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The IBP Journal

INTEGRATED BAR OF THE PHILIPPINES

Board of Editors
ROAN I. L IBARIOS Editor-in-Chief EDUARDO A. L ABITAG Managing Editor

D ANILO L. C ONCEPCION F LORIN T. H ILBAY J AIME G. H OFILEA M ARIO C.V. J ALANDONI CONCEPCION L. J ARDELEZA N ASSER A. M AROHOMSALIC O SCAR G. R ARO CARMELO V. S ISON AMADO D. V ALDEZ

O LIVER B. S AN A NTONIO V INCENT P EPITO F. Y AMBAO , J R . Associate Editors

V IVIAN C. C APIZNON Staff

V ICMUND Q. C AMACHO Layout/Design

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CONTENTS
A Framework for the Study of National Territory: A Statement of the Problem Merlin M. Magallona .....................................................................................1 The On-going National Territorial Debate: Issues and Perspectives Leo Tito L. Ausan, Jr. .................................................................................. 28 The Exploration, Development, and Utilization of the Spratlys Amado D. Valdez ......................................................................................... 57 The Legal Significance of the MOA on the Bangsamoro Ancestral Domain Vicente V. Mendoza ...................................................................................... 63 The Memorandum of Agreement on Ancestral Domain: A Commentary Nasser A. Marohomsalic, Musa I. Malayang, Carim L. Panumpang and Rasol Y. Mitmug, Jr. .......................................71 Revisiting Charter Change Through Peoples Initiative Froilan M. Bacungan .................................................................................100 The Purchased Power Adjustment (PPA) Scheme and Its Derivatives: Deciphering Cost Recovery Mechanisms and Understanding Energy Distribution Juan Arturo Iluminado C. de Castro ........................................................115 Survey of 2006 Supreme Court Decisions on Property and Land Registration Eduardo A. Labitag ...................................................................................159

The IBP JOURNAL (ISSN 0118-9247) is an official publication of the Integrated Bar of the Philippines Subscription Rates (inclusive of postage): Php1,000.00 (local), US $20.00 (Foreign Individual), US $25.00 (Foreign Institution) Editorial Office Integrated Bar of the Philippines 15 J. Vargas Avenue, Ortigas Center, Pasig City 1600 Telephone: (632) 631-3014/18 Fax: (632) 634-4697 Website: www.ibp.org.ph Email: journal@ibp.org.ph The IBP Journal accepts papers dealing with legal issues and developments as well as socioeconomic and political issues with legal dimensions. Only manuscripts accompanied by a soft copy (diskette, CD, e-mail, etc.), including an abstract and the curriculum vitae of the author, shall be accepted. All papers to be submitted must be signed. The articles published in the IBP Journal do not necessarily represent the views of the Board of Editors. Only the authors are responsible for the views expressed therein.

Synopsis
(The Articles in this Issue)
In this edition, the IBP Journal is dishing out another array of select legal articles to keep lawyers and legal scholars abreast with timely, relevant, if not pressing, legal issues of the day. Taking center stage is the debate on the Philippine territorial integrity, which hurtled to national limelight with the spate of controversial proposals involving amendments to the existing Baseline Law, the joint development of the Spratlys, and the Memorandum of Agreement (MOA) on the Bangsamoro Juridical Entity. Merlin M. Magallona, an acknowledged expert in international law, opens up the debate with an extensive presentation entitled A Framework for the Study of the National Territory. While traversing the entire breadth of the Philippine territorial claims, the article draws attention to two potential cataclysms that could submerge our claims over Sabah and Spratlys, particularly the Kalayaan Islands Group (KIG). First, the approval of pending House Bill No. 3216, which deliberately eliminates Sec. 2 of R.A. 5446 (the Baseline Law) the only legislative re-affirmation of Philippine sovereignty over Sabah. If enacted into law, the bill which has breezed through second reading would operate as a repeal of the Sabah provision of the present Baseline law, resulting in the derogation of the other territories clause of the Constitution. Second, the adoption of the regime of islands formula as proposed by the Executive Branch in dealing with our claim over Spratlys. In its present form, the formula would trash into pieces our sovereign claim over the regime of internal waters around the Kalayaan Island Group of the province of Palawan, including the seabed, subsoil and air space. Infusing historical dimension to the current debate is the disquisition of Leo Tito L. Ausan, Jr., an expert on International Maritime Law, entitled The National Territorial Debate: Issues and Perspectives. The article traces the debate to the longstanding dilemma facing the Philippine archipelago in delimiting its territorial baselines whether to stick it out with the UNCLOS or with the International Treaty Limits (ITL). As to which legal approach to take, the Philippines has yet to make up its mind. As a result, the national debate on territorial outer limits rages on with no immediate denouement in sight. Amado D. Valdez, another scholar in international law, shares his Alternative Perspectives on the Exploration, Development and Utilization of the Spratlys. Citing the military predominance of China which could scuttle the Philippine claim into a waning and whining rhetoric, he takes a conciliatory position, proposing to resolve the impasse based on a joint maritime approach, rather than cutting up the Spratlys islands like a big piece of real estate. The primary consideration is not territorial integrity but joint development with other claimant-states of the maritime zone teeming with rich oil reserves.

From Spratlys in South China Sea, the debate on territorial integrity shifts to a different dimension and arena where peaceful dialogues have taken the backseat in favor of armed hostilities the heartland of Muslim Mindanao. In The Legal Significance of the MOA on the Bangsamoro Ancestral Domain, Vicente V. Mendoza, a distinguished constitutionalist and a retired Justice of the Supreme Court, dissects the document which envisions a Bangsamoro Juridical Entity (BJE) in Southern Philippines. The MOA defies easy legal classifications as it cannot be upheld without amending the Constitution. To save it from nullity, the MOA has to be treated as a hybrid, an instrument of recognition cum treaty for the recognition and declaration of the independence of the BJE. And that would spell a virtual sellout of territorial integrity. But as raised by the author, are we prepared to pay that stiff price in the name of peace in Mindanao? Muslim scholars Nasser A. Marohomsalic, Musa Malayang, Carim L. Panumpang and Rasol Y. Mitmug, Jr., in their Memorandum of Agreement on Ancestral Domain: A Commentary, add to the BJE debate by arguing that the MOA is constitutional. The authors present with much passion the historical and legal bases for the creation of what they categorize as a sub-state within the Philippine archipelago that fully realizes the aspirations for self-determination of the Bangsamoro people. In Revisiting Charter Change through Peoples Initiative, Froilan M. Bacungan, a former law dean and constitutionalist, shares his trenchant analysis on another timely topic. The article presents the thesis that the existing RA 6735 is adequate to cover the system of peoples initiative on amendments to the constitution but subject to the procedural and legal requirements laid down in Lambino vs. Comelec (505 SCRA 218). This means that peoples initiative may only cover proposals for amendments, not revisions, to the Constitution. In Purchased Power Adjustment (PPA) Scheme and Its Derivatives: Deciphering Cost Recovery Mechanisms in the Distribution of Electric Power and Undertaking Government Policy on Energy Distribution, Juan Arturo Illuminado C. de Castro, a budding scholar on the power industry, examines the mechanics behind the passing on the systems loss to consumers. The issue surged to national prominence in the recent take-over bid by GSIS over Meralco which was marred by a bribery scandal that jolted the entire Court of Appeals. To cap the edition, Eduardo A. Labitag, a veteran law professor and managing editor of the IBP Law Journal, presents another annual harvest of jurisprudence to enrich legal knowledge Survey of 2006 Supreme Court Decisions on Property and Land Registration.

A Framework for the Study of National Territory: A Statement of the Problem*


Merlin M. Magallona**

1. Constitutional Foundation
1.1. The present Constitution defines the National Territory in Article I as follows: The national territory comprises the Philippine archipelago, with all the islands and waters embraced therein, and all other territories over which the Philippines has sovereignty or jurisdiction, consisting of its terrestrial, fluvial, and aerial domains, including its territorial sea, the seabed, the subsoil, the insular shelves, and other submarine areas. The waters around, between, and connecting the islands of the archipelago, regardless of their breadth and dimensions, form part of the internal waters of the Philippines. Under this definition, the geomorphological and political base of the Philippine State consist of the following components: (a) the Philippine Archipelago, and (b) all other territories over which the Philippines has sovereignty or jurisdiction. Based on the structure of this constitutional text, the appurtenances of these components are identified, thus: As to the main component, i.e., the Philippine Archipelago, it has the following appurtenances: (a) all the islands and waters embraced therein; and (b) its internal waters consisting of the waters around, between, and connecting the islands of the archipelago, regardless of their breadth and dimensions.
* ** Presented during the symposium at the Malcolm Theater, U.P. College of Law on May 29, 2008 on the Spratly Islands: Impact of the UNCLOS on the Territorial Integrity of the Philippines and other Related Legal Issues. Professorial Lecturer, former Dean and Professor of Law, College of Law, University of the Philippines.

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These appurtenances serve to demonstrate that the Constitution embodies the concept of an archipelago as a unity of land and water, which is integral to the historico-cultural and political elements of the Philippine Archipelago. There are appurtenances which the Constitution identifies as pertaining to the entire national territory, i.e., to both components. These are: (a) (b) (c) (d) (e) territorial sea; fluvial domain; aerial domain (air space); seabed and subsoil; and insular shelves and other submarine areas.

A.

Constitutional History of the Philippine Archipelago The Main Component of National Territory

1.2. By the Treaty of Paris of 10 December 1898, Spain ceded to the United States the Philippine Islands. Article III of this Treaty reads in part: Spain cedes to the United States the archipelago known as the Philippine Islands lying within the following lines . [drawing the International Treaty Limits (ITL) in technical terms]. The Treaty of Paris is complemented by the Treaty between the Kingdom of Spain and the United States of America for Cession of Outlying Islands of the Philippines concluded on 7 November 1900, and by the Convention between the United States and Great Britain Delimiting the Boundary between the Philippine Archipelago and the State of North Borneo concluded on 2 January 1930. Thus, the Philippine Archipelago as the main component of national territory comprehends the Philippine Islands described as archipelago in Article III of the Treaty of Paris, with the addition of the islands included by the two companion treaties referred to above. The said Spain-US Treaty of 7 November 1900 considers these additional islands as belonging to the [Philippine] Archipelago even as it identifies them as lying outside the lines described in Article III of [the Treaty of Paris]. It affirms that all such islands shall be comprehended in the cession of the Archipelago as fully as if they had been expressly included within those lines. These islands include Cagayan, Sulu and Sibutu. Under the US-Great Britain Convention of 2 January 1930, Turtle Islands and Mangsee Islands are acknowledged as comprised within the Philippine Archipelago. The US-Great Britain Treaty mentioned above describes the ITL as the boundary defined by the Treaty between the United States of America and Spain
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signed at Paris, December 10, 1898,1 to which is connected the boundary between the Philippine Archipelago and the State of Borneo it has established.2 Insofar as they define the national territory, the relevant provisions of these treaties, particularly the Treaty of Paris, have been constitutionalized, embodied in Section 1, Article I of the 1935 Constitution in the following text: The Philippines comprises all the territory ceded to the United States by the Treaty of Paris concluded between the United States and Spain on the tenth day of December eighteen hundred and ninety-eight, the limits of which are set forth in Article III of said treaty, together with all the islands embraced in the treaty concluded at Washington, between the United States and Spain on the seventh day of November, nineteen hundred, and in the treaty concluded between the United States and Great Britain on the second day of January, nineteen hundred and thirty, and all territory over which the present Government of the Philippine Islands exercises jurisdiction.3 In establishing the delimitation of national territory, this provision of the 1935 Constitution takes the lines described in Article III of the Treaty of Paris, referred to above as the ITL, as the boundaries of the Philippines by prescribing that the limits of which are set forth in Article III of the said treaty. These agreements are not to be treated merely as bilateral treaties of interest to the states parties. They have acquired constitutional status in the definition of national territory as elements of the Philippine State. This understanding is reflected in the proceedings of the 1934 Constitutional Convention which framed the 1935 Constitution. For example, Committee Report No. 7 of the Convention, submitted by the Committee on Territorial Delimitation on 31 August 1934, refers to Article III of the Treaty of Paris as describing the boundaries of the Philippine Islands. 1.3. With particular regard to the fact that the 1935 Constitution provides for the ITL as the boundaries of the Philippines, it is significant to recall that the said fundamental law was approved by the President of the United States pursuant to the Tydings-McDuffie Law of 1934, An Act [of the U.S. Congress] to provide for the Complete Independence of the Philippine Islands, to provide for the Adoption of a Constitution and a Form of Government for the Philippine Islands and for Other Purposes. As required by Section 3 of this Act, the President of the United States certified that the 1935 Constitution conformed substantially with the provisions of this Act and accordingly approved it, presumably with due regard to the definition of national territory.
1 2 3 Article I. The US-Great Britain Convention is in 137 League of Nation Treaty Series 299. Emphasis added. Preamble. Emphasis added. Emphasis added.

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Preparatory to Philippine Independence, the Tydings-McDuffie Law established the Government of the Commonwealth of the Philippines. By authority of Section 1 of this law, that Government shall exercise jurisdiction over all territory ceded to the United States by the treaty of peace concluded between the United States and Spain on the 10th day of December, the boundaries of which are set forth in Article III of said treaty, together with those islands embraced in the treaty between Spain and the United States concluded at Washington on the 7th day of November 1900. 4 Earlier, the United States Congress enacted the Philippine Autonomy Act, or the Jones Law of 1916. It provides that The name The Philippines as used in this act shall apply to the Philippine Islands ceded to the United States by the treaty of peace concluded between the Untied States and Spain on the tenth day of December, eighteen hundred and ninety-eight, the boundaries of which are set forth in Article III of the said treaty .5 1.4. Major legislative enactments of the Philippine Commission, the colonial civil government in the Philippine Islands instituted by the US Congress under the Philippine Bill of 1902 (Public Law No. 235), referred to the delimitation of ITL in the exercise of powers of government. The Administrative Code of 1916 (Act No. 265) defines the territorial jurisdiction and extent of powers of the Philippine Government by providing in Section 14 that The territory over which the Government of the Philippine Islands exercises jurisdiction consists of the entire Philippine Archipelago and is comprised in the limits defined by the treaties between the United States and Spain, respectively signed in the City of Paris on the tenth day of December, eighteen hundred and ninety-eight, and the city of Washington on the seventh day of November, one thousand nine hundred.6 The Fisheries Act of 1932 (Act No. 4003) defines Philippine waters or territorial waters of the Philippines in Section 6 as including All waters pertaining to the Philippine Archipelago, as defined in the treaties between the United States and Spain, dated respectively the tenth of December, eighteen hundred and ninety-eight, and the seventh of November, nineteen hundred.7
4 5 6 7 Emphasis added. Emphasis added. Emphasis added. Emphasis added.

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These enactments reconfirm the concrete application of governmental powers within the scope of jurisdiction and sovereignty determined by the boundaries of the Philippine Archipelago in Article III of the Treaty of Paris - in brief, the determination of the ITL as such boundaries within which the powers of jurisdiction and sovereignty have been exercised. They reflect the understanding that the waters enclosed by the ITL are established by U.S. sovereignty as territorial waters of the Philippine Archipelago and that the land and waters pertaining to the Philippine Islands are in unity as an archipelago. 1.5. The necessary implications of constituting the ITL as the boundaries of the Philippines, as explained above, are contained in the two diplomatic notes which the Philippine Government transmitted to the Secretary-General of the United Nations. The note of 12 December 1955 from the Philippine Department of Foreign Affairs presents two points, thus: [1] The position of the Philippine Government is that all waters around, between and connecting the different islands belonging to the Philippine Archipelago irrespective of their widths or dimensions, are necessary appurtenances of its land territory, forming an integral part of the national or inland waters, subject to the exclusive sovereignty of the Philippines. [2] All other water areas embraced in the imaginary lines described in the Treaty of Paris of December 10, 1898 8 [and the two companion treaties] are considered as maritime territorial waters of the Philippines for the purpose of protection of our fishing rights, conservation of our fishing resources, enforcement of revenue and anti-smuggling laws, defense and security, etc.9 In a note verbale of 20 January 1956, the Permanent Mission of the Philippines to the United Nations responded to the invitation of the UN Secretary-General to submit its observation on the drafts prepared by the International Law Commission on the regime of the high seas and on the breadth of the territorial sea. The Philippine note in reply reiterates the two points contained in the note of 12 December 1955 transmitted to the UN Secretary General, as set out above. It declares as follows: [1] [T]he Philippine Government assumes that high seas cannot exist within the waters comprised by the territorial limits of the Philippines as set down in the international treaties referred to above. In case of archipelagos or territories composed of many islands like the Philippines, which has many bodies of waters enclosed within the group of islands, the State would find the continuity of jurisdiction within its own territory disrupted, if certain bodies of water located between the islands composing its territory were declared or considered as high seas.
8 9 Referring to the International Treaty Limits (ITL). Emphasis added.

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[2] The Philippine Government considers the limitations of its territorial sea as referring to those waters within the recognized treaty limits,10 and for this reason it takes the view that the breadth of the territorial sea may extend beyond twelve miles. It may therefore be necessary to make exceptions, upon historical grounds, by means of treaties or conventions between States . Again, based on the boundaries drawn by the ITL, the Philippines presented its position in the 1960 UN Conference on the Law of the Sea, as follows: [S]ince the Treaty of Paris was ratified, and throughout all the time that the Philippines was under the American flag and the United States was exercising sovereign rights over all the land and sea territory embraced in that treaty, there was no protest from anyone against the exercise of such sovereignty. And since the Philippines became independent and continued to exercise sovereignty and jurisdiction over the same territory, there has likewise been no protest by any state. The title of the Philippines to a wider extent than twelve miles of territorial sea, therefore, has both a legal and historic basis. Such title cannot and should not be affected adversely by any new rule on the breadth of the territorial sea that may be adopted in this conference. A historic title is a generally recognized basis of acquired or established rights. The territorial sea of the Philippines, over which my country exercises sovereignty and jurisdiction by virtue of a legal and historic title, is, therefore, comprised of all the waters beyond the outermost islands of the archipelago but within the boundaries set by the Treaty of Paris. The case of the Philippines is sui generis, and cannot be covered by a general rule that may be formulated by the breadth of the territorial sea . [W]e must state that it is unthinkable and impossible for us to lend our support to any proposal which may be interpreted, evenly remotely, as impairing any of our historic rights, and which may be used as an excuse by foreign vessels and fisherman to penetrate with impunity into the very heart of our archipelago.11 1.6. The foregoing review, showing Article III of the Treaty of Paris12 as defining the boundaries of the Philippines represented by the ITL, is synthesized in the present Baseline Law - Republic Act No. 3046 as amended by Republic Act No. 5446 - An Act Defining the Baselines of the Territorial Sea of the Philippines. It is based on the premise that all the waters within the limits sets forth in the abovementioned treaties have always been regarded as part of the territory of the Philippine Islands.
10 11 12 Emphasis added. This means the waters within the ITL. Emphasis added. Together with the two companion treaties already identified above.

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This law defines the Philippine territorial sea as comprising all the waters beyond the outermost islands of the archipelago but within the limits of the boundaries set forth in the aforementioned treaties. The territorial sea therefore extends from the baselines connecting the outermost islands of the Philippine Archipelago to the ITL. It also defines all the waters around, between and connecting the various islands of the Philippine archipelago as necessary appurtenances of the land territory, forming part of the inland or internal waters of the Philippines.13 Hence, when the Baseline Law provides that all the waters within the limits set forth in the abovementioned treaties have always been regarded as part of the territory of the Philippine Islands, these waters are of two categories, as pointed out above, namely: (a) the territorial sea and (b) the internal waters, both being regimes of sovereignty of the Philippines. Again, the Philippine position provided in the present Baseline Law, outlined above, was communicated to the international community. The Philippine delegation to the UN Committee on the Peaceful Uses of the Sea-bed and the Ocean Floor Beyond the Limits of National Jurisdiction delivered a statement on 16 August 1971, which in part reads: . . . [T]he only rule that would be consistent with the nature of an archipelago as one State is that which would require and allow an archipelago to draw a single baseline around the islands that constitute it by joining appropriate points of the outermost islands of the archipelago with straight lines. We have followed this rule, having defined and clarified by legislation the baselines from which our territorial sea shall commence. The waters within the baselines are internal waters; those outside proceeding seaward within defined limits constitute our territorial sea.14

B.

Other Territories Under Philippine Sovereignty or Jurisdiction the Second Component of National Territory

1.7. As formulated above, the other component of national territory is subsumed under the clause all other territories over which the Philippines has sovereignty or jurisdiction in Article I of the present Constitution, territories which by law or historic right pertains to the Philippines.

13 14

Emphasis added. Estelito P. Mendoza, The Base-Lines of the Philippines, 46 Philippine Law Journal 628, 633 (September 1971). The Philippine statement was delivered in Sub-Committee II of this UN Committee by Prof. Estelito P. Mendoza.

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There are two legal enactments which are integrally connected to the otherterritories clause of the Constitution. By virtue of this interconnectivity, this constitutional clause has the effect of inhibiting their repeal or amendment adverse to territorial sovereignty. These enactments were already in place when the 1987 Constitution came into effect, and on account of the other-territories clause they have gained constitutional recognition. These enactments are: (1) The present Baseline Law Republic Act No. 3046 of 1961, as amended by Republic Act No. 5446. Section 2 of Republic Act No. 5446 provides: The definition of the baselines of the territorial sea of the Philippine Archipelago as provided in this Act is without prejudice to the delineation of the baselines of the territorial sea around the territory of Sabah, situated in North Borneo, over which the Republic of the Philippines has acquired dominion and sovereignty.15 (2) Presidential Decree No. 1596 which took effect on 11 June 1978. It declares that the Kalayaan Island Group (KIG) shall belong and be subject to the sovereignty of the Philippines, together with the seabed, subsoil, continental margin and air space. Under this Decree, the islands comprehended by the KIG are regarded as one area and as such is constituted as a distinct and separate municipality of the Province of Palawan and shall be known as Kalayaan. 1.8. Approved on second reading in the House of Representatives is House Bill No. 3216, An Act Defining the Archipelagic Baselines of the Philippine Archipelago, Amending for the Purpose Republic Act No. 3046 as amended by Republic Act No. 5446. Apparently mindless of the interconnectivity between the present Baseline Law and the other-territories clause of the Constitution, the bill deliberately eliminates Section 2 of Republic Act No. 5446 which is the only legislative affirmation of Philippine sovereignty over Sabah. If enacted into law, the bill would operate as a repeal of the said Sabah provision of the present Baseline Law, resulting in the derogation of the other-territories clause of the Constitution. In place of the Sabah provision of Republic Act No. 5446, the bill installs a without prejudice clause which reads: The delineation of baselines as provided in this Act shall be without prejudice to any claims to any contested portions of the national territory or maritime zones and jurisdiction of the Philippines in accordance with international law and under appropriate international dispute resolution mechanisms.16
15 16 Emphasis added. Emphasis added.

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The implication of the bill vis--vis Philippine sovereignty over Sabah is that it would radically change the status of Sabah in Philippine law as recognized by the Constitution, from an unequivocal pronouncement of Philippine sovereignty and dominion under the present Baseline Law to a mere statement of claim to a contested portion of the national territory to be settled in accordance with international law and under appropriate international dispute resolution mechanisms. But considering that in international law settlement of dispute is a matter addressed not to the unilateral act of a party to the dispute but to the consent of both parties, it follows that under Philippine law itself the status of Sabah is thereby reduced to indeterminate claim that may remain unsettled indefinitely for the reason that the other claimant may refuse any dispute resolution mechanisms. If the authors of the bill have in mind the prospect of resort to the International Court of Justice (ICJ), it is suggested that they deal with the following threshold problem. In its declaration of 23 December 1971, the Philippines recognizes as compulsory ipso facto and without special agreement, in relation to any other State accepting the same obligation, the jurisdiction of the International Court of Justice [ICJ] in all legal disputes as defined by the ICJs Statute. However, the Philippine declaration is subject to reservations, among which it specifies that it shall not apply to any dispute Arising out of or concerning jurisdiction or rights claimed or exercised by the Philippines . [i]n respect of the territory of the Republic of the Philippines, including its territorial seas and inland waters. The bill may thus be relying on a principal mechanism of dispute settlement in international law under the ICJ Statute from which the Philippines has deliberately excluded itself by formal reservation. 1.9. In the current public debate on the Spratly Islands, the same bill has stirred controversy with respect to how the baselines should be drawn in the Kalayaan Island Group (KIG). It appears that the solution preferred by the Executive Department, apparently in avoidance of friction with other territorial claimants, is to deal with KIG under the concept of regime of islands to be regulated by Article 121 of the United Nations Convention on the Law of the Sea (UNCLOS). By this UNCLOS provision, the islands constituted as KIG under Presidential Decree No. 1596 are to be regarded individually as An island naturally formed area of land, surrounded by water, which is above water at high tide,17 each with its own territorial sea, the contiguous zone, the exclusive economic zone and the continental shelf.18 The formula of regime of islands carries the risk of disintegrating effects on KIG as a unified local government unit in that the intrusion of Article 121 of the
17 18 UNCLOS, Article 121 (1). UNCLOS, Art. 121 (2).

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UNCLOS may demand that the constituent areas of land and water formations within the KIG be divided into categories of islands under paragraph 1 of Article 121 and of rocks under paragraph 2 of that provision, with the possible result in the reduction of areas of sovereign rights and jurisdiction. Paragraph 2 provides that Rocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf. Constituted as a political unit, as a distinct and separate municipality of the Province of Palawan, KIG has a regime of internal waters around, between and connecting its constituent islands. It would appear as a result that the formula of regime of islands may eliminate the regime of internal waters between, around and separating the constituent islands of the KIG, and would have adverse effects on the sovereignty over the affected sea-bed, subsoil as well as the air space. Overall, on account of the constitutional recognition under the other-territories clause, territorial sovereignty over the KIG under Presidential Decree No. 1596 should be beyond statutory alteration in order to prevent derogation of the national territory as defined in Article I of the Constitution. Note that the said Presidential Decree sets out in precise technical description the boundaries of the KIG, together with the identification of the furthest points which, if connected by straight lines would serve or become the baselines. Hence, not only that the changes to be introduced by the bill would prove to be superfluous, but these would be as well inimical to territorial sovereignty.

2. Reorganizing the National Territory: Shift from The Treaty of Paris to the UNCLOS
A. The Philippines as an Archipelago

2.1. By Article III of the Treaty of Paris, Spain cedes to the United States the archipelago known as the Philippine Islands.19 The term archipelago used as descriptive of the Philippines pertains to a historically established entity organized into one political unit. Sovereignty of the King of Spain was proclaimed over the whole Archipelago with Manila declared as its capital,20 and governed as such for more than three centuries as a unity of land and water. Under a centralized administration as a Spanish possession, the Philippines then consisted of thirty-three provinces, from Luzon to Mindanao, inhabited by a population of about 5 million paying tribute to the Spanish royal treasury.21 Following the defeat of the Spanish forces in the
19 20 21 Emphasis added. John Foreman, The Philippine Islands, 1906, p. 36. See Jean Mallet, The Philippines: History, Geography, Custom, Agriculture, Industry and Commerce of the Spanish Colonies in Oceania, 1994, trans. By Pura-Santillan-Castrence, Chap. V.

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battle of Manila by the US occupying forces, the terms of capitulation were signed by the military authorities of both camps, the principal stipulation of which was the surrender of the whole Philippine Archipelago.22 Relinquishment of sovereignty to the United States over the Philippines as a political unity covered all aspects of governmental powers, including the determination of status of Spanish subjects and of the native population in the entire territory ceded to the United States.23 In transition from military government, the Instructions of US President McKinley of 7 April 1900 strengthened the utilization of the islands into an archipelagic unity considered as one juridical category this time to be administered by a central civil government exercising legislative authority throughout the entire archipelago, which included the making of rules and orders having the effect of law, the raising of revenues by taxes, customs duties and imposts; the appropriation and expenditure of public funds of the Islands; the establishment of an education system to secure an efficient civil service; the organization of a system of courts; the organization and establishment of municipal and departmental governments, and the institution of the English language as a common medium of communication, [i]n view of the great member of languages spoken by the sectors of population in various parts of the archipelago. 2.2. Thus, long before the international law of the sea has evolved the archipelagic concept that is now crystallized in Article 46(1) of the UNCLOS, the Philippines was already established as an archipelago in unity of land and water as formalized in Article III of the Treaty of Paris, together with its authoritative interpretation set out above. It is instructive that a study on mid-ocean archipelagos that formed part of the preparatory work of the 1958 UN Conference on the Law of the Sea reflects the politico-geologic nature of the archipelago exemplified in the case of the Philippine Islands. Prepared by Jens Evensen, it defines outlaying or mid-ocean archipelagos as groups of islands situated out in the ocean at such distance from the coasts of firm lands as to be considered as an independent whole rather than forming part of or outer coastline of the mainland.24 The study goes on to point out the geographical and historical peculiarities of outlaying [or mid-ocean] archipelagos: No hard-and-fast rule exists whereby a State is compelled to disregard the geographic, historical (and economical) peculiarities of outlaying archipelagos. Frequently the only natural and practical solution is to treat such outlaying archipelagos as a whole for the delimitation of territorial waters by drawing straight baselines from the outermost points of the archipelago - that is, from the outermost points of the constituent islands, islets and rocks - and by drawing the

22 23 24

Foreman, op. cit., at 464-465. See Treaty of Paris, Arts. VIII and IX. Document A/CONF. 13/18. See UN Conference on the Law of the Sea, 1958, vol. I, p. 290. Emphasis added.

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seaward limit of the belt of the marginal seas at a distance of x nautical miles outside and parallel to such baselines.25 It is against the background of clashing interests in the 1958 UN Conference of the Sea that the Congress of the Philippines enacted the baseline law in Republic Act No. 3046 in 1961. Supported by the Evensen study, it crystallizes into definitive legislative pronouncement the position taken by the Philippine diplomatic notes referred to above.

B.

In Synthesis: The UNCLOS in Relation to the Treaty of Paris

2.3. The application of the UNCLOS to the Philippine territorial regime has the effect of eliminating the juridical function of the Treaty of Paris insofar as it established the boundaries of the Philippine State. It nullifies the authoritative interpretations of the Treaty of Paris to that effect, as reviewed above. Since the Philippines has established under its law and practice that Article III of the Treaty of Paris defines the boundaries of the Philippines, the breadth of its territorial waters should extend from the baselines to the ITL. The vast expanse of territorial waters within the boundaries set by the Treaty of Paris is spelled out by the Committee on National Territory of the 1971 Constitutional Convention in its Report No. 1, thus: Now if we plot on a map the boundaries of the Archipelago as set forth in the Treaty of Paris, a huge or giant rectangle will emerge, measuring about 600 miles in width and over 1200 miles in length. Inside this rectangle are the 7,100 islands comprising the Philippine Islands. From the east coast of Luzon to the eastern boundary of this huge rectangle in the Pacific Ocean, there is a distance of over 300 miles. From the west coast of Luzon to the western boundary of this giant rectangle in the China Sea, there is a distance of over 150 miles. On the other hand, when these boundaries are set aside as a consequence of the application of the UNCLOS, the territorial sea is reduced to a breadth not extending twelve nautical miles from the baselines. The UNCLOS reduces the territorial sea by 230,000 square miles, or almost by 50% which means the collapse of territorial sovereignty as extended to the territorial sea. If the limits set forth in the Treaty of Paris are understood in the concept of boundaries, as they are, to be applied in complement with the present Baseline Law, it is calculated that the area of the countrys territorial sea would cover about 520,700 squares miles.26
25 26 Ibid. See estimate in Primer on the United Nations Convention on the Law of the Sea, published by the Department of Foreign Affairs, Manila, May 1991, p. 15.

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C.

The UNCLOS and the Constitution (1) Boundaries of the National Territory

2.4. Boundary is defined in international law as a line which determines the limit of the territorial sphere of jurisdiction of States or other entities having an international status.27 Necessarily, boundaries are permanent lines of de jure jurisdiction.28 Deriving its definition of national territory from the 1935 Constitution, the present fundamental law takes the lines drawn in Article III of the Treaty of Paris, together with the two companion treaties, as the boundaries of the Philippines. But the implementation of the UNCLOS will have the effect of nullifying the legal status or function of the said treaty limits. The operation of Articles 47 and 48 of the UNCLOS in relation to its Article 3 will have that effect in a wholesale manner. Under the Treaty of Paris, the boundaries of the Philippines as drawn in Article III forms an integral part of its definition as an Archipelago and becomes an element of its statehood which is built into its National Territory as described in Section 1, Article I of the 1935 Constitution. The term archipelago in the definition of national territory under the 1973 and the present Constitution perpetuates the geographical, historical, political and legal context by which the 1935 fundamental law constitutionalized the nature of the Philippines as an archipelago under the Treaty of Paris. If the Philippines is to be categorized as an archipelagic state under the UNCLOS, the breadth of its territorial sea would be drawn from the archipelagic baselines. It is from these baselines that the territorial sea would be measured. Since under Article 3 of the UNCLOS the breadth of the territorial sea is limited to 12 nautical miles from the baselines, then accordingly the outer limit of territorial sovereignty extends no more than 12 nautical miles from the same starting point. 2.5. The claim of the United States Government that the limits set forth in the Treaty of Paris are not boundaries but merely represent lines of allocation for the islands only and do not necessarily include the waters within,29 is belied by the enactments of the U.S. Congress indicating the Treaty of Paris limits the boundaries of the Philippine Archipelago. It is an act of denying its own past in the establishment and administration of Philippine Island as its colony and the legal consequences of its own sovereign acts as a colonial power. Even if these are to be regarded as unilateral acts of the United States, nevertheless they are acts of sovereignty and

27 28 29

M. Bothe, Boundaries, in R. Bernhardt (ed.), Encyclopedia of Public International Law, Vol. I, pp. 443, 447 (1992). Id., at 444. See Merlin M. Magallona, International Law Issues in Perspective, 1996, pp. 204-205.

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they would assume validity for the reason that no rule of international law at the time prohibited its assertion and that they enjoy the acquiescence of the international community.

(2) Internal Waters Transformed into Archipelagic Waters: the Watered-Down Sovereignty
2.6. In defining national territory, the present Constitution specifies that

The waters around, between and connecting the islands of the archipelago, regardless of breadth and dimensions, form part of the internal waters of the Philippines.30 The provision runs in continuity with the territorial principles of the 1935 and the 1973 Constitutions. In a position communicated to the United Nations in 1955, the Philippines emphasized the legal status of these waters, as follows: The position of the Philippine Government in the matter is that all waters around, between and connecting the different islands belonging to the Philippine Archipelago irrespective of their width or dimensions, are necessary appurtenance of its land territory, forming an integral part of the national or inland waters, subject to the exclusive sovereignty of the Philippines ...31 All the more is the sovereignty over these waters vital as a political consolidation of a State whose material base is characterized by geographic fragmentation. Waters properly characterized as national waters or internal waters are closely linked to land territory by reason of the vital interests of the territorial sovereign concerning conditions of national and territorial integrity, of defense, or commerce and of industry.32 Land territory and internal waters are one under the sovereignty of a State. International law strikes a difference between territorial sea and internal waters in that it permits right of innocent passage by foreign ships in the former, but not through internal waters.33 It is only upon prior permission of the coastal State that submarine cable or pipelines may be laid in internal waters. Moreover, in customary international law there does not exist a ... right of access to
30 31 32 33 Emphasis added. Emphasis added. R. Lagoni, Internal Waters, in Rudolf Bernhardt (ed.), Encyclopedia of Public International Law, vol. 11 (North Holland, 1989), p. 153. See UNCLOS, Art. 17 and Convention on the Territorial Sea and Contiguous Zone, Art. 14(1). The only exception to the exclusion of right of innocent passage through internal waters pertains to a case of what used to be territorial waters, or parts of territorial sea, which has been enclosed by straight baselines as internal waters. Rainer Lagoni, Internal Waters, Seagoing Vessels, in Rudolf Bernhardt (ed.), Encyclopedia of Public International Law, vol 11, 1989, pp. 155-156.

34

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internal waters in general or to ports in particular,34 except in cases of distress. Warships and government ships operated for non-commercial purposes may not enter the internal waters of a State without its prior consent. A coastal State may allow entry to internal waters and to its ports upon certain conditions, which right may be withdrawn.35 On the other hand, the UNCLOS will radically change the status of the Philippine internal waters by transforming them into archipelagic waters. Under the UNCLOS, what the 1987 Constitution refers to as waters around, between, and connecting the islands of the archipelago are said to be subject to the sovereignty of the Philippines as an archipelagic state,36 but that sovereignty is watered down by the following limitations: (a) Ships of all states enjoy the right of innocent passage through archipelagic waters.37 This means that as a matter right foreign ships are allowed to navigate through the Philippine waters around, between, and connecting the islands of the archipelago, including stopping and anchoring incidental to ordinary navigation.38 In direct danger and risk to national security and environmental integrity, this right pertains to foreign submarines and nuclear-powered ships and ships carrying nuclear or other inherently dangerous or noxious substances.39 In making provision for the innocent passage of submarines and nuclear powered ships, the UNCLOS does not expressly exclude nuclear-armed ships and may imply they are allowed innocent passage in the archipelagic waters. It contains rules regulating the right of innocent passage for warships, clarifying all the more that this right pertains to this category of ships.40 Oil tankers too are among the beneficiaries of innocent passage through these waters, posing potential environmental disasters.41 (b) In archipelagic waters, the Philippines has the duty to recognize traditional fishing rights and other legitimate activities of the immediately neighboring States.42 (c) The Philippines must respect existing submarine cables laid by other States and passing through its waters without making a landfall and shall allow the maintenance and replacement of such cables upon receiving due notice of their location and the intention to repair or replace them.43
35 36 37 38 39 40 See R.R. Churchill and A.V. Lowe, The Law of the Sea, 1983, pp. 46-47. See UNCLOS, Art. 49. UNCLOS, Art. 52(1). UNCLOS, Art. 57 in relation to Arts. 17 and 18. UNCLOS, Art. 52(1) in relation to Arts. 20 and 23. The right of innocent passage for warships, submarines, and nuclear-powered ships is applied to archipelagic waters by reference to the rules applicable to these vessels in innocent passage in the territorial sea. See reference to Part II, section 3 of the UNCLOS by Art. 52(1). See F. Ngantcha, The Right of Innocent Passage and the Evolution of the International Law of the Sea, 1990, pp. 123-154. See UNCLOS, Art. 22(2). See UNCLOS, Art. 51(1). UNCLOS, Art. 52(2).

41 42 43

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Under the UNCLOS, the vast expanse of internal waters over which the Philippines has full territorial sovereignty are radically reduced to small pockets of waters enclosed by straight lines drawn across the mouth of rivers directly flowing into the sea, waters in bays, and in permanent harbor works, including lagoons inside reefs . 44 In the real sense, what are properly internal waters under our fundamental law will cease to be part of the countrys territorial sovereignty by virtue of these serious restrictions. UNCLOS has the effect of eliminating in a wholesale manner these internal waters as an integral part of Philippine sovereignty. Thus, the UNCLOS presents an anomaly in that it gives a new status to Philippine internal waters, calling them archipelagic waters, and subjects them to more restrictions than it does to the territorial sea. Consequently, the territorial sea surrounds a regime of waters inside the countrys baselines burdened with more onerous duties on the part of the Philippines than those in the territorial sea. The view of Churchill and Lowe is of striking relevance to marine pollution from ships in their innocent passage through waters interconnecting the Philippine islands: ... [T]he Convention [on the Law of the Sea] in its provisions on pollution gives the coastal state additional enforcement jurisdiction in respect of pollution over foreign vessels in its territorial sea .... This additional jurisdiction does not apply in archipelagic waters. The result, therefore, is that in its archipelagic waters an archipelagic State has less enforcement jurisdiction over foreign vessels in matters of pollution than a nonarchipelagic State in its territorial sea ... or than the archipelagic State itself has in its own territorial sea lying beyond its archipelagic waters.45

(3) Archipelagic Sea Lanes and Air Space - International Highways Traversing Zones of Exclusive Economic Zone, Territorial Sea, Internal Waters and Air Space
2.7. It is through the archipelagic sea lanes that the UNCLOS has the most devastating impact on Philippine sovereignty. In addition to the right of innocent passage of foreign vessels through the territorial sea and the archipelagic waters of archipelagic states, the UNCLOS creates a new maritime regime, namely, the archipelagic sea lane passage. The central feature of this new regime is the duty of the Philippines as an archipelagic state to designate sea lanes and air routes suitable for the continuous and expeditious passage of foreign ships and aircraft through or over the archipelagic waters and the adjacent territorial sea.46 Jayewardene interprets
44 45 46 UNCLOS, Arts. 50 in relation to Arts 9, 10 and 11. See H.W. Jayewardene, The Regime of Islands in International Law, 1990, p. 98. Churchill and Lowe, op. cit. supra, note 34 at 96-97. UNCLOS, Art. 53(1).

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the UNCLOS as requiring that each archipelagic sea lane be 50 nautical miles wide.47 Each archipelagic sea lane is to traverse the archipelagic waters and the territorial sea in order to create continuous, expeditious and unobstructed transit between one part of the high seas or an exclusive economic zone and another part of the high seas or an exclusive economic zone.48 The right of archipelagic sea lanes passage consists of two components, namely: (1) the right of passage of all ships, and (2) the right of overflight of all aircraft. Both components pertain to all States and the archipelagic state cannot discriminate in form or in fact among foreign ships,49 which should apply as well to foreign aircraft. It shall not hamper nor suspend the archipelagic sea lanes passage.50 Archipelagic sea lanes are indeed in the nature of international highways cutting across the territory of an archipelagic state and excluded from the exercise of its sovereign authority, so that foreign ships and aircraft, particularly those of naval powers, can maintain worldwide mobility. The proceedings of the Third UN Conference on the Law of the Sea, which prepared the UNCLOS, reveal that the special character of the archipelagic sea lanes passage lies primarily in the militarysecurity demands of the US, which were accepted by the Conference in exchange for compromises and concessions. One major result of these compromises and concessions is synthesized by Shigeru Oda, former judge of the International Court of Justice, as follows: ...the new regime on the passage through straits and archipelagic waters was introduced not only for the navigation of commercial vessels, but, in particular, to maintain uninterrupted navigation of warships - including submarines and the free navigation of military aircraft. [In the early 1970s] the United States declared that it would accept the 12-mile territorial sea limit on certain conditions, among others that the free and uninterrupted passage for warships and military aircraft and submarines through straits used for international navigation be guaranteed. This was a basic point of the new regime of transit passage through straits. The idea of the archipelagic sea lane passage developed in a similar fashion Even this development [i.e., the proposal to define innocent passage of vessels in the archipelagic waters, sponsored principally by the
47 This is an interpretation of Art. 53(3) which requires that the sea lanes and air routes shall be defined by a series of continuous axis lines from the entry points of passage routes to the exit points. It provides that ships and aircraft shall not deviate more than 25 nautical miles to either side of such axis lines. UNCLOS, Art. 53(3). See UNCLOS, Art. 42(2) in relation to Art. 54. See UNCLOS, Art. 44 in relation to Art. 54.

48 49 50

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Philippines and Indonesia] was unacceptable to the US Navy, because under the innocent passage concept its submarines would not be able to carry out underwater operations. The US Navy would only accept the archipelagic concept on the condition that the undetected and uninterrupted passage of submarines would be guaranteed throughout the archipelagic waters. Thus, the concept of the archipelagic sea lanes passage was first introduced to permit naval vessels including submarines and military aircraft to enjoy a free and uninterrupted passage through the archipelagic waters.51 Article 53(1) and (2) of the UNCLOS now provides that All ships and aircraft enjoy the right of archipelagic sea lanes passage in such sea lanes and air routes, which archipelagic states are under duty to designate.52 Kwiatkowska has a more concrete explanation as to the military-security motivation of the right of archipelagic sea lanes passage, thus: The right of innocent passage would be perfectly adequate for commercial navigation and non-applicability of this right never hindered civil aviation. But archipelagic sea lane passage was necessary to enable a submerged navigation of submarines and maneuvering of a military aircraft which are not permissible under the innocent passage regime.53 As to submarines, an anomaly in the UNCLOS arises from the fact that it requires submarines to navigate on the surface in the territorial sea,54 whereas in transit through the archipelagic sea lanes they are allowed passage in their submerged state, or in the normal mode.55 It can be generalized then that The essential feature of archipelagic sea lanes passage is that the United States, Soviet Union, Britain, France, and possibly others may send the SSBNs [nuclear ballistic missile submarines] or attack submarines through archipelagic waters in their normal mode of operation. This right of archipelagic sea lane passage is especially important [to such naval powers] in the Southwest Pacific archipelagos of the Philippines and Indonesia for east-west transit to and from the Indian Ocean.56

51 52 53 54 55 56

S. Oda, The Passage of Warships Through Straits and Archipelagic Waters, in J.M. Van Dyke, et als. (eds.), International Navigation: Rocks and Shoals Ahead?, 1988, pp. 155-156. Emphasis added. Emphasis added. Obviously, the world all intends to convey the meaning of the provision as including military vessels and aircraft, without being explicit about their special character. B. Kwiatkowska, An Evaluation of State Legislation on Archipelagic Waters, 6 World Bulletin 22, 23 (Nov. Dec. 1990). UNCLOS, Art. 20. UNCLOS, Art. 53(3). D.L. Larson, Security Issues and the Law of the Sea: A General Framework, 15 Ocean Dev. & Intl L. 99, 118 (1985).

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As to overflight over the archipelagic sea lanes, Kwiatkowska further explains the peculiar military nature of this right, thus: The requirement that air routes must be above archipelagic sea lanes was dictated not by need of civil air navigation but by the necessity to provide maneuvering possibilities for military aircraft while the naval forces of a particular fleet are passing through the sea lanes . . . . It follows from the foregoing that, contrary to what is often maintained, a general right of free overflight above archipelagic waters can - due to its strict application to the air space above the archipelagic sea lanes - be implemented in practice only by military aircraft. Civil aircraft could clearly not fulfill the zigzagging above the archipelagic sea lanes and of overflying archipelagic waters without passing above archipelagic land (island) territory57 This security concern over the archipelagic sea lanes passage is qualitatively magnified because of the expansion of sea-based nuclear weapons systems. As a United Nations study shows, The sea has now become the operational environment of ballistic missile submarines, each of which has been estimated to be carrying the equivalent of more explosive power than was used by all the combatants in the Second World War. The combination of missile and warhead design, nuclear propulsion power, highly accurate navigation and guidance systems and sophisticated hull design and construction techniques has provided the opportunity for the development of an entirely new naval capability of awesome specific power.58 Until lately, a great percentage of the ICBMs is sea-borne and more than 7,000 strategic nuclear warheads are carried by submarines of the five nuclear-weapon states.59 And yet with respect to passage through the archipelagic sea lanes, the UNCLOS does not require prior authorization - or even just notification - for the passage of submarines or warships carrying nuclear weapons or other dangerous or noxious cargoes.60 In this context, a more specific situation emerges in the case of the Philippines. Under Article 53(4) of the UNCLOS the archipelagic sea lanes, together with the air routes for overflight, shall include all normal passage routes used as routes for international navigation. Under the UNCLOS, if the Philippines fails to designate sea lanes or air routes, the right of archipelagic sea lanes may be exercised through
57 58 59 60 Op. cit. supra note 53, at 41-42. UN Dept. of Disarmament Affairs, The Naval Arms Race (New York, 1986), p. 14. Id. At p. 27. See. H.W. H.W. Jayewardene, The Regime of Islands in International Law, 1990, pp. 170-171.

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these normal routes of international navigation.61 Taking into account existing normal routes for international navigation, how many archipelagic sea lanes may traverse the Philippine archipelago? On this basis, at least four of such international highways each not less than 50 nautical miles wide, are likely to cut across its territory. Between the Pacific Ocean and the South China Sea, the first route may pass through Luzon Strait (which consists of the Bashi, Balintang, and Babuyan Channels) in Batanes. The second may go through San Bernardino Strait and Verde Island Passage. The third, through Surigao Strait, may connect the Pacific Ocean with Mindanao and the Sulu Seas from which ships may go out into the South China Sea through the Balabac Strait in southern Palawan.62 Passing through Mindoro Strait, the fourth route may connect the South China Sea with the Celebes Sea through Basilan Strait. The other branch of this fourth route may go out through Balabac Strait into the Indonesian route and on to the Singapore Strait or Malacca Strait.63 Bear in mind that these archipelagic sea lanes are drawn across what the Philippine Constitution characterizes as internal waters over which the Philippines exercises sovereignty as well its territorial sea.

(4) Transit Passage


2.8. Among the straits used for international navigation which may be used for archipelagic sea lane passage, eight are situated entirely within the archipelagic waters of the Philippines, or what are its internal waters under the Philippine Constitution. Under the UNCLOS, transit passage through straits used for international navigation constitutes a separate legal regime established principally for the military interests of the naval powers. In continuity with archipelagic sea lanes passage, all ships and aircraft have the freedom of navigation and overflight through these straits.64 Again, submarines are allowed passage in their normal modes, i.e., underwater, without the obligation to surface. Where these straits do not form part of archipelagic sea lanes, transit passage through them constitutes an additional restriction to Philippine territorial sovereignty, quite apart from the archipelagic sea lanes and innocent passage through connecting waters of the countrys islands. 2.9. On the whole, the UNCLOS raises fundamental questions which bear directly on the security and integrity of the Philippine State. Why the Philippines must pay such a heavy price in the interest of the military powers points to a review of the Philippine position with respect to the UNCLOS.

61 62 63 64

Art. 53(12). See B. Kwiatkowska, An Assessment of Philippine Legislation on Archipelagic Waters, 6 World Bulletin 28, 35-36 (Sept.-Oct. 1990). Ibid. See UNCLOS, Arts. 37 and 38.

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3. A Conditional Concurrence of the UNCLOS by the Batasang Pambasa: Is There Concurrence At All?
3.1. By Resolution No. 121, The Batasang Pambansa expressed its concurrence in the UN Convention on the Law of the Sea on 27 February 1984. It reads: Resolved by the Batasang Pambansa, To concur, as it hereby concurs, in the United Nations Convention on the Law of the Sea entered into and signed by the Representative of the Republic of the Philippine on December 10, 1982 at Montego Bay, Jamaica, with the understanding embodied in the Declaration filed on behalf of the Republic of the Philippines by the head of the Philippine delegation when he signed the said Convention. It is to be assumed that this Declaration, entitled The Philippine Declaration on the Signing of the Convention on the Law of the Sea, has become an integral part of the Concurrence Resolution. Its full meaning may be disclosed when its content is correlated with the Declaration. From the viewpoint of national law, the Declaration, having been made an integral part of Resolution No. 121, is deemed an enactment of the Batasang Pambansa within its constitutional authority. Its significance lies in its disclosure of a fuller legislative intent as to the limitations that will control the operation of the UNCLOS. It should be obvious that the undertakings contained in the Declaration are in the nature of conditions, such as: 1. The signing of the Convention by the Government of the Republic of the Philippines shall not in any manner impair or prejudice the sovereign rights of the Republic of the Philippines under and arising from the Constitution of the Philippines; 2. Such signing shall not in any manner affect the rights of the Republic of the Philippines as successor of the United States of America, under and arising out of the Treaty of Paris between Spain and the United States of America of December 10, 1898, and the Treaty of Washington between the United States of America and Great Britain of January 2, 1930; * * *

3. Such signing shall not diminish or in any manner impair or prejudice the sovereign rights of the Republic of the Philippines over any territory over which sovereign authority, such as the Kalayaan Islands, and the waters appurtenant thereto;

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4. The Convention shall not be construed as amending in any manner any pertinent laws and Presidential Decrees or Proclamations of the Republic of the Philippines; .65 * * *

In the light of these conditions, the implementation of the UNCLOS with respect to the Philippines would run against the grain of the Constitution and, therefore, contrary to the intent of the Concurrence Resolution. The supremacy of the Philippine Constitution and the laws over the UNCLOS as affirmed in the Declaration would preclude the effectuation of UNCLOS in Philippine jurisdiction. The understanding in paragraph 1 of the Declaration means that the rights of sovereignty of the Philippines as embodied in the Constitution shall prevail over its affected obligations under the UNCLOS, giving rise to a complete negation of the UNCLOS as a treaty on the part of the Philippines. By reason of this paragraph, it would not be legally possible for the UNCLOS to change the character of the internal waters connecting the constituent islands of the Philippine Archipelago into archipelagic waters. Neither would it be possible for such internal waters to be traversed by archipelagic sea lanes on account of the UNCLOS. Paragraph 2 of the Declaration reaffirms the legal status of the Treaty of Paris. It asserts the rights of the Philippines arising from this Treaty, which should, in the first place, pertain to territorial sovereignty as delimited by the ITL. In this respect, the Declaration confirms the premise of the present Baseline Law that all the waters within the limits sets forth in the abovementioned treaties have always been regarded as part of the territory of the Philippine Islands.66 Under paragraph 5 of the Declaration, it is impermissible for the UNCLOS to effect changes in the present Baseline Law which will continue to be effective, in particular with respect to the prescriptions contained in its preamble, among which are: 1. [A]ll the waters within the limits set forth in the abovementioned treaties have always been regarded as part of the territory of the Philippine Islands; 2. [A]ll the waters beyond the outermost islands of the archipelago but within the limits of the boundaries set forth in the aforementioned treaties comprise the territorial sea of the Philippines; . . .

65 66

Emphasis added. Referring to the Treaty of Paris and the two companion treaties.

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Pursuing the interpretation of the Declaration as part of the Concurrence Resolution in the context of national law, it would be instructive to inquire into the objections of other states parties to the UNCLOS against this Declaration. By these means, the Declaration comes into clearer view as a statement of exceptions to, or of modification of the legal effects of, the UNCLOS with respect to the Philippines. The Declaration, according to the formal objection of the Union of Soviet Socialist Republics (Russian Federation), is a statement made by the Philippines upon signature and then confirmed upon ratification. It contains exceptions to the Convention and is incompatible with Article 310 of the Convention, implying that the Declaration contains statements purporting to exclude or to modify the legal effect of the provisions of this Convention in their application to the Philippines. The Russian Federation is of the view that the Declaration emphasizes more than once that, despite its ratification of the Convention, the Philippines will continue to be guided in matters relating to the sea, not by the Convention and the obligation under it, by its domestic law and by agreements it has already concluded which are not in line with the Convention.67 To the same effect is the objection of Czechoslovakia.68 It points out that the Declaration indicates that in spite of having ratified the Convention, the Philippines intends to follow its national laws and previous agreements rather than the obligations under the Convention, not only taking into account of whether those laws and agreements are in harmony with the Convention but even, as proved in paragraph 6 and 7 of the Philippine understanding [or Declaration], deliberately contravening the obligations set forth therein.69 Ukraines objection70 pursues the same points, saying that the statement of the Government of the Republic of the Philippines has the purpose of establishing unjustified exceptions for that State, and in fact of modifying the legal effect of important provisions of the Convention as applied thereto. Australias position71 states that the Philippines does not consider that it is obliged to harmonize its law with the provisions of the Convention [and it] is seeking to modify the legal effect of the Conventions provisions. While made in the context of international law, the foregoing statements of state parties to the UNCLOS, among others, indicates as well the interpretive implications of the Declaration considered as part of national law. They have synthesized the central point of the Declaration that it holds the Philippine Constitution and the laws in supremacy over the UNCLOS, which is impermissible
67 68 69 70 71 E.D. Brown, The International Law of the Sea: Vol. II Documents, Cases and Tables, 1994, pp. 101-102. Raphael Perpetuo M. Lotilla (ed.), The Philippine National Territory, 1995, pp. 542-543. Ibid., pp. 544-545. Ibid., 544-545. Ibid., pp. 547-548.

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under international law. However, from the viewpoint of national law, the implementation of the UNCLOS in the Philippine jurisdiction entails derogation of sovereignty and is in conflict with the Constitution. Consequently, the UNCLOS is violative of the Declaration and of the Concurrence Resolution of which it is an integral part.

4. Concluding Statement
4.1. Philippine sovereignty resides in its own homeland. The Philippine State is a territorial entity and the protection of its integrity, its territorial sovereignty, is the seat of fundamental principles in the legal system, international or national. Philippine sovereignty is co-extensive with the nations territorial limits together with its recognized extraterritorial implications. In this sense, the legal and political function of those limits - or boundaries - is to determine to what extent the Philippines has the competence to express its sovereign authority and to protect its independence. Its boundaries are the frontier of its sovereignty. 4.2. As determined by legal, political and historical factors discussed above, the territory of the Philippine State had been established and settled long before the advent of the UNCLOS. For so long, it had been recognized by the United States, Spain, Great Britain and, as pointed out in Philippine diplomatic representation to the international community, there was no protest from anyone against the exercise of such sovereignty. As an independent State, the Philippines continued to exercise sovereignty and jurisdiction over the same territory, [and] there has been likewise no protest by any State. The definition of national territory had thus enjoyed the acquiescence of the international community. Under the circumstances, national territory so established had already become an embodiment of sovereignty of the Philippines as a State, an integral part of its statehood. Any transformative change or reorganization of its territorial definition as provided in its fundamental law becomes a derogation of sovereignty and an outrage on its integrity as a State. For an international conference to be allowed to impact on national territory with such consequences is impermissible and no full powers of any legitimate plenitude granted to a diplomatic delegation for any stage of treaty-making can override the demands of territorial sovereignty as embodied in the Constitution. It is beyond legal comprehension that the UNCLOS be implemented in the face of fundamental objections arising from the sovereignty and integrity of the Philippines as a State. The impact of the UNCLOS on the Philippines is nothing short of reorganizing its entire territorial regime, including the revision of its political boundaries, with the result that Philippines becomes unrecognizable as established under its constitutional system.

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4.3. In regard to the Concurrence Resolution No. 121 pertaining to the UNCLOS, together with the Declaration considered as its integral part, by virtue of its conditional character it cannot be given effect under the treaty clause of the 1973 Constitution, the fundamental law at the time. The concurrence requirement under the Constitution must be related to the act of ratification embodied in the Instrument of Ratification signed by the President who transmitted it to the Batasang Pambansa under the 1973 Constitution (or to the Senate under the present Constitution), together with the treaty or convention in question, with the request for concurrence of such treaty. If the Batasan or the Senate expresses concurrence subject to certain conditions or reservations, then there is failure of ratification as requested by the President set forth in the Instrument of Ratification. The conditions which the Batasan or the Senate stipulates would be sent back to the President, together with such treaty, as its response to the Presidents request for concurrence in his act of ratification. These conditions would have the effect - if not explicitly specified by the Batasan or the Senate - of a request to the President for him to renegotiate the treaty pursuant to such conditions, assuming that he would persist in the ratification of the treaty in compliance with the request of the Batasan or the Senate. If he does not act on the conditions indicated by the Batasan or the Senate, his Instrument of Ratification would have no legal effect. Hence, the Constitution provides no room for conditional concurrence. It would be a separate problem to consider whether the treaty in question would satisfy the standard of constitutionality or validity set forth in the substantive content of the conditions set forth in the Declaration. As an integral part of the Concurrence Resolution, the Declaration sets these standards, by which the UNCLOS is shown, as pointed out above, to be incompatible with the Constitution. Thus, based on Resolution No. 121 of the Batasan to which the said Declaration is integrated, there is failure of ratification of the UNCLOS by reason of the unfulfilled conditions which the Resolution and the Declaration require. Hence, Resolution No. 121 of the Batasan by its own terms cannot be binding as an act of concurrence for the reason that the UNCLOS impairs the rights of sovereignty of the Philippines under the Constitution and those under the Treaty of Paris and that it effects amendments to Philippine laws, contrary to the mandates of the Declaration as part of the said Resolution, which has the force of law in Philippine jurisdiction. 4.4. Even on the assumption that as a treaty the UNCLOS becomes binding law by virtue of ratification based on valid concurrence by the Batasan, its implementation involving as it does the reorganization of Philippine territorial sovereignty is open to question under the international law of treaties. The subjectmatter of the UNCLOS implementation is the territorial status of the Philippines which has been established and settled long before the negotiations for the UNCLOS
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started in the Third UN Conference on the Law of the Sea and much longer before the entry into force of the UNCLOS on 16 November 1994. Thus, UNCLOS is to be accorded retroactive application, which customary international law does not allow. As codified in the Vienna Convention on the Law of treaties of which the Philippines is a party, the non-retroactivity rule provides that Unless a different intention appears from the treaty or is otherwise established, its provisions do not bind a party in relation to any act or fact which took place or any situation which ceased to exist before the date of the entry into force of the treaty with respect to that party.72 Under the UNCLOS, there appears no intention to apply its provisions retroactively. Article 308 of the UNCLOS stipulates that it shall enter into force 12 months after the date of deposit of the sixtieth instrument of ratification or accession, which took place on 16 November 1994. Article 310 of the UNCLOS allows a State party to make declarations or statements with a view to the harmonization of its laws and regulations with the provisions of this Convention. But this provision does not intend to define an obligation; it pertains to a unilateral act or declaration of a state party which is left to its discretion to make. The UNCLOS also provides in Article 311(2) that This Convention shall not alter the rights and obligations of States Parties which arise from other agreements compatible with this Convention and which do not affect the enjoyment by other States Parties of their rights or the performance of their obligations under this Convention. This may imply that such rights and obligations arising from agreements other than the UNCLOS may be subject to alteration if not compatible with the UNCLOS. Under this provision may the definition of the national territory as embodied in the Treaty of Paris, together with its companion international agreements, be altered to align the territorial rights of the Philippines along the requirements of the UNCLOS? Insofar as Article 311(2) of the UNCLOS, given above, purports to have retroactive application of the UNCLOS, its operation is to be deemed controlled by the non-retroactivity rule in Article 28 of the Vienna Convention on the Law of Treaties (1969), which applies to the UNCLOS on account of the fact that the

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Article 28.

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UNCLOS entered into force on the date after the entry into force of the said Vienna Convention on 27 January 1980.73 Above all, the UNCLOS cannot effectuate any alteration of international agreements defining the territorial sovereignty without derogation of state sovereignty. It is a basic principle of international law under the Charter of the United Nations as affirmed in the UN Declaration on Principles of International Law that all states enjoy sovereign equality. By this principle, each state has the duty to respect the personality of other states; the territorial integrity of the state is inviolable.74 Having in mind this principle, any claim to an obligation under the UNCLOS must be subject to the supremacy clause in Article 103 of the UN Charter which reads that In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the present Charter shall prevail. Reinforcing the protection of its territorial sovereignty and integrity, precluding alteration of its territorial status by third-party settlement or intervention is the effect of the Philippine reservation to its acceptance of the compulsory jurisdiction of the International Court of Justice (ICJ), referred to above. To repeat, its recognition of the ICJs jurisdiction does not apply to any dispute Arising out of or concerning jurisdiction or rights claimed or exercised by the Philippines . . . [i]n respect of the territory of the Republic of the Philippines, including its territorial seas and inland waters.

73

As a general rule, Article 4 of the Vienna Convention on the Law of Treaties (1969) provides that this Convention applies only to treaties, which are concluded by States after the entry into force of the present Convention with regard to such States. This Declaration was adopted by the UN General Assembly as Resolution 2625 (XXV) on 24 October 1970. Its full title is Declaration on Principles of International Law Concerning Friendly Relations and Cooperation Among States in Accordance with the Charter of the United Nations. It declares that the principles it embodies constitute the basic principles of international law. For text of Declaration, see Merlin M. Magallona, Fundamentals of Public International Law, 2005, pp. 843-858.

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The On-going National Territorial Debate: Issues and Perspectives*


Leo Tito L. Ausan, Jr.**

Introduction
The national territorial debate in the Philippines had its resurgence during the first half of this year. While there could be loud disagreements on what could have possibly triggered it, many would agree that the debate is simply a redux of similar verbal and written tanglings on the subject in the past like those that once transpired in the halls where the countrys constitutions were crafted, in the chambers of the legislature where bills were dissected and treaties were scrutinized, in meeting rooms where negotiating positions were processed, in studies where speeches were assembled and decrees were written, and in journals and other relevant publications where issues and perspectives were expressed and clashed. Today, as was in many occasions before, the debate remains as passionate and as charged with patriotic fervor. For a subject as sensitive and as controversial as national territory, this is both understandable and expected. However and again like in the past, no early end looms. The issues remain complex and befuddled even as their respective manifold perspectives are not being clearly set out. Hence, serious and stoic analyses for the purpose of arriving at a desirable resolution that would serve the countrys best interests are never undertaken. And the debate continues. This is an attempt to present in brief the debates issues and perspectives. This is done in the fervent hope that when presented in proper and accurate context, they are made more percipient. Perhaps this could help in fermenting a collective realization that the country could not ignore them much longer and must now act and squarely address them in order to end the debate, once and for all.

A lecture-presentation delivered during the IBP Journal Lecture Series on the Spratly Islands: Impact of the UNCLOS on the Territorial Integrity of the Philippines and other Related Legal Issues at the Malcolm Theater, U.P. College of Law, Diliman Quezon City, 29 May 2008. Atty. Leo Tito L. Ausan, Jr., LL.M. in International Maritime Law (International Maritime OrganizationInternational Maritime Law Institute, Malta) is a mid-level officer in the Philippine Foreign Service. He is currently the Acting Executive Director of the Ocean Concerns Officers (OCO), Department of Foreign Affairs. He wrote and delivered this lecture in his private capacity. The views expressed are his alone, unless due attribution is made.

**

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RPs National Territory and its Peculiarities


The Philippines is a mid-ocean archipelago1 that is geo-strategically located in the heart of Southeast Asia. Its 7,107 islands are surrounded by the Pacific Ocean on the East, the South China Sea on the West and North and the Celebes Sea on the South. 62 of its 81 provinces have access to the sea and their aggregate coastline stretches to 36,289 km. It is at the crossroads of major international navigational routes. In fact, majority of the worlds tankers, super or otherwise, that pass through the Straits of Malacca and Singapore and the Sunda and Lombok Straits of Indonesia, proceed to the South China Sea at its westside and onwards. Domestically, it itself plays host to five major straits ordinarily used for international navigation.2 Exploratory geological activities abound in its southwestern waters, which possess a high yield potential for oil and gas. Further, it is renowned as the center of the center of marine biodiversity and is situated at the apex of the so-called Coral Triangle. The national territory of the Philippines, which prides itself of the aforesaid unique geo-physical peculiarities, is defined in its 1987 Constitution as comprises the Philippine Archipelago and embraces islands, waters and all other territories over which the Philippines has sovereignty or jurisdiction. It further describes it as consisting of terrestrial (including the seabed, the subsoil, the insular shelves and other submarine areas), fluvial (including the territorial sea) and aerial domains.3 Surveyors determine land and water areas on the basis of where they start and end, which of course must be clearly identified and established. The determination of the terrestrial domain (land area) of the Philippines at 296,340 sq. km.4 was surely done in this manner. Similar ease does not obtain, however, in the determination of the fluvial and aerial areas of the country. While it is a fact that the measuring of the expanse of the countrys waters starts where its lands end, it is uncertain where this should end as the Philippines national territorial boundaries the outer limits of its territorial sea is, to date, not definite. Consequently, measuring the aerial domain upwards on the basis of the outer limits of the fluvial domain cannot be performed accurately.
1 Geographically, archipelagos can be classified into two (2), namely: (a) continental or coastal; and (b) mid-ocean or outlying archipelagos. Coastal or continental archipelagos are those situated so close to the mainland that they may be reasonably considered to be part and parcel thereof, forming more or less an outer coast line. The Norwegian Skjaergaard and the Canadian Arctic Archipelago are prominent examples of coastal archipelagos. On the other hand, mid-ocean or outlying archipelagos are defined as groups of islands situated in the ocean at such a distance from the coasts of the firm land as to be considered as an independent whole rather than forming part of or outer coastline of the mainland. This type of archipelagos are further divided on the basis of political status unto those forming the whole territory of states (i.e., archipelagic states) and mid-ocean archipelagos belong to continental states. Philippines and Indonesia exemplify mid-ocean archipelagic states, while Faeroe Islands typify a mid-ocean archipelago belonging to a continental state (Denmark). (Munavaar, Mohamed, cean States: Archipelagic Regimes in the Law of the Sea, Martinus Nijhoff Publishers, 1993, at 15 & 17. Those that traverse through Luzon Strait/Bashi/Balintang & Babuyan Channels; from the Verde Island Passage to the San Bernardino Strait; Mindoro Strait-Basilan Pass/Sibutu Pass; Surigao Strait to Balabac Strait; and through the Balut Channel. Art. 1, Sec. 1, 1987 Constitution. Represents the aggregate of all surfaces delimited by international boundaries and/or coastlines, excluding inland water bodies (lakes, reservoirs, rivers) (CIA Factbook).

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Discernibly, the territorial boundaries of the Philippine archipelago are not found in the national territory provision of the 1987 Constitution. While the provision offers some kind of basis for its determination that is over which the Philippines exercises sovereignty or jurisdiction, it does not clearly supply the particular geographical limits of this exercise of sovereignty or jurisdiction. In fact, its manifest non-self-executing formulation, constricted by the practice of avoiding details (e.g., geographical limits of a States national territory) in crafting constitutions, yearns for the satiating of this inadequacy by relevant implementing legislation. Has the legal history of the 110-year old Philippine Republic produced this legislation yet? Are these laws, if any, sufficient to fill the need for definite national territorial boundaries? If they are sufficient, how come to date the Philippines cannot still pinpoint with convincing accuracy and clarity its national territorial boundaries? What issues and concerns stall the process of the Philippines establishment of territorial boundaries with exactitude? How should and could these be addressed? A careful survey of Philippine constitutional and statute law reveals that there is indeed existing legislation on the basis of which the national territorial boundaries of the Philippines could be determined. Regrettably, however, there are two (2) sets of these laws, with the application and substance of one contradicting the other, thereby, posing a question of precedence and preference in the context of law and policy and their implementation. They are: (a) those that collectively posit that the national territorial boundaries are the limits established by relevant international treaties; and (b) those that collectively prescribe that the outer limits of the Philippine national territory be determined after projecting the territorial sea in accordance with the United Nations Convention on the Law of the Sea (UNCLOS) of 1982.

Legal Moorings: RPs International Treaty Limits (ITL)


The Philippines has so-called international treaty limits that could serve as the metes and bounds of the national territory. How did these come about? The story straddles the entire length of the countrys history but is worth looking into again, albeit quickly, if one is to comprehend why the national territorial debate persists and remains perplexing. On 10 December 1898, as a result of the Spanish-American War, the then newly-emergent world power, the United States, and the vanquished, Spain, entered into a treaty of peace, popularly known in the annals of Philippine history as the Treaty of Paris. Article III of the treaty provided that for a sum of twenty million dollars ($20,000,000.00), which the US will pay Spain within three months after the exchange of the ratifications, Spain cedes to the United States the archipelago known as the Philippine Islands, and comprehending the islands lying within a specific set of lines (Map No. 1 provided at the end of the article), described as follows:
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A line running from west to east along or near the twentieth parallel of north latitude, and through the middle of the navigable channel of Bachi, from the one hundred and eighteenth (118th ) to the one hundred and twenty seventh (127th) degrees meridian of longitude east of Greenwich, thence along, the one hundred and twenty seventh (127th) degree meridian of longitude east of Greenwich to the parallel of four degree and forty five minutes (445) north latitude, thence along the parallel of four degrees and forty five minutes (445) north latitude to its intersection with the meridian of longitude one hundred and nineteen degrees and thirty five minutes (11935) east of Greenwich, thence along, the meridian of longitude one hundred and nineteen degrees and thirty five minutes (11935) east of Greenwich to the parallel of latitude seven degrees and forty minutes (740) north, thence along the parallel of latitude seven degrees and forty minutes (740) north to its intersection with the one hundred and sixteenth (116 th ) degree meridian of longitude east of Greenwich, thence by a direct line to the intersection of the tenth (10th) degree parallel of north latitude with the one hundred and eighteenth (118th) degree meridian of longitude east of Greenwich, and thence along the one hundred and eighteenth (118th) degree meridian of longitude east of Greenwich to the point of beginning. Subsequently, on 7 November 1900, in the sole article of the US-Spain Treaty of Cession of Outlying Islands of the Philippines, Spain relinquished to the United States all title and claim of title, which she may have had at the time of the conclusion of the Treaty of Peace of Paris, to any and all islands belonging to the Philippine Archipelago, lying outside the lines described in Article III of that Treaty and particularly to the islands of Cagayan, Sulu & Sibutu and their dependencies, and agrees that all such islands shall be comprehended in the cession of the Archipelago as fully as if they had been expressly included within those lines. For this relinquishment, the United States paid Spain the sum of One Hundred Thousand dollars ($100,000.00). Thirty years later, in Article III of the US-UK Convention Delimiting the Boundary Between the Philippine Archipelago & the State of North Borneo 1930, the States parties agreed that All the islands to the north & east of an agreed and declared line (described in Article I of the Convention) and all islands and rocks traversed by the said line, should there be any such, shall belong to the Philippine Archipelago and all islands to the south and west of the said line shall belong to the State of North Borneo. The islands referred to here are the Turtle and Mangsee Islands. The aforementioned lines collectively referred to as ITL hereinafter (Map No. 1), were accordingly embodied in the legislation of the period, as follows: Sec.14. Territorial jurisdiction and extent of powers of Philippine government. The territory over which the Government of the Philippine
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Islands exercises jurisdiction consists of the entire Philippine Archipelago and is comprised in the limits defined by the treaties between the United States and Spain, respectively signed in the city of Paris on the tenth day of December, eighteen hundred and ninety-eight; and in the city of Washington on the seventh day of November, one thousand nine hundred.5; and Sec. 16. Territorial jurisdiction and extent of powers of Philippine government. - The territory over which the Government of the Philippine Islands exercises jurisdiction consists of the entire Philippine Archipelago and is comprised in the limits defined by the treaties between the United States and Spain, respectively signed in the city of Paris on the tenth day of December, eighteen hundred and ninety-eight; and in the city of Washington on the seventh day of November, one thousand nine hundred.6 In the 1935 Constitution of the Philippine Commonwealth, the territory comprised in the Philippines Islands was described as that which: comprises all the territory ceded to the United States by the Treaty of Paris concluded between the United States and Spain on the tenth day of December, eighteen hundred and ninety-eight, the limits which are set forth in Article III of said treaty, together with all the islands embraced in the treaty concluded at Washington between the United States and Spain on the seventh day of November, nineteen hundred, and the treaty concluded between the United States and Great Britain on the second day of January, nineteen hundred and thirty, and all territory over which the present Government of the Philippine Islands exercises jurisdiction.7 In 1961, the Congress enacted Republic Act No. 3046, which described the national territory in its preamble as follows: WHEREAS, the Constitution of the Philippines describes the national territory as comprising all the territory ceded to the United States by the Treaty of Paris concluded between the United States and Spain on December 10, 1898, the limits of which are set forth in Article III of said treaty, together with all the islands embraced in the treaty concluded at Washington, between the United States and Spain on November 7, 1990, and in the treaty concluded between the United States and Great Britain on January 2, 1930 and all the territory over which the Government of the Philippine Islands exercised jurisdiction at the time of the adoption of the Constitution;
5 6 7 Art. IV, Act No. 2657 (Administrative Code of 1916). Art. IV, Act No. 2711 (Revised Administrative Code of 1917). Art. I (National Territory), Sec. 1.

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WHEREAS, all the waters within the limits set forth in the abovementioned treaties have always been regarded as part of the of the territory of the Philippine Islands; x x x WHEREAS, all the waters beyond the outermost islands of the archipelago but within the limits of the boundaries set forth in the aforementioned treaties comprise the territorial sea of the Philippines. In the 1973 Constitution, the Philippines first constitution after it was granted independent by the Americans in 1946, the national territory was described to comprise the Philippine archipelago, with all the islands and waters embraced therein, and all the other territories belonging to the Philippines by historic or legal title, including the territorial sea, the air space, the subsoil, the sea-bed, the insular shelves, and the submarine areas over which the Philippines has sovereignty or jurisdiction. x x x.8 The phrase by historic and legal title embraced the three (3) treaties enumerated in Article I, Section 1 of the 1935 Constitution. Thereafter, the 1987 Constitution did away with the phrase by historic and legal title and substituted it with over which the Philippines has sovereignty or jurisdiction, to wit: The national territory comprises the Philippine archipelago, with all the islands and waters embraced therein, and all other territories over which the Philippines has sovereignty or jurisdiction, consisting of its terrestrial, fluvial and aerial domains, including its territorial sea, the seabed, the subsoil, the insular shelves, and other submarine areas.9 Indirectly, however, the three (3) treaties remained encompassed in the later phrase. The records of the proceedings of the Constitutional Commission that drafted the 1987 Constitution would attest to this.

Legal Moorings: UNCLOS-based Territorial Limits (UTL)


On 10 December 1982, the UNCLOS was opened for signature in Montego Bay, Jamaica and the Philippines was one of the first countries to sign it. Simultaneous with its signing of the Convention, the Philippines submitted a Declaration, the salient paragraphs of which are as follows: The Government of the Republic of the Philippines hereby manifests that in signing the 1982 United Nations Convention on the Law of the Sea, it does so with
8 9 Art. I (National Territory), Sec. 1. Art. I (National Territory), Sec. 1.

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the understandings embodied in this declaration, made under the provisions of Article 10 of the Convention, to wit: 1. The signing of the Convention by the Government of the Republic of the Philippines shall not in any manner impair or prejudice the sovereign rights of the Republic of the Philippines under and arising from the Constitution of the Philippines; 2. Such signing shall not in any manner affect the sovereign rights of the Republic of the Philippines as successor of the United States of America, under and arising out of the Treaty of Paris between Spain and the United States of America of December 10, 1898 and the Treaty of Washington between the United States of America and Great Britain of January 2, 1930; 3. Such signing shall not diminish or in any manner affect the rights and obligations of the contracting parties under the Mutual Defense Treaty between the Philippines and the United States of America of August 30, 1951, and its related interpretative instrument; nor those under any other pertinent bilateral or multilateral treaty or agreement to which the Philippines is a party; 4. Such signing shall not in any manner impair or prejudice the sovereignty of the Republic of the Philippines over any territory over which it exercises sovereign authority, such as the Kalayaan Islands, and the waters appurtenant thereto; 5. The Convention shall not be construed as amending in any manner any pertinent laws and Presidential Decrees or Proclamations of the Republic of the Philippines; the Government of the Republic of the Philippines maintains and reserves the right and authority to make any amendments to such laws, decrees or proclamations pursuant to the provisions of the Philippine Constitution; 6. The provisions of the Convention on archipelagic passage through sea lanes do not nullify or impair the sovereignty of the Philippines as an archipelagic state over the sea lanes and do not deprive it of authority to enact legislation to protect its sovereignty, independence, and security; 7. The concept of archipelagic waters is similar to the concept of internal waters under the Constitution of the Philippines, and removes straits connecting these waters with the economic zone or high sea from the rights of foreign vessels to transit passage for international navigation; 8. The agreement of the Republic of the Philippines to the submission for peaceful resolution under any of the procedures provided in the
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Convention, of disputes under Article 298 shall not be considered as a derogation of Philippine sovereignty.10 Subsequently, the Batasan Pambansa ratified the UNCLOS in Resolution No. 121 dated 27 February 1984, which was eventually submitted to and entered into the records of the United Nations on 8 May 1984, to wit: WHEREAS, pursuant to paragraph (1), Section 14, Article Viii of the Constitution, the Convention on the Law of the Sea shall be valid and effective if concurred in by a majority of all the Members of the Batasan Pambansa: Now, therefore, be it Resolved by the Batasan Pambansa, to concur, as it hereby concurs, in the United Nations Convention on the Law of the Sea entered into and signed by the Representatives of the Republic of the Philippines on December 10, 1982 at Montego Bay, Jamaica, with the understandings embodied in the Declaration filed on behalf of the Republic of the Philippines by the head of the Philippine delegation when he signed the said Convention, copy of which is attached as Annex A.11 The UNCLOS finally entered into force on 16 November 1994. Significantly for the Philippines, the UNCLOS contained Part IV which provides for a regime of Archipelagic States. This came after almost three (3) decades of dogged campaign by the Philippines, together with other countries archipelago like Indonesia, to have the so-called archipelagic doctrine recognized in international law. Under the UNCLOS, an archipelago is defined as a group of islands, including parts of islands, interconnecting waters and other natural features which are so closely interrelated that such islands, waters and other natural features form an intrinsic geographical, economic and political entity, or which historically have been regarded as such.12 Correlatively, an archipelagic State is defined as a State constituted wholly by one or more archipelagos and may include other islands.13 As an archipelagic State, the Philippines may draw archipelagic baselines in accordance with UNCLOS prescriptions, as follows: 1. An archipelagic State may draw straight archipelagic baselines joining the outermost points of the outermost islands and drying reefs of the
10 Lotilla, R.P.M. (ed.), The Philippine National Territory: A Collection of Related Documents, Institute of International Legal Studies at 510-511 citing as source Focus: The Philippines and the Convention on the Law of the Sea, D-1, Philippine Y.B. Intl. L, Volume. VII (1982). Batas Pambansa, Acts & Resolutions, 6th Regular Session. Art. 46, Part IV, UNCLOS. Ibid.

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archipelago provided that within such baselines are included the main islands and an area in which the ratio of the area of the water to the area of the land, including atolls, is between 1 to 1 and 9 to 1 . 2. The length of such baselines shall not exceed 100 nautical miles, except that up to 3 per cent of the total number of baselines enclosing any archipelago may exceed that length, up to a maximum length of 125 nautical miles . 3. The drawing of such baselines shall not depart to any appreciable extent from the general configuration of the archipelago . 4. Such baselines shall not be drawn to and from low-tide elevations, unless lighthouses or similar installations which are permanently above sea level have been built on them or where a low-tide elevation is situated wholly or partly at a distance not exceeding the breadth of the territorial sea from the nearest island. 5. The system of such baselines shall not be applied by an archipelagic State in such a manner as to cut off from the high seas or the exclusive economic zone the territorial sea of another State. 6. If a part of the archipelagic waters of an archipelagic State lies between two parts of an immediately adjacent neighboring State, existing rights and all other legitimate interests which the latter State has traditionally exercised in such waters and all rights stipulated by agreement between those States shall continue and be respected. 7. For the purpose of computing the ratio of water to land under paragraph l, land areas may include waters lying within the fringing reefs of islands and atolls, including that part of a steep-sided oceanic plateau which is enclosed or nearly enclosed by a chain of limestone islands and drying reefs lying on the perimeter of the plateau. 8. The baselines drawn in accordance with this article shall be shown on charts of a scale or scales adequate for ascertaining their position. Alternatively, lists of geographical coordinates of points, specifying the geodetic datum, may be substituted.14 From its archipelagic baselines, the Philippines is allowed to project its various maritime zones such as the territorial sea, contiguous zone, exclusive economic zone

14

Art. 47, UNCLOS.

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(EEZ) and continental shelves in breadths allowed by the UNCLOS for coastal states.15 The territorial sea is up to a limit not exceeding 12 nautical miles.16 The contiguous zone may not extend beyond 24 nautical miles.17 The EEZ may not extend beyond 200 nautical miles.18 The juridical/legal continental shelf is coextensive with the EEZ or not exceeding 200 nautical miles, while the extended continental shelf (ECS) could extend beyond 200 nautical miles but not more than 350 nautical miles after the requirements of Art. 76 are met.19 Thenceforth, the domestic airspace (subject to the right of overflight) could be projected upwards over the countrys land territory, internal waters, archipelagic waters (Art.49 (2)) and territorial sea (Art.2). The airspace over zones beyond the territorial sea is international. (Map No. 2 at the end of the article) Hence, pursuant to the UNCLOS, the territory of an archipelagic State would embrace the following: (a) its land territory and internal waters; (b) its archipelagic waters and territorial sea as well as their bed and subsoil; and (c) its domestic airspace. The boundaries of this territory would be the outer limits of the territorial sea projected from its archipelagic baselines 20 although maritime zones, like the contiguous zone, EEZ and the continental shelves, extend beyond it. 21 (Map No. 3 at the end of the article)

15 16 17 18 19 20 21

Art. 48, UNCLOS. Art. 3, UNCLOS. Art. 33, UNCLOS. See also P.D. 1599 (1978) and Sec. 4, par. 18, R.A. 8550 (Philippine Fisheries Code of 1998). Art. 57, UNCLOS. Art. 76, UNCLOS. Art. 4, UNCLOS. It is worth adding that all waters of the Philippines or Philippine waters is now broadly defined as including all bodies of water within the Philippine territory such as lakes, rivers, streams, creeks, brooks, ponds, swamps, lagoons, gulfs, bays and seas and other bodies of water now existing or which may hereafter exist in the provinces, cities, municipalities, and barangays and the waters around, between and connecting the islands of the archipelago regardless of their breadth and dimensions, the territorial sea, the sea beds, the insular shelves and all other waters over which the Philippine has sovereignty and jurisdiction, including the 200-nautical miles exclusive economic zone and the continental shelf. (Sec. 4, RA No. 8550 (Philippine Fisheries Code of 1998)). Previously, Philippine waters was limitedly defined in Art. II, Sec. 6, Act No. 4003 (Fish & Other Aquatic Resources Act of the Philippine Islands of 1932) as including all waters pertaining to the Philippine Archipelago, as defined in the treaties between the United States and Spain, dated respectively the tenth of December, eighteen hundred and ninety-eight, and the seventh of November, nineteen hundred and in Sec. 3(r), P.D. No. 704 (Revised Fisheries Code of 1975) as including all bodies of water within Philippine territory, such as rivers, streams, creeks, brooks, ponds, swamps, lagoons, gulfs, bays, and seas and other bodies of water now existing, or which may hereafter exist in the provinces, cities and municipalities, municipal districts, and barrios; and the sea or fresh water around between and connecting each of the islands of the Philippine archipelago, irrespective of its depth, breadth, length and dimension, and all other waters belonging to the Philippines by historic or legal title including the territorial sea, the seabed, the insular shelves and other submarine areas over which the Philippines has sovereignty or jurisdiction.

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UNCLOS Minimum Expectations


As a party to the UNCLOS, an archipelagic State is accorded specific rights within each maritime zone projected from its baselines. In the territorial sea, the archipelagic State exercises its full sovereignty.22 This includes the right to enforce laws and exercise of police control and the right to exercise criminal23 and civil24 jurisdiction among others. In the contiguous zone, adjacent to the territorial sea, the archipelagic State may exercise the control necessary to prevent or punish infringement of its customs, fiscal, immigration or sanitary laws and regulations committed within its territory or territorial sea.25 Further, in the EEZ, the archipelagic State has sovereign rights for the purpose of exploring and exploiting, conserving and managing the natural resources, whether living or non-living, of the waters superjacent to the seabed and of the seabed and its subsoil,26 and with regard to other activities for the economic exploitation and exploration of the zone, such as the production of energy from the water, currents and winds.27 And it has jurisdiction with regard to the establishment and use of artificial islands, installations and structures; marine scientific research; and the protection and preservation of the marine environment.28 As regards both the contiguous zone and the EEZ, the Philippines has even gone farther than the UNCLOS by declaring that: All submerged lands within the contiguous zone and in the exclusive economic zone of the Philippines are hereby declared to be mineral reservations. 29 In the continental shelves, juridical or extended, the archipelagic State has sovereign rights for the purpose of exploring and exploiting the mineral and other non-living resources of the seabed and subsoil together with living organisms

22 23 24 25 26 27 28 29

Art. 2(1) & Art. 49, UNCLOS. Art. 27, UNCLOS. Art. 28, UNCLOS. Art. 33, UNCLOS. This (together with Art. 77, UNCLOS) provides legal basis for making the Philippine Fisheries Code of 1998 (RA 8550) enforceable in the EEZ and the continental shelf. (Sec. 3(a), RA 8550) Art. 56, UNCLOS. Art. 56, UNCLOS. Sec. 5, R.A. No. 7942 (Philippine Mining Act of 1995). In the same law, mineral reservations would be those areas that the President may establish when the national interest so requires, such as when there is a need to preserve strategic raw materials for industries critical to national development, or certain minerals for scientific, cultural or ecological value.

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belonging to sedentary species.30 The rights are exclusive in the sense that if the coastal State does not explore the continental shelf or exploit its natural resources, no one may undertake these activities without the express consent of the coastal State. The rights do not depend on occupation, effective or notional, or on any express proclamation.31 Correspondingly, an archipelagic State has the obligation to respect the rights of ships belonging to third States to pass through its territorial sea, archipelagic and internal waters in accordance with UNCLOS prescriptions (i.e., right of innocent passage,32 right of transit passage through straits normally used for international navigation33 and archipelagic sealanes passage,34 as may be applicable). On the other hand, its domestic airspace is subject to the right of overflight of other States.35 In the exercise of its rights and in meeting its obligations, an archipelagic State Party to the UNCLOS must necessarily meet certain expectations, one of which, as succinctly put by the UN Secretary General in 1994, is the development of a comprehensive and coordinated national oceans policy 36 and the other being that: 3. At the very minimum, all coastal States parties should by now have established in accordance with the Convention the baselines and the maritime zones they wish to claim and have deposited with the Secretary-General of the United Nations charts or lists of geographical coordinates showing the limits of maritime zones to which they are entitled.37

RPs UNCLOS Task List


Observably, almost a quarter of a century from its ratification of the UNCLOS in 1984, the Philippines has yet to meet the expressed minimum expectation of the Convention pronounced by the UN Secretary General. To this time, the country still has to draw its archipelagic baselines and still has to accurately project and

30 31 32 33 34 35 36 37

Organisms which, at the harvestable stage, either are immobile on or under the seabed or are unable to move except in constant physical contact with the seabed or the subsoil (Art. 77(4), UNCLOS). Art. 77, UNCLOS. Art. 52(1), subject to Art. 53 and without prejudice to Art. 50, UNCLOS (innocent passage through archipelagic waters) in accordance with Part II, Sec. 3 (Arts. 17-21), UNCLOS (innocent passage in the territorial sea). Art. 53(12), UNCLOS. Art. 53 in relation to Arts. 39, 40, 42 & 44, UNCLOS. Art. 53(2), (3) & (12) in relation to Arts. 39, 42 & 44, UNCLOS. Report of the UN Secretary General, A/59/62, 04 March 2004, p.5. Ibid, p.5.

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establish its seaward maritime zones from it.38 In addition, it has yet to lay claim to an ECS and is undecided on whether or not to adopt an archipelagic passage regime. Furthermore, it still has to delimit its common maritime boundary with its neighboring States, even as it has not considered opting for a mode of settling UNCLOS disputes. It does not matter whether or not the foregoing shortfalls in meeting UNCLOS expectations, particularly the drawing of the baselines and the establishment of maritime zones is attributable to either lack of political decisiveness or simply unbridled indifference. What matters is for as long as the metes and bounds of the national territory remain uncertain, the spectre of multifarious problems on national sovereignty, territorial integrity and national security will persist on haunting the country. It is, thus, imperative to muster sufficient conviction to resolve this quandary. In this regard, it is necessary that the following principal issues, which have emerged from the national territorial debate, be categorically addressed: (a) Are RPs ITL its national territorial boundaries?; (b) Is RP an archipelagic State yet?; (c) Is there a deadline for the Philippines to draw its archipelagic baselines?; (d) How should RP treat its landward waters if the archipelagic baselines are eventually drawn?; (e) How should RP treat its disputed territories when drawing its archipelagic baselines?; and, finally, (f) What should be RPs national territorial limits the outer limits of the territorial sea reckoned from UNCLOS-prescribed baselines or the ITL?

Are RPs ITL its national territorial boundaries?


Those who offer a negative answer to this question explain that the ITL cannot be the countrys national territorial boundaries because the three (3) treaties earlier cited merely mentioned the ceding by Spain to the United States of islands,39 islands of Cagayan, Sulu & Sibutu40 and all the islands to the north & east and

38

(a) To date, the Philippines still has to enact legislation establishing a 12 nautical mile territorial sea; (b) The country also does not have a law establishing a contiguous zone for the purposes enumerated in Article 33, UNCLOS although it has legislation that defines the contiguous zone as referring to water, sea bottom and substratum measured twenty-four nautical miles (24 n.m.) seaward from the base line of the Philippine archipelago. (Section 3. Definition of Terms, R.A. No. 7942 (Philippine Mining Act of 1995)); (c) It has established a zone to be known as the exclusive economic zone of the Philippines x x x (which) shall extend to a distance of two hundred nautical miles beyond and from the baselines from which the territorial sea is measured x x x. (Sec. 1, P.D. No. 1599 (1978)); (d) The country claims state ownership of, All natural deposits or occurrences of petroleum or natural gas in public and/or private lands in the Philippines, whether found in , on or under the surface of dry lands, creeks, rivers, lakes, or other submerged lands within the territorial waters or on the continental shelf or its analogue in an archipelago, seaward from the shores of the Philippines which are not within the territories of other countries. (R.A. No. 387 (Petroleum Act of 1949)) It has also declared as subject to its jurisdiction and control all mineral and other natural resources in the continental shelf of the Philippines. (Presidential Proclamation No. 370, 20 March 1968) Of the laws mentioned herein, only Proclamation No. 370 and P.D. No. 1599 had been reported to the United Nations in accordance with the UNCLOS. Art. III, Treaty of Paris, 10 December 1898. US-Spain Treaty of Cession of Outlying Islands of the Philippines, 7 November 1900.

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all islands and rocks traversed41 and not of waters. To them the ITL simply served as an identifier of the geographical space within which the mentioned islands are located or could be found. On the other hand, the proponents of an affirmative response aver that, while it may be true that the treaties were so worded to the effect that the cessions being made only involved islands and not the waters around, between and connecting them, public laws enacted during the American colonial period and thereafter categorically referred to the ITL as boundaries. To them the cessions contemplated not only the islands but also the waters within the ITL . Hence, the ITL are boundaries in a sense. Indeed, one of the preambulatory paragraphs of the Philippine Autonomy Act or the Jones Law (1916) provides that: the name The Philippines as used in this Act shall apply to and include the Philippine Islands ceded to the United States Government by the treaty of peace concluded between the United States and Spain on the eleventh day of April, eighteen hundred and ninety-nine, the boundaries of which are set forth in Article III of said treaty, together with those islands embraced in the treaty between Spain and the United States concluded at Washington on the seventh day of November, nineteen hundred.42 The Hare-Hawes Cutting Act (1933) followed suit by declaring that the government of the Commonwealth of the Philippine Islands that was to be established x x x shall exercise jurisdiction over all territory ceded to the United States and Spain on the 10th day of December 1898, the boundaries of which are set forth in Article III of said treaty, together with those islands embraced in the treaty between Spain and the United States concluded at Washington on the 7th day of November 1900.43 A year later, the Philippine Independence Act or the Tydings-McDuffie Act (1934) contained a provision that echoed verbatim the provision in the Hare-Hawes Cutting Act mentioned in the paragraph preceding.44 It is noteworthy, however, that the United States has consistently opposed the aforesaid view saying that:

41 42

Art. III, US-UK Convention Delimiting the Boundary between the Philippine Archipelago & the State of North Borneo (1930). Preamble, Chapter 416, Public Law No. 240 (An Act to Declare the purpose of the People of the United States as to the Future Political Status of the People of the Philippine Islands, and to Provide a More Autonomous Government for those Islands). Sec.1, Public Law No. 311 (An Act to Enable the People of the Philippine Islands to Adopt a Constitution and form a Government for the Philippine Islands, To Provide for the Independence of the same, and For Other Purposes). Sec. 1, Public Law No. 127 (An Act to Provide for the Complete Independence of the Philippine Islands, to Provide for the Adoption of a Constitution and A Form of Government for the Philippine Islands, and for Other Purposes).

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The United States attitude x x x is that the lines referred to in bilateral treaties between the United States and the United Kingdom and Spain merely delimited the area within which the land areas belong to the Philippines and that they were not intended as boundary lines . The United States, in 1958, stated that it recognized only a 3-mile territorial sea for each island.45 Objecting in seriatim to the various points raised in the Philippines Declaration upon signing the UNCLOS on 10 December 1982, the United States, further, had noted that: the understanding of the Government of the Republic of the Philippines that its signing of the 1982 Law of the Sea Convention does not affect its sovereign rights as successor of the United States to the Treaty of Paris of 1898 and the Treaty of Washington of 1930, as the Government of the Republic of the Philippines is aware, the Government of the United States does not share its view concerning the proper interpretation of the provisions of those treaties. As they relate to the rights of the Philippines in the waters surrounding the Philippine Islands. The Government of the United States continues to be of the opinion that neither those treaties nor subsequent practice has conferred upon the United States, nor upon the Republic of the Philippines as successor to the United States, greater rights in the waters surrounding the Philippine Islands than are otherwise recognized in customary international law. In this regard, the Government of the United States wishes to point out that neither the Mutual Defense Treaty between the Philippines and the United States of August 30, 1951, nor any related instrument, constitutes recognition by the United States of greater rights of the Philippines in such waters than are otherwise recognized in customary international law.46 It is additionally significant that the 3rd Conference on the Law of the Sea (UNCLOS III), which reached agreement on the final version of the UNCLOS, has categorically and definitively rejected the Philippine position to treat the waters within its ITL as its historical territorial waters and an exception to the 12 nautical mile rule on the territorial sea. This act of the UNCLOS III, in effect, turned down Philippines proposition that its ITL be treated as its national territorial boundaries. The best evidence of this rejection is the seething disappointment exuded in the statement of Senator Arturo M. Tolentino, Head of the Philippine Delegation, during the signing of the UNCLOS that: Mr. President, we are happy that we have reached the official conclusion of our labors. In utmost candor, however, I must say that my government
45 46 Lotilla, no. 5 above at 274-275 citing (4 January 1958): 2nd Conference on LOS: Summary Record, 17 March26 April, 1960; A/CONF. 19/8 pp.22. Ibid at 546.

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and my delegation are not fully satisfied with the text of the Convention that we have approved. x x x we have some problem with the 12mile breadth of the territorial sea provided in the Convention. My government has studied the problem; it is a difficult one for us. But this notwithstanding, my government nevertheless decided that it shall sign the Convention. There are two diametrically opposing views to the long lingering issue of whether or not RPs ITL are its national territorial boundaries that they are and that they are not. The existence of these two views does not, however, resolve the issue. The issue will only be resolved when a choice of one, over the other, is finally made. As to who should make the choice and how and when it should be made are sub-issues that the Philippines must necessarily address. Government policy makers may provide a solution. The issues delicate legal nature hovers as a primordial factor to consider, however, hinting that, ultimately, a judicial determination could be warranted. What remains a certainty is that until a solution is arrived at through firm and grim determination, the issue is here to stay.

Is RP an archipelagic State yet?


The national territorial debate has also brought into focus the matter of the Philippines archipelagic statehood, particularly, on whether or not it is already an archipelagic State. What has led to the revival of this long deserved attention is the notion that in as much as the Philippines has not thus far drawn its archipelagic baselines, it may yet opt out from archipelagic statehood and go the way that other States archipelagos, like the United Kingdom of Great Britain and Japan, have taken as if drawing the baselines is the operative act of archipelagic statehood. A brief review of the milestones on Philippines advocacy of the archipelagic doctrine would shed light on the issue. Firstly, in response to a query of the UN Secretary General on the extent of the Philippine maritime territory, the Philippines, through its Permanent Mission to the United Nations in New York (NYPM), in a note verbale date 7 March 1955, officially described its inland/internal waters as follows: 1. All waters around, between and connecting different islands belonging to the Philippine Archipelago, irrespective of their width or dimension, are necessary appurtenances of its land territory, forming an integral part of the national or inland waters, subject to the exclusive sovereignty of the Philippines;

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From the description, it may be gleaned that as early as 1955 the Philippines has officially considered itself as a unity of land and water, basically, the very concept of an archipelagic state. This position was re-enunciated in another NYPM note verbale dated 20 January 1956 addressed to the International Law Commission & to the UN Committee on Peaceful Uses of the Seabed and Ocean Floor Beyond the Limits of National Jurisdiction. Secondly, during UNCLOS I (1st UN Conference on the Law of the Sea), held in 195847 and UNCLOS II (2nd Conference on the Law of the Sea) held in 1960,48 the Philippines firmly maintained the same concept on its archipelagic nature. Thirdly, it may be recalled that in 1961, R.A. No. 3046 in its preamble reaffirmed the concept, to wit: WHEREAS, all the waters around, between and connecting the various islands of the Philippine archipelago, irrespective of their width or dimensions, have always been considered as necessary appurtenances of the land territory, forming part of the inland or internal waters of the Philippines; For the first time in Philippine legislation, the baselines as bases for determining the territorial sea was mentioned in the Act by adding that: WHEREAS, the baselines from which the territorial sea of the Philippines is determined consist of straight lines joining appropriate of the outermost islands of the archipelago; and WHEREAS, the said baselines should be clarified and specifically defined and described for the information of all concerned; In fact, R.A. No. 3046 did not only demarcate the Philippines internal waters from its territorial sea. It also established and firmed up the countrys state practice on baselines as a means to signify the unity of a group of islands and the waters around, between and connecting them. Fourthly, the unity of land and waters concept later found its way in the 1973 Constitution which provided that: The national territory comprises the Philippine archipelago, with all the islands and waters embraced therein, and all the other territories belonging to the Philippines by historic or legal title, including the territorial sea,
47 Adopted four (4) conventions namely the Convention on the Territorial Sea and the Contiguous Zone, Convention on the High Seas, Convention on Fishing and Convention of Living Resources of the High Seas, none of which was signed by the Philippines. Focused solely on reaching a possible agreement on the breadth of the territorial sea but failed.

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the air space, the subsoil, the sea-bed, the insular shelves, and the submarine areas over which the Philippines has sovereignty or jurisdiction.49 Fifthly, eventually, the Philippines unity of land and waters concept, now referred to as the archipelagic doctrine, finally found acceptance in UNCLOS III held in 1982 and was eventually enshrined in Part IV of the UNCLOS on Archipelagic States. The inclusion of Part IV in UNCLOS is perceived as the crowning glory of the Philippines unstinting advocacy of the archipelagic doctrine and a recognition of its status as an archipelagic State. Evidently, taking pride in this status, upon signing the UNCLOS the Philippines pronounced: 6. The provisions of the Convention on archipelagic passage through sea lanes do not nullify or impair the sovereignty of the Philippines as an archipelagic state over the sea lanes and do not deprive it of authority to enact legislation to protect its sovereignty, independence, and security;50 Sixthly, in its present Constitution, the Philippines continues to adhere to the archipelagic doctrine, thus: The national territory comprises the Philippine archipelago, with all the islands and waters embraced therein, and all other territories over which the Philippines has sovereignty or jurisdiction, consisting of its terrestrial, fluvial and aerial domains, including its territorial sea, the seabed, the subsoil, the insular shelves, and other submarine areas.51 Lastly, in the same Constitution it has professed that it has archipelagic waters, as follows: 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,52

49 50 51 52

Art. I (National Territory), Sec. 1. This definition is echoed in toto in Sec. 5, P.D. 1587 (Revised Administrative Code of 1978). Par. 6, Philippine Declaration upon signing the UNCLOS on 10 December 1982. Art. I, Sec. 1, 1987 Constitution. This definition is embodied in toto in Sec. 3, E.O. 292 (Revised Administrative Code of 1987). Art XII, Sec 2, par. 2, 1987 Constitution. This has found application in the Second Regular Investment Negative List issued pursuant to Executive Order No. 362, which took effect on 24 October 1996, List A: Foreign Ownership is Limited by Mandate of the Constitution and Specific Laws. No Foreign Equity, No. 7. Utilization of marine resources in archipelagic waters, territorial sea and exclusive economic zone. (Article XII, Section 2, 1987 Constitution)

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Manifestly, this is a profession only an archipelagic State can make.53 From the foregoing constitutional provisions, legislation, official issuances and representations, it is indubitable that the Philippines has already firmly established itself as an archipelagic State through its own unilateral and voluntary machinations. International acceptance that the Philippines is one of the seventeen archipelagic States in the world54 has further boosted this reputation. Consequently, the Philippines being a signatory and ratifier of the UNCLOS should not now shirk from meeting the Conventions rudimentary expectation to establish its archipelagic baselines and maritime zones. While holding back for longer or disavowing its archipelagic statehood due to difficulties encountered in the national territorial debate are logical policy options for a sovereign State like the Philippines, choosing either would greatly affect its respectability in the international community. It could even be construed as conduct inconsistent with adherence to the principle of pacta sunt servanda, more so because it would undo more than a quarter of a century of its advocacy of the archipelagic doctrine.

Is there a deadline for the Philippines to draw its archipelagic baselines?


In several instances in the past months, the national papers bannered reports that the Philippines must draw its archipelagic baselines as soon as possible in order to meet a United Nations imposed deadline and not lose parts of its territory, referring to the Kalayaan Island Group (KIG) in the South China Sea. Regrettably, the reports were erroneous. There is no such deadline. Strictly speaking, the drawing of archipelagic baselines is even optional to archipelagic States as may be deduced from the permissive phraseology of the following relevant UNCLOS provision: An archipelagic State may draw straight archipelagic baselines joining the outermost points of the outermost islands and drying reefs of the archipelago provided that within such baselines are included the main islands and an area in which the ratio of the area of the water to the area of the land, including atolls, is between 1 to 1 and 9 to 1.55

53

It is interesting that the Philippine Mining Act of 1995 in attempting to define the term offshore has made mention of the archipelagic sea, thus: Offshore means the water, sea bottom and subsurface from the shore or coastline reckoned from the mean low tide level up to the two hundred nautical miles (200 n.m.) exclusive economic zone including the archipelagic sea and contiguous zone. (Sec. 3(ai), R.A. No. 7942), which by itself escapes definition (unless, it is construed as equivalent to the territorial sea) in the light of discussions that have been done so far. Churchill, R.R & Lowe, A.F., The Law of the Sea, Manchester University Press, 1999 at 121-122. Art. 47 (1), UNCLOS.

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It must be pointed out, however, that even absent a deadline, archipelagic States like the Philippines must, nevertheless, still feel impelled to draw their archipelagic baselines not only because it meets a minimum UNCLOS expectation but by other equally compelling reasons like the following: (a) the need to definitively establish the metes & bounds of its territory (particularly, its fluvial and aerial domains), which is a fundamental element of statehood; (b) the importance of meeting its treaty obligations as a State Party to a popular56 international convention that is reputed as the Constitution of the Oceans; (c) the importance of delimiting maritime jurisdictions that meet UNCLOS requirements; (d) to be able to efficiently and effectively exercise its prerogatives as a sovereign State vis--vis its concerns of national sovereignty, territorial integrity and national security; (e) to be able to efficiently and effectively exercise its sovereign rights and limited jurisdiction in maritime zones beyond the territorial sea; and (f) to provide proper guidance by way of definitive boundaries to common maritime boundary delimitation negotiations with our immediate neighboring States in the near future. Furthermore, by not drawing archipelagic baselines, the Philippines will not lose the KIG or any other territory that it claims for that matter. In the same way that such nonfeasance is not a ground to lose territory, drawing archipelagic baselines is also not a way to acquire territory in international law. Taking hint from the papers that the deadline is set for next year, the reports could be referring to that deadline imposed on States Parties to the UNCLOS to file with the UN Commission on the Limits of the Continental Shelf (CLCS) their respective submissions of claims to extended continental shelves,57 an entirely different matter. In the context of all the foregoing, the baselines already drawn pursuant to R.A. No. 3046 as eventually amended by R.A. No. 5446 still serve some purpose. Instead of drawing an entirely new network of baselines, the Philippines could opt to adopt it after correcting portions (baselines) that do not comply with UNCLOS prescriptions and making some adjustments to optimize the resulting water areas.58

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As of this writing, 156 countries have either ratified or acceded to the UNCLOS. Meeting of States Parties to the Law of the Sea, SPLOS/72, 29 May 2001. Noticeably, it does not meet the requirement that the length of the baselines does not exceed 100 nautical miles with the exception that up to 3 per cent of the total number of baselines enclosing any archipelago may exceed that length, up to a maximum length of 125 nautical miles a principal requirement under Article 47(2) of the UNCLOS. The existing Philippine 80 baselines delineated under RA 3046 (as amended by RA 5446) have a total length of 8,174.8974 miles. Three (3) of these 80 baselines or 3.75% of the total number of baselines, exceed 100 miles in length. Moreover, one of these the baseline to the southeast of Mindanao in the Gulf of Moro is of 140.05 miles in length is over 125 miles in length.

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How should RP treat its landward waters if the archipelagic baselines are eventually drawn?
Since 1955, in NYPMs note verbale of 7 March 1955, the waters around, between and connecting the islands of the Philippine archipelago were denominated as internal (inland) waters. This concept was retained in NYPMs note verbale of 20 January 1956.59 R.A. No. 3046 re-enunciated the concept in the 1st paragraph of its Preamble, to wit: WHEREAS, all the waters around, between and connecting the various islands of the Philippine archipelago, irrespective of their width or dimensions, have always been considered as necessary appurtenances of the land territory, forming part of the inland or internal waters of the Philippines; With baselines drawn in accordance with the Act, the Philippine concept of internal waters has, in fact, acquired a modified meaning, that of being all waters around, between and connecting the islands within the baselines. Subsequently, the 1973 and 1987 Constitutions embraced the aforesaid Philippine concept of internal waters, respectively, as follows: The waters around, between, and connecting the islands of the archipelago, irrespective of their breadth and dimensions, form part of the internal waters of the Philippines60and The waters around, between, and connecting the islands of the archipelago, regardless of their breadth and dimensions, form part of the internal waters of the Philippines.61

59

The note also defined territorial sea and subjacent waters, respectively, in the following manner: All other water areas embraced within the lines described in the Treaty of Paris of 10 December 1898, the Treaty concluded at Washington, D.C. between the United States and Spain on 7 November 1900, the Agreement between the United States and the United Kingdom of 2 January 1930 and the Convention of 6 July 1932 between the United States and Great Britain, as reproduced in Section 6 of Commonwealth Act No. 4 0 0 3 and article I of the Philippine Constitution, are considered as maritime territorial waters of the Philippines for purposes of protection of its fishing rights, conservation of its fishery resources, enforcement of its revenue and anti-smuggling laws, defense and security, and protection of such other interests as the Philippines may deem vital to its national welfare and security, without prejudice to the exercise by friendly vessels of the right of innocent passage over these waters. (TERRITORIAL WATERS); and All natural deposits or resources of petroleum or natural gas in public and/or private lands (or other submerged lands) within the territorial waters or on the continental shelf, or its analogue in an archipelago, seaward from the shores of the Philippines which are not within the territories of other countries, belong inalienably and imprescriptibility to the Philippines, subject to the right of innocent passage of ships of friendly foreign States over these waters. (SUPERJACENTWATERS) Art. I (National Territory), Sec. 1, 1973 Constitution. Art. I (National Territory), Sec. 1, 1987 Constitution.

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On the other hand, the drawing of archipelagic baselines by archipelagic States in accordance with the UNCLOS will result into two kinds of landward waters namely: (a) archipelagic waters; and (b) internal waters. Archipelagic waters are those enclosed by the archipelagic baselines, regardless of their depth or distance from the coast.62 On the other hand, internal waters include waters of rivers and bays delimited by closing lines drawn in accordance with Articles 9 (Mouths of Rivers), 10 (Bays) and 11 (Ports), UNCLOS.63 Under the UNCLOS, therefore, internal waters partake of a specific meaning that is altogether different from its given meaning in Philippine law. Thus, when the Philippines signed and ratified the UNCLOS, this divergence in meaning became the root cause of the issue at hand. Should the Philippines continue to insist on its concept that all waters inside the archipelagic baselines are internal waters or should it apply the UNCLOS and go for archipelagic waters and internal waters classification? Faced again with a host of sub-issues (a) Can the divergence be addressed and cured by an enactment or amendment of the constitution or law?; (b) Which should be accorded due supremacy, the Constitution or the UNCLOS?; (c) Which is better in the light of the need to accommodate international navigations exercise of rights of passage (i.e., right of innocent passage; archipelagic sealanes passage; and passage through routes normally used for international navigation), the regime of archipelagic waters or the regime of internal waters?; (d) Upon drawing archipelagic baselines, should the archipelagic sealanes be established? Why or why not? Can the Philippines delay the establishment of the sealanes?; (e) Was the ratification of the UNCLOS a correct decision for the Philippines? Could the country still reverse the situation and back track, if not withdraw from the UNCLOS?; and (f) Can a proper action in court resolve the divergence? - the country again opts for indecision and continues debating.

How should RP treat its disputed territories when drawing its archipelagic baselines?
In drawing its archipelagic baselines, the Philippines has to contend with the stark reality that it has territories (e.g., Sabah, the KIG and the Scarborough Shoal (also known as the Bajo de Masinloc)) that are being disputed by other States. It, thus, is constrained to decide if it must include or exclude these disputed territories within the baselines. A. Sabah There is currently no legislation that establishes the metes and bounds of Sabah as claimed by the Philippines to be part of its territory. There is, however, not
62 63 Art. 49(1), UNCLOS. Art. 50, UNCLOS.

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much urgency to the drawing of baselines around it as there is already legislation that has provided for doing so at some future time. RA 5446 (1968), which was only supposed to amend the typographical mistakes in Section 1 of RA 3046 as may be gleaned from its title, has surreptitiously introduced a provision that addresses this matter as follows: Sec. 2. The definition of the baselines of the territorial sea of the Philippine Archipelago as provided in this Act is without prejudice to the delineation of the baselines of the territorial sea around the territory of Sabah, situated in North Borneo, over which the Republic of the Philippines has acquired dominion and sovereignty. As may be gleaned from the provision, the Philippines declares Sabah as its territory, having acquired dominion and sovereignty over it. In the meantime, however, the Philippines does not find it exigent to draw the baselines of (its) territorial sea. This is worthy of note because this approach vis--vis a disputed territory resembles that employed by China and Vietnam with respect to the Spratlys Archipelago, of which the KIG is part.64 China, while declaring its territory to include the mainland and its offshore islands, Taiwan and the various affiliated islands including Diaoyu Island, Penghu Islands, Dongsha Islands, Xisha Islands, Nansha (Spratly) Islands and other islands that belong to the Peoples Republic of China,65 subsequently, pronounced that it will announce the remaining baselines of the territorial sea of the Peoples Republic of China at another time.66 For its part, Vietnam, which claims Hoang Sa and Troung Sa archipelagos (Spratlys and Paracel Islands) as its territory has proclaimed that (4) The baseline for measuring the breadth of the territorial sea of the Hoang Sa and Truong Sa Archipelagos will be determined in a coming instrument in conformity with paragraph 5 of the 12 May 1977 statement of the Government of the Socialist Republic of Viet Nam.67

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P.D. No. 1956 only lays claim to the KIG, or those islands and waters, etc. that fall within specific boundaries (a six-sided polygon that abuts the ITL). It must be noted that the KIG does not include the Spratlys Island, which is at this time occupied by Vietnam. Art. 2, par. 2, Chinas Law on the Territorial Sea and the Contiguous Zone of 25 February 1992. Declaration of the Government of the Peoples Republic of China on the baselines of the territorial sea, 15 May 1996, in which law it drew an incomplete straight baselines for its mainland and a complete set of baselines around Xisha (Paracel) Islands. Statement of 12 November 1982 by the Government of the Socialist Republic of Viet Nam on the Territorial Sea Baseline of Viet Nam.

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Notably, the same approach is available to the Philippines as regards the Kalayaan Island Group (KIG)68 and the Scarborough Shoal69. B. The KIG & Scarborough Shoal In 1978, then President Ferdinand Marcos issued P.D. No. 1596, which declared the area within the following boundaries: KALAYAAN ISLAND GROUP From a point [on the Philippine Treaty Limits] at latitude 740' North and longitude 11600' East of Greenwich, thence due West along the parallel of 740' N to its intersection with the meridian of longitude 11210' E, thence due north along the meridian of 11210' E to its intersection with the parallel of 900' N, thence northeastward to the intersection of parallel of 1200' N with the meridian of longitude 11430' E, thence, due East along the parallel of 1200' N to its intersection with the meridian of 11800' E, thence, due South along the meridian of longitude 11800' E to its intersection with the parallel of 1000' N, thence Southwestwards to the point of beginning at 740' N, latitude and 11600' E longitude; including the sea-bed, sub-soil, continental margin and space as belonging and subject to the sovereignty of the Philippines. The decree also constituted a distinct and separate municipality of the Province of Palawan known as Kalayaan. In the process of drafting its archipelagic baselines law, the Philippines has taken the KIG and the Scarborough Shoal into consideration and many options had been looked into on how they should be treated in the process. Presently, House Bill No. 3216 (otherwise known as the Cuenco Bill), which is pending for third reading in congress, proposes that the baselines enclose the main archipelago, the KIG and the Scarborough Shoal.70 On the other hand, a common position of the Executive Branch (CEP) processed under the auspices of the Commission on Maritime and Ocean Affairs (CMOA) proposes that the baselines be drawn just around the main archipelago and the KIG and the Scarborough Shoal should just be considered as a regime of islands under Part VIII of the UNCLOS, which goes:

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The Philippines has even gone further by drawing a six-sided polygon around KIG and establishing a local government unit thereat through P.D. No. 1596 (1978). Formerly known as Bajo de Masinloc, the Scarborough Shoal can be said to have already been declared by the Philippines as part of its territory when in the Administrative Code of 1916 it enumerated Masinloc as a municipality of Zambales, one of its provinces. Of late, counterpart bills have been filed in the Senate.

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Article 121 Regime of islands 1. An island is a naturally formed area of land, surrounded by water, which is above water at high tide. 2. Except as provided for in paragraph 3, the territorial sea, the contiguous zone, the exclusive economic zone and the continental shelf of an island are determined in accordance with the provisions of this Convention applicable to other land territory. 3. Rocks which cannot sustain human habitation or economic life of their own shall have no exclusive economic zone or continental shelf. Expectedly, the proposal in the Cuenco Bill has gained the favor of nationalists who principally argue that it will not only affirm and strengthen our territorial claim over the KIG and the Scarborough Shoal but will also maximize the projection of our maritime zones. Those who advocate the CEP, however, point out that drawing the baselines around the KIG will require the building of lighthouses on the Sabina and Iroquois Shoals, and could be violative of the call for status quo contained in the ASEANChina Declaration of Conduct in the South China Sea. They also have expressed concern on the possibility that drawing the baselines around the Scarborough Shoal would be inconsistent with UNCLOS requirement that the baselines should not depart to any appreciable extent from the general configuration of the archipelago.71 They further underline that the CEP is less adversarial, less confrontational, less controversial, less politically motivated and less likely to aggravate the South China Sea (SCS) dispute over the KIG. The difficulties pertinent to the instant issue are not only due to the contradictions of options on how the archipelagic baselines should be drawn in relation to disputed territories. They also emerge in the crafting of the bill itself, particularly, as regards the CEP, and, specifically, on how to treat the KIG and Scarborough Shoal as regime of islands therein. Firstly, should there be a mention of the islands as belonging to the Philippines or forming part of Philippine territory or this should just be presumed in the light of P.D. No. 1596 and the Administrative Code of 1916? Should this reference be to the islands as a group or to the individual islands? Secondly, how should the regime of islands concept be presented in the bill? Should the islands be treated as a group of islands occupying a certain portion of the South China Sea or as individual islands with identifiable geographical coordinates? Thirdly, should the maritime zones of each and every island already be reflected in the law based on a determination of
71 Art. 47(3), UNCLOS.

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whether or not each of them is capable of sustaining human habitation or economic life? What maritime zones should each and every island project? How would the inhabitants of an existing municipality in the KIG react to a determination that some, if not all, of the islands in the KIG are incapable of sustaining human habitation or economic life? Fourthly, cant the islands simply be covered by a non-prejudice clause similar to that adopted in R.A. No. 5446 as regards Sabah? Can the Chinese/ Vietnamese approach on the Spratlys be adopted by the Philippines? Again, it is observed that in the face of clashing multifaceted arguments and sub-issues, the main issue on how to treat the KIG and Scarborough Shoal in the process of drawing the baselines remains unsettled, the process itself of drawing the baselines is stalled and the national territorial debate continues indefinitely. What should be RPs national territorial limits the outer limits of the territorial sea reckoned from UNCLOS-prescribed baselines or the ITL? This undeniably is the mother of all the issues in the national territorial debate. The countrys ultimate course of action that would finally settle all the other issues primarily depends on a definitive and decisive decision on this one. If the Philippines decides that its ITL are its territorial boundaries, then the establishment of its maritime zones, the common maritime boundary delimitation talks, its exercise of prerogatives as a sovereign, among others, could proceed accordingly with its guidance. The same thing obtains if UNCLOS-based territorial limits are preferred. Hence, what really matters is for this issue to be passed and decided upon once and for all. In trying to arrive at a decision on the issue, it should be recalled and considered that the Philippines ITL position had already been taken up exhaustively and, thereafter, rejected during UNCLOS III. Moreover, the Declaration upon signing the UNCLOS that sought to qualify its legal effects on the Philippines is also viewed as fundamentally flawed in the context of Art. 310, UNCLOS, taken in relation to Art. 309. Article 309 Reservations and exceptions No reservations or exceptions may be made to this Convention unless expressly permitted by other articles of this Convention. Article 310 Declarations and statements Article 309 does not preclude a State, when signing, ratifying or acceding to this Convention, from making declarations or statements, however phrased or named, with a view, inter alia, to the harmonization of its laws and regulations with the
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provisions of this Convention, provided that such declarations or statements do not purport to exclude or to modify the legal effect of the provisions of this Convention in their application to that State . In fact, it had been vehemently opposed, if not rejected by Australia, Belarus, Czechoslovakia, the Russian Federation (USSR), and Ukraine, among others.72 Hence, the prospect of obtaining international acceptance for the Philippines ITL seems remote. Projecting other maritime zones from the ITL is going to be a difficult undertaking. Maritime zones are creations of the UNCLOS, thus, their establishment should, logically, be on the basis of the rules it has prescribed. In this light, projecting the contiguous zone, EEZ and the continental shelves from the outer limits of the territorial waters or the ITL will be a challenging and controversial exercise, especially because it will result in vast overlaps with the maritime zones and even territories of neighboring States. In this respect, Philippine maritime zones may not be acceptable to the international community. The anomaly that portions of the Philippine territorial sea within the ITL fall outside the EEZ drawn in accordance with P.D. No. 1599, underscores this concern. (Map Slide No. 4) The observation that adherence to baselines drawn in accordance with the UNCLOS will dramatically reduce the expanse of RPs territorial sea is indeed a valid concern.73 But then a loss in the expanse of the territorial sea will be aptly and sufficiently compensated by the expanse of the EEZ not to mention that the seaward maritime zones of the country will now be anchored on formidable legal bases. However, to temper the concern of territorial collapse, it may help to know that many other countries like Albania, Argentina, Brazil, Cape Verde, Gabon, Ghana, Guinea, Guinea-Bissau, Haiti, Madagascar, Maldives, Mauritania, Senegal, Tanzania and Tonga had to roll back their territorial seas with the advent of the UNCLOS, thereby losing substantial portions of the breadth of territorial seas they previously claimed.74 Lastly, the Philippines should not forget that in its response to the Australian Protest in 1988, it has made a commitment to harmonize its domestic laws with the UNCLOS. Its passage of an archipelagic baselines law could, thus, be deemed as an act to fulfil the commitment even as it can be construed as abandonment of the ITL position. It can also be appreciated as a categorical act on its part to meet longstanding treaty obligations embodied in the UNCLOS.
72 For a more exhaustive discussion, please see, Nelson, L.D.M., Declarations, Statements and Disguised Reservations with Respect to the Convention on the Law of the Sea, (2001) 50 International & Comparative Law Quarterly 767-786. RP could lose approximately 826,000 sq. km. of its territorial sea as a result. Within the ITL, the total expanse of RPs territorial waters is almost 938,000 sq. km., while within the 12 nautical mile limit reckoned seawards from the baselines it is only about 112,000 sq. km. Ashley Roach, J and Smith, R.W., International Law Studies: Excessive Maritime Claims, V. 66, Naval War College, 1994 at 96-97.

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Conclusion
The principal issues in the on-going national territorial debate are clear and distinct and their respective perspectives have already been brought to fore in a lot of fora and media. A close scrutiny of recent developments reveals that, in fact, the issues have long been joined and what remains to be done is to make a decision as to which approach the Philippines should take. It is regrettable, however, that the decision-making process in this regard, since the Philippines became a signatory to the UNCLOS a quarter of a century ago, has all the while been agonizingly dragging. If only it can proceed with a sense of national urgency coupled with bold readiness to face the consequences of decisions taken, the debate can end earlier. The present generation can do the next generation a favor by ending the debate now. All it needs to do is to make up its mind, once and for all, on the issues involved. After all, being decisive on a matter of great importance such as the national territory is a hallmark of a country worth its statehood salt.

Map No. 1 - RPs International Treaty Limits (ITL) and its territorial waters (territorial sea within the ITL + internal waters within the baselines drawn in accordance with R.A. No. 3046, as amended by R.A. No. 5446).

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UNCLOS Maritime Zones

Extended CS (350 nm) Map No. 2 - Maritime zones projected two-dimensionally in accordance with pertinent provisions of the United Nations Law of the Sea.

Philippines Projected Maritime Zones

Map No. 3 - Philippine maritime zones projected in accordance with pertinent UNCLOS provisions.

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THE EXPLORATION, DEVELOPMENT, AND UTILIZATION OF THE SPRATLYS*


Amado D. Valdez**

I.

The Legal and Historical Context of the Spratlys

The Spratlys Islands is actually an archipelago traversing about 1,000 kilometers from north to south, between latitude 4o to 11o 30N, and longitude 109o 30o E. In relation to its claimants, it is 100 kilometers west of Palawan Island, Philippines, 160 kilometers from Malaysias Sarawak coast, 250 kilometers from the Sabah coast, 650 kilometers east of the Vietnamese coast, 750 kilometers south of the Paracels, and 1,000 kilometers from Chinas Hainan Island. Like a persona, the Spratlys of volcanic origin and coral outcroppings seems alive and in the process of growing. In fact, new unchartered islands have been formed with the passing of years. When Tomas Cloma proclaimed ownership by discovery and occupation of the Spratlys in 1956, he reported only thirty-three islands, sand cays, sand bards and coral reefs. Twenty two years later in 1978, the Philippine Coast and Geodetic Survey Office issued a new official map increasing the number of islands, islets, reefs, shoals, cays, and rocks to about fifty-one to sixty, depending on whether it is high or low tide. To set the record straight, the Philippines claims only the western section of the Spratlys, which is called the Kalayaan Island Group. Kalayaan was incorporated as a municipality of the Province of Palawan under a 1971 Presidential Proclamation and Presidential Decree No. 1594. It was made part of the 200-mile exclusive economic zone (EEZ) of the Philippines under Presidential Decree No. 1599. It consists of a territory of 360,000 square nautical miles.1 International observers have identified it as another flashpoint of controversy and armed confrontation due to conflicting claims from different countries. It is ironic that the country-claimant who happens to be the farthest from the Spratly archipelago is the fondest when it comes to asserting its claim. We recall the brief naval battle between China and Vietnam on March 14, 1988 which ended with three Vietnamese naval boats sunk and seventy-two Vietnamese soldiers killed but no Chinese casualties reported.
* Delivered as a reaction to the main presentation of Prof. Merlin Magallona during the symposium at the Malcolm Theater, UP College of Law on May 29, 2008 on the topic Spratly Islands: Impact of the UNCLOS on the Territorial Integrity of the Philippines and other Related Legal Issues. Dean, Univeristy of the East. Kalayaan is at least 350 nautical miles southeast of the Spratlys Island group, and from Pag-Asa island, only 220 nautical miles west northwest of Puerto Princesa, Palawan.

** 1

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The Philippines was not spared this unpleasant Chinese tactic coming 1,000 kilometers away from the Kalayaan Group of Islands. In January to mid-February 1995, Chinese soldiers arrested the Filipino crew of F/B Ana Lisa who were fishing off the waters of Mischief Shoal (Panganiban Reef to Philippine authorities), which is part of Clomas claim. In the same month of February, the Princess Seagull, another Filipino fishing boat which experienced engine trouble and had Kalayaan Mayor Gil Policarpio on board, was prevented by a Chinese blockade and was turned away from entry into the Panganiban reef despite displaying distress signals. Much earlier, in 1976, China warned the Philippines to stop oil exploration near the Reed Bank. The Chinese provocative actions came after Chinese Foreign Minister Quian Quichon had agreed to the ASEAN position with respect to the Spratlys issue made on July 22, 1992 which called on all claimant countries to exercise restraint with the view to creating a positive climate for the resolution of all disputes as well as to explore the possibility of cooperation relating to the safety of maritime navigation and communication, protection against pollution of the marine environment, coordination of search and rescue operations, combating piracy and armed robbery as well as collaboration in the campaign against illicit trafficking of drugs. That China has an ally in the United States is gauged from the subsequent attitude of American private enterprise. On May 8, 1992, or three months after China passed a law in February 1992 asserting sovereignty over the entire Spratly island chain, a US company, Creston Energy Corporation entered into a contract with the China National Offshore Oil Corporation (CNOOC) to explore oil in a 25,155 square kilometer area in the Tu Chinh bank with assurances of protection from the Chinese Navy against hostile forces. This transaction only validates the United States governments position that the Mutual Defense Treaty does not cover the defense of the Spratlys because of conflicting claims and that the Spratlys were not part of Philippine territory during the forging of the treaty. Still, the Philippines looked to the United States for support in early February 1995 after China refused to heed the Philippines request for it to leave the Mischief Shoal. With the present global economys reliance on oil, more US-Chinese partnership in the area may be forthcoming considering how oil-dependent these two countries are. According to Professor Teodoro Santos, formerly of the University of the Philippines National Institute of Geological Sciences (NIGS), the Kalayaan Island Group (KIG) is the most promising with respect to petroleum and natural gas. The Chinese have the highest estimate at 100 to 200 billion barrels, with Russian sources estimating a low of seven billion barrels.2

Philippine Graphic, Vol. 18, No. 45, April 14, 2008, page 24.

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Spratly as Part of the Philippine Territory and the U.N. Convention On The Law Of The Sea

Prior to Clomas claim, the Kalayaan Island Group was largely uncharted in international maps. Some had newly-arisen, and all of them were unoccupied and uninhabited. They were considered terra nullius and could be claimed by discovery and occupation. The UN Convention on the Law of the Sea (UNCLOS) could be said as reinforcing such claim. It is in this context that the Kalayaan Island Group is included as part of the national territory in the 1973 Constitution, which definition is substantially adopted in the 1987 Constitution. According to noted constitutionalist Fr. Joaquin Bernas, the 1987 version merely removed language possibly offensive to an ASEAN neighbor and achieved a more logical sequencing of the elements that make up the territory but preserved everything else found in the 1973 Constitution.3 The 1973 Constitution had left the territorial definition pliable to the expanding breadth of territory which could be foreseen from the developing international accord on the law of the sea where the official position of the Philippines found in Republic Act No. 3046 (1961) and Republic Act No. 5446 (1968) adopted the straight baseline method of fixing the territorial sea. This is a position upheld in the decision of the International Court of Justice in the Anglo-Norwegian Fisheries case. Then Constitutional Commission member and current Supreme Court Associate Justice Adolfo Azcuna rephrased the 1973 version in 1987 with its terrestrial, fluvial, and aerial domains, including the territorial sea, the seabed, the subsoil, the insular shelves, and other submarine areas,4 in accordance with the now existing 1982 UNCLOS. Under the above Convention, the limits of Philippine responsibility are reckoned from a so-called baseline. To establish the baseline, a country has to first identify the outermost island, and then identify the outermost point which is the low water mark. The low water mark is the point where the sea recedes in case of low tide. All maritime regimes or zones are reckoned from the baseline. The twelvemile territorial sea is the area where the State enforces its laws and exploits its resources. The twenty four-mile contiguous zone beyond the twelve-mile territorial sea is the area where a State can exercise its sovereign right to pursue smugglers, illegal fishers, illegal immigrants, and customs and tax evaders. The 200-mile exclusive economic zone is where the State has the right to exploit and develop the resources in the sea, all the way down to the seabed.
3 4 Bernas, The 1987 Constitution, A Commentary, p. 34. Constitutional Commission Journal of July 2, 1986; I Record 305.

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Under the UNCLOS, the continental shelf5 comprising up to 200 nautical miles from the archipelagic baseline automatically belongs to a State and no proof of claim is required. The Convention, however, allows coastal States to claim jurisdiction over territories 200 nautical miles, or 360 kilometers beyond their boundaries and extend these by 150 miles or 270 kilometers by 2009. For the extension, a State must conduct hydro-graphic and geo-scientific studies and submit the data to the UN Commission on the Limits of the Continental Shelf (CLCS), a significant and critical activity considering that parts of the Kalayaan Island Group are about 230 nautical miles from Palawan. Just what do we stand to lose in the event that the Philippines fails to meet the 2009 deadline in claiming the extension of the continental shelf beyond the 200 nautical mile boundary? Within the Kalayaan Island Group alone, the Chinese have estimated around 100 to 200 billion barrels of oil reserve as against the Russian estimate of a low of about seven billion barrels. It has been pointed out, however, that the Law of the Sea Convention does not treat questions of sovereignty over land territory. There is still a need to prove sovereignty over the islands from where the baseline is drawn before a country could claim its exclusive economic zone. In the case of the Kalayaan Island Group, the issue is not one of overlapping continental shelves between adjacent or opposite states but one of territorial dispute among different States claiming the said island territories.

III. Exploration, Development, and Utilization of Natural Resources in the Spratlys


May the Philippines enter into an arrangement with the other claimant States for the exploration, development, and utilization of the natural resources in the Spratlys, more particularly the Kalayaan Island Group? By the strength of the UNCLOS alone the Philippines may explore, develop and utilize the natural resources in the Spratlys. The problem is that China and Vietnam are not signatories to the Convention. Both countries claim rightful ownership over the islands on the basis of historic title while the Philippines based its claim on discovery and occupation. If only the two countries yield to propinquity as the basis of ownership and sovereignty, there is no doubt that the Philippines is situated nearest to the island groups.

The seabed and subsoil of submarine areas where it either gradually descends or drops off into ocean floor. Arbitration, (Netherlands/United States of America Intervening), Award of 4 April 1928.

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There is a slew of arbitral and international court decisions in favor of the preeminence of actual and effective occupation over claims of historic title. The Philippines then may enjoy a favorable position but China and Vietnam had, over time, reinforced their respective claims likewise by occupation. The Palmas6 and Clipperton7 decisions both required that an inchoate title to a discovered territory must be perfected within a reasonable period, although in the later Eastern Greenland8 decision it was sufficient for the claimant-state to establish its title to the territory in the period immediately prior to occupation. Once the historic claim is abandoned the determination of sovereignty becomes a question occupation terra nullius. It is not essential that a State immediately occupy the entire claimed territory nor is it necessary that the occupying State establish a special administration for the same. Claimant-states are in stalemate for failure to agree on peaceful avenues available under international customary laws and conventions. With its military predominance, China will eventually gain an irreversible upper hand. Philippine sovereignty or ownership of the Kalayaan Island Group may just become a waning and whining rhetoric. What is pumping fuel into the issue of sovereignty and jurisdiction is the question of the intrinsic wealth of natural resources teeming in the area. A control over the area is a control over the exploitation and utilization of these resources. Since nearly about only six percent of the disputed area is above sea water, there is a growing consensus to develop a maritime approach and not cutting up the South China Seas like a big piece of real estate. It was suggested during a conference in 19959 than an International Spratlys Authority be established, leaving aside the resolution of the issue of sovereignty, jurisdiction and territory to such entity, in order to jointly develop the area. There are precedents to this approach although admittedly they are not on all fours to the Spratlys dilemma. There is the Antarctica model in 1959 which was established subject to the precondition that all claims would be suspended. Another model is the condominium regime prescribed by the International Court of Justice in the Gulf of Fonseca decision which concerned the status of islands and maritime spaces in the gulf shared by El Salvador, Honduras, and Nicaragua.10 It is argued that the hands of the Philippine government are tied by the selfimposed limitations of exclusivity in the exploration, exploitation, and development
7 8 9 10 Clipperton Islands Arbitration, (France/Mexico Intervening), Award of 28 January 1931. Legal Status of Eastern Greenland Arbitration, (Denmark/Norway Intervening), 5 April 1933. Round Table Discussion on the Spratly Islands Dispute, UP Law Centeron 27 January, 1993. Case Concerning Land, Island and Maritime Frontier Dispute (El Salvador/Honduras: Nicaragua Intervening), Judgment of 11 September 1992.

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of the natural resources in the Kalayaan Island Group, particularly Section 2, Article XII of the 1987 Constitution, to wit: All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forest 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. xxx 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. It is the authors position that this limitation would apply only to natural resources in which our sovereignty, or even our mere ownership over these resources is unchallenged by other countries. Since this area is an economic zone and is part of the high seas, the general principles of international law on resolution of disputes have to be taken into consideration.11 This conciliatory intent is attuned to the spirit of the 1987 Constitution on the national territory. The fundamental consideration of our policy planners as well as the judiciary must be to interpret these provision not in the framework of territorial sovereignty but in consideration of such equally critical state interests as uplifting the well-being of the people within the framework of international law. The Philippines will definitely benefit from the development of the oil reserves in the Spratlys.

11

Bernas, The 1987 Constitution, A Commentary, p. 1140.

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The Memorandum 0f Agreement on Ancestral Domain: A Commentary

The Legal Significance of the MOA on the Bangsamoro Ancestral Domain*


Vicente V. Mendoza**
No other official document perhaps has excited as intensely or as emotionally as many people as the MOA on the Bangsamoro Ancestral Domain. Some thought it is a sell out of a portion of the Philippine territory, others a move on the sly to open the door for charter change, including extension of the Presidents term, while still others thought it is part of Americas strategic planning in the face of Chinas growing influence in the region. Those advocating signing of the MOA, on the other hand, say it is nothing but a piece of paper requiring approval in a plebiscite of the affected areas in Southern Philippines (Mindanao, Palawan, and Sulu) and until signed and submitted for approval should not alarm or unduly concern anyone.

Much Ado About Nothing?


Depending on their perception and perspective, the MOA is either a proposed treaty, a proposed amendment to the law1 creating the Autonomous Region in Muslim Mindanao, or a proposed amendment to the Constitution, or an attempt on the part of a foreign power to strengthen its position in Southeast Asian geopolitics. Whatever it is, if it is any of these, the MOA certainly cannot just be ignored as a piece of paper containing a list of what the parties intend to do. I cannot imagine any person, much less the government, to agree to take part in an idle ceremony of signing a mere list of things wished for, to be done with all the solemnity of signing a treaty in a foreign country with the attendance of the Secretary of Foreign Affairs of the Philippines and the Minister of Foreign Affairs of Malaysia, the host country. The fact is that the MOA is a contract. One does not make a contract, even one that needs the ratification of ones principal for it to be binding and effective, if one has no intention to be bound by it. In other words, the MOA is something, and excitement about it is not about nothing but about something, something that is important. First, if the MOA is a proposed treaty, the question is, is the government negotiating a treaty with an independent state? Is the Bangsamoro nation, called
* ** 1 Lecture delivered at the U.P. Law Center MCLE Program held on August 28, 2008. Supreme Court Associate Justice (Retired). R.A. No. 6734, as amended by R.A. No. 9054.

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the Bangsamoro Juridical Entity in the MOA, being recognized as a body politic possessing the attributes of a sovereign state? If so, then the assumption is that the BJE is a state, which is perhaps semi-independent, and therefore the MOA, as any other treaty, must be ratified by the President of the Philippines and concurred in by 2/3 vote of all the members of the Senate in accordance with the Constitution.2 The problem is that this is not provided in the MOA. What the MOA provides is that our legal framework, assuming the term means the Constitution, should be amended instead to make it conform to the provisions of the MOA and the Constitution or organic act of the BJE, called the Comprehensive Compact. Second, if the MOA is a proposed amendment to the Organic Act for the ARMM, it must be enacted into law after appropriate consultation with the local government units and be approved by a majority of the constituent units in accordance with the Constitution.3 However, this is not provided either in the MOA. In fact the Constitution is not even mentioned in the MOA. Third, if the MOA is an agreement to submit a proposed amendment or revision of the Constitution either to Congress, acting as a constituent assembly, or to a constitutional convention called by Congress, and then submit the proposed amendment to a plebiscite held throughout the country and not only in the constituent local government units, again, this is not provided in the MOA. The irony is that while the government panel is talking of a document that is incomplete and not effective for both sides until ratified or approved in accordance with its constitutional processes, the MILF panel is talking of a completed document that is already effective once signed although still to be ratified in accordance with the internal processes of the government. It seems the two panels are talking on totally different wavelengths, thus preventing a meeting of their minds! So what do I think the MOA is?

The MOA is an instrument of recognition cum treaty


The MOA is an instrument of recognition and a proposed treaty. As an instrument of recognition of the Bangsamoro as a semi-independent state, the MOA has instant effect once signed by the parties, although arguably the initials of the chairmen of the two panels, representing the two parties, might be considered as fully effective as their full signatures. The state recognized may be likened to the Philippines under the Commonwealth regime, which belonged to the United States of America as an unincorporated territory and so was subject to its sovereignty and control although allowed limited freedom to enter into relations with other counties.
2 3 Art. VII, 21. Art. X, 18.

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The BJE is contemplated, at least for now, to be part of the Philippine territory, entitled as such to the protection of the Philippine government. In that sense, what Stanley Karnow said to describe Philippine autonomy during the Commonwealth era applies to the BJEs independence: dependent independence. 4 Or the Bangsamoro may be likened to its claim to what its former status was, as a state under the suzerainty of the sultanates which were nation-states in the modern sense, according to the MOA. The premise of the MOA is that the BJE is a semi-independent state. That is the reason the MOA does not purport to be made in accord with the Constitution or the Organic Act for the ARMM. Any contrariety between the Constitution and the MOA and there are many must be removed by amending the Constitution and the laws to bring them in conformity with the MOA. Talk of the Constitution that does not apply to this document. This view is reinforced by the fact that the MOA was set for the signing in the presence of the Secretary of Foreign Affairs and the Minister of foreign Affairs of Malaysia where the ceremony was to be held on August 5, 2008, attended by representatives of other countries. Let me now consider the provisions of the MOA.

Salient features of the MOA


The MOA deals with three subjects: territory, resources, and governance. I will discuss the salient provisions concerning each and their underlying Concepts and Principles. 1. The Moros and indigenous peoples, who are natives or original inhabitants of Mindanao, Palawan, and Sulu at the time of the Spanish conquest and their descendants, constitute a distinct group known as the Bangsamoros5 2. Their territory embraces the regions of Mindanao, Sulu, and Palawan and is composed of the local government units listed in Annexes A and B of the MOA. Its core is the geographic area of the ARMM. This territory consists of ancestral, communal and customary lands, maritime, fluvial and alluvial domains, the aerial domain, the air space above and the natural resources.6 3. This territory is the homeland of the Bangsamoro people. Ownership is vested exclusively in them by virtue of their prior rights of occupation . . . since time immemorial as the first politically dominant occupants.7 The territory does
4 5 6 7 In Our Image 323 (1989). MEMORANDUM OF AGREEMENT ON THE ANCESTRAL DOMAIN ASPECT OF THE GRP-MILF TRIPOLI AGREEMENT ON PEACE OF 2001 (MOA), Concepts and Principles par. 1. MOA, Territory par. 1; Concepts and Principles par. 13. Concepts and Principles par. 2.

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not [therefore] form part of the public domain of the Philippines under Art. XII, Sec. 2 of the Constitution8 which belongs to the Philippines in accordance with the Regalian doctrine. 4. As owners of the ancestral domain, the Bangsamoro people, organized as the Bangsamoro Juridical Entity, have jurisdiction over the development, utilization, and disposition of all natural resources of the internal waters which extend from the coastline of the BJE up to 15 kilometers of the baselines of the Philippines. With regard to the mineral resources of the territorial sea, which extends beyond the baselines, the jurisdiction and authority of the BJE is concurrent or joint with that of the Philippine government.9 The profit split from production shall be shared between the government and the BJE, on the basis 75:25 percent in favor of the BJE as the party having control within its territorial jurisdiction.10 5. The government undertakes to conduct and deliver, using all possible legal measures, a plebiscite in the Bangsamoro territory within 12 months after the signing of the MOA for the approval of an enlarged territory consisting of the present ARMM and the additional local government units listed in Annexes A and B of the MOA.11 This is very vague, if not obfuscating, but it seems to mean in clear language that the government obliges itself to amend the organic act of the ARMM and, if necessary, the Constitution, to suit the MOA. 6. The Bangsamoro people have a right to self governance based on ancestral territoriality, exercised by them as protectorates of the sultanates and the Pat a Pagampong ku Ranaw which had the attributes of modern nation-states.12 7. As a juridical entity, the Bansangmoro nation has a right to enter into economic cooperation and trade relations with foreign countries, establish trade missions in such countries, and participate in international meetings and events, such as the ASEAN and the specialized agencies of the United Nations.13 For its part, the government will take steps to ensure the effective exercise of this power of the BJE in foreign trade and economic relations. 8. The BJE can organize its own institutions, including the civil service, electoral, financial, banking, education, legislation, legal, economic, and police internal security force, judicial system and correctional institution.14

8 9 10 11 12 13 14

Id. pars. 3-4; Territory par. 1. Territory par. 2 (f)-(g). Resources pars. 5-6. Territory par. 2 (d). Concepts and Principles par. 4. Resources par. 4. Governance par. 8.

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The BJE as a semi-independent state


As I stated before, the MOA is an instrument of recognition of a semiindependent state the ultimate objective [of] which] is to secure the identity and posterity of [the Bangsamoros], to protect their property rights and resources as well as to establish a system of governance suitable and acceptable to them as a distinct dominant people15 in order to realize their humanitarian and economic needs as well as their political aspirations.16 The entity so recognized is a body politic organized by common consent for mutual defense and mutual safety and to promote the general welfare. The picture presented by the MOA fits into the accepted definition of a state as a nation, its people occupying a definite territory, politically organized, exercising by means of its government will over the individuals within its territory and maintaining a separate international identity.17 At the risk of descending into pedantry, it may be said that there is in the Bangsamoro Juridical Entity, or BJE, all the elements of a state, namely, people, territory, sovereignty, and government.18 It is indeed true that the BJE is not fully independent or sovereign and indeed it is dependent on the Philippine government for its external defense and only lacks foreign recognition, at least at the present time. Nonetheless it is a state as the Philippines was a state during the Commonwealth period, which was not a part of the territory of the United States although subject to its sovereignty. As a state, it was a signatory to several treaties and international agreements, such as the Charter of the United Nations of January 1, 1942, and a participant in several conferences such as that held in Bretton Woods, New Hampshire, on July 1-22, 1944, on the GATT. As the U.S. Supreme Court noted in Hooven & Allison Co. vs. Evatt,19 the adoption of the 1935 Constitution prepared the way for the complete independence of the Philippines and the government organized under it had been given, in many aspects, by the United States the status of an independent government which has been reflected in its relation as such with the outside world. Similarly, the Supreme Court of the Philippines held in Laurel vs. Misa that the Commonwealth of the Philippines was a sovereign government although not absolute.20

15 16 17 18 19 20

Concepts and Principles par. 4; Governance par. 7. Concepts and Principles par. 2. Collector of Internal Revenue vs. Campos Rueda, 42 SCRA 23 (1971). See, e.g., Vicente G. Sinco, Philippine Political Law 4 (1962); Enrique M. Fernando, Constitution of the Philippines 54 (1978); Isagani Cruz, Philippine Political Law 14-18 (1993). 324 U.S. 652, 676 (1945). 77 Phil. 856, 863 (1947).

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Given this description of the BJE as a dominant group with a distinct culture, socio-economic structure, and religion, pursuing their own political aspirations, and occupying a definite territory over which they have exclusive dominion, possessing a government with its own financial, monetary and banking systems, and carrying on foreign trade relations, the signing of the MOA by the Philippine government could constitute an act of recognition of an independent state.21 Such recognition would be beyond the power of review of the courts. The MOA, in short, could be the instrument of recognition of the BJE under international law.

The MOA as a treaty


This is the reason why unlike the 1976 Tripoli Agreement with the MNLF and the Tripoli Agreement of 1996 and various other peace agreements with the MILF, the MOA makes no pretense at being in accord with the Philippine Constitution. It stands in sharp contrast to the 1976 agreement which provides for the establishment of autonomy in Southern Philippines within the realm of the sovereignty and territorial integrity of the Republic of the Philippines. The MOA also stands in sharp contrast to the 1998 peace agreement with the MILF, which provides that any conflict in the interpretation of this Agreement shall be resolved in the light of the Philippine Constitution and existing laws. In contrast, under the MOA, it is the Philippine government which is required to make the necessary changes in its legal framework to make it conform to the MOA. The MOA seems to be saying that, as far as the MILF is concerned, everything is done (a done deal), and it is all up to the Philippine government to change its Constitution and laws to make them conform to the provisions of the MOA and the Comprehensive Compact on the structure of the government of the BJE.

The MOA, a negation of the supremacy of the Constitution


Speaking of the constitutionality of the MOA, definitely it is unconstitutional even if approved as an amendment to the Organic Act of the ARMM.22 Mention has been made of the fact that under the MOA the BJE is given jurisdiction (control) over the utilization and disposition of the natural resources23 of the land and the natural resources of the internal waters which extend from the coastline of the BJE up 15 kilometers, and joint jurisdiction with the government over the utilization and disposition of the natural resources of the territorial waters which extend from the outer limits of the internal waters up to the baselines of the Philippines. That is definitely contrary to Article XII, Sec. 2 of the Constitution, which provides that all

21 22 23

Sinco, supra note 18 at 298-300; Jovito R. Salonga & Pedro L. Yap, Public International Law 94-96 (1958). R.A. No. 6734, as amended by R.A. No. 9054. Resources pars. 1-2.

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lands of the public domain, the waters, minerals, coal, petroleum, and other mineral oils, forces of potential energy, fisheries, timber, wild life, flora and fauna and other natural resources and the right to explore, develop, or use them belong to State. But that is just the point. Under the MOA the government acknowledges that ancestral domains and ancestral lands belong exclusively to the BJE. In one case,24 six justices expressed the view that while the State has sovereignty over the territory of the Philippines, it does not have dominion over all the lands embraced within the territory because ancestral domains and ancestral lands do not form part of the public domain but belong instead to the indigenous people by virtue of native title. The view of the six justices of course lacked the concurrence of two more Justices to constitute the majority opinion in that case. Now, by declaring that the ancestral domain and ancestral lands of the Bangsamoro people do not form part of the public domain, the MOA settles the meaning of the Constitution by fiat. More significantly, under Article I of the Constitution, the Philippines has sovereignty over the entire territory defined in that Article. That is the absolute power to govern persons and things within its territory, including private lands. Under the MOA, the sovereignty of the State is compromised by declaring that with respect to the Bangsamoro ancestral domain and ancestral lands, the relationship between the Central Government and the BJE shall be associative, characterized by shared authority and responsibility.25 That, in international law, is the condominium of two states (the Philippines and the Bangsamoro Juridical Entity) over a territory (the ancestral domain and ancestral lands). Both attributes of the Philippines statehood its dominium (or ownership) and its imperium (or authority) are thus qualified in the MOA. The first thing a student learns in law school is that the Constitution is the supreme law, anything contrary to it being void. This is the principle of the supremacy of the Constitution over official action. Its rationale was explained early in 1803 in Marbury vs. Madison26 by the U.S. Supreme Court, through the Chief Justice, thus: Certainly, all those who have framed constitutions contemplate them as forming the fundamental and paramount law of the nation, and consequently, the theory of every such government must be that an act of the legislature, repugnant to the constitution, is void. But, under its terms, the MOA cannot be void for being contrary to the Constitution. It is in fact irrelevant to ask whether the MOA is not unconstitutional. So that it will not be unconstitutional, it requires that the Constitution be amended so as to harmonize with the MOA. Adjust the Constitution to accommodate the

24 25 26

Cruz vs. Secretary of Environment and Natural Resources, 347 SCRA 18 (2000). Governance par. 4. 1 Cranch (5 U.S.) 137 (1803).

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MOA, not the MOA to make it accord with the Constitution. Even the ancient sophists could not have concocted such a theory to go around the doctrine of the supremacy of the Constitution.

The significance of recognizing the BJE as a semi-independent state


The only way to save the MOA from invalidity is to consider it an instrument for the recognition and declaration of the independence of the BJE. But are we willing or minded to do that, in the name of peace in Mindanao? Once signed, the MOA, will immediately be effective, for under our system of government the recognition of a state is the sole prerogative of the President. Its exercise is a political question, which is beyond the power of judicial review. Insistence on review by the courts of the act of the President can only result in a reprise of Javellana vs. Executive Secretary,27 in which it was held that whether or not the 1973 Constitution had been effectively ratified by the people in so-called citizens assemblies was a political question, giving the Court no alternative but to dismiss petitions raising this question and, consequently, leaving no further judicial obstacle in considering the Constitution in force and effect.

27

50 SCRA 30 (1973).

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The Memorandum of Agreement on Ancestral Domain: A Commentary


Nasser A. Marohomsalic* Musa I. Malayang** Carim L. Panumpang** Rasol Y. Mitmug, Jr.**
A civilization can be judged by the way it treats its minorities. - Mahatma Gandhi***

On 27 July 2008 and after eleven (11) years of negotiation, often marked, nay, marred with interregna occasioned by disagreement over nomenclatures 1 and outbreaks of hostilities, the Government of the Republic of the Philippines (GRP, for brevity) and the Moro Islamic Liberation Front (MILF, for brevity)

Marohomsalic is the Chairman of the Muslim Legal Assistant Foundation (MUSLAF) that intervened in G.R. Nos. 183591 and 183752 where petitioners assailed the constitutionality and validity of the MOA-AD, a Member of the Executive Committee of the Legal Network for Truthful Elections (LENTE), a Co-Convenor and Fellow of the Philippine Council for Islam and Democracy (PCID), a Presidential Assistant on Muslim Affairs of the Integrated Bar of the Philippines (IBP), a founding Member of the Counsels for the Defense of Liberties (CODAL), a former Commissioner of the Human Rights Commission, a former Commissioner of the Regional Consultative Commission for Muslim Mindanao (RCCMM), and author of Aristocrats of the Malay Race: A History of the Bangsa Moro Muslims in the Philippines and Towards Peace, Autonomy and Human Rights. The rest of the authors are also executive officers of the MUSLAF.

**

*** WHITEKAR, BEN, ed. 1973. The Fourth World: Victims of Group OppressionEight Reports from the Fieldwork of the Minority Rights Groups. New York: Schocken Books cited in Vijapur, Abdulrahim P., International Protection of Minority Rights, International Studies 2006, 43, 367 (2006) 1 In a meeting on 07 July 2008 at the Office of the Presidential Adviser for Peace Process (OPAPP) at Pasig City, Secretary and Peace Adviser Esperon briefed Atty. Nasser Marohomsalic, former Secretary Amina Rasul, Atty. Carim Panumpang, former Senator Santanina Rasul and Mr. Yusoph Ledesma that the GRP Peace Panel and the MILF Peace Panel had a long lay-off over their disagreement on the use of certain words and phrases in the MOA-AD. Government, he said, was aversed to the word freedom and the phrase the right to selfdetermination, which are mantras to the MILF. On the other hand, the MILF objected to the phrase constitutional process. In the MOA-AD, the word freedom and the phrase right to self-determination didnt appear, and so was the phrase constitutional process. In an interview with the media, Justice Secretary Raul Gonzales disclosed that it was President Macapagal who deleted the word freedom from the draft MOAAD, the President thinking that any mention of the word might give the Muslim the idea that they could secede [from the Philippines]. In the September 30, 2008 issue of the Philippine Daily Inquirer, p. A5.

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concluded and initialed a framework agreement2 known as the Memorandum of Agreement on the Ancestral Domain Aspect of the GRP-MILF Tripoli Agreement of Peace of 2001 (MOA-AD, for brevity). In the Agreement, the territorial boundary of the Bangsa Moro homeland is classified as a territory under compact (daru-ul mahada) or territory under peace agreement (dar-ul-sulh),3 which shall be entrenched with further territories or areas4, which modality is a relative recent invention in treaty-making.5 These geographic areas constituted also the ancestral domain and ancestral lands of the Bangsamoro over which the Bangsamoro Juridical Entity (BJE for brevity) shall have authority and jurisdiction, particularly exercising proprietary or patrimonial and political sovereignty and sharing powers with the Central Government according to some terms and over some areas thereof including its territorial waters and seabed.6 On the face of the Agreement is a recognition by the GRP and the MILF of the need, nay, obligation to negotiate and conclude a Comprehensive Compact where the mechanisms and modalities for the actual implementation of this MOA-AD shall be spelt out7 including the structure of governance for the BJE and the relationship between the Central Government and the BJE.8 The MOA-AD was scheduled for ceremonial signing on 05 August 2008 in Kuala Lumpur, Malaysia, between the representatives of the MILF and the GRP. Mohagher Iqbal, the Minister of Information of the MILF and Head of its Peace Panel, was set to sign the Agreement for the Liberation Front. For the Government of the Republic of the Philippines, Secretary Rodolfo Garcia, the Chair of the GRP Peace Panel, was tasked to sign it. To stand as witness-signatory for the MOA-AD was Datuk Othman Bin Abd Razak, the Special Adviser to the Prime Minister of Malaysia. Dr. Alberto G. Romulo, Secretary of Foreign Affairs of the Republic of the Philippines and Dato Seri Utama Dr. Rais Bin Yatim, Minister of Foreign Affairs of Malaysia, were named in the Agreement too as signatories witnesses. Also, the MOA-AD named Ambassador Sayed Elmasry, Adviser to Organization of the Islamic Conference (OIC) Secretary General and Special Envoy for Peace Process in Southern Philippines, as an endorser of the said Agreement and was tasked to sign it as such. Dignitaries and diplomats were invited to witness the occasion. Among those who arrived in Malaysia included the U.S. Ambassador to the Philippines, the
2 3 4 5 6 7 8 See Atty. Michael O. Mastura, Brief Commentary on MOA-AD, at www.luwaran.com. Paragraph 8 on Terms of Reference, MOA-AD. Paragraph 2(c)(d)(e) on Territory, MOA-AD. Mastura, supra. Paragraph 6 on Concepts and Principles, MOA-AD and pars. 3, 5 and 6on Territory, MOA-AD. Paragraph 7 on Governance, MOA-AD. Paragraphs. 2, 4 and 8, id.

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Japanese Ambassador to the Philippines, the Australian Ambassador to the Philippines, the Libyan Minister Counselor to the Philippines, Presidential Adviser on the Peace Process Secretary Esperon, Jr. and Moro leaders including former Secretary Amina Rasul, among others. But the ceremonial signing did not happen. In the afternoon of 04 August 2008 and when everybody was in Malaysia for the purpose, the Supreme Court issued a Temporary Restraining Order enjoining Secretary Rodolfo Garcia and the GRP Peace Panel not to sign the MOA-AD pursuant to a number of petitions lodged against the Agreement.9

Opposition
Individually or collectively, the petitions scored the Agreement for its illegal and unconstitutional provisions, the failure of government to render them a copy thereof in violation of their constitutional right to public information and the lack of transparency or lack of consultation during the negotiation of the MOA-AD. Particularly, they raised alarums over the alleged creation in the MOA-AD of a Bangsamoro Juridical Entity as a separate independent state and the dismemberment of the country thereby. In the media, petitioners drummed up their advocacy, denouncing the Executive Department and the Presidency for arbitrarily ceding a piece of Philippine territory in the south to the MILF to establish an independent Bangsamoro State named Bangsamoro Juridical Entity. The negative coverage of the media of, and the undue reaction of Christian leaders of influence to, the MOA-AD, muffled and drowned the Muslim perspective on the Agreement. But what is the MOA-AD all about? Why the furor? Is it a political furnace that spews out toxins on the national fabric of the country?

MOA-AD is an Interim Agreement


The MOA-AD is a work in progress. A lawyer-member of the MILF Peace Panel Atty. Michael Mastura, so described it, thus: It is a framework agreement for entrenching later, and more detailed, comprehensive compact (and legal measures) which elaborate the principles declared in this Agreement.10
9 10 The petitions are docketed as G.R. Nos. 183591 and 183752 and still pending with the Supreme Court as of this writing. Mastura, supra..

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Attorney Musib Buat, another lawyer-member of the MILF Peace Panel, described it as an Interim Agreement, its provisions needing further elaboration and entrenchment for the Comprehensive Compact, which agreement comes at the conclusion of the negotiation.11 The MOA-AD said as much of its nature and characteristics. In paragraph 7 on Governance, the MOA-AD provides, thus: The Parties agree that the mechanisms and modalities for the actual implementation of this MOA-AD shall be spelt out in the Comprehensive Compact to mutually take such steps to enable it to occur effectively. Any provisions of the MOA-AD requiring amendments to the existing legal framework shall come into force upon signing of a Comprehensive Compact and upon effecting the necessary changes to the legal framework with due regard to non-derogation of prior agreements and within the stipulated timeframe to be contained in the Comprehensive Compact. The Bangsamoro Juridical Entity is the political structure that is a component of mechanisms and modalities that will operationalize the whole concepts, principles and measures of self-determination defined in the MOA-AD including the associative relationship between the Central Government and the BJE. As it is, the BJE and the latters fundamental structures ( i.e. , executive, legislative, judicial and administrative) have yet to be negotiated and agreed upon for consideration into the Comprehensive Compact.12 Paragraph 8 of the MOA-AD under the same Title specified the institutions that shall be devolved to the BJE but its details are made subject to future discussion. These institutions are, namely, civil service, electoral, financial and banking, education, legislation, legal, economic, and police and internal security force, judicial system and correctional institutions. Other matters concerning the details of the agreed consensus points on governance not covered under the MOA-AD including the modalities for the governance intended to settle the outstanding negotiated political issues are deferred to future negotiations of the Comprehensive Compact.13 Also, according to the MOA-AD, the details for the management of the territorial waters of the BJE are going to be provided in an agreement to be entered into by the Parties.14

11 12 13 14

This is the sense of Atty. Musib Buat who spoke at a Public Forum on the MOA-AD at the Malcolm Theater, U.P. College of Law, Diliman, Quezon City, 19 August 2008. Paragraph 4 on Governance, MOA-AD. Paragraphs 6 and 10, id. Paragraph. 2(g) on Territory, MOA-AD.

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Requirement for the Enactment of the BJE Basic Law and the Amendment/ Revision of the Constitution It must be emphasized that the MOA-AD does not even consider the execution of a Comprehensive Compact as the curtains of the peace talks. Paragraph 6 of the MOA-AD under the Title on Governance provides that The Parties shall faithfully comply with their commitment to the associative arrangements upon entry into force of the Comprehensive Compact but the same section provides for the proviso, albeit not in the usual legal form, that the institutions for governance in a Comprehensive Compact, together with its modalities during the transition period, shall be fully entrenched and established in the basic law of the BJE. This means that the Comprehensive Compact has to go through the legislative mill for its enactment into law. Paragraph 7 of the same Title described the process more clearly, thus: Any provisions of the MOA-AD requiring amendments to the existing legal framework shall come into force upon signing of a Comprehensive Compact and upon effecting the necessary changes to the legal framework with due regard to non-derogation of prior agreements and within the stipulated timeframe to be contained in the Comprehensive Compact. By any language, the legal framework referred to here would mean the Philippine Constitutional System and its statutory components. In brief, the MOA-AD, in the above-named provision, calls for an enactment of a Basic Law for the BJE, which power belongs to the Legislature and the Executive Department, including the amendment or revision of the Constitution when necessary. Our submission jives with the appreciation of the GRP Peace Panel that the MOA-AD is subject to further discussions as to the details of its provisions.15 Thus: Once the details are discussed and agreed to, these will be incorporated, among others, into the Comprehensive Compact document.16 To implement provisions of the Agreement, the Executive branch will undertake the necessary processes, where needed, to effect changes to the existing legal framework. This will range from the passage of the necessary executive issuances (Executive Order), national laws (Republic

15 16

Item No. 10 of the Primer on the Memorandum of Agreement on Ancestral Domain, prepared by OPAPP. Id.

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Acts), and perhaps Constitutional amendment (via Constituent Assembly or Constitutional Convention) to legally entrench our arrangement on the BJE.17 The MILF is not oblivious to the political and legal predicament of the Government of the Republic of the Philippines. In his article entitled The Constitutional Dilemma: Impact and Implications on the GRP and MILF Peace Process, Atty. Buat wrote enough of the sense of the liberation front on the constitutional track of the government. Thus: The MILF as we understand is not necessarily adverse to the use of the phrase constitutional process but this should be meant as taking appropriate legal steps including the revision or amendment of the Philippine Constitution or the passage of a legislation by Congress, after both Parties have signed and entered into a comprehensive peace compact, during the transition period of the proposed Bangsamoro Juridical Entity (BJE) in order to give meaning and effect the act of entrenching the latter entity while the same undergoes institution and capacity building while being devolved with appropriate powers and authority towards effective self-governance preparatory to the determination of its political status via popular consultation leading to a referendum. This is in essence is along the track of the emerging approach of earned sovereignty the elements of which are found in several international peace agreements, such as that of the resolution of sovereignty-based disputes in South Sudan, Bougainville, Western Sahara, Kosovo and Northern Ireland.18 However, the process of revising or amending the Philippine Constitution or the enactment of a legislative act by Congress is internal to the Central Government and the MILF do not wish to participate in said political exercise being consistent on its position in not recognizing the Constitution as a framework of the peace negotiations but that of international law. It is the duty and obligation of the government as a Party to the GRP-MILF Peace Talks to take appropriate legal steps or constitutional processes whenever appropriate to see to it that the Peace Accord reached and entered into by the contracting Parties are implemented and complied with by both sides.19 In his Brief Commentary on MOA-AD, Atty. Mastura expressed enough his mind on the MOA-AD as a treaty or one evolving into a treaty20 and noted how government exercises or forges international relation by way of an Executive Agreement, which mode bypasses Congress, and by way of a Treaty, which requires concurrence by the
17 18 19 20 Id. At www.luwaran.com, 19 Dec. 2007. Id. Paragraph. 8, Mastura, supra.

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Senate.21 Atty. Mastura concedes that the government may do its part and go through either approach in obeisance to its constitutional traditions, explaining that For the MILF, that is a matter internal to the Government side as a shared competence.22 He cautioned though and wrote that procedural legitimacy obliges both GRP and MILF peace negotiating panels not only to adhere to the principle of nonderogation of agreed terms/texts but more importantly to sustain closure.23 As it is, government has repudiated the MOA-AD, publicly announcing that it will not sign it in its present form or in any other form. Even under normal circumstances, nobody could be adequately competent enough to foretell what will become of the MOA-AD in the negotiation for the Comprehensive Compact.

A House of Haze In the canvas of the MOA-AD and as now stand things , indeed we see a political house, the BJE, as a grandiose caravansary hulked in some yonder oasis but blurry under the noonday heat of the desert, so to speak. It could turn out to be some mirage and, indeed, it can become it, a picture in the mind, where government chooses to take its political caravan astray, which it already did, reneging on its commitment to journey by the path of peace and reverting to the course of war. Indeed, the MOA-AD is an Interim Agreement.

MOA-AD is an International Agreement


Even if the MOA-AD is considered as an Interim Agreement, it is our submission that it can stand alone, it being a Pactum de Contrahendo and an International Agreement in the category of the Tripoli Agreement of 1976. In Abbas vs. Comelec,24 the Court rendered its estimation of the Tripoli Agreement as binding International Agreement in this wise, thus: Assuming for the sake of argument that the Tripoli Agreement is a binding treaty or international agreement, it will fall in the same class as an act of Congress like R.A. 6737.
21 22 23 24 Paragraph. 12, id. Id. Atty. Michael O. Mastura, Misdirection of the Muslim Moro Agenda in Constitutionalism Commentary, at www.luwaran.com. 179 SCRA 287, 1989.

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This ruling explained that as such law, Republic Act 6737 or the Organic Act of the Autonomous Region in Muslim Mindanao has supplanted it, it being a subsequent law.25 But this jurisprudence has been qualified in Bayan vs. Executive Secretary, which underscores the fact that international law continues to make no distinction between treaties and executive agreements; they are equally binding obligations among nations.26 The Court amplifies, thus: As an integral part of the community of nations, we are responsible to assure that our government, Constitution and laws will carry out our international obligation. Hence, we cannot readily plead the Constitution as a convenient excuse for non-compliance with our obligations, duties and responsibilities under international law.27 Beyond this, Article 13 of the Declaration of Rights and Duties of States adopted by the International Law Commission in 1948 provides: Every State has the duty to carry out in good faith it obligations arising from treaties and other sources of international law and it may not invoke provisions in its Constitution or its laws as an excuse for failure to perform its duty.28 Equally important is Article 26 of the Convention which provides that Every Treaty in force is binding upon the parties to it and must be performed by them in good faith. This is known as the principle of pacta sunt servanda which preserves the sanctity of treaties and has been one of the most fundamental principles of positive international law, supported by the Jurisprudence of international tribunals.29

The MILF has International Personality to Enter into International Agreements The Tripoli Agreement was signed by Nur Misuari, Chair of the MNLF, and Undersecretary of National Defense for Civilian Relations Carmelo Barbero for the Government of the Republic of the Philippines. Signed in Tripoli, Libya, on 23 December 2006, it was facilitated by the Libyan Arab Republic and its signing was witnessed by the Minister of State for Foreign Affairs of the Libyan Arab Republic and the Secretary General of the Organization of the Islamic Conference. Like the Tripoli Agreement, the MOA-AD was facilitated by the Malaysian Government and initialed for signing by the representatives of the Government and the Republic of the Philippines and was supposed to be witnessed by the Special Adviser to the
25 26 27 28 29 Id. 342 SCRA 489, 2002. Id., p. 493. Id. Id. Citation omitted.

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Prime Minister of Malaysia, the Secretary of Foreign Affairs of the Philippines, the Minister of Foreign Affairs of Malaysia, and the Adviser to the Organization of Islamic Conference (OIC) Secretary General, and the Special Envoy for the Peace Process in Southern Philippines, among others. The botched signing was of no moment, since for all intents and purposes the Agreement was authenticated by the parties, hence, agreed upon and the signing, if it happened, would therefore be only a mere formality. 30 Secondly, many of the provisions in the MOA-AD are a reinstatement of provisions of previous documents including the GRP-MILF Tripoli Agreement of Peace in 2001, the mother agreement of the MOA-AD. Like the Moro National Liberation Front, the MILF is a liberation front and to date has surpassed the MNLF in terms of strength. It has engaged the Philippine military in a fierce conventional warfare for six (6) months in 2000 and held at bay the military in many battles despite the latters great superiority in number and equipment. In the General Framework of Agreement of Intent Between the Government of the Republic of the Philippines (GRP) and the Moro Islamic Liberation Front (MILF), dated 27 August 1998, the government saw fit to sign the Agreement with its counterparts from the MILF that included witnesses from its hierarchy including Sheik Abukhalil Yayha, Chairman of the Majlis Al-Shura (the MILF Parliament) and Sheik Ali Ismail, the Chairman of the MILF Supreme Court. Clearly, then, the MILF has earned an international personality akin to a State, or lesser to a State but impressed with its characteristics in substantive terms, granting it competence to enter into treaties or agreements pursuant to international law. Article 3 of the Vienna Convention on the Law of Treaties recognizes that under customary international law, entities other than States may have international personality necessary to allow them to enter into treaties.31 The constituent instruments of certain international organizations authorized them to enter into treaties.32 The United Nations Charter specifically authorizes the organization to conclude agreements with member States and with Specialized Agencies.33 [Certainly, the MILF can come within the definition of an entity with international personality, to which the Government of the Republic of the Philippines has to concede in obeisance to its commitment under the International Covenant on Civil and Political Rights that promotes the right to self-determination of peoples, and for which the U.N. Human Rights Committee has urged all State parties [like
30 31 32 33 During the oral arguments before the Supreme Court, Atty. Agabin, counsel for petitioner Senator Roxas, argued for this position as grounded in international law. Miriam Santiago and Jorge Coquia, International Law and World Organizations. 2005: Central Book Supply, p. 370. Id. Id., Articles 43 and 63.

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the Philippines] to take positive action to facilitate realization of and respect for the right of peoples to self-determination.34 At this point, the question may be posed: To what extent is the Government of the Republic of the Philippine bound to implement the MOA-AD? Or, what provisions of the MOA-AD bind the Government of the Republic of the Philippines may be bound to observe and implement? It is necessarily apposite to discuss the kind of peace process that governed the negotiation and the treatment both parties accorded to interim agreements or past agreements in every phase of the peace process.

Interim Agreements in Every Phase or Strand of the Peace Process are Implemented The negotiation between the MILF and the Government of the Republic of the Philippines went by strands or agenda. In the Agreement on Peace Between the Government of the Republic of the Philippines and the Moro Islamic Liberation Front, they agreed to go by the peace process progressively, dividing the agenda into separate timeframes, first, the Security Aspect, second, the Rehabilitation Aspect, and third, the Ancestral Domain Aspect.35 They addressed another issue later on for its fourth strand, the Political Governance Aspect. In this Peace Agreement, both Parties committed to implement all past agreements.36 In every strand, indeed, they have executed agreements. For the Security Aspect, they executed the following major agreements and implemented them, namely: Agreement for General Cessation of Hostilities, 21 July 1997; Agreement on the Gradual Repositioning of GRP Forces in Rajamuda and its Environs and the Return of Evacuees, 03 September 1997; Agreement to Sustain the Quest for Peace, 06 February 1998, which provided for the creation of Quick Reaction Teams (QRT) to immediately address alleged violations of the Agreement on the General Cessation of Hostilities, among others; Agreement to Reaffirm the Pursuit of Peace, 10 February 1999, which activated the GRP-MILF Coordinating Committees on Cessation of Hostilities (CCCH); various agreements on the acknowledgment of MILF camps to
34 35 36 General Comment 12 (21), par. 6, Ai39140(1984), p. 143, cited in McCorquodale, Self-Determination Human Rights Approach, The International Comparative Quarterly, Vol. 43, No. 4 (Oct. 4, 1994, pp. 857-885). Said Agreement was signed on 22 June 2001 in the presence of the representative of Gaddafy International Foundation for Charitable Associations, the Government of Malaysia and the Government of Indonesia. Paragraph. A, id.

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be covered by the cessation of hostilities for the duration of peace talks; Joint Communiqu on the isolation and interdiction of all criminal syndicates and kidnapfor-ransom groups and the creation of an Ad Hoc Joint Action Group for the purpose, 18 October 2001; the Agreement on the General Framework for the Resumption of Peace Talks Between the Government of the Republic of the Philippines and the Moro Islamic Liberation Front, 24 March 2001, where both Parties suspended offensive military operations; a Joint Statement, dated 02 December 2003, where the MILF committed support to the campaign of government against the terrorist Jemaah Al-Islamiyah. Both Parties requested Malaysia to fast track the deployment of its International Monitoring Team (IMT), which arrived in early October 2004.37 The Team was led by Malaysia38 with a substantial contingent from Brunei and Libya.39 Local Monitoring Team in every strategic area in the region was also organized. The presence of the IMT drastically reduced ceasefire violations from 500 ceasefire violations between 2002 and 2005 to only 37 mostly minor ceasefire violations.40 On the rehabilitation and development strand of the peace process, the Parties entered into many agreements including ones creating the Bangsamoro Development Agency tasked to manage foreign funding for rehabilitation of the victims of war and the building of infrastructure and the establishment of the Multi-Donor Trust Fund led by the World Bank.41 Under the auspices of the Government of Malaysia and other donor countries from the developed world, Moro professionals were sent to the Asian Institute of Management for leadership and competence training, while others were sent to the United States and Australia. The strategy was designed to build a manpower pool of competent Moro professionals where the BJE may draw its personnel needs. The third strand of the peace talks, the Ancestral Domain Aspect, produced the MOA-AD, which is now much maligned in the national debate and reeking of the fulminations from its detractors. Nevertheless, as noted in the said Peace Agreement, the negotiation by strands described the incremental characteristics of the peace process and, with every agreement in every phase of the peace process implemented, the progressive resolution of the Bangsamoro problem 42 rolls on.

37 38 39 40 41 42

See Joint Statement between GRP and the MILF, 04 October 2004. See Joint Statement between the GRP and the MILF, o4 May 2005. See Joint Statement between the GRP and the MILF, o3 June 2006. Joint Statement between the GRP and the MILF, 11 September 2005. Statement of Understanding between the GRP and the MILF, 06 April 2004. Paragraph A(1), Agreement on Peace Between the Government of the Republic of the Philippines and the Moro Islamic Liberation Front, 22 August 2001.

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Illegal and Unconstitutional Provisions are Excluded from Implementation Admittedly, there are illegal and unconstitutional provisions in the MOA-AD. The devolution to the BJE of the institutions of election, civil service, police and internal security under paragraph 8 of the MOA-AD on Governance, runs afoul with the Constitution which provides for their independence and fiscal autonomy under their respective governing Commissions.43 The 75-25 term of sharing in favor of the BJE of income derived from strategic minerals including oil, fossil fuel and the like44 collides with the 50-50 split provided for in Section 5(b), Article XII of Rep. Act No. 9054, the Organic Act for the Autonomous Region in Muslim Mindanao. In the Organic Act, the control and supervision over the exploration, utilization, development and protection of strategic minerals such as uranium, petroleum and other fossil fuels, mineral oils, all resources of potential energy, as well as national reserves and aquatic parks, forest and watershed reservations are vested in the national government.45 In the MOA-AD, however, jurisdiction and control over, and the right of exploring for, exploiting, producing and obtaining all potential sources of energy, petroleum in situ, fossil fuel, mineral oil and natural gas, whether onshore or offshore, is vested in the BJE, except in times of emergency, when public interest so requires, when the central government may, during the emergency, for a fixed period and under reasonable terms as may be agreed by both Parties, temporarily assume or direct the operations of such strategic resources.46 By constitutional fiat and by the intrinsic nature of his office, the Court ruled in Bayan vs. Zamora, the President, as head of State, is the sole organ and authority in the external affairs of the country. In many ways, the President is the chief architect of the nations foreign policy; his dominance in the field of foreign relations is (then) conceded. Wielding vast powers and influence, his conduct in the external affairs of the nation, as Jefferson describes, is executive altogether.47 In the MOA-AD, however, lesser powers of diplomacy are granted to the BJE such as the sending of trade missions to foreign countries with which it has economic cooperation agreements,48 participation in international meetings and events and in official Philippine missions and delegations in the negotiation of border agreements or protocols for environmental protection, equitable sharing of incomes and revenues

43 44 45 46 47 48

See Article IX and Section 6, Article XVI, 1987 Philippine Constitution. Paragraph 6 on Resources, MOA-AD. Section 5, Article XII, 1987 Philippine Constitution. Paragraph 5 on Resources, MOA-AD. Bayan vs. Zamora, 342 SCRA 494, 2000. Citation omitted. Paragraph 3(a) on Resources, MOA-AD.

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in the areas of sea, seabed and inland seas or bodies of water adjacent to or between islands forming part of the ancestral domain, in addition to those pertaining to fishing rights.49 But these illegal and unconstitutional provisions in the MOA-AD are not selfexecuting, the disregard of which cannot give rise to a cause of action in the courts;50 they are not intended to be implemented immediately. The MOA-AD itself proscribed it, providing conditionalities for their efficacy. Thus: Any provision of the MOA-AD requiring amendments to the existing legal framework shall come into force upon signing of a Comprehensive Compact and upon effecting the necessary changes to the legal framework with due regard to non-derogation of prior agreements and within the stipulated timeframe to be contained in the Comprehensive Compact.51

The MOA-AD is Pactum de Contrahendo


The Government of the Republic of the Philippines, however, is duty bound to implement the MOA-AD as it pertains to its commitment to pursue the peace process and implement this framework agreement on territory. This obligation on the part of government is set out in Paragraph 2(a) on Territory of the Agreement, thus: The GRP and MILF as the Parties to this Agreement commit themselves to the full and mutual implementation of this framework agreement on territory with the aim of resolving outstanding issues that emanate from the consensus points on Ancestral Domain. In the MOA-AD, the territorial core of the BJE would consist of the present Autonomous Region in Muslim Mindanao including the municipalities of Baloi, Munai, Nunungan, Pantar, Tagloan and Tangkal in the province of Lanao del Norte that voted for inclusion in the ARMM during the 2001 plebiscite.52 Without derogating from the requirements of prior agreements, the Government stipulates to conduct and deliver, using all possible legal measures, within twelve (12) months following the signing of the MOA-AD, a plebiscite covering the areas as enumerated in the Annex53 The Annex constitutes an integral part of this framework agreement. Towards this end, the Parties would endeavor to complete negotiations and resolve all outstanding issues on the Comprehensive Compact within fifteen (15) months
49 50 51 52 53 Paragraph 4(b), id. Kilosbayan vs. Morato, 246 SCRA 564, 1995. Paragraph 6 on Governance, MOA-AD. Paragraph. 2(c) on Territory, MOA-AD. Paragraph. 2(d), id.

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from the signing of the MOA-AD.54 Government also committed to render special socio-economic and cultural affirmative actions pending the conduct of a plebiscite which was slated not earlier than 25 years from the signing of the Comprehensive Compact to determine the question of their accession to the BJE.55 The Parties agree that the mechanisms and modalities for the actual implementation of this MOA-AD shall be spelt out in the Comprehensive Compact to mutually take such steps to enable it to occur effectively.56 On the whole the MOA-AD contains measures and principles both parties have committed to incorporate into the Comprehensive Compact, which obligation makes for the MOA-AD as a Pactum de Contrahendo, an agreement by a State to conclude a later and final agreement.57 It must be emphasized that the MOA-AD is not the only agreement where both Parties committed to pursue the quest for peace. In the General Framework of Agreement of Intent Between the Government of the Republic of the Philippines (GRP) and the Moro Islamic Liberation Front (MILF) executed as early as 1998, The Parties committed to pursue the peace negotiations on the substantive issues and soon as possible, and resolutely continue the negotiations until the Parties reach a negotiated political settlement.58 This agreement assumes legal significance with the signature of certain witnesses from the MILF side, namely, Sheikh Abukhalil Yayha, the Chairman of the Majlis AlShura (the MILF Parliament), and Sheikh Ali Ismail, the Chairman of the MILF Supreme Court. On 24 March 2001, the Parties entered into the Agreement on the General Framework for the Resumption of Peace Talks Between the Government of the Republic of the Philippines and the Moro Islamic Liberation Front where the Parties commit to honor, respect and implement all past agreements and other supplementary agreements signed by them 59 and to resume the stalled peace negotiations immediately after the signing of this Agreement, and continue the same where it had stopped before April 27, 2000 until they shall have reached a negotiated political settlement of the Bangsamoro problem.60

54 55 56 57 58 59 60

Id. Paragraph. 2(c), id. Paragraph 7 on Governance, MOA-AD. Santiago and Coquia, supra, p. 367. Article 1, General Framework of Agreement of Intent Between the Government of the Republic of the Philippines and the Moro Islamic Liberation Front, 1998. Article IV, id. Article 1, id.

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The point is, the Parties have laid out the path towards a political negotiated settlement of the so-called Moro Problem, and they have in fact trodden the track too far ahead to make a turn-around and make one excuse after another. The rule of pacta sunt servanda requires that both the Government of the Republic of the Philippines and the Moro Islamic Liberation Front beat the path of peace and continue with the negotiation for the execution of the Comprehensive Compact pursuant to the Pactum de Contrahendo they both signed, which is the MOA-AD.

A Case for Statecraft and Parens Patriae


As discussed, the impaired provisions of the MOA-AD are not self-executing and they find expressions in the MOA-AD in keeping with a new paradigm in the resolution of ethno-political conflicts brought about by the emergence of liberation movements asserting their right to self-determination against the State. And the government kept to this approach in its negotiation with the MILF.61

Earned-Sovereignty Approach This paradigm does not do violence to the constitution but seeks to resolve the tension between the claim of national sovereignty by insurgent ethnic communities flowing from their right to self-determination and the assertion of government of its State sovereignty with the view of making adjustments to the legal frameworks for the resolution of ethno-political conflicts. It does not perceive sovereignty to be a unitary right, but rather a bundle of authority and functions which may at times be shared by the state and sub-state entities as well as international institutions.62 Earned-sovereignty encompasses six (6) elements three (3) core elements and three (3) optional elements.63 The first core element is shared sovereignty. In each case of earned sovereignty the state and sub-state entity may both exercise sovereign authority and functions over a defined territory. In some instances, international institutions may also exercise sovereign authority and functions in addition to or in lieu of the parent state. In rare cases, the international community may exercise shared-sovereignty with an internationally recognized state.64
61 62 Paul William, Earned Sovereignty: The Road to Resolving the Conflict Over Kosovos Final Status, Denv. J. Intl L. Poly, Vol. 31: 3, p. 390. Karen D. Hey mann, Earned Sovereignty for Kashmir: The Legal Methodology to Avoiding a Nuclear Holocaust, 19 A.M. Intl L. Rev. (forthcoming Fall 2003. In James Hooper and Paul Williams, Earned Sovereignty: The Political Dimension, Renv. L. Intl & Poly, Vol. 31: 3, 2003, p. 357. Hooper and William, supra, pp. 356. Id.

63 64

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The second core element is institutional building. This element is utilized during the period of shared sovereignty prior to the determination of final status. Here the sub-state entity, frequently with the assistance of the international community, undertakes to construct institutions for selfgovernment and to build institutions capable of exercising increasing sovereign authority and functions.65 The third core element is the eventual determination of the final status of the sub-state entity and its relationship to the state. In many instances the status will be determined by a referendum, while in others it may involve a negotiated settlement between the state and sub-state entity, often with international mediation. Invariably the determination of final status for the sub-state entity involves the consent of the international community in the form of international recognition.66 The first optional element is phased sovereignty. Phased sovereignty entails the accumulation by the sub-state entity of increasing sovereign authority and functions over a specified period of time prior to the determination of final status.67 The second optional element is conditional sovereignty. Conditionality may be applied to the accumulation of increasing sovereign authority and functions by the sub-state entity, or it may be applied to the determination of the sub-state entitys final status. In either case the substate is required to meet certain benchmarks before it may acquire increased sovereignty. These benchmarks may include conditions such as protecting human and minority rights, developing democratic institutions, instituting the rule of law, and promoting regional stability.68 The third optional element, constrained sovereignty, involves continued limitations on the sovereign authority and functions of the new state, such as continued international administrative and/or military presence, and limits on the right of the state to undertake territorial association with other states.69 This approach to conflict-resolution was used to resolve the conflict in Northern Ireland which resulted in the execution of the Good Friday Accord that granted the Irish Catholics in Northern Ireland the freedom to elect independence from the United Kingdom in a referendum, or join the Republic of Ireland after seven years; the insurgency of the Christian minority Machakos of Southern Sudan who eked
65 66 67 68 69 Id. Id. Id. Id., p. 356-357. Id., p. 357.

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out the Machakos Protocol that granted them autonomy and the right to secede after six (6) years should they choose to; the ethno-political conflict in Kosovo which brought about the independence of Kosovo; and the insurgency of the Christian East Timorese with phased sovereignty that led to full independence.70

Belfast Agreement or the Good Friday Accord Particularly, the Good Friday Accord is one model that the MOA-AD is hewing very closely to. The negotiation between the Republic of Ireland, the United Kingdom and the Sin Fein, the political arm of the Irish Catholics in Northern Ireland, went by in three (3) strands. Among others, the Agreement provides for the repeal of laws and the amendment of the Constitution of the Republic of Ireland to adjust to the Accord. Government has taken note of the significance of this model, thus: Peace process models in other parts of the world (Sin Fein in Northern Ireland, Gam in Aceh, Fretelin in Timor Leste, etc.) have successfully showcased that in a post peace settlement scenario, it is possible for revolutionary group to later on shift their arena of struggle from armed (rebel group) to parliamentary (political party) where they are free to advance their political programs and compete for political power through the electoral system.71

A Hard Ball The negotiation for the MOA-AD was the most difficult phase in the peace process. The Parties had gone through five (5) Exploratory Talks from 20 April 2005 through 04 May 2006, without forging any final draft. In the 13th Exploratory Talks on 02 October 2007, the Parties broke the impasse.72 But in the Exploratory Talks on 15-16 December 2007, the MILF Peace Panel walked out on the GRP Peace Panel at Kuala Lumpur, Malaysia, when the latter submitted its own version of a Memorandum of Agreement that did away with the consensus points on Ancestral Domain.73 Obviously, government did not speak with one voice on the issue of Moro selfdetermination. On June 17, 2007, Prof. Rudy Rodil of the GRP Peace Panel announced in a public forum sponsored by the United States Institute of Peace at the Asian Institute of Management at Makati City that the government has offered to recognize
70 71 72 73 See Paul William, supra, p. 390; also Hooper and William, supra, pp. 359-375. Item No. 19, Primer on the Memorandum of Agreement on Ancestral Domain, prepared by OPAPP. At www. mindanews.com, 20 December 2007. In Atty. Buats The Constitutional Dillema, supra , at www.luwaran.com, 19 December 2007. Atty. Buat, id.

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the Moro right to self-determination, except on matters of national defense, foreign affairs, monetary system and postal system.74 Finally, on July 26, 2008, the MOA-AD was concluded and initialed. And as they say, the rest is history. But we do not wish history on the MOA-AD to be a rendition of its detractors.

Government has Bounden Duty to Promote Right to Self-Determination of the Bangsamoro

The GRP Peace Panel has not committed any grave abuse of discretion amounting to lack or excess of jurisdiction when it concluded and executed or initialed the MOA-AD. The act is in keeping with the right to self-determination of the Bangsamoro thats enshrined in our Constitution. Thus: The State recognizes and promotes the rights of indigenous cultural communities within the framework of national unity and development.75 Section 2, Article X of the Constitution provides for a limited autonomy for Muslim Mindanao, enumerating the powers therein devolved to the autonomous government. But at the end of the list is a catch all provision that authorizes Congress to legislate such other matters as may be authorized by law for the promotion of the people of the region.76 This is re-enforced by Section 1, Article XIII of the Constitution, thus: The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic and political inequalities and remove cultural inequities by equitably diffusing wealth and political power for the common good. xxxx By its plenary power, therefore, Congress can initiate and enact laws to expand the powers and jurisdiction of the autonomous government or cause the amendment or revision of the Constitution to accommodate the aspirations of the Bangsamoro. Obviously, this is what the GRP Peace Panel had in mind when it drafted the MOA74 75 76 Rudy Rodil, Finding New Paths to Peace: Ancestral Domain and Moro Self-Determination. In Autonomy and Peace Review, Vol. 3:3, July-September 2007, p.7. Section 2, Article II, 1987 Philippine Constitution. Section 9, Article X, 1987 Philippine Constitution.

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AD and provided for the constitutional requirement for the enactment of a Basic Law for the BJE and the need for the amendment or revision of the constitution, as the case may be, to make effective the MOA-AD or the Comprehensive Compact. In a manner of speaking, the GRP Peace Panel, by negotiating with the MILF and concluding the MOA-AD with them, was acting like it were a consultative body making expert opinion on the Moro problem and its resolution at the end of the day. But they were not just any agency sui generis; theyre representatives of the Executive Department and carried the magistracy of the Office of the President, which branch of government participates in law-making by its certification of bills as a priority policy of government and its exercise of veto power. Indeed, we cannot extrapolate from their actuation any malice or despotism as would indict them for grave abuse of discretion when they took to the EarnedSovereignty Approach in their negotiation with the MILF and concluded the MOAAD. What they did in fact was creative enough to address the aspirations of the Bangsamoro and their contemporary rebellion that has remained a sore in the body politic for almost 40 years.

MOA-AD is within the Framework of the Constitution To emphasize, the GRP Peace Panel, in dealing with the MILF and introducing into the MOA-AD so-called questionable provisions and agreeing to the adjustment of the Philippine Constitution to the MOA-AD where necessary, has not deviated from our constitutional framework, with the Constitution providing, in the first place, for mechanisms for its amendment or revision.77 The Constitution is not a tablet of granite or diamond of eons. As any human production, ruled Justice Laurel in the 1936 case of Angara vs. Electoral Commission, our Constitution is of course lacking in perfection and perfectibility78 The MOA-AD is one measure too to respond to the treaty obligations of the Government of the Republic of the Philippines under the International Covenant on Civil and Political Rights, the International Covenant on Social, Economic and Cultural Rights and the Universal Declaration of Human Rights that all promote self-determination of all peoples. In its General Comment on Article 1 of the International Covenant on Civil and Political Rights, the Human Rights Committee of the United Nations urged as early as 1984 all State parties to the Covenant to take positive action to facilitate
77 78 See Article XVII, id. 63 Phil. 157, 1936.

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realization of and respect for the right of peoples to self-determination.79 The U.N. General Assembly issued a Friendly Relations Declaration which provides that all peoples have the right freely to determine, without external influence, their political status and that a people choosing to live as a State has the perfect right to do so and, in such case, every State has the duty to respect this right.80

A Redress for Historical Injustice At this juncture, it must be stated that the MOA-AD offers less than the suzerainty of the Bangsamoro of the olden days, which was diminished through the years owing to colonial intrusion and the complicity of the Filipino Christian majority. In Southeast Asia, in their Sultanic System the Bangsamoro attained the highest stage of civilization unaided.81 In the 15th century and when most of the country was a scattered, disparate barangay, the south flourished with the Sultanate of Sulu.82 Then came the Rajahship of Buayan. The Sultanate of Maguindanao came around the second decade of the 16th century and began its zenith during the reign of Sultan Kudarat in the 17th century.83 The Sultanate of Butig developed alongside Maguindanao, striding to prominence and challenging Spanish presence elsewhere and beyond its suzerainty early in the 18th century.84 In the opening decade of the 18th century, Maguindanao spun out a part of its jurisdiction to become the Sultanate of Kabuntalan.85 By the third of the 18th century, nigeris in Lanao grew more independent from Butig, 17 of which were ruled by potentates called Rajah and 16 by principales bearing the title of Sultan.86 In the fight against Spain, they confederated into what is now called the Pat a Pangampong a Ranao or the Four Principalities of Lanao.87 These sultanates forged diadic and political alliances among themselves. In the fight over the throne of Brunei between two cousins in the opening decade of the 18th century, the Bangsamoro harkened to the call of the Sultan of Sulu and organized

79 80

General Comment 12(1) par. 6, AI39140, (1984), p. 143. Cited in Robert McCorquodale, supra, pp. 857-88. U.N. G.A. Res. 2614 (XXV) 24 Oct. 1970. The relevant part of the resolution (The principle of equal rights and self-determination of peoples) provides that in pursuit of their right to self-determination, peoples are entitled to seek and receive support in accordance with the purposes and principles of the Charter, cited in Koskenniemi, Martti, National Self-Determination Today: Problems of Legal Theory and Practice, The International and Comparative Law Quarterly, Vol. 43, No. 2 (Apr. 1994), pp. 241-269. Nasser A. Marohomsalic, Aristocrats of the Malay Race: A History of the Bangsa Moro in the Philippines. 2001: Quezon City, p. 14 Id., p. 37. Id., pp. 35, 55-58. Id., pp. 35, 58, 65 and 66. Id., p. 59. Id., pp. 84-85. Id., pp. 81-82.

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and sent an expeditionary army to quell the regional conflict in favor of Sultan Muaddin.88 Against Spain, they roved the Eastern Seas and raided its tributaries and citadels in the archipelago.89 Moro corsairs were usual sights in the domain of the Dutch and the English in the East Indies, assisting their Malay brethren in their resistance against these European powers.90 The Sultanates carried on diplomatic relation with foreign powers and concluded treaties with them.91 In the age of colonization, the capital of the Sulu Sultanate was the emporium of the East. European maritime fleets including men of war also frequented the port of Sultan Kudarat of Maguindanao by the Pulangi River and the Tubok tributary of the Illana Bay in the domain of the Iranuns.92 Spain coveted Moroland for vassalage and waged war against its sultanates for more than 300 years. Until its departure from its forlorn enclaves in Mindanao in 1898, the Bangsamoro potentates flew their flags, proud and free, unconquered and unbowed. Spain ceded the country including Moroland to America in the Treaty of Paris following the defeat of its flotilla off Manila Bay to American gunboats on May 1, 1898. Against America, the Bangsa Moro were vanquished militarily, but they remained in the ways of their ancestors even as they kept faith in Islam. Writes Tan, the Muslim submission to American rule was essentially a surrender of an inferior weapon system to a superior one. The Muslim leaders and their followers never recognized that their fighting qualities were inferior or that their surrender to the American authorities was a negation of their military tradition. Given the same sophistication in military technology, the Muslim armed struggle would have thwarted American rule at least in Mindanao and Sulu.93 The American colonialists created the Moro Province under its military in Mindanao for a time as a protectorate. They entered into treaties with the Sultanates of Sulu where they recognized the religious and judicial authority over the realm, among others.94 Generally, the military government did not intervene in the communal affairs of the Bangsamoro as long as these didnt disturb the peace and its pacification campaign.95 American Justice George Malcolm of the Philippine Supreme Court summed up American policy towards the Moro, thus:

88 89 90 91 92 93 94 95

Id., pp. 23-24, 82. Chapter 2, id. Also pp. 55-58, id. Id., pp. 14. 15, 24-25, 27, 67 and 69. Id., pp. 27-28, 70-71 and 109. Id., pp. 16, 17, 21 and 83-84. Samuel K. Tan, The Filipino Muslim Armed Struggle 1900-1972, 1977: Filipinos Foundation, pp. 36-37. Marohomsalic, supra, pp. 27-28. Id., p. 28.

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One cardinal point in the policy towards Moros has consistency been not interfere with their religion. This policy has meant tacit recognition of polygamy and even slavery but this could not be helped To emphasize the desire for unity, self-government has been partially accorded the Moros. The datus and sultans have not been molested when they have settled the disputes of their followers.96 In the grant of Philippine independence in 1946 and despite their opposition and open rebellion, America made Moroland a part of the new Republic whose northern population migrated in great numbers to their homeland through the years. In the early 1900s, the Bangsamoro accounted for majority of the population of Mindanao. By the close of the 20th century, they have been reduced to a minority. Today, they roughly constituted 20% to 25% of the population. Dislocated and marginalized by war and government policy, their region has become the poorest in the country. ARMM is the only region in the country that still has a poverty incidence level above 50% as of 2003.97 In the Philippine Human Development Report of 2005, four of the five ARMM provinces occupy the last four slots among the bottom ten provinces in the Human Development Index Ranking.98 In the Summary of the Poorest of the Poor in 2003 by the National AntiPoverty Commission, 23 out of the 40 municipalities are from Muslim Mindanao. The region had the poorest health situation in terms of life expectancy, infant mortality and access to public health services.99 Its simple literacy rate is 70.2%, significantly lower than the national average of 93.4%.100 Despite the introduction of electoral democracy and the political integration of the Bangsamoro into the larger body politic, the Bangsamoro kept faith with their past, abiding by the spirit of freedom of their ancestors, the revolutionaries among them including the MNLF and the MILF which engage in open rebellion against government. Twice, the government experimented with autonomy, albeit a limited one. First, under Marcos and then another after him with the 1986 Esda Revolution, but all failed. And so did all appeasement programs including the creation of the Office on Muslim Affairs and the appointment of Moro officials into policy-making positions in the central agencies of government.

96

See M.A. J. Tamano, The Government Policy of Integration Needed: Total Commitment, September 7, 1968. Included in the book by the aid author which is a collection of his speeches and writings entitled, Autonomy: To Keep This Nation Intact. 1986: Foreign Service Institute, Manila, p. 9. Cited in Marohomsalic, supra, p. 28. In Amina Rasuls Broken Peace? Assessing the 1996 GRP-MNLP Final Peace Agreement, 2007, p. 82. Id. Id., p. 85.

97 98 99

100 Id., p. 90.

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The MNLF struck an agreement with government in 1996, but government did not implement many of its provisions.101 In 1997, the MILF and the government began peace negotiations. Sporadic armed hostilities always flared up even during interregna in the peace talks. Until the botched signing of the MOA-AD during the first week of August, friendly relation between the MILF and the government were unrealized. Now, the contemporary rebellion has gone for almost 40 years and is still raging. A great majority of the Bangsamoro people pinned high hopes on the MOAAD for their liberation from the prevailing throttlehold of the political system. The relationship of the Bangsamoro with the Christian Filipino majority has been one of domination and discrimination against the former. They owned no symbol in the Philippine flag. The eight (8) rays of the sun the first eight (8) Christian provinces that rose up against Spain. They have no name of eminence as Rizal, Bonifacio and General Luna in the long list of proclaimed Filipino heroes. In 1987, Emmanuel Pelaez, Chair of the GRP Peace Panel, apologized for the historical injustices committed by the Christian Filipino majority against the Bangsamoro. Thus: In all frankness, it is high time that the Christian Filipino majority should rectify more vigorously its serious mistakes in regarding the Muslim minority as being somehow inferior in their faith, culture and way of life. For this attitude and prejudice stem from our ignorance of Islam and of the great achievements of Islamic civilization and its contributions to the world as a whole. Moreover, until now many Filipinos do not appreciate the reality that poverty and underdevelopment in the Moro lands are traceable in part to the Moros historic and nationalistic resistance to Western Imperialist powers, to defend their freedom and to keep their faith and way of life as a distinctive ethno-religious minority. Similarly, after independence they expended great time and resources to fend the continuance of the universalistic policies of political integration, cultural assimilation and national development that were applied without due regard to the distinctive characteristics of the Islamic and Moro cultures in Mindanao.102 The abandonment by the Presidency of the peace process and the MOA-AD has alienated the Moro public against government even as it draws a groundswell of sympathy from them for the revolutionary struggle. But all is not lost as yet between the Moro and the Filipino, and it is not a grave abuse of discretion and its never too late on the part of government to pick up the olive branch.
101 Id., pp. 36-41. 102 Marohomsalic, supra., p.293.

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Government as Parens Patriae In law, government is idealized as a sort of a parent or guardian for the disadvantaged sectors of society.103 Obviously, theres no better champion. And theres no better argument but the lowly lot of the Bangsamoro and no better lean-on but the structure of government. For three hundred and fifty years, wrote an American Colonel who served as Governor of the District of Zamboanga of the Moro Province for ten years, [the Moro] has stood at bay, defending his religion and home [against Spain]. He had no time for improvement, no chance to take on the amenities of civilization. Everything has gone before the ruthless hand of the destroyer, except the one thing, that to a Mohammedan is dearer than life, his religion. In this connection, it is well to remember that any solution of the Moro problem, by the American, or any other government, must count upon the element of his life, as the largest factor in the equation. In this constant struggle the Moro has retrogressed; certainly, who of us is strong enough to withstand such influences? It is a well recognized fact, that after the American people had come through the Civil War, there was a lower standard of morals and an undercurrent of brutality through the whole nation, that took years of peace to overcome. We had fought four years; multiply that by a hundred and where would our boasted civilization be today?104 Nevertheless, the Americans failed to appreciate the Moro and his religion105 and made war against him for his subjugation. So did the Christian Filipino majority. His insurgency was used for the declaration of Martial Law in 1972 which resulted in the death of about 120,000 people who are mostly innocent Moro civilians and the massive displacement of the Moro race starting off their Diaspora and their further minoritization in Mindanao. We raised these social arguments in all their poignancy to call attention to the MOA-AD as an equalizing instrument to get the Bangsamoro up to their rightful place in society. Certainly and contrary to the assumptions of the oppositors of the Agreement, the GRP Peace Panel has not committed grave abuse of discretion amounting to lack or excess of jurisdiction in concluding or executing or initialing the MOA-AD with the MILF that is designed as it is to render equity and justice in their favor.

103 See Government of P.I. vs. Monte de Piedad, 35 Phil. 747-748, 1916; Vasco vs. C.A., 81 SCRA, 766, 1978. Other citations omitted. 104 John P. Finley, The Mohammedan Problem in the Philippines, The Journal of Race Development, 15 April 1915, Vol., 5, No. 4, pp. 356-357. 105 Id., p. 360.

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The Bangsamoro Juridical Entity is not a separate state but a sub-state


Fears were expressed that the BJE comprises of geographic areas delineated and parceled out from the country as a gift to the MILF. As ownership of the Bangsamoro homeland is vested exclusively in the Bangsamoro by virtue of their prior right of occupation106 and is going to be constituted as a political unit with a system of governance suitable and acceptable to them,107 some people are led to believe that the MOA-AD creates an independent Bangsa Moro State named BJE. It is our submission that the MOA-AD is replete with provisions that make for the knowledge that the territorial domain of the Bangsamoro are within the territorial integrity and political map of the Philippines and that the BJE is only a sub-state. For example, first, its external defense is the duty and obligation of the Central Government; 108 second, both parties have to forge an economic cooperation agreement or arrangement over the income and revenues that are derived from the exploration, exploitation, use and development of any resources for the benefit of the Bangsamoro;109 third, royalties, bonuses, taxes, charges, custom, duties or imposts on natural resources have to be shared by the Parties on a percentage ratio of 75-25 in favor of the Bangsamoro Juridical Entity;110 fourth, in times of national emergency, when public interest so requires, the Central Government may, during the emergency, for a fixed period and under reasonable terms as may be agreed by both parties, temporarily assume or direct the operations of such strategic resources which include all potential sources of energy, petroleum, in situ, fossil fuel, mineral oil and natural gas, whether onshore or offshore; 111 fifth, the BJE may establish and open Bangsamoro trade missions in foreign countries,112 not embassies; sixth, the Central Government is to take necessary steps to ensure the BJEs participation in international meetings and events and its participation in Philippine official missions and delegations in negotiations of border agreements or protocols for environmental protection, equitable sharing of incomes and revenues in the areas of sea, seabed and inland seas or bodies of water adjacent to or between islands forming part of the ancestral domain, in addition to those of fishing rights;113 seven, beyond the fifteen (15) kilometers internal waters, the Central Government and the BJE shall exercise joint jurisdiction, authority and management over areas and all natural resources living and non-living contained therein.114
106 Paragraph 2 on Concepts and Principles, MOA-AD. 107 Paragraph 4, id. 108 Paragraph 4 on Resources, MOA-AD. 109 Paragraph 3, id. 110 Paragraph 6, id. 111 Paragraph 5, id. 112 Paragraph 4(a), id. 113 Paragraph 4(b), id. 114 Paragraph 2(g) on Territory, id.

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BJE is a Sub-State In fine, the BJE would come as a sub-state within the Philippine State, exercising many functions of a state and sharing competence with the parent state on matters of foreign trade and as member of any Philippine delegation and mission including those organized to tackle matters concerning natural resources within the BJEs territorial waters and seabed. Indeed, this BJE, touted as a geographical area nicked out from the country is, to quote Senator Joker Arroyo, a hush-hush, nay, a formless political bugaboo in the minds of those who lack understanding of, and sympathy for, the cause of the Bangsamoro and the ideals of peace. The BJE is born and so named only in the MOA-AD for convenience and practical purpose. Like a baby boy or a baby girl just born and given a name-tag to distinguish it as such baby boy or baby girl. And, as in this case, a baby child of the Executive Department and the MILF. It may not even crawl or toddle its way through, crippled this early with deadweights used in the dungeons of the past. Both Parties are aware of the transience of the name BJE, and its only after the ordinance of government is defined in the Comprehensive Compact will its true name and political complexion comes by. For the time being, and by definition of the MOA-AD, the BJE is a sub-state.

A Freedom House for the Indigenes Contrary to the presumptions of detractors, the MOA-AD does not derogate against the protection afforded by the State to the ancestral domain and the ancestral lands of the other indigenous people or Lumads under Republic Act 8371 or the Indigenous Peoples Right Act of 1997. Also, it will not violate the Torrens System obtaining in the country. Paragraph 7 on Concepts and Principles of the MOA-AD sees to that, thus: Vested property rights upon the entrenchment of the BJE shall be recognized and respected subject to paragraph 9 of the strand on Recourses. Paragraph 9 on Resources of the MOA-AD provides that Forest concessions, timber licenses, contracts or agreements, mining concessions, Mineral Production and Sharing Agreements (MPSA), and other land tenure instruments of any kind or nature whatsoever granted by the Philippine Government including those issued by the present Autonomous Region in Muslim by the present Autonomous Region in Muslim Mindanao (ARMM) shall continue to operate from the date of formal
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entrenchment of Bangsamoro juridical entity unless otherwise expired reviewed, modified and/or cancelled by the latter. This provision extends protection to concessions and the like within the Bangsamoro homeland, and it is not meant to derogate against the ownership by the Lumads of their ancestral lands and ancestral domain.

POSTCRIPT: A Requiem to Adversarial Politics and a Hossana to Pollyanna Politics


Oppositors of the MOA-AD from the political opposition scored against the lack of transparency on the part of government and the failure to consult them in the negotiations with the MILF. Offhand, we can emphatize with their predicament. But what we cannot understand are the behavioral tendencies of some political leaders who easily panic and fire up people with venomous rhetoric that will transmogrify them into their bestial ancestry. Ordinary minds may quack in trepidation or growl in anger under the strain, but leaders are leaders need to control and manage their emotions, and they are expected to exhibit grace even under difficult circumstances. Particularly, they denounced the members of the GRP Peace Panel in the media for alleged incompetence and for selling the country for a song to the MILF. One former Senator, who is one of the petitioners against the MOA-AD, made his accusation that the GRP Peace Panel committed acts of treason for their assent to the MOA-AD. Now, whos guilty of treason? Unwittingly and overly carried by his emotion, he forgot his law and ascribed to the MILF the status of a foreign state. In our jurisdiction, a citizen may commit treason by giving aid and comfort to an enemy (i.e., a foreign State against which the country is at war).115 The City Mayor of Iligan threatened to declare a member of the GRP Peace Panel, who is a resident of the City, as persona non grata, which is strange for a local executive who now petitioned the Supreme Court to grant him his human rights including the right to public information. According to Rodil, he had appeared twice before the Iligan City Sanggunian and clarified matters in connection with the peace talks between the MILF and the GRP.116

115 Article 114, Revised Penal Code 116 Rodil and Atty. Marohomsalic personally talked on the occasion of a Public Forum on MOA-AD at the Malcolm Theatre, U.P. College of Law, Dililam, Q.C., where he spoke. He shared the information with Atty. Marohomsalic.

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Cotabato Vice-Governor Piol, another petitioner, was most hostile to the MOA-AD. By the look of things, he is aware of developments on the peace process. In a ceremony on September 2005 for the outgoing Head of Mission of the Maysianled International Monitoring Team, MGen Dato Zulkifeli bin Mohd Zin, petitioner Piol, who was then Governor of Cotabato, was the guest of honor and, in his speech, he impressed his support to the on-going GRP-MILF peace talks, explaining that several planting seasons were missed in the past because of the fight. He called for a respite from fighting, to give way for childrens education, and to help achieve and maintain peace.117 In a public consultation in Zamboanga City, according to the Chair of the MILF Secretariat and Technical Committee Al Camlian, petitioner Zamboanga City Mayor Labregat was the guest of honor. But he didnt attend the affair, instead sent his representative to deliver his speech. Again, for the second time, Camlians party came to Zamboanga City and conducted public consultations but Mayor Lobregat snubbed it.118 Since 2001, the GRP Peace Panel has been providing regular updates on the peace process to strategic audiences, and in the process provides views and insights from the ground.119 The Office of the Presidential Adviser on the Peace process has kept a record of consultations and dialogues with stakeholders. Atty. Sedfrey Candelaria, Chief Legal Consultant of the GRP Peace Panel for Talks with the MILF, wrote a summary thereof, thus: [The MOA-AD] is the result of more than a hundred consultative dialogues with various stakeholders conducted by the GRP Penal spread to about 3-5 years, inclusive of the periodic technical working group meetings here and abroad between the Parties. Joint Statements are released to the public on key issues tackled after every exploratory task. The GRP Panel is also in receipt of local government resolutions, statements and memoranda expressing their sentiments on the key issues (for example, opposition to inclusion in Bangsamoro Homeland and the need for consultations, adding representatives to the Panel, etc120

117 Joint Statement between the MNLF and the MILF, 11 September 2005. 118 Al Camlian was a Reactor in a Public Forum on MOA-AD at the Malcolm Theatre, U.P. College of Law, Diliman, Q.C., 20 August 2008. He shared the information to Atty. Marohomsalic who was in the Forum. 119 Item No. 5, primer on the Memorandum of Agreement on Ancestral Domain, prepared by the Office of Presidential Adviser on the Peace Process. 120 Sedfrey Candelaria, Silencing Peace: The Story of MOA-AD. Unpublished.

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Politics of Polarity Finally, it may be asked: Why the brouhaha over the MOA-AD? Why did oppositors to the MOA-AD show overly negative gravitas in the propagation of their outlook? Do we see again the politics of polarity that pervades our political history? We remember, in the quest for Philippine independence President Quezon was handed the Tydings-McDuffie Law by Washington. But Senators Osmea and Roxas rejected it and they combined and went to Washington to lobby for a better deal. They came home with the Hares-Hawes Cutting Act. But the two (2) documents spoke of the same banana, both granting the country a ten-year transition period to independence. Our ancestors experienced the worst national leadership in our political history with their forced incorporation to the Philippine body politic, among others. And the present generation of Bangsamoros did experience it too in the abrogation of the MOA-AD, not to mention the oppressive policy of government.

Pollyanna Politics But it is well to remember here that the Bangsamoro have hungered long enough for peace and comfort. The Bangsamoro cannot now quit from their pursuit of their right to self-determination without forfeiting their heritage of freedom and tampering with the heroism of their forebears and the legacy of their contemporary champions.

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Revisiting Charter Change Through Peoples Initiative*


Froilan M. Bacungan**

Introduction
Our Constitution is a good Constitution. It could be the basis for the achievement of the ideals of democracy and justice if our public officers and employees show their allegiance to the State and the Constitution at all times. But it seems that for a very long time now, this is not the case. Thus, there is need to introduce into our Constitution certain provisions to ensure greater accountability of our public officers and this could be done by using Peoples Initiative as the mode of amending our Constitution. But peoples initiative a possible mode for changing our Constitution, given the decisions of the Supreme Court in the cases of Santiago vs. Commission on Elections, 270 SCRA 106; PIRMA vs. Commission on Elections, G.R. No. 129754, September 23, 1997, and Lambino vs. Commission on Elections, 505 SCRA 218? It is our position that inspite of the very negative rulings of the majority of the Supreme Court members in the above-mentioned cases, peoples initiative is a possible mode for changing our Constitution to ensure it is repeated greater accountability of our public officers.

Analyzing Santiago vs. Comelec


Antecendent Facts of the Case as Stated in the Decision On 6 December 1996, an Atty. Jesus S. Delfin filed with Commission on Elections (COMELEC), a Petition to Amend the Constitution, to Lift Term Limits of Elective Officials, by Peoples Initiative. Delfin asked the COMELEC for an order: 1. Fixing the time and dates for signature gathering all over the country; 2. Causing the necessary publications of said Order and the attached Petition for Initiative on the 1987 Constitution, in newspapers of general and local circulation;
* ** Lecture delivered at the U.P. Law Center MCLE Program held on August 28, 2008. Former Dean, College of Law, University of the Philippines.

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3. Instructing Municipal Election Registrars in all Regions of the Philippines to assist Petitioners and volunteers in establishing signing stations at the time and on the dates designated for the purpose. Delfin alleged in his petition that he is a founding member of the Movement for Peoples Initiative, a group of citizens desirous to avail of the system intended to institutionalize people power, that he and the members of the Movement and other volunteers intend to exercise the power to directly propose amendments to the Constitution granted under Section 2, Article XVII of the Constitution; that the exercise of that power shall be conducted in proceedings under the control and supervision of the COMELEC; that, as required in COMELEC Resolution No. 2300, signature stations shall be established all over the country, with the assistance of municipal election registrars, who shall verify the signatures affixed by individual signatories; that before the Movement and other volunteers can gather signatures, it is necessary that the time and dates to be designated for the purpose be first fixed in an order issued by the COMELEC; and that to adequately inform the people of the electoral process involved, it is likewise necessary that the said order, as well as the Petition on which the signatures shall be affixed, be published in newspapers of general and local circulation, under the control and supervision of the COMELEC. Delfin in his Petition further alleged that the provisions sought to be amended are Sections 4 and 7 of Article VI, Section 4 of Article VII, and Section 8 of Article X of the Constitution. Attached to the petition was a copy of a Petition for Initiative on the 1987 Constitution embodying the proposed amendments which consist in the deletion from the aforecited sections of the provisions concerning term limits, and with the following proposition: Do you approve of lifting the term limits of all elective government officials, amending for the purpose Section 4 and 7 of Article VI, Section 4 of Article VII, and Section 8 of Article X of the 1987 Philippine Constitution? According to Delfin, the said Petition for Initiative will first be submitted to the people, and after it is signed by at least twelve per cent of the total number of registered voters in the country, it will be formally filed with the COMELEC. Upon the filing of the Delfin Petition, which was forthwith given the number UND 96-037 (Initiative), the COMELEC, through its Chairman, issued an Order (a) directing Delfin to cause the publication of the petition, together with the attached Petition for Initiative on the 1987 Constitution (including the proposal, proposed constitutional amendment, and the signature form), and the notice of hearing in three (3) daily newspapers of general circulation at his own expense not later than 9 December 1996; and (b) setting the case for hearing on 12 December 1996. At the hearing, the following appeared: Delfin and Atty. Pete Q. Quadra; representatives of the Peoples Initiative for Reforms, Modernization and Action (PIRMA); intervenoroppositor Senator Raul S. Roco, together with his two other lawyers and representatives of, or counsel for, the Integrated Bar of the Philippines (IBP), Demockrasya-Ipagtangol and Konstitusyon (DIK), Public Interest Law Center, and
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Laban ng Demokratikong Pilipino (LABAN). Senator Roco, on that same day, filed a Motion to Dismiss the Delfin Petition on the ground that it is not the initiatory petition properly cognizable by the COMELEC. After hearing their arguments, the COMELEC directed Delfin and the oppositors to file their memoranda and/or oppositions/memoranda within five days. But on 18 December 1996, Senator Miriam Defensor Santiago, Alexander Padilla, and Maria Isabel Ongpin filed a special civil action for prohibition which is the subject of the decision of the Supreme Court in Santiago vs. Commission on Elections, Santiago raised the following arguments: (1) The constitutional provision on peoples initiative to amend the Constitution can only be implemented by law to be passed by Congress. No such law has been passed; in fact, Senate Bill No. 1290 entitled An Act Prescribing and Regulating Constitutional Amendments by Peoples Initiative, which petitioner Senator Santiago filed on 24 November 1995, was still pending before the Senate Committee on Constitutional Amendments. (2) It is true that R.A. No. 6735 provides for three systems of initiative, namely, initiative on the Constitution, on Statutes, and on local legislation. However, it failed to provide any subtitle initiative on the Constitution, unlike in the other modes of initiative, which are specifically provided for in Subtitle II and Subtitle III. This deliberate omission indicates that the matter of peoples initiative to amend the Constitution was left to some future law. Former Senator Arturo Tolentino stressed this deficiency in the law in his privilege speech delivered before the Senate in 1994: There is not a single word in that law which can be considered as implementing [the provision on constitutional initiative]. Such implementing provisions have been obviously left to a separate law. (3) Republic Act No. 6735 provides for the effectivity of the law after publication in print media. This indicates that the Act covers only laws and not constitutional amendments because the latter take effect only upon ratification and not after publication. (4) COMELEC Resolution No. 2300, adopted on 16 January 1991 to govern the conduct of initiative on the Constitution and initiative and referendum on national and local laws, is ultra vires insofar as initiative on amendments to the Constitution is concerned, since the COMELEC has no power to provide rules and regulations for the exercise of the right of initiative to amend the Constitution. Only Congress is authorized by the Constitution to pass the implementing law.
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(5) The peoples initiative is limited to amendments to the Constitution, not to revision thereof. Extending or lifting of term limits constitutes a revision and is, therefore, outside the power of the peoples initiative. (6) Finally, Congress has not appropriated funds for peoples initiative; neither the COMELEC nor any other government department, agency, or office has realigned funds for the purpose. To justify their recourse to the Supreme Court via the special civil action for prohibition, Senator Santiago and her co-petitioners alleged that in the event the COMELEC grants the Delfin Petition, the peoples initiative spearheaded by PIRMA would entail expenses to the national treasury for general re-registration of voters amounting to at least P180 million, not to mention the millions of additional pesos in expenses which would be incurred in the conduct of the initiative itself. Hence, the transcendental importance to the public and the nation of the issues raised demands that this petition for prohibition be settled promptly and definitely, brushing aside technicalities of procedure and calling for the admission of a taxpayers and legislators suit. Besides, there is no other plain, speedy, and adequate remedy in the ordinary course of law. On 19 December 1996, the Supreme Court (a) required Delfin and other private respondents to comment on the Santiago petition within a non-extendible period of ten days from notice. The Supreme Court also issued a temporary restraining order, effective immediately and continuing until further orders, enjoining the COMELEC from proceeding with the Delfin Petition, and private respondents Alberto and Carmen Pedrosa from conducting a signature drive for peoples initiative to amend the Constitution. On 2 January 1997, Delfin and the other private respondents, through Atty. Quadra, filed their Comment submitting the following counter arguments: (1) It is not true that it would entail expenses to the national treasury for general registration of voters amounting to at least pesos: One Hundred Eighty Million (P180,000,000.00) if the COMELEC grants the petition filed by respondent Delfin before the COMELEC. (2) Not a single centavo would be spent by the national government if the COMELEC grants the petition of respondent Delfin. All expenses in the signature gathering are all for the account of respondent Delfin and his volunteers per their program of activities and expenditures submitted to the COMELEC. The estimated cost of the daily per diem of the supervising school teachers in the signature gathering to be deposited and to be paid by Delfin and his volunteers is P2,571,200.00. (3) The pending petition before the COMELEC is only on the signature gathering which by law COMELEC is duty bound to supervise closely
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pursuant to its initiatory jurisdiction upheld by the Honorable Court in its recent September 26, 1996 Decision in the case of Subic Bay Metropolitan Authority vs. COMELEC, et al., G.R. No. 125416. (4) Republic Act No. 6735 approved on August 4, 1989 is the enabling law implementing the power of peoples initiative to propose amendments to the Constitution. Senator Defensor-Santiagos Senate Bill No. 1290 is a duplication of what is already provided in Republic Act No. 6735. (5) COMELEC Resolution No. 2300 promulgated on January 16, 1991 pursuant to Republic Act No. 6735 was upheld by the Honorable Court in the recent September 26, 1996 Decision in case of Subic Bay Metropolitan Authority vs. COMELEC, et al., G.R. No. 125416 where the Honorable Court said: The Commission on Elections can do no less by seasonably and judiciously promulgating guidelines and rules for both national and local use, in implementing of these laws. (6) Even Senator Defensor-Santiagos Senate Bill No. 1290 contains a provision delegating to the COMELEC the power to promulgate such rules and regulations as may be necessary to carry out the purposes of this Act. (Sec. 12, S.B. No. 1290) (7) The lifting of the limitation on the term of office of elective officials provided under the 1987 Constitution is not a revision of the Constitution. It is only an amendment. Amendment envisages an alteration of one or a few specific provisions of the Constitution. Revision contemplates a reexamination of the entire document to determine how and to what extent it should be altered. Considering the arguments for and against the Santiago petition, Justice Hilario G. Davide, Jr. as ponente, made the following categorical rulings:-

Ruling No. 1 The Instant Petition (of Senator Santiago, et. al) is Viable Despite the Pendency in the Comelec of Delfin Petition.
In support of the above ruling, the Davide ponencia states: (1) The COMELEC has no jurisdiction to take cognizance of the petition filed by private respondent Delfin. This being so, it becomes imperative to stop the COMELEC from proceeding any further, and under the Rules of Court, Rules 65, Section 2, a petition for prohibition is the proper remedy.
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(2) The writ of prohibition is an extraordinary judicial writ issuing out of a court of superior jurisdiction and directed to an inferior court, for the purpose of preventing the inferior tribunal from usurping a jurisdiction with which it is not legally vested. (People vs. Vera, supra.) In this case the writ is an urgent necessity, in view of the highly divisive and adverse environmental consequences on the body politic of the questioned COMELEC order. The consequent climate of legal confusion and political instability begs for judicial statesmanship.

Ruling No. 2 R.A. No. 6735 Intended to Include the System of Initiative on Amendments to the Constitution, But is, Unfortunately, Inadequate to Cover that System
In support of the above ruling, the Davide ponencia quotes extensively from the proceedings of the 1986 Constitutional Commission after which it carefully scrutinizes word for word R.A. 6735 which is being cited as that enabling law of peoples initiative. Among others, the Davide ponencia states: (1) While the Act provides subtitles for National Initiative and Referendum (Subtitle II) and for Local Initiative and Referendum (Subtitle III), no subtitle is provided for initiative on the Constitution. This conspicuous silence as to the latter simply means that the main thrust of the Act is initiative and referendum on national and local laws. If Congress intended R.A. No. 6735 to fully provide for the implementation of the initiative on amendments to the Constitution, it could have provided for a subtitle therefor, considering that in the order of things, the primacy of interest, or hierarchy of values, the right of the people to directly propose amendment, to the Constitution is far more important than the initiative on national and local laws. (2) We cannot accept the argument that the initiative on amendments to the Constitution is subsumed under the subtitle on National Initiative and Referendum because it is national in scope. Our reading of Subtitle II (National Initiative and Referendum) and Subtitle III (Local Initiative and Referendum) leaves no room for doubt that the classification is not based on the scope of the initiative involved, but on its nature and character. It is national initiative if what is proposed to be adopted or enacted is a national law, or a law which only Congress can pass. It is local initiative if what is proposed to be adopted or enacted is a law, ordinance, or resolution which only the legislative bodies of the governments of the autonomous regions, provinces, cities, municipalities, and barangays can pass.
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Hence, to complete the classification under the subtitle, there should have been a subtitle on initiative on amendments to the Constitution.

Ruling No. 3 Comelec Resolution No. 2300, Insofar as it Prescribed Rules and Regulations on the Conduct of Initiative on Amendments to the Constitution, is Void
In support of the above ruling, the Davide ponencia states: It logically follows that the COMELEC cannot validly promulgate rules and regulations to implement the exercise of the right of the people to directly propose amendments to the Constitution through the system of initiative. It does not have that power under R.A. No. 6735. Reliance on the COMELECs power under Section 2 (1) of Article IX-C of the Constitution is misplaced, for the laws and regulations referred to therein are those promulgated by the COMELEC under (a) Section 3 of Article IX-C of the Constitution, or (b) a law where subordinate legislation is authorized and which satisfies the completeness and the sufficient standard tests.

Ruling No. 4 Comelec Acted Without Jurisdiction or with Grave Abuse of Discretion in Entertaining the Delfin Petition.
In support of the above ruling, the Davide ponencia states: Even if it be conceded ex gratia that R.A. 6735 is a full compliance with the power of Congress to implement the right to initiate constitutional amendments, or that it has validly vested upon the COMELEC the power of subordinate legislation and that COMELEC Resolution 2300 is valid, the COMELEC acted without jurisdiction or with grave abuse of discretion in entertaining the Delfin Petition. Under Section 2 of Article XVII of the Constitution and Section 5(b) of R.A. No. 6735, a petition for initiative on the Constitution must be signed by at least 12% of the total number of registered voters of which every legislative district is represented by at least 3% of the registered voters therein. The Delfin Petition does not contain signatures of the required number of voters. Delfin himself admits that he has not yet gathered signatures and that the purpose of his petition is primarily to obtain assistance in his drive to gather signatures. Without the required signatures, the petition cannot be deemed validly initiated.

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On the basis of the above four Rulings, the Davide decision among others a) Declared R.A. No. 6735 inadequate to cover the system of initiative on amendments to the Constitution, and it failed to provide sufficient standard for subordinate legislation; and b) Declared void those parts of Resolution No. 2300 of the Commission on Elections prescribing rules and regulations on the conduct of initiative or amendments to the Constitution.

Rulings in PIRMA vs. COMELEC


In this case, the Supreme Court ruled, first, by a unanimous vote, that no grave abuse of discretion could be attributed to the COMELEC in dismissing the petition filed by PIRMA, it appearing that it (meaning COMELEC) only complied with the dispositions in the Decision of the Supreme Court in Santiago vs. Commission on Elections. The majority of members of the Supreme Court, namely, the Chief Justice Narvasa and Justices Regalado, Davide, Romero, Bellosillo, Kapunan and Torres voted that there was no need to re-examine their ruling that R.A. 6735 cannot be considered as the enabling law for peoples initiative. In the PIRMA case, there is also this angry opinion of Justice Davide: With much more vigor do I reiterate my view that this case must be summarily dismissed and should not be allowed to stay a moment longer before this Court. It is undeniable and inescapable that this Court already decreed, with finality, the inadequacy and insufficiency of R.A. No. 6735 in implementing the right of the people to directly propose amendments to the Constitution through the system of initiative. The petition then makes a mockery of the judicial process and breaches the principle which bars relitigation of issues between parties and doctrines related thereto; moreover, it is a brazen insult to the intelligence of the Members of this Court.

Analyzing Lambino vs. COMELEC


Antecedent Facts of the Case as Stated in the Decision On 15 February 2006, Raul L. Lambino and Erico B. Aumentado (Lambino Group) with other groups and individuals, commenced gathering signatures for an initiative petition to change the 1987 Constitution. On 25 August 2006, the Lambino Group filed a petition with the COMELEC to hold a plebiscite that will ratify their
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initiative petition under Section 5(b) and (c) and Section 7 of Republic Act No. 6735 or the Initiative and Referendum Act. The Lambino Group alleged that their petition had the support of 6,327,952 individuals constituting at least twelve percent (12%) of all registered voters, with each legislative district represented by at least three per centum (3%) of its registered voters. The Lambino Group also claimed that COMELEC election registrars had verified the signatures of the 6.3 million individuals. The Lambino Groups initiative petition changes the 1987 Constitution by modifying Section 1-7 of Article VI (Legislative Department) and Section 1-4 of Article VII (Executive Department) and by adding Article XVIII entitled Transitory Provisions. These proposed changes will shift the present Bicameral-Presidential system to a Unicameral-Parliamentary form of government. The Lambino Group prayed that after due publication of their petition, the COMELEC should submit the following proposition in a plebiscite for the voters ratification: DO YOU APPROVE THE AMENDMENT OF ARTICLES VI AND VII OF THE 1987 CONSTITUTION, CHANGING THE FORM OF GOVERNMENT FROM THE PRESENT BICAMERAL PRESIDENTIAL TO A UNICAMERAL -PARLIAMENTARY SYSTEM, AND PROVIDING ARTICLE XVIII AS TRANSITORY PROVISIONS FOR THE ORDERLY SHIFT FROM ONE SYSTEM TO THE OTHER? On 30 August 2006, the Lambino Group filed an Amendment Petition with the COMELEC indicating modifications in the proposed Article XVIII (Transitory Provisions) of their initiative.

The Ruling of the COMELEC


On 31 August 2006, the COMELEC issued its Resolution denying due course to the Lambino Groups petition for lack of an enabling law governing initiative petitions to amend the Constitution. The COMELEC invoked this Courts ruling in Santiago vs. Commission on Elections declaring R.A. 6735 inadequate to implement the initiative clause on proposals to amend the Constitution. In G.R. No. 174153, the Lambino Group prayed for the issuance of the writs of certiorari and mandamus to set aside the COMELEC Resolution of 31 August 2006 and to compel the COMELEC to give due course to their initiative petition. The Lambino Group contends that the COMELEC committed grave abuse of discretion in denying due course to their petition since Santiago is not a binding precedent. Alternatively, the Lambino Group claims that Santiago binds only the parties to that case, and their petition deserves cognizance as an expression of the will of the sovereign people.
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In his Comment to the Lambino Groups petition, the Solicitor General joined causes with the petitioners, urging the Court to grant the petition despite the Santiago ruling. The Solicitor General proposed that the Court treat R.A. 6735 and its implementing rules as temporary devises to implement the system of initiative. Various groups and individuals sought intervention, filing pleadings supporting or opposing the Lambino Groups petition. The supporting intervenors uniformly held the view that the COMELEC committed grave abuse of discretion in relying on Santiago. On the other hand, the opposing intervenors held the contrary view and maintain that Santiago is a binding precedent. The opposing intervenors also challenged (1) the Lambino Groups standing to file the petition; (2) the Lambino Groups compliance with the minimum requirement for the percentage of voters supporting an initiative petition under Section 2, Article XVII of the 1987 Constitution; (3) the nature of the proposed changes as revisions and not mere amendments as provided under Section 2, Article XVII of the 1987 Constitution; and (4) the Lambino Groups compliance with the requirement in Section 10(a) of RA 6735 limiting initiative petitions to only one subject.

The Issues
To the Supreme Court, the petitions raised the following issues: 1. Whether the Lambino Groups initiative petition complies with Section 2, Article XVII of the Constitution on amendments to the Constitution through a peoples initiative; 2. Whether this Court should revisit its ruling in Santiago declaring RA 6735 incomplete, inadequate or wanting in essential terms and conditions to implement the initiative clause on proposals to amend the Constitution; and 3. Whether the COMELEC committed grave abuse of discretion in denying due course to the Lambino Groups petition.

The Rulings of the Supreme Court


To the Supreme Court, Justice Carpio and a majority of the Justices ruled that there was no merit to the petition of the Lambino Group. The Carpio ponencia stated. The Lambino Groups miserably failed to comply with the basic requirements of the Constitution for conducting a peoples initiative. Thus, there is even no need to revisit Santiago, as the present petition warrants dismissal based alone on the
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Lambino Groups glaring failure to comply with the basic requirements of the Constitution. The Carpio ponencia emphatically stated: no grave abuse of discretion is attributable to the Commission on Elections.

The Davide Ponencia Compared to the Carpio Ponencia


The PIRMA peoples initiative petition was not given due course because the Davide ponencia emphasized that there was no enabling law for peoples initiative as a mode for amending the 1987 Constitution. R.A. 6735 cannot be considered to be the required enabling law. In the Lambino case, the Carpio ponencia focused on these two categorical findings: 1. The Initiative Petition Does Not Comply with Section 2, Article XVII of the Constitution on Direct Proposal by the People 2 . The Initiative Violates Section 2, Article XVII of the Constitution Disallowing Revision through Initiatives The Carpio ponencia on the first categorical findings states: clearly, the framers of the Constitution intended that the draft of the proposed constitutional amendments should be ready and shown to the people before they sign such proposal. The framers plainly stated that before they sign there is already a draft shown to them. The framers also envisioned that the people should sign on the proposal itself because the proponents must prepare that proposal and pass it around for signature. The essence of amendments directly proposed by the people through initiative upon a petition is that the entire proposal on its face is a petition by the people. This means two essential elements must be present. First, the people must author and thus sign the entire proposal. No agent or representative can sign on their behalf. Second, as an initiative upon a petition, the proposal must be embodied in a petition. These essential elements are present only if the full text of the proposed amendments is first shown to the people who express their assent by signing such complete proposal in a petition. Thus, an amendment is directly proposed by the people through initiative upon a petition only if the people sign on a petition that contains the full text of the proposed amendments. The full text of the proposed amendments may be either written on the face of the petition, or attached to it. If so attached, the petition must state the fact of
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such attachment. This is an assurance that every one of the several millions of signatories to the petition had seen the full text of the proposed amendments before signing. Otherwise, it is physically impossible, given the time constraint, to prove that every one of the millions of signatories had seen the full text of the proposed amendments before signing. In the Carpio ponencia the second categorical finding states: There can be no mistake about it. The framers of the Constitution intended, and wrote, a clear distinction between amendment and revision of the Constitution. The framers intended, and wrote, that only Congress or a constitutional convention may propose revisions to the Constitution. The framers intended, and wrote, that a peoples initiative may propose only amendments to the Constitution. Where the intent and language of the Constitution clearly withheld from the people the power to propose revisions to the Constitution, the people cannot propose revisions even as they are empowered to propose amendments. A change in the structure of government is a revision of the Constitution, as when the three great co-equal branches of government in the present Constitution are reduced into two. This alters the separation of powers in the Constitution. A shift from the present Bicameral-Presidential system to a Unicameral-Parliamentary system is a revision of the Constitution. Merging the legislative and executive branches is a radical change in the structure of government. The abolition alone of the Office of the President as the locus of Executive Power alters the separation of powers and thus constitutes a revision of the Constitution. Likewise, the abolition alone of one chamber of Congress alters the system of check-and-balances within the legislature and constitutes a revision of the Constitution. By any legal test and under any jurisdiction, the shift from a BicameralPresidential to a Unicameral-Parliamentary system, involving the abolition of the Office of the President and the abolition of one chamber of Congress, is beyond doubt a revision, not a mere amendment. On the face alone of the Lambino Groups proposed changes, it is readily apparent that the changes will radically alter the framework of government as set forth in the Constitution.

Concluding Statements of Justice Carpio in his ponencia


The Constitution, as the fundamental law of the land, deserves the utmost respect and obedience of all the citizens of this nation. No one can trivialize the Constitution by cavalierly amending or revising it in blatant violation of the clearly specified modes of amendment and revision laid down in the Constitution itself. To allow such change in the fundamental law is to set adrift the Constitution in unchartered waters, to be tossed and turned by every dominant political group of
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the day. If this Court allows today a cavalier change in the Constitution outside the constitutionally prescribed modes, tomorrow the new dominant political group that comes will demand its own set of changes in the same cavalier and unconstitutional fashion. A revolving-door constitution does not augur well for the rule of law in this country. An overwhelming majority 16,622,111 voters comprising of 76.3 percent of the total votes cast approved our Constitution in a national plebiscite held on 11 February 1987. That approval is the unmistakable voice of the people, the full expression of the peoples sovereign will. That approval included the prescribed modes for amending or revising the Constitution. No amount of signatures, not even the 6,327,952 million signatures gathered by the Lambino Group, can change our Constitution contrary to the specific modes that the people, in their sovereign capacity, prescribed when they ratified the Constitution. The alternative is an extra-constitutional change, which means subverting the peoples sovereign will and discarding the Constitution. This is one act the Court cannot and should never do. As the ultimate guardian of the Constitution, this Court is sworn to perform its solemn duty to defend and protect the Constitution, which embodies the real sovereign will of the people. Incantations of peoples voice, peoples sovereign will, or let the people decide cannot override the specific modes of changing the Constitution as prescribed in the Constitution itself. Otherwise, the Constitution the peoples fundamental covenant that provides enduring stability to our society becomes easily susceptible to manipulative changes by political groups gathering signatures through false promises. Then, the Constitution ceases to be the bedrock of the nations stability. The Lambino Group claims that their initiative is the peoples voice. However, the Lambino Group unabashedly states in ULAP Resolution No. 2006-02, in the verification of their petition with the COMELEC, that ULAP maintains its unqualified support to the agenda of Her Excellency President Gloria MacapagalArroyo for constitutional reforms. The Lambino Group thus admits that their peoples initiative is an unqualified support to the agenda of the incumbent President to change the Constitution. This forewarns the Court to be wary of incantations of peoples voice or sovereign will in the present initiative. This Court cannot betray its primordial duty to defend and protect the Constitution. The Constitution, which embodies the peoples sovereign will, is the bible of this Court. This Court exists to defend and protect the Constitution. To allow this constitutionally infirm initiative, propelled by deceptively gathered signatures, to alter basic principles in the Constitution is to allow a desecration of the Constitution. To allow such alteration and desecration is to lose this Courts raison detre.

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The Future of Peoples Initiative


On the basis of the above presentations practically just of excerpts of the Davide ponencia and the Carpio ponencia the following observations could be made: 1. The Davide ponencia emphasizes that R.A. No. 6735 intended to include the system of initiative on amendments to the Constitution, and is unfortunately, inadequate to cover that system. 2. The Carpio ponencia emphasizes two findings: (1) a Peoples Initiative Petition should Comply with Section 2, Article XVII of the Constitution on Direct Proposal by the People; and (2) the Initiative should also comply with Section 2, Article XVII of the Constitution there can not be a revision, only an amendment through initiative. Peoples initiative could yet be the mode for amending our Constitution to ensure it is repeated greater accountability of our public officers. To achieve the above, let us hope that the Supreme Court will agree to revisit its majority decision in Santiago vs. Commission on Elections particularly its ruling that R.A. No. 6735 is inadequate to cover the system of initiative on amendments to the Constitution, and adopt the opinion of then Justice, now Chief Justice Reynaldo Puno who believes that R.A. No. 6735 sufficiently implements the right of the people to initiate amendments to the Constitution through initiative. Our effort to discover the meaning of R.A. No. 6735 should start with the search for the intent of our lawmakers. A knowledge of this intent is critical, for the intent of the legislature is the controlling factor in its interpretation. Stated otherwise, intent is the essence of the law, the spirit which gives life to its enactment. Then, those who will use peoples initiative as a mode for amending the Constitution should follow the advice stated in the Carpio ponencia, namely - that the draft of the proposed constitutional amendments should be ready and shown to the people before they sign such proposal. The framers plainly stated that before they sign there is already a draft shown to them. The framers also envisioned that the people should sign on the proposal itself because the proponents must prepare that proposal and pass it around for signature. Those interested in utilizing peoples initiative as a mode of amending our Constitution should use the provision on Barangay Assemblies in the Local Government Code, which provides: Sec. 397. Composition; Meetings. (a) There shall be a barangay assembly composed of all persons who are actual residents of the barangay for at least six (6) months, fifteen (15) years of age or over, citizens of the Philippines, and duly registered in the list of barangay assembly members.
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(b) The barangay assembly shall meet at least twice a year to hear and discuss the semestral report of the Sangguniang Barangay concerning its activities and finances as well as problems affecting the barangay. Its meeting shall be held upon call of the punong barangay or of at least four (4) members of the sangguniang barangay, or upon written petition of at least five percent (5%) of the assembly members. Organizations like the Integrated Bar of the Philippines and the Philippine Constitution Association should study how the present provisions in transparency can be re-worded to provide greater if not complete transparency of information on expenses of public funds. The present provision which reads: (a) Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions involving public interest. (Sec. 28, Article II) (b) The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizens, subject to such limitations as may be provided by law. (Sec. 7, Article III) The above provisions of our Constitution should be amended to provide for full transparency re: expenditure of public funds except expenditure on national security.

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The Purchased Power Adjustment (PPA) Scheme and Its Derivatives: Deciphering Cost Recovery Mechanisms and Understanding Energy Distribution
Juan Arturo Iluminado C. de Castro*

Introduction
The electric power industry is indispensable to the national interest. It affects the lives of every Filipino, rich and poor alike, as it has become a necessity in daily life. As the Supreme Court stated in MERALCO vs. Court of Appeals1: One can not deny the vital role which a public utility such as MERALCO, having a monopoly of the supply of electrical power in Metro Manila and some nearby municipalities, plays in the life of people living in such areas. Electricity has become a necessity to most people in these areas, justifying the exercise by the State of its regulatory power over the business of supplying electrical service to the public, in which petitioner MERALCO is engaged. Thus, the State may regulate, as it has done through Section 97 of the Revised Order No. 1 of the Public Service Commission, the conditions under which and the manner by which a public utility such as MERALCO may effect a disconnection of service to a delinquent customer. Given its nature and function, the electric power industry cannot be left to free market forces and has to be highly regulated. The factors necessary for laissezfaire to work are not present as domestic competition is very limited, if not totally absent. Firstly, the generation, transmission and distribution of electricity necessarily entails economies of scale. The electric power industry is highly capital-intensive

Ll. M. Student, University of California, Berkeley (2008-2009); also admitted to the University of Michigan Law School (2008-2009); junior partner, De Castro & Cagampang Law Offices; Associate Solicitor, Office of the Solicitor General (2007-2008); Ll.B. (2006,UP College of Law, opf); Co-editor, Philippine Law Journal vol. 78; B.A. Political Science (UP) cum laude. The author would like to thank Mr. Wilbert S. Balilia of the Energy Regulatory Commission for his assistance in the preparation of this paper. 157 SCRA 243, 247-248 [1988], G.R. No. L-39019, January 22, 1988.

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and as such operates as a natural monopoly.2 Industrial inputs like coal or fuel must be purchased in large amounts to keep up with the demand for energy. Investments in power plants to generate electric power , whether it be coal, geothermal, hydroelectric or otherwise are huge and can only be undertaken by a chosen few. For distribution of electricity, an investor would have to install the necessary infrastructure such as electric posts and electric lines along public roads and highways or rights of way acquired from private parties upon payment of just compensation within the vicinity to be supplied with electricity, including control stations. Secondly, generation of electricity involves the utilization of natural resources such as water, and all sources of potential energy, which are owned by the State.3 Private enterprises cannot engage in electric power generation without State intervention. Although most of the fuels that are used to generate electricity in the powerplants are imported and privately-owned, still, there are other reasons necessitating State intervention. Thirdly, the electric power industry has a captive market because consumption of electricity is on a take-it-or-leave it basis. Generally, households cannot choose the supplier of their electricity as each supplier or distributor of electricity or distributing utility has its own specific assigned locality as determined by the contract with the government. Indeed, without State intervention, consumers would be left at the mercy of profiteering electric power producer and distributor whose principal motive would be to make profits with no or little consideration for public necessity and public service.

Statement of Objectives
Any individual who has seen an electric bill has been puzzled at one time or another by the entry PPA which adds several percentages more to the regular charges. The question arises: Why am I paying more when in fact I already paid for the amount of electricity I used per kilowatt hour? In Manila Electric Co. vs. CA,4 the Supreme Court recognized the right of a consumer to be informed of the items in his electric bill. In that case, private respondent requested MERALCO to itemize the purchased power adjustment, which the latter refused prompting the filing of an injunction case to restrain Manila Electric from disconnecting private respondents electricity. In ruling for private respondent, the Supreme Court held:

2 3 4

430 SCRA 389 [2004], G.R. No. 152569, May 31, 2004. Const. (1987) Art. XII, Section 2. 271 SCRA 417 [1997], G.R. No. 103595, April 18, 1997.

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The right of (private respondent) CCM Gas to be informed concerning an item in its electric bill is undoubted. Revised Order No. 1, 4, which was issued by the then Public Service Commission provides: Information and assistance to customers. Each public service shall, upon request, give its customers or users, all information and assistance pertaining to his service in order that they may secure proper, efficient and economical service. In the 2004 elections, a senator vowed to eliminate the PPA as part of his campaign slogan. This may have gotten him several thousand votes, but is this feasible and wise? This article seeks to answer these questions, by examining the nature and function of the PPA and other adjustment mechanisms in the electric bill charges. An evaluation will be made as to its necessity and usefulness, as well as how each consumer can help minimize billings and charges. The PPA or Purchased Power Adjustment is an automatic cost adjustment mechanism that allows the Distributing Utilities (hereafter, DUs) to recover the actual cost of electricity vis--vis their approved basic rates. Admittedly however, the PPA has already been superseded by other adjustment mechanisms like the Generation Rate Adjustment Mechanism (GRAM), Automatic Generation Rate Adjustment (AGRA), System Loss Rate Adjustment (SLRA), and the Transmission Rate Adjustment (TRA) brought about by the requirements of the EPIRA. Regardless, it is the PPA which consumers are most familiar with. For this reason, the author will focus on the PPA and relate it to the other adjustment mechanisms. Besides, these new adjustment mechanisms operate on the same principles and appear merely to be the unbundled forms of the PPA. To have better understanding of the PPA, it is necessary to deal with the aspects of the electric power industry and briefly examine how the State regulates electric charges. This paper will also trace the history of the computation of electric charges, taking into consideration the generation and distribution aspects of the electric power industry but concentrating on such matters only in relation to Electric Cooperatives (hereafter, ECs) rather than the privately-owned distribution utilities. Note that the principles and development of the adjustment mechanisms for both sectors are similar. This article will focus on the ECs because they account for a majority of the distribution of electricity in the country as the providers of electricity in rural areas. Given their wide geographical reach, they affect a vast portion of the countrys population. After laying the background on the history and development of electric charges in relation to ECs, the PPAs nature and function will be discussed and evaluated.
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The Electric Power Industry in a Nutshell


The electric power industry currently consists mainly of three aspects generation, transmission, distribution although the new Electric Power Reform Act of 2001, popularly known as the EPIRA divided the energy sector into four5 by adding the supply sector. The first three aspects are considered as the traditional sectors of the electric power industry which are highly capital-intensive and as such operate as natural monopolies.6 However, the fourth supply sector in the EPIRA is not yet operational and existing. The inclusion of the supply sector in the EPIRA gives private investors the opportunity to participate in the electric industry by purchasing electric power from electric power generators and then selling this electricity to big end-users. The idea is to open the industry to the private sector and allow the market forces to work but still subject to state regulation. The supply sector however, will have to await open access7 to give the current players in the industry time to prepare for competition. A. Generation Aspect The generation aspect involves the various power plants that produce or generate electricity, including those powered by coal, wind, water and geothermal energy. Upon generation, electricity is then transported to the various DUs by transmission lines. The DUs then distribute electricity to the consumers and endusers. Prior to the EPIRA,8 the generation and transmission aspects of the electric power industry were both handled by the National Power Corporation. Currently, generation is still handled by the NPC with the addition of various independent power producers (hereafter, IPPs). The transmission aspect is now handled separately. B. Transmission Aspect The EPIRA created the National Transmission Corporation (NTC) or Transco,9 a government-owned and controlled corporation, which assumed the NPCs electrical transmission functions, including the planning, construction and centralized operation and maintenance of high-voltage transmission facilities, grid interconnections and ancillary services. It has been operating separately from the NPC since March 1, 2003, with the unique and crucial role of linking power plants owned by the NPC
5 6 7 8 9 Rep. Act No. 9136, sec. 5. Organization. The electric power industry shall be divided into four (4) sectors, namely: generation, transmission, distribution and supply. Milwaukee Industries Corp. vs. Pampanga III Electric Cooperative, Inc. 430 SCRA 389 [2004], G.R. No. 152569, May 31, 2004. See Rep. Act No. 9136, sec. 31. Rep. Act No. 9136 [2001].. Rep. Act No. 9136, sec. 8 [2001].

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and IPPs to the nineteen (19) privately-owned distribution utilities and 120 electric cooperatives10 which in turn deliver electricity to end-users.11 The Power Sector Assets and Liabilities Management Corporation (PSALM) manages the sale, disposition, and privatization of these transmission assets based on terms and conditions which shall optimize the assets value and sale prices. C. Distribution Aspect The distribution aspect involves setting up of power lines and allotment of electricity to the various end-users, including households and businesses. The distribution utilities are either privately-owned enterprises or electric cooperatives. The privately-owned enterprises are generally business enterprises that operate in urban areas, while the ECs operate primarily in rural areas.12 The formation of electric cooperatives was patterned after the National Rural Electric Cooperative Association (NRECA) of the United States, which took charge of electrifying rural areas which were unattractive ventures for private business entities.13 However, there are also government-owned utilities and existing local government units14 which have exclusive franchises to operate a distribution system in accordance with the EPIRA.15 The electric power industry can be illustrated, as follows:

Generation

Transmission

Distribution

10 11 12 13 14 15

As of November 2007. http://www.transco.ph/aboutus.asp http://www.nea.gov.ph/home.htm Ibid. e.g., Public Utility Department (PUD) of Olongapo City See Guidelines for AGRA and SLR, infra. and Guidelines for Transmission Rates, infra.

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State Regulation of the Electric Power Industry


It is a settled principle that the electric power industry, which necessarily involves public utilities, is imbibed with national interest, and therefore, subject to regulation by the State. This was the pronouncement in Republic vs. MERALCO,16 where the Supreme Court through Chief Justice Puno stated: The business and operations of a public utility are imbued with public interest. In a very real sense, a public utility is engaged in public service providing basic commodities and services indispensable to the interest of the general public. For this reason, a public utility submits to the regulation of government authorities and surrenders certain business prerogatives, including the amount of rates that may be charged by it. It is the imperative duty of the State to interpose its protective power whenever too much profits become the priority of public utilities.

The EPIRA On the same premise of national interest, Philippine Congress passed the Electric Power Industry Reform Act of 2001 (EPIRA). The EPIRA aims to reform the power industry and boost power delivery services to customers by privatizing the electric industry allowing market forces to maintain a feasible supply subject to state regulation. The Energy Regulatory Commission (ERC) Under the EPIRA, the Energy Regulatory Commission (ERC)17 was created. It is an independent quasi-judicial regulatory body and an administrative agency vested with broad regulatory and monitoring functions over the Philippine electric industry. It aims to restructure and modernize the said industry while promoting consumer interest.18 The ERC mandate is found in Section 43 of the EPIRA: Section 43. Functions of the ERC. The ERC shall promote competition, encourage market development, ensure customer choice and penalize abuse of market power in the restructured electricity industry. In appropriate cases, the ERC is authorized to issue cease and desist order after due notice and hearing. x x x

16 17 18

401 SCRA 130, 141 [2003], G.R. No. 141314, April 9, 2003. Rep. Act No. 9136 [2001], Sec. 38. Rep. Act No. 9136, Whereas Clauses.

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When the EPIRA took effect on June 26, 2001, the ERC replaced and succeeded the Energy Regulatory Board (ERB), which was created in 1987 by Executive Order No. 172. Prior to the ERB, the regulation of rates for privately owned entities was made by Board of Power and Waterworks,19 and the Board of Energy.20The ERC inherited the functions21 of its predecessor. With the inherited powers from the ERB, the ERC likewise inherited the cases and other matters from the ERB, including the pending verification and confirmation of the PPA charges and oversight of electric cooperatives. For ECs, regulation was made first by Congress which regulated them through the issuance of franchises.22 Former President Marcos then transferred this authority to the National Electrification Administration (NEA).23 Later on, the power to set the rates of ECs was transferred to the ERB under the Department of Energy Act of 1993.24 The EPIRA Law subsequently transferred such responsibility to the ERC.25 The ERC has the following powers and functions relevant to the imposition of the Purchased Power Adjustment charges which are passed on to consumers: Section 43. x x x Towards this end, it (ERC) shall be responsible for the following key functions in the restructured industry. xxx (f) In the public interest, establish and enforce a methodology for setting transmission and distribution wheeling rates and retail rates for the captive market of a distribution utility, taking into account all relevant considerations, including the efficiency or inefficiency of the regulated entities. The rates must be such as to allow the recovery of just and reasonable costs and a reasonable return on rate base (RORB) to enable the entity to operate viably. The ERC may adopt alternative forms of internationally-accepted rate-setting methodology as it may deem appropriate. The rate-setting methodology so adopted and applied must ensure a reasonable price of electricity. The rates prescribed shall be non-discriminatory. To achieve this objective and to ensure the complete removal of cross subsidies, the cap on the recoverable rate of system losses prescribed in Section 10 of Republic Act No. 7832, is hereby
19 20 21 22 23 24 25 Pres. Dec. 269, sec. 3(l) [1973]. Pres. Dec. 1206, sec. 9 [1980]. Rep. Act No. 9136, Sec. 44 [2001]. http://www.nea.gov.ph/home.htm. P.D. No. 269; see Milwaukee Industries vs. Pampanga III Electric Cooperative, 430 SCRA 389 [2004], G.R. No. 152569, May 31, 2004. R.A. No. 7638 [1993]. See NASECORE vs. ERC, 481 SCRA 480 [2006], G.R. No. 163936, February 2, 2006, and Motion for Reconsideration 499 SCRA 103 [2006], G.R. No. 16395, August 16, 2006.

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amended and shall be replaced by caps which shall be determined by the ERC based on load density, sales mix, cost of service, delivery voltage and other technical considerations it may promulgate. The ERC shall determine such form or rate-setting methodology, which shall promote efficiency. In case the rate setting methodology used is RORB, it shall be subject to the following guidelines: (i) For purposes of determining the rate base, the TRANSCO or any distribution utility may be allowed to revalue its eligible assets not more than once every three (3) years by an independent appraisal company: Provided, however, That ERC may give an exemption in case of unusual devaluation: Provided, further, That the ERC shall exert efforts to minimize price shocks in order to protect the consumers; (ii) Interest expenses are not allowable deductions from permissible return on rate base; (iii) In determining eligible cost of services that will be passed on to the end-users, the ERC shall establish minimum efficiency performance standards for the TRANSCO and distribution utilities including systems losses, interruption frequency rates, and collection efficiency; (iv) Further, in determining rate base, the TRANSCO or any distribution utility shall not be allowed to include management inefficiencies like cost of project delays not excused by force majeure, penalties and related interest during construction applicable to these unexcused delays; and (v) Any significant operating costs or project investments of the TRANSCO and distribution utilities which shall become part of the rate base shall be subject to verification by the ERC to ensure that the contracting and procurement of the equipment, assets and services have been subjected to transparent and accepted industry procurement and purchasing practices to protect the public interest. xxx (h) Review and approve any changes on the terms and conditions of service of the TRANSCO or any distribution utility; xxx (k) Monitor and take measures in accordance with this Act to penalize abuse of market power, cartelization, and anti-competitive or
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discriminatory behavior by any electric power industry participant; (l) Impose fines or penalties for any non-compliance with or breach of this Act, the IRR of this Act and the rules and regulations which it promulgates or administers; xxx (r) In the exercise of its investigative and quasi-judicial powers, act against any participant or player in the energy sector for violations of any law, rule and regulation governing the same, including the rules on cross-ownership, anti-competitive practices, abuse of market positions and similar or related acts by any participant in the energy sector or by any person, as may be provided by law, and require any person or entity to submit any report or data relative to any investigation or hearing conducted pursuant to this Act; (emphasis supplied)

Judicial Treatment of Specialized Technical Agency Applicable to the ERC The regulatory bodies of the electric power industry, the NEA, the ERB and the ERC, are specialized administrative agencies which have acquired expertise and technical know-how. The doctrine in Beautifont, Inc., vs. Court of Appeals26, applies to them as follows: There is moreover so strong a presumption respecting the correctness of the acts and determinations of administrative agencies x x x that the policy has been adopted for courts not to interfere therewith unless there is a clear showing of arbitrary action or palpable and serious error. The legal presumption is that the official duty has been duly performed; and it is particularly strong as regards administrative agencies x x x vested with powers set to be quasi-judicial in nature, in connection with the enforcement of laws, affecting particular fields of activity, the proper regulations and/or promotion of which requires a technical or special training, aside from a good knowledge and grasp of the over-all conditions, relevant to said field, obtaining in the nation (Pangasinan Transportation vs. Public Utilities Commission, 70 Phil. 221). The consequent policy and practice underlying our Administrative Law is that court of justice should respect the findings of fact of said administrative agencies, unless there is absolutely no evidence in support thereof or such evidence is clearly, manifestly and patently insubstantial (Heacock vs. NLU, 95 Phil. 553).
26 157 SCRA 481 [1988], G.R. No. 50141, January 29, 1988.

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Hence, (c)ourts of justice will not generally interfere with purely administrative matters which are addressed to the sound discretion of government agencies unless there is a clear showing that the latter acted arbitrarily or with grave abuse of discretion or when they have acted in a capricious and whimsical manner such that their action may amount to an excess or lack of jurisdiction. This was reiterated by the Supreme Court in Republic vs. Manila Electric Company27 and MERALCO vs. Lualhati28 taking into consideration the highly technical aspect of rate fixing and regulation of the electric power industry: We again stress the long established doctrine that findings of administrative or regulatory agencies on matters which are within their technical area of expertise are generally accorded not only respect but finality if such findings and conclusions are supported by substantial evidence. Rate fixing calls for a technical examination and a specialized review of specific details which the courts are ill-equipped to enter, hence, such matters are primarily entrusted to the administrative or regulating authority.

Rate Fixing
Pursuant to the EPIRA, the ERC now has the authority to review, verify, and confirm whether the basic power cost and system loss as estimated by the Purchased Power Adjustment (PPA) formula were the same as the actual basic power cost and system loss. This is the methodology it adopted for public interest in setting transmission and distribution wheeling rates and retail rates for the captive market of a distribution utility, taking intro account all relevant considerations. The ERC regulates the retail rates of electric distribution utilities, both privately-owned and the ECs, for the supply of electricity to their customers based on the principle of full recovery of prudent and reasonable economic costs incurred, or such other principles that promote efficiency. As mandated by Section 43 of the EPIRA, the rates which are set by the EPIRA must be such as to allow the recovery of just and reasonable costs and a reasonable return on rate base (RORB) to enable the entity to operate viably, while ensuring a reasonable price of electricity. In the interest of the consuming public, any over-recovery by DUs and ECs must be refunded to its captive market.

27 28

401 SCRA 130, [ 2003 ], G.R. No. 141369, April 9, 2003. 510 SCRA 455 [2006], G.R. No. 166769, December 6, 2006.

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Fixing Rates of the PPA and its Derivatives: GRAM and AGRA The Purchased Power Adjustment (PPA) and its derivative adjustment mechanisms such as the Generation Rate Adjustment Mechanism (GRAM), and subsequently, the Automatic Adjustment of Generation Rates (AGRA), the System Loss Rate Adjustment (SLRA) and the Transmission Rate Adjustment (TRA), are part of the power charges that are billed to the consumer. It is actually an innovative mechanism allowing DUs to recover their costs and maintain their business while protecting public interest against profiteering. As the Supreme Court succinctly puts it: Rate regulation calls for a careful consideration of the totality of facts and circumstances material to each application for an upward rate revision. Rate regulators should strain to strike a balance between the clashing interests of the public utility and the consuming public and the balance must assure a reasonable rate of return to public utilities without being unreasonable to the consuming public.29 An Examination of Rate Fixing Methodology of Electric Cooperatives To better understand the PPA and other cost adjusting mechanisms, tracing the history and background on rate fixing is indispensable. The electric cooperatives first used the cash based methodology, then the multiplier scheme and ultimately the PPA. On the other hand, privately-owned DUs utilized the Return on Rate Base methodology and other mechanisms aside from the multiplier scheme. The difference in origin and nature of these DUs explains the difference in the adjustment schemes they used. The Anti-Electricity and Electric Transmission Line/Materials Pilferage Act of 1994 On January 15, 1995, the Anti-Electricity and Electric Transmission Line/ Materials Pilferage Act of 1994 or Republic Act No. 7832 went into effectivity. It aimed to gradually phase out pilferage losses as a component of the DUs recoverable system losses. The manner of rate fixing has been greatly affected by the Anti-Electricity and Electric Transmission Line/Materials Pilferage Act of 199430 which instituted caps on the systems losses and which overhauled the manner of fixing rates by encouraging
29 30 Republic vs. MERALCO, 401 SCRA 130, G.R. No. 141314 &141369, April 9, 2003. Rep. Act No. 7832 [1994]. 5% Reinvestment Fund, taken from the Gross Revenue, is money allocated by a DU for use in financing the rehabilitation of its distribution system and other capital programs, after covering operation expenses, debt service and increases in working capital. The fund allows preparation for future contingencies as regards their equipment.

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DUs and ECs to be efficient in minimizing the losses. Previous to the institution of caps, DUs had no incentive to minimize the losses because they were able to pass the entire burden of the losses to the consumers as all the losses it incurred were built in the power rates. Under R.A. 7832, the amount of losses which a DU can input in the charges to the consumers was limited by a cap, thus encouraging these utilities to minimize losses within the limit which they can pass on to consumers.

Power rates prior to the passage of Anti-Electricity and Electric Transmission Line/Materials Pilferage Act of 1994 A. Cash Based Methodology The core business of DUs consists of putting up and maintaining the distribution network to be able to distribute to its customers as the end-users, the electricity that it purchases from the National Power Corporation or the generation companies, or both. Previously, the transmission sector of the electric industry was dependent on and integral to the generation cost because the NPC owned both the generation and transmission lines. This can be illustrated, as follows:

Generation

Transmission

Distribution

Generation Cost

Distribution Cost

The monthly electric bill that the DUs issue to its electricity consumers accounts for both the generation costs and distribution costs it incurred in providing the service. The components of generation costs include the cost of the power purchased from NPC (or other generation companies, if this is the case, as well as from its own
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generation, if it has a generation plant) and the cost for using the transmission system. The distribution cost accounts for the costs of the DUs in putting up, operating, and maintaining the distribution network, which made the delivery of the electricity to the end-user possible.

National Electrification Administration (NEA) Rate Fixing Policies Prior to the ERB and ERCs assumption of rate fixing functions, the task pertained to the National Electrification Administration (NEA). Under the NEA, the basic monthly rates that an EC can charge its customers for their electricity consumption are set using the Cash Based Methodology. This methodology allows an EC to recover from its customers only its actual and allowable cash expenses. There is no return on the assets it puts up. The cost data of an EC, or the cost components that NEA allows an EC to recover consist primarily of two items: (a) generation cost and (b) distribution cost. The generation cost and distribution cost are embodied in the cost components of the cost data, which comprises the basic rates that DUs are allowed to charge consisting of the following: (a) basic cost; (b) allowance for system loss; (c) non-power cost; (d) debt service or amortization cost; and (e) five percent (5%) reinvestment fund.31 Under the Cash Based Methodology system of setting power rates, there arises the issue of inflexibility of the rate set because it is not sensitive to the changes in basic power cost and variation in system losses. Variable costs in power generation, like the cost of fuel, lead to changes in the basic power cost on a regular basis. Higher prices for fuel mean higher basic power costs because the power producers impute such increases to the price of power transmitted to ECs. As regards variations in system losses, these depend on the rampancy of pilferage, weather, and age of equipment used in transmission.
31 a. Basic Power Cost ; Basic Power Cost refers to costs incurred by a DU for the purchase of power from its power suppliers, which is mainly the NPC. Some have their own generation. b. A llowance for System Loss ; Allowance for System Loss is the loss ratio that an EC is allowed to recover. System Loss refers to electricity purchased from power suppliers, which the DU is not able to sell to its end-users because these electrons are lost as they pass through the wires, whether caused naturally or through pilferage. c. Non-power Cost ; Non-power Cost pertains to operation, maintenance, administrative and customer-related expenses which an EC incurs in performing its responsibility of providing electricity to its consumers. d. Debt Service or Amortization Cost ; and Debt Service or Amortization Cost relates to cost which an EC bears in amortizing the loans it had availed, usually from the NEA. e. Five Percent (5%) Reinvestment Fund. 5% Reinvestment Fund, taken from the Gross Revenue, is money allocated by a DU for use in financing the rehabilitation of its distribution system and other capital programs, after covering operation expenses, debt service and increases in working capital. The fund allows preparation for future contingencies as regards their equipment.

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The inflexibility of the power rates poses great risk to the feasibility of operations of ECs. Even if the ECs actual generation cost inflates because of the rise in basic power costs and systems losses, the power rates approved remains the same. The EC cannot unilaterally adjust the rates to recover incremental costs without dealing with the NEA. It would be too tedious and impractical to petition for revision of cost data to increase the allowable rates charged every time there is a change in generation cost as the DU concerned would have to file for increase of power rates almost every month. To address the issue, the NEA issued Resolution No. 1 sometime in January 1994, which was later superseded by NEA Memorandum No. 1-A, which allowed DUs to use a multiplier scheme. B. Multiplier Scheme The multiplier scheme allows the recovery of incremental costs in the power purchased from the NPC and consequent system losses that are not included in the ECs approved basic rates. This mechanism relieves the EC from the burden of filing rate applications with the NEA every time there are increases in its generation costs. With the use of the multiplier, an EC is allowed to automatically adjust its rates when the cost of power purchased from the NPC changes. Under this multiplier scheme, the ECs can use multipliers ranging from 1.2 to 1.4, depending on their actual system losses, as follows:
1.2 Multiplier 1.3 Multiplier 1.4 Multiplier - For ECs with system loss of 15% and below; - For ECs with system loss ranging from 16% to 22%; - For ECs with system loss ranging from 23% and above.32

To illustrate how the multiplier scheme works, assume for example that a DU has the following NEA-approved basic rate effective January 1991:
Cost Data Particulars Power Cost System Loss (20%) Non-power Cost (ex. Payroll, Operation and Maintenance) Amortization Cost 5% Reinvestment Cost Total Basic Rate PhP/kWh 1.00 0.20 1.00 1.00 0.48 3.68

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NEA Memorandum No. 1-A [1994].

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Considering its system loss to be at 20%, the multiplier that applies to such EC is 1.3. If the NPC increased its rates by Php 0.25/kWh in December 1991, applying the multiplier scheme to the incremental increase of PhP0.25/kWh in NPCs rates, the ECs Basic Rate is adjusted by three centavos, thus:
Cost Data Particulars Power Cost System Loss (20%) Non-power Cost (ex. Payroll, Operation and Maintenance) Amortization Cost 5% Reinvestment Cost Add: 1. NPC Increase (December 1991) (PhP0.025 x 1.3) Total Basic Rate PhP/kWh 1.00 0.20 1.00 1.00 0.48 0.03 3.71

Loss Levy Charge Another pricing mechanism implemented by the NEA is the loss levy charge. ECs are non-stock and non-profit entities which source their financial requirements mostly from the government or from other finance institutions, including the Asian Development Bank (ADB). As part of the loan covenant, the ECs that avail of loans from the ADB, for instance, agree to have their recoverable system loss limited to 15%. To allow these ECs to recover their system loss in excess of 15%, the NEA has approved the inclusion in the basic rates of a separate item for loss levy charge. In short, the excess systems loss was imputed into the basic rate in another form. When the ERB took over the NEAs rate-setting function over the ECs, it adopted and continued the implementation of the above procedures and policies for setting and adjusting the ECs rates.

Power rates under the Anti-Electricity and Electric Transmission Line/Materials Pilferage Act of 1994

Institution of System Loss Caps The Anti-Electricity and Electric Transmission Line/Materials Pilferage Act of 1994 (Republic Act No. 7832), which became effective in 1995, gradually phased out pilferage losses as a component of the DUs recoverable system losses by instituting
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system loss caps. With the imposition of these caps, it was no longer possible to use the Multiplier Scheme because system losses which DUs could pass on to the consumers were already limited. It was no longer possible to use the approved multiplier to the corresponding systems losses which were beyond the caps.

C. Purchase Power Adjustment (PPA) The Guide Formula Since the multiplier scheme was no longer feasible, the problem of inflexibility and incapability to adjust to changes would resurface. Thus, the ERB came out with a guide formula 33 for the DUs. The guide formula allows them to implement adjustments in their rates to recover the incremental costs in generation and the associated system losses, subject to the applicable system loss cap under the law. This would be the basis for the Purchased Power Adjustment (PPA) formula as utilized by DUs. The guide formula reads:34 Section 2. Automatic Cost Adjustment Formula. Each and every utility shall file with the ERB, on or before September 30, 1995, an application for approval of an amended Generation Charge or Power Cost Adjustment formula that would reflect the new system loss cap to be included in its schedule of rates. The automatic cost adjustment clause of every utility shall be guided by the following formula: Generation Charge Subsidizing consumption shall be charged a generation charge per kWh equal to: A x B (C+D) Where: A = Cost of electricity purchased and generated for the previous month less revenue from subsidized kWh on generation charge applicable B = Total kiloWatt Hours (kWh) purchased and generated for the previous month
33 34 Implementing Rules and Regulations (IRR) of R.A. No. 7832. R.A. 7832, Implementing Rules and Regulations, Rule IX, Sec. 2.

1 -E 1-FT

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C = The actual system loss but not to exceed the maximum recoverable rate of system loss in kWh plus actual company use in kWh but not to exceed 1% of total kWh purchased and generated D = kWh consumed by subsidized consumers E = applicable base cost of the amount incorporated into their basic rate per kWh FT =Franchise tax rate The PPA is an automatic cost adjustment mechanism that allows the DUs to recover the actual cost of electricity vis--vis their approved basic rates. DUs are not supposed to earn additional revenue but only recover their actual costs to keep their operations financially feasible. The above guide formula35 became basis for the Purchased Power Adjustment PPA formula which the DUs submitted to the ERC for approval. As directed in the Implementing Rules and Regulations of R.A. No. 7832, the ECs filed with the ERB their applications for approval of their PPA or their proposed formula to recover adjustments in the power costs subject to the system loss cap under the law. Their proposed formula for PPA was similar to the guide formula provided in the IRR of R.A. No. 7832. Instead of filing individual applications, the Regional Electric Cooperatives Associations in Luzon, Visayas, and Mindanao to which each of the ECs belonged filed their respective consolidated applications on behalf of all their member-ECs. This reflected a similarity of their situation given their geographical proximity.36

35

as prescribed under the Implementing Rules and Regulations of R.A. 7832, Rule IX, Sec. 2 Western Visayas Electric Cooperatives Association (WEVECA), Central Visayas Electric Cooperatives Association (CEVECA) and Leyte Samar Electric Cooperatives Association (LESECA) filed ERB Case No. 96-43 which was redocketed as ERC Case No. 2001-341. c. For Mindanao, Association Of Mindanao Rural Electric Cooperatives (AMRECO) filed ERB Case No. 96-49 which was redocketed as ERC Case No. 2001-343. gg) Zamboanga del Sur I Electric Cooperative, Inc. (ZAMSURECO I); hh) Bukidnon II Electric Cooperative, Inc. (BUSECO); ii) Camiguin Electric Cooperative, Inc. (CAMELCO); jj) Dinagat Island Electric Cooperative, Inc. (DIELCO); kk) First Bukidnon Electric Cooperative, Inc. (FIBECO); and ll) Davao Oriental Electric Cooperative, Inc. (DORECO). a. For Luzon, There were three applications: a. the Association of Southern Tagalog Electric Cooperatives (ASTEC) and Bicol Electric Cooperatives Association (BECA) filed ERB Case No. 96-35 redocketed as ERC Case No. 2001-338; b. North Western Luzon Electric Cooperatives Association (NWELECA) and North Eastern Luzon Electric Cooperatives Association (NLECA) were the applicants in ERC Case No. 2001-339 (formerly ERB Case No. 96-36); c. Central Luzon Electric Cooperatives Association (CLECA) initiated ERB Case No. 96-37 which was redocketed as ERC Case No. 2001-340. b. For the Visayas, Western Visayas Electric Cooperatives Association (WEVECA), Central Visayas Electric Cooperatives Association (CEVECA) and Leyte Samar Electric Cooperatives Association (LESECA) filed ERB Case No. 96-43 which was redocketed as ERC Case No. 2001-341. c. For Mindanao, Association Of Mindanao Rural Electric Cooperatives (AMRECO) filed ERB Case No. 96-49 which was redocketed as ERC Case No. 2001-343.

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On February 19, 1997, in an Order issued in ERB Cases Nos. 96-35, 96-36, 9643, and 96-49, the ERB provisionally authorized the ECs to use and implement the PPA formula. For ERB Case No. 96-37, the ERB provisionally authorized the ECs of the Central Luzon Electric Cooperatives Association (CLECA) to implement the PPA formula in its Order dated April 25, 1997. The authority granted to the ECs was provisional. The adjustments to be implemented by the ECs using the PPA formula were conditional and subject to the review, verification, and confirmation of the ERB and later on, the ERC. There is a need to verify whether the projected power cost as estimated by the PPA formula is equal to the actual power cost. For example, if the PPA Formula yields the amount of PhP 2.25/kWh, there is a need to verify whether the actual power cost is indeed PhP2.25/kWh as allowed and computed in accordance with the formula. If it turned out during the confirmation process that this should only be PhP2.15/kWh, the correct PPA should only have been PhP0.15/kWh and not PhP0.25/kWh as earlier implemented by the EC. Considering this over-recovery, the EC should refund to its customers PhP0.10/kWh, otherwise it would be earning or recovering more than what was allowed. In the same order, the ERB and later on, the ERC, required the ECs to submit on or before the 20th day of the month their implementation of the PPA formula in the previous month for purposes of review, verification, and confirmation. The adjustments implemented by the ECs using the PPA formula were not final, until they were subsequently reviewed, verified, and confirmed. By reason of the provisional authority granted to ECs in the ERBs order dated February 19, 1997 in ERB Cases Nos. 96-35, 96-36, 96-43 and 96-49, and in its order dated April 25, 1997 in ERB Case No. 96-37, the ECs started collecting the PPA charge from the customers. To monitor that the DUs and ECs implementation of the PPA was profit-neutral as well as to guard against profiteering, the ERB reviewed, verified and confirmed the PPA charged and collected by the respective DUs and ECs. By its nature, the PPA was just an estimate of the incremental costs. Thus it was necessary to confirm and verify whether the incremental cost as estimated by the PPA would approximate, if not equal its actual cost when the data was already available.

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On various dates from 1999 to 2001, the ERB verified and confirmed the PPA charges of thirty-eight (38) ECs.37 In confirming the PPA implementation, the ERB considered most of the costs included by the ECs in their computation of their actual power cost/allowable kWh. The following factors were considered: (a) the previous months data (and not the current months data) for determining the killowatts purchased; (b) corresponding cost; (c) 12 months average System Loss; and (d) coop use consequently, while most of the confirmation orders issued by the ERB found the ECs to have over-recovered, the amounts of these over-recoveries were only minimal.

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a) b) c) d) e) f) g) h) i) j) k) l) m) n) o) p) q) r) s) t) u) v) w) x) y) z)

Abra Electric Cooperative, Inc. (ABRECO); Benguet Electric Cooperative, Inc. (BENECO); Ilocos Sur Electric Cooperative, Inc. (ISECO); Mountain Province Electric Cooperative, Inc. (MOPRECO); Pangasinan I Electric Cooperative, Inc. (PANELCO I); Central Pangasinan Electric Cooperative, Inc. (CENPELCO); Pangasinan III Electric Cooperative, Inc. (PANELCO III); Pampanga I Electric Cooperative, Inc. (PELCO I); Batangas II Electric Cooperative, Inc. (BATELEC II); Quezon I Electric Cooperative, Inc. (QUEZELCO I); Quezon II Electric Cooperative, Inc. (QUEZELCO II); Oriental Mindoro Electric Cooperative, Inc. (ORMECO); Albay Electric Cooperative, Inc. (ALECO); Camarines Sur I Electric Cooperative, Inc. (CASURECO I); Camarines Sur II Electric Cooperative, Inc. (CASURECO II); Camarines Sur III Electric Cooperative, Inc. (CASURECO III); Camarines Sur IV Electric Cooperative, Inc. (CASURECO IV); First Catanduanes Electric Cooperative, Inc. (FICELCO) Masbate Electric Cooperative, Inc. (MASELCO); Sorsogon I Electric Cooperative, Inc. (SORECO I); Ticao Island Electric Cooperative, Inc. (TISELCO); Biliran Electric Cooperative, Inc. (BILECO); Eastern Samar Electric Cooperative, Inc. (ESAMELCO); Northern Samar Electric Cooperative, Inc. (NORSAMELCO); Samar I Electric Cooperative, Inc. (SAMELCO I); Samar II Electric Cooperative, Inc. (SAMELCO II); aa) Southern Leyte Electric Cooperative, Inc. (SOLECO); bb) Leyte I Electric Cooperative, Inc. (LEYECO I); cc) Leyte II Electric Cooperative, Inc. (LEYECO II); dd) Leyte III Electric Cooperative, Inc. (LEYECO III); ee) Leyte IV Electric Cooperative, Inc. (LEYECO IV); ff) Leyte V Electric Cooperative, Inc. (LEYECO V);

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When the EPIRA took effect in 2001, the ERC took over the review, verification and confirmation of the PPA implementation from the ERB. Before proceeding with the verification and confirmation of the ECs PPA charges, the ERC reviewed the ERBs procedures and policies. To protect public interest, the ERC adopted its own policies which were to be applied to its verification and confirmation of the PPA. This ensured that the application of the PPA formula would not result to any gain or loss to the ECs and that the PPA implementation would be purely cost-recovery and revenue-neutral for the ECs. The ERC thereafter issued the Orders dated June 17, 2003 and January 14, 2005, to embody and clarify its procedure and policies for the verification and confirmation of the DUs PPA charges.

Cost of electricity purchased and/or generatedNet of discounts not Gross In the June 17, 2003 Order, the ERC noted that the PPA formula was silent on whether or not the calculation of the cost of electricity purchased and/or generated (variable A) should be gross or net of the discounts. Although the ERB in the past used gross, the ERC resolved to use net of discounts, as this was more in keeping with the policy that the PPA is profit-neutral and DUs should not gain from the PPA implementation, but only recover their actual costs. Note that the variable A is a dividend in the formula, and thus, there is direct proportion. If A is greater, then the allowable PPA would also be greater. If on the other hand A is smaller, then the PPA would also lessen. Necessarily, the cost of electricity purchased and/or generated gross of discounts is greater than cost of electricity net of discounts as the latter has to be deducted from the amount of discounts. Thus, it was more in the nature of the PPA to consider net of discounts to keep it profit neutral. Otherwise, the DUs would be able to take the discounts given to them by the power producers as profits since they are passing on to consumers more than the actual costs of the power purchased and/or generated. In the January 14, 2005 Order, the ERC clarified its policies in the verification and confirmation of the ECs unconfirmed PPAs, as follows: a) The computation and confirmation of the PPA prior to the Commissions Order dated June 17, 2003 shall be based on the approved PPA formula; b) The computation and confirmation of PPA after the Commissions Order dated June 17, 2003 shall be based on the power cost net of discount; and c) If the approved PPA formula is silent in terms of discount, the computation and confirmation of the PPA shall be based on the power cost at gross
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reduced by the amount of discounts extended to customers, subject to the submission of proof that said discounts are being extended to customers. The ERC then proceeded with the review, verification, and confirmation of the ECs charges. The ERC requested each of the DUs to submit additional data and information necessary to establish and determine their actual costs, and to compare such data and information with the actual PPA charges. These data and information became basis to determine the accuracy of the DUs charges. After requesting additional data and information in support of the PPA, the ERC conducted exit conferences with the ECs to give them the additional opportunity to comment on the preliminary figures arrived at by staff and to submit additional data, clarifications, and requests for recalculation. Clearly, the ECs are given every opportunity to justify their PPA charges and implementation, all in the interest of due process.

Refund To Customers of Over-recoveries or Collect Under-recoveries from Customers. As a result of the review, verification and confirmation, the ERC issued a PPA Confirmation Order for each DU. The Confirmation Order contained its findings whether there was over-recovery or under-recovery in the respective DUs PPA implementation. If there was over-recovery, the ERCs Confirmation Order directed the DU to issue a refund. Otherwise, the ERC authorized the electric cooperatives to collect the deficiency. The respective DUs were also allowed to ask for the reconsideration of their PPA Confirmation Order. In some instances, the ERC granted partial reconsideration and conducted a recalculation based on the submissions of the EC. It is in this factual and historical milieu that the PPA and its successor adjustment mechanisms will be examined.

PPA Implementation Review / Verification, and Confirmation Process Since the approved PPA formula was implemented without the ERB or ERCs prior supervision and approval, the ERB and subsequently, the ERC reviewed, verified and confirmed such implementation to ensure that the PPA would only be to the extent necessary for the DU to recover its incremental generation costs and system loss subject to the systems loss cap under R.A. 7832.

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The review, verification, and confirmation process is necessitated further by an inherent limitation in the use of the PPA formula. The resulting PPA is actually a mere estimate of the actual incremental costs incurred by the DU for the current month. This is so because at the time the DU computes the PPA for the current month, the actual billings of the DUs power suppliers for the current month are not yet available. As a proxy for this figure, the DU is allowed under the formula to use the previous months data or information. As necessarily implied by its nature, the PPA is revenue-neutral and only covers its actual costs for purchasing power. The respective DUs should not incur any overor under-recoveries in its PPA implementation. To ensure this, the DUs PPA is subject to the regulators review, verification, and confirmation. If the confirmation results in a finding of over recovery, the DU is obliged to return to its customers the excess by implementing a reduction in its rates. As regards the system loss and coop use, the proper implementation of the PPA formula used the running average of the previous twelve months in the computation of the current billing months PPA. This neutralizes the impact of system losses on the PPA considering that system losses abruptly fluctuate every month. Both the system loss and the coop use are subject to caps. System loss is capped to encourage DUs to minimize their incurred losses. The coop use is capped to discourage the DUs from inflating their non-power costs including operations, administrative and maintenance of their equipment and personnel. Considering the PPA to be a mere estimate, using historical data of the DUs incremental costs at the time of actual implementation, the confirmation process considers all the needed actual data. It is noted that these data and information were not available at the time of implementation because the power producers have not billed them for power costs at that time. Such data were available only during the confirmation process when the basic power costs have already been charged by the power producers to the DU involved. As regards the systems losses and coop use, the DU would already have such actual data at the confirmation process even if these were merely estimated at the time of its implementation. Thus, the confirmation process serves as the true value of the incremental costs in the purchase of basic power cost using data on the actual costs incurred by the DU and not just mere estimates.

Provisional Rate Increases The system of allowing provisional rate increases prior to ERC approval was recognized by the Supreme Court in MERALCO vs. Lualhati38 as follows:

38

510 SCRA 455 [2006], G.R. Nos. 166769 & 166818, December 6, 2006.

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The established rule in this jurisdiction is that findings of administrative or regulatory agencies on matters within their technical area of expertise are generally accorded not only respect but finality if such findings are supported by substantial evidence. Rate-fixing calls for a technical examination and a specialized review of specific details which the courts are ill-equipped to enter; hence, such matters are primarily entrusted to the administrative or regulating authority. Thus, this Court finds no reversible error on the part of ERC in rendering its assailed decision and order. However, while ruling in said manner, this Court is cognizant that such ruling has far-reaching effects and is of utmost significance to the public, especially to the poor, who face the threat of deeper wallowing in the quagmire of financial distress once the burden of electricity rate increases is passed on to them. Better judgment, therefore, calls for this Court to temper the rigidity of its decision. Although affirming the decision and the order of the ERC approving the rate increases for electricity, this Court is not closing its eyes to the fundamental principle of social justice so emphatically expressed by the late President Magsaysay in his statement: He who has less in life should have more in law. The concern for the poor is recognized as a public duty, and the protection of the rights of those marginalized members of society have always dutifully been pursued by the Court as a sacred mission. Consistent with this duty and mission, the Court deems it proper to approve the rate increases applied for by MERALCO provisionally, i.e., MERALCO to impose provisional rate increases while directing the ERC, at the same time, to seek the assistance of COA in conducting a complete audit on the books, records and accounts of MERALCO to see to it that the rate increases that MERALCO has asked for are reasonable and justified. Stated otherwise, the provisional rate increases will continue to be subject to its being reasonable and just until after the ERC has taken the appropriate action on the COA Report.

How the PPA Formula Works


Applying the PPA Formula As an automatic cost adjustment mechanism the PPA allows the DUs to recover the actual cost of electricity vis--vis their approved basic rates but does not allow DUs to earn additional revenue. DUs should only recover their actual costs to keep their operations financially feasible.
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The PPA Formula that was provisionally authorized to be used and implement on February 19, 1997, in an Order issued in ERB Cases Nos. 96-35, 96-36, 96-43, and 96-49, and on April 25, 1997 in an Order issued in ERB Case No. 96-37, is as follows: PPA = A B (C + C1 + D) E

Where: A = represents the cost of power purchased and generated for the previous month less amount recovered from pilferages if any. B = represents the total monthly kilowatt hours (kWhrs) of electricity purchased and generated for the previous month. C = represents the actual system loss but not to exceed the maximum recoverable rate of system loss in kWh C1 = represents the actual company use in kWhrs but not to exceed 1% of total kWhrs purchased and generated. D = represents the kWh consumed by subsidized consumers. E = represents the base cost of power equal to the amount incorporated into their basic rate per kWh. To summarize, the PPA is just the difference between the ECs actual power cost (translated into a PhP/kWh rate) and its basic power cost such that if for example the ECs actual power is PhP2.25/kWh and its basic power cost is PhP2.00/kWh, the PPA it can implement is PhP0.25/kWh. Variables There are five (5) variables in the PPA formula: PPA = A B (C + C1 + D) - E

(Actual power cost/allowable kWh) less (basic power rate) The variable A in the formula represents the actual monthly cost which the DUs incur in purchasing electricity from their power suppliers (NPC and other IPPs) and cost of generation for those with own generation capacity. Pilferage recoveries and collections from those caught pilfering electricity are deducted from this variable.
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The variable B in the formula is the corresponding monthly kilowatthours (kWh) of electricity which the DUs purchased from their power suppliers for distribution to their consumers. The variable C in the formula is the system loss39 that the ECs may recover subject to the caps mandated by R.A. No. 7832. The recoverable system loss is the mandated caps or the actual system loss, whichever is lower. The variable C1 in the formula refers to Coop Use or the kWh consumption of the DUs which they are allowed to recover. This is also subject to a cap to promote efficiency. The variable D pertains to discounts or subsidized kWhs which the DUs were mandated to make available to their consumers. Normally, these subsidies are provided to marginalized consumers. The variable E pertains to the basic power cost component of the ECs that are integrated into their restructured basic rates. This variable in the PPA formula is fixed by the ERC. This can only be changed once a new basic rate is approved for the DU. Given the caps on recoverable system loss under R.A. No. 7832, the ERB restructured the basic rates of the DUs as previously approved by the NEA to implement the caps, while maintaining the ECs existing rate levels. The PPA rate per kWh that is determined using the PPA formula aims to capture the incremental cost in purchased and generated electricity plus recoverable system loss in excess of what had already been included as the power cost component in the ECs basic rates. As can be seen, the PPA is just the difference between the approved recoverable power cost and system loss pegged at a certain rate, which are incorporated in the DUs approved basic rates, and the prevailing purchased power cost incurred by the DUs and their allowable system loss for a particular billing month, as estimated using the previous months data. This would then be subject to review, verification, and confirmation by the ERC.

39

System loss is equal to the KWh purchased less kWh sales and coop Use. The percent (%) system loss is determined by getting the quotient of the kWh system loss and the kWh Purchased multiplied by 100. Using the above data and assuming that the kWh sales is 84,500, the system loss will be computed as follows: SL(kWh) = 100,000 84,500 500 SL(kWh) = 15,000 SL(%) SL(%) = (15,000/100,000) x 100 = 15%

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For example, assume that an EC computes its PPA charge using the May 2000 power suppliers bill for the billing month of June 2000, and previous 12 months average system loss and coop use, as follows:
Particulars Purchased Cost @ P2.50/kWh kWh Purchased Actual Average System Loss (@ 15%) System Loss @ 14% cap Actual Average Coop Use Coop Use @ 1% cap Subsidized Consumption Basic Power Cost Component Data 250,000 100,000 15,000 14,000 500 1,000 0 2.00 PPA Formula A B C C1 D E

PhP kWh kWh kWh kWh kWh kWh PhP/kWh

The PPA charge to be implemented by the EC, on top of its PhP2.00/kWh Basic Power Cost Component, is computed, as follows: PPA = PhP 250,000 100,000 kWh (14,000 kWh+ 500 kWh+0) PhP2.92/kWh PhP2.00/kWh PhP0.92/kWh - PhP2.00/kWh

PPA PPA

= =

The system loss recovery is governed by caps, which R.A. No. 7832 mandated. In applying the PPA formula, the principle observed in considering system losses is the actual system loss or the caps, whichever is lower. This is also observed in coop use, which is capped at 1% of kWh purchased for a particular billing month. In the example above, the actual system loss incurred by the DU is 15%, which is in excess of the recoverable cap of 14%. Given this, the system loss cap of 14% or the equivalent kWh of 14,000 was adopted in the computation. In the case of coop use, the actual data is less than the set cap of 1% of kWh purchased, hence the actual coop use was considered and used in the computation.

The Rule on Caps


There are two caps relevant to the PPA formula: The systems loss cap (variable C) and the coop use cap (variable C-1). Both of them seek to promote efficiency and avoid electric wastage for the benefit of the consuming public by limiting the systems loss and non-power costs which cooperatives can pass on to the consumers. A. System Loss Caps Systems losses are part of the costs of DUs, both privately-owned and ECs. They constitute the difference between the amount of electricity it bought from the
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power producers, and the amount of electricity it actually delivers to its end-users. The loss is due to electricity lost as they pass through the wires, either through natural causes or pilferage. The law allows this loss to be passed on to consumers as part of their monthly bill. Under the NEA and sometime under the ERB, the entire system losses, regardless of amount, could be imputed in the basic rate and passed on to the consumers. In 1994, the Anti-Electricity and Electric Transmission Line/Materials Pilferage Act of 1994 instituted a cap to the amount of system losses which a DU or EC can pass on to its consumers. Note the diminishing rates as time passes clearly indicating the gradual phasing out of the system loss as an item in the power charges. Under R.A. 7832, the system loss caps are as follows: a. For private electric utilities: (i) Fourteen and a half percent (14 1/2 %) at the end of the first year following the effectivity of R.A. 7832; (ii) Thirteen and one-fourth percent (13 1/4%) at the end of the second year following the effectivity of R.A. 7832; (iii) Eleven and three-fourths percent (11 3/4%) at the end of the third year following the effectivity of R.A. 7832; and (iv) Nine and a half percent (9 1/2%) at the end of the fourth year following the effectivity of R.A. 7832.40 Thus, for privately-owned cooperatives the rates were as follows: Fourteen and Half percent (14.5%) effective on February 1996 billing; Thirteen and Half percent (13.5%) effective on February 1997 billing; Eleven and Three-Fourths (11.75%) effective on February 1998 billing; Nine and a half (9.5%) effective on February 1999 billing.41 After the fourth year, the ERB determines whether the cap should be reduced further in no case lower than 9%. In the calculation of the system loss for private electric utilities, direct sales of electricity shall be excluded. Direct sales are electricity sold within the following conditions: (1) the point of metering by the NPC or any other utility is less than one thousand (1,000) meters from the consumer; or (2) the consumers electric consumption is three percent (3%) or more of the total load consumption of all the customers of the utility; or (3) there is no other consumer connected to the distribution

40 41

Rep. Act. No. 7832 [1994], sec. 10 (a). IRR of R.A. 7832, Rule IX, sec. 1.

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line of the utility which connects to the NPC or any other utility point of metering to the consumer meter.42 b. For rural electric cooperatives: (i) Twenty-two percent (22%) at the end of the first year following the effectivity of R.A. 7832; (ii) Twenty percent (20%) at the end of the second year following the effectivity of R.A. 7832; (iii) Eighteen percent (18%) at the end of the third year following the effectivity of R.A. 7832; (iv) Sixteen percent (16%) at the end at the fourth year following the effectivity of R.A. 7832; and (v) Fourteen percent (14%) at the end of the fifth year following the effectivity of R.A. 7832. 43 Thus, for rural cooperatives the rates were as follows: Twenty-two percent (22%) effective on February 1996 billing; Twenty percent (20%) effective on February 1997 billing; Eighteen percent (18%) effective on February 1998 billing; Sixteen percent (16%) effective on February 1999 billing; and Fourteen percent (14%) effective on February 2000 billing.44 Under the EPIRA, the ERC has sufficient leeway and discretion to set the caps based on the load density, sales mix, cost of service, delivery voltage and other technical considerations as well as the efficiency or inefficiency of the regulated entities. The rates must be such as to allow the recovery of just and reasonable costs and a reasonable return on rate base (RORB) to enable the entity to operate viably.45 In exercising its discretion, the ERC may adopt alternative forms of internationally-accepted rate-setting methodology as it may deem appropriate to ensure a reasonable price of electricity. The rates prescribed must also be nondiscriminatory and must promote efficiency.46

42 43 44 45 46

Rep. Act. No. 7832, sec. 10 (a), para. 2. Rep. Act No. 7832, sec. 10 (b). IRR of R.A. 7832, Rule IX, sec. 4. Rep. Act No. 9136 [2001], Section 43 (f). Rep. Act No. 9136 [2001], Section 43 (f).

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B. Coop use The coop use is the electricity used for operations, administration, and maintenance of the cooperatives equipment and personnel. These reflect the nonpower cost of operating an electric cooperative. For coop use, there was always a 1% cap instituted by the ERB and the ERC to avoid any possible abuse and carelessness in incurring operating expenses. Thus, a DU can only pass on a maximum of 1% of its own usage to the public. This discourages a DU from incurring and using electricity beyond 1% as it would then have to bear its own costs. How the Caps work Both the systems loss cap and the coop use cap are limits to systems loss and coop use which a DU could pass on to its consumers. By necessary implication, DUs can only recover its actual system loss/coop use or the applicable cap whichever is lower. This method of implementing the caps for system losses and coop use is in accord with the nature, function and ratio of the said caps as instituted by law. Their respective caps set the limit for the DUs recoverable rate of system losses and coop use. The cap did not replace the actual data which a DU incurred as system loss or coop use. Thus, an EC can only recover its actual system loss or coop use subject only to the cap or limit. If the actual system loss or coop use is lower, then the actual loss should be the percentage considered as part of the PPA. If the cap is lower, then the cap is the input used in the PPA formula. As regards systems losses, the interpretation that the DU can only recover its actual loss or the cap whichever is lower is in accord with the spirit behind Section 10 of R.A. 7832 which aims to promote a more efficient distribution of electricity by phasing out pilferage losses as part of the charges to the consumers. The cap discourages DUs to incur more system losses by limiting what it could pass on to its consumers, thus promoting a more efficient distribution of electricity since any excess in system losses will be borne by the DUs, encouraging it to minimize system losses. Moreover, allowing a DU to recover only its actual system loss or the cap whichever is lower is consonant with the policy that DUs can only be allowed reasonable rate of return by being purely cost-recovery and revenue-neutral for the DUs. If the cap is used when the actual loss is lower, there would result a surplus on what the DU can recover from the public. As regards the coop use cap, DUs are not allowed to impute their own use of electricity to the consumers indiscriminately. Any electricity a DU uses in excess of 1% will have to be borne directly by such DU without the possibility of transferring such burden to the public. Thus, DUs would be more conscious in minimizing their own use of electricity and are encouraged to utilize cost cutting measures to maximize the 1% electricity allowed for their own consumption which can be imputed in the power charges to the consuming public.
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Successors of the PPA


1. The Generation Rate Adjustment Mechanism (GRAM) On February 24, 2007, the ERC recognized the problems of the PPA mechanism. While R.A. 9136 requires the unbundling of rates, the continuation of the then current PPA process would result in generation, transmission and certain distribution costs to be bundled. The goals of any automatic adjustment mechanism should balance the need for timely recoveries of costs by the utilities with the commissions need to review reasonableness and prudence of such costs.47 Thus, the ERC observed: The Commission believes it difficult to assure the public that the current PPA process meets this goal for several reasons. First, the current PPA process is not implemented uniformly due to the use of different formulas by different distribution utilities. Second, the confirmation process is conducted long after the costs have already been recovered from customers. Third, rates are changed without an Order from the Commission. Lastly, the rates established by the formulas may not generate the appropriate level of recovery given the use of estimates in the use of calculations. In order to address these concerns the commission developed an alternative recovery process.48 The alternative formula was devised and called the Generation Rate Adjustment Mechanism (GRAM). In the same order, the ERB adopted the Incremental Currency Exchange Recovery Adjustment (ICERA) which aims to cope with changes in the valuation and devaluation of the peso. The GRAM had the same objective as the PPA in the ultimate goal of passing costs of generation to the consumers. They differ only as to how the passing of costs is done, as follows: a. Under the GRAM, the costs must be reviewed by the ERC prior to the levying of such costs on the consumers; whereas under the PPA, costs were reviewed by the ERC only after the same has already been imposed on the consumers. b. As regards the change in rates, DUs could only change rates quarterly under the GRAM, unlike under the PPA when they were allowed to change rates monthly. c. Unlike the PPA, the change in recovery of fixed costs of generation was no longer automatic under the GRAM. This change is possible

47 48

See Order in ERC Case No. 2003-44 dated February 24, 2003 (hereinafter referred to as GRAM Order) GRAM Order

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only through a petition to adjust generation rate subject to approval by the ERC within a maximum period of forty-five days (45) days. d. Since the problem with the PPA was that it was unbundled in so many respects, the GRAM excludes Transmission Component, System Loss, and Franchise Tax. e. The PPA had no carrying cost while the GRAM had carrying costs.49 To summarize, the GRAM has the following salient features: a. This excludes stranded costs under Section 32 and 33 of the EPIRA. Stranded costs are the excess of the contracted cost of electricity under eligible contracts over the actual selling price of such contracts in the market. These costs are recoverable only at the start of open access or the moment the market is in place. On the other hand, the GRAM will be implemented after the unbundling of a distribution utilitys rates and continues indefinitely. b. GRAM is applicable only to DUs which have a composite or mixed source of power, i.e., DUs which source power from the NPC and the IPPs. c. The system loss rate was fixed during GRAMs implementation without regard for its volatility.

The GRAM mechanism was adopted in light of the fact that generation costs are also charged by IPPs to the DUs which they supply. The ERC only approves contracts between the IPPs and DUs but it does not fix the rates or prices of electricity. The formula for adjustments and other terms and conditions of engagement between the IPP and DU are governed by the contract between them. ERCs regulation of rates comes in only when the DU charges the end-users and consumers. Unlike the NPC, the power rates for IPPs are not preapproved. Thus, this generation cost is volatile and subject to change as the ERC does not fix the rates which IPPs charge the DUs for the electricity supplied to them. This volatility in generation cost is not present for DUs sourcing their electricity solely from NPC at a pre-approved rate. Note however that the GRAM was also applicable to NPC because it sources some of its electricity from the IPPs at a volatile rate. The GRAM entailed the calculation of Adjustments for Generation Rate at the following formula: GR = BR + FC period I + PP period i kWh sales period i + DAA

49

Ibid.

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Where: GR = Generation rate for test period i BR = Base Rate per Grid based on CY2000 costs FC = Fuel Costs (if applicable) as approved by the ERC subject to heat rate cap. PP = Purchased Power costs as approved by the ERC DAA = Deferred accounting adjustment. In turn, the Deferred Accounting Adjustment is computed as follows: DB DAA = T Where: DAA = Deferred Accounting Adjustment DB T = The balance in the deferred generation cost account as of the end of the test period = The total estimated sales for the recovery period.

The GRAM was the crux of the controversy in NASECORE vs. ERC, 50 where the Supreme Court declared the ERC order approving MERALCOs generation charge from PhP 3.1886 per kiloWatthour (kWh) to Php 3.3213 (kWh) as void for violating the publication requirements of Section 4(e) of the Implementing Rules of the EPIRA. While recognizing ERCs jurisdiction to promulgate rules, guidelines or methodologies such as the GRAM for the recovery by the distribution utilities of their fuel and purchased power costs, the Supreme Court held that these rules, guidelines or methodologies so adopted should conform to requirements of pertinent laws, including Section 4(e), Rule 3 of the IRR of the EPIRA51 which required publication for all applications for rate changes without any distinction. In that case, the ERC pointed out the logistical nightmare of the ruling of the Supreme Court that publication is required for all applications for rate adjustment, including those which are volatile such as the distribution utilities applications to recover purchased power or fuel costs, to wit:
50 51 481 SCRA 480 [2006], G.R. No. 163936, February 2, 2006, and Motion for Reconsideration 499 SCRA 103 [2006], G.R. No. 16395, August 16, 2006. 499 SCRA 103, 25 [2006], G.R. No. 16395, August 16, 2006.

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Among others, it (ERC) envisioned a scenario where, in a given year, it would allegedly be required to travel to and conduct 1,680 hearings in various localities all over the country for cost recovery filings alone. It would allegedly take the ERC 4 1/2 years to decide the 1,680 cost recovery filings made in just a year even if it would render decisions on Saturdays and Sundays. By the Courts declaration that applications of distribution utilities for adjustments to recover their purchased power or fuel adjustment costs are covered by Section 4(e), Rule 3 of the EPIRA IRR, according to the ERC, it is being required to enforce something that cannot be accomplished, given the insurmountable time, budgetary and other logistical constraints it faces. In such a case, it would allegedly be impossible for the ERC to attend to its other equally important responsibilities and functions under the EPIRA, i.e. , to ensure the successful restructuring of the electric power industry. Since the reason for invalidity was the Implementing Rules and Regulations of the EPIRA, which can be amended by the President through then Energy Secretary Raphael Lotilla promulgated amendments to Section 4(e) of the Implementing Rules and Regulations of the EPIRA.52 The said section now expressly excludes several automatic adjustment mechanisms including the GRAM from the requirements of such provision. Thus, unlike in the NASECORE case, lack of publication is no longer a ground to annul adjustments of rates involving volatile costs like the GRAM. This amendment by the Secretary of Energy does not contravene EPIRA and is in accordance with the fact that the ERC is given wide latitude in performing its duties and functions.

2. AGRA On October 13, 2004, the ERC promulgated the Guidelines for the Automatic Adjustment of Generation Rates (AGRA) and System Loss Rates (SLR) by DUs superseding the GRAM. The GRAM was replaced for two reasons: a. It was inflexible and burdensome for DUs because it had to bridge finance costs. The manner of adjusting rates lagged behind the volatility of the generation costs. DUs had to bear the burden of having to pay electricity supply costs pending the approval of the new rate by the ERC. b. It did not provide for the adjustment of System Loss Rates disregarding the volatility of such costs. System Loss varies on account of the weather, rampancy of pilferage, and other causes beyond the control of the DUs. For example, data shows that pilferage is higher
52 Amendments to Sec. 4 (e) of Rule 3 and Section 7 of Rule 18 of the Implementing Rules and Regulations (IRR) of Republic Act No. 9136, otherwise known as EPIRA promulgated on June 21, 2007.

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in December and lower in January. Perhaps, this is caused by the Christmas season. It would not be feasible for DUs to operate when it could pass on the consumers only a fixed system loss rate insensitive to its volatility. To address these problems in the GRAM, the ERC promulgated the Guidelines for the Automatic Adjustment of Generation Rates and System Loss Rates by Distribution Utilities53 (hereinafter AGRA and SLR Guidelines). For the adjustment mechanism of transmission costs, there is the Guidelines for the Adjustment of Transmission Rates by Distribution Utilities.54 The itemization of the adjustment mechanisms for generation under the AGRA, system loss under SLR, and transmission rates are in consonance with the mandate of the EPIRA to unbundled the rates.55 Thus, adjustments in generation cost, system loss, and transmission rates are now independently computed, whereas before they were all imputed and considered in the PPA. Note, however, that the GRAM is still used as adjustments for the NPC which is differently situated from the DUs. Although the NPC also sources power from the IPPs, the former passes the same power or electricity to DUs at a pre-approved rate. The mechanics governing the supply of power by the IPPs to the NPC is different than that supplied by IPPs to the DUs. 1. Adjustment for Generation Rates The adjustment for generation rates is allowed through the AGRA using the following formula:56 On or before the tenth day of each calendar month57, distribution utilities shall calculate new generation rates based on the following formula: GR = AGC + OGA Where: GR = Generation Rate to be charged per kWh

53 54 55 56 57

Promulgated by the ERC on October 13, 2007 as amended by Resolution No. 10-01 (October 20, 2007) and Resolution No. 10-04 (October 27, 2007), Series of 2004. ERC Resolution No. 19, Series of 2005 (September 28, 2005) in relation to ERC Case No. 2005-06 RM. Rep. Act No. 9136 [2001], Sec. 36. Guidelines for AGRA and SLRA, Art. III, Sec. 1. ERC, Reso. No. 10-01, Series of 2004, October 20, 2007 amending the Guidelines for AGRA and SLR.

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AGC = Adjusted Generation Cost, automatically computed without need of prior ERC verification and Confirmation as follows: [ (GCi +GCii+ .+GCn) (PPD*50%) AGC = TP Where: GC i to n = The Generation Cost in Pesos from source of power 1 through source of power n for the previous month, excluding power sourced from self-generating facilities. PPD = Prompt Payment Discounts availed by the Distribution Utility, net of the Prompt Payment Discounts passed on to the end customers relative to the previous months generation cost. TP = Total Purchase in kWh for the previous month

OGA = Other Generation Rate Adjustments, which refer to adjustments deemed necessary by the Commission after prior verification and confirmation, which shall include, but shall not be limited to, under(over)-recoveries in generation costs and recoveries from violation of contracts and other pilferages. The OGA shall not be subject to any carrying charge. 2. Adjustment for System Loss Rates For system loss rates, the Guidelines for AGRA and SLRA58 have already been amended only two weeks after its promulgation.59 Presently, the formula reads: On or before the tenth (10th) day of each calendar month, Distribution Utilities shall calculate new System Loss Rates based on the following formula: SLR = ( GR * U ) + ( ATR * U ) Where: SLR
58 59

= System Loss Rate

Promulgated on October 13, 2007. ERC Resolution No. 10-04, Series of 2004, October 27, 2007.

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GR

= Generation Rate calculated in accordance with Article III as cited above.

ATR = Average Transmission Rate based on the most recent unbundling decision in Peso per kWh, computed as Transmission Costs per unbundling divided by the Annualized Sales in kWh per unbundling. U = Gross Up Factor = (%System Loss / [1-%System Loss])

The % System Loss is based on the actual System Loss or the System Loss cap whichever is lower plus actual company use or the company use cap of 1% whichever is lower. The actual System Loss and company use are based on the average of the most recent twelve (12) month period for which information is available. Actual System Loss can be calculated on an individual customer class level if the Distribution Utility has the requisite information to support individual System Loss Rates. The Guidelines for AGRA and SLRA remedied the problem of the GRAM because it now expressly provides for system loss rate adjustments whereas the GRAM did not, thus recognizing the volatility of system loss although it is still subject to a cap. Moreover, the inflexibility under the GRAM caused by the necessity of quarterly applications to, and approval by, the ERC is inexistent under the AGRA. Whereas the changes in adjustment rates required quarterly application and approval by the ERC, the adjustment of generation rates and system loss rates are automatic and prior approval by the ERC is not necessary. ERC regulation is made through subsequent review, verification and confirmation. The only item which needs prior approval is the Other Generation Rate Adjustments (OGA) mechanism, which refers to adjustments deemed necessary by the Commission after prior verification and confirmation. It includes under or over-recoveries in generation costs and recoveries from violations of contracts and other pilferages. 3. Adjustment for Transmission Rates Adjustment of Transmission Rates (ATR) by DUs is indispensable in discussing the PPA because transmission costs were essential components of the PPA when the rates were still bundled. As mentioned, the charges on consumers were required to be unbundled by the EPIRA.60 This entailed severing the items which were included in one rate, and itemizing them with their own separate and distinct formula.

60

Rep. Act No. 9136 [2001], Sec. 36.

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A formula for transmission rate adjustment is necessary because of the volatility of costs entailed in transmission. Transmission is the transfer of electricity from the source, either the National Power Corporation or IPPs, to the DUs like electric cooperatives and privately-owned corporations. This function is mainly handled by the National Transmission Corporation (NTC) or Transco which has been operating separately from the NPC since March 1, 2003. Transmission rates emanate from costs in the planning, construction and centralized operation and maintenance of high-voltage transmission facilities, grid interconnections and ancillary services.61 This varies depending on the level of electrification within the area of transmission, or the weather and system loss. If the level of electrification is low, there would entail more costs in building various electricity-related infrastructure. As regards the weather, if storms rampage the country there would be more costs in repairs and maintenance. The transmission aspect of the power industry also suffers system loss on account of pilferage. These are only some of the factors causing volatility in transmission charges beyond the control of the DUs which the latter can pass on to the consumers. Note, however, that the main cause for variation in transmission costs is the amount loaned to acquire assets and equipment for transmission of electricity. These are outstanding loans subject to interest and affected by changes in currency. As such, transmission costs are also subject to periodic adjustments affected by pertinent indices like the consumer price index. Given the nature of transmission costs, the following were formulated depending on how the transmission rates were expressed: 1. Peso/kWh - Customer classes with Transmission Rates expressed in Peso per Kilowatt Hour (Peso/kWh): tn + OTCA TRn = P Where: TRn tn = Transmission Rate expressed in Peso/Kwh = Current TRANSCO Transmission Rate x billing determinant for the previous twelve (12) months ending December 31 multiplied by the Coincident Peak (CP) demand allocation factor for customer

61

See http://www.transco.ph/aboutus.asp

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classn corresponding to the same period, if available, or the CP demand allocation factor as reflected in the last approved unbundled rates of DUs. OTCA = Other Transmission Cost Adjustment P = kWh purchased for the previous twelve (12) months ending December 31 for customer classn.

2. Peso/kW - Customer classes with Transmission Rates expressed in Peso per kiloWatt (Peso/kW): (tn + OTCA) TRn = Dn Where: TRn tn = = Transmission Rate expressed in Peso/Kw Current TRANSCO Transmission Rate x billing determinant for the previous twelve (12) months ending December 31 multiplied by the Coincident Peak (CP) demand allocation factor for customer classn corresponding to the same period, if available, or the CP demand allocation factor as reflected in the last approved unbundled rates of DUs

OTCA = Other Transmission Cost Adjustment Dn = kW billing demand for the previous twelve (12) months ending December 31 for customer classn. 3. Mixed = Peso/kWh & Peso/kW: Customer classes with transmission rates expressed in both Peso/kWh and Peso/kW. The component expressed in Peso/kWh shall remain constant. On the other hand, the component expressed in Peso/kW shall be adjusted using the following formula. tn - [TKRn *Sn) + OTCA] TWRn = Dn

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Where: TWRn = Transmission Rate component in Peso/Kw tn = Current TRANSCO Transmission Rate x billing determinant for the previous twelve (12) months ending December 31 multiplied by the Coincident Peak (CP) demand allocation factor for customer classn corresponding to the same period, if available, or the CP demand allocation factor as reflected in the last approved unbundled rated of DUs

TKRn = Current Transmission Rate component expressed in Peso/kWh Sn = kWh sales for the previous twelve (12) months ending December 31 for customer classn

OTCA = Other Transmission Cost Adjustment In the case of OTCA, the DUs shall calculate OTCA from the effectivity of these guidelines. Dn = kW billing demand for the previous twelve (12) months ending December 31 for customer classn

Other Adjustment Mechanisms


Note that AGRA, SLR, and ATR are not the only automatic adjustment mechanisms by which costs are shifted to the consumers by DUs. There are many other adjustment mechanisms which are recognized as valid and reasonable considering their volatility and objectivity. In NASECORE, the ERC discussed the criteria for valid for automatic adjustment mechanisms, thus: Automatic adjustment clauses have been adopted for the recovery of certain utility costs only under the following limited and well-recognized circumstances: (1) when such costs are extremely volatile, changing rapidly over short periods of time, e.g., the cost of coal or other fuel burned to generate electricity or the cost of natural gas; (2) when such volatile cost changes represent significant portions of total utility operating expenses, and (3) when such volatile cost changes are beyond the ability of the utility to control, e.g., a utility must purchase coal or gas at whatever prices that procedures or pipelines are willing to sell (Re Mountain States Telephone. & Teleg. Co., 78 PUR 4th 287, 1986). The Oregon Public Utility Commission recently described the purpose of an escalator clause, which it euphemistically called a tracker as follows: It purports
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to track a particular cost, increasing or decreasing revenues just enough to offset the alleged change in cost. The isolated cost is ordinarily one over which the utility has no influence and about which there is little likelihood of dispute (Re Portland General Electric Co., 104 PUR 4th 266, 268, Or. P.U.C., 1989). It is clear from the foregoing that escalator or tracker or any other similar automatic adjustment clauses are merely cost recovery or cost flow-through mechanisms; that what they purport to cover are operating costs only which are very volatile and unstable in nature and over which the utility has no control; and that the use of the said clauses is deemed necessary to enable the utility to make the consequent adjustments on the billings to its customers so that ultimately its rate of return would not be quickly eroded by the escalations in said costs of operation. The total of all rate adjustments should not operate to increase overall rate of return for a particular utility company above the basic rates approved in the last previous rate case (Re Adjustment Clause in Telephone Rate Schedules, 3 PUR 4th 298, N.J. Bd. of Pub. Util. Commrs., 1973. Affirmed 66 N.J. 476, 33 A.2d 4, 8 PUR 4th 36, N.J.,1975). Note, however, that the validity of escalator clauses are still dependent on whether or not the law expressly provides for it and whether or not its imposition was in accordance with law. Thus, even if the foregoing criteria were present, the adjustment or escalator clause would still be null and void if it does not have basis in law or if it did not comply with the requirements of the law like in NASECORE where the adjustment rate granted to MERALCO violated the publication requirements of the IRR. As of date, the following adjustment mechanisms have been implemented without prior approval of the ERC: a. Generation Rate Adjustment Mechanism (GRAM) but applicable only sale of electricity by IPPs to NAPOCOR b. Incremental Currency Exchange Recovery Adjustment (ICERA) c. Transmission Rate Adjustment Mechanism

d. Transmission True-up Mechanism e. System Loss Rate Adjustment Mechanism f. Lifeline Rate Recover Mechanism

g. Cross-subsidy Mechanism

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h. Local Franchise Tax Recovery Mechanism i. j. Business Tax Recovery Mechanism Automatic Generation Rate Adjustment Mechanism

k. VAT Recovery Mechanism l. Incremental Generation Cost Adjustment Mechanism

m. Recovery of Deferred Accounting Adjustment for Fuel Cost and Power Producers by NPC and NPC SPUG.62 These adjustment mechanisms, one way or another, will become part of the billing charges to the consumers. For all intents and purposes, the PPA has not been eliminated but merely transformed into different forms in accordance with the unbundling policy of the EPIRA. Other charges, particularly those pertaining to true-up mechanisms arose on account of the absence of adjustments for volatile costs. These are recovery mechanisms by which DUs could pass on the costs to consumers which DUs were not able to pass on under the previous system of rate fixing. An example would be the Transmission True-Up Mechanism which seeks to recover volatile costs which were not considered under the previous bundled system. Remember that Transmission Costs were bundled together with generation costs on account of the fact that both sectors were owned by the NPC or NAPOCOR. The unbundling of rates and allowance of adjustment mechanisms finds its basis and rationale in the same philosophy behind the EPIRA as enunciated in Freedom from Debt Coalition vs. Energy Regulation Commission: 63 One of the landmark pieces of legislation enacted by Congress in recent years is the EPIRA. It established a new policy, legal structure and regulatory framework for the electric power industry. The new thrust is to tap private capital for the expansion and improvement of the industry as the large government debt and the highly capitalintensive character of the industry itself have long been acknowledged as the critical constraints to the program. To attract private investment, largely foreign, the jaded structure of the industry had to be addressed. While the generation and transmission sectors were centralized and monopolistic, the distribution side was fragmented with over 130 utilities,
62 63 Amendments to Section 4 (e) of Rule 3 and Section 7 of Rule 18 of the Implementing Rules and Regulations (IRR) of Republic Act No. 9136 or EPIRA, June 21, 2007 432 SCRA 157,171-172 [2004], G.R. No. 161113, June 15, 2004.

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mostly small and uneconomic. The pervasive flaws have caused a low utilization of existing generation capacity; extremely high and uncompetitive power rates; poor quality of service to consumers; dismal to forgettable performance of the government power sector; high system losses; and an inability to develop a clear strategy for overcoming these shortcomings. Thus, the EPIRA provides a framework for the restructuring of the industry, including the privatization of the assets of the National Power Corporation (NPC), the transition to a competitive structure, and the delineation of the roles of various government agencies and the private entities. The law ordains the division of the industry into four (4) distinct sectors, namely: generation, transmission, distribution and supply. Corollarily, the NPC generating plants have to privatized and its transmission business spun off and privatized thereafter. (citations omitted) The adjustment mechanisms allow recovery of costs by DUs and other players in the power industry from the consumers. All the costs in generation, transmission, distribution, and supply are passed on to the consumers from big end-users like large companies to the ordinary person in far-flung provinces. Note, however, the consumers are protected by the State whenever too much profit becomes the priority of such public utilities. DUs including the ECs cannot overcharge at the expense of the public and worse, they cannot complain that they are not overcharging enough.64 As regards the flip-flop in adopting different computation methodologies, it is important to note the nature of rate regulation as follows: xxx the rule then as it is now, is that rate regulating authorities are not hidebound to use any single formula or combination of formulas for property valuation purposes because the rate-making process involves the balancing of investor and consumer interests which takes into account various factors that may be unique or peculiar to a particular rate revision application.65

What the Ordinary Consumer Can Do


Obviously, it always pays to conserve electricity and maximize its use. Less obvious however is consumer participation in system loss which has its own
64 65 See Republic vs. MERALCO, 401 SCRA 130 [2003], G.R. Nos. 141314, April 9, 2003. See Republic vs. MERALCO, ibid.

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adjustment mechanism. System Loss accounts for the difference in the amount of electricity purchased from source and the amount of electricity sold to its end-users. These is the electricity lost in the process of transmission and distribution to the consumers attributable to natural causes and pilferage. The natural causes for loss are beyond anyones control. It is in the pilferage that consumers play a more direct and material role. Electric pilferage has been criminalized by the Anti-Electricity and Electric Transmission Lines/Materials Pilferage Act of 1994 which imposes a penalty of prisin mayor or a fine ranging from en thousand pesos to twenty thousand pesos or both, at the discretion of the court, for illegal use of electricity,66 and an imprisonment of reclusin temporal or a fine ranging from fifty thousand pesos to one hundred thousand pesos or both at the discretion of the court for theft of electric power transmission lines and materials.67 Despite this criminalization pilferage persists. It even has peak and low seasons. December registers the highest rate of pilferage while January has the lowest due to the holiday season. Apparently, pilferers also use Christmas lights. Perhaps a common misperception is that electric pilferage is a victimless crime. The only obvious victim would be MERALCO or the DU concerned. With this perception, households become indifferent to the illegal connections of their neighbors because these households believe they would not be affected. To curb pilferage, the public must be made aware that they are directly affected by their neighbors illegal connections. Consumers actually bear the burden of the pilferage because these losses are just passed on and imputed in their power charges or billings by MERALCO or other DUs. In reality, it is the consumers who pay for the illegal connections. The direct effect of pilferage to the consumers should be enough incentive for reporting illegal connections to the NPC or the police authorities. As additional incentive, a monetary scheme has been devised by R.A. No. 7832. A monetary reward in the minimum amount of five thousand pesos will be given to any person who shall report to the NPC or law enforcement authorities any act which constitutes theft of electric power transmission lines and materials.

66 67

Rep. Act 7832 [1994], Sec. 7 (a) in relation to Section. 2. Rep. Act 7832 [1994], Sec. 7 (b) in relation to Section 3.

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Conclusion
This paper sought to decipher the nature and function of the PPA and other adjustment mechanisms amidst the mathematical mysticism of the power charges as experienced by consumers. Apparently, they are accommodations to DUs. The interplay among the DUs which are public utilities, the government regulators such as the ERC, and the consuming public has been encapsulated by the Supreme Court in Republic vs. MERALCO : Rate regulation calls for a careful consideration of the totality of facts and circumstances material to each application for an upward rate revision. Rate regulators should strain to strike a balance between the clashing interests of the public utility and the consuming public and the balance must assure a reasonable rate of return to public utilities without being unreasonable to the consuming public. What is reasonable or unreasonable depends on a calculus of changing circumstances that ebb and flow with time. Yesterday cannot govern today, no more than today can determine tomorrow. x x x The rapid pace of transition from one formula or system of computation to another indicates a continuing effort to search for the correct formula that approximates and reflects actual costs. Apparently, the perfect and all-encompassing formula continues to elude state regulators. An important feature of the policy behind the electric power industry is the bundling and unbundling of rates. Prior to EPIRA, the components of each power charge have been lumped and imputed into a more universal rate. Under the bundled rates, consumers do not have the opportunity to examine the particular components of the power charge and billings as all these components are already included in one item of their charge. The bundled rates contravene the right of consumers to be informed on the items in their electric bill. Thus, unbundling became indispensable in reforming the electric power industry. In the effort to understand the interplay between the DUs, regulators and consumers, what comes to mind is the fact that each of them plays a crucial role in the goal of charging reasonable electricity rates. The DUs must incur operational costs in the most efficient manner. The regulator must continue the search for the perfect formula that strikes a balance between the business interest of DUs and the consumers. For their part, consumers must contribute in guarding against pilferage, an integral part of system loss which DUs are authorized to impute in their power charges. Only when these players run in harmony with each other will the electric power industry truly be reformed.

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Eduardo A. Labitag*

I.

Classification of Property
A. Property of Public Dominion

1. Property For Public Use For Public Purpose and for the Development of National Wealth a. Forest Land In several cases last year the Supreme Court had occasion to restate the rule on non-appropriability of inalienable lands of the public domain. Republic vs. Naguiat G.R. No. 134209, January 24, 2006 Public forest lands or forest reserves, unless declassified and released by positive act of the Government so that they may form part of the disposable agricultural lands of the public domain, are not capable of private appropriation. As to these assets, the rules on confirmation of imperfect title do not apply. Given this postulate, the principal issue is whether or not the areas in question have ceased to have the status of forest or other inalienable lands of the public domain. Forests, in the context of both the Public Land Act and the Constitution classifying lands of the public domain into agricultural, forest or timber, mineral lands and national parks, do not necessarily refer to a large tract of wooded land or an expanse covered by dense growth of trees and underbrush. In Heirs of Amunategui, ___ SCRA 19__, as ruled by the Supreme Court: A forested area classified as forest land of the public domain does not lose such classification simply because loggers or settlers 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. . . . . The classification is merely descriptive of its legal nature
* Professor of Law, College of Law, University of the Philippines.

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or status and does not have to be descriptive of what the land actually looks like. . . . Under Section 2, Article XII of the Constitution, which embodies the Regalian doctrine, all lands of the public domain belong to the State the source of any asserted right to ownership of land. All lands not appearing to be clearly of private dominion presumptively belong to the State. Accordingly, public lands not shown to have been reclassified or released as alienable agricultural land or alienated to a private person by the State remain part of the inalienable public domain. Under Section 6 of the Public Land Act, the prerogative of classifying or reclassifying lands of the public domain, i.e., from forest or mineral to agricultural and vice versa, belongs to the Executive Branch of the government and not the court. Needless to stress, the onus to overturn by incontrovertible evidence, the presumption that the land subject of an application for registration is alienable or disposable rests with the applicant. The Court emphasized that unwarranted appropriation of public lands has been a notorious practice resorted to in land registration cases. For this reason, the Court has made it a point to stress, when appropriate, that declassification of forest and mineral lands, as the case may be, and their conversion into alienable and disposable lands need an express and positive act from the government. The foregoing considered, the issue of whether or not respondent and her predecessor-in-interest have been in open, exclusive and continuous possession of the parcels of land in question is now of little moment. For, unclassified land, as here, cannot be acquired by adverse occupation or possession; occupation thereof in the concept of owner, however long, cannot ripen into private ownership and be registered as title. Heirs of Palanca vs. Republic G.R. No. 151312, August 30, 2006 On July 1973, the heirs of Pedro S. Palanca, (PETITIONERS) filed an application to bring the pieces of land they allegedly owned under the operation of the Land Registration Act. These are: a two hundred thirty-nine thousand nine hundred eighty (239,980) square meter parcel of land situated in Barrio Panlaitan, Municipality of Busuanga, Province of Palawan, as shown on plan Psu-04-000074, and a one hundred seventy-six thousand five hundred eighty-eight (176,588) square meter land in Barrio of Panlaitan (Island of Capari), Municipality of New Busuanga, Province of Palawan, as shown on plan Psu-04-000073. The petitioners acquired said realties by inheritance from the late Pedro S. Palanca, who had occupied and possessed said land openly and continuously in the concept of an owner since 1934, or 39 years before the filing of said application, and planted on said lands about 1,200 coconut trees on each land, declared the same for taxation purposes and paid the taxes thereof.
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In Civil Case No. 573 entitled Heirs of Pedro Palanca, vs. Guillamac for Recovery of Possession of a Parcel of Land the Court of First Instance of Palawan rendered a decision on March 4, 1970, declaring the heirs of Pedro S. Palanca, as the rightful possessors of the land at Talampulan Island, Bario of Panlaitan After trial, the CFI of Palawan issued a decision on December 1977 declaring petitioners as the owners in fee simple of the two parcels of land in question. On December 2000, or after almost twenty-three years, respondent Republic of the Philippines filed with the CA a petition for annulment of judgment, cancellation of the decree of registration and title, and reversion. Respondent sought to annul the December 15, 1977 decision of the CFI, arguing that the decision was null and void because the two lands in question were unclassified public forest land and, as such, were not capable of private appropriation. On July 2001, the CA rendered a decision in favor of the respondents The issue presented to the Supreme Court was whether or not the land in dispute is alienable. The Court ruled in the negative. The validity of the CFI (RTC now) decision was impugned on the basis of the courts lack of jurisdiction. If the properties were alienable public lands, then the CFI, acting as a land registration court, had jurisdiction over them and could validly confirm petitioners imperfect title. Otherwise, if the properties were indeed public forests, then the CA was correct in declaring that the land registration court never acquired jurisdiction over the subject matter of the case and, as a result, its decision decreeing the registration of the properties in favor of petitioners was be null and void. The reason for this is the fact that public forests are inalienable public lands. The possession of public forests on the part of the claimant, however long, cannot convert the same into private property. Possession in such an event, even if spanning decades or centuries, could never ripen into ownership. Unless and until the land classified as forest is released in an official proclamation to that effect so that it may form part of the disposable lands of the public domain, the rules on confirmation of imperfect title do not apply. In the present case, the Court found that Land Classification Map No. 839, Project 2-A indicated that the Talampulan and Capari Islands on which the properties are located were unclassified public lands as of December 9, 1929. It was by virtue of Executive Proclamation No. 219 issued on July 2, 1967 that these islands were subsequently classified as national reserves. Based on these, these properties have never been released for public disposition. Obviously, from the time that petitioners and their predecessor-in-interest were occupied the properties in 1934 until the time that an application for registration was filed in 1973, these properties remained as inalienable public lands.
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The ponencia ruled that 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. When the property is still unclassified, whatever possession applicants may have had, and however long, still cannot ripen into private ownership. This is because, pursuant to Constitutional precepts, all lands of the public domain belong to the State, and the State is the source of any asserted right to ownership in such lands and is charged with the conservation of such patrimony. Thus, the Court has emphasized the need to show in registration proceedings that the government, through a positive act, has declassified inalienable public land into disposable land for agricultural or other purposes. To reiterate, where there is a showing that lots sought to be registered are part of the public domain, the applicant for land registration under Section 48 of Commonwealth Act No. 141 must secure a certification from the government that the lands claimed to have been possessed by the applicant as owner for more than 30 years are alienable and disposable. Petitioners failure to do so in this case, when taken with the evidence adduced by respondent showing that the lands in question indeed remain part of the public domain and form part of the national reserves, confirms that the CFI never acquired jurisdiction to order the registration of such lands in favor of petitioners, and certainly justifies their reversion to the State. b. Public Plaza Roman Catholic Bishop of Kalibo Aklan vs. Municipality of Buruanga, Aklan G.R. No. 149145, March 31, 2006 In 1894, the Roman Catholic Church of Buruanga, Aklan was built in the middle portion of a lot, with an area of 9,545 square meters, and is a block bounded by four streets on all sides, and has been in existence since then up to the present. In 1978, the Municipality of Buruanga constructed its municipal building on the northeastern portion of the subject lot after it obtained the permission of Fr. Jesus Patio, then parish priest of Buruanga. In October 1989, the said municipal building was razed by fire allegedly perpetrated by members of the New Peoples Army. On November 25, 1989, the Roman Catholic Bishop of Kalibo, through its counsel, wrote to the Municipal Mayor of Buruanga requesting the officials of the said municipality to refrain from constructing its new building on the same site because it is the property of the church. Further, it needed the said land for its social action projects. On March 12, 1990, the Roman Catholic Bishop of Kalibo wrote the Department of Public Works and Highways of the said province requesting the said office not to issue any building permit to the Municipal Mayor and/or the Municipality
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of Buruanga in connection with the construction of its municipal building on the land owned by the Roman Catholic Bishop of Kalibo. The construction of the new municipal building on the same site proceeded. In 1990, the Roman Catholic Bishop of Kalibo, Aklan, filed with the RTC thereof a complaint for declaration of ownership and quieting of title to land with prayer for preliminary injunction against the Municipality of Buruanga, Aklan. On November 29, 1990, the lower court appointed Geodetic Engineer Santiago of the Bureau of Lands as Commissioner and directed him to identify and delineate the lot in question. The sketch submitted by Engr. Santiago showed the delineation of Lot 138 into three parts: Lots 138-A, 138-B and 138-C. The municipal building stood on Lot 138-A; the Roman Catholic Church stood on Lot 138-B and the municipal health center and the Buruanga Community Medicare building stood on Lot 138-C. It also showed that portions of Lots 138-A and 138-C were being used as public plaza. The trial court ruled that The Roman Catholic Bishop of Kalibo, Aklan is the lawful owner and possessor of Lot 138-B while it declared that the Municipality of Buruanga is declared the lawful owner and possessor of Lot 138-A and Lot 138-C, said lots being public plaza destined for public use. On appeal by the petitioner, the Court of Appeals affirmed the ownership of the Roman Catholic Bishop of Kalibo over Lot 138-B but reversed the court a quos ruling relative to the ownership of Lots 138-A and 138-C. The appellate court declared the said lots property of public dominion, hence, not owned by either of the parties. On the issue of whether or not the petitioners claim of ownership over Lots 138-A and 138-C should be sustained, the Supreme Court ruled against the petitioner Roman Catholic Church. The Court found that the petitioner has not shown that, at one time after the church was built in 1894 in the middle of Lot 138 (now Lot 138-B), it exercised acts of ownership or possession over Lots 138-A and 138-C as well. It emphasized that the petitioners allegation that it merely tolerated the construction of not only the municipal building but also the other improvements thereon, e.g., the rural health center, Buruanga community Medicare hospital, basketball court, Rizal monument and grandstand, has remained unsubstantiated. The Court ruled that the petitioner has not shown that it exercised proprietary acts or acts of dominion over Lots 138-A and 138-C, to the exclusion of others, to buttress its claim of ownership over these lots; Contrary to its submission, the petitioner has not acquired ipso jure or by operation of law a government grant or title to the entire Lot 138.

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One of the important requisites for the application of the pertinent provisions of Act No. 926 and Act No. 2874 (the old Public Land laws) is the open, continuous, exclusive and notorious possession and occupation of the land by the applicant. Actual possession of land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property. Since the law speaks of possession and occupation. and these words are separated by the conjunction, the clear intention of the law is not to make one synonymous with the other. Possession is broader than occupation because it includes constructive possession. When, therefore, the law adds the word occupation, it seeks to delimit the all-encompassing effect of constructive possession. Taken together with the words open, continuous, exclusive and notorious, the word occupation serves to highlight the fact that for one to qualify under paragraph (b) of the aforesaid section, his possession of the land must not be mere fiction. Possession is open when it is patent, visible, apparent, notorious and not clandestine. It is continuous when uninterrupted, unbroken and not intermittent or occasional; exclusive when the adverse possessor can show exclusive dominion over the land and an appropriation of it to his own use and benefit; and notorious when it is so conspicuous that it is generally known and talked of by the public or the people in the neighborhood. Use of land is adverse when it is open and notorious. Indisputably, the petitioner has been in open, continuous, exclusive and notorious possession and occupation of Lot 138-B since 1894 as evidenced by the church structure built thereon. However, the record is bereft of any evidence that would tend to show that such possession and occupation extended to Lots 138-A and 138-C beginning the same period. No single instance of the exercise by the petitioner of proprietary acts or acts of dominion over these lots was established. Its unsubstantiated claim that the construction of the municipal building as well as the subsequent improvements thereon, e.g., the rural health center, Buruanga community Medicare hospital, basketball court, Rizal monument and grandstand, was by its tolerance does not constitute proof of possession and occupation on its part. Absent the important requisite of open, continuous, exclusive and notorious possession and occupation thereon since 1894, no government grant or title to Lots 138-A and 138-C had vested upon the petitioner ipso jure or by operation of law. Possession under paragraph 6 of section 54 of Act No. 926, as amended by paragraph (b) of section 45 of Act No. 2874, is not gained by mere nominal claim.

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On the issue of whether or not Lots 138-A and 138-C are property of public dominion, hence, not susceptible to private ownership the Supreme Court ruled that: Ruling: Yes. The appellate court correctly declared that Lots 138-A and 138-C comprise the public plaza and are property of public dominion; hence, they may not be the object of appropriation either by the petitioner or respondent municipality. In the case of Bishop of Calbayog vs. Director of Lands (45 SCRA 418, 19___) involving the same question of ownership of the land which surrounded the parish church of the town, the Supreme Court therein declared that the public plaza and public thoroughfare are not subject to registration by the church; that since neither the Church nor the municipality presented positive proof of ownership or exclusive possession for an appreciable period of time, and the only indubitable fact is the free and continuous use of Lot 2 by residents of Catarman, and the town had no public plaza to speak of other than the disputed parcel of land, there was a strong presumption that the same had been segregated as a public plaza upon the founding of the municipality of Catarman. In the present case, the following improvements now stand on Lots 138-A and 138-C: the municipal building, rural health center, Buruanga community Medicare hospital, basketball court, Rizal monument and grandstand. Except for the construction of the municipal building, the other improvements were made on Lots 138-A and 138-C, and continuously used by the public without the petitioners objection. Further, there is no proof that the petitioner merely tolerated the construction of these improvements. On the other hand, the free and continuous use by the public of Lots 138-A and 138-C, as found by the court a quo and affirmed by the appellate court, incontrovertibly establishes that they are property for public use. Property for public use of provinces and towns are governed by the same principles as property of public dominion of the same character. The ownership of such property, which has the special characteristics of a collective ownership for the general use and enjoyment, by virtue of their application to the satisfaction of the collective needs, is in the social group, whether national, provincial, or municipal. Their purpose is not to serve the State as a juridical person, but the citizens; they are intended for the common and public welfare, and so they cannot be the object of appropriation, either by the State or by private persons.

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2. Lakebed Republic vs. Candy Maker Inc. G.R. No. 163766, June 22, 2006 Issue: Whether the land in question may be the subject of registration. Ruling: No. Applicants for confirmation of imperfect title must, therefore, prove the following: (a) that the land forms part of the disposable and alienable agricultural lands of the public domain; and (b) that they have been in open, continuous, exclusive, and notorious possession and occupation of the same under a bona fide claim of ownership either since time immemorial or since June 12, 1945. Under the Regalian doctrine, all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. The presumption is that lands of whatever classification belong to the State. Unless public land is shown to have been reclassified as alienable or disposable to a private person by the State, it remains part of the inalienable public domain. Property of the public domain is beyond the commerce of man and not susceptible of private appropriation and acquisitive prescription. Occupation thereof in the concept of owner no matter how long cannot ripen into ownership and be registered as a title. The statute of limitations with regard to public agricultural lands does not operate against the State unless the occupant proves possession and occupation of the same after a claim of ownership for the required number of years to constitute a grant from the State. No public land can be acquired by private persons without any grant from the government, whether express or implied. It is indispensable that there be a showing of a title from the State. The rationale for the period since time immemorial or since June 12, 1945 lies in the presumption that the land applied for pertains to the State, and that the occupants or possessor claim an interest thereon only by virtue of their imperfect title as continuous, open and notorious possession. To prove that the land subject of an application for registration is alienable, an applicant must conclusively establish the existence of a positive act of the government such as a presidential proclamation or an executive order, or administrative action, investigation reports of the Bureau of Lands investigator or a legislative act or statute. Until then, the rules on confirmation of imperfect title do not apply. A certification of the Community Environment and Natural Resources Officer in the Department of Environment and Natural Resources stating that the land subject of an application is found to be within the alienable and disposable site per a land classification project map is sufficient evidence to show the real character of the land subject of the application.
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The applicant is burdened to offer proof of specific acts of ownership to substantiate the claim over the land. Actual possession consists in the manifestation of acts of dominion over it of such a nature as a party would actually exercise over his own property. A mere casual cultivation of portions of the land by the claimant does not constitute sufficient basis for a claim of ownership; such possession is not exclusive and notorious as to give rise to a presumptive grant from the State. Under Section 6 of P.D. 813 amending Rep. Act No. 4850, the LLDA is empowered to issue such rules and regulations as may be necessary to effectively carry out the policies and programs therein provided including the policies and projects of the LLDA, subject to the approval of the National Economic Development Authority. In 1996, the Board of Directors of LLDA approved Resolution No. 113, series of 1996 relating to the Environmental Uses Fee Systems and Approval of the Work and Financial Plan for its operationalization in the Laguna de Bay Basin. Section 5 of the Resolution provides that the LLDA as a matter of policy is to maintain all shoreland areas lying below elevation 12.50 meters as buffer zone in consonance with the LLDA policies, plans programs for the improvement of the water quality and pollution and conservation of the water resources of the Laguna de Bay. As gleaned from the Survey Report of Magalonga, Polanco and Medenilla of the LLDA based on the ocular inspection dated September 14, 2001 as well as the Memorandum of Engineer Christopher Pedrezuela, the property is located below the reglementary level of 12.50 m.; hence, part of the bed of the Laguna de Bay, and, as such, is public land. Under R.A. No. 4850 and the issuances of LLDA, registerable rights acquired by occupants before the effectivity of the law are recognized. However, the respondent failed to adduce proof that its predecessors-in-interest had acquired registerable title over the property before July 18, 1966

3. Lakebed; Definition of Continuous and Notorious Possession PELBEL Manufacturing Corp. vs. Republic G.R. No. 141174, July 31, 2006 Petitioners, in this case, applied for registration of title to two parcels of land covered by Plan Psu-240345. Both parcels of land are located in San Juan, Taytay, Rizal, near the shore of Laguna de Bay. The controlling law in the instant case is Commonwealth Act No. 141, as amended, otherwise known as the Public Land Act. It governs what were used to be known as public agricultural lands, or what are otherwise known as alienable and disposable lands of the public domain.

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Under the Public Land Act, there is a presumption that the land applied for belongs to the state, and that the occupants and possessors can only claim an interest in the land by virtue of their imperfect title or continuous, open, and notorious possession thereof for a period prescribed by law. This principle is rooted in the Regalian doctrine, under which the State is the source of any asserted right to ownership of land. The basic doctrine is that all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. Any applicant for judicial confirmation of an imperfect title has the burden of proving, by incontrovertible evidence, that the (a) land applied for is alienable and disposable public land; and, (b) the applicant, by himself or through his predecessorsin-interest had occupied and possessed the land, in the concept of owner, openly, continuously, exclusively, and adversely since June 12, 1945, or earlier. We hold that petitioners failed to show that the parcels of land subject of their application are alienable and disposable. The government, through the Laguna Lake Development Authority, established that the areas sought to be registered are below the statutory minimum elevation of 12.50 meters, hence formed part of the bed of Laguna Lake under Republic Act (R.A.) No. 4850, as amended. In a Report dated November 19, 1985, Laguna Lake Development Authority Geodetic Engineer Joel G. Merida stated that one-half of the area of Lot 1 and the entire area of Lot 2, Psu240345, are covered by mud and lake water at an elevation of 11.77 meters, and the highest observed elevation is 12.19 meters. This means that the subject lots form part of the lake bed or basin of Laguna Lake. Sec. 41(11) of R.A. No. 4850 sets the minimum water elevation at 12.50 meters. Lands located at and below such elevation are public lands which form part of the bed of said lake. Art. 502 of the Civil Code enumerates the bodies of water that are properties of public dominion, as follows: The following are of public dominion: (1) Rivers and their natural beds; (2) Continuous or intermittent waters of springs and brooks running in their natural beds and the beds themselves; (3) Waters rising continuously or intermittently on lands of public dominion; (4) Lakes and lagoons formed by Nature on public lands, and their beds; xxx xxx xxx The SC agreed with the ruling of the appellate court that the fact that a few of the other estates in the vicinity had succeeded in being registered, and that there are already existing houses and roads between Laguna Lake and the subject lots, does not prove that the subject lots are not part of the Laguna Lake bed. Mr. Ananias Mariano registered 6,993 square meters of land in his name under Original Certificate of Title (OCT) No. 8906 which land appears to be even located farther from the lake than the subject lots, while Juvencio Ortaez registered 84,238 square meters of land in his name under OCT No. 55351 which land is situated near the margins of
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the Laguna Lake. The land titles of these two individuals only prove that they are the owners in fee simple of the respective real properties described therein, free from all liens and encumbrances except such as may be expressly noted thereon or otherwise reserved by law. They do not prove petitioners title to the subject lots. In Ledesma vs. Municipality of Iloilo, the SC held that simple possession of a certificate of title, under the Torrens System, does not make the possessor the true owner of all the property described therein. If a person obtains a title, under the Torrens System, which includes by mistake or oversight land which cannot be registered under the Torrens System, he does not, by virtue of said certificate alone, become the owner of the lands illegally included. Possession is open when it is visible and apparent to a common observer. Continuous possession consists of uninterrupted acts of nonpermissive possession of property by the current occupants and their predecessors. To be notorious, possession must be so conspicuous that it is generally known and talked of by the public or at least by the people in the vicinity of the premises. Mere possession of land and the making of vague assertions to the public that a possessor is claiming the land are not sufficient to satisfy the requirement of open and notorious possession.

4. Foreshore Land SIAIN Enterprises vs. F.F. Cruz G.R. No. 146616, August 31, 2006 Western Visayas Industrial Corporation (WESVICO) filed on September 1973 a foreshore lease application over the foreshore land adjacent to certain lots registered in its name, located in La Paz, Iloilo City, including Lot 3309. Later, it withdrew the application and filed on March 1976 a petition for registration over the same foreshore land with the then Court of First Instance of Iloilo. The case was, however, archived as WESVICOs representative could no longer be contacted. WESVICO ceased to hold operations and its properties including Lot 3309 were foreclosed by the Development Bank of the Philippines (DBP) which later consolidated its ownership thereon. On July 1983, F.F. Cruz & Co. (F.F. CRUZ) filed with the Bureau of Lands, Iloilo City, a foreshore lease application over a foreshore land, a portion of which is adjacent to Lot 3309. Petitioner Siain Enterprises Inc. (SIAIN), who purchased from the DBP the properties previously owned by WESVICO including Lot 3309, filed on September
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1986 a foreshore lease application 7over the foreshore land adjacent to the properties it bought from DBP. When SIAIN learned that 130 linear meters of the foreshore land subject of F.F. Cruzs foreshore lease application overlapped that covered by its foreshore lease application, it filed on January 1987 a protest alleging that it being the owner of the property adjoining the overlapping area, it should be given preference in its lease. On March 1987, the Sangguniang Panglungsod of Iloilo City, by Resolution No. 174, approved the recommendation of its Committee on Finance that for the mutual interest of F.F. Cruz and SIAIN, SIAIN would get 70 linear meters and F.F. Cruz would get 60 linear meters of the disputed area, in light of its finding that, among other things, both SIAIN and F.F. Cruz would contribute substantially to the economic growth of the City of Iloilo. The Land Management Bureau (LMB) through its Director dismissed SIAINs protest. SIAIN appealed to the Secretary of the Department of Environment and Natural Resources (DENR). On May 1997, then DENR Acting Secretary Antonio G.M. La Via set aside the LMB Order, and rendered a decision in favor of SIAIN. F.F. Cruz appealed to the Office of the President. The Office of the President, through then Executive Secretary Ronaldo B. Zamora, reversed the decision of the DENR Acting Secretary and reinstated that of the LMB SIAIN filed a petition for review before the CA. The CA dismissed SIAINs petition.

Issue: Who has better right over the foreshore land, SIAIN or F.F. Cruz Ruling: SIAIN. The key to the present controversy lies in the classification of the disputed area. The DENR Secretary found that the disputed area is a natural foreshore, hence, it concluded that SIAIN, being a littoral owner (owner of land bordering the sea or lake or other tidal waters), has preferential right to lease it as provided in paragraph 32 of Lands Administrative Order No. 7-1 dated April 30, 1936 which reads: 32. Preference of Riparian Owner. The owner of the property adjoining foreshore lands or lands covered with water bordering upon shores or banks of navigable lakes or rivers, shall be given preference to apply for such lands adjoining his property as may not be needed for the public service, subject to the laws and regulations governing lands of this nature,
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provided that he applies therefore within sixty (60) days from the date he receives a communication from the Director of Lands advising him of his preferential right. The Office of the President went on to hold that since the disputed area is already reclaimed land, it cannot be subject to littoral claim, SIAIN, not being the littoral owner within the contemplation of the law, citing Santulan vs. The Executive Secretary which elucidated on the principal reason for giving a riparian or littoral owner preferential right, thus: Now, then, is there any justification for giving to the littoral owner the preferential right to lease the foreshore land abutting on his land? That rule in paragraph 32 is in consonance with article 4 of the Spanish Law of Waters of 1866 which provides that, while lands added to the shores by accretions and alluvial deposits caused by the action of the sea form part of the public domain, such lands, when they are no longer washed by the waters of the sea are not necessary for purposes of public utility, or for the establishment of special industries, or for the coast guard service, shall be declared by the Government to be the property of the owners of the estates adjacent thereto and as increment thereof. In other words, article 4 recognizes the preferential right of the littoral (riparian according to paragraph 32) to the foreshore land formed by accretions or alluvial deposits due to the action of the sea. The reason for the preferential right is the same as the justification for giving accretions to the riparian owner for the diminutions which his land suffers by reason of the destructive force of the waters. So, in the case of littoral lands, he who loses by the encroachments of the sea should gain by its recession. That the foreshore area had been reclaimed does not remove it from its classification of foreshore area subject to the preferential right to lease of the littoral owner. It bears noting that it was not the reclamation that brought the disputed foreshore area into existence. Such foreshore area existed even before F.F. Cruz undertook its reclamation. It was formed by accretions or alluvial deposits due to the action of the sea. Following Santulan, the littoral owner has preferential right to lease the same. Contrary to the ruling of the Office of the President, as affirmed by the appellate court, littoral owner WESVICO cannot be considered to have waived or abandoned its preferential right to lease the disputed area when it subsequently filed an application for registration thereover. For being a part of the public domain, ownership of the area could not be acquired by WESVICO. Its preferential right remained, however. Its move to have the contested land titled in its name, albeit a faux pas, in fact more than proves its interest to utilize it.
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II. Ownership/Possession
A. Right to Recover Property
1. In general Ramos-Balalio vs. Ramos G.R. No. 168464, January 23, 2006

Issue: WON Zenaida, as an applicant for public land, may be considered as having any right to the land occupied, which may entitle her to sue in courts for the return of the possession thereof Ruling: Zenaida has proven prior possession of the portion of land she claims as her share, which possession antedates the filing of the homestead application. She produced evidence showing that she has filed a verified application for the registration of the land with the Bureau of Lands on August 10, 1971, which is still pending. The documents remain uncontested and the application has not been assailed by any of the parties to the case. She alleged that during the lifetime of her mother, she and her maternal grandfather cultivated and occupied the land. Zenaida presented tax declarations both in her name and that of her predecessor-in-interest (mother Susana Bueno) covering the property. Time and again, we have held that although tax declarations or realty tax payments of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of owner for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive possession. They constitute at least proof that the holder has a claim of title over the property. The voluntary declaration of a piece of property for taxation purposes manifests not only ones sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government. Zenaidas uncontested and verified application for a homestead patent coupled with her open and notorious occupation of the land convinces us of her preferential right to possess the land claimed, which entitles her to be protected by the law in such possession.

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2. Collateral Attack Erasusta vs. Amorin G.R. No. 149231, July 17, 2006 Subject of the controversy are 4 lots (Lot 11, Lot 19-A, Lot 19-C, and Lot 34-D) located at Maria Luisa Street, Sampaloc, Manila. These lots originally formed part of the Prieto Estate owned by the late Antonio Prieto, Sr. (Prieto). The Prieto Estate was subdivided into separate lots and sold to tenants on installment basis. De Los Reyes is among the tenants who purchased lots from Prieto under separate contracts of sale on installment. Lot 11 was sold to her as early as April 1955, while Lot 19-A, Lot 19-C and Lot 34-D were purchased by her on December 1960, September 1959 and October 1959, respectively. De Los Reyes later transferred her rights over Lot 19-C to Fortunato A. Amorin, the late husband of respondent Amparo J. Amorin. The next day, Prieto executed a deed of sale in favor of Fortunato and, by virtue thereof, TCT No. 91454/T-732 was issued in Fortunatos name. The Amorins took possession of the house located at No. 933 Maria Luisa Street, supposedly the place where Lot 19-C is located, and erected their own residential house thereon. After the death of Fortunato, the Amorins executed an Extrajudicial Partition. On January 1969, TCT No. 95422 was issued in the Amorins names. In September 1973, a representative from the Bank went to the Amorins house at No. 933, informing them that they are occupying Lot 19-A which had been mortgaged to and foreclosed by the Bank. In 1974, the Bank sent a formal demand letter for the Amorins to vacate the premises, insisting that they were occupying Lot 19-A and that the Bank was now the owner of said lot. Apparently, De Los Reyes was deceived by a certain Valenzuela into entrusting to the latter the documents evidencing her rights over Lot 11, Lot 19-A, and Lot 34D on Valenzuelas representation that he would assist De Los Reyes in transferring the titles of said lots to her three (3) children. Valenzuela, thru a forged deed of assignment, fraudulently transferred the rights over the 3 lots to his own name. The subdivision owner, Prieto, unaware of the fraud and forged instrument, executed a deed of sale over the same 3 lots in favor of Valenzuela who eventually secured TCTs in his own name. Valenzuela then mortgaged the 3 lots to respondent Bank as collaterals for a loan obtained by him. De Los Reyes filed two (2) criminal complaints for estafa through falsification of public documents against Valenzuela. Valenzuela was later convicted in both cases.
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On 1970, the respondent Bank foreclosed Valenzuelas real estate mortgages. On account thereof, Lot 11, Lot 19-A and Lot 34-D were sold at a public auction to the respondent Bank as the highest bidder. The Bank consolidated its ownership over the 3 lots and was issued new TCTs. Amparo checked the records in the office of the subdivision owner and with the Land Registration Commission (LRC). The records of the LRC confirmed the mix-up in the designations of Lot 19-C and Lot 19-A. It turned out that Lot 19-C was, in fact, the one located at No. 925 Maria Luisa St. and Lot 19-A was the one located at No. 933 Maria Luisa Street. Amparo, demanded that De Los Reyes and the latters tenants surrender and vacate the premises at No. 925 Maria Luisa Street, which is actually Lot 19-C, but De Los Reyes refused. De Los Reyes insisted that the lot being occupied by the Amorins at No. 933 Maria Luisa Street is Lot 19-C. The Amorins filed in the then CFI of Manila, an action for Recovery of Ownership with Damages, against De Los Reyes, the latters tenants at No. 925 Maria Luisa Street, and the respondent Bank. On January 1986, the TC rendered a decision ordering the cancellation of the 3 certificates of title issued to the Bank, the correction by the Register of Deeds of the title of the Amorins to correspond to the master plan of the LRC and the correction of the subdivision plan pertaining to the property of the Amorins to correspond to the master plan of the LRC. The trial court ruled that What was actually sold to the Amorins by Lucena delos Reyes was Lot 19-A located at 933 Maria Luisa Street and not Lot 19-C located at 925 Maria Luisa Street. In another Order dates August 1996, the TC modified its earlier decision by (1) ordering the cancellation of the respondent Banks TCT on Lot 11 and Lot 34-D and Valenzuelas TCTs on Lot 11, Lot 19-A, and Lot 34-D for having been obtained from fraudulent source; and (2) ordering the Register of Deeds to interchange the technical descriptions of Lot 19-A and Lot 19-C On appeal, the CA rendered a decision reversing that of the trial court and granting the respondent Banks appeal and dismissing the separate appeal of De Los Reyes Issue 1: Who has better right over the lot, the Bank or De Los Reyes? Ruling: De Los Reyes. While it is a familiar doctrine that a forged or fraudulent document may become the root of a valid title if the property has already been transferred from the name of the owner to that of the forger, the same does not always hold true. The doctrine likewise emphasizes that only a person who deals with registered property in good
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faith will acquire good title from a forger and be absolutely protected by a Torrens title. In the final analysis, the resolution of this case depends on the issue of whether the respondent Bank is a mortgagee/purchaser in good faith It is a matter of judicial notice that a banking institution, before approving a loan, sends its representative to the premises of the land offered as collateral, and investigates who are the true owners and actual possessors thereof. Here, evidence is wanting that the respondent Bank did make any such investigation. Quite significantly, it was established during trial that an employee of respondent Bank by the name of Jesus Ortega was a close friend of swindler Valenzuela. In fact, it was never disputed that no officer or employee of the respondent Bank inspected the premises before accepting the same as collaterals for the loan it extended to Valenzuela. It cannot be overemphasized that the respondent Bank, being in the business of extending loans secured by real estate mortgages, is familiar with the rules on land registration. As such, it was, as here, expected to exercise more care and prudence than ordinary private individuals in its dealing with registered lands. Given, inter alia, the suspicious-provoking presence of occupants, other than the owner, on the land to be mortgaged, it behooved the respondent Bank to conduct a more exhaustive investigation on the history of the mortgagors title. That the respondent Bank accepted in mortgage the properties in question, notwithstanding the existence of structures thereon and the actual and visible presence thereat of persons other than the mortgagor, constitutes gross negligence amounting to bad faith. Respondent claims that, being an innocent mortgagee, it should not be required to conduct an exhaustive investigation on the history of the mortgagors title before it could extend a loan. Respondent, however, is not an ordinary mortgagee; it is a mortgagee-bank. As such, unlike private individuals, it is expected to exercise greater care and prudence in its dealings, including those involving registered lands. A banking institution is expected to exercise due diligence before entering into a mortgage contract. The ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and indispensable part of its operations. Issue 2: Whether the Banks titles over Lot 11, Lot 19-A and Lot 34-D can be collaterally attacked? Ruling: Yes. The concept of non-collateral attack of title is based on Section 48, PD 1529, 21 which provides:

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Certificate not Subject to Collateral attack. A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. Clear it is from the above that what cannot be collaterally attacked is the certificate of title and not the title itself. As it is, a certificate of title is the document issued by the Register of Deeds in case of conveyance of real estates and is known as TCT. But by title, the law refers to the ownership which a certificate of title merely represents. Apparently, respondent Bank confuses a certificate of title with the title itself. Placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is different from a certificate of title. Also, Bank did not raise the issue of non-collateral attack on its titles as a defense in the trial court. Hence, it cannot be raised for the first time on appeal. This defense, if at all, is deemed waived. 3. Accion Reivindicatoria Iglesia ni Cristo vs. Ponferrada G.R. No. 168943, October 27, 2006 Alicia, Alfredo, Roberto, Enrique and Susan, all surnamed Santos, and Sonia Santos-Wallin, represented by Enrique G. Santos, filed a complaint for Quieting of Title and/or Accion Reivindicatoria before the RTC of QC against the Iglesia Ni Cristo (INC). From the complaint, plaintiffs appear to be the heirs of Enrique Santos, represented by Enrique G. Santos. The latter signed the Verification and Certificate of Non-Forum Shopping. Defendant moved to dismiss on the ground that the case involved more than one plaintiff but the verification and certification against forum shopping incorporated in the complaint was signed only by Enrique Santos. Although the complaint alleges that plaintiffs are represented by Enrique Santos, there is no showing that he was, indeed, authorized to so represent the other plaintiffs to file the complaint and to sign the verification and certification of non-forum shopping. RTC denied the MTD. It declared that since Enrique Santos was one of the heirs, his signature in the verification and certification constitutes substantial compliance with the Rules. The court, likewise, held that prescription had not set in and that failure to state the address of plaintiffs in the complaint does not warrant the dismissal of the complaint. CA affirmed the lower court. Issue 1: Whether verification executed by one of the plaintiffs is sufficient? Ruling: Yes. The general rule is that the certification must be signed by all plaintiffs in a case and the signature of only one of them is insufficient. However, the Court has
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also stressed in a number of cases that the rules on forum shopping were designed to promote and facilitate the orderly administration of justice and thus should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. The rule of substantial compliance may be availed of with respect to the contents of the certification. This is because the requirement of strict compliance with the provisions merely underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded. The Court applied the rule on substantial compliance because of the commonality of interest of all the parties with respect to the subject of the controversy. In the instant case, both parties have their respective TCTs over the property. They have a common interest over the property being the heirs of the late Enrique Santos, the alleged registered owner of the subject property as shown in one of the TCTs. As such heirs, they are considered co-owners pro indiviso of the whole property since no specific portion yet has been adjudicated to any of the heirs. Consequently, as one of the heirs and principal party, the lone signature of Enrique G. Santos in the verification and certification is sufficient for the RTC to take cognizance of the case. The commonality of their interest gave Enrique G. Santos the authority to inform the RTC on behalf of the other plaintiffs therein that they have not commenced any action or claim involving the same issues in another court or tribunal, and that there is no other pending action or claim in another court or tribunal involving the same issues. Considering that at stake in the present case is the ownership and possession over a prime property in Quezon City, the apparent merit of the substantive aspects of the case should be deemed as a special circumstance or compelling reason to allow the relaxation of the rule. Issue 2: Whether there is a need to show Enrique G Santos authority to represent his co-heirs. Ruling: No. Respondents herein are co-owners of the subject property. As such co-owners, each of the heirs may properly bring an action for ejectment, forcible entry and detainer, or any kind of action for the recovery of possession of the subject properties. Thus, a co-owner may bring such an action, even without joining all the other coowners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all. We uphold the validity of the complaint because of the following circumstances: the caption of the instant case is Heirs of Enrique Santos vs. Iglesia ni Cristo;

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the opening statement of the complaint states that plaintiffs are the heirs of Enrique Santos and likewise names the particular heirs of the latter who instituted the complaint below; the case involves a property owned by the predecessor-in-interest of plaintiffs therein; and the verification signed by Enrique G. Santos clearly states that he is one of the children of the late Enrique Santos and that he represents the heirs of said Enrique Santos Issue 3: Whether prescription has set in? Ruling: No. A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest in land appearing in some legal form but which is, in fact, unfounded, or which it would be inequitable to enforce. An action for quieting of title is imprescriptible until the claimant is ousted of his possession. Admittedly, respondents interposed that the owner of a real property, as plaintiff, is entitled to the relief of quieting of title even if, at the time of the commencement of his action, he was not in actual possession of real property. After all, under Article 477 of the New Civil Code, the owner need not be in possession of the property. If on the face of TCT under the name of plaintiff, its invalidity does not appear but rests partly in pais, an action for quieting of title is proper. As gleaned from the averments of the complaint, the action of respondents was one for quieting of title under Rule 64 of the Rules of Court, in relation to Article 476 of the New Civil Code In the present case, respondent alleged in their complaint, that their father, Enrique Santos, was the owner of the property based on TCT issued on July 27, 1961; and that, after his death on February 9, 1970, they inherited the property; Enrique Santos, during his lifetime, and respondents, after the death of the former, had been in actual, continuous and peaceful possession of the property until 1994 when petitioner claimed ownership based on TCT issued on September 18, 1984 and barred respondents from fencing their property. The alternative reinvindicatory action against petitioner. An accion reinvindicatoria does not necessarily presuppose that the actual and material possession of the property is on defendant and that plaintiff seeks the recovery of such possession from defendant. It bears stressing that an accion reinvindicatoria is a remedy seeking the recovery of ownership and includes jus possidendi, jus utendi, and jus fruendi as well. It is an action whereby a party claims ownership over a parcel of land and seeks recovery of its full possession. Thus, the owner of real property in actual and material possession thereof may file an accion reinvindicatoria against another seeking ownership
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over a parcel of land including jus vindicandi, or the right to exclude defendants from the possession thereof. In this case, respondents filed an alternative reinvindicatory action claiming ownership over the property and the cancellation of TCT under the name of petitioner. In fine, they sought to enforce their jus utendi and jus vindicandi when petitioner claimed ownership and prevented them from fencing the property. Since respondents were in actual or physical possession of the property when they filed their complaint against petitioner on October 24, 2001, the prescriptive period for the reinvindicatory action had not even commenced to run, even if petitioner was able to secure TCT over the property in 1984 Petition denied. 2. Forcible Entry/ Unlawful Detainer a. difference between forcible entry and unlawful detainer Cajayon vs. Santiago G.R. No. 149118, February 16, 2006 Flaviana Lim Cajayon and Carmelita Lim Constantino (PETITIONERS) and Isagani Candelaria (CANDELARIA) were co-owners of a 260-square meter lot, then covered by Transfer Certificate of Title (TCT) No. C-10870. On February 1995, a partition agreement was entered into by petitioners and Candelaria, wherein Lot 6-A, Psd 00-034294, containing an area of 100 square meters, more or less, was adjudicated to Candelaria, while Lot 6-B, Psd 00-034294, containing an area of 160 square meters, more or less, was given to petitioners. TCT No. C10870 was cancelled and TCT No. 288500 was issued in the name of petitioners. On May 1995, Candelaria sold his property, including the improvements thereon, to Spouses Santiago and Fortunata Batuyong (RESPONDENTS). TCT No. 294743 was issued in their names over the said parcel of land. On 21 May 1996, petitioners started the construction of a seven (7)-door bungalow-type building that allegedly intruded into the lot of respondents. The parties were summoned by barangay officials to a meeting on the matter. It was then agreed upon that petitioners would defer the construction work pending the result of a relocation survey to be conducted by a government surveyor. The verification survey yielded the findings that Lot 6-A (Candelarias) and Lot 6-B (petitioners) were not correctly positioned geographically on the ground with respect to TCT No. 294743. Thus, as per survey, sub-lot B with an area of 10.43 square meters serves as right of way of Lot 6-B (petitioners lot) while sub-lot C with an area of 10.18 square meters was the portion of Lot 6-A (respondents lot) presently occupied by petitioners.

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Despite the delineation of said boundaries, petitioners proceeded with the forestalled construction, allegedly occupying at least 20.61 square meters of respondents lot, including the portion being used as right of way for petitioners tenants. The demands of the respondents for the petitioners to vacate the encroached portion were left unheeded. On, 14 April 1997, the respondents filed an ejectment case against the petitioners before the Metropolitan Trial Court of Caloocan City. The MeTC rendered a decision ordering the petitioners to vacate and surrender possession of a portion of respondents lot. On appeal, the RTC affirmed the decision of the MeTC. Issue: Whether the court acquired jurisdiction over the ejectment case filed by the respondents Ruling: Yes. From the above-quoted allegations taken in tandem with the textbook distinctions between forcible entry and unlawful detainer, it is clear that the complaint makes out a case for forcible entry, as opposed to unlawful detainer. The distinctions between the two forms of ejectment suits, are: first, in forcible entry, the plaintiff must prove that he was in prior physical possession of the premises until he was deprived thereof by the defendant, whereas, in unlawful detainer, the plaintiff need not have been in prior physical possession; second, in forcible entry, the possession of the land by the defendant is unlawful from the beginning as he acquires possession thereof by force, intimidation, threat, strategy or stealth, while in unlawful detainer, the possession of the defendant is inceptively lawful but it becomes illegal by reason of the termination of his right to the possession of the property under his contract with the plaintiff; third, in forcible entry, the law does not require a previous demand for the defendant to vacate the premises, but in unlawful detainer, the plaintiff must first make such demand, which is jurisdictional in nature. Respondents had been in prior physical possession of the property in the concept of owner prior to petitioners intrusion on 21 May 1996. When petitioners encroached upon respondents lot and started construction works thereon the latter was dispossessed of the area involved. Despite various demands by respondents to vacate, petitioners obstinately refused to do so. Clearly, petitioners entry into the said property was illegal from the beginning, precluding an action for unlawful detainer. On the other hand, to establish a case of forcible entry, the complaint must allege that one in physical possession of a land or building has been deprived of that possession by another through force, intimidation, threat, strategy or stealth. It is not essential, however, that the complaint should expressly employ the language of
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the law. It would be sufficient that facts are set up showing that dispossession took place under said conditions. The words by force, intimidation, threat, strategy or stealth include every situation or condition under which one person can wrongfully enter upon real property and exclude another, who has had prior possession thereof. To constitute the use of force as contemplated in the above-mentioned provision, the trespasser does not have to institute a state of war. Nor is it even necessary that he use violence against the person of the party in possession. The act of going on the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property, and this is all that is necessary. In the case at bar, petitioners encroachment into respondents property in an oppressive and malevolent manner, coupled with their refusal to vacate the premises despite knowledge of the proper boundaries and heedless of respondents serious objections, indelibly connotes force within the meaning of the law. Petitioners contend that while they concede they might have intruded on respondents property, the action is barred by prescription because it was filed more than one (1) year after the occurrence of the alleged intrusion. The contention is baseless. Section 1, Rule 70 of the Rules of Court allows a plaintiff to bring an action in the proper inferior court for forcible entry or unlawful detainer within one (1) year, respectively, after such unlawful deprivation or withholding of possession. In forcible entry, the one-year period is counted from the date of actual entry on the land. Records show that the ejectment suit was instituted on 11 April 1997. Petitioners actual entry into the property, according to the complaint, took place on 21 May 1996. Thus, the suit was filed well within the one (1)-year period mandated by law.

b. issues to be decided in ejectment cases Copuyoc vs. De Sola G.R. No. 151322, October 11, 2006 The principal issue to be resolved in forcible entry cases is mere physical or material possession (possession de facto) and not juridical possession (possession de jure) nor ownership of the property involved. Title is not involved. In David vs. Cordova, the SC explained: The only question that the courts must resolve in ejectment proceedings is who is entitled to the physical possession of the premises, that is, to the possession de facto and not to the possession de jure. It does not even matter if a partys title to the property is questionable, or when both parties intruded into public land and their applications to own the land have yet to be approved by the proper government agency. Regardless of
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the actual condition of the title to the property, the party in peaceable quiet possession shall not be thrown out by a strong hand, violence or terror. Neither is the unlawful withholding of property allowed. Courts will always uphold respect for prior possession. Thus, a party who can prove prior possession can recover such possession even against the owner himself. Whatever may be the character of his possession, if he has in his favor prior possession in time, he has the security that entitles him to remain on the property until a person with a better right lawfully ejects him. To repeat, the only issue that the court has to settle in an ejectment suit is the right to physical possession. It is also well settled that in civil cases, the burden of proof is on the plaintiff to establish his case by a preponderance of evidence. If the plaintiff claims a right granted or created by law, the same must be proven by competent evidence. The plaintiff must rely on the strength of his own evidence and not on the weakness of that of his opponent.

3. Building, Planting, Sowing a. Useful Improvements by Lessee Programme Inc. vs. Province of Bataan G.R. No. 144635, June 26, 2006 BASECO was the owner of Piazza Hotel and Mariveles Lodge, both located in Mariveles, Bataan. BASECO granted petitioner a contract of lease over Piazza Hotel from January 1, 1986 to January 1, 1989, subject to renewal by mutual agreement of the parties. After the expiration of the three-year lease period, petitioner was allowed to continue operating the hotel on monthly extensions of the lease. Presidential Commission on Good Government (PCGG) issued a sequestration order against BASECO pursuant to Executive Order No. 1 of former President Corazon C. Aquino. Among the properties provisionally seized and taken over was the lot on which Piazza Hotel stood. However, Piazza Hotel was sold at a public auction for non-payment of taxes to Province of Bataan. BASECOs TCT was cancelled and a new TCT was issued to the Province of Bataan. Petitioner filed a complaint for preliminary injunction and collection of sum of money against BASECO. Respondent, as the new owner of the property, filed a motion for leave to intervene. After its motion was granted, respondent filed a complaint-in-intervention praying, inter alia, that petitioner be ordered to vacate Piazza Hotel and Mariveles Lodge for lack of legal interest. During the pre-trial of the complaint-in-intervention, the parties agreed that the case be tried on the sole issue of whether respondent province, as complainantintervenor, was the legitimate owner of the Piazza Hotel and Mariveles Lodge. Trial court rendered judgment in favor of respondent. CA affirmed.
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Issue: Whether the Province of Bataan can claim ownership of Piazza Hotel and Mariveles Lodge? Ruling: Yes. Time and again, we have ruled that factual matters are best evaluated by trial courts which can scrutinize evidence and hear testimony presented and offered by the parties (in this case, on the issue of ownership of the subject property). All the more does this principle ring true in this petition since such factual determination by the RTC was upheld by the CA. Only questions of law are the proper subject of a petition for review on certiorari in this Court, unless any of the known exceptions is extant in this case. The evidence clearly established respondents ownership of Piazza Hotel. First, the title of the land on which Piazza Hotel stands was in the name of respondent. Second, Tax Declaration No. 12782 was in the name of respondent as owner of Piazza Hotel. Third, petitioner was doubtlessly just a lessee. In the lease contract annexed to the complaint, petitioner in fact admitted BASECOs (respondents predecessorin-interest) ownership then of the subject property. The Rules of Court states that an admission, verbal or written, made by a party in the course of the proceedings in the same case, does not require proof. The admission may be contradicted only by showing that it was made through palpable mistake or that no such admission was made. To be considered as a judicial admission, the same must be made in the same case in which it is offered. In its own complaint for preliminary injunction and sum of money, petitioner acknowledged that it was not the owner of the property when it stated that BASECO leased to petitioner the building Piazza Hotel and its outlet Mariveles Lodge xxx for monthly rentals of P6,500.00. Petitioner could not possibly be the owner of a building merely leased to it. Furthermore, petitioners reference to Article 448 of the Civil Code to justify its supposed rights as possessor in good faith was erroneous. The benefits granted to a possessor in good faith cannot be maintained by the lessee against the lessor because, such benefits are intended to apply only to a case where one builds or sows or plants on land which he believes himself to have a claim of title and not to lands wherein ones only interest is that of a tenant under a rental contract, otherwise, it would always be in the power of a tenant to improve his landlord out of his property. Besides, as between lessor and lessee, the Code applies specific provisions designed to cover their rights. Hence, the lessee cannot claim reimbursement, as a matter of right, for useful improvements he has made on the property, nor can he assert a right of retention
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until reimbursed. His only remedy is to remove the improvement if the lessor does not choose to pay its value; but the court cannot give him the right to buy the land. Petitioners assertion that Piazza Hotel was constructed at (its) expense found no support in the records. Neither did any document or testimony prove this claim. At best, what was confirmed was that petitioner managed and operated the hotel. There was no evidence that petitioner was the one which spent for the construction or renovation of the property. And since petitioners alleged expenditures were never proven, it could not even seek reimbursement of one-half of the value of the improvements upon termination of the lease under Article 1678 of the Civil Code. Petition denied. b. Mutual Bad Faith Feliciano vs. Zaldivar G.R. No. 162593. September 26, 2006 Action for Declaration of Nullity of TCT; Art. 440 CC Applied Remegia Y. Feliciano (FELICIANO) filed against the spouses Aurelio and Luz Zaldivar a complaint for declaration of nullity of TCTNo. T-17993 and reconveyance of the property consisting of 243 square meters of lot situated in Cagayan de Oro City. The said title is registered in the name of Aurelio Zaldivar. Feliciano alleges that she was the registered owner of a parcel of land in Cagayan de Oro City with an area of 444 square meters, covered by TCT No. T-8502. Sometime in 1974, Aurelio, allegedly through fraud, was able to obtain TCT No. T17993 covering the 243-sq-m portion of Felicianos lot as described in her TCT No. T-8502. Feliciano also contends that the subject lot was originally leased from her by Pio Dalman, Aurelios father-in-law, for P5.00 a month, later increased to P100.00 a month in 1960. She further alleged that she was going to mortgage the subject lot to Ignacio Gil for P100.00, which, however, did not push through because Gil took back the money without returning the receipt she had signed as evidence of the supposed mortgage contract. Thereafter, in 1974, Aurelio filed with the then Court of First Instance of Misamis Oriental a petition for partial cancellation of TCT No. T-8502. It was allegedly made to appear therein that Aurelio and his spouse Luz acquired the subject lot from Dalman who, in turn, purchased it from Gil. The petition was granted and TCT No. T-17993 was issued in Aurelios name. Feliciano denied that she sold the subject lot either to Gil or Dalman. She likewise impugned as falsified the joint affidavit of confirmation of sale that she and her uncle, Narciso Labuntog, purportedly executed before a notary public, where Feliciano appears to have confirmed the sale of the subject property to Gil. She
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alleged that she never parted with the certificate of title and that it was never lost. As proof that the sale of the subject lot never transpired, Feliciano pointed out that the transaction was not annotated on TCT No. T-8502. The RTC rendered a judgment in favor of Feliciano. On appeal, the CA reversed the decision of the RTC and ruled in favor of the Zaldivars Issue 1: Whether the Court of Appeals was correct in ruling that the land in dispute was correctly registered in the name of Aurelio Zaldivar. Ruling: No. It should be recalled that respondent Aurelio Zaldivar filed with the then CFI of Misamis Oriental a petition for issuance of a new owners duplicate copy of TCT No. T-8502, alleging that the owners duplicate copy was lost. In the Order dated March 20, 1974, the said CFI granted the petition and consequently, a new owners duplicate copy of TCT No. T-8502 was issued. However, as the trial court correctly held, the CFI which granted Aurelios petition for the issuance of a new owners duplicate copy of TCT No. T-8502 did not acquire jurisdiction to issue such order. It has been consistently ruled that when the owners duplicate certificate of title has not been lost, but is in fact in the possession of another person, then the reconstituted certificate is void, because the court that rendered the decision had no jurisdiction. Reconstitution can validly be made only in case of loss of the original certificate. In such a case, the decision authorizing the issuance of a new owners duplicate certificate of title may be attacked any time. The new owners duplicate TCT No. T-8502 issued by the CFI in the name of Aurelio is thus void. As Feliciano averred during her testimony, the owners duplicate copy of TCT No. T-8502 was never lost and was in her possession from the time it was issued to her. The court a quo correctly nullified TCT No. T-17993 in Aurelios name, emanating as it did from the new owners duplicate TCT No. T-8502, which Aurelio procured through fraud. Aurelio cannot raise the defense of indefeasibility of title because the principle of indefeasibility of a Torrens title does not apply where fraud attended the issuance of the title. The Torrens title does not furnish a shield for fraud. As such, a title issued based on void documents may be annulled. Neither can the respondents spouses Zaldivar rely on the principle of indefeasibility of TCT No. 17793 which was issued in favor of Aurelio. As it is, the subject lot is covered by two different titles: TCT No. T-8502 in Felicianos name covering an area of 444 sq m including therein the subject lot, and TCT No. 17793 in the name of Aurelio covering the subject lot. Aurelios title over the subject lot has not become indefeasible, by virtue of the fact that TCT No. T-8502 in the name of Feliciano has remained valid.
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The claim of indefeasibility of the petitioners title under the Torrens land title system would be correct if previous valid title to the same parcel of land did not exist. The respondent had a valid title . . . It never parted with it; it never handed or delivered to anyone its owners duplicate of the transfer certificate of title; it could not be charged with negligence in the keeping of its duplicate certificate of title or with any act which could have brought about the issuance of another certificate upon which a purchaser in good faith and for value could rely. If the petitioners contention as to indefeasibility of his title should be upheld, then registered owners without the least fault on their part could be divested of their title and deprived of their property. Such disastrous results which would shake and destroy the stability of land titles had not been foreseen by those who had endowed with indefeasibility land titles issued under the Torrens system Issue 2: What are the rights of Feliciano over the house built by the Zaldivar spouses over the land in dispute? Ruling: Nonetheless, the Court is not unmindful of the fact that respondents had built their house on the subject lot and, despite knowledge thereof, Feliciano did not lift a finger to prevent it. Article 453 of the Civil Code is applicable to their case: ART. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith. It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part. Under the circumstances, respondents and Feliciano are in mutual bad faith and, as such, would entitle the former to the application of Article 448 of the Civil Code governing builders in good faith: ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 29 and 548, 30 or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such a case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after the proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
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Feliciano is obliged to exercise either of the following options: (1) to appropriate the improvements, including the house, built by the Zaldivars on the subject lot by paying the indemnity required by law, or (2) sell the subject lot to the Zaldivars. Feliciano cannot refuse to exercise either option and compel respondents to remove their house from the land. In case Feliciano choose to exercise the second option, Zaldivars are not obliged to purchase the subject lot if its value is considerably more than the improvements thereon and in which case, the Zaldivars must pay rent to Feliciano. If they are unable to agree on the terms of the lease, the court shall fix the terms thereof. 4. Action to Quiet Title Rumarate vs. Hernandez G.R. No. 168222, April 18, 2006 Lot No. 379 was previously possessed and cultivated by Teodulo Rumarates (Teodulo) godfather, Santiago Guerrero (Santiago), a bachelor, who used to live with the Rumarate family in San Pablo City. From 1925 to 1928, Santiago occupied Lot No. 379 cultivating five hectares thereof. Before moving to Kagakag, Lopez, Quezon in 1929, Santiago orally bequeathed his rights over Lot No. 379 to Teodulo and entrusted to him a copy of a Decision of the Court of First Instance (CFI) of Tayabas dated April 21, 1925 recognizing his (Santiago) rights over Lot No. 379. Since Teodulo was only 14 years old then, his father helped him cultivate the land. Their family thereafter cleared the land, built a house and planted coconut trees, corn, palay and vegetables thereon. From 1929, Teodulo and later, his wife and 11 children possessed the land as owners and declared the same for taxation, the earliest being in 1961. In 1960, Santiago executed an Affidavit (quit-claim) ratifying the transfer of his rights over Lot No. 379 to Teodulo. In 1970, Teodulo discovered that spouses Cipriano Hernandez and Julia Zoleta, respondents predecessors-in-interest, were able to obtain a title over Lot No. 379. He did not immediately file a case against respondents because he was advised to just remain on the land and pay the corresponding taxes thereon. On September 1, 1992, petitioner spouses Teodulo Teodulo and Rosita Rumarate filed an action for reconveyance of real property and/or quieting of title with damages against respondent heirs of the late spouses Cipriano Hernandez and Julia Zoleta Respondents claimed that on November 11, 1964, Santiago sold the questioned lot to their parents, the spouses Cipriano Hernandez and Julia Zoleta, for P9,000.00.
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The trial court rendered a decision in favor of petitioners. On appeal to the Court of Appeals, the CA reversed the decision of the trial court. Issue 1: To whom should Lot No. 379 be awarded? To petitioners who possessed and cultivated the lot since 1929 up to the present, but do not have a certificate of title over the property, or to respondents who have a certificate of title but are not in possession of the disputed lot? Ruling: The land should be awarded to the petitioners. In an action for quieting of title, the court is tasked to determine the respective rights of the parties so that the complainant and those claiming under him may be forever free from any danger of hostile claim. Under Article 476 of the Civil Code, the remedy may be availed of only when, by reason of any instrument, record, claim, encumbrance or proceeding, which appears valid but is, in fact, invalid, ineffective, voidable or unenforceable, a cloud is thereby cast on the complainants title to real property or any interest therein. Article 477 of the same Code states that the plaintiff must have legal or equitable title to, or interest in the real property which is the subject matter of the suit. For an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. In the present case, The SC found that Teodulos open, continuous, exclusive, notorious possession and occupation of Lot No. 379, in the concept of an owner for more than 30 years vested him and his heirs title over the said lot. The law applicable at the time Teodulo completed his 30-year possession (from 1929 to 1959) of Lot No. 379, in the concept of an owner was Sec. 48(b) of Commonwealth Act No. 141 or the Public Land Act, as amended by Republic Act (RA) No. 1942, effective June 22, 1957 30 which provides: Sec. 48. The following-described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance (now Regional Trial Courts) of the province where the land is located for confirmation of their claims and the issuance of a certificate of title thereafter, under the Land Registration Act (now Property Registration Decree), to wit: xxx xxx xxx

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(b) Those who by themselves or through their predecessors-in-interest have been, in continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title, except when prevented by war or force majeure. 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. When the conditions specified therein are complied with, the possessor is deemed to have acquired, by operation of law, a right to a government grant, without necessity of a certificate of title being issued, and the land ceases to be part of the public domain. The confirmation proceedings would, in truth be little more than a formality, at the most limited to ascertaining whether the possession claimed is of the required character and length of time; and registration thereunder would not confer title, but simply recognize a title already vested. The proceedings would not originally convert the land from public to private land, but only confirm such conversion already effected by operation of law from the moment the required period of possession became complete. A careful examination of the evidence on record shows that Teodulo possessed and occupied Lot No. 379 in the concept of an owner. Since 1929, Teodulo cultivated the controverted land, built his home, and raised his 11 children thereon. In 1957, he filed a homestead application over Lot No. 379 but failed to pursue the same. After his demise, all his 11 children continued to till the land. From 1929 to 1960, Santiago never challenged Teodulos possession of Lot No. 379 nor demanded or received the produce of said land. For 31 years Santiago never exercised any act of ownership over Lot No. 379. And, in 1960, he confirmed that he is no longer interested in asserting any right over the land by executing in favor of Teodulo a quitclaim. All these prove that Teodulo possessed and cultivated the land as owner thereof since 1929. While the oral donation in 1929 as well as the 1960 quitclaim ceding Lot No. 379 to Teodulo are void for non-compliance with the formalities of donation, they nevertheless explain Teodulo and his familys long years of occupation and cultivation of said lot and the nature of their possession thereof. There is no question that the donation in question is invalid because it involves an immovable property and the donation was not made in a public document as required by Article 633 of the old Civil Code, in connection with Article 1328 of the same Code, but it does not follow that said donation may not serve as basis of acquisitive prescription when on the strength thereof the donee has taken possession of the property adversely and in the concept of owner.

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In the instant case, Santiagos short-lived possession and cultivation of Lot No. 379 could not vest him title. While he tilled the land in 1925, he ceased to possess and cultivate the same since 1928. He abandoned the property and allowed Teodulo to exercise all acts of ownership. His brief possession of Lot No. 379 could not thus vest him title. Nemo potest plus juris ad alium transferre quam ipse habet. No one can transfer a greater right to another than he himself has. Hence, spouses Cipriano Hernandez and Julia Zoleta and herein respondents did not acquire any right over the questioned lot and the title issued in their names are void, because of the legal truism that the spring cannot rise higher than the source. Issue 2: WON the action for quieting of title has already prescribed Ruling: No. An action for quieting of title is imprescriptible, as in the present case, where the person seeking relief is in possession of the disputed property. A person in actual possession of a piece of land under claim of ownership may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, and that his undisturbed possession gives him the continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his title. Considering that petitioners herein continuously possessed Lot No. 379 since 1929 up to the present, their right to institute a suit to clear the cloud over their title cannot be barred by the statute of limitations.

Ragasa vs. Sps. Roa G.R. No. 141964, June 30, 2006 On May 1989, Spouses Edesito and Consorcia (RAGASA SPOUSES) entered into a contract with Oakland Development Resources Corporation for the purchase in installments of a piece of property, with improvements covered by TCT No. 27946. The Ragasa Spouses took possession of the property covered by TCT No. 27946 and resided thereat together with their relatives who continued to occupy the same whenever the Ragasa Spouses would leave for Italy where they both worked. In March 1992, Ragasa Spouses were able to fully pay for the agreed purchase price of the property and a Deed of Absolute Sale dated March 12, 1992 was executed by and between Oakland Development Resources Corporation and the original owners copy of TCT No. 27946 was turned over to them.

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Despite the execution of the Deed of Absolute Sale, the Corporation failed to cause the transfer of title to plaintiffs. On the part of plaintiffs, all the while they thought that the Deed of Absolute Sale and possession of the original of the owners copy of TCT No. 27946 was more than sufficient to protect their rights and interests over the property Sometime March of 1999 Consorcia Ragasa decided to cause the transfer of registration of TCT No. 27946, upon learning that Oakland Development Resources Corporation was no longer functional as a corporate entity. She was surprised to learn from the Registry of Deeds for Quezon City that on April 14, 1995, the property in question was sold by defendant Ex-Officio Sheriff of Quezon City] to defendants Gerardo and Rodriga Roa (ROA SPOUSES) as the highest bidder. The Ragasa Spouses filed a complaint against the Roa Spouses before the QC RTC. The Roa Spouses moved for the dismissal of the complaint on the grounds of prescription and laches. The RTC granted the motion. Characterizing the suit as an action upon an injury to the rights of the plaintiff which, according to Article 1146 of the Civil Code, must be filed within four years, the RTC held that Ragasa Spouses action was barred by prescription for having been filed more than four years after the registration of the execution sale. Issue: Whether the suit filed by the Ragasa Spouses has already prescribed. Ruling: No. A reading of the allegations in petitioners complaint reveals that the action was essentially one for quieting of title to real property under Article 476 of the Civil Code which states: Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An action may also be brought to prevent a cloud being cast upon title to real property or any interest therein. To make out an action to quiet title under the foregoing provision, the initiatory pleading has only to set forth allegations showing that (1) the plaintiff has title to real property or any interest therein and (2) the defendant claims an interest therein adverse to the plaintiffs arising from an instrument, record, claim, encumbrance, or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable.
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Thus, the averments in petitioners complaint that (1) they acquired ownership of a piece of land by tradition or delivery as a consequence of sale and (2) private respondents subsequently purchased the same piece of land at an allegedly void execution sale were sufficient to make out an action to quiet title under Article 476. This being the case, Article 1146, which refers to actions upon an injury to the rights of the plaintiff and upon a quasi-delict, did not apply. It is an established rule of American jurisprudence (made applicable in this jurisdiction by Art. 480 of the New Civil Code) 12 that actions to quiet title to property in the possession of the plaintiff are imprescriptible. The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one who is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors remain in actual possession of the land, claiming to be owners thereof, the reason for this rule being that while the owner in fee continues liable to an action, proceeding, or suit upon the adverse claim, he has a continuing right to the aid of a court of equity to ascertain and determine the nature of such claim and its effect on his title, or to assert any superior equity in his favor. He may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. But the rule that the statute of limitations is not available as a defense to an action to remove a cloud from title can only be invoked by a complainant when he is in possession. One who claims property which is in the possession of another must, it seems, invoke his remedy within the statutory period.

Diaz vs. Virata G.R. No. 162037, August 7, 2006 An action for quieting of title is a remedy which may be availed of only when by reason of any instrument, record, claim, encumbrance or proceeding, which appears valid but is, in fact, invalid, ineffective, voidable or unenforceable, a cloud is thereby cast on the complainants title to real property or any interest therein. Article 476 of the Civil Code provides: Article 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein. Further, Article 477 of the same Code mandates that in an action to quiet title, the party bringing the action must have a legal or, at least, an equitable title to
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the real property subject of the action and that the alleged cloud on his title must be shown to be in fact invalid. For an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) the deed, claim, encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. Time and again, we have upheld the fundamental principle in land registration that a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. It becomes the best proof of ownership of a parcel of land. Well-established is the principle that the person holding a prior certificate is entitled to the land as against a person who relies on a subsequent certificate. This rule refers to the date of the certificate of title. Absent any muniment of title issued prior to 1959 in favor of appellants [Enrique, et al.] which could prove their ownership over the contested lots, this Court is left with no other alternative but to declare appellants claim over the properties as void. By express provision of Section 48 of Presidential Decree No. 1529, a certificate of title cannot be subject to a collateral attack, thus: SEC. 48. Certificate not subject to collateral attack. A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. When is an action a direct attack and when is it collateral? This Court made a distinction, to wit: An action is deemed an attack on a title when the object of the action or proceeding is to nullify the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of the action is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof. Laches is defined as the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it. This equitable defense is based upon grounds of public policy, which requires the discouragement of stale claims for the peace of society. Indeed, while it is true that a Torrens Title is indefeasible and imprescriptible, the registered landowner may lose his right to recover the possession of his registered property by reason of laches. However, In the case at bar, laches cannot be appreciated in petitioners favor.
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For laches to apply, it must be shown that there was lack of knowledge or notice on the part of the defendant that complainant would assert the right in which he bases his suit.

B. Right to Just Compensation in Case of Expropriation


MIAA vs. Rodriguez G.R. No. 161836, February 28, 2006 Manila International Airport Authority (MIAA), the government-owned and controlled corporation managing and operating the Ninoy Aquino International Airport Complex, implemented expansion programs for its runway. MIAA received a letter from Joaquin Rodriguez (Rodriguez) proposing to sell one of the lots already occupied by the expanded runway but assumed as not yet expropriated by the MIAA. The proposal did not ripen to a deal. Subsequently Rodriguez bought the bigger lot a portion of which was occupied by the runway, as well as all the rights to claim reasonable rents and damages for the occupation, from its owner then, Buck Estate, Inc. The property purchased had a portion already occupied by the runway. This occupied portion is hereinafter referred to as the subject lot. Through a letter, Rodriguez, through counsel, demanded from the MIAA full payment for the property and back rentals for 27 years, amounting to P468,800,000.00. As he did not reach an agreement with the MIAA, Rodriguez filed a case for accion reinvindicatoria with damages. RTC rendered judgment in favor of Rodriguez. CA partially granted the MR by including the legal rate of interest. Issue: WON Rodriguez should be awarded compensation for the subject lot? Ruling: Yes. While the instant case stemmed from the accion reinvindicatoria that Rodriguez had filed, it essentially revolves around the taking of the subject lot by the MIAA. There is taking when the expropriator enters private property not only for a momentary period but for a more permanent duration, or for the purpose of devoting the property to a public use in such a manner as to oust the owner and deprive him of all beneficial enjoyment thereof. In this context, there was taking when the MIAA occupied a portion thereof for its expanded runway. The value of the property must be determined either as of the date of the taking of the property or the filing of the complaint, whichever came first. Even before the new rule, however, it was already held in Commissioner of Public Highways vs. Burgos that the price of the land at the time of taking, not its value after the passage of time, represents the true value to be paid as just compensation. It was, therefore, error for the Court of Appeals to rule that the just compensation to be paid to
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respondent should be determined as of the filing of the complaint in 1990, and not the time of its taking by the NIA in 1981, because petitioner was allegedly remiss in its obligation to pay respondent, and it was respondent who filed the complaint. In the case of Burgos, it was also the property owner who brought the action for compensation against the government after 25 years since the taking of his property for the construction of a road. Issue: Whether damages should be awarded? Ruling: Yes. Undeniably, the MIAAs illegal occupation for more than twenty (20) years has resulted in pecuniary loss to Rodriguez and his predecessors-in-interest. Such pecuniary loss entitles him to adequate compensation in the form of actual or compensatory damages, which in this case should be the legal interest (6%) on the value of the land at the time of taking, from said point up to full payment by the MIAA. This is based on the principle that interest runs as a matter of law and follows from the right of the landowner to be placed in as good position as money can accomplish, as of the date of the taking. Petitioners claim that Rodriguez is a buyer in bad faith since prior to his purchase he was aware of the MIAAs occupation of the property and therefore proceeded with the purchase in anticipation of enormous profits from the subsequent sale to the MIAA. The point is irrelevant. Regardless of whether or not Rodriguez acted in bad faith, all that he will be entitled to is the value of the property at the time of the taking, with legal interest thereon from that point until full payment of the compensation by the MIAA. Besides, assuming the question is of any consequence, the circumstances surrounding Rodriguezs purchase may not even amount to bad faith. For more than twenty (20) years, the MIAA occupied the subject lot without the benefit of expropriation proceedings and without the MIAA exerting efforts to ascertain ownership of the lot and negotiating with any of the owners of the property. To our mind, these are wanton and irresponsible acts which should be suppressed and corrected. Hence, the award of exemplary damages and attorneys fees is in order. However, while Rodriguez is entitled to such exemplary damages and attorneys fees, the award granted by the courts below should be equitably reduced. We hold that Rodriguez is entitled only to P200,000.00 as exemplary damages, and attorneys fees equivalent to one percent (1%) of the amount due.

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III. Co-ownership
A. Right of Redemption between co-owners excludes adjoining owners
Avila vs. Sps. Barabat G.R. No. 141993, March 17, 2006 Anunciacion Bahena vda. de Nemeo was the original owner of a lot in Cebu. Upon her death, ownership of the lot was transferred by operation of law to her five children, petitioners in this case. These heirs built their respective houses on the lot. In 1964, respondent Benjamin Barabat leased a portion of the house owned by Avila. His co-respondent, Jovita Barabat, moved in with him in 1969 when they got married. Avila subsequently relocated to Cagayan de Oro City. She came back to Cebu in July 1979 to sell her house and share in the lot to her siblings but no one showed interest in it. She then offered it to respondents who agreed to buy it. Their agreement was evidenced by a private document. Respondents stopped paying rentals to Avila and took possession of the property as owners. They also assumed the payment of realty taxes on it. They were confronted by petitioner Januario Adlawan who informed them that they had until March 1982 only to stay in Avilas place because he was buying the property. Respondents replied that the property had already been sold to them by Avila showing him the document. Afterwards they received a letter from Atty. Joselito Alo informing them that Avila had sold her house and share to his clients, the spouses Januario and Nanette Adlawan. Considering the sale to the spouses Adlawan as prejudicial to their title and peaceful possession of the property, they demanded that Avila execute a public document evidencing the sale of the property to them but Avila refused. Respondents filed a complaint for quieting of title with the RTC. It decided in favor of respondents. CA affirmed in toto. Issue 1: WON the transaction between Avila and Respondents is valid as an absolute sale? Ruling: Yes. For Articles 1602 and 1604 (on equitable mortgage) to apply, two requisites must concur: (1) the parties entered into a contract denominated as a contract of sale and (2) their intention was to secure an existing debt by way of mortgage. Here, both the trial and appellate courts found that Exhibit A evidenced a contract of sale. They also agreed that the circumstances of the case show that Avila intended her agreement with respondents to be a sale. Both courts were unanimous in finding that the subsequent acts of Avila revealed her intention to absolutely convey the disputed property. It was only after the perfection of the contract, when her siblings began protesting the sale, that she wanted to change the agreement. Furthermore,
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contrary to petitioners claim, the trial court found that it was respondents who took over the payment of real property taxes after the execution of Exhibit A. Petitioners claim of gross inadequacy of selling price has no basis. They failed to introduce evidence of the correct price at the time the land was sold to respondents in 1979. How can we therefore conclude that the price was grossly inadequate? In the absence of evidence as to the fair market value of a parcel of land at the time of its sale, we cannot reasonably conclude that the price at which it was sold was inadequate Issue 2: WON the right of redemption of co-owners excludes that of adjoining owners? Ruling: Yes. Petitioners right to redeem would have existed only had there been coownership among petitioners-siblings. But there was none. For this right to be exercised, co-ownership must exist at the time the conveyance is made by a co-owner and the redemption is demanded by the other co-owner or co-owners. However, by their own admission, petitioners were no longer co-owners when the property was sold to respondents in 1979. The co-ownership had already been extinguished by partition. Every act intended to put an end to indivision among co-heirs is deemed to be a partition. Here, the particular portions pertaining to petitioners had been ascertained and they in fact already took possession of their respective parts The purpose of partition is to separate, divide and assign a thing held in common among those to whom it belongs. By their own admission, petitioners already segregated and took possession of their respective shares in the lot. Their respective shares were therefore physically determined, clearly identifiable and no longer ideal. Thus, the co-ownership had been legally dissolved. With that, petitioners right to redeem any part of the property from any of their former co-owners was already extinguished. As legal redemption is intended to minimize co-ownership, once a property is subdivided and distributed among the co-owners, the community ceases to exist and there is no more reason to sustain any right of legal redemption Under the law (Article 1622 of the Civil Code) , subject to certain conditions, owners of adjoining urban land have the pre-emptive right to a lot before it is sold to third parties, or the redemptive right if it has already been sold. However, this provision does not apply here. Aside from the fact that petitioners never raised it as an issue, the conditions provided for its application were not met. While the property may be considered as urban land, it was not shown or even alleged that its area and location would render a major portion of no practical use within a reasonable time. Neither was there any allegation to the effect that the disputed property was bought merely for speculation.
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B. No Co-Ownership in adulterous relationship


Rivera vs. Heirs of Villanueva G.R. No. 141501, July 21, 2006 Petitioners are allegedly the half-brothers (Elino and Dominador), the halfsister-in-law (Soledad), and the children of a half-brother (Teofila and Cecilia) of the deceased Pacita Gonzales (hereinafter Gonzales). Respondents Catalino, Lucia, Purificacion and Melchor, all surnamed Villanueva, and Arnaldo vs. Avendano are allegedly the siblings, full and half-blood of Romualdo Villanueva (hereinafter Villanueva). They are denominated as the heirs of Villanueva and are represented by Melchor. The remaining respondents, Angelina Villanueva (hereinafter respondent Angelina) and husband Victoriano de Luna, are allegedly the daughter and the son-in-law, respectively, of the late Villanueva. From 1927 until her death in 1980, Gonzales cohabited with Villanueva without the benefit of marriage because the latter was married to one Amanda Musngi who died on April 20, 1963. In the course of their cohabitation, they acquired several properties including the properties involved in this case. Gonzales died on July 3, 1980 without leaving a will. On August 1980, Villanueva and respondent Angelina executed a deed of extrajudicial partition with sale, that is, an extrajudicial settlement of Gonzales estate comprising a number of the disputed properties. Petitioners (Gonzales half-brothers, etc.) filed a case for partition of Gonzales estate and annulment of titles and damages with the RTC of Nueva Ecija. The RTC rendered a decision dismissing the complaint. The CA affirmed the RTC decision. Issue: WON the properties acquired by Gonzales and Villanueva during their cohabitation were equally owned by them Ruling: No. According to the trial court Gonzales and Villanueva lived together without the benefit of marriage and therefore their property relations were governed by Article 144 of the Civil Code: Art. 144. When a man and a woman live together as husband and wife, but they are not married, or their marriage is void from the beginning, the property acquired by either or both of them through their work or industry or their wages and salaries shall be governed by the rules on coownership. However, the contending parties agreed that the relationship of Villanueva and Gonzales was adulterous, at least until the death of Amanda Musngi, Villanuevas
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legal wife, on April 20, 1963. While Romualdo Villanueva claimed that he and Pacita C. Gonzales lived as husband and wife and that they were married, it turned out that he was not legally married to the latter, for then, his marriage in the year 1927, was still subsisting with one Amanda Musngi. Because the cohabitation of Villanueva and Gonzales from 1927 to 1963 was adulterous, their property relations during those 36 years were not governed by Article 144 of the Civil Code which applies only if the couple living together is not in any way incapacitated from getting married. According to the doctrine laid down by Juaniza vs. Jose, no co-ownership exists between parties to an adulterous relationship. In Agapay vs. Palang, 342 Phil. 302 (1997), we expounded on this doctrine by declaring that in such a relationship, it is necessary for each of the partners to prove his or her actual contribution to the acquisition of property in order to be able to lay claim to any portion of it. Presumptions of co-ownership and equal contribution do not apply.

IV. Donation
Moralidad vs. Pernes G.R. No. 152809, August 3, 2006 Mercedes Moralidad (Petitioner) owned a parcel of land under TCT No. T123125 of the Registry of Deeds of Davao City. Petitioner acquired the lot property initially for the purpose of letting her niece, Arlene Pernes, move from Mandug to Davao City but later she wanted the property to be also available to any of her kin wishing to live and settle in Davao City. Petitioner made this intention in a document she executed on July 21, 1986. The document reads: I, MERCEDES VINA MORALIDAD, of legal age, single, having been born on the 29 th day of January, 1923, now actually residing at 8021 Lindberg Boulevard, Philadelphia, Pennsylvania, U.S.A., wishes to convey my honest intention regarding my properties situated at Palm Village Subdivision, Bajada, Davao City, 9501, and hereby declare: 1. That it is my desire that Mr. and Mrs. Diosdado Pernes may build their house therein and stay as long as they like; 2. That anybody of my kin who wishes to stay on the aforementioned property should maintain an atmosphere of cooperation, live in harmony ad must avoid bickering with one another; 3. That anyone of my kin may enjoy the privilege to stay therein and may avail the use thereof. Provided, however, that the same is not inimical to the purpose thereof; 4. That anyone of my kin who cannot conform with the wishes of the undersigned may exercise the freedom to look for his own;
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5. That any proceeds or income derived from the aforementioned properties shall be allotted to my nearest kin who have less in life in greater percentage and lesser percentage to those who are better of in standing. Following her retirement in 1993, petitioner came back to the Philippines to stay with the respondents on the house they built on the subject property. In the course of time, their relationship turned sour which eventually ended up with petitioner filing an unlawful detainer suit against respondent spouses. Petitioner alleged that she is the registered owner of he land on which the respondents built their house; that through her counsel, she sent the respondent spouses a letter demanding them to vacate the premises and to pay rentals therefore, which the respondents failed to heed. In their defense, the respondents alleged having entered the property in question, building their house thereon and maintaining the same as their residence with petitioners full knowledge and express consent. To prove their point, they invited attention to her written declaration of July 21, 1986. The MTC ruled in petitioners favor. On appeal, the RTC reversed the order of the MTC, holding that respondents possession of the property in question was not by mere tolerance but rather by her express consent. Petitioner appealed the decision to the CA. The CA dismissed said appeal concluding that the ejectment suit was premature and affirmed the RTC decision. Issue 1: Whether a usufruct existed between petitioner and respondents? Ruling: Yes. Usufruct is defined under Article 562 of the Civil Code in the following wise: Art. 562. Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides. Usufruct, in essence, is nothing else but simply allowing one to enjoy anothers property. It is also defined as the right to enjoy the property of another temporarily, including both the jus utendi and the jus fruendi, with the owner retaining the jus disponendi or the power to alienate the same. It is undisputed that petitioner, in a document dated July 21, 1986, made known her intention to give respondents and her other kin the right to use and to enjoy the fruits of her property. There can also be no quibbling about the respondents being given the right to build their own house on the property and to stay thereat as long as they like. Paragraph #5 of the same document earmarks proceeds or income derived from the aforementioned properties for the petitioners nearest kin who have less in life in greater percentage to those who are better of in standing. The established facts undoubtedly gave
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respondents not only the right to use the property but also granted them, among the petitioners other kin, the right to enjoy the fruits thereof. Issue 2: Whether the existing usufruct may be deemed to have been extinguished or terminated? Ruling: Terminated. The term or period of the usufruct originally specified provides only one of the bases for the right of a usufructuary to hold and retain possession of the thing given in usufruct. There are other modes or instances whereby the usufruct shall be considered terminated or extinguished. For sure, the Civil Code enumerates such other modes of extinguishment: ART. 603. Usufruct is extinguished: (1) By the death of the usufructuary, unless a contrary intention clearly appears; (2) By expiration of the period for which it was constituted, or by the fulfillment of any resolutory condition provided in the title creating the usufruct ; (3) By merger of the usufruct and ownership in the same person; (4) By renunciation of the usufructuary; (5) By the total loss of the thing in usufruct; (6) By the termination of the right of the person constituting the usufruct; (7) By prescription. The document executed by the petitioner dated July 21, 1986 constitutes the title creating, and sets for the conditions of, the usufruct. Paragraph #3 thereof states That anyone of my kin may enjoy the privilege to stay therein and may avail the use thereof. Provided, however, that the same is not inimical to the purpose thereof. What may be inimical to the purpose constituting the usufruct may be gleaned from the preceding paragraph wherein petitioner made it abundantly clear that anybody of my kin who wishes to stay on the aforementioned property should maintain an atmosphere of cooperation, live in harmony and must avoid bickering with one another. That the maintenance of a peaceful and harmonious relations between and among kin constitutes an indispensable condition for the continuance of the usufruct is clearly deduced from the succeeding Paragraph # 4 where petitioner stated That anyone of my kin who cannot conform with the wishes of the undersigned may exercise the freedom to look for this own. In fine, the occurrence of any of the following: the loss of the atmosphere of cooperation, the bickering or the cessation of harmonious relationship between/ among kin constitutes a resolutory condition which, by express wish of the petitioner, extinguishes the usufruct. To reiterate, the relationship between the petitioner and respondents respecting the property in question is one of owner and usufructuary. Accordingly, respondents claim for reimbursement of the improvements they introduced on the property during
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the effectivity of the usufruct should be governed by applicable statutory provisions and principles on usufruct. In this regard, we cite with approval what Justice Edgardo Parras wrote on the matter: If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In case like this, the terms of the contract and the pertinent provisions of law should govern (3 Manresa 215-216; see also Montinola vs. Bantug, 71 Phil 449). By express provision of law, respondents, as usufructuary, do not have the right to reimbursement for the improvements they may have introduced on the property. We quote Articles 579 and 580 of the Civil Code: ART. 579 . The usufructuary may make on the property held in usufruct such useful improvements or expenses for mere pleasure as he may deem proper, provided he does not alter its form or substance; but he shall have no right to be indemnified therefor. He may, however, remove such improvements, should it be possible to do so without damage to the property. ART. 580. The usufructuary may set off the improvements he may have made on the property against any damage to the same. Given the foregoing perspective, respondents will have to be ordered to vacate the premises without any right of reimbursement. If the rule on reimbursement or indemnity were otherwise, then the usufructuary might, as an author pointed out, improve the owner out of his property. The respondents may, however, remove or destroy the improvements they may have introduced thereon without damaging the petitioners property.

LAND TITLES and DEEDS


A. Indefeasibility of the Torrens Title
Fil. Estate vs. Trono G.R. No. 130871, February 17, 2006 Respondents application for registration of a parcel of land already covered by a Torrens title is actually a collateral attack against petitioners title not permitted under the principle of indefeasibility of a Torrens title. It is well settled that a Torrens title cannot be collaterally attacked; the issue on the validity of title, i.e., whether or not it was fraudulently issued, can only be raised in an action expressly instituted for the purpose. Hence, whether or not respondents have the right to claim title over the property in question is beyond the province of the instant proceeding. That
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should be threshed out in a proper action. It has been invariably stated that the real purpose of the Torrens System is to quiet title to land and to stop forever any question as to its legality. Once a title is registered, the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting on the mirador su casa to avoid the possibility of losing his land. In Ramos vs. Rodriguez (244 SCRA 418), we held: It must be noted that petitioners failed to rebut the LRA report and only alleged that the title of the Payatas Estate was spurious, without offering any proof to substantiate this claim. TCT No. 8816, however, having been issued under the Torrens System, enjoys the conclusive presumption of validity. As we declared in an earlier case (Reyes and Nadres vs. Borbon and Director of Lands, 50 Phil. 791), the very purpose of the Torrens system would be destroyed if the same land may be subsequently brought under a second action for registration. The application for registration of the petitioners in this case would, under the circumstances, appear to be a collateral attack of TCT No. 8816 which is not allowed under Section 48 of P.D. 1529. (underscoring ours) Corollarily, Section 32 of the same law states: Sec. 32. Review of decree of registration; Innocent purchaser for value. The decree of registration shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgment, subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein whose rights may be prejudiced. Whenever the phrase innocent purchaser for value or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value. Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become incontrovertible. Any person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or any other person responsible for the fraud. A decree of registration that has become final shall be deemed conclusive not only on the questions actually contested and determined, but also upon all matters that might be litigated or decided in the land registration proceedings.
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B. Good Faith Buyer


Naval vs. Camalla G.R. No. 167412, February 22, 2006 While we agree with the appellate court that respondents have superior right over the petitioner on the subject property, we find Article 1544 inapplicable to the case at bar since the subject land was unregistered at the time of the first sale. The registration contemplated under this provision has been held to refer to registration under the Torrens System, which considers the act of registration as the operative act that binds the land. 28 Thus, in Carumba vs. Court of Appeals, we held that Article 1544 of the Civil Code has no application to land not registered under Torrens System. The law applicable therefore is Act No. 3344, which provides for the registration of all instruments on land neither covered by the Spanish Mortgage Law nor the Torrens System. Under this law, registration by the first buyer is constructive notice to the second buyer that can defeat his right as such buyer in good faith. Applying the law, we held in Bautista vs. Fule that the registration of an instrument involving unregistered land in the Registry of Deeds creates constructive notice and binds third person who may subsequently deal with the same property. We also held in Bayoca vs. Nogales 31 that: Verily, there is absence of prior registration in good faith by petitioners of the second sale in their favor. As stated in the Santiago case, registration by the first buyer under Act No. 3344 can have the effect of constructive notice to the second buyer that can defeat his right as such buyer. On account of the undisputed fact of registration under Act No. 3344 by [the first buyers], necessarily, there is absent good faith in the registration of the sale by the [second buyers] for which they had been issued certificates of title in their names. It follows that their title to the land cannot be upheld. Even if petitioner argues that she purchased and registered the subject land in good faith and without knowledge of any adverse claim thereto, respondents still have superior right over the disputed property. We held in Rayos vs. Reyes 32 that: [T]he issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is registered land and the purchaser is buying the same from the registered owner whose title to the land is clean . . . in such case the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value. Since the properties
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in question are unregistered lands, petitioners as subsequent buyers thereof did so at their peril. Their claim of having bought the land in good faith, i.e., without notice that some other person has a right to or interest in the property, would not protect them if it turns out, as it actually did in this case, that their seller did not own the property at the time of the sale. It is an established principle that no one can give what one does not have, nemo data quod non habet. Accordingly, one can sell only what one owns or is authorized to sell, and the buyer can acquire no more than what the seller can transfer legally. In the case at bar, since Ildefonso no longer owned the subject land at the time of the sale to the petitioner, he had nothing to sell and the latter did not acquire any right to it. True, a certificate of title, once registered, should not thereafter be impugned, altered, changed, modified, enlarged or diminished except in a direct proceeding permitted by law. Moreover, Section 32 of Presidential Decree No. 1529 provides that upon the expiration of said period of one year, the decree of registration and the certificate of title shall become incontrovertible. However, it does not deprive an aggrieved party of a remedy in law. What cannot be collaterally attacked is the certificate of title and not the title or ownership which is represented by such certificate. Ownership is different from a certificate of title. The fact that petitioner was able to secure a title in her name did not operate to vest ownership upon her of the subject land. Registration of a piece of land under the Torrens System does not create or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the expense of others. Its issuance in favor of a particular person does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner. As correctly held by the Court of Appeals, notwithstanding the indefeasibility of the Torrens title, the registered owner may still be compelled to reconvey the registered property to its true owners. The rationale for the rule is that reconveyance does not set aside or re-subject to review the findings of fact of the Bureau of Lands. In an action for reconveyance, the decree of registration is respected as incontrovertible. What is sought instead is the transfer of the property or its title which has been wrongfully or erroneously registered in another persons name, to its rightful or legal owner, or to the one with a better right.

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Bautista vs. Silva G.R. No. 157434, September 19, 2006 That Transfer Certificate of Title No. B-37189 of the Registry of Deeds over a parcel of land situated in Barrio of Parada, Valenzuela, Metro Manila, containing an area of 216 square meters, was registered in the names of Spouses Berlina F. Silva and Pedro M. Silva on August 14, 1980 On March 1988, Pedro M. Silva, for himself and as attorney-in-fact of his wife Berlina F. Silva, thru a Special Power of Attorney purportedly executed on November 1987 by Berlina F. Silva in his favor, signed and executed a Deed of Absolute Sale over the said parcel of land covered by Transfer Certificate of Title No. B-37189 in favor of defendants-spouses Claro Bautista and Nida Bautista TCT No. 37189 was cancelled and in lieu thereof, TCT No. V-2765 of the Registry of Deeds for the Valenzuela Branch was issued in the names of Spouses Claro Bautista and Nida Bautista on March 1988. Berlinda filed in the RTC an action for Annulment of Deed of Absolute Sale and TCT No. V-2765, Reconveyance and Damages. The RTC rendered a decision in favor of Silva. The CA affirmed the RTCs decision. Issue: Who is a buyer for value in good faith? Ruling: A buyer for value in good faith is one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. He buys the property with the well-founded belief that the person from whom he receives the thing had title to the property and capacity to convey it. To prove good faith, a buyer of registered and titled land need only show that he relied on the face of the title to the property. He need not prove that he made further inquiry for he is not obliged to explore beyond the four corners of the title. Such degree of proof of good faith, however, is sufficient only when the following conditions concur: first, the seller is the registered owner of the land; second, the latter is in possession thereof; and third, at the time of the sale, the buyer was not aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his capacity to convey title to the property. Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and obliges the latter to exercise a higher degree of diligence by scrutinizing the certificate of title and examining all factual circumstances in order to determine the sellers title and capacity to transfer any interest in the property.
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Under such circumstance, it is no longer sufficient for said buyer to merely show that he relied on the face of the title; he must now also show that he exercised reasonable precaution by inquiring beyond the title. Failure to exercise such degree of precaution makes him a buyer in bad faith.

C. Direct and Collateral Attack on Certificate of Tile


Diaz vs. Virata G.R. No. 162037, August 7, 2006

When is an action a direct attack and when is it collateral? This Court made a distinction, to wit: An action is deemed an attack on a title when the object of the action or proceeding is to nullify the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of the action is to annul or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.

D. Recon veyance
1. Property held in Trust Cervantes vs. Madarcos G.R. No. 146050, September 27, 2006 In connection, and in relation to the issue of prescription, since the land in question was evidently obtained by private respondent through fraudulent machinations by means of which a free patent and title were issued in his name, he is deemed to have held it in trust for the benefit of petitioner who was prejudiced by his actions. The Civil Code provides: ARTICLE 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. The remedy of reconveyance, which has its basis on Section 53 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, and the foregoing article of the Civil Code, is available to petitioner as alleged and prayed for in his pleading.
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An action for reconveyance based on an implied trust prescribes in ten years from the issuance of the Torrens title over the property. Here, private respondents certificate of title was issued on April 6, 1977. Petitioner previously initiated a similar case, Civil Case No. 1505, against respondent on September 8, 1981 which had the effect of suspending the prescriptive period until it was dismissed by the Court of First Instance of Palawan on October 21, 1981. The present case was later on filed on May 18, 1987. Clearly, the present action is not barred by prescription. 2. Application of Res Judicata Villarino vs. Avila G.R. No. 131191, September 26, 2006 Spouses Villarino filed an action for Annulment of Title, Reconveyance, respondent (AVILAS). The property sought to be reconveyed was a portion of Lot No. 967 situated in San Fernando, Cebu and covered by OCT No. 1035. Said title was issued to the Avilas, as the culmination of the land registration proceedings. In said case, the Villarino spouses opposed the application of the Avilas for the registration of Lot No. 967 on the ground that a portion of Lot No. 967 encroached upon Lot No. 968 to the extent of 2,146 square meters. Lot No. 968 is the adjacent property belonging to the Villarino spouses per OCT No. 14601 issued in their names. The decision in the LRC Case had become final and executory. The corresponding decree of registration was issued on January 1989, paving the way for the issuance of OCT No. 1035 in the name of the Avilas. The Villarino spouses averred that the registration of Lot No. 967 was based on an erroneous survey and technical description. They sought the reconveyance of the disputed area and the cancellation of OCT No. 1035 to reflect the consequent reduction in area. The RTC dismissed the case. The CA affirmed the RTCs decision. Issue: Whether the action instituted by the Villarino Spouses is barred by res judicata. Ruling: Yes. For res judicata to serve as an absolute bar to a subsequent action, the following requisites must concur: (1) the former judgment or order must be final; (2) the judgment or order must be on the merits; (3) it must have been rendered by a court having jurisdiction over the subject matter and parties; and (4) there must be between the first and second actions, identity of parties, of subject matter, and of causes of action.
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When there is no identity of causes of action, but only an identity of issues, there exists res judicata in the concept of conclusiveness of judgment. Although it does not have the same effect as res judicata in the form of bar by former judgment which prohibits the prosecution of a second action upon the same claim, demand, or cause of action, the rule on conclusiveness of judgment bars the relitigation of particular facts or issues in another litigation between the same parties on a different claim or cause of action. All the elements of res judicata in the mode of bar by prior judgment are present in the instant case. The final decision in LRC Case No. N-1175, which has long been executed, is a bar to the civil case filed by petitioners. There is no question that said decision was an adjudication on the merits. Petitioners and respondents were the same party litigants in LRC Case No. N-1175 and in Civil Case No. CEB-13599. Petitioners claim that the disputed portion is covered by their title, but that it was erroneously included in the survey and technical description of Lot No. 967 subject of the Avilas land registration application. Precisely, that was the content and thrust of petitioners opposition to the Avilas land registration application. But the land registration court debunked the opposition and upheld the application. Petitioners could have appealed the decision of the land registration court. They did not. Their failure to do so rendered said decision final and executory. After the finality of the decision, the decree of registration and the certificate of title were issued as a matter of course. The final decision has appropriately engendered the application of the principle of res judicata.

E. Reconstitution of Title
Subido vs. Republic G.R. No. 152149, April 25, 2006 As may be noted, Section 13 of R.A. No. 26 specifically enumerates the manner of notifying interested parties of the petition for reconstitution, namely: (a) publication in the Official Gazette; (b) posting on the main entrance of the provincial capitol building and of the municipal building of the municipality or city in which the land is situated; and (c) by registered mail or otherwise, to every person named in the notice. The notification process being mandatory, non-compliance with publication and posting requirements would be fatal to the jurisdiction of the reconstituting trial court and invalidates the whole reconstitution proceedings. So would failure to notify, in the manner specifically prescribed in said Section 13, interested persons of the initial hearing date. Contextually, Section 13 particularly requires that the notice of the hearing be sent to the property occupant or other persons interested, by registered mail or otherwise. The term otherwise could only contemplate a notifying mode other
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than publication, posting, or thru the mail. That other mode could only refer to service of notice by hand or other similar mode of delivery. It cannot be over-emphasized that R.A. No. 26 specifically provides the special requirements and procedures that must be followed before the court can properly act, assume and acquire jurisdiction over the petition and grant the reconstitution prayed for. These requirements, as the Court has repeatedly declared, are mandatory. Publication of notice in the Official Gazette and the posting thereof in provincial capitol and city/municipal buildings would not be sufficient. The service of the notice of hearing to parties affected by the petition for reconstitution, notably actual occupant/s of the land, either by registered mail or hand delivery must also be made. In the case at bar, the posting of the notice at the place where TCT No. 95585 is situated is not, as urged by petitioner, tantamount to compliance with the mandatory requirement that notice by registered mail or otherwise be sent to the person named in the notice. In view of what amounts to a failure to properly notify parties affected by the petition for reconstitution of the date of the initial hearing thereof, the appellate court correctly held that the trial court indeed lacked jurisdiction to take cognizance of such petition. And needless to stress, barring the application in appropriate cases of the estoppel principle, a judgment rendered by a court without jurisdiction to take cognizance of the case is void, ergo, without binding legal effect for any purpose.

Government vs. Wee G.R. No. 147212, March 24, 2006 Respondent Salvador Wee (Wee) contends that pursuant to an Extra-Judicial Settlement of Estate with Sale, he acquired from the heirs of Francisco Rivera the parcel of land subject of the petition The copy of the Original Certificate of Title No. 0-10046 was lost and/or destroyed, as evidenced by the certification issued by the Register of Deeds of Zamboanga City The property was declared by Francisco Rivera for taxation purposes. No coowners, mortgagees or lessees duplicate copy of the certificate of title has been issued. No deed or other instrument adversely affecting the ownership of the property has been presented for registration in the Register of Deeds of Zamboanga City. Wee filed Cadastral Case No. 96-1 on January 2, 1996, seeking the judicial reconstitution of Original Certificate of Title No. 0-10046. The RTC issued its Order allowing reconstitution of Original Certificate of Title No. 0-10046. The CA affirmed the RTCs decision.
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Issue: WON the reconstitution Ruling: No.

RTC

acquired

jurisdiction

over

the

action

for

Petitioner reiterates its argument that the trial court did not acquire jurisdiction over the case for non-compliance with the jurisdictional requirements set in Section 13 of R.A. No. 26. Substantial compliance with the jurisdictional requirements laid down in Sections 12 and 13 of R.A. No. 26 is not enough; the trial courts acquisition of jurisdiction over the reconstitution case is hinged on a strict compliance with the requirements of the law. It must be stressed that the purposes of the stringent and mandatory character of the legal requirements of publication, posting and mailing are to safeguard against spurious and unfounded land ownership claims, to apprise all interested parties of the existence of such action, and to give them enough time to intervene in the proceeding. Where the authority to proceed is conferred by a statute and the manner of obtaining jurisdiction is mandatory, the same must be strictly complied with, or the proceedings will be utterly void. As such, the court upon which the petition for reconstitution of title is filed is duty-bound to examine thoroughly the petition for reconstitution of title and review the record and the legal provisions laying down the germane jurisdictional requirements. Lozano vs. Register of Deeds G.R. No. 166899, August 10, 2006 The reconstitution of the title or deed is simply the re-issuance of the copy of the certificate of title allegedly lost or destroyed in its original form and condition. The purpose of the reconstitution of title or any document is to have the same reproduced, after observing the procedure provided by law, in the same form they were when the loss or destruction occurred. Section 41, second paragraph of Act No. 496 reads: Immediately upon the entry of the decree of registration the clerk shall send a certified copy thereof, under the seal of the court to the register of deeds for the province, or provinces or city in which the land lies, and the register of deeds shall transcribe the decree in a book to be called the Registration Book, in which a leaf, or leaves, in consecutive order, shall be devoted exclusively toe ach title. The entry made by the register of deeds in this book in each case shall be the original certificate of title, and
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shall be signed by him and sealed with the seal of the court. All certificates of title shall be numbered consecutively, beginning with number one. The register of deeds in each case make an exact duplicate of the original certificate, including the seal, but putting on it the words owners duplicate certificate, and deliver the same to the owner or to his attorney duly authorized. In case of a variance between the owners duplicate certificate and the original certificate the original shall prevail. The certified copy of the decree of registration shall be filed and numbered by the register of deeds with a reference noted on it to the place of record of the original certificate of title: Provided, however, That when an application includes land lying in more than one province or one province and the city of Manila, the court shall cause the part lying in each province or in the city of Manila to be described separately by metes and bounds in the decree of registration, and the clerk shall send to the register of deeds of each province, or the city of Manila, as the case may be, a copy of the decree containing a description of the land within that province or city, and the register of deeds shall register the same and issue an owners duplicate therefore, and thereafter for all matters pertaining to registration under this Act the portion in each province or city shall be treated as a separate parcel of land. Any title issued by the Register of Deeds, including the original copy on file in the Office of the Register of Deeds or the owners duplicate of said title, must bear the signature of the Register of Deeds. Hence, the owners duplicate copy of title relied upon by the petitioner must be authentic and not spurious. In the present case, the owners duplicate of TCT No. 17100 which petitioners adduced in evidence is not signed by the Register of Deeds, and does not even contain the number of the title certificate. After the words Certifico de Transferencio De Titulo No. is a blank space where the number of the title is supposed to be typewritten. The petitioners failed to explain why the owners duplicate of TCT No. 17100 does not contain such signature. Thus, the ruling of the CA that the owners duplicate presented by the petitioners is spurious is correct.

Calimpong vs. Heirs of Gumela G.R. No. 163751, March 31, 2006 The title of ownership on the land is vested upon the owner upon the expiration of the period to appeal from the decision or adjudication by the cadastral court, without such appeal having been perfected. The certificate of title would then be necessary for purposes of effecting registration of subsequent disposition of the land where court proceedings would no longer be necessary.

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As we have here a decree issued by the cadastral court, ordering the issuance to Inocencio de los Santos of the certificate of title over Lot No. 395 after the decision adjudicating ownership to him of the said property had already become final, and there being no imputation of irregularity in the said cadastral proceedings, title of ownership on the said adjudicatee was vested as of the date of the issuance of such judicial decree. The land, for all intents and purposes, had become from that time, registered property which could not be acquired by adverse possession. Whether a certificate of title was issued in the name of respondents predecessors-in-interest is immaterial. For, following De la Merced, the title of ownership on respondents predecessors-in-interest was vested as of 1927. The lot, for all intents and purposes, had become from said date registered property which could not be acquired by adverse possession and was, therefore, beyond the jurisdiction of the Land Management Bureau of the DENR (formerly the Bureau of Lands) to subject it to free patent. Under the provision of Act No. 2874 pursuant to which the title of private respondents predecessor in interest was issued, the President of the Philippines or his alter ego, the Director of Lands, has no authority to grant a free patent for land that has ceased to be a public land and has passed to private ownership, and a title so issued is null and void. The nullity arises not, from the fraud or deceit, but from the fact that the land is not under the jurisdiction of the Bureau of Lands. The jurisdiction of the Director of Lands is limited only to public lands and does not cover lands privately owned. The purpose of the legislature in adopting the former Public Land Act, Act No. 2874, was and is to limit its application to lands of the public domain, and lands held in private ownership are not included therein and are not affected in any manner whatsoever thereby. Land held in freehold or fee title, or of private ownership, constitute no part of the public domain and cannot possibly come within the purview of said Act No. 2874, inasmuch as the subject of such freehold or private land is not embraced in any manner in the title of the Act and the same are excluded from the provisions of the text thereof.

Republic vs. Sps. Sanchez G.R. No. 146081, July 17, 2006 In sum, RA 26 separates petitions for reconstitution of lost or destroyed certificates of title into two main groups with two different requirements and procedures. Sources enumerated in Sections 2(a), 2(b), 3(a), 3(b), and 4(a) of RA 26 are lumped under one group (Group A); and sources enumerated in Sections 2(c), 2(d), 2(e), 2(f), 3(c), 3(d), 3(e), and 3(f) are placed together under another group (Group B). For Group A, the requirements for judicial reconstitution are set forth in
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Section 10 in relation to Section 9 of RA 26; while for Group B, the requirements are in Sections 12 and 13 of the same law. There is no question that in [petitions for] reconstitution involving Sections 12 and 13 of RA 26, notices to adjoining owners and to the actual occupants of the land are mandatory and jurisdictional. But in petitions for reconstitution falling under Sections 9 and 10 of RA 26 where, as in the present case, the source is the owners duplicate copy, notices to adjoining owners and to actual occupants of the land are not required. When the law is clear, the mandate of the courts is simply to apply it, not to interpret or to speculate on it. Reconstitution proceedings under RA 26 has for their purpose the restoration in the original form and condition of a lost or destroyed instrument attesting the title of a person to a piece of land. Thus, reconstitution must be granted only upon clear proof that the title sought to be restored was indeed issued to the petitioner. Strict observance of this rule is vital to prevent parties from exploiting reconstitution proceedings as a quick but illegal way to obtain Torrens certificates of titles over parcels of land which turn out to be already covered by existing titles. The social and economic costs of such modus operandi cannot be underestimated. As was observed by the SC in Director of Lands vs. Court of Appeals: The efficacy and integrity of the Torrens System must be protected and preserved to ensure the stability and security of land titles for otherwise land ownership in the country would be rendered erratic and restless and can certainly be a potent and veritable cause of social unrest and agrarian agitation. . . . . The real purpose of the Torrens System which is to quiet title to the land must be upheld and defended, and once a title is registered, the owner may rest secure, without the necessity of waiting in the portals of the court or sitting in the mirador de su casa to avoid the possibility of losing his land.

Republic vs. Jacob G.R. No. 146874, July 20, 2006 Section 48(b) of Commonwealth Act No. 141, as amended by Republic Act No. 1942, reads: Section 48.The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit:
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(b) Those who by themselves or through their predecessors in-interest therein 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, for at least thirty years immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter. This provision was further amended by Presidential Decree (P.D.) No. 1903 by substituting the phrase for at least thirty years with since June 12, 1945, thus: Sec. 4. The provisions of Section 48(b) and Section 48(c), Chapter VIII, of the Public Land Act are hereby amended in the sense that these provisions shall apply only to alienable and disposable lands of the public domain which have been in open, continuous, exclusive and notorious possession, and occupation by the applicant himself or through his predecessor-in-interest, under a bona fide claim of acquisition of ownership, since June 12, 1945 Section 14(1) of P.D. No. 1529, otherwise known as the Property Registration Decree, likewise provides: SEC. 14. Who may apply. The following persons may file in the proper Court of First Instance [now Regional Trial Court] 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 Applicants for confirmation of imperfect title must, therefore, prove the following: (a) that the land forms part of the disposable and alienable agricultural lands of the public domain; and (b) that they have been in open, continuous, exclusive, and notorious possession and occupation of the same under a bona fide claim of ownership either since time immemorial or since June 12, 1945. Under the Regalian doctrine, all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State. The presumption is that lands of whatever classification belong to the State. Unless public land is shown to have been reclassified as alienable or disposable to a private person by the State, it remains part of the inalienable public domain. Property of the public domain is beyond the commerce of man and not susceptible of private appropriation and
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acquisitive prescription. Occupation thereof in the concept of owner no matter how long cannot ripen into ownership and be registered as a title. The statute of limitations with regard to public agricultural lands does not operate against the State unless the occupant proves possession and occupation of the same after a claim of ownership for the required number of years to constitute a grant from the State. No public land can be acquired by private persons without any grant from the government, whether express or implied. It is indispensable that there be a showing of a title from the State. The rationale for the period since time immemorial or since June 12, 1945 lies in the presumption that the land applied for pertains to the State, and that the occupants or possessor claim an interest thereon only by virtue of their imperfect title as continuous, open and notorious possession. In the present case, when private respondent filed her application with the RTC on May 6, 1994, Lot No. 4094 was no longer alienable and disposable property of the public domain, since as of August 14, 1970, by virtue of Proclamation No. 739, it was segregated from the public domain and declared part of the reservation for the development of geothermal energy. 25 Private respondent filed her application for confirmation 24 years after the said proclamation was issued; thus, the period of her possession and occupancy after such proclamation can no longer be tacked in favor of the claimant.

D. Cadastral Proceedings
Veranga vs. Republic G.R. No. 149114, July 21, 2006 Under the Cadastral System, pursuant to initiative on the part of the Government, titles for all the land within a stated area, are adjudicated whether or not the people living within this district desire to have titles issued. The purpose, as stated in section one of the Cadastral Act (No. 2259), is to serve the public interests, by requiring that the titles to any lands be settled and adjudicated. Admitting that such compulsory registration of land and such excessive interference with private property constitutes due process of law and that the Acts providing for the same are constitutional, a question not here raised, yet a study of the law indicates that many precautions are taken to guard against injustice. The proceedings are initiated by a notice of survey. When the lands have been surveyed and plotted, the Director of Lands, represented by the Attorney General, files a petition in court praying that the titles to the lands named be settled and adjudicated. Notice of the filing of the petition is then published twice in successive issues of the Official Gazette in both the English and Spanish languages. All persons interested are given the benefit of assistance by competent officials and are informed of their rights. A trial is had. All conflicting interests shall be adjudicated by the court and
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decrees awarded in favor of the persons entitled to the lands or the various parts thereof, and such decrees, when final, shall be the bases of original certificates of title in favor of said persons. (Act No. 2259, Sec. 11.) Aside from this, the commotion caused by the survey and a trial affecting ordinarily many people, together with the presence of strangers in the community, should serve to put all those affected on their guard. After trial in a cadastral case, three actions are taken. The first adjudicates ownership in favor of one of the claimants. This constitutes the decision the judgment the decree of the court, and speaks in a judicial manner. The second action is the declaration by the court that the decree is final and its order for the issuance of the certificates of title by the Chief of the Land Registration Office. Such order is made if within thirty days from the date of receipt of a copy of the decision no appeal is taken from the decision. This again is judicial action, although to a less degree than the first. The third and last action devolves upon the General Land Registration Office. This office has been instituted for the due effectuation and accomplishment of the laws relative to the registration of land. (Administrative Code of 1917, Sec. 174.) An official found in the office, known as the chief surveyor, has as one of his duties to prepare final decrees in all adjudicated cases. (Administrative Code of 1917, Sec. 177.) This latter decree contains the technical description of the land and may not be issued until a considerable time after the promulgation of the judgment. The form of the decree used by the General Land Registration Office concludes with the words: Witness, the Honorable (name of the judge), on this the (date). The date that is used as authority for the issuance of the decree is the date when, after hearing the evidence, the trial court decreed the adjudication and registration of the land. The judgment in a cadastral survey, including the rendition of the decree, is a judicial act. As the law says, the judicial decree when final is the base of the certificate of title. The issuance of the decree by the Land Registration Office is ministerial act. The date of the judgment, or more correctly stated, the date on which the defeated party receives a copy of the decision, begins the running of the time for the interposition of a motion for a new trial or for the perfection of an appeal to the Supreme Court. The date of the title prepared by the Chief Surveyor is unimportant, for the adjudication has taken place and all that is left to be performed is the mere formulation of the technical description. If an unknown individual could wait possibly years until the day before a surveyor gets around to transcribing a technical description of a piece of land, the defeated party could just as reasonably expect the same consideration for his appeal. As a matter of fact, the so-called unknown is a party just as much as the known oppositor for notice is to all the world, and the decree binds all the world.

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Sps. Rodriguez vs. CA G.R. No. 142687, July 20, 2006

The Property Registration Decree requires that the deed of sale with assumption of mortgage be registered with the Register of Deeds in order to be binding on third persons. The law provides: Sec. 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. It is admitted in this case that the deed of sale with assumption of mortgage was not registered, but instead, respondents Barrameda filed an affidavit of adverse claim with the Register of Deeds. In the case at bar, the reason given for the nonregistration of the deed of sale with assumption of mortgage was that the owners duplicate copy of the certificate of title was in the possession of HMDF. It was not shown, however, that either respondents Barrameda or respondents Calingo exerted any effort to retrieve the owners duplicate copy from the HMDF for the purpose of registering the deed of sale with assumption of mortgage. In fact, the parties did not even seek to obtain the consent of, much less inform, the HMDF of the sale of the property. Again, we stress that the annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of property where the registration of such interest or right is not otherwise provided for by the law on registration of real property. The deed of sale with assumption of mortgage executed by respondents Calingo and Barrameda is a registerable instrument. In order to bind third parties, it must be registered with the Office of the Register of Deeds. It was not shown in this case that there was justifiable reason why the deed could not be registered. Hence, the remedy of adverse claim cannot substitute for registration.

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Caoibes vs. Pantoja-Caoibes G.R. No. 162873, July 21, 2006 The agreement of the parties is analogous to a deed of sale in favor of respondent, it having transferred ownership for and in consideration of her payment of the loan in the principal amount of P19,000 outstanding in the name of one Guillermo C. Javier. The agreement having been made through a public instrument, the execution was equivalent to the delivery of the property to respondent. In respondents complaint for specific performance, she seeks to enforce the agreement for her to be subrogated and/or substituted as applicant in the land registration proceeding over Lot 2. The agreement is of course in consonance with Sec. 22 of P.D. 1529 (Property Registration Decree which became effective on June 11, 1978) reading: SEC. 22. Dealings with land pending original registration. After the filing of the application and before the issuance of the decree of registration, the land therein described may still be the subject of dealings in whole or in part, in which case the interested party shall present to the court the pertinent instruments together with the subdivision plan approved by the Director of Lands in case of transfer of portions thereof, and the court, after notice to the parties, shall order such land registered subject to the conveyance or encumbrance created by said instruments, or order that the decree of registration be issued in the name of the person to whom the property has been conveyed by said instruments. The law does not require that the application for registration be amended by substituting the buyer or the person to whom the property has been conveyed for the applicant. Neither does it require that the buyer or the person to whom the property has been conveyed be a party to the case. He may thus be a total stranger to the land registration proceedings. The only requirements of the law are: (1) that the instrument be presented to the court by the interested party together with a motion that the same be considered in relation with the application; and (2) that prior notice be given to the parties to the case. In light of the law and jurisprudence, the substitution by respondent of petitioners as applicant in the land registration case over Lot 2 is not even necessary. All respondent has to do is to comply with the requirements under the above-quoted Sec. 22 of the Property Registration Decree. Ergo, it was unnecessary for respondent to file the case for specific performance subject of the present petition against petitioners to honor their agreement allowing her to be substituted in their stead as applicant in the land registration proceeding.

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E. Relocation Survey
Tabaniag vs. Tanque G.R. No. 144024, July 27, 2006 Plaintiff Margarito Tanque (TANQUE) is the son of Anastasio Tanque who, during his lifetime, owned and possessed a parcel of land with an area of 47,443 square meters situated at Tubungan, Iloilo. Upon the death of his father on December 1966, Tanque took over the ownership and possession of the said land and declared the same in his name for taxation purposes. He has, since then, paid the real property taxes on the land until the present time. When the lands in Tubungan, Iloilo were cadastrally surveyed by the Bureau of Lands in 1982, Tanques parcel of land was surveyed and identified as Cadastral Lot 2104 with an area of 4.7433 hectares. On February 1986, OCT No. F-31883 was issued to Tanque based on Free Patent No. 17553 obtained from the Bureau of Lands. In 1988, defendant Pedro Tagabi (TAGABI) asserted ownership over a portion of Cadastral Lot 2104 with an area of 654 square meters, claiming that the same forms part of Cadastral Lot 2097 which is owned by him. Without the knowledge and consent of Tanque, Tagabi had the said portion entered into by his co-defendant, Demetrio Tabaniag, who planted the same with palay and corn. Tanque went to the Bureau of Lands and asked that Cadastral Lot 2104 be relocated to determine whether a portion was encroached upon by Tagabi. The relocation survey was made by Geodetic Engineer Ernesto Ciriaco in the presence of both Tanque Tababi and Tabaniag. It was found out that, indeed, a portion with an area of 654 square meters within lot 2104 was encroached upon by the defendants. Tanque filed an action in court to recover possession of the disputed portion. The RTC rendered a decision in favor of Tanque. The appeal of the defendants in the CA was dismissed upon motion of Tanque. Issue: WON the defendants are bound by the findings of the courtappointed commissioner showing that the questioned area of 654 square meters is inside Cadastral Lot 2104. Ruling: Yes. The Order of the Bureau of Lands was issued at the instance of both parties and this Order categorically states that the relocation survey should be made to ascertain whether the disputed portion is within Cadastral Lot 2097 or 2104 of the
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Cadastral Survey of Tubungan, Iloilo. Since the lots to be relocated are cadastral lots, it is but logical and proper that the relocation survey should be conducted on the basis of the data gathered during the cadastral survey. According to Geodetic Engineer Filomeno Dano, both plaintiff and defendant Tagabi, were present during the relocation survey and both were fully aware of and, in fact, agreed to the use by the Commissioner of the cadastral records and the available data pertinent to the cadastral survey of the two lots. In fact, both parties helped the Commissioner and pointed to the disputed portion using the available cadastral records relative to the two cadastral lots. In any case, it is quite clear from the text of the Order dated February 5, 1993 appointing the Commissioner that the parties agreed to abide by the results of the relocation survey which results, according to the same Order, shall be made the basis of resolving the dispute between them. It is now too late in the day, so to speak, for the defendants to back out from such commitment that they had made. Having agreed to abide by the results of the relocation survey, defendants are now estopped from questioning the same. In Bulacan vs. Torcino (134 SCRA 252), the Supreme Court held: The Torcinos try to impugn the results of the relocation survey. We agree with the appellee that the appellants are now estopped on this issue because they themselves prayed in the stipulation of facts that the findings of the geodetic engineer would be the basis for the decision of the Court of First Instance. We see no error, much less any grave abuse of discretion, in the lower courts findings that the house of the Torcinos encroached on the lot of Victoriano Bulacan Settled is the rule that a certificate of title cannot be subject to collateral attack and can be altered, modified, or cancelled only in a direct proceeding in accordance with law. In Mallilin, Jr. vs. Castillo, the Court held that an action is considered as an attack on a title when the object of the action or proceeding is to nullify the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of an action or proceeding is to annul, or set aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof. In the present case, the attack on respondents title is definitely merely collateral as the relief being sought by respondent in his action was recovery of ownership and possession. Petitioners attack on the validity of respondents certificate of title was merely raised as a defense in their Answer filed with the trial court.

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F. Extrinsic and Intrinsic Fraud in Land Registration Cases


Cal vs. Zosa G.R. No. 152518, July 31, 2006 The right of a person deprived of land or of any estate or interest therein by adjudication or confirmation of title obtained by actual or extrinsic fraud is recognized by law under Section 32 of P.D. No. 1529, thus: Review of decree of registration; Innocent purchaser for value. The decree of registration shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance (now the Regional Trial Court) a petition for reopening and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced. Fraud is of two kinds: actual or constructive. Actual or positive fraud proceeds from an intentional deception practiced by means of the misrepresentation or concealment of a material fact. Constructive fraud is construed as a fraud because of its detrimental effect upon public interests and public or private confidence, even though the act is not done with an actual design to commit positive fraud or injury upon other persons. Fraud may also be either extrinsic or intrinsic. Fraud is regarded as intrinsic where the fraudulent acts pertain to an issue involved in the original action, or where the acts constituting the fraud were or could have been litigated therein. Fraud is regarded as extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is procured, so that there is not a fair submission of the controversy. Extrinsic fraud is also actual fraud, but collateral to the transaction sued upon. The fraud contemplated by Section 32, P.D. No. 1529 is extrinsic. For fraud to justify a review of a decree, it must be extrinsic or collateral, and the facts upon which it is based have not been controverted or resolved in the case where the judgment sought to be annulled was rendered. Thus, relief is granted to a party deprived of his interest in land where the fraud consists in a deliberate misrepresentation that the lots are not contested when
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in fact, they are; or in willfully misrepresenting that there are no other claims; or in deliberately failing to notify the party entitled to notice; or in inducing him not to oppose an application; or in misrepresenting about the identity of the lot to the true owner by the applicant causing the former to withdraw his application. In all these examples, the overriding consideration is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court or from presenting his case. The fraud, therefore, is one that affects and goes into the jurisdiction of the court. Relief on the ground of fraud will not be granted where the alleged fraud goes into the merits of the case, is intrinsic and not collateral, and has been controverted and decided, like what is very much obtaining in the present case.

Ugale vs. Gorospe G.R. No. 149516, September 11, 2006 Federico U. Gorospe (GOROSPE), is the registered owner of a parcel of land situated in Maddalero, Buguey, Cagayan, having bought the same from Maria Ugale and Enrique Unciano, evidenced by two separate Deeds of Sale. As a consequence, Transfer Certificate of Title No. 85450 was issued in his name. When Gorospe tried to exercise attributes of ownership of the lot, he was prevented from doing so by the defendants claiming to be the installed tenants of defendant Juanita A. Vibangco and her brother, Ninoy Altura. Gorospe filed the present case to remove the clouds over his title and for the recovery of possession of the disputed land. The RTC ruled in favor of the defendants. On appeal, the CA reversed the decision of the RTC and ruled in favor of Gorospe. Issue: WON the CA was correct when it applied the principle of indefeasibility of title in favor of Gorospe Ruling: Yes. In this case, the CA correctly held that the claim of petitioners in their Answer that respondents title was acquired through fraud is nothing less than a collateral attack on the decree of registration and title which is against the principle of indefeasibility and incontrovertibility of the title in favor of the person whose name appears therein and the rule that any attack on the validity of such title should be threshed out only in an action directly or expressly filed for that purpose.

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This is consistent with the precept that the validity of a Torrens title cannot be assailed collaterally. Section 48 of Presidential Decree No. 1529 provides that: Certificate not Subject to Collateral attack. A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. Indeed, a certificate of title, once registered, should not thereafter be impugned, altered, changed, modified, enlarged or diminished, except in a direct proceeding permitted by law. Otherwise, reliance on registered titles would be lost. Here, the attack on the validity of private respondents certificate of title was raised as a defense in petitioners Answer filed with the trial court. Such defense is in the nature of a collateral attack which is not allowed by law as the issue of the validity of title, i.e. whether or not it was fraudulently issued, can only be raised in an action expressly instituted for that purpose. Petitioners argue that respondent cannot invoke the principle of indefeasibility of title since he knew of petitioners possession of the property since time immemorial; that he was not in good faith. While there are rulings stating that a buyer of a real property which is in the possession of persons other than the seller must be wary and should investigate the rights of those in possession, otherwise such buyer cannot be regarded as a buyer in good faith, petitioners in this case, however, failed to show that they have a better right over the subject property. As respondent has presented TCT No. T-85450 in his name, the burden of proof has shifted to petitioners who must establish by preponderance of evidence their allegation that they have a better right over the subject property. This petitioners failed to do.

Republic vs. Sps. Enriquez G.R. No. 160990, September 11, 2006 Before one can register his title over a parcel of land, the applicant must show that (a) he, by himself or through his predecessors-in-interest, has been in open, continuous, exclusive and notorious possession and occupation of the subject land under a bona fide claim of ownership since June 12, 1945 or earlier; and (b) the land subject of the application is alienable and disposable land of the public domain. One of the mandatory requirements in applications of original registration of land is the submission in evidence of the original tracing cloth plan or the sepia copy (Diazo Polyester Film), duly approved by the Bureau of Lands. This is to establish the true identity of the land to ensure that it does not overlap a parcel of land or a portion thereof already covered by a previous land registration, and to
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forestall the possibility that it will be overlapped by a subsequent registration of any adjoining land. Failure to comply with this requirement is fatal to petitioners application for registration. Nevertheless, in several cases, the Court allowed substantial compliance with this rule. In Recto vs. Republic of the Philippines (440 SCRA 79) this Court held that blueprint copies of the original tracing cloth plan from the Bureau of Lands and other evidence could also provide sufficient identification to identify a piece of land for registration purposes, as the property was sufficiently identified by: 1) the blueprint copy of the plan and technical description which were both approved by the Land Management Services of the Department of Environment and Natural Resources (DENR); and 2) the report of the Land Management Sector stating that the subject property is not a portion of, nor identical to any previously approved isolated survey. The applicants in the Recto case also submitted a certified true copy of the original tracing cloth plan to the CA as well as a certification from the Land Registration Authority attesting that the original plan in diazo polyester film was on file. In Republic of the Philippines vs. Hubilla (451 SCRA 181), the Court also deemed as substantial compliance the submission of the following in lieu of the original tracing cloth plan, to wit: 1) a blueprint copy of the subdivision plan approved by the Director of Lands; 2) a technical description approved by the Land Management Bureau of the DENR; 3) a certification from the DENR Community Environment and Natural Resources Office (CENRO) which states that the Property has not been forfeited for non-payment of real estate taxes, is entirely within the alienable and disposable zone as of December 31, 1925, has not been previously titled and is not covered by any previous public land application; and 4) a report of the Land Management Bureau stating that the Property is not recorded in their lot and plan index cards as being subject of a previous public land application. The applicants also filed a motion to admit original tracing cloth plan with the Court of Appeals during the pendency of the appeal and attached thereto the original plan, which the Court noted as the same as the blueprint subdivision plan offered as evidence before the trial court.

G. Action for Declaration of Nullity of TCT


Feliciano vs. Zaldivar G.R. No. 162593, September 26, 2006 Remegia Y. Feliciano (FELICIANO) filed against the spouses Aurelio and Luz Zaldivar a complaint for declaration of nullity of TCTNo. T-17993 and reconveyance of the property consisting of 243 square meters of lot situated in Cagayan de Oro City. The said title is registered in the name of Aurelio Zaldivar.
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Feliciano alleges that she was the registered owner of a parcel of land in Cagayan de Oro City with an area of 444 square meters, covered by TCT No. T-8502. Sometime in 1974, Aurelio, allegedly through fraud, was able to obtain TCT No. T17993 covering the 243-sq-m portion of Felicianos lot as described in her TCT No. T-8502. Feliciano also contends that the subject lot was originally leased from her by Pio Dalman, Aurelios father-in-law, for P5.00 a month, later increased to P100.00 a month in 1960. She further alleged that she was going to mortgage the subject lot to Ignacio Gil for P100.00, which, however, did not push through because Gil took back the money without returning the receipt she had signed as evidence of the supposed mortgage contract. Thereafter, in 1974, Aurelio filed with the then Court of First Instance of Misamis Oriental a petition for partial cancellation of TCT No. T-8502. It was allegedly made to appear therein that Aurelio and his spouse Luz acquired the subject lot from Dalman who, in turn, purchased it from Gil. The petition was granted and TCT No. T-17993 was issued in Aurelios name. Feliciano denied that she sold the subject lot either to Gil or Dalman. She likewise impugned as falsified the joint affidavit of confirmation of sale that she and her uncle, Narciso Labuntog, purportedly executed before a notary public, where Feliciano appears to have confirmed the sale of the subject property to Gil. She alleged that she never parted with the certificate of title and that it was never lost. As proof that the sale of the subject lot never transpired, Feliciano pointed out that the transaction was not annotated on TCT No. T-8502. The RTC rendered a judgment in favor of Feliciano. On appeal, the CA reversed the decision of the RTC and ruled in favor of the Zaldivars Issue 1: Whether the CA was correct in ruling that the land in dispute was correctly registered in the name of Aurelio Zaldivar. Ruling: No. It should be recalled that respondent Aurelio Zaldivar filed with the then CFI of Misamis Oriental a petition for issuance of a new owners duplicate copy of TCT No. T-8502, alleging that the owners duplicate copy was lost. In the Order dated March 20, 1974, the said CFI granted the petition and consequently, a new owners duplicate copy of TCT No. T-8502 was issued. However, as the trial court correctly held, the CFI which granted Aurelios petition for the issuance of a new owners duplicate copy of TCT No. T-8502 did not acquire jurisdiction to issue such order. It has been consistently ruled that when the owners duplicate certificate of title has not been lost, but is in fact in the possession of another person, then the reconstituted certificate is void, because the court that rendered the decision had no jurisdiction. Reconstitution can validly be made only in case of loss of the original certificate. In such a case, the decision authorizing the issuance of a new owners duplicate certificate of title may be attacked any time.
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The new owners duplicate TCT No. T-8502 issued by the CFI in the name of Aurelio is thus void. As Feliciano averred during her testimony, the owners duplicate copy of TCT No. T-8502 was never lost and was in her possession from the time it was issued to her. The court a quo correctly nullified TCT No. T-17993 in Aurelios name, emanating as it did from the new owners duplicate TCT No. T-8502, which Aurelio procured through fraud. Aurelio cannot raise the defense of indefeasibility of title because the principle of indefeasibility of a Torrens title does not apply where fraud attended the issuance of the title. The Torrens title does not furnish a shield for fraud. As such, a title issued based on void documents may be annulled. Neither can the respondents spouses Zaldivar rely on the principle of indefeasibility of TCT No. 17793 which was issued in favor of Aurelio. As it is, the subject lot is covered by two different titles: TCT No. T-8502 in Felicianos name covering an area of 444 sq m including therein the subject lot, and TCT No. 17793 in the name of Aurelio covering the subject lot. Aurelios title over the subject lot has not become indefeasible, by virtue of the fact that TCT No. T-8502 in the name of Feliciano has remained valid. The claim of indefeasibility of the petitioners title under the Torrens land title system would be correct if previous valid title to the same parcel of land did not exist. The respondent had a valid title . . . It never parted with it; it never handed or delivered to anyone its owners duplicate of the transfer certificate of title; it could not be charged with negligence in the keeping of its duplicate certificate of title or with any act which could have brought about the issuance of another certificate upon which a purchaser in good faith and for value could rely. If the petitioners contention as to indefeasibility of his title should be upheld, then registered owners without the least fault on their part could be divested of their title and deprived of their property. Such disastrous results which would shake and destroy the stability of land titles had not been foreseen by those who had endowed with indefeasibility land titles issued under the Torrens system Issue 2: What are the rights of Feliciano over the house built by the Zaldivar spouses over the land in dispute? Ruling: Nonetheless, the Court is not unmindful of the fact that respondents had built their house on the subject lot and, despite knowledge thereof, Feliciano did not lift a finger to prevent it. Article 453 of the Civil Code is applicable to their case: ART. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith.
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It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part. Under the circumstances, respondents and Feliciano are in mutual bad faith and, as such, would entitle the former to the application of Article 448 of the Civil Code governing builders in good faith: ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 29 and 548, 30 or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such a case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after the proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. Feliciano is obliged to exercise either of the following options: (1) to appropriate the improvements, including the house, built by the Zaldivars on the subject lot by paying the indemnity required by law, or (2) sell the subject lot to the Zaldivars. Feliciano cannot refuse to exercise either option and compel respondents to remove their house from the land. In case Feliciano choose to exercise the second option, Zaldivars are not obliged to purchase the subject lot if its value is considerably more than the improvements thereon and in which case, the Zaldivars must pay rent to Feliciano. If they are unable to agree on the terms of the lease, the court shall fix the terms thereof.

H. Free Patent
Saad Agro. Industrial vs. Republic G.R. No. 152570, September 27, 2006 On October 1967, Socorro Orcullo (Orcullo) filed her application for Free Patent for Lot No. 1434, a parcel of land with an area of 12.8477 hectares located in Barangay Abugon, Sibonga, Cebu. On February 1971, the Secretary of Agriculture and Natural Resources issued Free Patent No. 473408, while the Registry of Deeds for the Province of Cebu issued OCT No. 0-6667 over the said lot. The subject lot was sold to SAAD Agro-Industries, Inc. (CORPORATION) by one of Orcullos heirs.
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Sometime in 1995, the Republic of the Philippines, through the Solicitor General, filed a complaint for annulment of title and reversion of the lot, on the ground that the issuance of the said free patent and title for Lot No. 1434 was irregular and erroneous, following the discovery that the lot is allegedly part of the timberland and forest reserve of Sibonga, Cebu. The discovery was made after Pedro Urgello filed a letter-complaint DENR of Cebu City, about the alleged illegal cutting of mangrove trees and construction of dikes within the area covered by Urgellos Fishpond Lease Agreement. On 14 July 1995, Urgello filed a complaint-in-intervention against the heirs of Orcullo. However, the heirs failed to file their answer to the complaint and were thus declared in default. The RTC dismissed the complaint. On appeal, the CA revered the RTCs decision. Issue: WON the respondent was able to prove that the free patent and the original title were erroneously and irregularly obtained. Ruling: No. It has been held that a complaint for reversion involves a serious controversy, involving a question of fraud and misrepresentation committed against the government and it is aimed at the return of the disputed portion of the public domain. It seeks to cancel the original certificate of registration, and nullify the original certificate of title, including the transfer certificate of title of the successors-in-interest because the same were all procured through fraud and misrepresentation. Thus, the State, as the party alleging the fraud and misrepresentation that attended the application of the free patent, bears that burden of proof. Fraud and misrepresentation, as grounds for cancellation of patent and annulment of title, should never be presumed but must be proved by clear and convincing evidence, mere preponderance of evidence not even being adequate. It is but judicious to require the Government, in an action for reversion, to show the details attending the issuance of title over the alleged inalienable land and explain why such issuance has deprived the State of the claimed property. In the present case, the Solicitor General claimed that Free Patent No. 473408 and Original Certificate of Title No. 0-6667 were erroneously and irregularly obtained as the Bureau of Lands (now Lands Management Bureau) did not acquire jurisdiction over the land subject thereof, nor has it the power and authority to dispose of the same through [a] free patent grant, hence, said patent and title are null and void ab initio. It was incumbent upon respondent to prove that the free patent and original title were truly erroneously and irregularly obtained. Unfortunately, respondent failed to do so.
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Reliance on this provision is highly misplaced. P.D. No. 705 was promulgated only on 19 May 1975, or four (4) years after the free patent and title were awarded to Orcullo. Thus, it finds no application in the instant case. Prior forestry laws, including P.D. No. 389, which was revised by P.D. No. 705, does not contain a similar provision. Article 4 of the Civil Code provides that laws shall have no retroactive effect unless the contrary is provided. The Court does not infer any intention on the part of then President Marcos to ordain the retroactive application of Sec. 13 of P.D. No. 705. Thus, even assuming for the nonce that subject parcel was unclassified at the time Orcullo applied for a free patent thereto, the fact remains that when the free patent and title were issued thereon in 1971, respondent in essence segregated said parcel from the mass of public domain. Thus, it can no longer be considered unclassified and forming part of the public forest as provided in P.D. No. 705. Private interests have intervened before classification was made pursuant to P.D. No. 705. Not only has Orcullo by herself and through her predecessors-in-interest cultivated and possessed the subject lot since 1930, a free patent was also awarded to her and a title issued in her name as early as 1971. In fact, it appears that the issuance of the free patent and certificate of title was regular and in order. Orcullo complied with the requisites for the acquisition of free patent provided under Commonwealth Act No. 141 (Public Land Act), as certified by the Director of Lands and approved by the Secretary of Agriculture and Natural Resources.

I. Jurisdiction of Director of Lands


Angeles vs. Republic, G.R. No. 166281, October 27, 2006 The well-entrenched rule is that when property has ceased to be public because it has been acquired by a private individual by operation of law, the Director of Lands loses jurisdiction over the said property and the State has no more title over the property. In this case, public respondent no longer has a cause of action for reversion of the property against the heirs of Juan Sanga and petitioners.

Miscellaneous Cases
A. Paraphernal vs. Conjugal Property Spouses Mendoza Go vs. Yamane G.R. No. 160762, May 3, 2006 A parcel of land in Baguio City was registered in the name on Muriel Pucay Yamane, wife of Leonardo Yamane. This land was sold at a public auction as it was
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levied to satisfy the lien for attorneys fees. No redemption was made during the 1 year period so a Final Sheriffs Certificate of Sale was issued to spouses Go. A case was filed with the RTC for cancellation of the sale by Leonardo Yamane on the ground that it was conjugal property. RTC dismissed. CA reversed holding that property acquired during marriage is presumed to be conjugal. Issue: Whether the property was paraphernal or conjugal? Ruling: Conjugal. The mere registration of a property in the name of one spouse does not destroy its conjugal nature. Hence, it cannot be contended in the present case that, simply because the title and the Deed of Sale covering the parcel of land were in the name of Muriel alone, it was therefore her personal and exclusive property. As stated earlier, to rebut the presumption of the conjugal nature of the property, petitioners must present clear and convincing evidence. The non-redemption of the property by respondent within the period prescribed by law did not, in any way, indicate the absence of his right or title to it. Since petitioners have failed to present convincing evidence that the property is paraphernal, the presumption that it is conjugal therefore stands. Charging lien is not chargeable against conjugal property. The expenses incurred by Muriel for the recovery of the balance of the purchase price of her paraphernal property are her exclusive responsibility. This piece of land may not be used to pay for her indebtedness, because her obligation has not been shown to be one of the charges against the conjugal partnership. Moreover, her rights to the property are merely inchoate prior to the liquidation of the conjugal partnership. Under the New Civil Code, a wife may bind the conjugal partnership only when she purchases things necessary for the support of the family, or when she borrows money for that purpose upon her husbands failure to deliver the needed sum; when administration of the conjugal partnership is transferred to the wife by the courts or by the husband; or when the wife gives moderate donations for charity. Failure to establish any of these circumstances in the present case means that the conjugal asset may not be bound to answer for Muriels personal obligation B. Emancipation Patent Estribillo vs. DAR G.R. No. 159674, June 30, 2006 Inasmuch as there is no positive statement of the Public Land Law, regarding the titles granted thereunder, such silence should be construed and interpreted in favor of the homesteader who come into the possession of his homestead after complying with the requirements thereof. Section 38 of the Land Registration Law
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should be interpreted to apply by implication to the patent issued by the Director of Lands, duly approved by the Minister of Natural Resources, under the signature of the President of the Philippines, in accordance with law. After complying with the procedure, therefore, in Section 105 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree (where the DAR is required to issue the corresponding certificate of title after granting an EP to tenant-farmers who have complied with Presidential Decree No. 27), 24 the TCTs issued to petitioners pursuant to their EPs acquire the same protection accorded to other TCTs. The certificate of title becomes indefeasible and incontrovertible upon the expiration of one year from the date of the issuance of the order for the issuance of the patent, . . . . Lands covered by such title may no longer be the subject matter of a cadastral proceeding, nor can it be decreed to another person. As was held by the SC through Justice J.B.L. Reyes in Lahora vs. Dayanghirang, Jr., 147 Phil. 301, 304 (1971): The rule in this jurisdiction, regarding public land patents and the character of the certificate of title that may be issued by virtue thereof, is that where land is granted by the government to a private individual, the corresponding patent therefor is recorded, and the certificate of title is issued to the grantee; thereafter, the land is automatically brought within the operation of the Land Registration Act, the title issued to the grantee becoming entitled to all the safeguards provided in Section 38 of the said Act. In other words, upon expiration of one year from its issuance, the certificate of title shall become irrevocable and indefeasible like a certificate issued in a registration proceeding. The EPs themselves, like the Certificates of Land Ownership Award (CLOAs) in Republic Act No. 6657 (the Comprehensive Agrarian Reform Law of 1988), are enrolled in the Torrens system of registration. The Property Registration Decree in fact devotes Chapter IX 27 on the subject of EPs. Indeed, such EPs and CLOAs are, in themselves, entitled to be as indefeasible as certificates of title issued in registration proceedings. C. Double Sale Delfin vs. Banez G.R. No. 132281, September 15, 2006 From the very opening statement of the appellate court in the decision under review, it is obvious that said court, along with the court below it, resolved the controversy on the premise that there exists a case of double sale. On that premise, the CA and the trial court applied to this case the provisions of Article 1544 of the Civil Code, which reads:
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ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith. The application of Article 1544 of the Civil Code presupposes the existence of two (2) valid and binding contracts of sale, which, under legal contemplation, is made possible by the operation of the Torrens System whereunder registration is the operative act which transfers title or ownership of a titled property, such that before the first buyer registers his sale to consolidate ownership and title in his favor, the seller who retains the title and ownership in the meantime can validly transfer such title and ownership by way of a second sale to another buyer, who, in case he succeeds in registering said second sale before he acquired notice of the first sale, can defeat the rights of the first buyer under Article 1544 of the Civil Code. To the two (2) courts below, the two (2) sales of the lot in question Lot No. 3D-1 are: (1) the sale entered into on May 9, 1979 between Josefina, through her attorney-in-fact, Atty. Carlos Valdez, Jr., in favor of Lagon over the 4,094-square meter portion of the former Lot No. 3 which portion covered the entire area of Lot No. 3-D-1, referred to herein as the first sale; and (2) the sale of Lot No. 3-D-1 entered into between Josefina and Delfin on June 4, 1987, hereinafter referred to as the second sale. While on the surface, there is apparently a situation of double sale, in truth and in law, there is only one: the sale of Lot No. 3-D-1 by Josefina to the petitioner on June 4, 1987. Hence, Article 1544 of the Civil Code finds no application in this case. With the reality that this Court in Valdez deemed the so-called first sale as null and void by reason of Lagons breach of the express terms and conditions relative thereto before the second sale was entered into by and between Josefina and Delfin, the provisions of Article 1544 of the Civil Code on double sales do not apply. Josefina had full and complete ownership over the subject lot (Lot No. 3-D-1) at the time of the second sale, the obligation to return to Lagon the sum of money originally received by her from the latter notwithstanding. This title and ownership of Lot No. 3-D-1 was effectively transferred from Josefina to Delfin with the issuance of a clean new transfer certificate of title in the name of Delfin upon the registration of the second sale.

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D. F ORECLOSURE

OF A REAL ESTATE MORTGAGE

Guanco vs. Antolo G.R. No. 150852, July 31, 2006 Under Section 5 of Republic Act No. 720, as amended by Rep. Act No. 7939, the provincial sheriff is mandated to post a notice of the foreclosure of the real estate mortgage in at least three of the most conspicuous public places not only in the municipality but also in the barrio where the land mortgaged is situated during the 60-day period immediately preceding the public auction: The foreclosure of mortgages covering loans granted by rural banks shall be exempt from the publication in newspapers now required by law where the total amount of the loan, including interests due and unpaid, does not exceed three thousand pesos. It shall be sufficient publication in such cases if the notices of foreclosure are posted in at least three of the most conspicuous public places in the municipality and barrio where the land mortgaged is situated during the period of sixty days immediately preceding the public auction. Proof of publication as required herein shall be accomplished by affidavit of the sheriff or officer conducting the foreclosure sale and shall be attached with the records of the case: Provided, That when a homestead or free patent land is foreclosed, the homesteader or free patent holder, as well as their heirs shall have the right to redeem the same within two years from the date of foreclosure in case of a land not covered by a Torrens title or two years from the date of the registration of the foreclosure in the case of a land covered by a Torrens title: Provided, finally, That in case of borrowers who are mere tenants the produce corresponding to their share may be accepted as security. In the present case, the provincial sheriff failed to comply with the law. It appears on the face of the Final Deed of Sale executed by Deputy Sheriff Alvior that the petition for extrajudicial foreclosure of the real estate mortgage purportedly filed with the said office was dated July 21, 1977. The deputy sheriff set the public auction sale on August 19, 1977, or less than a month after the filing of the said petition, short of the 60 day-period under Section 5 of Rep. Act No. 720, as amended. E. Lease Josefa vs. Buenaventura G.R. No. 163429, March 3, 2006 Lourdes San Buenaventura is the owner of a 364-sqm parcel of land in Pasig City. On July 15, 1990, Johnny Josefa entered into a Contract of Lease with San Buenaventura over the said parcel of land. The parties agreed that the period covered by the lease agreement is from August 1, 1990 to July 31, 1995, or a period of five (5) years, renewable upon agreement of the parties.
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Upon expiry of the contract, San Buenaventura wrote Josefina informing him that the lease would no longer be extended but that he may continue with the lease at a rental rate of P30,000.00 a month. Josefa was told to vacate the property and pay any arrearages if he opted not to lease the property after the expiration of the lease contract. However, Josefa refused to vacate the premises. He continued to occupy the property and paid a monthly rental of P15,400.00 which San Buenaventura received. However, San Buenaventura subsequently made demands for Josefa to vacate the property in a Letter dated June 3, 1998. Josefa still refused to leave the premises. San Buenaventura then filed a complaint for unlawful detainer against Josefa which was however dismissed due to the plaintiffs failure to secure a certification from the lupon ng barangay . The complaint was refiled with the MeTC Pasig and docketed as Civil Case No. 6798. In his Answer, Josefa averred that San Buenaventura had no cause of action because under the contract, San Buenaventura was obliged to renew the lease. Josefa pointed out that because of this commitment to renew the contract, he made renovations and improvements on the land. He also set up attorneys fees as counterclaim against San Buenaventura. He prayed that should the lease contract not be renewed, San Buenaventura be ordered to reimburse to him the cost of the improvements in the amount of not less than P3,000,000.00. The MeTC ruled in favor of San Buenaventura, declaring that the phrase renewable upon agreement of the parties in the lease contract implied mutuality, i.e. both parties consent to the renewal of the lease. Josefa appealed to the RTC. The RTC reversed the ruling of the MeTC holding that the inclusion of the renewal clause in the contract showed the intent on the part of both parties to extend the lease without any condition or requirement of mutual agreement. It declared that the phrase was merely a useless addition for the convenience of any party who may wish, in bad faith, to back out of the extension of the lease. According to the RTC, the only time that phrase may come into play is when both parties mutually decline to extend the lease, but when only one party insists on the extension while the other party refuses, the latter party is bound by the term. San Buenaventura appealed to the CA. The CA reversed and declared that, after the expiration of the five-year period in the lease contract, the owner of the property had the right not only to terminate the lease but to demand a new rental rate. It held that it was unfair for the lessee to refuse to pay the demanded increased rate and still remain in possession of the property. The CA also ruled that Josefa could not claim to be a builder in good faith since he knew that he was only a lessee, whose rights relative to the improvements he introduced on the property are governed by Article 1678 of the New Civil Code.
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Issue 1: Whether the lease contract between petitioner and respondent contained a renewal clause, and as such, they had agreed to extend the period of lease after July 31, 1995? NO. It bears stressing that after the subject lease contract expired on July 15, 1995, petitioner was already unlawfully withholding possession of the leased premises from respondent as to entitle the latter to file her complaint for ejectment against petitioner as defendant. Since the lease contract was executed for a determinate time, such contract ceased on the day fixed without need of further demand. A notice to vacate constitutes an express act on the part of the lessor that he no longer consents to the continued occupation by the lessee of the property. Hence, respondent, as plaintiff in the trial court, had a cause of action for ejectment against petitioner who was the defendant below. It is true that petitioner and respondent agreed that the subject lease contract was renewable upon agreement. The Court notes, however, that the effect of the petitioners intransigent refusal to pay the P30,000.00 monthly rental proposed by respondent was the failure of the parties to agree on the renewal of the contract. The clause renewable upon the agreement of the parties in the lease contract is clear and admits of no other interpretation: the contract is renewable only upon agreement of the parties. If no such agreement is forged, petitioner has no other option except to vacate the property. Even petitioner himself admits that under the subject clause, the lease contract would not be automatically renewed upon its expiration on July 31, 1995. Respondent, as the owner of the property whose title is recognized in the lease contract, was not obliged to agree to renew the lease contract, much less negotiate with petitioner for such renewal if she opts not to renew the agreement. Since the renewal of the contract contemplates the death of the old contract, it is necessary that the new one be executed by the parties. A contract can only be renewed upon the mutual agreement of the parties or at the will of both of them. After all, as the Court ruled in Bruce vs. Court of Appeals: In the case at bar, it was not specifically indicated who may exercise the option to renew, neither was it stated that the option was given for the benefit of herein petitioner. Thus, pursuant to the Fernandez ruling and Article 1196 of the Civil Code, the period of the lease contract is deemed to have been set for the benefit of both parties. Renewal of the contract may be had only upon their mutual agreement or at the will of both of them. Since the private respondents were not amenable to a renewal, they cannot be compelled to execute a new contract when the old contract terminated on June 1, 1994. It is the owner-lessors prerogative to terminate the lease at its expiration. The continuance, effectivity and fulfillment of a contract of lease cannot be made to depend exclusively upon the free and uncontrolled choice of the lessee between continuing
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the payment of the rentals or not, completely depriving the owner of any say in the matter. Mutuality does not obtain in such a contract of lease and no equality exists between the lessor and the lessee since the life of the contract would be dictated solely by the lessee. In Fernandez vs. CA, the Court ruled that the stipulation of the parties in their lease contract to be renewable at the option of both parties stresses that the faculty to renew was given not to the lessee alone nor to the lessor by himself but to the two simultaneously; hence, both must agree to renew if a new contract is to come about. Issue 2: Whether Josefa could be considered a builder in good faith. Ruling: No. In this case, there is no question that petitioner was initially a lawful possessor because his entry into the property is by virtue of a lease contract with respondent. However, as a mere lessee whose possession after the expiration of the contract is at the sufferance of the owner of the property, he cannot claim to be a builder in good faith. Under Article 1678 NCC, petitioner is entitled to one-half of the value of the improvements only if respondent, as the owner decides to appropriate the improvements. Since respondent refused to appropriate the improvements, petitioner cannot compel her to reimburse to him one-half of their value. The sole right of the petitioner under Article 1678 is to remove the improvements without causing any more damage upon the property leased than is necessary. Issue 3: Whether the CA erred in ordering him to pay P30,000.00 monthly rental for the renewal of the lease contract. Ruling: Yes. The submission of the petitioner has no merit. In the first place, the CA awarded the P30,000.00 monthly rentals not for the renewal of the lease contract, but as compensation for petitioners continued occupancy of the property after the lease expired. However, we agree with petitioners contention that the increase of the award to P30,000.00 has no factual basis considering that the appellate court failed to state its basis for doubling the amount adjudged by the trial court. It simply increased the award in the dispositive portion of its decision.

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G.Q. GARMENTS, INC. vs. MIRANDA G.R. No. 161722, July 20, 2006

Angel Miranda is the registered owner of a 9,646 square meters parcel of land located at Niog, Bacoor, Cavite. In 1984, Angelito Miranda, the son of Angel Miranda, established the Executive Machineries and Equipment Corporation (EMECO). He owned 80% of the stocks, while his wife Florenda owned 10%. That year, Angel entered into a verbal contract of lease over the Property with EMECO, and allowed it to build a factory thereon. The agreement was on a month-to-month basis, at the rate of P8,000 per month. EMECO constructed its factory on the property. At the outset, EMECO paid the monthly rentals. However, after Angelito died on June 21, 1988, EMECO failed to pay the rentals but still continued possessing the leased premises. On November 19, 1989, the factory of EMECO was totally razed by fire. In a letter to EMECO dated June 3, 1991, Angel demanded the payment of accrued rentals in the amount of P280,000.00 as of May 1991. EMECO was also informed that the oral contract of lease would be terminated effective June 30, 1991. However, EMECO failed to pay the accrued rentals and to vacate the property. Another demand letter dated September 27, 1991 was sent to EMECO. It vacated the leased premises, but the accrued rentals remained unpaid. Sometime in November 1991, Florenda arrived at the office of petitioner and offered to sublease the property to Wilson Kho, the Officer-in Charge of the corporation. Florenda showed Kho a purported copy of a contract of lease over the said property allegedly executed by Angel in favor of EMECO. After visiting and viewing the property, Kho agreed to rent the area upon the condition that its true and registered owner would personally sign the lease contract in his presence. When Florenda failed to present Angel for said purpose, Kho turned down her proposal. Later, Kho was able to locate Angel and offered, in behalf of G.Q. Garments, to lease the property. Angel agreed. On December 23, 1991, Angel and the corporation, executed a contract of lease over the subject property. The lease was for a period of 15 years for a monthly rental of P30,000.00. As lessee, it was authorized to introduce improvements, structures, and buildings on the property as it may deem necessary and for the purpose for which it was leased. After securing the necessary documents, the construction of a building and a factory then commenced. On January 27, 1992, Florenda, together with several armed men who identified themselves as policemen, forcibly evicted petitioner from the leased premises. During the encounter, Florenda and her men took some equipment, machinery and other properties belonging to petitioner, thereby causing loss and damage to said properties.
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In the meantime, Angel secured a copy of the purported contract of lease he allegedly executed in favor of EMECO. On March 12, 1992, he filed a complaint for declaration of nullity of the contract of lease before the RTC alleging that his signature as lessor was a forgery. Meanwhile, G.Q. Garments sought the help of the Philippine National Police (PNP). General Gerardo N. Flores, Deputy Director General and Chief Directorial Staff, issued a Memorandum to Superintendent Wenceslao A. Soberano, ordering the latter to prevent his men from interfering with the pending civil case. Petitioner subsequently regained possession over the leased premises. Florenda and her group were undaunted. They went back to the place and ousted the guards and other personnel manning the corporations office, and even removed their equipment, and ransacked anew their raw materials, electric wire and other valuables inside. On April 20, 1992, petitioner instituted an action for damages and recovery of possession of the property before the RTC of Cavite City, Branch 17, with Angel, EMECO and Florenda, as alternative defendants. On June 25, 1992, Angel and G.Q. Garments, as plaintiffs, filed a separate complaint for ejectment against Florenda before the MTC of Bacoor, Cavite. After due proceedings, the court ordered the eviction of Florenda and all those claiming the property in her behalf. The decision was appealed to the RTC. However, for failure to pay a supersedeas bond, the decision was executed and Florenda was evicted from the property. On November 26, 1993, the RTC rendered judgment in Civil Case No. N5573, dismissing the complaint against all the alternative defendants without prejudice. It declared that plaintiff was entitled to damages, but it had to dismiss the complaint because of the pendency of Civil Case Nos. 92-699 and 92-1265. However, the RTC resolved to deny the motion of petitioner prompting it to appeal to the Court of Appeals. Angel Miranda also appealed the decision, which was docketed as CA-G.R. CV No. 45567. On September 22, 1994, the RTC rendered judgment in Civil Case No. 92699 in favor of Angel and declared the contract of lease purportedly executed by him and EMECO void. On October 29, 2002, the CA rendered judgment reversing the decision of the RTC. It dismissed the complaint with prejudice against Angel Miranda and ordered Florenda Miranda to pay G.Q. Garments, Inc. the amount of: (1) P300,000.00 as and for nominal damages; (2) P200,000.00 as and for attorneys fees; and (3) To pay the costs of suit.

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G.Q. Garments filed a motion for the reconsideration. It averred that Angel was liable for damages under Article 1654(3) of the New Civil Code, under which, as lessor, he was obliged to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract. It likewise cited De la Cruz vs. Seminary of Manila where it was ruled that in case of legal disturbance, the lessor is liable for whatever the lessee has lost by virtue of the breach of the contract and that it is the duty of the lessor to place the lessee in legal possession of the premises and to maintain him in the peaceful possession of the property during the lifetime of the lease. It insisted that the lessor who fails in the performance of such obligation must indemnify the lessee for the damages occasioned thereby, the true measure of damages being the actual loss to the lessee arising from the breach of the contract on the part of the lessor. The motion was denied by the CA. Issue 1: Whether respondents are liable to petitioner for the amount of P10,000,000.00 by way of actual damages? Ruling: No. To be entitled to an award of actual damages, it is necessary to prove the precise amount of the loss with a reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable by the injured party to justify such award. The award of actual damages cannot be simply based on the mere allegation of a witness without any tangible claim, such as receipts or other documentary proofs to support such claim. Failing to satisfy the court that petitioner certainly suffered actual damages, its claim must now fail. In this case, there is no question that, indeed, petitioner sustained damages because its equipment, machineries, and other valuables were taken, and its building was destroyed by respondent Florenda Miranda and her cohorts. Respondent Angel Miranda did not cause the damages sustained by petitioners property. However, the only evidence adduced by the petitioner to prove the value of said property is the testimony of Kho. No other proof was adduced to establish the value or price of the equipment, machineries and valuables taken by respondent Florenda Miranda, as well as the damage to petitioners building. The bare claim of Kho that the petitioner sustained actual damages in the amount of P10,000,000.00 is utterly insufficient on which to anchor a judgment for actual damages in the amount of P10,000,000.00; it is speculative and merely a surmise. Issue 2: Whether Angel Miranda was liable for damages caused to petitioners property. Ruling: No. We agree with the ruling of the CA that respondent Angel Miranda is not liable for damages caused to petitioners property. Article 1654 of the New Civil Code reads:
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Art. 1654. The lessor is obliged: (1) To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended; (2) To make on the same during the lease all the necessary repairs in order to keep it suitable for the use to which it has been devoted, unless there is a stipulation to the contrary; (3) To maintain the less in the peaceful and adequate enjoyment of the lease for the entire duration of the contract. Under the provision, a lessor is obliged to maintain petitioners peaceful and adequate enjoyment of the premises for the entire duration of the lease. In case of noncompliance with these obligations, the lessee may ask for the rescission of the lease contract and indemnification for damages or only the latter, allowing the contract to remain in force. The trespass referred to in Article 1654, paragraph 3, of the New Civil Code, is legal trespass or perturbacion de mero derecho. The lessor is not liable for the mere fact of a trespass or trespass in fact (perturbacion de mero hecho) made by a third person of the leased property. The lessee shall have a direct action against the trespasser and not against the lessor. As explained by the Court, if the act of trespass is not accompanied or preceded by anything which reveals a really juridical intention on the part of the trespasser, in such wise that the lessee can only distinguish the material fact, such a trespass is merely a trespass in fact. The duty of the lessor to maintain the lessee in the peaceful and adequate enjoyment of the leased property for the entire duration of the contract is merely a warranty that the lessee shall not be disturbed in having legal and not physical possession of the property. In this case, the trespass perpetrated by respondent Florenda Miranda and her confederates was merely trespass in fact. They forcibly entered the property and caused damage to the equipment and building of petitioner, because the latter refused to enter into a contract of lease with EMECO over the property upon respondent Florenda Mirandas failure to present respondent Angel Miranda to sign the contract of lease. It turned out that respondent Florenda Miranda attempted to hoodwink petitioner and forged respondent Angel Mirandas signature on the contract of lease she showed to petitioner. It appears that respondent Florenda Miranda tried to coerce the petitioner into executing a contract of lease with EMECO over the property, only to be rebuffed by the petitioner. Petitioner cannot rely on the ruling of this Court in De la Cruz vs. Seminary of Manila, because, in this case, respondent Angel Miranda had the legal power to place petitioner in the peaceful possession of the property upon the execution of the
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contract of lease between him and petitioner; in fact, actual possession of the property was placed in the hands of petitioner, enabling it to start the construction of its factory.

Julia-ay vs. Estate of Buenaventura G.R. No. 149788, May 31, 2006 Starting in 1995, Romeo Julag-ay leased an apartment owned by Felimon Buenaventura, Sr. On October 15, 1996, Felimon Buenaventura, Sr. died intestate, survived by his two children, Teresita and Felimon Buenaventura, Jr. Felimon Buenaventura, Jr. took over the administration of the property. During his administration, Julag-ay failed to pay rentals covering the whole year of 1998. Felimon Buenaventura, Jr. died on December 17, 1998. Teresita assumed the administration of the property. On February 28, 1999, Julag-ay paid Teresita rental payments for the month of January and February 1999, but made no further payments. In April 1999, Teresita referred the matter to the Lupon Tagapamayapa for conciliation. During the proceedings, Julag-ay acknowledged that he had not paid his monthly rentals and promised to pay in installments. Despite his promise, he still failed to pay. On April 5, 1999, Teresita demanded that Julag-ay vacate the leased premises. Julag-ay refused. She then filed a complaint for ejectment asserting that the estate is the lawful owner of the property and that the estate had been deprived of the use of the property because of Julag-ays refusal to vacate the premises, and that it had suffered damages because of his refusal to pay arrears in rents due. Julag-ay answered that Teresita had no personality to sue since she was not the legal representative of the Estate of Felimon Buenaventura, Sr. He also asserted that the said estate had no cause of action to eject him from the property, as it was owned by the Estate of Felisa Tamio de Buenaventura, which was under the administration of Resurreccion A. Bihis. He claimed that he did not owe Teresita any arrears in rent payments as he had already paid rent to Resurreccion A. Bihis.

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Issue 1 : Whether Teresita had legal personality to file the ejectment case. Ruling: Yes. The evidence is clear that after Felimon Buenaventura, Sr. and his son, Buenaventura, Jr. died, Teresita was appointed as administratrix of his estate. As administratrix of the estate, Teresita has the unquestionable personality to file an ejectment suit against Julag-ay. Likewise the records show that Julag-ay dealt with Felimon Buenaventura, Sr. while he was still alive, and, thereafter, with his known children, Buenaventura, Jr. and Teresita. He paid the rentals of the property to them. Petitioners promissory note and his payment of two months rents to Teresita are eloquent proofs of his recognition of Teresita as Felimon Buenaventura, Sr.s lawful successor. In this connection, Article 1436 CC provides: Article 1436. A lessee or bailee is estopped from asserting title to the thing leased or received, as against the lessor or bailor. In relation thereto, Rule 131, Section 2(b) of the Rules of Court provides: Sec. 2. Conclusive presumptions The following are instances of conclusive presumptions: xxx (b) The tenant is not permitted to deny the title of his landlord at the time of the commencement of the relations of landlord and tenant between them. These provisions bar Julag-ay from contesting the title of his landlord, i.e., the Estate or its representative. This Court has consistently held that lessees who have had undisturbed possession for the entire term under the lease, like Julag-ay, are estopped to deny their landlords title, or to assert a better title not only in themselves, but also in some third person, while they remain in possession of the leased premises and until they surrender possession to the landlord. It is of no significance that Julag-ay is not claiming title to the property for himself. Estoppel still applies, as he enjoyed the use of the property without interruption from 1995.

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Issue 2: Whether Julag-ay may raise the legality of Teresitas adoption by Felimon Buenaventura, Sr.? Ruling: No. It is futile for Julag-ay to raise the issue of the legality of Teresitas adoption by Felimon Buenaventura, Sr. These proceedings are not the proper venue to ventilate the legality of her adoption. As a rule, ejectment proceedings are limited to the solitary issue of legality of possession. This issue affects the peace of the community and should be resolved with dispatch. It should not be delayed by peripheral issues appropriate to be resolved by other courts. Issue 3: Whether the appellate court erred when it relied on the affidavit executed jointly by Felisa Tamio de Buenaventura and Felimon Buenaventura, Sr. to prove their co-ownership of the property in question? Ruling: No. It is unprocedural to rule on the ownership of the subject property. To reiterate, the only issue in ejectment proceedings is the legality of Julag-ays physical possession of the premises - - - his possession de facto and not his possession de jure. Thus, we have ruled that it is of no moment that at the time an action for unlawful detainer is under litigation, there is another action respecting the same property and the same parties involving the issue of ownership. The rights asserted and the reliefs prayed for are different in the two cases. Consequently, it is untenable for Julag-ay to demand that Teresita should first prove herself to be the true and lawful owner of the property before she asserts her right to its possession. It is settled that an action for unlawful detainer may be filed even by one who is not an owner of the property in dispute.

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Integrated Bar of the Philippines


BOARD OF GOVERNORS
(2007-2009) FELICIANO M. BAUTISTA Chairman ROGELIO A. VINLUAN Vice Chairman & Governor for Southern Luzon

ABELARDO C. ESTRADA Governor for Northern Luzon ERNESTO A. GONZALES, JR. Governor for Central Luzon MARCIAL M. MAGSINO Governor for Greater Manila BONIFACIO T. BARANDON, JR. Governor for Bicolandia

EVERGISTO S. ESCALON Governor for Eastern Visayas RAYMOND JORGE A. MERCADO Governor for Western Visayas RAMON EDISON C. BATACAN Governor for Eastern Mindanao CARLOS L. VALDEZ, JR. Governor for Western Mindanao

NATIONAL OFFICERS
(July 2007 - June 2009) FELICIANO M. BAUTISTA National President ROGELIO A. VINLUAN Executive Vice President TOMAS N. PRADO National Secretary JAIME M. VIBAR National Executive Director ALICIA A. RISOS-VIDAL National Director for Bar Discipline MARIA TERESITA C. SISON GO Assistant National Treasurer ROGELIO V. GARCIA Deputy Director for Bar Discipline RODOLFO G. URBIZTONDO Deputy General Counsel & Chief of Staff EDUARDO A. LABITAG Managing Editor, IBP Journal MANUEL P. LEGASPI Presidential Assistant for Chapter Affairs ESTER SISON CRUZ National Treasurer ROSARIO T. SETIAS-REYES National Director for Legal Aid DOMINIC C.M. SOLIS Assistant National Secretary DEAN PACIFICO A. AGABIN General Counsel ROAN I. LIBARIOS Editor-in-Chief, IBP Journal JOSE AMOR M. AMORADO Presidential Assistant for External Affairs HERMINIO HARRY L. ROQUE, JR. Presidential Assistant for Human Rights OLIVER B. SAN ANTONIO Presidential Assistant for Public Relations

Integrated Bar of the Philippines 15 J. Vargas Avenue, Ortigas Center, Pasig City 1600 Telephone: (632) 631-3014/18 Fax: (632) 634-4697 Website: www.ibp.org.ph Email: journal@ibp.org.ph VOLUME 33 NUMBER 2 (SEPTEMBER 2008)

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