case has not been rendered moot either by the transfer and registration of
the FTAA to a Filipino-owned corporation or by the non-issuance of a temporary restraining order or a
preliminary injunction to stay the above-said July 23, 2002 decision of the Office of the President. [53] The
validity of the transfer remains in dispute and awaits final judicial determination. This assumes, of course,
that such transfer cures the FTAAs alleged unconstitutionality, on which question judgment is reserved.
WMCP also points out that the original claimowners of the major mineralized areas included in the
WMCP FTAA, namely, Sagittarius, Tampakan Mining Corporation, and Southcot Mining Corporation, are all
Filipino-owned corporations,[54] each of which was a holder of an approved Mineral Production Sharing
Agreement awarded in 1994, albeit their respective mineral claims were subsumed in the WMCP
FTAA;[55] and that these three companies are the same companies that consolidated their interests in
Sagittarius to whom WMC sold its 100% equity in WMCP. [56] WMCP concludes that in the event that the
FTAA is invalidated, the MPSAs of the three corporations would be revived and the mineral claims would
revert to their original claimants.[57]
These circumstances, while informative, are hardly significant in the resolution of this case, it involving
the validity of the FTAA, not the possible consequences of its invalidation.
Of the above-enumerated seven grounds cited by petitioners, as will be shown later, only the first and
the last need be delved into; in the latter, the discussion shall dwell only insofar as it questions the effectivity
of E. O. No. 279 by virtue of which order the questioned FTAA was forged.
I citizens, taxpayers or voters who actually sue in the public interest. Hence, the question in standing is
Before going into the substantive issues, the procedural questions posed by respondents shall first be
tackled.
REQUISITES FOR JUDICIAL REVIEW
When an issue of constitutionality is raised, this Court can exercise its power of judicial review only if
the following requisites are present:
(1) The existence of an actual and appropriate case;
(2) A personal and substantial interest of the party raising the constitutional question;
(3) The exercise of judicial review is pleaded at the earliest opportunity; and
(4) The constitutional question is the lis mota of the case. [58]
Respondents claim that the first three requisites are not present.
Section 1, Article VIII of the Constitution states that (j)udicial power includes the duty of the courts of
justice to settle actual controversies involving rights which are legally demandable and enforceable. The
power of judicial review, therefore, is limited to the determination of actual cases and controversies. [59]
An actual case or controversy means an existing case or controversy that is appropriate or ripe for
determination, not conjectural or anticipatory, [60] lest the decision of the court would amount to an advisory
opinion.[61] The power does not extend to hypothetical questions [62] since any attempt at abstraction could
only lead to dialectics and barren legal questions and to sterile conclusions unrelated to actualities. [63]
Legal standing or locus standi has been defined as a personal and substantial interest in the case such
that the party has sustained or will sustain direct injury as a result of the governmental act that is being
challenged,[64] alleging more than a generalized grievance. [65] The gist of the question of standing is whether
a party alleges such personal stake in the outcome of the controversy as to assure that concrete
adverseness which sharpens the presentation of issues upon which the court depends for illumination of
difficult constitutional questions.[66] Unless a person is injuriously affected in any of his constitutional rights by
the operation of statute or ordinance, he has no standing. [67]
Petitioners traverse a wide range of sectors. Among them are La Bugal Blaan Tribal Association, Inc.,
a farmers and indigenous peoples cooperative organized under Philippine laws representing a community
actually affected by the mining activities of WMCP, members of said cooperative, [68] as well as other
residents of areas also affected by the mining activities of WMCP.[69] These petitioners have standing to
raise the constitutionality of the questioned FTAA as they allege a personal and substantial injury. They
claim that they would suffer irremediable displacement [70] as a result of the implementation of the FTAA
allowing WMCP to conduct mining activities in their area of residence. They thus meet the appropriate case
requirement as they assert an interest adverse to that of respondents who, on the other hand, insist on the
FTAAs validity.
In view of the alleged impending injury, petitioners also have standing to assail the validity of E.O. No.
279, by authority of which the FTAA was executed.
Public respondents maintain that petitioners, being strangers to the FTAA, cannot sue either or both
contracting parties to annul it.[71] In other words, they contend that petitioners are not real parties in interest
in an action for the annulment of contract.
Public respondents contention fails. The present action is not merely one for annulment of contract but
for prohibition and mandamus. Petitioners allege that public respondents acted without or in excess of
jurisdiction in implementing the FTAA, which they submit is unconstitutional. As the case involves
constitutional questions, this Court is not concerned with whether petitioners are real parties in interest, but
with whether they have legal standing. As held in Kilosbayan v. Morato:[72]
x x x. It is important to note . . . that standing because of its constitutional and public policy underpinnings, is
very different from questions relating to whether a particular plaintiff is the real party in interest or has
capacity to sue. Although all three requirements are directed towards ensuring that only certain parties can
maintain an action, standing restrictions require a partial consideration of the merits, as well as broader
policy concerns relating to the proper role of the judiciary in certain areas.[] (FRIEDENTHAL, KANE AND
MILLER, CIVIL PROCEDURE 328 [1985])
Standing is a special concern in constitutional law because in some cases suits are brought not by parties
who have been personally injured by the operation of a law or by official action taken, but by concerned
whether such parties have alleged such a personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon which the court so largely depends
for illumination of difficult constitutional questions. (Baker v. Carr, 369 U.S. 186, 7 L.Ed.2d 633 [1962].)
As earlier stated, petitioners meet this requirement.
The challenge against the constitutionality of R.A. No. 7942 and DAO No. 96-40 likewise fulfills the
requisites of justiciability. Although these laws were not in force when the subject FTAA was entered into,
the question as to their validity is ripe for adjudication.
The WMCP FTAA provides:
14.3 Future Legislation
Any term and condition more favourable to Financial &Technical Assistance Agreement
contractors resulting from repeal or amendment of any existing law or regulation or from
the enactment of a law, regulation or administrative order shall be considered a part of this
Agreement.
It is undisputed that R.A. No. 7942 and DAO No. 96-40 contain provisions that are more favorable to WMCP,
hence, these laws, to the extent that they are favorable to WMCP, govern the FTAA.
In addition, R.A. No. 7942 explicitly makes certain provisions apply to pre-existing agreements.
SEC. 112. Non-impairment of Existing Mining/Quarrying Rights. x x x That the provisions of Chapter XIV on
government share in mineral production-sharing agreement and of Chapter XVI on incentives of this Act
shall immediately govern and apply to a mining lessee or contractor unless the mining lessee or contractor
indicates his intention to the secretary, in writing, not to avail of said provisions x x xProvided, finally, That
such leases, production-sharing agreements, financial or technical assistance agreements shall comply with
the applicable provisions of this Act and its implementing rules and regulations.
As there is no suggestion that WMCP has indicated its intention not to avail of the provisions of Chapter XVI
of R.A. No. 7942, it can safely be presumed that they apply to the WMCP FTAA.
Misconstruing the application of the third requisite for judicial review that the exercise of the review is
pleaded at the earliest opportunity WMCP points out that the petition was filed only almost two years after
the execution of the FTAA, hence, not raised at the earliest opportunity.
The third requisite should not be taken to mean that the question of constitutionality must be raised
immediately after the execution of the state action complained of. That the question of constitutionality has
not been raised before is not a valid reason for refusing to allow it to be raised later.[73] A contrary rule would
mean that a law, otherwise unconstitutional, would lapse into constitutionality by the mere failure of the
proper party to promptly file a case to challenge the same.
PROPRIETY OF PROHIBITION
AND MANDAMUS
Before the effectivity in July 1997 of the Revised Rules of Civil Procedure, Section 2 of Rule 65 read:
SEC. 2. Petition for prohibition. When the proceedings of any tribunal, corporation, board, or person,
whether exercising functions judicial or ministerial, are without or in excess of its or his jurisdiction, or with
grave abuse of discretion, and there is no appeal or any other plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court alleging the
facts with certainty and praying that judgment be rendered commanding the defendant to desist from further
proceeding in the action or matter specified therein.
Prohibition is a preventive remedy.[74] It seeks a judgment ordering the defendant to desist from
continuing with the commission of an act perceived to be illegal.[75]
The petition for prohibition at bar is thus an appropriate remedy. While the execution of the contract
itself may be fait accompli, its implementation is not. Public respondents, in behalf of the Government, have
obligations to fulfill under said contract. Petitioners seek to prevent them from fulfilling such obligations on
the theory that the contract is unconstitutional and, therefore, void.
The propriety of a petition for prohibition being upheld, discussion of the propriety of the mandamus
aspect of the petition is rendered unnecessary.
HIERARCHY OF COURTS
The contention that the filing of this petition violated the rule on hierarchy of courts does not likewise
lie. The rule has been explained thus:
Between two courts of concurrent original jurisdiction, it is the lower court that should initially pass upon the
issues of a case. That way, as a particular case goes through the hierarchy of courts, it is shorn of all but the
important legal issues or those of first impression, which are the proper subject of attention of the appellate
court. This is a procedural rule borne of experience and adopted to improve the administration of justice.
This Court has consistently enjoined litigants to respect the hierarchy of courts. Although this Court has
concurrent jurisdiction with the Regional Trial Courts and the Court of Appeals to issue writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give a
party unrestricted freedom of choice of court forum. The resort to this Courts primary jurisdiction to issue
said writs shall be allowed only where the redress desired cannot be obtained in the appropriate courts or
where exceptional and compelling circumstances justify such invocation. We held in People v.
Cuaresma that:
A becoming regard for judicial hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level (inferior) courts should be filed with the Regional Trial Court, and those
against the latter, with the Court of Appeals. A direct invocation of the Supreme Courts original
jurisdiction to issue these writs should be allowed only where there are special and important
reasons therefor, clearly and specifically set out in the petition. This is established policy. It is a policy
necessary to prevent inordinate demands upon the Courts time and attention which are better devoted to
those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Courts docket x x
x.[76] [Emphasis supplied.]
The repercussions of the issues in this case on the Philippine mining industry, if not the national
economy, as well as the novelty thereof, constitute exceptional and compelling circumstances to justify
resort to this Court in the first instance.
In all events, this Court has the discretion to take cognizance of a suit which does not satisfy the
requirements of an actual case or legal standing when paramount public interest is involved. [77] When the
issues raised are of paramount importance to the public, this Court may brush aside technicalities of
procedure.[78]
II
Petitioners contend that E.O. No. 279 did not take effect because its supposed date of effectivity came
after President Aquino had already lost her legislative powers under the Provisional Constitution.
And they likewise claim that the WMC FTAA, which was entered into pursuant to E.O. No. 279, violates
Section 2, Article XII of the Constitution because, among other reasons:
(1) It allows foreign-owned companies to extend more than mere financial or technical assistance to
the State in the exploitation, development, and utilization of minerals, petroleum, and other mineral oils, and
even permits foreign owned companies to operate and manage mining activities.
(2) It allows foreign-owned companies to extend both technical and financial assistance, instead
of either technical or financial assistance.
To appreciate the import of these issues, a visit to the history of the pertinent constitutional provision,
the concepts contained therein, and the laws enacted pursuant thereto, is in order.
Section 2, Article XII reads in full:
Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned
by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The
exploration, development, and utilization of natural resources shall be under the full control and supervision
of the State. The State may directly undertake such activities or it may enter into co-production, joint venture,
or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding
twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as
may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other
than the development of water power, beneficial use may be the measure and limit of the grant.
The State shall protect the nations marine wealth in its archipelagic waters, territorial sea, and exclusive
economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as
cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers, lakes, bays, and
lagoons.
The President may enter into agreements with foreign-owned corporations involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and
other mineral oils according to the general terms and conditions provided by law, based on real contributions
to the economic growth and general welfare of the country. In such agreements, the State shall promote the
development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this provision,
within thirty days from its execution.
THE SPANISH REGIME
AND THE REGALIAN DOCTRINE
 The first sentence of Section 2 embodies the Regalian doctrine or jura regalia. Introduced by Spain into
these Islands, this feudal concept is based on the States power of dominium, which is the capacity of the
State to own or acquire property.[79]
In its broad sense, the term jura regalia refers to royal rights, or those rights which the King has by virtue of
his prerogatives. In Spanish law, it refers to a right which the sovereign has over anything in which a subject
has a right of property or propriedad. These were rights enjoyed during feudal times by the king as the
sovereign.
The theory of the feudal system was that title to all lands was originally held by the King, and while the use
of lands was granted out to others who were permitted to hold them under certain conditions, the King
theoretically retained the title. By fiction of law, the King was regarded as the original proprietor of all lands,
and the true and only source of title, and from him all lands were held. The theory of jura regalia was
therefore nothing more than a natural fruit of conquest. [80]
The Philippines having passed to Spain by virtue of discovery and conquest, [81] earlier Spanish
decrees declared that all lands were held from the Crown. [82]
The Regalian doctrine extends not only to land but also to all natural wealth that may be found in the
bowels of the earth.[83] Spain, in particular, recognized the unique value of natural resources, viewing them,
especially minerals, as an abundant source of revenue to finance its wars against other nations. [84] Mining
laws during the Spanish regime reflected this perspective.[85]
THE AMERICAN OCCUPATION AND
THE CONCESSION REGIME
By the Treaty of Paris of December 10, 1898, Spain ceded the archipelago known as the Philippine
Islands to the United States. The Philippines was hence governed by means of organic acts that were in the
nature of charters serving as a Constitution of the occupied territory from 1900 to 1935.[86] Among the
principal organic acts of the Philippines was the Act of Congress of July 1, 1902, more commonly known as
the Philippine Bill of 1902, through which the United States Congress assumed the administration of the
Philippine Islands.[87] Section 20 of said Bill reserved the disposition of mineral lands of the public domain
from sale. Section 21 thereof allowed the free and open exploration, occupation and purchase of mineral
deposits not only to citizens of the Philippine Islands but to those of the United States as well:
Sec. 21. That all valuable mineral deposits in public lands in the Philippine Islands, both surveyed and
unsurveyed, are hereby declared to be free and open to exploration, occupation and purchase, and the land
in which they are found, to occupation and purchase, by citizens of the United States or of said
Islands: Provided, That when on any lands in said Islands entered and occupied as agricultural lands under
the provisions of this Act, but not patented, mineral deposits have been found, the working of such mineral
deposits is forbidden until the person, association, or corporation who or which has entered and is occupying
such lands shall have paid to the Government of said Islands such additional sum or sums as will make the
total amount paid for the mineral claim or claims in which said deposits are located equal to the amount
charged by the Government for the same as mineral claims.
Unlike Spain, the United States considered natural resources as a source of wealth for its nationals
and saw fit to allow both Filipino and American citizens to explore and exploit minerals in public lands, and to
grant patents to private mineral lands.[88] A person who acquired ownership over a parcel of private mineral
land pursuant to the laws then prevailing could exclude other persons, even the State, from exploiting
minerals within his property.[89] Thus, earlier jurisprudence[90] held that:
A valid and subsisting location of mineral land, made and kept up in accordance with the provisions of the
statutes of the United States, has the effect of a grant by the United States of the present and exclusive
possession of the lands located, and this exclusive right of possession and enjoyment continues during the
entire life of the location. x x x.
x x x.
The discovery of minerals in the ground by one who has a valid mineral location perfects his claim and his
location not only against third persons, but also against the Government. x x x. [Italics in the original.]
The Regalian doctrine and the American system, therefore, differ in one essential respect. Under the
Regalian theory, mineral rights are not included in a grant of land by the state; under the American doctrine,
mineral rights are included in a grant of land by the government. [91]
Section 21 also made possible the concession (frequently styled permit, license or
lease)[92] system.[93] This was the traditional regime imposed by the colonial administrators for the
exploitation of natural resources in the extractive sector (petroleum, hard minerals, timber, etc.). [94]
Under the concession system, the concessionaire makes a direct equity investment for the purpose of
exploiting a particular natural resource within a given area. [95] Thus, the concession amounts to complete
control by the concessionaire over the countrys natural resource, for it is given exclusive and plenary rights
to exploit a particular resource at the point of extraction. [96] In consideration for the right to exploit a natural
resource, the concessionaire either pays rent or royalty, which is a fixed percentage of the gross
proceeds.[97]
Later statutory enactments by the legislative bodies set up in the Philippines adopted the contractual
framework of the concession.[98] For instance, Act No. 2932,[99] approved on August 31, 1920, which
provided for the exploration, location, and lease of lands containing petroleum and other mineral oils and gas
in the Philippines, and Act No. 2719,[100] approved on May 14, 1917, which provided for the leasing and
development of coal lands in the Philippines, both utilized the concession system.[101]
THE 1935 CONSTITUTION AND THE
NATIONALIZATION OF NATURAL RESOURCES
By the Act of United States Congress of March 24, 1934, popularly known as the Tydings-McDuffie
Law, the People of the Philippine Islands were authorized to adopt a constitution. [102] On July 30, 1934, the
Constitutional Convention met for the purpose of drafting a constitution, and the Constitution subsequently
drafted was approved by the Convention on February 8, 1935. [103] The Constitution was submitted to the
President of the United States on March 18, 1935.[104] On March 23, 1935, the President of the United States
certified that the Constitution conformed substantially with the provisions of the Act of Congress approved on
March 24, 1934.[105] On May 14, 1935, the Constitution was ratified by the Filipino people.[106]
The 1935 Constitution adopted the Regalian doctrine, declaring all natural resources of the Philippines,
including mineral lands and minerals, to be property belonging to the State.[107]As adopted in a republican
system, the medieval concept of jura regalia is stripped of royal overtones and ownership of the land is
vested in the State.[108]
Section 1, Article XIII, on Conservation and Utilization of Natural Resources, of the 1935 Constitution
provided:
SECTION 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy, and other natural resources of the
Philippines belong to the State, and their disposition, exploitation, development, or utilization shall be limited
to citizens of the Philippines, or to corporations or associations at least sixty per centum of the capital of
which is owned by such citizens, subject to any existing right, grant, lease, or concession at the time of the
inauguration of the Government established under this Constitution. Natural resources, with the exception of
public agricultural land, shall not be alienated, and no license, concession, or lease for the exploitation,
development, or utilization of any of the natural resources shall be granted for a period exceeding twenty-five
years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of water power, in which cases beneficial use may be the measure and the limit of the grant.
The nationalization and conservation of the natural resources of the country was one of the fixed and
dominating objectives of the 1935 Constitutional Convention.[109] One delegate relates:
There was an overwhelming sentiment in the Convention in favor of the principle of state ownership of
natural resources and the adoption of the Regalian doctrine. State ownership of natural resources was seen
as a necessary starting point to secure recognition of the states power to control their disposition,
exploitation, development, or utilization. The delegates of the Constitutional Convention very well knew that
the concept of State ownership of land and natural resources was introduced by the Spaniards, however,
they were not certain whether it was continued and applied by the Americans. To remove all doubts, the
Convention approved the provision in the Constitution affirming the Regalian doctrine.
The adoption of the principle of state ownership of the natural resources and of the Regalian doctrine was
considered to be a necessary starting point for the plan of nationalizing and conserving the natural resources
of the country. For with the establishment of the principle of state ownership of the natural resources, it
would not be hard to secure the recognition of the power of the State to control their disposition, exploitation,
development or utilization.[110]
The nationalization of the natural resources was intended (1) to insure their conservation for Filipino
posterity; (2) to serve as an instrument of national defense, helping prevent the extension to the country of
foreign control through peaceful economic penetration; and (3) to avoid making the Philippines a source of
international conflicts with the consequent danger to its internal security and independence. [111]
The same Section 1, Article XIII also adopted the concession system, expressly permitting the State to
grant licenses, concessions, or leases for the exploitation, development, or utilization of any of the natural
resources. Grants, however, were limited to Filipinos or entities at least 60% of the capital of which is owned
by Filipinos.
The swell of nationalism that suffused the 1935 Constitution was radically diluted when on November
1946, the Parity Amendment, which came in the form of an Ordinance Appended to the Constitution, was
ratified in a plebiscite.[112] The Amendment extended, from July 4, 1946 to July 3, 1974, the right to utilize
and exploit our natural resources to citizens of the United States and business enterprises owned or
controlled, directly or indirectly, by citizens of the United States: [113]
Notwithstanding the provision of section one, Article Thirteen, and section eight, Article Fourteen, of the
foregoing Constitution, during the effectivity of the Executive Agreement entered into by the President of the
Philippines with the President of the United States on the fourth of July, nineteen hundred and forty-six,
pursuant to the provisions of Commonwealth Act Numbered Seven hundred and thirty-three, but in no case
to extend beyond the third of July, nineteen hundred and seventy-four, the disposition, exploitation,
development, and utilization of all agricultural, timber, and mineral lands of the public domain, waters,
minerals, coals, petroleum, and other mineral oils, all forces and sources of potential energy, and other
natural resources of the Philippines, and the operation of public utilities, shall, if open to any person, be open
to citizens of the United States and to all forms of business enterprise owned or controlled, directly or
indirectly, by citizens of the United States in the same manner as to, and under the same conditions
imposed upon, citizens of the Philippines or corporations or associations owned or controlled by citizens of
the Philippines.
The Parity Amendment was subsequently modified by the 1954 Revised Trade Agreement, also known
as the Laurel-Langley Agreement, embodied in Republic Act No. 1355.[114]
THE PETROLEUM ACT OF 1949
AND THE CONCESSION SYSTEM
In the meantime, Republic Act No. 387,[115] also known as the Petroleum Act of 1949, was approved on
June 18, 1949.
The Petroleum Act of 1949 employed the concession system for the exploitation of the nations
petroleum resources. Among the kinds of concessions it sanctioned were exploration and exploitation
concessions, which respectively granted to the concessionaire the exclusive right to explore for[116] or
develop[117] petroleum within specified areas.
Concessions may be granted only to duly qualified persons [118] who have sufficient finances,
organization, resources, technical competence, and skills necessary to conduct the operations to be
undertaken.[119]
Nevertheless, the Government reserved the right to undertake such work itself.[120] This proceeded
from the theory that all natural deposits or occurrences of petroleum or natural gas in public and/or private
lands in the Philippines belong to the State.[121] Exploration and exploitation concessions did not confer upon
the concessionaire ownership over the petroleum lands and petroleum deposits.[122] However, they did grant
concessionaires the right to explore, develop, exploit, and utilize them for the period and under the
conditions determined by the law.[123]
Concessions were granted at the complete risk of the concessionaire; the Government did not
guarantee the existence of petroleum or undertake, in any case, title warranty.[124]
Concessionaires were required to submit information as maybe required by the Secretary of Agriculture
and Natural Resources, including reports of geological and geophysical examinations, as well as production
reports.[125] Exploration[126] and exploitation[127] concessionaires were also required to submit work programs.
Exploitation concessionaires, in particular, were obliged to pay an annual exploitation tax, [128] the object
of which is to induce the concessionaire to actually produce petroleum, and not simply to sit on the
concession without developing or exploiting it. [129] These concessionaires were also bound to pay the
Government royalty, which was not less than 12% of the petroleum produced and saved, less that
consumed in the operations of the concessionaire. [130] Under Article 66, R.A. No. 387, the exploitation tax
may be credited against the royalties so that if the concessionaire shall be actually producing enough oil, it
would not actually be paying the exploitation tax.[131]
Failure to pay the annual exploitation tax for two consecutive years, [132] or the royalty due to the
Government within one year from the date it becomes due, [133] constituted grounds for the cancellation of the
concession. In case of delay in the payment of the taxes or royalty imposed by the law or by the concession,
a surcharge of 1% per month is exacted until the same are paid. [134]
As a rule, title rights to all equipment and structures that the concessionaire placed on the land belong
to the exploration or exploitation concessionaire. [135] Upon termination of such concession, the
concessionaire had a right to remove the same.[136]
The Secretary of Agriculture and Natural Resources was tasked with carrying out the provisions of the
law, through the Director of Mines, who acted under the Secretarys immediate supervision and
control.[137] The Act granted the Secretary the authority to inspect any operation of the concessionaire and to
examine all the books and accounts pertaining to operations or conditions related to payment of taxes and
royalties.[138]
The same law authorized the Secretary to create an Administration Unit and a Technical
Board.[139] The Administration Unit was charged, inter alia, with the enforcement of the provisions of the
law.[140] The Technical Board had, among other functions, the duty to check on the performance of
concessionaires and to determine whether the obligations imposed by the Act and its implementing
regulations were being complied with.[141]
Victorio Mario A. Dimagiba, Chief Legal Officer of the Bureau of Energy Development, analyzed the
benefits and drawbacks of the concession system insofar as it applied to the petroleum industry:
Advantages of Concession. Whether it emphasizes income tax or royalty, the most positive aspect of the
concession system is that the States financial involvement is virtually risk free and administration is simple
and comparatively low in cost. Furthermore, if there is a competitive allocation of the resource leading to
substantial bonuses and/or greater royalty coupled with a relatively high level of taxation, revenue accruing
to the State under the concession system may compare favorably with other financial arrangements.
Disadvantages of Concession. There are, however, major negative aspects to this system. Because the
Governments role in the traditional concession is passive, it is at a distinct disadvantage in managing and
developing policy for the nations petroleum resource. This is true for several reasons. First, even though
most concession agreements contain covenants requiring diligence in operations and production, this
establishes only an indirect and passive control of the host country in resource development. Second, and
more importantly, the fact that the host country does not directly participate in resource management
decisions inhibits its ability to train and employ its nationals in petroleum development. This factor could
delay or prevent the country from effectively engaging in the development of its resources. Lastly, a direct
role in management is usually necessary in order to obtain a knowledge of the international petroleum
industry which is important to an appreciation of the host countrys resources in relation to those of other
countries.[142]
Other liabilities of the system have also been noted:
x x x there are functional implications which give the concessionaire great economic power arising from its
exclusive equity holding. This includes, first, appropriation of the returns of the undertaking, subject to a
modest royalty; second, exclusive management of the project; third, control of production of the natural
resource, such as volume of production, expansion, research and development; and fourth, exclusive
responsibility for downstream operations, like processing, marketing, and distribution. In short, even if
nominally, the state is the sovereign and owner of the natural resource being exploited, it has been shorn of
all elements of control over such natural resource because of the exclusive nature of the contractual regime
of the concession. The concession system, investing as it does ownership of natural resources, constitutes a
consistent inconsistency with the principle embodied in our Constitution that natural resources belong to the
state and shall not be alienated, not to mention the fact that the concession was the bedrock of the colonial
system in the exploitation of natural resources.[143]
Eventually, the concession system failed for reasons explained by Dimagiba:
Notwithstanding the good intentions of the Petroleum Act of 1949, the concession system could not have
properly spurred sustained oil exploration activities in the country, since it assumed that such a capital-
intensive, high risk venture could be successfully undertaken by a single individual or a small company. In
effect, concessionaires funds were easily exhausted. Moreover, since the concession system practically
closed its doors to interested foreign investors, local capital was stretched to the limits. The old system also
failed to consider the highly sophisticated technology and expertise required, which would be available only
to multinational companies.[144]
A shift to a new regime for the development of natural resources thus seemed imminent.
PRESIDENTIAL DECREE NO. 87, THE 1973
CONSTITUTION AND THE SERVICE CONTRACT SYSTEM
The promulgation on December 31, 1972 of Presidential Decree No. 87, [145] otherwise known as THE
OIL EXPLORATION AND DEVELOPMENT ACT OF 1972 signaled such a transformation. P.D. No. 87
permitted the government to explore for and produce indigenous petroleum through service contracts.[146]
Service contracts is a term that assumes varying meanings to different people, and it has carried many
names in different countries, like work contracts in Indonesia, concession agreements in Africa, production-
sharing agreements in the Middle East, and participation agreements in Latin America. [147] A functional
definition of service contracts in the Philippines is provided as follows:
A service contract is a contractual arrangement for engaging in the exploitation and development of
petroleum, mineral, energy, land and other natural resources by which a government or its agency, or a
private person granted a right or privilege by the government authorizes the other party (service contractor)
to engage or participate in the exercise of such right or the enjoyment of the privilege, in that the latter
provides financial or technical resources, undertakes the exploitation or production of a given resource, or
directly manages the productive enterprise, operations of the exploration and exploitation of the resources or
the disposition of marketing or resources.[148]
In a service contract under P.D. No. 87, service and technology are furnished by the service contractor
for which it shall be entitled to the stipulated service fee. [149] The contractor must be technically competent
and financially capable to undertake the operations required in the contract. [150]
Financing is supposed to be provided by the Government to which all petroleum produced
belongs.[151] In case the Government is unable to finance petroleum exploration operations, the contractor
may furnish services, technology and financing, and the proceeds of sale of the petroleum produced under
the contract shall be the source of funds for payment of the service fee and the operating expenses due the
contractor.[152] The contractor shall undertake, manage and execute petroleum operations, subject to the
government overseeing the management of the operations. [153] The contractor provides all necessary
services and technology and the requisite financing, performs the exploration work obligations, and assumes
all exploration risks such that if no petroleum is produced, it will not be entitled to reimbursement. [154] Once
petroleum in commercial quantity is discovered, the contractor shall operate the field on behalf of the
government.[155]
P.D. No. 87 prescribed minimum terms and conditions for every service contract. [156] It also granted the
contractor certain privileges, including exemption from taxes and payment of tariff duties, [157] and permitted
the repatriation of capital and retention of profits abroad.[158]
Ostensibly, the service contract system had certain advantages over the concession regime. [159] It has
been opined, though, that, in the Philippines, our concept of a service contract, at least in the petroleum
industry, was basically a concession regime with a production-sharing element.[160]
On January 17, 1973, then President Ferdinand E. Marcos proclaimed the ratification of a new
Constitution.[161] Article XIV on the National Economy and Patrimony contained provisions similar to the 1935
Constitution with regard to Filipino participation in the nations natural resources. Section 8, Article XIV
thereof provides:
SEC. 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With
the exception of agricultural, industrial or commercial, residential and resettlement lands of the public
domain, natural resources shall not be alienated, and no license, concession, or lease for the exploration,
development, exploitation, or utilization of any of the natural resources shall be granted for a period
exceeding twenty-five years, renewable for not more than twenty-five years, except as to water rights for
irrigation, water supply, fisheries, or industrial uses other than the development of water power, in which
cases beneficial use may be the measure and the limit of the grant.
While Section 9 of the same Article maintained the Filipino-only policy in the enjoyment of natural
resources, it also allowed Filipinos, upon authority of the Batasang Pambansa, to enter into service contracts
with any person or entity for the exploration or utilization of natural resources.
SEC. 9. The disposition, exploration, development, exploitation, or utilization of any of the natural resources
of the Philippines shall be limited to citizens, or to corporations or associations at least sixty per centum of
which is owned by such citizens. The Batasang Pambansa, in the national interest, may allow such
citizens, corporations or associations to enter into service contracts for financial, technical,
management, or other forms of assistance with any person or entity for the exploration, or utilization
of any of the natural resources. Existing valid and binding service contracts for financial, technical,
management, or other forms of assistance are hereby recognized as such. [Emphasis supplied.]
The concept of service contracts, according to one delegate, was borrowed from the methods followed
by India, Pakistan and especially Indonesia in the exploration of petroleum and mineral oils. [162] The
provision allowing such contracts, according to another, was intended to enhance the proper development of
our natural resources since Filipino citizens lack the needed capital and technical know-how which are
essential in the proper exploration, development and exploitation of the natural resources of the country. [163]
The original idea was to authorize the government, not private entities, to enter into service contracts
with foreign entities.[164] As finally approved, however, a citizen or private entity could be allowed by the
National Assembly to enter into such service contract.[165] The prior approval of the National Assembly was
deemed sufficient to protect the national interest. [166]Notably, none of the laws allowing service contracts
were passed by the Batasang Pambansa. Indeed, all of them were enacted by presidential decree.
On March 13, 1973, shortly after the ratification of the new Constitution, the President promulgated
Presidential Decree No. 151.[167] The law allowed Filipino citizens or entities which have acquired lands of
the public domain or which own, hold or control such lands to enter into service contracts for financial,
technical, management or other forms of assistance with any foreign persons or entity for the exploration,
development, exploitation or utilization of said lands. [168]
Presidential Decree No. 463,[169] also known as THE MINERAL RESOURCES DEVELOPMENT
DECREE OF 1974, was enacted on May 17, 1974. Section 44 of the decree, as amended, provided that a
lessee of a mining claim may enter into a service contract with a qualified domestic or foreign contractor for
the exploration, development and exploitation of his claims and the processing and marketing of the product
thereof.
Presidential Decree No. 704[170] (THE FISHERIES DECREE OF 1975), approved on May 16, 1975,
allowed Filipinos engaged in commercial fishing to enter into contracts for financial, technical or other forms
of assistance with any foreign person, corporation or entity for the production, storage, marketing and
processing of fish and fishery/aquatic products.[171]
Presidential Decree No. 705[172] (THE REVISED FORESTRY CODE OF THE PHILIPPINES), approved
on May 19, 1975, allowed forest products licensees, lessees, or permitees to enter into service contracts for
financial, technical, management, or other forms of assistance . . . with any foreign person or entity for the
exploration, development, exploitation or utilization of the forest resources. [173]
Yet another law allowing service contracts, this time for geothermal resources, was Presidential Decree
No. 1442,[174] which was signed into law on June 11, 1978. Section 1 thereof authorized the Government to
enter into service contracts for the exploration, exploitation and development of geothermal resources with a
foreign contractor who must be technically and financially capable of undertaking the operations required in
the service contract.
Thus, virtually the entire range of the countrys natural resources from petroleum and minerals to
geothermal energy, from public lands and forest resources to fishery products was well covered by apparent
legal authority to engage in the direct participation or involvement of foreign persons or corporations
(otherwise disqualified) in the exploration and utilization of natural resources through service contracts.[175]
THE 1987 CONSTITUTION AND TECHNICAL
OR FINANCIAL ASSISTANCE AGREEMENTS
After the February 1986 Edsa Revolution, Corazon C. Aquino took the reins of power under a
revolutionary government. On March 25, 1986, President Aquino issued Proclamation No.
3,[176] promulgating the Provisional Constitution, more popularly referred to as the Freedom Constitution. By
authority of the same Proclamation, the President created a Constitutional Commission (CONCOM) to draft
a new constitution, which took effect on the date of its ratification on February 2, 1987.[177]
The 1987 Constitution retained the Regalian doctrine. The first sentence of Section 2, Article XII
states: All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of
potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned
by the State.
Like the 1935 and 1973 Constitutions before it, the 1987 Constitution, in the second sentence of the
same provision, prohibits the alienation of natural resources, except agricultural lands.
The third sentence of the same paragraph is new: The exploration, development and utilization of
natural resources shall be under the full control and supervision of the State. The constitutional policy of
the States full control and supervision over natural resources proceeds from the concept of jura regalia, as
well as the recognition of the importance of the countrys natural resources, not only for national economic
development, but also for its security and national defense. [178] Under this provision, the State assumes a
more dynamic role in the exploration, development and utilization of natural resources. [179]
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitutions authorizing the
State to grant licenses, concessions, or leases for the exploration, exploitation, development, or utilization of
natural resources. By such omission, the utilization of inalienable lands of public domain through license,
concession or lease is no longer allowed under the 1987 Constitution. [180]
Having omitted the provision on the concession system, Section 2 proceeded to introduce unfamiliar
language:[181]
The State may directly undertake such activities or it may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens.
Consonant with the States full supervision and control over natural resources, Section 2 offers the
State two options.[182] One, the State may directly undertake these activities itself; or two, it may enter into
co-production, joint venture, or production-sharing agreements with Filipino citizens, or entities at least 60%
of whose capital is owned by such citizens.
A third option is found in the third paragraph of the same section:
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well as
cooperative fish farming, with priority to subsistence fishermen and fish-workers in rivers, lakes, bays, and
lagoons.
While the second and third options are limited only to Filipino citizens or, in the case of the former, to
corporations or associations at least 60% of the capital of which is owned by Filipinos, a fourth allows the
participation of foreign-owned corporations. The fourth and fifth paragraphs of Section 2 provide:
The President may enter into agreements with foreign-owned corporations involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and
other mineral oils according to the general terms and conditions provided by law, based on real contributions
to the economic growth and general welfare of the country. In such agreements, the State shall promote the
development and use of local scientific and technical resources.
The President shall notify the Congress of every contract entered into in accordance with this provision,
within thirty days from its execution.
Although Section 2 sanctions the participation of foreign-owned corporations in the exploration,
development, and utilization of natural resources, it imposes certain limitations or conditions to agreements
with such corporations.
First, the parties to FTAAs. Only the President, in behalf of the State, may enter into these
agreements, and only with corporations. By contrast, under the 1973 Constitution, a Filipino citizen,
corporation or association may enter into a service contract with a foreign person or entity.
Second, the size of the activities: only large-scale exploration, development, and utilization is allowed.
The term large-scale usually refers to very capital-intensive activities.[183]
Third, the natural resources subject of the activities is restricted to minerals, petroleum and other
mineral oils, the intent being to limit service contracts to those areas where Filipino capital may not be
sufficient.[184]
Fourth, consistency with the provisions of statute. The agreements must be in accordance with the
terms and conditions provided by law.
Fifth, Section 2 prescribes certain standards for entering into such agreements. The agreements must
be based on real contributions to economic growth and general welfare of the country.
Sixth, the agreements must contain rudimentary stipulations for the promotion of the development
and use of local scientific and technical resources.
Seventh, the notification requirement. The President shall notify Congress of every financial or
technical assistance agreement entered into within thirty days from its execution.
Finally, the scope of the agreements. While the 1973 Constitution referred to service contracts for
financial, technical, management, or other forms of assistance the 1987 Constitution provides for
agreements. . . involving either financial or technical assistance. It bears noting that the phrases service
contracts and management or other forms of assistance in the earlier constitution have been omitted.
By virtue of her legislative powers under the Provisional Constitution, [185] President Aquino, on July 10,
1987, signed into law E.O. No. 211 prescribing the interim procedures in the processing and approval of
applications for the exploration, development and utilization of minerals. The omission in the 1987
Constitution of the term service contracts notwithstanding, the said E.O. still referred to them in Section 2
thereof:
SEC. 2. Applications for the exploration, development and utilization of mineral resources, including renewal
applications and applications for approval of operating agreements and mining service contracts, shall be
accepted and processed and may be approved x x x. [Emphasis supplied.]
The same law provided in its Section 3 that the processing, evaluation and approval of all mining
applications . . . operating agreements and service contracts . . . shall be governed by Presidential Decree
No. 463, as amended, other existing mining laws, and their implementing rules and regulations. . . .
As earlier stated, on the 25th also of July 1987, the President issued E.O. No. 279 by authority of which
the subject WMCP FTAA was executed on March 30, 1995.
On March 3, 1995, President Ramos signed into law R.A. No. 7942. Section 15 thereof declares that
the Act shall govern the exploration, development, utilization, and processing of all mineral resources. Such
declaration notwithstanding, R.A. No. 7942 does not actually cover all the modes through which the State
may undertake the exploration, development, and utilization of natural resources.
The State, being the owner of the natural resources, is accorded the primary power and responsibility
in the exploration, development and utilization thereof. As such, it may undertake these activities through
four modes:
The State may directly undertake such activities.
(2) The State may enter into co-production, joint venture or production-sharing agreements with Filipino
citizens or qualified corporations.
(3) Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens.
(4) For the large-scale exploration, development and utilization of minerals, petroleum and other
mineral oils, the President may enter into agreements with foreign-owned corporations involving technical or
financial assistance.[186]
Except to charge the Mines and Geosciences Bureau of the DENR with performing researches and
surveys,[187] and a passing mention of government-owned or controlled corporations,[188] R.A. No. 7942 does
not specify how the State should go about the first mode. The third mode, on the other hand, is governed by
Republic Act No. 7076[189] (the Peoples Small-Scale Mining Act of 1991) and other pertinent laws. [190] R.A.
No. 7942 primarily concerns itself with the second and fourth modes.
 Mineral production sharing, co-production and joint venture agreements are collectively classified by
R.A. No. 7942 as mineral agreements.[191] The Government participates the least in a mineral production
sharing agreement (MPSA). In an MPSA, the Government grants the contractor [192] the exclusive right to
conduct mining operations within a contract area [193] and shares in the gross output.[194] The MPSA
contractor provides the financing, technology, management and personnel necessary for the agreements
implementation.[195] The total government share in an MPSA is the excise tax on mineral products under
Republic Act No. 7729,[196] amending Section 151(a) of the National Internal Revenue Code, as
amended.[197]
In a co-production agreement (CA),[198] the Government provides inputs to the mining operations other
than the mineral resource,[199] while in a joint venture agreement (JVA), where the Government enjoys the
greatest participation, the Government and the JVA contractor organize a company with both parties having
equity shares.[200] Aside from earnings in equity, the Government in a JVA is also entitled to a share in the
gross output.[201] The Government may enter into a CA[202] or JVA[203] with one or more contractors. The
Governments share in a CA or JVA is set out in Section 81 of the law:
The share of the Government in co-production and joint venture agreements shall be negotiated by the
Government and the contractor taking into consideration the: (a) capital investment of the project, (b) the
risks involved, (c) contribution of the project to the economy, and (d) other factors that will provide for a fair
and equitable sharing between the Government and the contractor. The Government shall also be entitled to
compensations for its other contributions which shall be agreed upon by the parties, and shall consist,
among other things, the contractors income tax, excise tax, special allowance, withholding tax due from the
contractors foreign stockholders arising from dividend or interest payments to the said foreign stockholders,
in case of a foreign national and all such other taxes, duties and fees as provided for under existing laws.
All mineral agreements grant the respective contractors the exclusive right to conduct mining
operations and to extract all mineral resources found in the contract area. [204] A qualified person may enter
into any of the mineral agreements with the Government.[205] A qualified person is
any citizen of the Philippines with capacity to contract, or a corporation, partnership, association, or
cooperative organized or authorized for the purpose of engaging in mining, with technical and financial
capability to undertake mineral resources development and duly registered in accordance with law at least
sixty per centum (60%) of the capital of which is owned by citizens of the Philippines x x x. [206]
The fourth mode involves financial or technical assistance agreements. An FTAA is defined as a
contract involving financial or technical assistance for large-scale exploration, development, and utilization of
natural resources.[207] Any qualified person with technical and financial capability to undertake large-scale
exploration, development, and utilization of natural resources in the Philippines may enter into such
agreement directly with the Government through the DENR. [208] For the purpose of granting an FTAA, a
legally organized foreign-owned corporation (any corporation, partnership, association, or cooperative duly
registered in accordance with law in which less than 50% of the capital is owned by Filipino citizens) [209] is
deemed a qualified person.[210]
Other than the difference in contractors qualifications, the principal distinction between mineral
agreements and FTAAs is the maximum contract area to which a qualified person may hold or be
granted.[211] Large-scale under R.A. No. 7942 is determined by the size of the contract area, as opposed to
the amount invested (US $50,000,000.00), which was the standard under E.O. 279.
Like a CA or a JVA, an FTAA is subject to negotiation. [212] The Governments contributions, in the form
of taxes, in an FTAA is identical to its contributions in the two mineral agreements, save that in an FTAA:
The collection of Government share in financial or technical assistance agreement shall commence after the
financial or technical assistance agreement contractor has fully recovered its pre-operating expenses,
exploration, and development expenditures, inclusive. [213]
III
Having examined the history of the constitutional provision and statutes enacted pursuant thereto, a
consideration of the substantive issues presented by the petition is now in order.
THE EFFECTIVITY OF
EXECUTIVE ORDER NO. 279
Petitioners argue that E.O. No. 279, the law in force when the WMC FTAA was executed, did not come
into effect.
E.O. No. 279 was signed into law by then President Aquino on July 25, 1987, two days before the
opening of Congress on July 27, 1987.[214] Section 8 of the E.O. states that the same shall take
effect immediately. This provision, according to petitioners, runs counter to Section 1 of E.O. No.
200,[215] which provides:
SECTION 1. Laws shall take effect after fifteen days following the completion of their publication either
in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise
provided.[216] [Emphasis supplied.]
On that premise, petitioners contend that E.O. No. 279 could have only taken effect fifteen days after
its publication at which time Congress had already convened and the Presidents power to legislate had
ceased.
Respondents, on the other hand, counter that the validity of E.O. No. 279 was settled in Miners
Association of the Philippines v. Factoran, supra. This is of course incorrect for the issue in Miners
Association was not the validity of E.O. No. 279 but that of DAO Nos. 57 and 82 which were issued pursuant
thereto.
Nevertheless, petitioners contentions have no merit.
It bears noting that there is nothing in E.O. No. 200 that prevents a law from taking effect on a date
other than even before the 15-day period after its publication. Where a law provides for its own date of
effectivity, such date prevails over that prescribed by E.O. No. 200. Indeed, this is the very essence of the
phrase unless it is otherwise provided in Section 1 thereof.Section 1, E.O. No. 200, therefore, applies only
when a statute does not provide for its own date of effectivity.
What is mandatory under E.O. No. 200, and what due process requires, as this Court held in Taada v.
Tuvera,[217] is the publication of the law for
without such notice and publication, there would be no basis for the application of the maxim ignorantia legis
n[eminem] excusat. It would be the height of injustice to punish or otherwise burden a citizen for the
transgression of a law of which he had no notice whatsoever, not even a constructive one.
While the effectivity clause of E.O. No. 279 does not require its publication, it is not a ground for its
invalidation since the Constitution, being the fundamental, paramount and supreme law of the nation, is
deemed written in the law.[218] Hence, the due process clause,[219] which, so Taada held, mandates the
publication of statutes, is read into Section 8 of E.O. No. 279.Additionally, Section 1 of E.O. No. 200 which
provides for publication either in the Official Gazette or in a newspaper of general circulation in the
Philippines, finds suppletory application. It is significant to note that E.O. No. 279 was actually published in
the Official Gazette[220] on August 3, 1987.
From a reading then of Section 8 of E.O. No. 279, Section 1 of E.O. No. 200, and Taada v. Tuvera, this
Court holds that E.O. No. 279 became effective immediately upon its publication in the Official Gazette on
August 3, 1987.
That such effectivity took place after the convening of the first Congress is irrelevant. At the time
President Aquino issued E.O. No. 279 on July 25, 1987, she was still validly exercising legislative powers
under the Provisional Constitution.[221] Article XVIII (Transitory Provisions) of the 1987 Constitution explicitly
states:
SEC. 6. The incumbent President shall continue to exercise legislative powers until the first Congress is
convened.
The convening of the first Congress merely precluded the exercise of legislative powers by President
Aquino; it did not prevent the effectivity of laws she had previously enacted.
There can be no question, therefore, that E.O. No. 279 is an effective, and a validly enacted,
statute.
THE CONSTITUTIONALITY
OF THE WMCP FTAA
Petitioners submit that, in accordance with the text of Section 2, Article XII of the Constitution, FTAAs
should be limited to technical or financial assistance only. They observe, however, that, contrary to the
language of the Constitution, the WMCP FTAA allows WMCP, a fully foreign-owned mining corporation, to
extend more than mere financial or technical assistance to the State, for it permits WMCP to manage and
operate every aspect of the mining activity. [222]
Petitioners submission is well-taken. It is a cardinal rule in the interpretation of constitutions that the
instrument must be so construed as to give effect to the intention of the people who adopted it. [223] This
intention is to be sought in the constitution itself, and the apparent meaning of the words is to be taken as
expressing it, except in cases where that assumption would lead to absurdity, ambiguity, or
contradiction.[224] What the Constitution says according to the text of the provision, therefore, compels
acceptance and negates the power of the courts to alter it, based on the postulate that the framers and the
people mean what they say.[225] Accordingly, following the literal text of the Constitution, assistance
accorded by foreign-owned corporations in the large-scale exploration, development, and utilization of
petroleum, minerals and mineral oils should be limited to technical or financial assistance only.
WMCP nevertheless submits that the word technical in the fourth paragraph of Section 2 of E.O. No.
279 encompasses a broad number of possible services, perhaps, scientific and/or technological in
basis.[226] It thus posits that it may also well include the area of management or operations . . . so long as
such assistance requires specialized knowledge or skills, and are related to the exploration, development
and utilization of mineral resources.[227]
This Court is not persuaded. As priorly pointed out, the phrase management or other forms of
assistance in the 1973 Constitution was deleted in the 1987 Constitution, which allows only technical or
financial assistance. Casus omisus pro omisso habendus est. A person, object or thing omitted from an
enumeration must be held to have been omitted intentionally. [228] As will be shown later, the management or
operation of mining activities by foreign contractors, which is the primary feature of service contracts, was
precisely the evil that the drafters of the 1987 Constitution sought to eradicate.
Respondents insist that agreements involving technical or financial assistance is just another term for
service contracts. They contend that the proceedings of the CONCOM indicate that although the terminology
service contract was avoided [by the Constitution], the concept it represented was not. They add that [t]he
concept is embodied in the phrase agreements involving financial or technical assistance. [229] And point out
how members of the CONCOM referred to these agreements as service contracts. For instance:
SR. TAN. Am I correct in thinking that the only difference between these future service contracts and the
past service contracts under Mr. Marcos is the general law to be enacted by the legislature and the
notification of Congress by the President? That is the only difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards[?]
MR. VILLEGAS. Yes. There was no law at all governing service contracts before.
SR. TAN. Thank you, Madam President.[230] [Emphasis supplied.]
WMCP also cites the following statements of Commissioners Gascon, Garcia, Nolledo and Tadeo who
alluded to service contracts as they explained their respective votes in the approval of the draft Article:
MR. GASCON. Mr. Presiding Officer, I vote no primarily because of two reasons: One, the provision on
service contracts. I felt that if we would constitutionalize any provision on service contracts, this should
always be with the concurrence of Congress and not guided only by a general law to be promulgated by
Congress. x x x.[231] [Emphasis supplied.]
x x x.
MR. GARCIA. Thank you.
I vote no. x x x.
Service contracts are given constitutional legitimization in Section 3, even when they have been
proven to be inimical to the interests of the nation, providing as they do the legal loophole for the
exploitation of our natural resources for the benefit of foreign interests. They constitute a serious
negation of Filipino control on the use and disposition of the nations natural resources, especially with regard
to those which are nonrenewable.[232] [Emphasis supplied.]
xxx
MR. NOLLEDO. While there are objectionable provisions in the Article on National Economy and Patrimony,
going over said provisions meticulously, setting aside prejudice and personalities will reveal that the article
contains a balanced set of provisions. I hope the forthcoming Congress will implement such provisions
taking into account that Filipinos should have real control over our economy and patrimony, and if foreign
equity is permitted, the same must be subordinated to the imperative demands of the national interest.
x x x.
It is also my understanding that service contracts involving foreign corporations or entities are
resorted to only when no Filipino enterprise or Filipino-controlled enterprise could possibly
undertake the exploration or exploitation of our natural resources and that compensation under
such contracts cannot and should not equal what should pertain to ownership of capital. In other
words, the service contract should not be an instrument to circumvent the basic provision, that the
exploration and exploitation of natural resources should be truly for the benefit of Filipinos.
Thank you, and I vote yes.[233] [Emphasis supplied.]
x x x.
MR. TADEO. Nais ko lamang ipaliwanag ang aking boto.
Matapos suriin ang kalagayan ng Pilipinas, ang saligang suliranin, pangunahin ang salitang
imperyalismo. Ang ibig sabihin nito ay ang sistema ng lipunang pinaghaharian ng iilang monopolyong
kapitalista at ang salitang imperyalismo ay buhay na buhay sa National Economy and Patrimony na nating
ginawa. Sa pamamagitan ng salitang based on, naroroon na ang free trade sapagkat tayo ay mananatiling
tagapagluwas ng hilaw na sangkap at tagaangkat ng yaring produkto. Pangalawa, naroroon pa rin ang
parity rights, ang service contract, ang 60-40 equity sa natural resources. Habang naghihirap ang
sambayanang Pilipino, ginagalugad naman ng mga dayuhan ang ating likas na yaman. Kailan man
ang Article on National Economy and Patrimony ay hindi nagpaalis sa pagkaalipin ng ating
ekonomiya sa kamay ng mga dayuhan. Ang solusyon sa suliranin ng bansa ay dalawa lamang: ang
pagpapatupad ng tunay na reporma sa lupa at ang national industrialization. Ito ang tinatawag naming
pagsikat ng araw sa Silangan. Ngunit ang mga landlords and big businessmen at ang mga komprador ay
nagsasabi na ang free trade na ito, ang kahulugan para sa amin, ay ipinipilit sa ating sambayanan na ang
araw ay sisikat sa Kanluran. Kailan man hindi puwedeng sumikat ang araw sa Kanluran. I vote
no.[234] [Emphasis supplied.]
This Court is likewise not persuaded.
As earlier noted, the phrase service contracts has been deleted in the 1987 Constitutions Article on
National Economy and Patrimony. If the CONCOM intended to retain the concept of service contracts under
the 1973 Constitution, it could have simply adopted the old terminology (service contracts) instead of
employing new and unfamiliar terms (agreements . . . involving either technical or financial assistance). Such
a difference between the language of a provision in a revised constitution and that of a similar provision in
the preceding constitution is viewed as indicative of a difference in purpose.[235] If, as respondents suggest,
the concept of technical or financial assistance agreements is identical to that of service contracts, the
CONCOM would not have bothered to fit the same dog with a new collar. To uphold respondents theory
would reduce the first to a mere euphemism for the second and render the change in phraseology
meaningless.
An examination of the reason behind the change confirms that technical or financial assistance
agreements are not synonymous to service contracts.
[T]he Court in construing a Constitution should bear in mind the object sought to be accomplished by its
adoption, and the evils, if any, sought to be prevented or remedied. A doubtful provision will be examined in
light of the history of the times, and the condition and circumstances under which the Constitution was
framed. The object is to ascertain the reason which induced the framers of the Constitution to enact the
particular provision and the purpose sought to be accomplished thereby, in order to construe the whole as to
make the words consonant to that reason and calculated to effect that purpose. [236]
As the following question of Commissioner Quesada and Commissioner Villegas answer shows the
drafters intended to do away with service contracts which were used to circumvent the capitalization (60%-
40%) requirement:
MS. QUESADA. The 1973 Constitution used the words service contracts. In this particular Section 3, is there
a safeguard against the possible control of foreign interests if the Filipinos go into coproduction with them?
MR. VILLEGAS. Yes. In fact, the deletion of the phrase service contracts was our first attempt to avoid
some of the abuses in the past regime in the use of service contracts to go around the 60-40
arrangement. The safeguard that has been introduced and this, of course can be refined is found in Section I voted in favor of the Jamir proposal because it is not really exploitation that we granted to the alien
3, lines 25 to 30, where Congress will have to concur with the President on any agreement entered into corporations but only for them to render financial or technical assistance. It is not for them to enjoy
between a foreign-owned corporation and the government involving technical or financial assistance for our natural resources. Madam President, our natural resources are depleting; our population is increasing
large-scale exploration, development and utilization of natural resources.[237] [Emphasis supplied.] by leaps and bounds. Fifty years from now, if we will allow these aliens to exploit our natural resources,
In a subsequent discussion, Commissioner Villegas allayed the fears of Commissioner Quesada there will be no more natural resources for the next generations of Filipinos. It may last long if we will begin
regarding the participation of foreign interests in Philippine natural resources, which was supposed to be now. Since 1935 the aliens have been allowed to enjoy to a certain extent the exploitation of our natural
restricted to Filipinos. resources, and we became victims of foreign dominance and control. The aliens are interested in coming to
MS. QUESADA. Another point of clarification is the phrase and utilization of natural resources shall be under the Philippines because they would like to enjoy the bounty of nature exclusively intended for Filipinos by
the full control and supervision of the State. In the 1973 Constitution, this was limited to citizens of the God.
Philippines; but it was removed and substituted by shall be under the full control and supervision of the And so I appeal to all, for the sake of the future generations, that if we have to pray in the Preamble to
State. Was the concept changed so that these particular resources would be limited to citizens of the preserve and develop the national patrimony for the sovereign Filipino people and for the generations to
Philippines? Or would these resources only be under the full control and supervision of the State; meaning, come, we must at this time decide once and for all that our natural resources must be reserved only to
noncitizens would have access to these natural resources? Is that the understanding? Filipino citizens.
MR. VILLEGAS. No, Mr. Vice-President, if the Commissioner reads the next sentence, it states: Thank you.[239] [Emphasis supplied.]
Such activities may be directly undertaken by the State, or it may enter into co-production, joint venture, The opinion of another member of the CONCOM is persuasive [240] and leaves no doubt as to the
production-sharing agreements with Filipino citizens. intention of the framers to eliminate service contracts altogether. He writes:
So we are still limiting it only to Filipino citizens. Paragraph 4 of Section 2 specifies large-scale, capital-intensive, highly technological undertakings for which
x x x. the President may enter into contracts with foreign-owned corporations, and enunciates strict conditions that
MS. QUESADA. Going back to Section 3, the section suggests that: should govern such contracts. x x x.
The exploration, development, and utilization of natural resources may be directly undertaken by the State, This provision balances the need for foreign capital and technology with the need to maintain the national
or it may enter into co-production, joint venture or production-sharing agreement with . . . corporations or sovereignty. It recognizes the fact that as long as Filipinos can formulate their own terms in their own
associations at least sixty per cent of whose voting stock or controlling interest is owned by such citizens. territory, there is no danger of relinquishing sovereignty to foreign interests.
Lines 25 to 30, on the other hand, suggest that in the large-scale exploration, development and utilization of Are service contracts allowed under the new Constitution? No. Under the new Constitution, foreign
natural resources, the President with the concurrence of Congress may enter into agreements with foreign- investors (fully alien-owned) can NOT participate in Filipino enterprises except to provide: (1)
owned corporations even for technical or financial assistance. Technical Assistance for highly technical enterprises; and (2) Financial Assistance for large-scale
I wonder if this part of Section 3 contradicts the second part. I am raising this point for fear that foreign enterprises.
investors will use their enormous capital resources to facilitate the actual exploitation or exploration, The intent of this provision, as well as other provisions on foreign investments, is to prevent the
development and effective disposition of our natural resources to the detriment of Filipino investors. I am not practice (prevalent in the Marcos government) of skirting the 60/40 equation using the cover of
saying that we should not consider borrowing money from foreign sources. What I refer to is that foreign service contracts.[241] [Emphasis supplied.]
interest should be allowed to participate only to the extent that they lend us money and give us technical Furthermore, it appears that Proposed Resolution No. 496,[242] which was the draft Article on National
assistance with the appropriate government permit. In this way, we can insure the enjoyment of our natural Economy and Patrimony, adopted the concept of agreements . . . involving either technical or financial
resources by our own people. assistance contained in the Draft of the 1986 U.P. Law Constitution Project (U.P. Law draft) which was taken
MR. VILLEGAS. Actually, the second provision about the President does not permit foreign investors into consideration during the deliberation of the CONCOM. [243] The former, as well as Article XII, as adopted,
to participate. It is only technical or financial assistance they do not own anything but on conditions employed the same terminology, as the comparative table below shows:
that have to be determined by law with the concurrence of Congress. So, it is very restrictive. PROPOSED RESOLUTION NO. ARTICLE XII OF THE 1987
If the Commissioner will remember, this removes the possibility for service contracts which we said 496 OF THE CONSTITUTIONAL CONSTITUTION
yesterday were avenues used in the previous regime to go around the 60-40 DRAFT OF THE UP LAW COMMISSION
requirement.[238][Emphasis supplied.] CONSTITUTION PROJECT
The present Chief Justice, then a member of the CONCOM, also referred to this limitation in scope in SEC. 1. All lands of the public SEC. 3. All lands of the public SEC. 2. All lands of the public
proposing an amendment to the 60-40 requirement: domain, waters, minerals, coal, domain, waters, minerals, coal, domain, waters, minerals, coal,
MR. DAVIDE. May I be allowed to explain the proposal? petroleum and other mineral oils, petroleum and other mineral oils, petroleum, and other mineral oils,
MR. MAAMBONG. Subject to the three-minute rule, Madam President. all forces of potential energy, all forces of potential energy, all forces of potential energy,
MR. DAVIDE. It will not take three minutes. fisheries, flora and fauna and fisheries, forests, flora and fauna, fisheries, forests or timber,
The Commission had just approved the Preamble. In the Preamble we clearly stated that the Filipino other natural resources of the and other natural resources are wildlife, flora and fauna, and other
people are sovereign and that one of the objectives for the creation or establishment of a Philippines are owned by the owned by the State. With the natural resources are owned by
government is to conserve and develop the national patrimony. The implication is that the national State. With the exception of exception of agricultural lands, all the State. With the exception of
patrimony or our natural resources are exclusively reserved for the Filipino people. No alien must be agricultural lands, all other natural other natural resources shall not agricultural lands, all other natural
allowed to enjoy, exploit and develop our natural resources. As a matter of fact, that principle resources shall not be be alienated. The exploration, resources shall not be
proceeds from the fact that our natural resources are gifts from God to the Filipino people and it alienated. The exploration, development, and utilization of alienated. The exploration,
would be a breach of that special blessing from God if we will allow aliens to exploit our natural development and utilization of natural resources shall be under development, and utilization of
resources. natural resources shall be under the full control and supervision of natural resources shall be under
the full control and supervision of the State. Such activities may be the full control and supervision of
the State. Such activities may be
directly undertaken by the state,
or it may enter into co-production,
joint venture, production sharing
agreements with Filipino citizens
or corporations or associations
sixty per cent of whose voting
stock or controlling interest is
owned by such citizens for a
period of not more than twenty-
five years, renewable for not more
than twenty-five years and under
such terms and conditions as may
be provided by law. In case as to
water rights for irrigation, water
supply, fisheries, or industrial
uses other than the development
of water power, beneficial use
may be the measure and limit of
the grant.
The National Assembly may by
law allow small scale utilization of
natural resources by Filipino
citizens.
The National Assembly, may, by
two-thirds vote of all its members
by special law provide the terms
and conditions under which a
foreign-owned corporation may
enter into agreements with the
government involving either
technical or financial
assistance for large-scale
exploration, development, or
utilization of natural
resources. [Emphasis supplied.]
directly undertaken by the State,
or it may enter into co-production,
joint venture, production-sharing
agreements with Filipino citizens
or corporations or associations at
least sixty per cent of whose
voting stock or controlling interest
is owned by such citizens. Such
agreements shall be for a period
of twenty-five years, renewable
for not more than twenty-five
years, and under such term and
conditions as may be provided by
law. In cases of water rights for
irrigation, water supply, fisheries
or industrial uses other than the
development for water power,
beneficial use may be the
measure and limit of the grant.
The Congress may by law allow
small-scale utilization of natural
resources by Filipino citizens, as
well as cooperative fish farming in
rivers, lakes, bays, and lagoons.
The President with the
concurrence of Congress, by
special law, shall provide the
terms and conditions under which
a foreign-owned corporation may
enter into agreements with the
government involving either
technical or financial
assistance for large-scale
exploration, development, and
utilization of natural
resources. [Emphasis supplied.]
the State. The State may directly
undertake such activities or it may
enter into co-production, joint
venture, or production-sharing
agreements with Filipino citizens,
or corporations or associations at
least sixty per centum of whose
capital is owned by such
citizens. Such agreements may
be for a period not exceeding
twenty-five years, renewable for
not more than twenty-five years,
and under such terms and
conditions as may be provided by
law. In case of water rights for
irrigation, water supply, fisheries,
or industrial uses other than the
development of water power,
beneficial use may be the
measure and limit of the grant.
The State shall protect the nations
marine wealth in its archipelagic
waters, territorial sea, and
exclusive economic zone, and
reserve its use and enjoyment
exclusively to Filipino citizens.
The Congress may, by law, allow
small-scale utilization of natural
resources by Filipino citizens, as
well as cooperative fish farming,
with priority to subsistence
fishermen and fish-workers in
rivers, lakes, bays, and lagoons.
The President may enter into
agreements with foreign-owned
corporations involving either
technical or financial
assistance for large-scale
exploration, development, and
utilization of minerals, petroleum,
and other mineral oils according
to the general terms and
conditions provided by law, based
on real contributions to the
economic growth and general
welfare of the country. In such
agreements, the State shall
promote the development and use
of local scientific and technical
resources.[Emphasis supplied.]
The President shall notify the
Congress of every contract
entered into in accordance with
this provision, within thirty days
from its execution.
The insights of the proponents of the U.P. Law draft are, therefore, instructive in interpreting the phrase
technical or financial assistance.
In his position paper entitled Service Contracts: Old Wine in New Bottles?, Professor Pacifico A.
Agabin, who was a member of the working group that prepared the U.P. Law draft, criticized service
contracts for they lodge exclusive management and control of the enterprise to the service contractor, which
is reminiscent of the old concession regime. Thus, notwithstanding the provision of the Constitution that
natural resources belong to the State, and that these shall not be alienated, the service contract system
renders nugatory the constitutional provisions cited.[244] He elaborates:
Looking at the Philippine model, we can discern the following vestiges of the concession regime, thus:
1. Bidding of a selected area, or leasing the choice of the area to the interested party and then negotiating
the terms and conditions of the contract; (Sec. 5, P.D. 87)
2. Management of the enterprise vested on the contractor, including operation of the field if
petroleum is discovered; (Sec. 8, P.D. 87)
3. Control of production and other matters such as expansion and development; (Sec. 8)
4. Responsibility for downstream operations marketing, distribution, and processing may be with the
contractor (Sec. 8);
5. Ownership of equipment, machinery, fixed assets, and other properties remain with contractor (Sec. 12,
P.D. 87);
6. Repatriation of capital and retention of profits abroad guaranteed to the contractor (Sec. 13, P.D. 87); and
7. While title to the petroleum discovered may nominally be in the name of the government, the
contractor has almost unfettered control over its disposition and sale, and even the domestic
requirements of the country is relegated to a pro rata basis (Sec. 8).
In short, our version of the service contract is just a rehash of the old concession regime x x x. Some people
have pulled an old rabbit out of a magicians hat, and foisted it upon us as a new and different animal.
The service contract as we know it here is antithetical to the principle of sovereignty over our natural
resources restated in the same article of the [1973] Constitution containing the provision for service
contracts. If the service contractor happens to be a foreign corporation, the contract would also run
counter to the constitutional provision on nationalization or Filipinization, of the exploitation of our
natural resources.[245] [Emphasis supplied. Underscoring in the original.]
Professor Merlin M. Magallona, also a member of the working group, was harsher in his reproach of
the system:
x x x the nationalistic phraseology of the 1935 [Constitution] was retained by the [1973] Charter, but the
essence of nationalism was reduced to hollow rhetoric. The 1973 Charter still provided that the exploitation
or development of the countrys natural resources be limited to Filipino citizens or corporations owned or
controlled by them. However, the martial-law Constitution allowed them, once these resources are in their
name, to enter into service contracts with foreign investors for financial, technical, management, or other
forms of assistance. Since foreign investors have the capital resources, the actual exploitation and
development, as well as the effective disposition, of the countrys natural resources, would be under their
direction, and control, relegating the Filipino investors to the role of second-rate partners in joint ventures.
Through the instrumentality of the service contract, the 1973 Constitution had legitimized at the
highest level of state policy that which was prohibited under the 1973 Constitution, namely: the
exploitation of the countrys natural resources by foreign nationals. The drastic impact of [this]
constitutional change becomes more pronounced when it is considered that the active party to any
service contract may be a corporation wholly owned by foreign interests. In such a case, the
citizenship requirement is completely set aside, permitting foreign corporations to obtain actual
possession, control, and [enjoyment] of the countrys natural resources.[246] [Emphasis supplied.]
Accordingly, Professor Agabin recommends that:
Recognizing the service contract for what it is, we have to expunge it from the Constitution and
reaffirm ownership over our natural resources. That is the only way we can exercise effective control
over our natural resources.
This should not mean complete isolation of the countrys natural resources from foreign investment. Other
contract forms which are less derogatory to our sovereignty and control over natural resources like
technical assistance agreements, financial assistance [agreements], co-production agreements, joint
ventures, production-sharing could still be utilized and adopted without violating constitutional
provisions. In other words, we can adopt contract forms which recognize and assert our sovereignty
and ownership over natural resources, and where the foreign entity is just a pure contractor instead
of the beneficial owner of our economic resources.[247] [Emphasis supplied.]
Still another member of the working group, Professor Eduardo Labitag, proposed that:
2. Service contracts as practiced under the 1973 Constitution should be discouraged, instead the
government may be allowed, subject to authorization by special law passed by an extraordinary
majority to enter into either technical or financial assistance. This is justified by the fact that as
presently worded in the 1973 Constitution, a service contract gives full control over the contract area to the
service contractor, for him to work, manage and dispose of the proceeds or production. It was a subterfuge
to get around the nationality requirement of the constitution.[248] [Emphasis supplied.]
In the annotations on the proposed Article on National Economy and Patrimony, the U.P. Law draft
summarized the rationale therefor, thus:
5. The last paragraph is a modification of the service contract provision found in Section 9, Article XIV of the
1973 Constitution as amended. This 1973 provision shattered the framework of nationalism in our
fundamental law (see Magallona, Nationalism and its Subversion in the Constitution). Through the service
contract, the 1973 Constitution had legitimized that which was prohibited under the 1935 constitutionthe
exploitation of the countrys natural resources by foreign nationals. Through the service contract, acts
prohibited by the Anti-Dummy Law were recognized as legitimate arrangements. Service contracts lodge
exclusive management and control of the enterprise to the service contractor, not unlike the old
concession regime where the concessionaire had complete control over the countrys natural
resources, having been given exclusive and plenary rights to exploit a particular resource and, in
effect, having been assured of ownership of that resource at the point of extraction (see Agabin,
Service Contracts: Old Wine in New Bottles). Service contracts, hence, are antithetical to the principle of
sovereignty over our natural resources, as well as the constitutional provision on nationalization or
Filipinization of the exploitation of our natural resources.
Under the proposed provision, only technical assistance or financial assistance agreements may be
entered into, and only for large-scale activities. These are contract forms which recognize and assert
our sovereignty and ownership over natural resources since the foreign entity is just a pure
contractor and not a beneficial owner of our economic resources. The proposal recognizes the need
for capital and technology to develop our natural resources without sacrificing our sovereignty and
control over such resources by the safeguard of a special law which requires two-thirds vote of all
the members of the Legislature. This will ensure that such agreements will be debated upon exhaustively
and thoroughly in the National Assembly to avert prejudice to the nation.[249] [Emphasis supplied.]
The U.P. Law draft proponents viewed service contracts under the 1973 Constitution as grants of
beneficial ownership of the countrys natural resources to foreign owned corporations.While, in theory, the
State owns these natural resources and Filipino citizens, their beneficiaries service contracts actually vested
foreigners with the right to dispose, explore for, develop, exploit, and utilize the same. Foreigners, not
Filipinos, became the beneficiaries of Philippine natural resources. This arrangement is clearly incompatible
with the constitutional ideal of nationalization of natural resources, with the Regalian doctrine, and on a
broader perspective, with Philippine sovereignty.
The proponents nevertheless acknowledged the need for capital and technical know-how in the large-
scale exploitation, development and utilization of natural resources the second paragraph of the proposed
draft itself being an admission of such scarcity. Hence, they recommended a compromise to reconcile the
nationalistic provisions dating back to the 1935 Constitution, which reserved all natural resources exclusively
to Filipinos, and the more liberal 1973 Constitution, which allowed foreigners to participate in these
resources through service contracts. Such a compromise called for the adoption of a new system in the
exploration, development, and utilization of natural resources in the form of technical agreements or financial
agreements which, necessarily, are distinct concepts from service contracts.
The replacement of service contracts with agreements involving either technical or financial assistance,
as well as the deletion of the phrase management or other forms of assistance, assumes greater
significance when note is taken that the U.P. Law draft proposed other equally crucial changes that were
obviously heeded by the CONCOM. These include the abrogation of the concession system and the
adoption of new options for the State in the exploration, development, and utilization of natural
resources. The proponents deemed these changes to be more consistent with the States ownership of, and
its full control and supervision (a phrase also employed by the framers) over, such resources. The Project
explained:
3. In line with the State ownership of natural resources, the State should take a more active role in the
exploration, development, and utilization of natural resources, than the present practice of granting licenses,
concessions, or leases hence the provision that said activities shall be under the full control and supervision
of the State. There are three major schemes by which the State could undertake these activities: first,
directly by itself; second, by virtue of co-production, joint venture, production sharing agreements with
Filipino citizens or corporations or associations sixty per cent (60%) of the voting stock or controlling
interests of which are owned by such citizens; or third, with a foreign-owned corporation, in cases of large-
scale exploration, development, or utilization of natural resources through agreements involving either
technical or financial assistance only. x x x.
At present, under the licensing concession or lease schemes, the government benefits from such benefits
only through fees, charges, ad valorem taxes and income taxes of the exploiters of our natural
resources. Such benefits are very minimal compared with the enormous profits reaped by theses licensees,
grantees, concessionaires. Moreover, some of them disregard the conservation of natural resources and do
not protect the environment from degradation. The proposed role of the State will enable it to a greater share
in the profits it can also actively husband its natural resources and engage in developmental programs that
will be beneficial to them.
4. Aside from the three major schemes for the exploration, development, and utilization of our natural
resources, the State may, by law, allow Filipino citizens to explore, develop, utilize natural resources in
small-scale. This is in recognition of the plight of marginal fishermen, forest dwellers, gold panners, and
others similarly situated who exploit our natural resources for their daily sustenance and survival.[250]
Professor Agabin, in particular, after taking pains to illustrate the similarities between the two systems,
concluded that the service contract regime was but a rehash of the concession system. Old wine in new
bottles, as he put it. The rejection of the service contract regime, therefore, is in consonance with the
abolition of the concession system.
In light of the deliberations of the CONCOM, the text of the Constitution, and the adoption of other
proposed changes, there is no doubt that the framers considered and shared the intent of the U.P. Law
proponents in employing the phrase agreements . . . involving either technical or financial assistance.
While certain commissioners may have mentioned the term service contracts during the CONCOM
deliberations, they may not have been necessarily referring to the concept of service contracts under the
1973 Constitution. As noted earlier, service contracts is a term that assumes different meanings to different
people.[251] The commissioners may have been using the term loosely, and not in its technical and legal
sense, to refer, in general, to agreements concerning natural resources entered into by the Government with
foreign corporations. These loose statements do not necessarily translate to the adoption of the 1973
Constitution provision allowing service contracts.
It is true that, as shown in the earlier quoted portions of the proceedings in CONCOM, in response to
Sr. Tans question, Commissioner Villegas commented that, other than congressional notification, the only
difference between future and past service contracts is the requirement of a general law as there were no
laws previously authorizing the same.[252]However, such remark is far outweighed by his more categorical
statement in his exchange with Commissioner Quesada that the draft article does not permit foreign
investors to participate in the nations natural resources which was exactly what service contracts did except
to provide technical or financial assistance.[253]
In the case of the other commissioners, Commissioner Nolledo himself clarified in his work that the
present charter prohibits service contracts.[254] Commissioner Gascon was not totally averse to foreign
participation, but favored stricter restrictions in the form of majority congressional concurrence.[255] On the
other hand, Commissioners Garcia and Tadeo may have veered to the extreme side of the spectrum and
their objections may be interpreted as votes against any foreign participation in our natural resources
whatsoever.
WMCP cites Opinion No. 75, s. 1987,[256] and Opinion No. 175, s. 1990[257] of the Secretary of Justice,
expressing the view that a financial or technical assistance agreement is no different in concept from the
service contract allowed under the 1973 Constitution. This Court is not, however, bound by this
interpretation. When an administrative or executive agency renders an opinion or issues a statement of
policy, it merely interprets a pre-existing law; and the administrative interpretation of the law is at best
advisory, for it is the courts that finally determine what the law means. [258]
In any case, the constitutional provision allowing the President to enter into FTAAs with foreign-owned
corporations is an exception to the rule that participation in the nations natural resources is reserved
exclusively to Filipinos. Accordingly, such provision must be construed strictly against their enjoyment by
non-Filipinos. As Commissioner Villegas emphasized, the provision is very restrictive. [259] Commissioner
Nolledo also remarked that entering into service contracts is an exception to the rule on protection of natural
resources for the interest of the nation and, therefore, being an exception, it should be subject, whenever
possible, to stringent rules.[260] Indeed, exceptions should be strictly but reasonably construed; they extend
only so far as their language fairly warrants and all doubts should be resolved in favor of the general
provision rather than the exception.[261]
With the foregoing discussion in mind, this Court finds that R.A. No. 7942 is invalid insofar as said Act
authorizes service contracts. Although the statute employs the phrase financial and technical agreements in
accordance with the 1987 Constitution, it actually treats these agreements as service contracts that grant
beneficial ownership to foreign contractors contrary to the fundamental law.
Section 33, which is found under Chapter VI (Financial or Technical Assistance Agreement) of R.A. No.
7942 states:
SEC. 33. Eligibility.Any qualified person with technical and financial capability to undertake large-scale
exploration, development, and utilization of mineral resources in the Philippines may enter into a
financial or technical assistance agreement directly with the Government through the
Department. [Emphasis supplied.]
Exploration, as defined by R.A. No. 7942,
means the searching or prospecting for mineral resources by geological, geochemical or geophysical
surveys, remote sensing, test pitting, trending, drilling, shaft sinking, tunneling or any other means for the
purpose of determining the existence, extent, quantity and quality thereof and the feasibility of mining them
for profit.[262]
A legally organized foreign-owned corporation may be granted an exploration permit,[263] which vests it with
the right to conduct exploration for all minerals in specified areas, [264] i.e., to enter, occupy and explore the
same.[265] Eventually, the foreign-owned corporation, as such permittee, may apply for a financial and
technical assistance agreement.[266]
Development is
the work undertaken to explore and prepare an ore body or a mineral deposit for mining, including the
construction of necessary infrastructure and related facilities. [267]
Utilization means the extraction or disposition of minerals.[268] A stipulation that the proponent shall
dispose of the minerals and byproducts produced at the highest price and more advantageous terms and
conditions as provided for under the implementing rules and regulations is required to be incorporated in
every FTAA.[269]
A foreign-owned/-controlled corporation may likewise be granted a mineral processing
permit.[270] Mineral processing is the milling, beneficiation or upgrading of ores or minerals and rocks or by
similar means to convert the same into marketable products. [271]
An FTAA contractor makes a warranty that the mining operations shall be conducted in accordance
with the provisions of R.A. No. 7942 and its implementing rules [272] and for work programs and minimum
expenditures and commitments.[273] And it obliges itself to furnish the Government records of geologic,
accounting, and other relevant data for its mining operation. [274]
Mining operation, as the law defines it, means mining activities involving exploration, feasibility,
development, utilization, and processing.[275]
The underlying assumption in all these provisions is that the foreign contractor manages the mineral
resources, just like the foreign contractor in a service contract.
Furthermore, Chapter XII of the Act grants foreign contractors in FTAAs the same auxiliary mining
rights that it grants contractors in mineral agreements (MPSA, CA and JV). [276]Parenthetically, Sections 72 to
75 use the term contractor, without distinguishing between FTAA and mineral agreement contractors. And
so does holders of mining rights in Section 76. A foreign contractor may even convert its FTAA into a mineral
agreement if the economic viability of the contract area is found to be inadequate to justify large-scale
mining operations,[277]provided that it reduces its equity in the corporation, partnership, association or
cooperative to forty percent (40%).[278]
Finally, under the Act, an FTAA contractor warrants that it has or has access to all the
financing, managerial, and technical expertise. . . .[279] This suggests that an FTAA contractor is bound to
provide some management assistance a form of assistance that has been eliminated and, therefore,
proscribed by the present Charter.
By allowing foreign contractors to manage or operate all the aspects of the mining operation, the
above-cited provisions of R.A. No. 7942 have in effect conveyed beneficial ownership over the nations
mineral resources to these contractors, leaving the State with nothing but bare title thereto.
Moreover, the same provisions, whether by design or inadvertence, permit a circumvention of the
constitutionally ordained 60%-40% capitalization requirement for corporations or associations engaged in
the exploitation, development and utilization of Philippine natural resources.
In sum, the Court finds the following provisions of R.A. No. 7942 to be violative of Section 2, Article XII
of the Constitution:
(1) The proviso in Section 3 (aq), which defines qualified person, to wit:
Provided, That a legally organized foreign-owned corporation shall be deemed a qualified person for
purposes of granting an exploration permit, financial or technical assistance agreement or mineral
processing permit.
(2) Section 23,[280] which specifies the rights and obligations of an exploration permittee, insofar as said
section applies to a financial or technical assistance agreement,
(3) Section 33, which prescribes the eligibility of a contractor in a financial or technical assistance
agreement;
(4) Section 35,[281] which enumerates the terms and conditions for every financial or technical
assistance agreement;
(5) Section 39,[282] which allows the contractor in a financial and technical assistance agreement to
convert the same into a mineral production-sharing agreement;
(6) Section 56,[283] which authorizes the issuance of a mineral processing permit to a contractor in a
financial and technical assistance agreement;
The following provisions of the same Act are likewise void as they are dependent on the foregoing
provisions and cannot stand on their own:
(1) Section 3 (g),[284] which defines the term contractor, insofar as it applies to a financial or technical
assistance agreement.
Section 34,[285] which prescribes the maximum contract area in a financial or technical assistance
agreements;
Section 36,[286] which allows negotiations for financial or technical assistance agreements;
 Section 37,[287] which prescribes the procedure for filing and evaluation of financial or technical
assistance agreement proposals;
Section 38,[288] which limits the term of financial or technical assistance agreements;
Section 40,[289] which allows the assignment or transfer of financial or technical assistance agreements;
Section 41,[290] which allows the withdrawal of the contractor in an FTAA;
The second and third paragraphs of Section 81,[291] which provide for the Governments share in a
financial and technical assistance agreement; and
Section 90,[292] which provides for incentives to contractors in FTAAs insofar as it applies to said
contractors;
When the parts of the statute are so mutually dependent and connected as conditions, considerations,
inducements, or compensations for each other, as to warrant a belief that the legislature intended them as a
whole, and that if all could not be carried into effect, the legislature would not pass the residue
independently, then, if some parts are unconstitutional, all the provisions which are thus dependent,
conditional, or connected, must fall with them.[293]
There can be little doubt that the WMCP FTAA itself is a service contract.
Section 1.3 of the WMCP FTAA grants WMCP the exclusive right to explore, exploit, utilise[,] process
and dispose of all Minerals products and by-products thereof that may be produced from the Contract
Area.[294] The FTAA also imbues WMCP with the following rights:
(b) to extract and carry away any Mineral samples from the Contract area for the purpose of conducting tests
and studies in respect thereof;
(c) to determine the mining and treatment processes to be utilised during the Development/Operating Period
and the project facilities to be constructed during the Development and Construction Period;
(d) have the right of possession of the Contract Area, with full right of ingress and egress and the right to
occupy the same, subject to the provisions of Presidential Decree No. 512 (if applicable) and not be
prevented from entry into private ands by surface owners and/or occupants thereof when prospecting,
exploring and exploiting for minerals therein;
xxx
(f) to construct roadways, mining, drainage, power generation and transmission facilities and all other types
of works on the Contract Area;
(g) to erect, install or place any type of improvements, supplies, machinery and other equipment relating to
the Mining Operations and to use, sell or otherwise dispose of, modify, remove or diminish any and all parts
thereof;
(h) enjoy, subject to pertinent laws, rules and regulations and the rights of third Parties, easement rights and
the use of timber, sand, clay, stone, water and other natural resources in the Contract Area without cost for
the purposes of the Mining Operations;
xxx
(l) have the right to mortgage, charge or encumber all or part of its interest and obligations under this
Agreement, the plant, equipment and infrastructure and the Minerals produced from the Mining Operations;
x x x. [295]
All materials, equipment, plant and other installations erected or placed on the Contract Area remain
the property of WMCP, which has the right to deal with and remove such items within twelve months from
the termination of the FTAA.[296]
Pursuant to Section 1.2 of the FTAA, WMCP shall provide [all] financing, technology, management and
personnel necessary for the Mining Operations. The mining company binds itself to perform all Mining
Operations . . . providing all necessary services, technology and financing in connection therewith, [297] and to
furnish all materials, labour, equipment and other installations that may be required for carrying on all Mining
Operations.[298] WMCP may make expansions, improvements and replacements of the mining facilities and
may add such new facilities as it considers necessary for the mining operations. [299]
These contractual stipulations, taken together, grant WMCP beneficial ownership over natural
resources that properly belong to the State and are intended for the benefit of its citizens.These stipulations
are abhorrent to the 1987 Constitution. They are precisely the vices that the fundamental law seeks to avoid,
the evils that it aims to suppress. Consequently, the contract from which they spring must be struck down.
In arguing against the annulment of the FTAA, WMCP invokes the Agreement on the Promotion and
Protection of Investments between the Philippine and Australian Governments, which was signed in Manila
on January 25, 1995 and which entered into force on December 8, 1995.
x x x. Article 2 (1) of said treaty states that it applies to investments whenever made and thus the fact that
[WMCPs] FTAA was entered into prior to the entry into force of the treaty does not preclude the Philippine
Government from protecting [WMCPs] investment in [that] FTAA. Likewise, Article 3 (1) of the treaty
provides that Each Party shall encourage and promote investments in its area by investors of the
other Party and shall [admit] such investments in accordance with its Constitution, Laws,
regulations and investment policies and in Article 3 (2), it states that Each Party shall ensure that
investments are accorded fair and equitable treatment. The latter stipulation indicates that it was
intended to impose an obligation upon a Party to afford fair and equitable treatment to the investments of the
other Party and that a failure to provide such treatment by or under the laws of the Party may constitute a
breach of the treaty. Simply stated, the Philippines could not, under said treaty, rely upon the inadequacies
of its own laws to deprive an Australian investor (like [WMCP]) of fair and equitable treatment by invalidating
[WMCPs] FTAA without likewise nullifying the service contracts entered into before the enactment of RA
7942 such as those mentioned in PD 87 or EO 279.
This becomes more significant in the light of the fact that [WMCPs] FTAA was executed not by a mere
Filipino citizen, but by the Philippine Government itself, through its President no less, which, in entering into
said treaty is assumed to be aware of the existing Philippine laws on service contracts over the exploration,
development and utilization of natural resources. The execution of the FTAA by the Philippine Government
assures the Australian Government that the FTAA is in accordance with existing Philippine
laws.[300] [Emphasis and italics by private respondents.]
The invalidation of the subject FTAA, it is argued, would constitute a breach of said treaty which, in
turn, would amount to a violation of Section 3, Article II of the Constitution adopting the generally accepted
principles of international law as part of the law of the land. One of these generally accepted principles
is pacta sunt servanda, which requires the performance in good faith of treaty obligations.
Even assuming arguendo that WMCP is correct in its interpretation of the treaty and its assertion that
the Philippines could not . . . deprive an Australian investor (like [WMCP]) of fair and equitable treatment by
invalidating [WMCPs] FTAA without likewise nullifying the service contracts entered into before the
enactment of RA 7942 . . ., the annulment of the FTAA would not constitute a breach of the treaty
invoked. For this decision herein invalidating the subject FTAA forms part of the legal system of the
Philippines.[301] The equal protection clause[302]guarantees that such decision shall apply to all contracts
belonging to the same class, hence, upholding rather than violating, the fair and equitable treatment
stipulation in said treaty.
One other matter requires clarification. Petitioners contend that, consistent with the provisions of
Section 2, Article XII of the Constitution, the President may enter into agreements
involving either technical or financial assistance only. The agreement in question, however, is a
technical and financial assistance agreement.
Petitioners contention does not lie. To adhere to the literal language of the Constitution would lead to
absurd consequences.[303] As WMCP correctly put it:
x x x such a theory of petitioners would compel the government (through the President) to enter into contract
with two (2) foreign-owned corporations, one for financial assistance agreement and with the other, for
technical assistance over one and the same mining area or land; or to execute two (2) contracts with
only one foreign-owned corporation which has the capability to provide both financial and technical
assistance, one for financial assistance and another for technical assistance, over the same mining
area. Such an absurd result is definitely not sanctioned under the canons of constitutional
construction.[304] [Underscoring in the original.]
Surely, the framers of the 1987 Charter did not contemplate such an absurd result from their use of
either/or. A constitution is not to be interpreted as demanding the impossible or the impracticable; and
unreasonable or absurd consequences, if possible, should be avoided. [305] Courts are not to give words a
meaning that would lead to absurd or unreasonable consequences and a literal interpretation is to be
rejected if it would be unjust or lead to absurd results. [306] That is a strong argument against its
adoption.[307] Accordingly, petitioners interpretation must be rejected.
The foregoing discussion has rendered unnecessary the resolution of the other issues raised by the
petition.
WHEREFORE, the petition is GRANTED. The Court hereby declares unconstitutional and void:
(1) The following provisions of Republic Act No. 7942:
(a) The proviso in Section 3 (aq),
(b) Section 23,
(c) Section 33 to 41,
(d) Section 56,
(e) The second and third paragraphs of Section 81, and
(f) Section 90.
(2) All provisions of Department of Environment and Natural Resources Administrative Order 96-40, s.
1996 which are not in conformity with this Decision, and
(3) The Financial and Technical Assistance Agreement between the Government of the Republic of the
Philippines and WMC Philippines, Inc.
SO ORDERED.
LA BUGAL B’LAAN TRIBAL ASSOCIATION INC., et. al. v. V. O. RAMOS, Secretary Department of service contracts was precisely the evil the drafters of the 1987 Constitution sought to avoid.
Environment and Natural Resources; H. RAMOS, Director, Mines and Geosciences Bureau (MGB- The constitutional provision allowing the President to enter into FTAAs is an exception to the rule that
DENR); R. TORRES, Executive Secretary; and WMC (PHILIPPINES) INC. participation in the nation‘s natural resources is reserved exclusively to Filipinos. Accordingly, such provision
The constitutional provision allowing the President to enter into FTAA is a exception to the rule that must be construed strictly against their enjoyment by non-Filipinos. Therefore, RA 7942 is invalid insofar as
participation in the nation’s natural resources is reserved exclusively to Filipinos. Provision must be the said act authorizes service contracts. Although the statute employs the phrase ―financial and technical
construed strictly against their enjoyment by non-Filipinos. agreements in accordance with the 1987 Constitution, its pertinent provisions actually treat these
RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the effectivity of RA 7942, or on agreements as service contracts that grant beneficial ownership to foreign contractors contrary to the
March 30, 1995, the President signed a Financial and Technical Assistance Agreement (FTAA) with WMCP, fundamental law.
a corporation organized under Philippine laws, covering close to 100,000 hectares of land in South The underlying assumption in the provisions of the law is that the foreign contractor manages the mineral
Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. On August 15, 1995, the Environment resources just like the foreign contractor in a service contract. By allowing foreign contractors to manage or
Secretary Victor Ramos issued DENR Administrative Order 95-23, which was later repealed by DENR operate all the aspects of the mining operation, RA 7942 has, in effect, conveyed beneficial ownership over
Administrative Order 96-40, adopted on December 20, 1996. the nation‘s mineral resources to these contractors, leaving the State with nothing but bare title thereto.
Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the government and WMCP The same provisions, whether by design or inadvertence, permit a circumvention of the constitutionally
be declared unconstitutional on ground that they allow fully foreign owned corporations like WMCP to ordained 60-40% capitalizationrequirement for corporations or associations engaged in the exploitation,
exploit, explore and develop Philippine mineral resources in contravention of Article XII Section 2 development and utilization of Philippine natural resources.
paragraphs 2 and 4 of the Charter. When parts of a statute are so mutually dependent and connected as conditions, considerations,
In January 2001, WMC – a publicly listed Australian mining and exploration company – sold its whole stake inducements or compensations for each other as to warrant a belief that the legislature intended them as a
in WMCP to Sagittarius Mines, 60% of which is owned by Filipinos while 40% of which is owned by Indophil whole, then if some parts are unconstitutional, all provisions that are thus dependent, conditional or
Resources, an Australian company. DENR approved the transfer and registration of the FTAA in Sagittarius‘ connected, must fail with them.
name but Lepanto Consolidated assailed the same. The latter case is still pending before the Court of Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited only to merely
Appeals. technical or financial assistance to the State for large scale exploration, development and utilization of
EO 279, issued by former President Aquino on July 25, 1987, authorizes the DENR to accept, consider and minerals, petroleum and other mineral oils.
evaluate proposals from foreign owned corporations or foreign investors for contracts or agreements Second Issue: RP Government-WMCP FTAA is a Service Contract
involving wither technical or financial assistance for large scale exploration, development and utilization of The FTAA between he WMCP and the Philippine government is likewise unconstitutional since the
minerals which upon appropriate recommendation of the (DENR) Secretary, the President may execute with agreement itself is a service contract.
the foreign proponent. WMCP likewise contended that the annulment of the FTAA would violate a treaty Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive right to explore,
between the Philippines and Australia which provides for the protection of Australian investments. exploit, utilize and dispose of all minerals and by-products that may be produced from the contract area.
ISSUES: Section 1.2 of the same agreement provides that EMCP shall provide all financing, technology,
1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully foreign-owned corporations management, and personnel necessary for the Mining Operations.
to exploit the Philippine mineral resources. 2. Whether or not the FTAA between the government and WMCP These contractual stipulations and related provisions in the FTAA taken together, grant WMCP beneficial
is a ―service contract that permits fully foreign owned companies to exploit the Philippine mineral ownership over natural resources that properly belong to the State and are intended for the benefit of its
resources. citizens. These stipulations are abhorrent to the 1987 Constitution. They are precisely the vices that the
HELD: fundamental law seeks to avoid, the evils that it aims to suppress. Consequently, the contract from which
First Issue: RA 7942 is Unconstitutional they spring must be struck down.
RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully foreign owned
corporations to exploit the Philippine natural resources.
Article XII Section 2 of the 1987 Constitution retained the Regalian Doctrinewhich states that ―All lands of
the public domain, waters, minerals, coal, petroleum, and other minerals, coal, petroleum, and other mineral
oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural
resources are owned by the State. The same section also states that, ―the exploration and development
and utilization of natural resources shall be under the full control and supervision of the State.
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitution authorizing the State to
grant licenses, concessions, or leases for the exploration, exploitation, development, or utilization of natural
resources. By such omission, the utilization of inalienable lands of the public domain through license,
concession or lease is no longer allowed under the 1987 Constitution.
Under the concession system, the concessionaire makes a direct equity investment for the purpose of
exploiting a particular natural resource within a given area. The concession amounts to complete control by
the concessionaireover the country‘s natural resource, for it is given exclusive and plenary rights to exploit a
particular resource at the point of extraction.
The 1987 Constitution, moreover, has deleted the phrase ―management or other forms of assistance in the
1973 Charter. The present Constitution now allows only ―technical and financial assistance. The
management and the operation of the mining activities by foreign contractors, the primary feature of the
 [G. R. No. 107764. October 4, 2002]
EDNA COLLADO, BERNARDINA TAWAS, JORETO C. TORRES, JOSE AMO, SERGIO L.
MONTEALEGRE, VICENTE C. TORRES, JOSEPH L. NUEZ, GLORIA SERRANO, DANILO
FABREGAS, FERNANDO T. TORRES, LUZ G. TUBUNGBANUA, CARIDAD T. TUTANA, JOSE
C. TORRES, JR., IMELDA CAYLALUAD, ROSALIE TUTANA, NORMA ASTORIAS, MYRNA M.
LANCION, NORBERTO CAMILOTE, CECILIA MACARANAS, PEDRO BRIONES, REMEDIOS
BANTIGUE, DANTE L. MONTEALEGRE, AIDA T. GADON, ARMANDO T. TORRES and
FIDELITO ECO, petitioners, vs. COURT OF APPEALS and REPUBLIC OF THE PHILIPPINES,
thru the Director of Lands, respondents,
BOCKASANJO ISF AWARDEES ASSOCIATION, INC., LITA MENDOZA, MORADO PREFIDIGNO,
TERESITA CRUZ and CALOMA MOISES, respondents/intervernors.
DECISION
CARPIO, J.:
The Case
This Petition[1] seeks to set aside the Decision of the Court of Appeals, [2] dated June 22, 1992, in CA-
G.R. SP No. 25597, which declared null and void the Decision [3] dated January 30, 1991 of the Regional
Trial Court of Antipolo, Rizal, Branch 71, in LRC No. 269-A, LRC Rec. No. N-59179, confirming the imperfect
title of petitioners over a parcel of land.
The Facts
On April 25, 1985, petitioner Edna T. Collado filed with the land registration court an application for
registration of a parcel of land with an approximate area of 1,200,766 square meters or 120.0766 hectares
(Lot for brevity). The Lot is situated in Barangay San Isidro (formerly known as Boso-boso), Antipolo, Rizal,
and covered by Survey Plan Psu-162620. Attached to the application was the technical description of the Lot
as Lot Psu-162620 signed by Robert C. Pangyarihan, Officer-in-Charge of the Survey Division, Bureau of
Lands, which stated, [t]his survey is inside IN-12 Mariquina Watershed. On March 24, 1986, petitioner
Edna T. Collado filed an Amended Application to include additional co-applicants.[4] Subsequently, more
applicants joined (collectively referred to as petitioners for brevity).[5]
The Republic of the Philippines, through the Solicitor General, and the Municipality of Antipolo, through
its Municipal Attorney and the Provincial Fiscal of Rizal, filed oppositions to petitioners application. In due
course, the land registration court issued an order of general default against the whole world with the
exception of the oppositors.
Petitioners alleged that they have occupied the Lot since time immemorial. Their possession has been
open, public, notorious and in the concept of owners. The Lot was surveyed in the name of Sesinando
Leyva, one of their predecessors-in-interest, as early as March 22, 1902. Petitioners declared the Lot for
taxation purposes and paid all the corresponding real estate taxes. According to them, there are now twenty-
five co-owners in pro-indiviso shares of five hectares each. During the hearings, petitioners submitted
evidence to prove that there have been nine transfers of rights among them and their predecessors-in-
interest, as follows:
1. SESINANDO LEYVA was the earliest known predecessor-in-interest of the Applicants who
was in actual, open, notorious and continuous possession of the property in the concept of
owner. He had the property surveyed in his name on 22 March 1902 (Exhibit W and W-1
testimonies of J. Torres on 16 December 1987 and Mariano Leyva on 29 December 1987).
2. DIOSDADO LEYVA, is the son of Sesinando Leyva, who inherited the property. He had
the property resurveyed in his name on May 21-28, 1928 (Exhibit X and X-1; testimony of
Mariano Leyva, a son of Diosdado Leyva).
3. GREGORIO CAMANTIQUE bought the property from Diosdado Leyva before the Japanese
Occupation of the Philippines during World War II. He owned and possessed the
property until 1958. He declared the property for tax purposes, the latest of which
was under Tax Declaration No. 7182 issued on 3 February 1957 (Exhibit I and testimony of
Mariano Leyva, supra).
4. ANGELINA REYNOSO, bought the property from Gregorio Camantique by virtue of a Deed of
Sale on 3 February 1958 (Exhibit H). During the ownership of the property by Angelina
Reynoso, Mariano Leyva the grandson of Sesinando Leyva, the previous owner, attended to
the farm. (Testimony of Mariano Leyva, supra). Angelina Reynoso declared the property in
her name under Tax Declaration No. 7189 in 4 February 1958, under Tax Declaration No.
8775 on 3 August 1965, under Tax Declaration No. 16945 on 15 December 1975, and
under Tax Declaration No. 03-06145 on 25 June 1978.
5. MYRNA TORRES bought the property from Angelina Reynoso on 16 October 1982 through
a Deed of Sale (Exhibit G).
6. EDNA COLLADO bought the property from Myrna Torres in a Deed of Sale dated 28 April
1984 (Exhibit P-1 to P-3).
7. Additional owners BERNARDINA TAWAS, JORETO TORRES, JOSE AMO, VICENTE
TORRES and SERGIO MONTEALEGRE who bought portions of the property from Edna
Collado through a Deed of Sale on 6 November 1985 (Exhibit Q to Q-3).
8. And more additional Owners JOSEPH NUNEZ, DIOSDADO ARENOS, DANILO
FABREGAS, FERNANDO TORRES, LUZ TUBUNGBANUA, CARIDAD TUTANA, JOSE
TORRES JR., RODRIGO TUTANA, ROSALIE TUTANA, NORMA ASTORIAS, MYRNA
LANCION, CHONA MARCIANO, CECILIA MACARANAS, PEDRO BRIONES, REMEDIOS
BANTIQUE, DANTE MONTEALEGRE, ARMANDO TORRES, AIDA GADON and AMELIA M.
MALAPAD bought portions of the property in a Deed of Sale on 12 May 1986 (Exhibit S to
S-3).
9. Co-owners DIOSDADO ARENOS, RODRIGO TUTANA, CHONA MARCIANO and AMELIA
MALAPAD jointly sold their shares to new OWNERS GLORIA R. SERRANO, IMELDA
CAYLALUAD, NORBERTO CAMILOTE and FIDELITO ECO through a Deed of Sale dated
18 January 1987 (Exhibit T to T-9).[6]
During the hearing on January 9, 1991, only the assistant provincial prosecutor appeared without the
Solicitor General. For failure of the oppositors to present their evidence, the land registration court issued an
order considering the case submitted for decision based on the evidence of the petitioners. The court later
set aside the order and reset the hearing to January 14, 1991 for the presentation of the evidence of the
oppositors. On this date, counsel for oppositors failed to appear again despite due notice. Hence, the court
again issued an order submitting the case for decision based on the evidence of the petitioners.
The Trial Courts Ruling
After appraisal of the evidence submitted by petitioners, the land registration court held that petitioners
had adduced sufficient evidence to establish their registrable rights over the Lot.Accordingly, the court
rendered a decision confirming the imperfect title of petitioners. We quote the pertinent portions of the courts
decision, as follows:
From the evidence presented, the Court finds that from the testimony of the witnesses presented by the
Applicants, the property applied for is in actual, open, public and notorious possession by the applicants and
their predecessor-in-interest since time immemorial and said possession had been testified to by witnesses
Jimmy Torres, Mariano Leyva, Sergio Montealegre, Jose Amo and one Chona who were all cross-examined
by Counsel for Oppositor Republic of the Philippines.
Evidence was likewise presented that said property was declared for taxation purposes in the names of the
previous owners and the corresponding taxes were paid by the Applicants and the previous owners and said
property was planted to fruit bearing trees; portions to palay and portions used for grazing purposes.
To the mind of the Court, Applicants have presented sufficient evidence to establish registrable title over
said property applied for by them.
On the claim that the property applied for is within the Marikina Watershed, the Court can only add that all
Presidential Proclamations like the Proclamation setting aside the Marikina Watershed are subject to private
rights.
In the case of Municipality of Santiago vs. Court of Appeals, 120 SCRA 734, 1983 private rights is proof of
acquisition through (sic) among means of acquisition of public lands.
In the case of Director of Lands vs. Reyes, 68 SCRA 193-195, by private rights means that applicant should
show clear and convincing evidence that the property in question was acquired by applicants or their
ancestors either by composition title from the Spanish government or by Possessory Information title, or any
other means for the acquisition of public lands xxx (underscoring supplied).
The Court believes that from the evidence presented as above stated, Applicants have acquired private
rights to which the Presidential Proclamation setting aside the Marikina Watershed should be subject to such
private rights.
At any rate, the Court notes that evidence was presented by the applicants that as per Certification issued
by the Bureau of Forest Development dated March 18, 1980, the area applied for was verified to be within
the area excluded from the operation of the Marikina Watershed Lands Executive Order No. 33 dated July
26, 1904 per Proclamation No. 1283 promulgated on June 21, 1974 which established the Boso-boso Town
Site Reservation, amended by Proclamation No. 1637 dated April 18, 1977 known as the Lungsod Silangan
Townsite Reservation. (Exhibit K).[7]
In a motion dated April 5, 1991, received by the Solicitor General on April 6, 1991, petitioners alleged
that the decision dated January 30, 1991 confirming their title had become final after the Solicitor General
received a copy of the decision on February 18, 1991. Petitioners prayed that the land registration court
order the Land Registration Authority to issue the necessary decree in their favor over the Lot.
On April 11, 1991, the Solicitor General inquired from the Provincial Prosecutor of Rizal whether the
land registration court had already rendered a decision and if so, whether the Provincial Prosecutor would
recommend an appeal. However, the Provincial Prosecutor failed to answer the query.
According to the Solicitor General, he received on April 23, 1991 a copy of the land registration courts
decision dated January 30, 1991, and not on February 18, 1991 as alleged by petitioners in their motion.
In the meantime, on May 7, 1991, the land registration court issued an order directing the Land
Regulation Authority to issue the corresponding decree of registration in favor of the petitioners.
On August 6, 1991, the Solicitor General filed with the Court of Appeals a Petition for Annulment of
Judgment pursuant to Section 9(2) of BP Blg. 129 on the ground that there had been no clear showing that
the Lot had been previously classified as alienable and disposable making it subject to private appropriation.
On November 29, 1991, Bockasanjo ISF Awardees Association, Inc., an association of holders of
certificates of stewardship issued by the Department of Environment and Natural Resources (DENR for
brevity) under its Integrated Social Forestry Program (ISF for brevity), filed with the Court of Appeals a
Motion for Leave to Intervene and to Admit Petition-In-Intervention. They likewise opposed the registration
and asserted that the Lot, which is situated inside the Marikina Watershed Reservation, is inalienable. They
claimed that they are the actual occupants of the Lot pursuant to the certificates of stewardship issued by
the DENR under the ISF for tree planting purposes.
The Court of Appeals granted the motion to intervene verbally during the preliminary conference held
on April 6, 1992. During the preliminary conference, all the parties as represented by their respective
counsels agreed that the only issue for resolution was whether the Lot in question is part of the public
domain.[8]
The Court of Appeals Ruling
In a decision dated June 22, 1992, the Court of Appeals granted the petition and declared null and void
the decision dated January 30, 1991 of the land registration court. The Court of Appeals explained thus:
Under the Regalian Doctrine, which is enshrined in the 1935 (Art. XIII, Sec. 1), 1973 (Art. XIV, Sec. 8), and
1987 Constitution (Art. XII, Sec. 2), all lands of the public domain belong to the State. An applicant, like the
private respondents herein, for registration of a parcel of land bears the burden of overcoming the
presumption that the land sought to be registered forms part of the public domain (Director of Lands vs.
Aquino, 192 SCRA 296).
A positive Act of government is needed to declassify a public land and to convert it into alienable or
disposable land for agricultural or other purposes (Republic vs. Bacas, 176 SCRA 376).
In the case at bar, the private respondents failed to present any evidence whatsoever that the land applied
for as described in Psu-162620 has been segregated from the bulk of the public domain and declared by
competent authority to be alienable and disposable. Worse, the technical description of Psu-162620 signed
by Robert C. Pangyarihan, Officer-in-Charge, Survey Division, Bureau of Lands, which was attached to the
application of private respondents, categorically stated that "This survey is inside IN-12 Mariquina
Watershed."
That the land in question is within the Marikina Watershed Reservation is confirmed by the Administrator of
the National Land Titles and Deeds in a Report, dated March 2, 1988, submitted to the respondent Court in
LR Case No. 269-A. These documents readily and effectively negate the allegation in private respondent
Collados application that said parcel of land known as Psu-162620 is not covered by any form of title, nor
any public land application and are not within any government reservation (Par. 8, Application; Emphasis
supplied). The respondent court could not have missed the import of these vital documents which are
binding upon the courts inasmuch as it is the exclusive prerogative of the Executive Department to classify
public lands. They should have forewarned the respondent judge from assuming jurisdiction over the case.
x x x inasmuch as the said properties applied for by petitioners are part of the public domain, it is the
Director of Lands who has jurisdiction in the disposition of the same (subject to the approval of the Secretary
of Natural Resources and Environment), and not the courts. x x x Even assuming that petitioners did have
the said properties surveyed even before the same was declared to be part of the Busol Forest Reservation,
the fact remains that it was so converted into a forest reservation, thus it is with more reason that this action
must fail. Forest lands are inalienable and possession thereof, no matter how long, cannot convert the same
into private property. And courts are without jurisdiction to adjudicate lands within the forest zone. (Heirs of
Gumangan vs. Court of Appeals. 172 SCRA 563; Emphasissupplied).
Needless to say, a final judgment may be annulled on the ground of lack of jurisdiction, fraud or that it is
contrary to law (Panlilio vs. Garcia, 119 SCRA 387, 391) and a decision rendered without jurisdiction is a
total nullity and may be struck down at any time (Suarez vs. Court of Appeals, 186 SCRA 339).[9]
Hence, the instant petition.
The Issues
The issues raised by petitioners are restated as follows:
I
WHETHER THE COURT OF APPEALS ERRED OR GRAVELY ABUSED ITS DISCRETION IN
REVERSING THE DECISION OF THE TRIAL COURT GRANTING THE APPLICATION OF THE
PETITIONERS FOR CONFIRMATION OF TITLE;
II
WHETHER THE COURT OF APPEALS ERRED OR GRAVELY ABUSED ITS DISCRETION IN GIVING
DUE COURSE TO THE PETITION FOR ANNULMENT OF JUDGMENT FILED BY THE REPUBLIC LONG
AFTER THE DECISION OF THE TRIAL COURT HAD BECOME FINAL;
III
WHETHER THE COURT OF APPEALS ERRED OR GRAVELY ABUSED ITS DISCRETION IN GIVING
DUE COURSE TO THE INTERVENORS PETITION FOR INTERVENTION WHICH WAS FILED OUT OF
TIME OR LONG AFTER THE DECISION OF THE TRIAL COURT HAD BECOME FINAL.
The Courts Ruling
The petition is bereft of merit.
First Issue: whether petitioners have registrable title over the Lot.
There is no dispute that Executive Order No. 33 (EO 33 for brevity) dated July 26, 1904 [10] established
the Marikina Watershed Reservation (MWR for brevity) situated in the Municipality of Antipolo,
Rizal. Petitioners even concede that the Lot, described as Lot Psu-162620, is inside the technical, literal
description of the MWR. However, the main thrust of petitioners claim over the Lot is that all Presidential
proclamations like the proclamation setting aside the Marikina Watershed Reservation are subject to private
rights. They point out that EO 33 contains a saving clause that the reservations are subject to existing
private rights, if any there be. Petitioners contend that their claim of ownership goes all the way back to
1902, when their known predecessor-in-interest, Sesinando Leyva, laid claim and ownership over the Lot.
They claim that the presumption of law then prevailing under the Philippine Bill of 1902 and Public Land
Act No. 926 was that the land possessed and claimed by individuals as their own are agricultural lands and
therefore alienable and disposable. They conclude that private rights were vested on Sesinando Leyva
before the issuance of EO 33, thus excluding the Lot from the Marikina Watershed Reservation.
Petitioners arguments find no basis in law.
The Regalian Doctrine: An Overview
 Under the Regalian Doctrine, all lands not otherwise appearing to be clearly within private ownership
are presumed to belong to the State.[11] The Spaniards first introduced the doctrine to the Philippines through
the Laws of the Indies and the Royal Cedulas, specifically, Law 14, Title 12, Book 4 of the Novisima
Recopilacion de Leyes de las Indias[12] which laid the foundation that all lands that were not acquired from
the Government, either by purchase or by grant, belong to the public domain.[13] Upon the Spanish conquest
of the Philippines, ownership of all lands, territories and possessions in the Philippines passed to the
Spanish Crown.[14]
The Laws of the Indies were followed by the Ley Hipotecaria or the Mortgage Law of 1893. The
Spanish Mortgage Law provided for the systematic registration of titles and deeds as well as possessory
claims. The Royal Decree of 1894 or the Maura Law partly amended the Mortgage Law as well as the Law
of the Indies. The Maura Law was the last Spanish land law promulgated in the Philippines. It required the
adjustment or registration of all agricultural lands, otherwise the lands would revert to the state. [15]
Four years later, Spain ceded to the government of the United States all rights, interests and claims
over the national territory of the Philippine Islands through the Treaty of Paris of December 10, 1898. In
1903, the United States colonial government, through the Philippine Commission, passed Act No. 926, the
first Public Land Act, which was described as follows:
Act No. 926, the first Public Land Act, was passed in pursuance of the provisions of the Philippine Bill of
1902. The law governed the disposition of lands of the public domain. It prescribed rules and regulations for
the homesteading, selling and leasing of portions of the public domain of the Philippine Islands, and
prescribed the terms and conditions to enable persons to perfect their titles to public lands in the Islands. It
also provided for the issuance of patents to certain native settlers upon public lands, for the establishment of
town sites and sale of lots therein, for the completion of imperfect titles, and for the cancellation or
confirmation of Spanish concessions and grants in the Islands. In short, the Public Land Act operated on
the assumption that title to public lands in the Philippine Islands remained in the government; and
that the governments title to public land sprung from the Treaty of Paris and other subsequent
treaties between Spain and the United States. The term public land referred to all lands of the public
domain whose title still remained in the government and are thrown open to private appropriation and
settlement, and excluded the patrimonial property of the government and the friar lands.[16]
Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902 and Public Land Act No.
926, mere possession by private individuals of lands creates the legal presumption that the lands are
alienable and disposable.
Act 2874, the second Public Land Act, superseded Act No. 926 in 1919. After the passage of the 1935
Constitution, Commonwealth Act No. 141 (CA 141 for brevity) amended Act 2874 in 1936. CA 141, as
amended, remains to this day as the existing general law governing the classification and disposition of
lands of the public domain other than timber and mineral lands. [17]
In the meantime, in order to establish a system of registration by which recorded title becomes
absolute, indefeasible and imprescriptible, the legislature passed Act 496, otherwise known as the Land
Registration Act, which took effect on February 1, 1903. Act 496 placed all registered lands in the Philippines
under the Torrens system.[18] The Torrens system requires the government to issue a certificate of title
stating that the person named in the title is the owner of the property described therein, subject to liens and
encumbrances annotated on the title or reserved by law. The certificate of title is indefeasible and
imprescriptible and all claims to the parcel of land are quieted upon issuance of the certificate. [19] PD 1529,
known as the Property Registration Decree enacted on June 11, 1978,[20] amended and updated Act 496.
The 1935, 1973, 1987 Philippine Constitutions
The 1935, 1973 and 1987 Constitutions adopted the Regalian doctrine substituting, however, the state,
in lieu of the King, as the owner of all lands and waters of the public domain. [21]Justice Reynato S. Puno, in
his separate opinion in Cruz vs. Secretary of Environment and Natural Resources,[22] explained thus:
One of the fixed and dominating objectives of the 1935 Constitutional Convention was the nationalization
and conservation of the natural resources of the country. There was an overwhelming sentiment in the
Convention in favor of the principle of state ownership of natural resources and the adoption of the
Regalian doctrine. State ownership of natural resources was seen as a necessary starting point to secure
recognition of the states power to control their disposition, exploitation, development, or utilization. The
delegates to the Constitutional Convention very well knew that the concept of State ownership of land and
natural resources was introduced by the Spaniards, however, they were not certain whether it was continued
and applied by the Americans. To remove all doubts, the Convention approved the provision in the
Constitution affirming the Regalian doctrine.
Thus, Section 1, Article XIII[23] of the 1935 Constitution, on Conservation and Utilization of Natural
Resources barred the alienation of all natural resources except public agricultural lands, which were the only
natural resources the State could alienate. The 1973 Constitution reiterated the Regalian doctrine in Section
8, Article XIV[24] on the National Economy and the Patrimony of the Nation. The 1987 Constitution reaffirmed
the Regalian doctrine in Section 2 of Article XII[25] on National Economy and Patrimony.
Both the 1935 and 1973 Constitutions prohibited the alienation of all natural resources except
agricultural lands of the public domain. The 1987 Constitution readopted this policy.Indeed, all lands of the
public domain as well as all natural resources enumerated in the Philippine Constitution belong to the State.
Watershed Reservation is a Natural Resource
The term natural resource includes not only timber, gas, oil coal, minerals, lakes, and submerged
lands, but also, features which supply a human need and contribute to the health, welfare, and benefit of a
community, and are essential to the well-being thereof and proper enjoyment of property devoted to park
and recreational purposes.[26]
In Sta. Rosa Realty Development Corp. vs. Court of Appeals, et al.,[27] the Court had occasion to
discourse on watershed areas. The Court resolved the issue of whether the parcel of land which the
Department of Environment and Natural Resources had assessed to be a watershed area is exempt from
the coverage of RA No. 6657 or the Comprehensive Agrarian Reform Law (CARL for brevity). [28] The Court
defined watershed as an area drained by a river and its tributaries and enclosed by a boundary or divide
which separates it from adjacent watersheds. However, the Court also recognized that:
The definition does not exactly depict the complexities of a watershed. The most important product of a
watershed is water which is one of the most important human necessit(ies). The protection of watershed
ensures an adequate supply of water for future generations and the control of flashfloods that not only
damage property but also cause loss of lives. Protection of watersheds is an intergenerational responsibility
that needs to be answered now.
Article 67 of the Water Code of the Philippines (PD 1067) provides:
Art. 67. Any watershed or any area of land adjacent to any surface water or overlying any ground water may
be declared by the Department of Natural Resources as a protected area. Rules and Regulations may be
promulgated by such Department to prohibit or control such activities by the owners or occupants thereof
within the protected area which may damage or cause the deterioration of the surface water or ground water
or interfere with the investigation, use, control, protection, management or administration of such waters.
The Court in Sta. Rosa Realty also recognized the need to protect watershed areas and took note of
the report of the Ecosystems Research and Development Bureau (ERDB), a research arm of the DENR,
regarding the environmental assessment of the Casile and Kabanga-an river watersheds involved in that
case. That report concluded as follows:
The Casile barangay covered by CLOA in question is situated in the heartland of both
watersheds. Considering the barangays proximity to the Matangtubig waterworks, the activities of the
farmers which are in conflict with proper soil and water conservation practices jeopardize and endanger the
vital waterworks. Degradation of the land would have double edge detrimental effects. On the Casile side
this would mean direct siltation of the Mangumit river which drains to the water impounding reservoir
below. On the Kabanga-an side, this would mean destruction of forest covers which acts as recharged areas
of the Matangtubig springs. Considering that the people have little if no direct interest in the protection of the
Matangtubig structures they couldnt care less even if it would be destroyed.
The Casile and Kabanga-an watersheds can be considered a most vital life support system to thousands of
inhabitants directly and indirectly affected by it. From these watersheds come the natural God-given
precious resource water. x x x
Clearing and tilling of the lands are totally inconsistent with sound watershed management. More so, the
introduction of earth disturbing activities like road building and erection of permanent infrastructures.Unless
the pernicious agricultural activities of the Casile farmers are immediately stopped, it would not be long
before these watersheds would cease to be of value. The impact of watershed degradation threatens the
livelihood of thousands of people dependent upon it. Toward this, we hope that an acceptable
comprehensive watershed development policy and program be immediately formulated and implemented
before the irreversible damage finally happens.
The Court remanded the case to the Department of Agriculture and Adjudication Board or DARAB to re-
evaluate and determine the nature of the parcels of land involved in order to resolve the issue of its
coverage by the CARL.
Sta. Rosa Realty gives us a glimpse of the dangers posed by the misuse of natural resources such as
watershed reservations which are akin to forest zones. Population growth and industrialization have taken a
heavy toll on the environment. Environmental degradation from unchecked human activities could wreak
havoc on the lives of present and future generations.Hence, by constitutional fiat, natural resources remain
to this day inalienable properties of the State.
Viewed under this legal and factual backdrop, did petitioners acquire, as they vigorously argue, private
rights over the parcel of land prior to the issuance of EO 33 segregating the same as a watershed
reservation?
The answer is in the negative.
First. An applicant for confirmation of imperfect title bears the burden of proving that he meets the
requirements of Section 48 of CA 141, as amended. He must overcome the presumption that the land he is
applying for is part of the public domain and that he has an interest therein sufficient to warrant registration
in his name arising from an imperfect title. An imperfect title may have been derived from old Spanish grants
such as a titulo real or royal grant, a concession especial or special grant, a composicion con el estado or
adjustment title, or a titulo de compra or title through purchase.[29] Or, that he has had continuous, open and
notorious possession and occupation of agricultural lands of the public domain under a bona fide claim of
ownership for at least thirty years preceding the filing of his application as provided by Section 48 (b) CA
141.
Originally, Section 48(b) of CA 141 provided for possession and occupation of lands of the public
domain since July 26, 1894. This was superseded by RA 1942 which provided for a simple thirty-year
prescriptive period of occupation by an applicant for judicial confirmation of an imperfect title. The same,
however, has already been amended by Presidential Decree No. 1073, approved on January 25, 1977, the
law prevailing at the time petitioners application for registration was filed on April 25, 1985. [30] As amended,
Section 48 (b) now reads:
(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of agricultural lands of the public domain, under a bona
fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of the
application for confirmation of title, except when prevented by wars or force majeure. Those shall be
conclusively presumed to have performed all the conditions essential to a Government grant and shall be
entitled to a certificate of title under the provisions of this chapter.
Interpreting Section 48 (b) of CA 141, the Court stated that the Public Land Act requires that the
applicant must prove the following:
(a) that the land is alienable public land and (b) that his open, continuous, exclusive and notorious
possession and occupation of the same must either be since time immemorial or for the period prescribed in
the Public Land Act. When the conditions set by law are complied with, the possessor of the land, by
operation of law, acquires a right to a grant, a government grant, without the necessity of a certificate of title
being issued.[31]
Petitioners do not claim to have documentary title over the Lot. Their right to register the Lot is predicated
mainly upon continuous possession since 1902.
Clearly, petitioners were unable to acquire a valid and enforceable right or title because of the failure to
complete the required period of possession, whether under the original Section 48 (b) of CA 141 prior to the
issuance of EO 33, or under the amendment by RA 1942 and PD 1073.
There is no proof that prior to the issuance of EO 33 in 1904, petitioners had acquired ownership or
title to the Lot either by deed or by any other mode of acquisition from the State, as for instance by
acquisitive prescription. As of 1904, Sesinando Leyva had only been in possession for two years. Verily,
petitioners have not possessed the parcel of land in the manner and for the number of years required by law
for the confirmation of imperfect title.
Second, assuming that the Lot was alienable and disposable land prior to the issuance of EO 33 in
1904, EO 33 reserved the Lot as a watershed. Since then, the Lot became non-disposable and inalienable
public land. At the time petitioners filed their application on April 25, 1985, the Lot has been reserved as a
watershed under EO 33 for 81 years prior to the filing of petitioners application.
The period of occupancy after the issuance of EO 33 in 1904 could no longer be counted because as a
watershed reservation, the Lot was no longer susceptible of occupancy, disposition, conveyance or
alienation. Section 48 (b) of CA 141, as amended, applies exclusively to alienable and disposable public
agricultural land. Forest lands, including watershed reservations, are excluded. It is axiomatic that the
possession of forest lands or other inalienable public lands cannot ripen into private
ownership. In Municipality of Santiago, Isabela vs. Court of Appeals,[32] the Court declared that
inalienable public lands -
x x x cannot be acquired by acquisitive prescription. Prescription, both acquisitive and extinctive, does not
run against the State.
The possession of public land, however long the period may have extended, never confers title thereto upon
the possessor because the statute of limitations with regard to public land does not operate against the
State, unless the occupant can prove possession and occupation of the same under claim of ownership
for the required number of years to constitute a grant from the State.
Third, Gordula vs. Court of Appeals[33] is in point. In Gordula, petitioners did not contest the nature
of the land. They admitted that the land lies in the heart of the Caliraya-Lumot River Forest Reserve, which
Proclamation No. 573 classified as inalienable. The petitioners in Gordula contended, however, that
Proclamation No. 573 itself recognizes private rights of landowners prior to the reservation. They claim to
have established their private rights to the subject land. The Court ruled:
We do not agree. No public land can be acquired by private persons without any grant, express or implied
from the government; it is indispensable that there be a showing of a title from the state. The facts show that
petitioner Gordula did not acquire title to the subject land prior to its reservation under Proclamation No.
573. He filed his application for free patent only in January, 1973, more than three (3) years after the
issuance of Proclamation No. 573 in June, 1969. At that time, the land, as part of the Caliraya-Lumot River
Forest Reserve, was no longer open to private ownership as it has been classified as public forest reserve
for the public good.
Nonetheless, petitioners insist that the term, private rights, in Proclamation No. 573, should not be
interpreted as requiring a title. They opine that it suffices if the claimant had occupied and cultivated the
property for so many number of years, declared the land for taxation purposes, [paid] the corresponding real
estate taxes [which are] accepted by the government, and [his] occupancy and possession [is] continuous,
open and unmolested and recognized by the government. Prescinding from this premise, petitioners urge
that the 25-year possession by petitioner Gordula from 1944 to 1969, albeit five (5) years short of the 30-
year possession required under Commonwealth Act (C.A.) No. 141, as amended, is enough to vest upon
petitioner Gordula the private rights recognized and respected in Proclamation No. 573.
The case law does not support this submission. In Director of Lands vs. Reyes, we held that a settler
claiming the protection of private rights to exclude his land from a military or forest reservation must show x x
x by clear and convincing evidence that the property in question was acquired by [any] x x x means for the
acquisition of public lands.
In fine, one claiming private rights must prove that he has complied with C.A. No. 141, as amended,
otherwise known as the Public Land Act, which prescribes the substantive as well as the procedural
requirements for acquisition of public lands. This law requires at least thirty (30) years of open, continuous,
exclusive and notorious possession and possession of agricultural lands of the public domain, under a bona
fide claim of acquisition, immediately preceding the filing of the application for free patent. The rationale for
the 30-year period lies in the presumption that the land applied for pertains to the State, and that the
occupants and/or possessors claim an interest therein only by virtue of their imperfect title or continuous,
open and notorious possession.
 Next, petitioners argue that assuming no private rights had attached to the Lot prior to EO 33 in 1904,
the President of the Philippines had subsequently segregated the Lot from the public domain and made the
Lot alienable and disposable when he issued Proclamation No. 1283 on June 21, 1974. Petitioners contend
that Proclamation No. 1283 expressly excluded an area of 3,780 hectares from the MWR and made the area
part of the Boso-boso Townsite Reservation. Petitioners assert that Lot Psu-162620 is a small part of this
excluded town site area. Petitioners further contend that town sites are considered alienable and disposable
under CA 141.
Proclamation No. 1283 reads thus:
PROCLAMATION NO. 1283
EXCLUDING FROM THE OPERATION EXECUTIVE ORDER NO. 33, DATED JULY 26, 1904, AS
AMENDED BY EXECUTIVE ORDERS NOS. 14 AND 16, BOTH SERIES OF 1915, WHICH ESTABLISHED
THE WATERSHED RESERVATION SITUATED IN THE MUNICIPALITY OF ANTIPOLO, PROVINCE OF
RIZAL, ISLAND OF LUZON, A CERTAIN PORTION OF THE LAND EMBRACED THEREIN AND
RESERVING THE SAME, TOGETHER WITH THE ADJACENT PARCEL OF LAND OF THE PUBLIC
DOMAIN, FOR TOWNSITE PURPOSES UNDER THE PROVISIONS OF CHAPTER XI OF THE PUBLIC
LAND ACT.
Upon recommendation of the Secretary of Agriculture and Natural Resources and pursuant to the authority
vested in me by law, I, FERDINAND E. MARCOS, President of the Philippines, do hereby, exclude from the
operation of Executive Order No. 33 dated July 26, 1904, as amended by Executive Orders Nos. 14 and 16,
both series of 1915, which established the Watershed Reservation situated in the Municipality of Antipolo,
Province of Rizal, Island of Luzon, certain portions of land embraced therein and reserve the same, together
with the adjacent parcel of land of the public domain, for townsite purposes under the provisions of Chapter
XI of the Public Land Act, subject to private rights, if any there be, and to future subdivision survey in
accordance with the development plan to be prepared and approved by the Department of Local
Government and Community Development, which parcels are more particularly described as follows:
Lot A (Part of Watershed Reservation)
A parcel of land (Lot A of Proposed Poor Mans Baguio, being a portion of the Marikina Watershed, IN-2),
situated in the municipality of Antipolo, Province of Rizal, Island of Luzon, beginning at a point marked 1 on
sketch plan, being N-74-30 E, 8480.00 meters more or less, from BLLM 1, Antipolo, Rizal; thence N 33 28 W
1575.00 m. to point 2; thence N 40 26 W 1538.50 m. to point 3; thence N 30 50W 503.17 m. to point 4;
thence N 75 02 W 704.33 m. to point 5; thence N 14 18 W 1399.39 m. to point 6; thence N 43 25 W 477.04
m. to point 7; thence N 71 38 W 458.36 m. to point 8; thence N 31 05 W 1025.00 m. to point 9; thence Due
North 490.38 m. to point 10; thence Due North 1075.00 m. to point 11; thence Due East 1000.00 m. to point
12; thence Due East 1000.00 m. to point 13; thence Due East 1000.00 m. to point 14; thence Due East
1000.00 m. to point 15; thence Due East 1000.00 m. to point 16; thence Due East 1000.00 m. to point 17;
thence Due East 1075.00 m. to point 18; thence Due South 1000.00 m. to point 19; thence Due South
1000.00 m. to point 20; thence Due South 1000.00 m. to point 21; thence Due South 1000.00 m. to point 22;
thence Due South 1000.00 m. to point 23; thence Due South 1000.00 m. to point 24; thence Due South
1075.00 m. to point 25; thence Due West 1000.00 m. to point 26; thence Due West 1000.00 m. to point 27;
thence Due West 636.56 m. to point of beginning.Containing an area of three thousand seven hundred
eighty (3,780) Hectares, more or less.
Lot B (Alienable and Disposable Land)
A parcel of land (Lot B of Proposed Poor Mans Baguio, being a portion of alienable and disposable portion
of public domain) situated in the municipality of Antipolo, Province of Rizal, Island of Luzon.Beginning at a
point marked 1 on sketch plan being N 74 30 E., 8430.00 m., more or less, from BLLM 1. Antipolo, Rizal;
thence Due West 363.44 m. to point 2; thence Due West 1000.00 m. to point 3; thence Due West 100.00 m.
to point 4; thence Due West 1000.00 m. to point 5; thence Due West 1075.00 m. to point 6; thence Due
North 1000.00 m. to point 7; thence Due North 1000.00 m. to point 8; thence Due North 1000.00 m. to point
9; thence Due North 1000.00 m. to point 10; thence Due North 1000.00 m. to point 11; thence Due North
509.62 m. to point 12; thence S. 31 05 E 1025.00 m. to point 13; thence S 71 38 E 458.36 m. to point 14;
thence S 43 25 E 477.04 m. to point 15; thence S 14 18 E 1399.39 m. to point 16; thence S 75 02 E 704.33
m. to point 17; thence S. 30 50 E 503.17 m. to point 18; thence S 40 26 E 1538.50 m. to point 19; thence s
33 23 e 1575.00 m to point of beginning. Containing an area of one thousand two hundred twenty five
(1,225) Hectares, more or less.
Note: All data are approximate and subject to change based on future survey.
IN WITNESS WHEREOF, I Have hereunto set my hand and caused the seal of the Republic of the
Philippines to be affixed.
Done in the City of Manila, this 21st day of June, in the year of Our Lord, nineteen hundred and seventy-four.
(Sgd.) FERDINAND E. MARCOS
President
Republic of the Philippines
Proclamation No. 1283 has since been amended by Proclamation No. 1637 issued on April 18,
1977. Proclamation No. 1637 revised the area and location of the proposed townsite.According to then
DENR Secretary Victor O. Ramos, Proclamation No. 1637 excluded Lot A (of which the Lot claimed by
petitioners is part) for townsite purposes and reverted it to MWR coverage. [34] Proclamation No. 1637 reads:
PROCLAMATION NO. 1637
AMENDING PROCLAMATION NO. 1283, DATED JUNE 21, 1974, WHICH ESTABLISHED THE
TOWNSITE RESERVATION IN THE MUNICIPALITIES OF ANTIPOLO AND SAN MATEO, PROVINCE OF
RIZAL, ISLAND OF LUZON BY INCREASING THE AREA AND REVISING THE TECHNICAL
DESCRIPTION OF THE LAND EMBRACED THEREIN, AND REVOKING PROCLAMATION NO. 765
DATED OCTOBER 26, 1970 THAT RESERVED PORTIONS OF THE AREA AS RESETTLEMENT SITE.
Upon recommendation of the Secretary of Natural Resources and pursuant to the authority vested in me by
law, I, FERDINAND E. MARCOS, President of the Philippines, do hereby amend Proclamation No. 1283,
dated June 21, 1974 which established the townsite reservation in the municipalities of Antipolo and San
Mateo, Province of Rizal, Island of Luzon, by increasing the area and revising the technical descriptions of
the land embraced therein, subject to private rights, if any there be, which parcel of land is more particularly
described as follows:
(Proposed Lungsod Silangan Townsite)
A PARCEL OF LAND (Proposed Lungsod Silangan Townsite Reservation amending the area under SWO-
41762 establishing the Bagong Silangan Townsite Reservation) situated in the Municipalities of Antipolo,
San Mateo, and Montalban, Province of Rizal, Island of Luzon. Bounded on the E., along lines 1-2-3-4-5-6-
7-8-9-10-11-12-13-14-15-16-17-18-19-20-21-22-23 by the Marikina Watershed Reservation (IN-12); on the
S., along lines 23-24-25 by the portion of Antipolo; on the W., along lines 25-26-27-28-29-30 by the
Municipalities of Montalban, San Mateo; and on the N., along lines 30-31-32-33-34-35-36-37-38-39-40-41-
42-43-44 by the Angat Watershed Reservation. Beginning at a point marked 1 on the Topographic Maps
with the Scale of 1:50,000 which is the identical corner 38 IN-12, Marikina Watershed Reservation.
xxx xxx xxx
NOTE: All data are approximate and subject to change based on future survey.
Proclamation No. 765 dated October 26, 1970, which covered areas entirely within the herein Lungsod
Silangan Townsite, is hereby revoked accordingly.
IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the Republic of the
Philippines to be affixed.
Done in the City of Manila, this 18th day of April, in the year of Our Lord, nineteen hundred and seventy-
seven.
(Sgd.) FERDINAND E. MARCOS
President of the Philippines
A positive act (e.g., an official proclamation) of the Executive Department is needed to declassify land
which had been earlier classified as a watershed reservation and to convert it into alienable or disposable
land for agricultural or other purposes.[35] Unless and until the land classified as such is released in an official
proclamation so that it may form part of the disposable agricultural lands of the public domain, the rules on
confirmation of imperfect title do not apply.[36]
The principal document presented by petitioners to prove the private character of the Lot is the
Certification of the Bureau of Forest Development dated March 18, 1986 that the Lot is excluded from the
Marikina Watershed (Exh. R). The Certification reads:
 Republic of the Philippines
Ministry of Natural Resources
BUREAU OF FOREST DEVELOPMENT
REGION IV
EL AL Building
100 Quezon Avenue, Quezon City
MAR 18 1986
VERIFICATION ON THE STATUS OF LAND:
TO WHOM IT MAY CONCERN:
This is to certify that the tract of land situated in Barangay San Isidro, Antipolo, Rizal, containing an area of
1,269,766 square meters, as shown and described on the reverse side hereof, surveyed by Geodetic
Engineer Telesforo Cabading for Angelina C. Reynoso, is verified to be within the area excluded from the
operation of Marikina Watershed Reservation established under Executive Order No. 33 dated July 26, 1904
per Proclamation No. 1283, promulgated on June 21, 1974, which established the Boso-Boso Townsite
Reservation, amended by proclamation No. 1637 dated April 18, 1977 known as Lungsod Silangan Townsite
Reservation.
Subject area also falls within the bounds of Bagong Lipunan Site under P.D. 1396 dated June 2, 1978 under
the sole jurisdiction of the Ministry of Human Settlements, to the exclusion of any other government
agencies.
This verification is made upon the request of the Chief, Legal Staff, R-4 as contained in his internal
memorandum dated March 18, 1986.
Verified by:
(Sgd) ROMEO C. PASCUBILLO
Cartographer II
Checked by:
(Sgd) ARMENDO R. CRUZ
Supervising Cartographer
ATTESTED:
(Sgd) LUIS G. DACANAY
Chief, Forest Engineering &
Infrastructure Section
The above certification on which petitioners rely that a reclassification had occurred, and that the Lot is
covered by the reclassification, is contradicted by several documents submitted by the Solicitor General
before the land registration court.
The Solicitor General submitted to the land registration court a Report [37] dated March 2, 1988, signed
by Administrator Teodoro G. Bonifacio of the then National Land Titles and Deeds Registration
Administration, confirming that the Lot described in Psu-162620 forms part of the MWR. He thus
recommended the dismissal of the application for registration. The Report states:
COMES NOW the Administrator of the National Land Titles and Deeds Registration Commission and to this
Honorable Court respectfully reports that:
1. A parcel of land described in plan Psu-162620 situated in the Barrio of San Isidro, Municipality
of Antipolo, Province of Rizal, is applied for registration of title in the case at bar.
2. After plotting plan Psu-162620 in our Municipal Index Map it was found that a portion of the
SW, described as Lot 3 in plan Psu-173790 was previously the subject of registration in Land
Reg. Case No. N-9578, LRC Record No. N-55948 and was issued Decree No. N-191242 on
April 4, 1986 in the name of Apolonia Garcia, et al., pursuant to the Decision and Order for
Issuance of the Decree dated February 8, 1984 and March 6, 1984, respectively, and the
remaining portion of plan Psu-162620 is inside IN-12, Marikina Watershed. x x x
WHEREFORE, this matter is respectfully submitted to the Honorable Court for its
information and guidance with the recommendation that the application in the instant
proceedings be dismissed, after due hearing (Underlining supplied).
Likewise, in a letter[38] dated November 11, 1991, the Deputy Land Inspector, DENR, Region IV,
Community Environment and Natural Resources Office, Antipolo, Rizal, similarly confirmed that the Lot is
within the MWR. The letter states:
That the land sought to be registered is situated at San Isidro (Boso-boso), Antipolo, Rizal, with an area of
ONE HUNDRED TWENTY SIX POINT ZERO SEVEN SIXTY SIX (126.0766) hectares, more particularly
described in Psu-162620, which is within the Marikina Watershed Reservation under Executive Order No. 33
dated July 2, 1904 which established the Marikina Watershed Reservation (IN-12) x x x.
xxx
That the land sought to be registered is not a private property of the Registration Applicant but part of the
public domain, not subjected to disposition and is covered by Proclamation No. 585 for Integrated Social
Forestry Program hence, L.R.C. No. 269-A is recommended for rejection (Underlining supplied). Copy of the
letter is attached herewith as Annex 3 and made an integral part hereof.
Lastly, the Solicitor General pointed out that attached to petitioner Edna T. Collados [as original
applicant] application is the technical description [39] of the Lot signed by Robert C. Pangyarihan, Officer-in-
Charge of the Survey Division of the Bureau of Lands. This technical description categorically stated that the
Lot is inside IN-12 Mariquina Watershed.
The evidence of record thus appears unsatisfactory and insufficient to show clearly and positively that
the Lot had been officially released from the Marikina Watershed Reservation to form part of the alienable
and disposable lands of the public domain. We hold that once a parcel of land is included within a watershed
reservation duly established by Executive Proclamation, as in the instant case, a presumption arises that the
land continues to be part of such Reservation until clear and convincing evidence of subsequent
declassification is shown.
It is obvious, based on the facts on record that neither petitioners nor their predecessors-in-interest
have been in open, continuous, exclusive and notorious possession and occupation of the Lot for at least
thirty years immediately preceding the filing of the application for confirmation of title. Even if they submitted
sufficient proof that the Lot had been excluded from the MWR upon the issuance of Proclamation No. 1283
on June 21, 1974, petitioners possession as of the filing of their application on April 25, 1985 would have
been only eleven years counted from the issuance of the proclamation in 1974. The result will not change
even if we tack in the two years Sesinando Leyva allegedly possessed the Lot from 1902 until the issuance
of EO 33 in 1904. Petitioners case falters even more because of the issuance of Proclamation No. 1637 on
April 18, 1977. According to then DENR Secretary Victor Ramos, Proclamation No. 1637 reverted Lot A or
the townsite reservation, where petitioners' Lot is supposedly situated, back to the MWR.
Finally, it is of no moment if the areas of the MWR are now fairly populated and vibrant communities as
claimed by petitioners. The following ruling may be applied to this case by analogy:
A forested area classified as forest land of the public domain does not lose such classification simply
because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest land
may actually be covered with grass or planted to crops by kaingin cultivators or other farmers. Forest lands
do not have to be on mountains or in out of the way places. Swampy areas covered by mangrove trees, nipa
palms and other trees growing in brackish or sea water may also be classified as forest land. The
classification is descriptive of its legal nature or status and does not have to be descriptive of what the land
actually looks like. Unless and until the land classified as forest is released in an official proclamation to that
effect so that it may form part of the disposable agricultural lands of the public domain, the rules on
confirmation of imperfect title do not apply.[40]
Second Issue: Whether the petition for annulment of judgment
should have been given due course.
Petitioners fault the Court of Appeals for giving due course to the Republics petition for annulment of
judgment which was filed long after the decision of the land registration court had allegedly become final and
executory. The land registration court rendered its decision on January 30, 1991 and the Solicitor General
received a copy of the decision on April 23, 1991. [41]Petitioners point out that the Solicitor General filed with
the Court of Appeals the petition for annulment of judgment invoking Section 9(2) of BP Blg. 129 [42] only on
August 6, 1991, after the decision had supposedly become final and executory. Moreover, petitioners further
point out that the Solicitor General filed the petition for annulment after the land registration court issued its
order of May 6, 1991 directing the Land Registration Authority to issue the corresponding decree of
registration.
The Solicitor General sought the annulment of the decision on the ground that the land registration
court had no jurisdiction over the case, specifically, over the Lot which was not alienable and
disposable. The Solicitor General maintained that the decision was null and void.
Petitioners argue that the remedy of annulment of judgment is no longer available because it is barred
by the principle of res judicata. They insist that the land registration court had jurisdiction over the case
which involves private land. They also argue that the Republic is estopped from questioning the land
registration courts jurisdiction considering that the Republic participated in the proceedings before the court.
It is now established that the Lot, being a watershed reservation, is not alienable and disposable public
land. The evidence of the petitioners do not clearly and convincingly show that the Lot, described as Lot
Psu-162620, ceased to be a portion of the area classified as a watershed reservation of the public
domain. Any title to the Lot is void ab initio. In view of this, the alleged procedural infirmities attending the
filing of the petition for annulment of judgment are immaterial since the land registration court never acquired
jurisdiction over the Lot. All proceedings of the land registration court involving the Lot are therefore null and
void.
We apply our ruling in Martinez vs. Court of Appeals,[43] as follows:
The Land Registration Court has no jurisdiction over non-registrable properties, such as public navigable
rivers which are parts of the public domain, and cannot validly adjudge the registration of title in favor of
private applicant. Hence, the judgment of the Court of First Instance of Pampanga as regards the Lot No. 2
of certificate of Title No. 15856 in the name of petitioners may be attacked at any time, either directly or
collaterally, by the State which is not bound by any prescriptive period provided for by the Statute of
Limitations.
We also hold that environmental consequences in this case override concerns over technicalities and rules
of procedure.
In Republic vs. De los Angeles,[44] which involved the registration of public lands, specifically parts of
the sea, the Court rejected the principle of res judicata and estoppel to silence the Republics claim over
public lands. The Court said:
It should be noted further that the doctrine of estoppel or laches does not apply when the Government
sues as a sovereign or asserts governmental rights, nor does estoppel or laches validate an act that
contravenes law or public policy, and that res judicata is to be disregarded if its application would involve the
sacrifice of justice to technicality.
The Court further held that the right of reversion or reconveyance to the State of the public properties
registered and which are not capable of private appropriation or private acquisition does not prescribe.
Third issue: Whether the petition-in-intervention is proper.
The Bockasanjo ISF Awardees Association, Inc., an association of holders of certificates of
stewardship issued by the DENR under its Integrated Social Forestry Program, filed with the Court of
Appeals on November 29, 1991 a Motion for Leave to Intervene and to Admit Petition-In-Intervention.
According to intervenors, they are the actual occupants of the Lot which petitioners sought to
register. Aware that the parcels of land which their forefathers had occupied, developed and tilled belong to
the Government, they filed a petition with then President Corazon C. Aquino and then DENR Secretary
Fulgencio S. Factoran, to award the parcels of land to them.
Secretary Factoran directed the Director of Forest Management Bureau to take steps for the
segregation of the aforementioned area from the MWR for development under the DENRs ISF
Programs. Subsequently, then President Aquino issued Proclamation No. 585 dated June 5, 1990
excluding 1,430 hectares from the operation of EO 33 and placed the same under the DENRs Integrated
Social Forestry Program. Proclamation No. 585 reads:
PROCLAMATION NO. 585
AMENDING FURTHER EXECUTIVE ORDER NO. 33, DATED JULY 26, 1904 WHICH ESTABLISHED THE
MARIKINA WATERSHED RESERVATION (IN-12) AS AMENDED, BY EXCLUDING CERTAIN PORTIONS
OF LANDS EMBRACED THEREIN SITUATED AT SITIOS BOSOBOSO, KILINGAN, VETERANS,
BARANGAYS SAN JOSEPH AND PAENAAN, MUNICIPALITY OF ANTIPOLO, PROVINCE OF RIZAL,
ISLAND OF LUZON.
Upon recommendation of the Secretary of Environment and Natural Resources and pursuant to the authority
vested in me by law, I, CORAZON C. AQUINO, President of the Philippines, do hereby exclude from the
operation of Executive Order No. 33, which established the Marikina Watershed Reservation, certain parcel
of land of the public domain embraced therein situated in Sitios Bosoboso, Veterans, Kilingan and Barangay
San Joseph and Paenaan, Municipality of Antipolo, Province of Rizal and place the same under the
Integrated Social Forestry Program of the Department of Environment and Natural Resources in accordance
with existing laws, rules and regulations, which parcel of land is more particularly described as follows:
A PARCEL OF LAND, within the Marikina Watershed Reservation situated in the Municipality of Antipolo,
Province of Rizal, beginning at point 1 on plan, being identical to corner 1 of Marikina Watershed
Reservation; thence
xxx xxx xxx
Containing an area of One Thousand Four Hundred Thirty (1,430) Hectares.
All other lands covered and embraced under Executive Order No. 33 as amended, not otherwise affected by
this Proclamation, shall remain in force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the Republic of the
Philippines to be affixed.
Done in the City of Manila, this 5th day of June, in the year of Our Lord, nineteen hundred and ninety.
(Sgd.) CORAZON C. AQUINO
President of the Philippines
Pursuant to Proclamation No. 585, the chief of the ISF Unit, acting through the Regional Executive
Director of the DENR (Region IV), issued sometime between the years 1989 to 1991 certificates of
stewardship contracts to bona fide residents of the barangays mentioned in the proclamation as qualified
recipients of the ISF programs. Among those awarded were intervenors. The certificates of stewardship are
actually contracts of lease granted by the DENR to actual occupants of parcels of land under its ISF
programs for a period of twenty-five (25) years, renewable for another twenty-five (25) years.[45] The DENR
awarded contracts of stewardship to ISF participants in Barangay San Isidro (or Boso-boso) and the other
barangays based on the Inventory of Forest Occupants the DENR had conducted. [46]
According to intervenors, they learned only on July 31, 1991 about the pendency of LRC Case No.
269-A before the Regional Trial Court of Antipolo, Rizal. On August 8, 1991, they filed a Motion for Leave to
Intervene and to Admit Opposition in Intervention before the land registration court to assert their rights and
to protect their interests.
However, shortly after the filing of their opposition, intervenors learned that the land registration court
had already rendered a decision on January 30, 1991 confirming petitioners imperfect title. Intervenors
counsel received a copy of the decision on August 9, 1991.
On August 14, 1991, intervenors filed a motion to vacate judgment and for new trial before the land
registration court. According to intervenors, the land registration court could not act on its motions due to the
restraining order issued by the Court of Appeals on August 8, 1991, enjoining the land registration court from
executing its decision, as prayed for by the Solicitor General in its petition for annulment of judgment. The
intervenors were thus constrained to file a petition for intervention before the Court of Appeals which allowed
the same.
Rule 19 of the 1997 Rules of Civil Procedure[47] provides in pertinent parts:
Section 1. Who may intervene. A person who has a legal interest in the matter in litigation, or in the success
of either of the parties, or an interest against both, or is so situated as to be adversely affected by a
distribution or other disposition of property in the custody of the court, or an officer thereof may, with leave of
court, be allowed to intervene in the action. The Court shall consider whether or not the intervention will
unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the
inertvenors rights may be fully protected in a separate proceeding.
Sec. 2. Time to intervene. The motion to intervene may be filed at any time before rendition of judgment by
the trial court. A copy of the pleading-in-intervention shall be attached to the motion and served on the
original parties.
 As a rule, intervention is allowed before rendition of judgment by the trial court, as Section 2, Rule 19
expressly provides. However, the Court has recognized exceptions to this rule in the interest of substantial
justice. Mago vs. Court of Appeals[48] reiterated the ruling in Director of Lands vs. Court of Appeals,
where the Court allowed the motions for intervention even when the case had already reached this
Court. Thus, in Mago the Court held that:
It is quite clear and patent that the motions for intervention filed by the movants at this stage of the
proceedings where trial had already been concluded x x x and on appeal x x x the same affirmed by the
Court of Appeals and the instant petition for certiorari to review said judgment is already submitted for
decision by the Supreme Court, are obviously and, manifestly late, beyond the period prescribed under x x x
Section 2, Rule 12 of the rules of Court.
But Rule 12 of the Rules of Court, like all other Rules therein promulgated, is simply a rule of procedure, the
whole purpose and object of which is to make the powers of the Court fully and completely available for
justice. The purpose of procedure is not to thwart justice. Its proper aim is to facilitate the application of
justice to the rival claims of contending parties. It was created not to hinder and delay but to facilitate and
promote the administration of justice. It does not constitute the thing itself which courts are always striving to
secure to litigants. It is designed as the means best adopted to obtain that thing. In other words, it is a
means to an end.
To be sure, the Court of Appeals did not pass upon the actual status of intervenors in relation to the Lot
as this was not in issue. Neither was the validity of the certificates of stewardship contracts which
intervenors allegedly possessed inquired into considering this too was not in issue. In fact, intervenors did
not specifically seek any relief apart from a declaration that the Lot in question remains inalienable land of
the public domain. We cannot fault the Court of Appeals for allowing the intervention, if only to provide the
rival groups a peaceful venue for ventilating their sides. This case has already claimed at least five lives due
to the raging dispute between the rival camps of the petitioners on one side and those of the DENR
awardees on the other. It also spawned a number of criminal cases between the two rival groups including
malicious mischief, robbery and arson. A strict application of the rules would blur this bigger, far more
important picture.
WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated June 22, 1992
declaring null and void the Decision dated January 30, 1991 of Branch 71, Regional Trial Court of Antipolo,
Rizal, in LRC No. 269-A, LRC Rec. No. N-59179 is AFFIRMED.
SO ORDERED.
Collado, et al. v. CA, et al., G.R. No. 107764, Oct.4,2002

Facts: Edna T. Collado (Collado) filed with the land registration court an application for registration of a
parcel of land with an approximate area of 1,200,766 square meters or 120.0766 hectares. The Lot is
situated in Barangay San Isidro, Antipolo, Rizal. Attached to the applicationwas the technical description of
the Lotwhich stated that, "[tJhis survey is inside IN-12 Mariquina Watershed." Collado filed an Amended
Application to include additional co-applicants and subsequently, more applicants joined.
The Republic of the Philippines, through the Solicitor General, and the Municipality of Antipolo, through its
Municipal Attorney and the Provincial Fiscal of Rizal, filed oppositions to Collado, et al.'s application. In due
course, the land registration court issued an order of general default against the whole world with the
exception of the oppositors.
During the hearing, only the assistant provincial prosecutor appeared without the Solicitor General. For
failure of the oppositors to present their evidence, the land registration court issued an order considering the
case submitted for decision based on the evidence of the petitioners. The court set aside the order and reset
the hearing for the presentation of the evidence. Counsel for oppositors failed to appear again despite due
notice. Hence, the court issued an order submitting the case for decision based on the evidence of the
petitioners.
Second, assuming that the Lot was alienable and disposable land prior to the issuance of EO 33 in 1904,
EO 33 reserved the Lot as a watershed. Since then, the Lot became nondisposable and inalienable public
land. At the time Collado, et al. filed their application on April25,1985, the Lot has been reserved as a
watershed under EO 33 for 81 years prior to the filing of petitioners' application. The period of occupancy
after the issuance of EO 33 in 1904 could no longer be counted because as a watershed reservation, the Lot
was no longer susceptible of occupancy, disposition, conveyance or alienation. CA 141, applies exclusively
to alienable and disposable public agricultural land. Forestlands, including watershed reservations, are
excluded. It is axiomatic that the possession of forest lands or other inalienable public lands cannot ripen
into private ownership.
Third, Based on the facts on record that neither Collado, et al. nor their predecessors-ininterest have been in
open, continuous, exclusive and notorious possession and occupation of the Lot for at least thirty years
immediately preceding the filing of the application for confirmation of title.

Lower Court's Ruling: The RTC held that Collado, et al. had adduced sufficient evidence to establish their
registrable rights over the Lot. Accordingly, the RTC rendered a decision confirming the imperfect title of
Collado, et al.

Appellate Court's Ruling: The CA declared null and void the decision of the RTC.

Issues: Whether Collado, et al. have registrable title over the lot

The Supreme Court's decision: Collado, et al. did not acquire private rights over the parcel of land prior to
the issuance of EO 33 segregating the same as a watershed reservation.

First. An applicant for confirmation of imperfect title bears the burden of proving that he meets the
requirements of CA 141. He must overcome the presumption that the land he is applying for is part of the
public domain and that he has an interest therein sufficient to warrant registration in his name arising from
an imperfect title. An imperfect title may have been derived from old Spanish grants such as a titulo real or
royal grant, a concession especial or special gtant, a composition con el estado or adjustment title, or a titulo
de compra or title through purchase. Or, that he has had continuous, open and notorious possession and
occupation of agricultural lands of the public domain under a bona fide claim of ownership for at least thirty
years preceding the filing of his application as provided by CA 14r.

Clearly, Collado, et al. were unable to acquire a valid and enforceable right or title because of the failure to
complete the required period of possession, whether under CA 141 prior to the issuance of EO 33, or under
the amendment by RA 1942 and PD 1073. There is no proof that prior to the issuance of EO 33 in 1904,
Collado, et al. had acquired ownership or title to the MDG-F 1919: Enhancing Access to and Provision of
Water Seruices with the Active Participation of the Poor for the Compilation and Analysis of Jurisprudence
on Water Supply Case Digests with of Development lmplications Lot either by deed or by any other mode of
acquisition from the State, as for instance by acquisitive prescription. As of 1904, Sesinando Leyva had only
been in possession for two years. Verily, Collado, et al. have not possessed the parcel of land in the manner
and for the number of years required by law for the confirmation of imperfect title.
G.R. No. 167707
Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand beaches and warm
crystalline waters, is reputedly a premier Philippine tourist destination.The island is also home to 12,003
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT inhabitants[4] who live in the bone-shaped islands three barangays.[5]
AND NATURAL RESOURCES, THE
REGIONAL EXECUTIVE Present: On April 14, 1976, the Department of Environment and Natural Resources (DENR)
DIRECTOR, DENR-REGION VI, approved the National Reservation Survey of Boracay
REGIONAL TECHNICAL PUNO, C.J., Island,[6] which identified several lots as being occupied or claimed by named persons. [7]
DIRECTOR FOR LANDS, QUISUMBING,
LANDS MANAGEMENT BUREAU, YNARES-SANTIAGO, On November 10, 1978, then President Ferdinand Marcos issued Proclamation
REGION VI PROVINCIAL CARPIO, No. 1801[8] declaring Boracay Island, among other islands, caves and peninsulas in the Philippines,
ENVIRONMENT AND NATURAL AUSTRIA-MARTINEZ, as tourist zones and marine reserves under the administration of the Philippine Tourism Authority
RESOURCES OFFICER OF KALIBO, CORONA,* (PTA). President Marcos later approved the issuance of PTACircular 3-82[9] dated September 3, 1982, to
AKLAN, REGISTER OF DEEDS, CARPIO MORALES, implement Proclamation No. 1801.
DIRECTOR OF LAND AZCUNA,
REGISTRATION AUTHORITY, TINGA, Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an
DEPARTMENT OF TOURISM CHICO-NAZARIO, application for judicial confirmation of imperfect title or survey of land for titling purposes, respondents-
SECRETARY, DIRECTOR OF VELASCO, JR., claimants
PHILIPPINE TOURISM NACHURA,** Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a petition for declaratory
AUTHORITY, REYES, relief with the RTC in Kalibo, Aklan.
Petitioners, LEONARDO-DE CASTRO, and
BRION, JJ. In their petition, respondents-claimants alleged that Proclamation No. 1801 and PTA Circular No. 3-
- versus - 82 raised doubts on their right to secure titles over their occupied lands. They declared that they themselves,
or through their predecessors-in-interest, had been in open, continuous, exclusive, and notorious possession
and occupation in Boracay since June 12, 1945, or earlier since time immemorial. They declared their lands
MAYOR JOSE S. YAP, LIBERTAD for tax purposes and paid realty taxes on them. [10]
TALAPIAN, MILA Y. SUMNDAD, and
ANICETO YAP, in their behalf and Promulgated: Respondents-claimants posited that Proclamation No. 1801 and its implementing Circular did not
in behalf of all those similarly situated, place Boracay beyond the commerce of man. Since the Island was classified as a tourist zone, it was
Respondents. October 8, 2008 susceptible of private ownership. Under Section 48(b) of Commonwealth Act (CA) No. 141, otherwise known
as the Public Land Act, they had the right to have the lots registered in their names through judicial
x--------------------------------------------------x confirmation of imperfect titles.

DECISION
REYES, R.T., J.:
AT stake in these consolidated cases is the right of the present occupants of Boracay Island to
secure titles over their occupied lands.
There are two consolidated petitions. The first is G.R. No. 167707, a petition for review
on certiorari of the Decision[1] of the Court of Appeals (CA) affirming that[2] of the Regional Trial Court (RTC)
in Kalibo, Aklan, which granted the petition for declaratory relief filed by respondents-claimants Mayor Jose
Yap, et al. and ordered the survey of Boracay for titling purposes. The second is G.R. No. 173775, a petition
for prohibition, mandamus, and nullification of Proclamation No. 1064 [3] issued by President Gloria
Macapagal-Arroyo classifying Boracay into reserved forest and agricultural land.
The Republic, through the Office of the Solicitor General (OSG), opposed the petition for
declaratory relief. The OSG countered that Boracay Island was an unclassified land of the public domain. It
formed part of the mass of lands classified as public forest, which was not available for disposition pursuant
to Section 3(a) of Presidential Decree (PD) No. 705 or the Revised Forestry Code, [11] as amended.
The OSG maintained that respondents-claimants reliance on PD No. 1801 and PTA Circular No. 3-
82 was misplaced. Their right to judicial confirmation of title was governed by CA No. 141 and PD No.
705. Since Boracay Island had not been classified as alienable and disposable, whatever possession they
had cannot ripen into ownership.
During pre-trial, respondents-claimants and the OSG stipulated on the following facts: (1)
respondents-claimants were presently in possession of parcels of land in Boracay Island; (2) these parcels
of land were planted with coconut trees and other natural growing trees; (3) the coconut trees had heights of
more or less twenty (20) meters and were planted more or less fifty (50) years ago; and (4) respondents-
claimants declared the land they were occupying for tax purposes. [12]

The Antecedents The parties also agreed that the principal issue for resolution was purely legal: whether
Proclamation No. 1801 posed any legal hindrance or impediment to the titling of the lands in Boracay. They
G.R. No. 167707
decided to forego with the trial and to submit the case for resolution upon submission of their respective
memoranda.[13]
The RTC took judicial notice[14] that certain parcels of land in Boracay Island, more particularly Lots
1 and 30, Plan PSU-5344, were covered by Original Certificate of Title No. 19502 (RO 2222) in the name of
the Heirs of Ciriaco S. Tirol. These lots were involved in Civil Case Nos. 5222 and 5262 filed before
the RTC of Kalibo, Aklan.[15]The titles were issued on
August 7, 1933.[16]
RTC and CA Dispositions
On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, with
a fallo reading:
WHEREFORE, in view of the foregoing, the Court declares that Proclamation No.
1801 and PTA Circular No. 3-82 pose no legal obstacle to the petitioners and those
similarly situated to acquire title to their lands in Boracay, in accordance with the
applicable laws and in the manner prescribed therein; and to have their lands surveyed
and approved by respondent Regional Technical Director of Lands as the approved
survey does not in itself constitute a title to the land.
SO ORDERED.[17]
The RTC upheld respondents-claimants right to have their occupied lands titled in their name. It
ruled that neither Proclamation No. 1801 nor PTA Circular No. 3-82 mentioned that lands in Boracay were
inalienable or could not be the subject of disposition. [18] The Circular itself recognized private ownership of
lands.[19] The trial court cited Sections 87[20] and 53[21] of the Public Land Act as basis for acknowledging
private ownership of lands in Boracay and that only those forested areas in public lands were declared as
part of the forest reserve.[22]
The OSG moved for reconsideration but its motion was denied. [23] The Republic then appealed to
the CA.
On December 9, 2004, the appellate court affirmed in toto the RTC decision, disposing as follows:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered
by us DENYING the appeal filed in this case and AFFIRMING the decision of the lower
court.[24]
The CA held that respondents-claimants could not be prejudiced by a declaration that the lands
they occupied since time immemorial were part of a forest reserve.
Again, the OSG sought reconsideration but it was similarly denied. [25] Hence, the present petition
under Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo issued
Proclamation No. 1064[26] classifying Boracay Island into four hundred (400) hectares of reserved forest land
(protection purposes) and six hundred twenty-eight and 96/100 (628.96) hectares of agricultural land
(alienable and disposable). The Proclamation likewise provided for a fifteen-meter buffer zone on each side
of the centerline of roads and trails, reserved for right-of-way and which shall form part of the area reserved
for forest land protection purposes.
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay,[27] Wilfredo Gelito,[28] and other
landowners[29] in Boracay filed with this Court an original petition for prohibition, mandamus, and nullification
of Proclamation No. 1064.[30] They allege that the Proclamation infringed on their prior vested rights over
portions of Boracay. They have been in continued possession of their respective lots in Boracay since time
immemorial. They have also invested billions of pesos in developing their lands and building internationally
renowned first class resorts on their lots.[31]
Petitioners-claimants contended that there is no need for a proclamation reclassifying Boracay into
agricultural land. Being classified as neither mineral nor timber land, the island is deemed agricultural
pursuant to the Philippine Bill of 1902 and Act No. 926, known as the first Public Land Act.[32] Thus, their
possession in the concept of owner for the required period entitled them to judicial confirmation of imperfect
title.
Opposing the petition, the OSG argued that petitioners-claimants do not have a vested right over
their occupied portions in the island. Boracay is an unclassified public forest land pursuant to Section 3(a) of
PD No. 705. Being public forest, the claimed portions of the island are inalienable and cannot be the subject
of judicial confirmation of imperfect title. It is only the executive department, not the courts, which has
authority to reclassify lands of the public domain into alienable and disposable lands. There is a need for a
positive government act in order to release the lots for disposition.
On November 21, 2006, this Court ordered the consolidation of the two petitions as they principally
involve the same issues on the land classification of Boracay Island.[33]
Issues
G.R. No. 167707
The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular No. 3-82 pose
any legal obstacle for respondents, and all those similarly situated, to acquire title to their occupied lands
in Boracay Island.[34]
G.R. No. 173775
Petitioners-claimants hoist five (5) issues, namely:
I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT
OF OWNER OVER THEIR RESPECTIVE AREAS IN BORACAY, SINCE TIME
IMMEMORIAL OR AT THE LATEST SINCE 30 YRS. PRIOR TO THE FILING OF THE
PETITION FOR DECLARATORY RELIEF ON NOV. 19, 1997, WERE THE AREAS
OCCUPIED BY THEM PUBLIC AGRICULTURAL LANDS AS DEFINED
BY LAWS THEN ON JUDICIAL CONFIRMATION OF IMPERFECT TITLES OR PUBLIC
FOREST AS DEFINED BY SEC. 3a, PD 705?
II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE
OWNERSHIP OVER THEIR OCCUPIED PORTIONS OF BORACAY LAND, DESPITE
 THE FACT THAT THEY HAVE NOT APPLIED YET FOR JUDICIAL CONFIRMATION OF
IMPERFECT TITLE?
III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS
ALIENABLE AND DISPOSABLE UNDER SEC 6, CA 141 [AN] INDISPENSABLE PRE-
REQUISITE FOR PETITIONERS TO OBTAIN TITLE UNDER THE TORRENS SYSTEM?
IV.
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE
PRIOR VESTED RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR
LANDS IN BORACAY, PROTECTED BY THE DUE PROCESS CLAUSE OF THE
CONSTITUTION OR IS PROCLAMATION 1064 CONTRARY TO SEC. 8, CA 141,
OR SEC. 4(a) OF RA 6657.
V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE
SURVEY AND TO APPROVE THE SURVEY PLANS FOR PURPOSES OF THE
APPLICATION FOR TITLING OF THE LANDS OF PETITIONERS IN
BORACAY?[35] (Underscoring supplied)
In capsule, the main issue is whether private claimants (respondents-claimants in G.R. No. 167707
and petitioners-claimants in G.R. No. 173775) have a right to secure titles over their occupied portions in
Boracay. The twin petitions pertain to their right, if any, to judicial confirmation of imperfect title under CA No.
141, as amended. They do not involve their right to secure title under other pertinent laws.
Our Ruling
Regalian Doctrine and power of the executive
to reclassify lands of the public domain
Private claimants rely on three (3) laws and executive acts in their bid for judicial confirmation of
imperfect title, namely: (a) Philippine Bill of 1902 [36] in relation to Act No. 926, later amended and/or
superseded by Act No. 2874 and CA No. 141;[37] (b) Proclamation No. 1801[38] issued by then President
Marcos; and (c) Proclamation No. 1064[39] issued by President Gloria Macapagal-Arroyo. We shall proceed
to determine their rights to apply for judicial confirmation of imperfect title under these laws and executive
acts.
But first, a peek at the Regalian principle and the power of the executive to reclassify lands of the
public domain.
The 1935 Constitution classified lands of the public domain into agricultural, forest or
timber.[40] Meanwhile, the 1973 Constitution provided the following divisions: agricultural, industrial or
commercial, residential, resettlement, mineral, timber or forest and grazing lands, and such other classes as
may be provided by law,[41] giving the government great leeway for classification.[42] Then the 1987
Constitution reverted to the 1935 Constitution classification with one addition: national parks.[43] Of
these, onlyagricultural lands may be alienated.[44] Prior to Proclamation No. 1064 of May 22,
2006, Boracay Island had never been expressly and administratively classified under any of these grand
divisions. Boracay was an unclassified land of the public domain.
The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State
is the source of any asserted right to ownership of land and charged with the conservation of such
patrimony.[45] The doctrine has been consistently adopted under the 1935, 1973, and 1987 Constitutions. [46]
All lands not otherwise appearing to be clearly within private ownership are presumed to belong to
the State.[47] Thus, all lands that have not been acquired from the government, either by purchase or by
grant, belong to the State as part of the inalienable public domain. [48] Necessarily, it is up to the State to
determine if lands of the public domain will be disposed of for private ownership. The government, as the
agent of the state, is possessed of the plenary power as the persona in law to determine who shall be the
favored recipients of public lands, as well as under what terms they may be granted such privilege, not
excluding the placing of obstacles in the way of their exercise of what otherwise would be ordinary acts of
ownership.[49]
Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish conquest of
the Philippines, ownership of all lands, territories and possessions in the Philippines passed to the Spanish
Crown.[50] The Regalian doctrine was first introduced in the Philippines through the Laws of the Indies and
the Royal Cedulas, which laid the foundation that all lands that were not acquired from the Government,
either by purchase or by grant, belong to the public domain. [51]
The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of 1893. The
Spanish Mortgage Law provided for the systematic registration of titles and deeds as well as possessory
claims.[52]
The Royal Decree of 1894 or the Maura Law[53] partly amended the Spanish Mortgage Law and
the Laws of the Indies. It established possessory information as the method of legalizing possession of
vacant Crown land, under certain conditions which were set forth in said decree. [54] Under Section 393 of the
Maura Law, an informacion posesoria or possessory information title,[55] when duly inscribed in the Registry
of Property, is converted into a title of ownership only after the lapse of twenty (20) years of uninterrupted
possession which must be actual, public, and adverse, [56] from the date of its inscription.[57] However,
possessory information title had to be perfected one year after the promulgation of the Maura Law, or
until April 17, 1895. Otherwise, the lands would revert to the State.[58]
In sum, private ownership of land under the Spanish regime could only be founded on royal
concessions which took various forms, namely: (1) titulo real or royal grant; (2) concesion especial or special
grant; (3) composicion con el estado or adjustment title; (4) titulo de compra or title by purchase; and
(5) informacion posesoria or possessory information title.[59]
The first law governing the disposition of public lands in the Philippines under American rule was
embodied in the Philippine Bill of 1902.[60] By this law, lands of the public domain in the Philippine Islands
were classified into three (3) grand divisions, to wit: agricultural, mineral, and timber or forest lands.[61] The
act provided for, among others, the disposal of mineral lands by means of absolute grant (freehold system)
and by lease (leasehold system).[62] It also provided the definition by exclusion of agricultural public
lands.[63] Interpreting the meaning of agricultural lands under the Philippine Bill of 1902, the Court declared
in Mapa v. Insular Government:[64]
x x x In other words, that the phrase agricultural land as used in Act No. 926
means those public lands acquired from Spain which are not timber or mineral
lands. x x x[65](Emphasis Ours)
 On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise known as the Land
Registration Act. The act established a system of registration by which recorded title becomes absolute,
indefeasible, and imprescriptible. This is known as the Torrens system.[66]
Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926, which was the
first Public Land Act. The Act introduced the homestead system and made provisions for judicial and
administrative confirmation of imperfect titles and for the sale or lease of public lands. It permitted
corporations regardless of the nationality of persons owning the controlling stock to lease or purchase lands
of the public domain.[67] Under the Act, open, continuous, exclusive, and notorious possession and
occupation of agricultural lands for the next ten (10) years preceding July 26, 1904 was sufficient for judicial
confirmation of imperfect title.[68]
On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise known as the
second Public Land Act. This new, more comprehensive law limited the exploitation of agricultural lands to
Filipinos and Americans and citizens of other countries which gave Filipinos the same privileges. For judicial
confirmation of title, possession and occupation en concepto dueo since time immemorial, or since July 26,
1894, was required.[69]
After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on December 1,
1936. To this day, CA No. 141, as amended, remains as the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral lands, [70] and
privately owned lands which reverted to the State.[71]
Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of possession and
occupation of lands of the public domain since time immemorial or since July 26, 1894. However, this
provision was superseded by Republic Act (RA) No. 1942, [72] which provided for a simple thirty-year
prescriptive period for judicial confirmation of imperfect title. The provision was last amended by PD No.
1073,[73] which now provides for possession and occupation of the land applied for since June 12, 1945, or
earlier.[74]
The issuance of PD No. 892[75] on February 16, 1976 discontinued the use of Spanish titles as
evidence in land registration proceedings.[76] Under the decree, all holders of Spanish titles or grants should
apply for registration of their lands under Act No. 496 within six (6) months from the effectivity of the decree
on February 16, 1976. Thereafter, the recording of all unregistered lands[77] shall be governed by Section
194 of the Revised Administrative Code, as amended by Act No. 3344.
On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known as the Property
Registration Decree. It was enacted to codify the various laws relative to registration of property. [78] It
governs registration of lands under the Torrens system as well as unregistered lands, including chattel
mortgages.[79]
A positive act declaring land as alienable and disposable is required. In keeping with the
presumption of State ownership, the Court has time and again emphasized that there must be a positive
act of the government, such as an official proclamation,[80] declassifying inalienable public land into
disposable land for agricultural or other purposes.[81] In fact, Section 8 of CA No. 141 limits alienable or
disposable lands only to those lands which have been officially delimited and classified. [82]
The burden of proof in overcoming the presumption of State ownership of the lands of the public
domain is on the person applying for registration (or claiming ownership), who must prove that the land
subject of the application is alienable or disposable. [83] To overcome this presumption, incontrovertible
evidence must be established that the land subject of the application (or claim) is alienable or
disposable.[84] There must still be a positive act declaring land of the public domain as alienable and
disposable. To prove that the land subject of an application for registration is alienable, the applicant must
establish the existence of a positive act of the government such as a presidential proclamation or an
executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a
legislative act or a statute.[85] The applicant may also secure a certification from the government that the land
claimed to have been possessed for the required number of years is alienable and disposable. [86]
In the case at bar, no such proclamation, executive order, administrative action, report, statute, or
certification was presented to the Court. The records are bereft of evidence showing that, prior to 2006, the
portions of Boracay occupied by private claimants were subject of a government proclamation that the land
is alienable and disposable.Absent such well-nigh incontrovertible evidence, the Court cannot accept the
submission that lands occupied by private claimants were already open to disposition before 2006. Matters
of land classification or reclassification cannot be assumed. They call for proof.[87]
Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it,
agricultural lands. Private claimants posit that Boracay was already an agricultural land pursuant to the old
cases Ankron v. Government of the Philippine Islands (1919)[88] and De Aldecoa v. The Insular Government
(1909).[89] These cases were decided under the provisions of the Philippine Bill of 1902 and Act No.
926. There is a statement in these old cases that in the absence of evidence to the contrary, that in each
case the lands are agricultural lands until the contrary is shown. [90]
Private claimants reliance on Ankron and De Aldecoa is misplaced. These cases did not have the
effect of converting the whole of Boracay Island or portions of it into agricultural lands. It should be stressed
that the Philippine Bill of 1902 and Act No. 926 merely provided the manner through which land registration
courts would classify lands of the public domain. Whether the land would be classified as timber, mineral, or
agricultural depended on proof presented in each case.
Ankron and De Aldecoa were decided at a time when the President of the Philippines had no power
to classify lands of the public domain into mineral, timber, and agricultural. At that time, the courts were free
to make corresponding classifications in justiciable cases, or were vested with implicit power to do so,
depending upon the preponderance of the evidence. [91] This was the Courts ruling in Heirs of the Late
Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic,[92] in which it stated,
through Justice Adolfo Azcuna, viz.:
x x x Petitioners furthermore insist that a particular land need not be formally
released by an act of the Executive before it can be deemed open to private ownership,
citing the cases of Ramos v. Director of Lands and Ankron v. Government of the
Philippine Islands.
xxxx
Petitioners reliance upon Ramos v. Director of Lands and Ankron v.
Government is misplaced. These cases were decided under the Philippine Bill of 1902 and
the first Public Land Act No. 926 enacted by the Philippine Commission on October 7,
1926, under which there was no legal provision vesting in the Chief Executive or President
of the Philippines the power to classify lands of the public domain into mineral, timber and
agricultural so that the courts then were free to make corresponding classifications in
justiciable cases, or were vested with implicit power to do so, depending upon the
preponderance of the evidence.[93]
To aid the courts in resolving land registration cases under Act No. 926, it was then necessary to
devise a presumption on land classification. Thus evolved the dictum in Ankron that the courts have a right
to presume, in the absence of evidence to the contrary, that in each case the lands are agricultural lands
until the contrary is shown.[94]
But We cannot unduly expand the presumption in Ankron and De Aldecoa to an argument that all
lands of the public domain had been automatically reclassified as disposable and alienable agricultural
lands. By no stretch of imagination did the presumption convert all lands of the public domain into
agricultural lands.
If We accept the position of private claimants, the Philippine Bill of 1902 and Act No. 926 would
have automatically made all lands in the Philippines, except those already classified as timber or mineral
land, alienable and disposable lands. That would take these lands out of State ownership and worse, would
be utterly inconsistent with and totally repugnant to the long-entrenched Regalian doctrine.
The presumption in Ankron and De Aldecoa attaches only to land registration cases brought under
the provisions of Act No. 926, or more specifically those cases dealing with judicial and administrative
confirmation of imperfect titles. The presumption applies to an applicant for judicial or administrative
conformation of imperfect title under Act No. 926. It certainly cannot apply to landowners, such as private
claimants or their predecessors-in-interest, who failed to avail themselves of the benefits of Act No. 926. As
to them, their land remained unclassified and, by virtue of the Regalian doctrine, continued to be owned by
the State.
In any case, the assumption in Ankron and De Aldecoa was not absolute. Land classification was,
in the end, dependent on proof. If there was proof that the land was better suited for non-agricultural uses,
the courts could adjudge it as a mineral or timber land despite the presumption. In Ankron, this Court stated:
In the case of Jocson vs. Director of Forestry (supra), the Attorney-General
admitted in effect that whether the particular land in question belongs to one class or
another is a question of fact. The mere fact that a tract of land has trees upon it or has
mineral within it is not of itself sufficient to declare that one is forestry land and the other,
mineral land. There must be some proof of the extent and present or future value of the
forestry and of the minerals. While, as we have just said, many definitions have been
given for agriculture, forestry, and mineral lands, and that in each case it is a question of
fact, we think it is safe to say that in order to be forestry or mineral land the proof must
show that it is more valuable for the forestry or the mineral which it contains than it is for
agricultural purposes. (Sec. 7, Act No. 1148.) It is not sufficient to show that there exists
some trees upon the land or that it bears some mineral. Land may be classified as forestry
or mineral today, and, by reason of the exhaustion of the timber or mineral, be classified
as agricultural land tomorrow. And vice-versa, by reason of the rapid growth of timber or
the discovery of valuable minerals, lands classified as agricultural today may be differently
classified tomorrow. Each case must be decided upon the proof in that particular
case, having regard for its present or future value for one or the other purposes. We
believe, however, considering the fact that it is a matter of public knowledge that a majority
of the lands in the Philippine Islands are agricultural lands that the courts have a right to
presume, in the absence of evidence to the contrary, that in each case the lands are
agricultural lands until the contrary is shown. Whatever the land involved in a particular
land registration case is forestry or mineral land must, therefore, be a matter of
proof. Its superior value for one purpose or the other is a question of fact to be
settled by the proof in each particular case. The fact that the land is a manglar
[mangrove swamp] is not sufficient for the courts to decide whether it is agricultural,
forestry, or mineral land. It may perchance belong to one or the other of said classes of
land. The Government, in the first instance, under the provisions of Act No. 1148, may, by
reservation, decide for itself what portions of public land shall be considered forestry land,
unless private interests have intervened before such reservation is made. In the latter
case, whether the land is agricultural, forestry, or mineral, is a question of proof. Until
private interests have intervened, the Government, by virtue of the terms of said Act (No.
1148), may decide for itself what portions of the public domain shall be set aside and
reserved as forestry or mineral land. (Ramos vs. Director of Lands, 39 Phil. 175; Jocson
vs. Director of Forestry, supra)[95] (Emphasis ours)
Since 1919, courts were no longer free to determine the classification of lands from the facts of
each case, except those that have already became private lands. [96] Act No. 2874, promulgated in 1919 and
reproduced in Section 6 of CA No. 141, gave the Executive Department, through the President,
the exclusive prerogative to classify or reclassify public lands into alienable or disposable, mineral or
forest.96-a Since then, courts no longer had the authority, whether express or implied, to determine the
classification of lands of the public domain.[97]
Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in 1933, [98] did
not present a justiciable case for determination by the land registration court of the propertys land
classification. Simply put, there was no opportunity for the courts then to resolve if the land the Boracay
occupants are now claiming were agricultural lands. When Act No. 926 was supplanted by Act No. 2874 in
1919, without an application for judicial confirmation having been filed by private claimants or their
predecessors-in-interest, the courts were no longer authorized to determine the propertys land
classification. Hence, private claimants cannot bank on Act No. 926.
We note that the RTC decision[99] in G.R. No. 167707 mentioned Krivenko v. Register of Deeds of
[100]
Manila, which was decided in 1947 when CA No. 141, vesting the Executive with the sole power to
classify lands of the public domain was already in effect. Krivenko cited the old cases Mapa v. Insular
Government,[101] De Aldecoa v. The Insular Government,[102] and Ankron v. Government of the
Philippine Islands.[103]
Krivenko, however, is not controlling here because it involved a totally different issue. The pertinent
issue in Krivenko was whether residential lots were included in the general classification of agricultural
lands; and if so, whether an alien could acquire a residential lot. This Court ruled that as an alien, Krivenko
was prohibited by the 1935 Constitution[104] from acquiring agricultural land, which included residential
lots. Here, the issue is whether unclassified lands of the public domain are automatically deemed
agricultural.
Notably, the definition of agricultural public lands mentioned in Krivenko relied on the old cases
decided prior to the enactment of Act No. 2874, including Ankron and De Aldecoa.[105] As We have already
stated, those cases cannot apply here, since they were decided when the Executive did not have the
authority to classify lands as agricultural, timber, or mineral.
Private claimants continued possession under Act No. 926 does not create a presumption
that the land is alienable. Private claimants also contend that their continued possession of portions
of Boracay Island for the requisite period of ten (10) years under Act No. 926 [106] ipso facto converted the
island into private ownership. Hence, they may apply for a title in their name.
A similar argument was squarely rejected by the Court in Collado v. Court of
Appeals.[107] Collado, citing the separate opinion of now Chief Justice Reynato S. Puno in Cruz v. Secretary
of Environment and Natural Resources,107-a ruled:
 Act No. 926, the first Public Land Act, was passed in
pursuance of the provisions of the Philippine Bill of 1902. The law
governed the disposition of lands of the public domain. It prescribed
rules and regulations for the homesteading, selling and leasing of
portions of the public domain of the Philippine Islands, and prescribed
the terms and conditions to enable persons to perfect their titles to
public lands in the Islands. It also provided for the issuance of patents to
certain native settlers upon public lands, for the establishment of town
sites and sale of lots therein, for the completion of imperfect titles, and
for the cancellation or confirmation of Spanish concessions and grants
in the Islands. In short, the Public Land Act operated on the assumption
that title to public lands in the Philippine Islands remained in the
government; and that the governments title to public land sprung from
the Treaty of Paris and other subsequent treaties between Spain and
the United States. The term public land referred to all lands of the public
domain whose title still remained in the government and are thrown
open to private appropriation and settlement, and excluded the
patrimonial property of the government and the friar lands.
Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902
and Public Land Act No. 926, mere possession by private individuals of lands
creates the legal presumption that the lands are alienable and
disposable.[108] (Emphasis Ours)
Except for lands already covered by existing titles, Boracay was an unclassified land of the
public domain prior to Proclamation No. 1064. Such unclassified lands are considered public forest
under PD No. 705. The DENR[109] and the National Mapping and Resource Information Authority[110] certify
that Boracay Island is an unclassified land of the public domain.
PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain as
public forest. Section 3(a) of PD No. 705 defines a public forest as a mass of lands of the public domain
which has not been the subject of the present system of classification for the determination of which lands
are needed for forest purpose and which are not. Applying PD No. 705, all unclassified lands, including
those in Boracay Island, are ipso facto considered public forests. PD No. 705, however, respects titles
already existing prior to its effectivity.
The Court notes that the classification of Boracay as a forest land under PD No. 705 may seem to
be out of touch with the present realities in the island. Boracay, no doubt, has been partly stripped of its
forest cover to pave the way for commercial developments. As a premier tourist destination for local and
foreign tourists, Boracay appears more of a commercial island resort, rather than a forest land.
Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts on the
island;[111] that the island has already been stripped of its forest cover; or that the implementation of
Proclamation No. 1064 will destroy the islands tourism industry, do not negate its character as public forest.
Forests, in the context of both the Public Land Act and the Constitution[112] classifying lands of the
public domain into agricultural, forest or timber, mineral lands, and national parks, do not necessarily refer to
large tracts of wooded land or expanses covered by dense growths of trees and underbrushes. [113] The
discussion in Heirs of Amunategui v. Director of Forestry[114] is particularly instructive:
A forested area classified as forest land of the public domain does not lose such
classification simply because loggers or settlers may have stripped it of its forest
cover. Parcels of land classified as forest land may actually be covered with grass or
planted to crops by kaingin cultivators or other farmers. Forest lands do not have to be on
mountains or in out of the way places. Swampy areas covered by mangrove trees, nipa
palms, and other trees growing in brackish or sea water may also be classified as forest
land. The classification is descriptive of its legal nature or status and does not have
to be descriptive of what the land actually looks like. Unless and until the land
classified as forest is released in an official proclamation to that effect so that it may form
part of the disposable agricultural lands of the public domain, the rules on confirmation of
imperfect title do not apply.[115] (Emphasis supplied)
There is a big difference between forest as defined in a dictionary and forest or timber land as a
classification of lands of the public domain as appearing in our statutes. One is descriptive of what appears
on the land while the other is a legal status, a classification for legal purposes. [116] At any rate, the Court is
tasked to determine the legal status of Boracay Island, and not look into its physical layout. Hence, even if
its forest cover has been replaced by beach resorts, restaurants and other commercial establishments, it has
not been automatically converted from public forest to alienable agricultural land.
Private claimants cannot rely on Proclamation No. 1801 as basis for judicial confirmation of
imperfect title. The proclamation did not convert Boracay into an agricultural land. However, private
claimants argue that Proclamation No. 1801 issued by then President Marcos in 1978 entitles them to
judicial confirmation of imperfect title. The Proclamation classified Boracay, among other islands, as a tourist
zone. Private claimants assert that, as a tourist spot, the island is susceptible of private ownership.
Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay into an
agricultural land. There is nothing in the law or the Circular which made Boracay Island an agricultural
land. The reference in Circular No. 3-82 to private lands[117] and areas declared as alienable and
disposable[118] does not by itself classify the entire island as agricultural. Notably, Circular No. 3-82 makes
reference not only to private lands and areas but also to public forested lands. Rule VIII, Section 3 provides:
No trees in forested private lands may be cut without prior authority from
the PTA. All forested areas in public lands are declared forest reserves. (Emphasis
supplied)
Clearly, the reference in the Circular to both private and public lands merely recognizes that the
island can be classified by the Executive department pursuant to its powers under CA No. 141. In fact,
Section 5 of the Circular recognizes the then Bureau of Forest Developments authority to declare areas in
the island as alienable and disposable when it provides:
Subsistence farming, in areas declared as alienable and disposable by the
Bureau of Forest Development.
Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to
classify Boracay Island as alienable and disposable land. If President Marcos intended to classify the island
as alienable and disposable or forest, or both, he would have identified the specific limits of each, as
President Arroyo did in Proclamation No. 1064. This was not done in Proclamation No. 1801.
The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the declaration of
Boracay Island, together with other islands, caves and peninsulas in the Philippines, as a tourist zone and
marine reserve to be administered by the PTA to ensure the concentrated efforts of the public and private
sectors in the development of the areas tourism potential with due regard for ecological balance in the
marine environment. Simply put, the proclamation is aimed at administering the islands for tourism and
ecological purposes. It does not address the areas alienability.[119]
 More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixty-four (64) other
islands, coves, and peninsulas in the Philippines, such as Fortune and Verde Islands in Batangas, Port
Galera in Oriental Mindoro, Panglao and Balicasag Islands in Bohol, Coron Island, Puerto Princesa and
surrounding areas in Palawan, Camiguin Island in Cagayan de Oro, and Misamis Oriental, to name a few. If
the designation of Boracay Island as tourist zone makes it alienable and disposable by virtue of
Proclamation No. 1801, all the other areas mentioned would likewise be declared wide open for private
disposition. That could not have been, and is clearly beyond, the intent of the proclamation.
It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as alienable
and opened the same to private ownership. Sections 6 and 7 of CA No. 141[120] provide that it is only the
President, upon the recommendation of the proper department head, who has the authority to classify the
lands of the public domain into alienable or disposable, timber and mineral lands. [121]
In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised the
authority granted to her to classify lands of the public domain, presumably subject to existing vested
rights. Classification of public lands is the exclusive prerogative of the Executive Department, through the
Office of the President. Courts have no authority to do so.[122] Absent such classification, the land remains
unclassified until released and rendered open to disposition. [123]
Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land and 628.96
hectares of agricultural land. The Proclamation likewise provides for a 15-meter buffer zone on each side of
the center line of roads and trails, which are reserved for right of way and which shall form part of the area
reserved for forest land protection purposes.
Contrary to private claimants argument, there was nothing invalid or irregular, much less
unconstitutional, about the classification of Boracay Island made by the President through Proclamation No.
1064. It was within her authority to make such classification, subject to existing vested rights.
Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law. Private
claimants further assert that Proclamation No. 1064 violates the provision of the Comprehensive Agrarian
Reform Law (CARL) or RA No. 6657 barring conversion of public forests into agricultural lands. They claim
that since Boracay is a public forest under PD No. 705, President Arroyo can no longer convert it into an
agricultural land without running afoul of Section 4(a) of RA No. 6657, thus:
SEC. 4. Scope. The Comprehensive Agrarian Reform Law of 1988 shall cover,
regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229,
including other lands of the public domain suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive
Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or
suitable for agriculture. No reclassification of forest or mineral
lands to agricultural lands shall be undertaken after the approval of
this Act until Congress, taking into account ecological,
developmental and equity considerations, shall have determined
by law, the specific limits of the public domain.
That Boracay Island was classified as a public forest under PD No. 705 did not bar the Executive
from later converting it into agricultural land. Boracay Island still remained an unclassified land of the public
domain despite PD No. 705.
In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic,[124] the Court
stated that unclassified lands are public forests.
While it is true that the land classification map does not categorically state
that the islands are public forests, the fact that they were unclassified lands leads
to the same result.In the absence of the classification as mineral or timber land, the land
remains unclassified land until released and rendered open to disposition.[125] (Emphasis
supplied)
Moreover, the prohibition under the CARL applies only to a reclassification of land. If the land had
never been previously classified, as in the case of Boracay, there can be no prohibited reclassification under
the agrarian law. We agree with the opinion of the Department of Justice[126] on this point:
Indeed, the key word to the correct application of the prohibition in Section 4(a) is
the word reclassification. Where there has been no previous classification of public forest
[referring, we repeat, to the mass of the public domain which has not been the subject of
the present system of classification for purposes of determining which are needed for
forest purposes and which are not] into permanent forest or forest reserves or some other
forest uses under the Revised Forestry Code, there can be no reclassification of forest
lands to speak of within the meaning of Section 4(a).
Thus, obviously, the prohibition in Section 4(a) of the CARL against the
reclassification of forest lands to agricultural lands without a prior law delimiting the limits
of the public domain, does not, and cannot, apply to those lands of the public domain,
denominated as public forest under the Revised Forestry Code, which have not been
previously determined, or classified, as needed for forest purposes in accordance with the
provisions of the Revised Forestry Code.[127]
Private claimants are not entitled to apply for judicial confirmation of imperfect title under
CA No. 141. Neither do they have vested rights over the occupied lands under the said law. There are
two requisites for judicial confirmation of imperfect or incomplete title under CA No. 141, namely: (1) open,
continuous, exclusive, and notorious possession and occupation of the subject land by himself or through his
predecessors-in-interest under a bona fide claim of ownership since time immemorial or from June 12, 1945;
and (2) the classification of the land as alienable and disposable land of the public domain.[128]
As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did not convert
portions of Boracay Island into an agricultural land. The island remained an unclassified land of the public
domain and, applying the Regalian doctrine, is considered State property.
Private claimants bid for judicial confirmation of imperfect title, relying on the Philippine Bill of 1902,
Act No. 926, and Proclamation No. 1801, must fail because of the absence of the second element of
alienable and disposable land. Their entitlement to a government grant under our present Public Land Act
presupposes that the land possessed and applied for is already alienable and disposable. This is clear from
the wording of the law itself.[129] Where the land is not alienable and disposable, possession of the land, no
matter how long, cannot confer ownership or possessory rights. [130]
Neither may private claimants apply for judicial confirmation of imperfect title under Proclamation
No. 1064, with respect to those lands which were classified as agricultural lands. Private claimants failed to
prove the first element of open, continuous, exclusive, and notorious possession of their lands in Boracay
since June 12, 1945.

We cannot sustain the CA and RTC conclusion in the petition for declaratory relief that private
claimants complied with the requisite period of possession.
The tax declarations in the name of private claimants are insufficient to prove the first element of
possession. We note that the earliest of the tax declarations in the name of private claimants were issued in
1993. Being of recent dates, the tax declarations are not sufficient to convince this Court that the period of
possession and occupation commenced on June 12, 1945.
Private claimants insist that they have a vested right in Boracay, having been in possession of the
island for a long time. They have invested millions of pesos in developing the island into a tourist spot. They
say their continued possession and investments give them a vested right which cannot be unilaterally
rescinded by Proclamation No. 1064.
The continued possession and considerable investment of private claimants do not automatically
give them a vested right in Boracay. Nor do these give them a right to apply for a title to the land they are
presently occupying. This Court is constitutionally bound to decide cases based on the evidence presented
and the laws applicable. As the law and jurisprudence stand, private claimants are ineligible to apply for a
judicial confirmation of title over their occupied portions in Boracay even with their continued possession and
considerable investment in the island.
To be sure, forest lands are fundamental to our nations survival. Their promotion and protection are
not just fancy rhetoric for politicians and activists. These are needs that become more urgent as destruction
of our environment gets prevalent and difficult to control. As aptly observed by Justice Conrado Sanchez in
1968 in Director of Forestry v. Munoz:[134]
The view this Court takes of the cases at bar is but in adherence to public policy
that should be followed with respect to forest lands. Many have written much, and many
more have spoken, and quite often, about the pressing need for forest preservation,
conservation, protection, development and reforestation. Not without justification. For,
forests constitute a vital segment of any country's natural resources. It is of common
knowledge by now that absence of the necessary green cover on our lands produces a
number of adverse or ill effects of serious proportions. Without the trees, watersheds dry
up; rivers and lakes which they supply are emptied of their contents. The fish disappear.
Denuded areas become dust bowls. As waterfalls cease to function, so will hydroelectric
plants. With the rains, the fertile topsoil is washed away; geological erosion results. With
erosion come the dreaded floods that wreak havoc and destruction to property crops,
livestock, houses, and highways not to mention precious human lives. Indeed, the
foregoing observations should be written down in a lumbermans decalogue. [135]
WHEREFORE, judgment is rendered as follows:

One Last Note 1. The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals Decision
in CA-G.R. CV No. 71118 REVERSED AND SET ASIDE.
The Court is aware that millions of pesos have been invested for the development
of Boracay Island, making it a by-word in the local and international tourism industry. The Court also notes 2. The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit.
that for a number of years, thousands of people have called the island their home. While the Court
commiserates with private claimants plight, We are bound to apply the law strictly and judiciously. This is the SO ORDERED.
law and it should prevail. Ito ang batas at ito ang dapat umiral.

All is not lost, however, for private claimants. While they may not be eligible to apply for judicial
confirmation of imperfect title under Section 48(b) of CA No. 141, as amended, this does not denote their
automatic ouster from the residential, commercial, and other areas they possess now classified as
agricultural. Neither will this mean the loss of their substantial investments on their occupied alienable
lands. Lack of title does not necessarily mean lack of right to possess.

For one thing, those with lawful possession may claim good faith as builders of
improvements. They can take steps to preserve or protect their possession. For another, they may look into
other modes of applying for original registration of title, such as by homestead [131] or sales patent,[132] subject
to the conditions imposed by law.

More realistically, Congress may enact a law to entitle private claimants to acquire title to their
occupied lots or to exempt them from certain requirements under the present land laws. There is one such
bill[133] now pending in the House of Representatives. Whether that bill or a similar bill will become a law is
for Congress to decide.

In issuing Proclamation No. 1064, the government has taken the step necessary to open up the
island to private ownership. This gesture may not be sufficient to appease some sectors which view the
classification of the island partially into a forest reserve as absurd. That the island is no longer overrun by
trees, however, does not becloud the vision to protect its remaining forest cover and to strike a healthy
balance between progress and ecology. Ecological conservation is as important as economic progress.
Secretary of DENR vs Yap
Natural Resources and Environmental Laws: Regalian Doctrine
GR No. 167707; Oct 8, 2008
FACTS: This petition is for a review on certiorari of the decision of the Court of Appeals (CA) affirming that
of the Regional Trial Court (RTC) in Kalibo Aklan, which granted the petition for declaratory relief filed by
respondents-claimants Mayor Jose Yap et al, and ordered the survey of Boracay for titling purposes.
On Nov. 10, 1978, President Marcos issued Proclamation No. 1801 declaring Boracay Island as a tourist
zone and marine reserve. Claiming that Proc. No. 1801 precluded them from filing an application for a
judicial confirmation of imperfect title or survey of land for titling purposes, respondents-claimants filed a
petition for declaratory relief with the RTC in Kalibo, Aklan.
The Republic, through the Office of the Solicitor General (OSG) opposed the petition countering that
Boracay Island was an unclassified land of the public domain. It formed part of the mass of lands classified
as “public forest,” which was not available for disposition pursuant to section 3(a) of PD No. 705 or the
Revised Forestry Code.
ISSUE: Whether unclassified lands of the public domain are automatically deemed agricultural land,
therefore making these lands alienable.
HELD: No. To prove that the land subject of an application for registration is alienable, the applicant must
establish the existence of a positive act of the government such as a presidential proclamation or an
executive order, an administrative action, investigative reports of the Bureau of Lands investigators, and a
legislative act or statute.
A positive act declaring land as alienable and disposable is required. In keeping with the presumption of
state ownership, the Court has time and again emphasized that there must be a positive act of the
government, such as an official proclamation, declassifying inalienable public land into disposable land for
agricultural or other purposes.
The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State is the
source of any asserted right to ownership of land and charged with the conservation of such patrimony.

All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State.
Thus, all lands that have not been acquired from the government, either by purchase or by grant, belong to
the State as part of the inalienable public domain.
REPUBLIC OF THE PHILIPPINES, G.R. No. 159589 1. Certificate of Death proving the fact of death of Juan Fabio;[6]
Petitioner, 2. Special Power of Attorney showing that the heirs authorized Esteibar to file the application; [7]
Present: 3. Order dated 25 November 1994 of Sydicious F. Panoy, Regional Technical Director, Regional
- versus - Office No. IV-A, Department of Environment and Natural Resources (DENR), giving authority to
PUNO, C.J., Chairperson, survey the Lot, which survey was numbered SWO-042121-003369-D;[8]
HEIRS OF JUAN FABIO, CARPIO, 4. Surveyors Certificate and Transmittal of Survey Returns signed by Geodetic Engineer Susipatro
namely: DOMINGA C. FABIO, SOCORRO D. FABIO, CHICO-NAZARIO,* Mancha proving that the Lot was surveyed;[9]
LYDIA D. FABIO, ROLANDO D. FABIO, NORMA D. VELASCO, JR.,** and 5. Sepia copies of the survey plan establishing that the land area is more or less 109 hectares and
FABIO, NORMA L. FABIO, ANGELITA FABIO, LEONARDO-DE CASTRO, JJ. that the Lot was already surveyed and the boundaries determined; [10]
ROSALIE FABIO, DANILO 6. Letter of Authority dated 30 June 1997 authorizing Engineer Roberto C. Pangyarihan
FABIO, RENATO FABIO, (Pangyarihan) to represent the Land Management Sector, DENR-Region IV, and to testify on plan
LEVITA FABIO, IRENE FABIO, TERESITA MOLERA, SWO-042121-003369-D covering the Lot;[11]
ROSEMARIE C. PAKAY, 7. Technical Description signed by Pangyarihan proving the boundaries of the Lot as surveyed;[12]
LIGAYA C. MASANGKAY, ALFREDO F. CASTILLO, 8. Letter dated 22 April 1991 of Arnaldo Conlu (Conlu), Land Management Inspector, DENR-Region
MELINDA F. CASTILLO, MERCEDITA F. CASTILLO, IV establishing that the Lot is alienable and disposable;[13]
ESTELA DE JESUS AQUINO, FELECITO FABIO, 9. First Indorsement dated 22 April 1991 of Rufo F. Lorenzo, Community Environment and Natural
and ALEXANDER FABIO, represented herein by Resources Officer, forwarding to the Regional Technical Director, Land Management Division,
ANGELITA F. ESTEIBAR as their Attorney-in-Fact, through the Chief, Surveys Division, DENR-Region IV the investigation report of Land Management
Respondents. Inspector, Conlu;[14]
10. Certifications dated 4 July 1995 and 23 November 1995 of Conrado C. Lindo,
Municipal Mayor, and Flordeliza C. Soberano, Municipal Assessor of Ternate, Cavite, respectively,
establishing that Juan Fabio was the declared owner of the Lot under Tax Declaration No. 1385
Promulgated: having an area of 200 hectares and situated in Calumpang and Caybangat, Zapang, Ternate,
Cavite;[15]
December 23, 2008 11. Tax Declarations corresponding to different years showing that the Lot has been
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x declared under the name of Juan Fabio for tax purposes: Tax Declaration No. 428 for the year
1947, Tax Declaration No. 302 for the year 1961; Tax Declaration No. 227 for the year 1969, Tax
D E C I S I O N Declaration No. 210 for the year 1974, Tax Declaration No. 173 for the year 1980, Tax Declaration
No. 1543 for the year 1985, and Tax Declaration No. 1385 for the year 1994;[16] and
CARPIO, J.: 12. Certifications of the Assistant Municipal Treasurer of Ternate, Cavite stating that the real estate
taxes for the years 1994 to 1997 were paid.[17]
The Case
After the presentation of exhibits establishing the jurisdictional facts, the trial prosecutor assigned to the case
Before the Court is a petition for review on certiorari [1] assailing the Decision[2] dated 29 August 2003 of the interposed no objection. Thus, the trial court ordered a general default against the public except the
Court of Appeals in CA-G.R. CV No. 66522, which affirmed the judgment of the Regional Trial Court of government.
Naic, Cavite, Branch 15, in LRC Case No. NC-96-782 granting respondents application for registration of
title to Lot No. 233 (Lot), Cad-617-D, Ternate Cadastre. On 1 July 1997, respondents presented their evidence consisting of documentary exhibits and the
The Facts testimonies of witnesses Esteibar, Pangyarihan, Dominga Fabio Lozano, Mariano Huerto, and Raymundo
On 21 November 1996, respondents, who are the heirs of Juan Fabio, represented by Angelita F. Esteibar Pakay.
(Esteibar) as their Attorney-in-Fact, filed with the Regional Trial Court of Naic, Cavite, Branch 15, an Esteibar, the duly appointed representative of the heirs of Juan Fabio, testified that her grandfather, Juan,
application for registration of title[3] to the Lot with an approximate area of 1,096,866 square meters or 109.6 died in 1959 when she was only 13 years old. She attested that she was born on the Lot and knows that her
hectares. The Lot is situated in Barangay Sapang, Ternate, Cavite. The respondents sought the registration grandfather owned, possessed and occupied the Lot until his death. Esteibar claimed that they and their
of title under the provisions of Act No. 496 or the Land Registration Act, as amended by Presidential Decree predecessors-in-interest have possessed and occupied the Lot openly, publicly, continuously, peacefully,
No. 1529 (PD 1529).[4] without interruption in the concept of an owner and adverse to the public since time immemorial up to the
present or for more than 100 years. They had paid real estate taxes; planted trees, vegetables, rice, and
In the application, respondents alleged that they are the owners of the Lot, including all the improvements, banana plants; and raised animals on the Lot. Further, she stated that the Lot is neither mortgaged nor
having acquired the same through a bona fide claim of ownership.They declared that they and their encumbered and that no other person other than her and her co-heirs are in possession of the Lot.
predecessors-in-interest were in open, continuous, exclusive and notorious possession of the Lot in the
concept of an owner for more than 100 years.[5] The next witness, Pangyarihan of the Land Management Sector, DENR-Region IV, testified that he had
been connected with DENR-Region IV since 1956. He was formerly the Chief of the Survey Division of
Together with the application for registration, respondents submitted the following documents: DENR-Region IV from 1991 until his designation as Special Assistant to the Regional Director in
1995. Pangyarihan affirmed that the Lot is 1,096,866 square meters or 109.6 hectares and that he
recommended the approval of the survey plan, SWO-042121-003369-D, which includes the Lot, on the basis
of submission of certain requirements like tax declarations, report of investigation by the land investigator
and survey returns prepared by the geodetic engineer. He verified that the survey plan and the technical
descriptions matched with each other and stated that there is no overlap or encroachment on other
surrounding claims on adjacent or adjoining lots. Further, he confirmed that there is a notation at the left
hand footnote of the approved survey plan which reads this survey falls within the Calumpang Point
Naval Reservation and disposition hereof shall be subject to the final delimitation thereof as per
Proc. No. 1582-A dated September 6, 1976.
Dominga Fabio Lozano, the only living and youngest child of Juan Fabio and who was then 63 years of age,
testified that she was born in 1934 in Calumpang, Ternate, Cavite.She alleged that she was born and has
lived on the Lot, owned by her father Juan Fabio, who in turn inherited the land from his father Ignacio
Fabio. She narrated that her father was born in 1887 and died in 1959 at the age of 72 as evidenced by his
death certificate. She stated further that no one has ever questioned their ownership or disturbed their
peaceful possession and occupation of the Lot. As a result, their possession of the Lot covers more than 100
years of continuous, uninterrupted, public, open and peaceful possession.
Mariano Huerto, a helper of the late Juan Fabio, testified that since 1935, when he was only 12 years old, he
had helped cultivate the Lot until he left the place in 1955. He stated that at the time he served as helper,
Juan Fabio and his family were the ones who possessed and occupied the Lot. He helped plant vegetables,
banana plants, papaya trees and upland rice and was familiar with the boundaries of the Lot.
Raymundo Pakay, 70 years of age at the time and a resident of Ternate, Cavite, testified that he knew Juan
Fabio as the owner of the Lot, which has an area of 200 hectares, more or less. He stated that Juan built a
house there and could not recall of anyone else who claimed ownership of the Lot.
On 7 August 1997, the Assistant City Prosecutor of Tagaytay City filed his Manifestation and Comment
dated 28 July 1997:
COMES NOW the government, through the undersigned Assistant City Prosecutor of
Tagaytay City, assisting the Office of the Provincial Prosecutor of the Province of Cavite,
by way of comment to petitioners formal offer of evidence dated July 3, 1997 hereby
manifest that the government interposes no objection to Exhibit A up to PP together with
its sub markings, the same being material and relevant to the instant petition.
The government further manifests that considering the fact that it has no controverting
evidence in its possession to refute the material allegations of the herein petitioner, the
government is submitting the instant case for the immediate resolution of this Honorable
Court on the basis of the evidence adduced by the petitioner and the cross examination
propounded by the Trial Prosecutor.[18]
On 29 September 1997, the trial court rendered a Decision ordering the registration of the Lot in the name of
Juan Fabio. The dispositive portion states:
WHEREFORE, PREMISES CONSIDERED, finding the application for registration and
grant of title under Act 496, as amended by Presidential Decree No. 1529 to be
meritorious and fully substantiated by evidence sufficient and requisite under the law, this
Court, confirming its previous Order of general default as against the general public,
hereby decrees and adjudges and hereby orders the registration of the parcel of land as
hereinabove described, identified, and bounded and now the subject matter of the present
application for registration of title in the above-entitled case, in favor of, and in the name of
JUAN FABIO, of Barangay Sapang, Municipality of Ternate, Province of Cavite.
FURTHER, upon the finality of this DECISION, the Administrator, Land Registration
Authority, is hereby ordered to issue the corresponding decree of registration and the
Original Certificate of Title in favor of, and in the name of JUAN FABIO, of Barangay
Sapang, Municipality of Ternate, Province of Cavite, over the parcel of land described,
identified and bounded as hereinabove-mentioned and subject matter of this Decision
which decreed and adjudged the registration of its title in his name.
SO ORDERED.[19]
The Republic of the Philippines (petitioner), through the Office of the Solicitor General, filed an appeal with
the Court of Appeals. Petitioner claimed that the trial court erred in ruling that respondents have acquired a
vested right over the Lot which falls within the Calumpang Point Naval Reservation. Petitioner asserted that
the trial court disregarded the testimony of Pangyarihan who recommended the approval of the survey plan
with the following notation:
This survey falls within the Calumpang Point Naval Reservation and disposition hereof
shall be subject to the final delimitation thereof as per Proc. No. 1582-A dated September
6, 1976. x x x
In essence, petitioner argued that the trial courts grant of registration is contrary to the provisions of Section
88 of Commonwealth Act No. 141[20] and Proclamation No. 1582-A.[21]
The Ruling of the Court of Appeals
On 29 August 2003, the Court of Appeals affirmed the ruling of the trial court. [22] The appellate court ruled
that the mode of appeal filed by petitioner was wrong. Since the lone question involved was one of law,
petitioner should have filed a petition for review with this Court under Rule 45 of the 1997 Rules of Civil
Procedure instead of filing an appeal under Rule 41. Nevertheless, the appellate court looked into the merits
of the case and sustained the findings of the trial court:
On the merits of the case, it may be true that the General Order 56 of the United States
War Department dated 25 March 1904 reserved the subject property as a military
reservation, however, President Ferdinand Marcos issued Proclamation 307 on 20
November 1967 which provides x x x.
In other words, Presidential Proclamation 307 provides for an exception those properties
subject to private rights or those on which private individuals can prove ownership by any
mode acceptable under our laws and Torrens system.
Proclamation 1582-A issued by President Marcos on 6 September 1976 again provided
the following x x x.
Without doubt, this complements and recognizes the rights acquired by private individuals
under Proclamation 307, over the portion of the properties reserved under General Order
56 of the United States War Department dated 25 March 1904.
Considering that the annotation appearing in the survey plan merely provides that the
controversial portion shall be subject to final delimitation as per Proclamation 1582-A, the
same is consistent with the provisions of Proclamation 307.
 For wrong remedy and for lack of merit, the Court holds and so rules that the trial court
erred not in granting petitioners application for registration of title.
WHEREFORE, premises considered, the appeal is DISMISSED and the challenged 29
September 1997 Decision of the court a quo is hereby AFFIRMED in toto. No costs.
SO ORDERED.[23]
Hence, the instant petition.
The Issues
The issues for our resolution are (1) whether petitioner correctly appealed the ruling of the trial court to the
Court of Appeals, and (2) whether the respondents have acquired a right over the Lot.
The Courts Ruling
The petition has merit.
First Issue: Mode of Appeal
Petitioner contends that the jurisdiction of the Court of Appeals over the appeal is determined on the basis of
the averments in the notice of appeal. Since the appeal involves questions of fact and law, petitioner
correctly appealed the ruling of the trial court to the Court of Appeals and not directly to this Court.
Respondents, on the other hand, maintain that the remedy resorted to by petitioner before the Court of
Appeals was not correct. Respondents contend that the issues actually raised in the appellants brief
determine the appropriate mode of appeal, not the averments in the notice of appeal. Since the appellate
court found that petitioner only raised questions of law, the appeal is dismissible under the Rules.
Section 2, Rule 41 of the 1997 Rules of Civil Procedure, as amended, which governs appeals from
judgments and final orders of the Regional Trial Court to the Court of Appeals, provides:
Section 2. Modes of appeal.
(a) Ordinary appeal. The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal
with the court which rendered the judgment or final order appealed from and serving a copy
thereof upon the adverse party. No record on appeal shall be required except in special
proceedings and other cases of multiple or separate appeals where the law or these Rules so
require. In such cases, the record on appeal shall be filed and served in like manner.
(b) Petition for review. The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in
accordance with Rule 42.
(c) Appeal by certiorari. In all cases where only questions of law are raised or involved,
the appeal shall be to the Supreme Court by petition for review on certiorari in
accordance with Rule 45. (Emphasis supplied)
A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a
question of fact when the doubt arises as to the truth or falsity of the alleged facts. For questions to be one
of law, the same must not involve an examination of the probative value of the evidence presented by the
litigants. The resolution of the issue must rest solely on what the law provides on the given set of
circumstances.[24]
In its appellants brief filed with the Court of Appeals, petitioner interposed a lone assignment of error:
The trial court erred in ruling that appellees have acquired a vested right over the subject
property despite the fact that it falls within the Calumpang Point Naval Reservation.[25]
Clearly, the issue stated by petitioner provides no confusion with regard to the truth or falsity of the given
facts pertaining to the Lot and its location as established during the trial.It had been duly established that the
Lot falls within the Calumpang Point Naval Reservation as shown in the survey conducted and attested to by
the DENR. Here, the only issue involved is the interpretation of a relevant order and proclamations
denominating the Lot as part of a military reservation subject to the limitation that private rights should be
respected. Undoubtedly, this is a pure question of law.
Thus, petitioners appeal under Rule 41 having been improperly brought before the Court of Appeals, it
should have been dismissed by the appellate court pursuant to Section 2, Rule 50 of the 1997 Rules of Civil
Procedure, as amended, which provides:
Sec. 2. Dismissal of improper appeal to the Court of Appeals. An appeal under Rule
41 taken from the Regional Trial Court to the Court of Appeals raising only questions of
law shall be dismissed, issues purely of law not being reviewable by the said court. x x x
(Emphasis supplied)
Nonetheless, the appellate court in resolving that petitioners appeal constituted a wrong remedy, looked into
the merits of the case and found that the laws involved recognize the rights of respondents. As such, equity
considerations require that we take a similar course of action in order to put a rest to this case.
Second Issue: Validity of Respondents Title
Petitioner asserts that both the trial and appellate courts failed to recognize the import of the notation in the
survey plan stating that the Lot falls within the Calumpang Point Naval Reservation. At the time the
application for registration of title was filed, the Lot was no longer open to private ownership as it had been
classified as a military reservation for public service. Thus, respondents are not entitled to have the Lot
registered under the Torrens system.
Respondents, on the other hand, maintain that they have acquired a vested right over the Lot. The
Presidential Proclamations, which declared the Lot part of a naval reservation, provided for an exception that
private rights shall be respected, taking the portion covered by private rights out of the reservation. Thus,
respondents claim they are entitled to have the Lot registered under their names.
The three proclamations cited reserving the Calumpang Point Naval Reservation for the exclusive use of the
military are the following: (1) U.S. War Department Order No. 56 issued on 25 March 1904, (2) Proclamation
No. 307[26] issued on 20 November 1967, and (3) Proclamation No. 1582-A issued on 6 September
1976. Such proclamations state:
U.S. War Department General Order No. 56[27]
U.S. War Department General Order No. 56
Washington, March 25, 1904.
For the knowledge and governance of all interested parties, the following is hereby
announced:
The President of the United States, by the Order dated March 14, 1904, which provides
that the reservations made by Executive Order of April 11, 1902 (General Order No. 38,
Army Headquarters, Office of the Adjutant General, April 17, 1902), at the entrance of
Manila Bay, Luzon, Philippine Islands, are arranged in such a way that will include only
these lands as later described, whose lands were reserved by the Order of March 14,
1904 for military purposes, by virtue of Article 12 of the Act of Congress approved on July
1, 1902, entitled Act providing for the Temporary Administration of Civil Affairs of the
Government of the Philippine Islands and for Other Purposes (32 Stat. L., 691); namely:
1. In the northern side of the entrance to Manila Bay, in the province of Bataan,
Luzon (Mariveles Reservation), all public lands within the limits that are described as
follows:
Starting from the mouth of the Mariveles River in the eastern border and from here straight
North to a distance of 5,280 feet; from this point straight to the East to intercept a line, in a
straight direction to the South from a stone monument marked U.S. (Station 4); from there
straight from the North until the aforementioned Station 4; from here straight to the East to
a distance of 6,600 feet until a stone monument marked U.S. (Station 5); from here
straight South to a distance of 6,600 feet until a stone monument marked U.S. (Station 6);
from here straight to the East to a distance of 8,910 feet until a stone monument marked
U.S. (Station 7); from here straight to the South to a distance of 7,730 feet until a stone
monument marked U.S. (Station 8), situated at the northwest corner of the second creek
to the east of Lasisi Point, 30 feet North of the high-tide mark; from there in the same
direction until the high-tide mark; from here towards the East following the shoreline up to
the starting point.
2. In the southern side of the Manila Bay entrance, in the province of
Cavite, Luzon (Calumpan Point Reservation), all public lands within the limits that
are described as follows:
Starting from a stone monument marked U.S. (Station 1) situated in the cliff on the
Eastern side of Asubig Point, 20 feet above the high-tide mark and about 50 feet
from the edge of the cliff and continuing from there to the South 28 10 West, a
distance of up to 22,000 feet until a stone monument marked U.S. (Station 2); from
here to North 54 10' West at a distance of 5,146 feet until a stone monument marked
U.S. (Station 3); from here towards South 85 35 ' 30 West, at a distance of 2,455 feet
until a stone monument marked U.S. (Station 4), situated on the beach near the
Northeast corner of Limbones Bay, about 50 feet from the high-tide mark and
following in the same direction until the high-tide mark; from here towards North
and East following the shoreline until North 28 10 ' East from the starting point and
from there encompassing more or less 5,200 acres. The markers are exact.
3. The islands of Corregidor, Pulo Caballo, La Monja, El Fraile, and Carabao,
and all other islands and detached rocks lying between Mariveles Reservation on the
north side of the entrance to Manila Bay and Calumpan Point Reservation on the south
side of said entrance.
4. The jurisdiction of the military authorities in the case of reservations in the
northern and southern beaches of the entrance to Manila Bay and all the islands referred
to in paragraph 3, are extended from the high-tide marker towards the sea until a distance
of 1,000 yards.
By Order of the Secretary of War:
GEORGE L. GILLESPIE,
General Commander, Chief of Internal General Staff,
Official copy.
W.P. HALL, Internal Adjutant General. (Emphasis supplied)
Proclamation No. 307
x x x do hereby withdraw from sale or settlement and reserve for military purposes under
the administration of the Chief of Staff, Armed Forces of the Philippines, subject to private
rights, if any there be, a certain parcel of land of the public domain situated in the
municipality of Ternate, province of Cavite, Island of Luzon, more particularly described as
follows:
Proposed Naval Reservation
Calumpang Point
A parcel of land (the proposed Calumpang Point Naval Reservation), situated in the
municipality of Ternate, province of Cavite. Bounded on the NW., N. and E., by Manila
Bay; on the SE. and S., by municipality of Ternate; and on the W., by Manila
Bay. Beginning at a point marked 1 on the attached Sketch Plan traced from Coastal
Hydrography of Limbones Island.
thence N. 54 deg. 30 E., 750.00 m. to point 2;
thence N. 89 deg. 15E., 1780.00 m. to point 3;
thence N. 15 deg. 10 E., 6860.00 m. to point 4;
thence N. 12 deg. 40 W., 930.00 m. to point 5;
thence S. 77 deg. 20 W., 2336.00 m. to point 6;
thence S. 49 deg. 30 W., 4450.00 m. to point 7;
thence S. 12 deg. 40 E., 2875.00 m. to point 8;
thence S. 30 deg. 30 E., 2075.00 m. to the point of beginning; containing
an approximate area of twenty eight million nine hundred seventy three
thousand one hundred twelve (28, 973,112) square meters.
NOTE: All data are approximate and subject to change based on future
surveys.
Proclamation No. 1582-A
WHEREAS, Proclamation No. 307 dated November 20, 1967 and U.S. War
Department Order No. 56 dated March 25, 1904 reserved for military purposes, and
withdrew from sale or settlement, a parcel of land of the public domain situated in
the Municipality of Ternate, Province of Cavite, more particularly described as follows:
xxx
WHEREAS, the Philippine Navy and the Philippine Marines now need that portion of this
area reserved under Proclamation No. 307, particularly, Cayladme Cove, Caynipa Cove,
Calumpang Cove and Sinalam Cove, for their use as official station, not only to guard and
protect the mouth of Manila Bay and the shorelines of the Province of Cavite, Batangas
 and Bataan, but also to maintain peace and order in the Corregidor area, which is now
one of the leading tourist attractions in the country; x x x
x x x containing an approximate area of EIGHT MILLION EIGHTY NINE THOUSAND
NINE HUNDRED NINETY (8,089,990) SQUARE METERS, more or less.
The portion that remains after the segregation which are occupied shall be released
to bona fide occupants pursuant to existing laws/policies regarding the disposition of lands
of the public domain and the unoccupied portions shall be considered as alienable or
disposable lands. (Emphasis supplied)
The proclamations established that as early as 1904 a certain parcel of land was placed under the exclusive
use of the government for military purposes by the then colonial American government. In 1904, the U.S.
War Department segregated the area, including the Lot, for military purposes through General Order No.
56. Subsequently, after the Philippines regained its independence in 1946, the American government
transferred all control and sovereignty to the Philippine government, including all the lands appropriated for a
public purpose. Twenty years later, two other presidential proclamations followed, both issued by former
President Ferdinand E. Marcos, restating that the same property is a naval reservation for the use of the
Republic.
There is no question that the Lot is situated within a military reservation. The only issue to be resolved is
whether the respondents are entitled to have the Lot registered under the Torrens systems based on the
limitation clause cited in the proclamations: (1) subject to private rights, if any there be in Proclamation No.
307, and (2) the portion that remains after the segregation which are occupied shall be released to bona
fide occupants pursuant to existing laws/policies regarding the disposition of lands of the public domain and
the unoccupied portions shall be considered as alienable or disposable lands in Proclamation No. 1582-
A. This proviso means that persons claiming rights over the reserved land are not precluded from proving
their claims. In effect, the State gives respect and recognizes the rights of private persons who may have
acquired any vested interest to the Lot before the issuance of the General Order or proclamations.
Commonwealth Act No. 141 (CA 141), also known as the Public Land Act, remains to this day the existing
general law governing the classification and disposition of lands of the public domain, other than timber and
mineral lands.[28] Under the Regalian doctrine embodied in our Constitution, land that has not been acquired
from the government, either by purchase, grant or any other mode recognized by law, belongs to the State
as part of the public domain.[29] No public land can be acquired by private persons through any other means,
and it is indispensable that the person claiming title to public land should show that his title was acquired
through purchase or grant from the State, or through any other mode of acquisition recognized by law.[30]
Section 48(b) of CA 141, as amended by Presidential Decree No. 1073 (PD 1073), [31] provides:
Sec. 48. The following described citizens of the Philippines, occupying lands of the public
domain or claiming to own any such land or an interest therein, but whose titles have not
been perfected or completed, may apply to the Court of First Instance of the province
where the land is located for confirmation of their claims and the issuance of a certificate of
title therefor, under the Land Registration Act, to wit:
xxx
(b) Those who by themselves or through their predecessors in interest have been in open,
continuous, exclusive, and notorious possession and occupation of agricultural lands of
the public domain, under a bona fide claim of acquisition of ownership, since June 12,
1945, or earlier, immediately preceding the filing of the application for confirmation of title,
except when prevented by war or force majeure. These shall be conclusively presumed to
have performed all the conditions essential to a Government grant and shall be entitled to
a certificate of title under the provisions of this chapter.[32]
Similarly, Section 14 of PD 1529 or the Property Registration Decree, governing original registration through
registration proceedings, provides:
SECTION 14. Who may apply. - The following persons may file in the proper Court of First
Instance an application for registration of title to land, whether personally or through their
duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier.
xxx
To put it simply, Section 14(1) of PD 1529 states that there are three requisites for the filing of an application
for registration of title: (1) that the property in question is alienable and disposable land of the public domain;
(2) that the applicants by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation; and (3) that such possession is under
a bona fide claim of ownership since 12 June 1945 or earlier.
To prove that the Lot is alienable and disposable land of the public domain, respondents presented in
evidence a letter[33] dated 22 April 1991 of Conlu, a Land Management Inspector of the DENR-Region IV.
The relevant portion of the letter states:
In examination [of] the above-noted subject, please be [informed] that I have examined the
land x x x and the following findings [were] ascertained;
That the land covers a portion of 3 (three) barangays, namely: Calumpang, Cabangat and
Zapang, all within the municipality of Ternate, Cavite;
That the land is within alienable and disposable zone under Project No. 22-B, L.C. Map
No. 3091;
That the land was declared for taxation purposes since 1945, the latest of which is Tax
Declaration No. 1543 with a market value of P1,250,000.00 in favor of Juan Fabio x x
x (Emphasis supplied)
This letter-certification is insufficient. Conlu is merely a land investigator of the DENR. It is not enough that
he alone should certify that the Lot is within the alienable and disposable zone. Under Section 6 of the Public
Land Act, the prerogative of classifying or reclassifying lands of the public domain belongs to the
President.[34] The President, through a presidential proclamation or executive order, can classify or reclassify
a land to be included or excluded from the public domain. The DENR Secretary is the only other public
official empowered by law to approve a land classification and declare such land as alienable and
disposable.[35]
From the records, this letter was the only evidence presented by respondents to prove that the Lot is
alienable and disposable. In fact, not even the Community Environment and Natural Resources Office
(CENRO) certified as correct the investigation report of the Land Management Inspector. The most that the
CENRO officer did was to indorse the report to the Regional Technical Director of the DENR. [36] In Republic
v. T.A.N. Properties, Inc.,[37] we ruled that it is not enough for the Provincial Environment and Natural
Resources Office (PENRO) or CENRO to certify that a land is alienable and disposable. The applicant for
land registration must prove that the DENR Secretary had approved the land classification and released the
land of the public domain as alienable and disposable, and that the land subject of the application for
registration falls within the approved area per verification through survey by the PENRO or CENRO. In
addition, the applicant must present a copy of the original classification of the land into alienable and
disposable, as declared by the DENR Secretary, or as proclaimed by the President. Such copy of the DENR
Secretarys declaration or the Presidents proclamation must be certified as a true copy by the legal custodian
of such official record. These facts must be established to prove that the land is alienable and disposable.
Respondents have failed to present any of these documents. No document was presented to show that the
DENR Secretary or the President has classified the Lot as alienable and disposable. No CENRO or PENRO
certification was presented that the Lot, per verification through survey, falls within the alienable and
disposable zone. The 22 April 1991 letter of Land Management Inspector Conlu is not proof that the DENR
Secretary or the President has classified the Lot as alienable and disposable, or that the Lot falls within the
alienable and disposable zone. The mere issuance of the letter does not prove the facts stated in such
letter.[38]
While it is an acknowledged policy of the State to promote the distribution of alienable public lands to spur
economic growth and in line with the ideal of social justice, the law imposes stringent safeguards upon the
grant of such resources lest they fall into the wrong hands to the prejudice of the national patrimony. [42] We
must not, therefore, relax the stringent safeguards relative to the registration of imperfect titles.[43]
In Republic v. Estonilo,[44] we ruled that persons claiming the protection of private rights in order to exclude
their lands from military reservations must show by clear and convincing evidence that the properties in
question have been acquired by a legal method of acquiring public lands. Here, respondents failed to do so,
and are thus not entitled to have the Lot registered in their names. Clearly, both the trial and appellate courts
gravely erred in granting respondents application for registration of title.
WHEREFORE, we GRANT the petition. We SET ASIDE the 29 August 2003 Decision of the Court of
Appeals in CA-G.R. CV No. 66522. We DISMISS respondents application for registration and issuance of
title to Lot No. 233, Cad-617-D, Ternate Cadastre in LRC Case No. NC-96-782 filed with the Regional Trial
Court of Naic, Cavite, Branch 15.

Further, the burden is on respondents to prove that the Lot ceased to have the status of a military SO ORDERED.
reservation or other inalienable land of the public domain. No proof was ever submitted by respondents that
the Calumpang Point Naval Reservation, or the Lot, ceased as a military reservation. Even if its ownership
and control had been transferred by the Americans to the Philippine government, the Calumpang Point
Naval Reservation remained as an official military reservation. Thus, being a military reservation at the time,
the Calumpang Point Naval Reservation, to which the Lot is a part of, can not be subject to occupation, entry
or settlement.[39] This is clear from Sections 83 and 88 of CA 141, which provide:

SECTION 83. Upon the recommendation of the Secretary of Agriculture and Commerce,
the President may designate by proclamation any tract or tracts of land of the public
domain as reservations for the use of the Commonwealth of the Philippines or of any of its
branches, or of the inhabitants thereof, in accordance with regulations prescribed for this
purpose, or for quasi-public uses or purposes when the public interest requires it, including
reservations for highways, rights of way for railroads, hydraulic power sites, irrigation
systems, communal pastures or leguas comunales, public parks, public quarries, public
fishponds, working-mens village and other improvements for the public benefit.
SECTION 88. The tract or tracts of land reserved under the provisions of section eighty-
three shall be non-alienable and shall not be subject to occupation, entry, sale, lease,
or other disposition until again declared alienable under the provision of this Act or
by proclamation of the President. (Emphasis supplied)

Well-entrenched is the rule that unless a land is reclassified and declared alienable and disposable,
occupation in the concept of an owner, no matter how long, cannot ripen into ownership and be registered
as a title.[40] Consequently, respondents could not have occupied the Lot in the concept of an owner in 1947
and subsequent years when respondents declared the Lot for taxation purposes, or even earlier when
respondents predecessors-in-interest possessed the Lot, because the Lot was considered inalienable from
the time of its declaration as a military reservation in 1904. Therefore, respondents failed to prove, by clear
and convincing evidence, that the Lot is alienable and disposable.

Public lands not shown to have been classified as alienable and disposable land remain part of the
inalienable public domain.[41] In view of the lack of sufficient evidence showing that the Lot was already
classified as alienable and disposable, the Lot applied for by respondents is inalienable land of the public
domain, not subject to registration under Section 14(1) of PD 1529 and Section 48(b) of CA 141, as
amended by PD 1073. Hence, there is no need to discuss the other requisites dealing with respondents
occupation and possession of the Lot in the concept of an owner.