Contents

Rosana vs Molave....................................................................................................... 1
Anchor savings vs Furigay.......................................................................................... 6
Clidoro vs Jalmanzar................................................................................................. 19
LPB vs Cacayuran..................................................................................................... 26
Resident Marine mamals vs Reyes...........................................................................32
Holy Trinity vs Dela Cruz........................................................................................... 65
Sps Hing vs Choachuy.............................................................................................. 89
Aguilar vs OPallick................................................................................................... 96
Oposa vs Factoran.................................................................................................. 102

Rosana vs Molave
SECOND DIVISION

DOA ROSANA REALTY AND G.R. No. 180523

DEVELOPMENT CORPORATION
and SY KA KIENG,
Petitioners, Present:
CARPIO, J., Chairperson,
- versus - BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.
MOLAVE DEVELOPMENT
CORPORATION represented by Promulgated:
TEOFISTA TINITIGAN,
Respondent. March 26, 2010
x --------------------------------------------------------------------------------------- x
DECISION
ABAD, J.:
1

This case is about the propriety of the trial courts dismissal of the plaintiffs complaint after
receiving evidence at a preliminary hearing of the affirmative defenses raised by the defendant.
The Facts and the Case
Carmelita Austria Medina (Medina) owned an 86.4959-hectare land in Anupil, Bamban, Tarlac,
covered by Transfer Certificate of Title (TCT) T-31590. On December 16, 1994 she executed a
contract to sell the land to respondent Molave Development Corporation (Molave Development),
represented
by
its
president, Teofista P. Tinitigan (Tinitigan),
for P14
million. Molave Development paid P1 million to Medina upon the signing of the contract
and P1.3 million more as first installment. But it refused to pay the rest of the installments on
being informed by the Department of Agrarian Reform (DAR) of the existence of alleged tenants
on the land.
Two years later or in January 1997, Medina wrote respondent Molave Development a
letter, rescinding the contract to sell between them. Molave Development later learned that a
month earlier or on December 18, 1996, Medina sold the land to petitioner Doa Rosana Realty
and Development Corporation (Doa Rosana Realty) to whom the Register of Deeds issued TCT
288633.
After learning of the sale or on March 3, 1997 respondent Molave Development filed
with the Regional Trial Court (RTC) of Capas, Tarlac, an action for specific performance,
delivery of possession, and annulment of title in Civil Case 389 against Medina,
petitioner Doa Rosana Realty,
and
its
chairman
of
the
board
of
directors, Sy Ka Kieng. Molave Development
claimed
that Medina and Doa Rosana Realty
conspired to deprive it of the lot and prayed for an award of moral and exemplary damages plus
attorneys fees for a total of P1.1 million.
By way of third party complaint, petitioner Doa Rosana Realty sued Medinas
nephew, Wilfredo Miranda, and the latters lawyer, Atty. Delfin Supapo, Jr., for allegedly
conniving with Medina in concealing from it the contract to sell that Medina entered into with
respondent Molave Development.

The RTC declared Medina in default. Petitioner Doa Rosana Realty, on the other hand, filed an
answer and a motion to set the case for preliminary hearing on its special and affirmative
defenses. Doa Rosana Realty claimed that it acted in good faith in purchasing the property and
that respondent Molave Development was estopped from questioning the sale because it agreed
to cancel the contract to sell and, after the complaint was filed, its president, Tinitigan, received
from Medinas counsel a P1.3 million partial reimbursement as shown by a receipt dated March
13, 1997.[1]
For its part, Molave Development presented Tinitigans letter to Medina dated March 15,
1997, informing the latter that she (Tinitigan) was treating the P1.3 million as partial payment for
the damages she sought in the pending case before the trial court.
On February 5, 1998 the RTC denied petitioner Doa Rosana Realtys motion to dismiss[2] but, on
petition with the Court of Appeals (CA), the latter court directed the RTC to conduct a
preliminary hearing on Doa Rosana Realtys special affirmative defense of good faith. [3] The RTC
did so and on November 19, 2003 it dismissed the complaint insofar as Doa Rosana Realty
and Sy Ka Kieng were concerned.[4] It held that the latter were buyers in good faith and,
therefore, respondent MolaveDevelopment had no cause of action against them. On July 16,
2004 the trial court denied Molave Developments motion for reconsideration.[5]
On appeal, the CA held that contrary to the ruling of the trial court,
respondent Molave Developments complaint in fact stated a cause of action against Medina and
petitioner Doa Rosana Realty. The CA thus remanded the case to the RTC for further
proceedings.[6] Not satisfied with this ruling, Doa Rosana Realty took recourse to this Court
through the present petition.

The Issue Presented

The issue presented in this case is whether or not the CA erred in holding that no ground
existed
for
dismissing
respondent Molave Developments
complaint
against
petitioner Doa Rosana Realty given that such complaint stated a cause of action.
The Courts Ruling
3

The CA held, after closely examining respondent Molave Developments complaint below, that
the same in fact stated a cause of action. The complaint alleged that the circumstances show
conspiracy and/or collusion to defraud plaintiffs by defendants.
But the CA seems to have missed the point in the RTC decision. It will be recalled that
petitioner Doa Rosana Realty filed a motion with the RTC to hear and resolve its affirmative
defenses. The RTC did so and resolved to deny the motion. On a petition filed with the CA,
however, the latter court directed the RTC to hear and resolve Doa Rosana Realtys affirmative
defense of good faith in buying Medinas property. The RTC complied and, after hearing the
evidence of the parties, dismissed the case, holding that Doa Rosana Realty and its president
were buyers of the property in good faith and Molave Development did not have a cause of
action against them. Clearly, The RTC did not dismiss the case on the ground that the complaint
did not state a cause of action, which is an entirely different matter.
Section 1, Rule 16 of the Rules of Civil Procedure provides that the trial court may dismiss a
complaint on the ground that the claim or demand set forth in the plaintiffs complaint has been
paid, waived, abandoned, or otherwise extinguished. This ground essentially admits the
obligation set out in the complaint but points out that such obligation has been extinguished, in
this case apparently by abandonment after respondent Molave Development received partial
reimbursement from Medina as a consequence of the cancellation of contract to sell between
them.
On March 13, 1997, 10 days after it filed its complaint with the
RTC, Molave Development acknowledged having received P1.3 million as a consideration for
the cancellation of its contract to sell with Medina. The acknowledgment receipt its president
signed reads:
ACKNOWLEDGMENT RECEIPT
This is to acknowledge the receipt of one (1) Allied Bank Check No.
25111954 dated March 4, 1997 in the amount of ONE MILLION THREE
HUNDRED THOUSAND (P1,300,000.00) from Ms. Carmelita Austria
Medina as partial reimbursement pursuant to the cancelled Contract to Sell
(Doc. No. 447; page 190; Book 114; Series of 1994 Notarial Register of
Atty. Delfin R. Supapo, Jr.) entered into between Ms. Medina
and Molave Dev. Corporation over that parcel of land located
at Bamban, Tarlaccovered by TCT No. T-31590.[7]
4

Makati City. March 13, 1997.

MOLAVE DEV. CORPORATION
by:
TEOFISTA P. TINITIGAN
President[8]
Tinitigan of respondent Molave Development of course later asserted that she signed the
above receipt because Medinas lawyer would not have released the check to her. But this is not a
valid ground for claiming vitiation of consent. If she did not want to agree to the cancellation,
she had no business signing the receipt and accepting the check. She could very well have stood
her ground and pressed for complete performance of the contract to sell. Having received
the P1.3 million, MolaveDevelopments remaining remedy was to pursue a claim for the balance
of P1 million that it paid Medina upon the execution of the contract to sell.
Further, as the RTC correctly held, respondent Molave Development failed to overcome
the presumption of good faith in favor of petitioner Doa Rosana Realty.[9] The title to the
property was unencumbered when it bought the same. And the evidence shows
that Doa Rosana Realty learned of the existence of the unregistered contract to sell only after it
had bought the land. Indeed, it even filed a third party complaint against Willie Miranda and
Atty. Supapo, Jr., for allegedly conniving withMedina in concealing that contract to sell.
The letter of petitioner Doa Rosana Realtys lawyer to the DAR dated September 17,
1996, stating that Medina had retained him to represent her in the tenancy case involving the
land cannot serve as notice to Doa Rosana Realty that Medinaexecuted a contract to sell in favor
of respondent Molave Development. The letter did not mention such contract. At best, the letter
served as notice to Doa Rosana Realty that the land could have a tenancy problem.
In light of the foregoing, the Court holds that respondent Molave Development has no
valid claim against petitioner Doa Rosana Realty and its president.
WHEREFORE, the Court REVERSES and SETS ASIDE the September 11, 2007
Decision and November 9, 2007 Resolution of the Court of Appeals in CA-G.R. CV 83599
and REINSTATES the November 19, 2003 Resolution of the Regional Trial Court
of Capas, Tarlac, Branch 66, dismissing the complaint against Doa Rosana Realty Development
Corporation and Sy Ka Kieng in Civil Case 389.
5

SO ORDERED.

Anchor savings vs Furigay

THIRD DIVISION
G.R. NO. 191178 : March 13, 2013
ANCHOR SAVINGS BANK (FORMERLY ANCHOR FINANCE AND
INVESTMENT
CORPORATION), Petitioner, v.HENRY
H.
FURIGAY,
GELINDA C. FURIGAY, HERRIETTE C. FURIGAY and HEGEM C.
FURIGAY, Respondents.
DECISION
MENDOZA, J.:
This concerns a petition for review_ on certiorari filed by petitioner Anchor
Savings Bank (ASB) under Rule 45 of the 1997 Rules of Civil Procedure,
assailing the May 28, 2009 Decision1and the January 22, 2010 Resolution 2 of
the Court of Appeals (CA), in CA-G.R. CV No. 90123, dismissing the
appeal.3chanroblesvirtualawlibrary
The assailed resolution denied the separate motions for reconsideration of
both parties.
The Facts
On April 21, 1999, ASB filed a verified complaint for sum of money and
damages with application for replevin against Ciudad Transport Services, Inc.
(CTS), its president, respondent Henry H. Furigay; his wife, respondent
Gelinda C. Furigay; and a "John Doe." The case was docketed as Civil Case
No. 99-865 and raffled to Branch 143 of the Regional Trial Court of Makati
City (RTC).4chanroblesvirtualawlibrary
On November 7, 2003, the RTC rendered its Decision 5 in favor of ASB, the
dispositive portion of which reads:chanroblesvirtualawlibrary
WHEREFORE, judgment is hereby rendered in favor of plaintiff Anchor
Savings Bank ordering defendants Ciudad Transport Services, Inc., Henry H.
6

Furigay
and
Genilda
C.
following:chanroblesvirtualawlibrary

Furigay

to

pay

the

1) The amount of Eight Million Six Hundred Ninety Five Thousand Two
Hundred

Two

pesos

and

Fifty

Nine

centavos

(Php8,695,202.59)

as

PRINCIPAL OBLIGATION as of 12 April 1999;cralawlibrary

2) An INTEREST of Twelve per cent (12%) per annum until fully
paid;cralawlibrary
3) PENALTY CHARGE of Twelve per cent (12%) per annum until fully
paid;cralawlibrary
4) LIQUIDATED DAMAGES of Ten (10%) per cent of the total amount
due;cralawlibrary
5)

One

Hundred

Thousand

pesos

as

reasonable

ATTORNEY'S

FEES;cralawlibrary
6) Costs of suit.
SO ORDERED.6chanroblesvirtualawlibrary
While Civil Case No. 99-865 was pending, respondent spouses donated their
registered properties in Alaminos, Pangasinan, to their minor children,
respondents Hegem G. Furigay and Herriette C. Furigay. As a result, Transfer
Certificate of Title (TCT) Nos. 21743, 7 21742,8 21741,9 and 2174010 were
issued in the names of Hegem and Herriette Furigay.
Claiming that the donation of these properties was made in fraud of
creditors, ASB filed a Complaint for Rescission of Deed of Donation, Title and
Damages11 against the respondent spouses and their children. The case was
docketed as Civil Case No. A-3040 and raffled to Branch 55 of the RTC of
Alaminos, Pangasinan. In its Complaint, ASB made the following
allegations:chanroblesvirtualawlibrary
xxx
4. That Ciudad Transport Services, Inc., Henry H. Furigay and Gelinda C.
Furigay obtained a loan from Anchor Savings Bank and subsequently the
7

former defaulted from their loan obligation which prompted Anchor Savings
Bank to file the case entitled "Anchor Savings Bank vs. Ciudad Transport
Services, Inc., Henry H. Furigay and Gelinda C. Furigay" lodged before
Makati City Regional Trial Court Branch 143 and docketed as Civil Case No.
99-865. On 7 November 2003 the Honorable Court in the aforesaid case
issued

Decision

the

dispositive

portion

of

which

reads

as

follows:chanroblesvirtualawlibrary
xxx
5. That defendants Sps. Henry H. Furigay and Gelinda C. Furigay are the
registered owners of various real properties located at the Province of
Pangasinan covered by Transfer Certificate of Title Nos. 19721, 21678,
21679, and 21682. x x x
6. That on 8 March 2001 defendants Sps. Henry H. Furigay and Gelinda C.
Furigay executed a Deed of Donation in favor of their children herein
defendants Hegem C. Furigay and Herriette C. Furigay donating to them all
of the above-mentioned properties. Hence, the following titles were issued
under their names to wit: Transfer Certificate of Title Nos. 21743, 21742,
21741, and 21740. x x x
7. That the donation made by defendants Sps. Henry H. Furigay and Gelinda
C. Furigay were done with the intention to defraud its creditors particularly
Anchor Savings Bank. Said transfer or conveyance is the one contemplated
by

Article

1387

of

the

New

Civil

Code,

which

reads:chanroblesvirtualawlibrary
xxx
8. x x x In the instant case, Sps. Furigay donated the properties at the time
there was a pending case against them. x x x. In the instant case, the Sps.
Furigay donated the properties to their son and daughter. Moreover, the
transfer or donation was executed in 2001 when both donees Hegem C.
Furigay and Herriette C. Furigay are minors.

9. Clearly, the Donation made by defendants Sps. Furigay was intended to

deprive plaintiff Anchor Savings Bank from going after the subject properties
to answer for their due and demandable obligation with the Bank. The
donation being undertaken in fraud of creditors then the same may be
rescinded pursuant to Article 1381 of the New Civil Code. The said provision
provides that: x x x
Consequently, Transfer Certificate of Title Nos. 21743, 21742, 21741, and
21740 issued under the names of defendants Herriette C. Furigay and
Hegem C. Furigay should likewise be cancelled and reverted to the names of
co-defendants Henry and Gelinda Furigay.
10. That because of the fraud perpetrated by defendants, plaintiff suffered
the following damages.
11. Plaintiff suffered actual and compensatory damages as a result of the
filing of the case the bank has spent a lot of man-hours of its employees and
officers re-evaluating the account of defendant Sps. Furigay. Such man-hour
when converted into monetary consideration represents the salaries and per
diems of its employees particularly the CI/Appraiser, Head Office Lawyer and
Bank Auditor;cralawlibrary
12.

Said

claim

likewise

represents

administrative

expenses

such as

transportation expenses, reproduction of documents, and courier expenses

among others;cralawlibrary
13. Defendants should be made to pay plaintiff Anchor Savings Bank the
amount of PESOS: ONE MILLION (P1,000,000.00) as moral damages for the
damage

it

caused

to

the

latter's

business

goodwill

and

reputation;cralawlibrary
14. By way of example for the public and to deter others from the malicious
filing of baseless (sic) suit, defendants should be ordered to pay [plaintiff]
the amount of PESOS: TWO HUNDRED THOUSAND (P200,000.00) as
exemplary damages.

15. Attorneys fees equivalent to twenty-five percent (25%) of the total

amount that can be collected from defendant;cralawlibrary
16. Defendants should also be held liable to pay for the cost of
suit.12chanroblesvirtualawlibrary
Instead of filing an answer, respondents sought the dismissal of the
complaint, principally arguing that the RTC failed to acquire jurisdiction over
their persons as well as over the subject matter in view of the failure of the
ASB to serve the summons properly and to pay the necessary legal fees.
RTC Resolutions
On September 29, 2006, the RTC issued an Order 13 denying the motion to
dismiss. Respondents sought reconsideration of the Order adding that the
ASB's action for rescission had already prescribed.
Upon filing of ASB's opposition to the motion for reconsideration, on
February 27, 2007, the RTC reconsidered its earlier pronouncement and
dismissed the complaint for failure of ASB to pay the correct docket fees and
for prescription.14chanroblesvirtualawlibrary
RTC explained that the service of summons by publication made by ASB was
valid because respondents' whereabouts could not have been ascertained
with exactitude and because Section 14, Rule 14 of the Rules of Court did
not distinguish what kind of action it would apply.
On the issue of lack of jurisdiction over the subject matter of the case, the
RTC ruled that the complaint was actually a real action as it affected title to
or possession of real property. Accordingly, the basis for determining the
correct docket fees was the fair market value of the real property under
litigation as stated in its current tax declaration or its current zonal
valuation, whichever was higher. Considering that ASB did not state the
current tax declaration or current zonal valuation of the real properties
involved, as well as the amount of actual damages and attorney's fees it
prayed for, the trial court was of the view that ASB purposely evaded the
payment of the correct filing fees.
On the issue of prescription, the RTC ruled that the action for rescission had
already prescribed. It stated that an action for rescission grounded on fraud
should be filed within four (4) years from the discovery of fraud. ASB filed
the action for rescission only on October 14, 2005 or after four (4) years
10

from the time the Deed of Donation was registered in the Register of Deeds
of Alaminos, Pangasinan, on April 4, 2001. The four-year prescriptive period
should be reckoned from the date of registration of the deed of donation and
not from the date of the actual discovery of the registration of the deeds of
donation because registration is considered notice to the whole world. Thus,
the RTC disposed:chanroblesvirtualawlibrary
WHEREFORE, premises considered, the Order dated September 29, 2006 is
hereby reconsidered and set aside, in lieu thereof, the instant complaint is
hereby ordered dismissed on the account of lack of jurisdiction over the
subject matter of the case for failure of the plaintiff to pay the correct docket
fees upon its institution attended by bad faith and on the ground of
prescription.
SO ORDERED.15chanroblesvirtualawlibrary
ASB sought reconsideration, but to no avail.16chanroblesvirtualawlibrary
Ruling of the CA
On appeal, the CA agreed with ASB that its complaint should not have been
dismissed on the ground that it failed to pay the correct docket fees. It
stated that the lack of specific amount of actual damages and attorney's fees
in ASB's complaint did not, by itself, amount to evident bad faith. The CA
noted that ASB had previously manifested before the trial court that it was
willing to pay additional docket fees should the same be found insufficient.
On the issue of prescription, however, the CA saw things differently.
Considering the subsidiary nature of an action for rescission, the CA found
that the action of ASB had not yet prescribed, but was premature. The CA
noted that ASB failed to allege in its complaint that it had resorted to all
legal
remedies
to
obtain
satisfaction
of
its
claim.
The
CA
wrote:chanroblesvirtualawlibrary
After a thorough examination of the foregoing precepts and the facts
engirding this case, this court opines that plaintiff-appellant's action for
rescission has not yet prescribed for it must be emphasized that it has not
even accrued in the first place. To stress, an action for rescission or accion
pauliana
accrues
only
if
all
five
requisites
are
present,
to
wit:chanroblesvirtualawlibrary
1) That the plaintiff asking for rescission, has a credit prior to the alienation,
although demandable later;cralawlibrary
11

2) That the debtor has made a subsequent contract conveying a patrimonial

benefit to a third person;cralawlibrary
3) That the creditor has no other legal remedy to satisfy his claim, but would
benefit by rescission of the conveyance to the third person;cralawlibrary
4) That the act being impugned is fraudulent; and
5) That the third person who received the property conveyed, if by onerous
title, has been an accomplice in the fraud.
In the instant case, the plaintiff-appellant failed to satisfy the third
requirement considering that it did not allege in its complaint that it has
resorted to all legal remedies to obtain satisfaction of his claim. It did not
even point out in its complaint if the decision in Civil Case No. 99-865 has
already become final and executory and whether the execution thereof
yielded negative result in satisfying its claims. Even the skip tracing allegedly
done by the plaintiff-appellant to locate the properties of the defendantappellees was not mentioned. And although the skip tracing reports were
subsequently presented by the plaintiff-appellant, such reports are not
sufficient to satisfy the third requirement. First, they are not prepared and
executed by the sheriff, and second, they do not demonstrate that the sheriff
failed to enforce and satisfy the judgment of the court and that the plaintiffappellant has exhausted the property of the defendant-appellees. Perforce,
the
action
for
rescission
filed
by
the
plaintiff-appellant
is
17
dismissible. chanroblesvirtualawlibrary
As stated at the outset, both parties sought reconsideration but were
rebuffed.
Issue
Hence, this recourse of ASB to the Court, presenting the lone issue
of:chanroblesvirtualawlibrary
WHETHER OR NOT THE COURT OF APPEALS, IN CA G.R. CV NO 90123, HAS
DECIDED A QUESTION OF SUBSTANCE, NOT HERETOFORE DETERMINED BY
THE SUPREME COURT, OR HAS DECIDED IT IN A WAY PROBABLY NOT IN
ACCORDANCE WITH LAW OR THE APPLICABLE DECISIONS OF THE SUPREME
COURT, WHEN IT RENDERED THE DECISION DATED 28 MAY 2009, AND
RESOLUTION DATED 22 JANUARY 2010, IN FINDING THAT PETITIONER
12

FAILED TO PROVE THAT IT HAS RESORTED TO ALL LEGAL REMEDIES TO

OBTAIN SATISFACTION OF ITS CLAIM, WITHOUT GIVING PETITIONER THE
OPPORTUNITY TO BE HEARD OR THE CHANCE TO PRESENT EVIDENCE TO
SUPPORT ITS ACTION, THEREBY DEPRIVING THE LATTER OF THE RIGHT TO
DUE PROCESS.18chanroblesvirtualawlibrary
ASB argues that, considering that its action was still in its preliminary
stages, the CA erred in dismissing its action on the ground that it failed to
allege in its complaint the fact that it had resorted to all other legal remedies
to satisfy its claim, because it is a matter that need not be alleged in its
complaint, but, rather, to be proved during trial. It asserts that its action is
not yet barred by prescription, insisting that the reckoning point of the four
(4)-year prescriptive period should be counted from September 2005, when
it discovered the fraudulent donation made by respondent spouses.
The basic issue in this case is whether the CA was correct in dismissing
ASB's complaint on the ground that the action against respondents was
premature.
Ruling of the Court
The Court finds the petition bereft of merit.
Section 1 of Rule 2 of the Revised Rules of Court requires that every
ordinary civil action must be based on a cause of action. Section 2 of the
same rule defines a cause of action as an act or omission by which a party
violates the right of another. In order that one may claim to have a cause of
action, the following elements must concur: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created;
(2) an obligation on the part of the named defendant to respect or not to
violate such right; and (3) an act or omission on the part of such defendant
in violation of the right of the plaintiff or constituting a breach of the
obligation of the defendant to the plaintiff for which the latter may maintain
an action for recovery of damages or other appropriate relief.19 In other
words, "a cause of action arises when that should have been done is not
done,
or
that
which
should
not
have
been
done
is
20
done." chanroblesvirtualawlibrary
In Philippine American General Insurance Co., Inc. v. Sweet Lines, Inc.,21 it
was held that "before an action can properly be commenced, all the essential
elements of the cause of action must be in existence, that is, the cause of
action must be complete. All valid conditions precedent to the institution of
13

the particular action, whether prescribed by statute, fixed by agreement of

the parties or implied by law must be performed or complied with before
commencing the action, unless the conduct of the adverse party has been
such as to prevent or waive performance or excuse non-performance of the
condition."
Moreover, it is not enough that a party has, in effect, a cause of action.
The rules of procedure require that the complaint must contain a concise
statement of the ultimate or essential facts constituting the plaintiff's cause
of action. "The test of the sufficiency of the facts alleged in the complaint is
whether or not, admitting the facts alleged, the court can render a valid
judgment upon the same in accordance with the prayer of plaintiff." 22 The
focus is on the sufficiency, not the veracity, of the material allegations.
Failure to make a sufficient allegation of a cause of action in the complaint
warrants its dismissal.23chanroblesvirtualawlibrary
In relation to an action for rescission, it should be noted that the remedy of
rescission is subsidiary in nature; it cannot be instituted except when the
party suffering damage has no other legal means to obtain reparation for the
same.24 Article
1177
of
the
New
Civil
Code
provides:chanroblesvirtualawlibrary
The creditors, after having pursued the property in possession of the debtor
to satisfy their claims, may exercise all the rights and bring all the actions of
the latter for the same purpose, save those which are inherent in his person;
they may also impugn the actions which the debtor may have done to
defraud them. (Emphasis added)
Consequently, following the subsidiary nature of the remedy of rescission, a
creditor would have a cause of action to bring an action for rescission, if it is
alleged that the following successive measures have already been taken: (1)
exhaust the properties of the debtor through levying by attachment and
execution upon all the property of the debtor, except such as are exempt by
law from execution; (2) exercise all the rights and actions of the debtor, save
those personal to him (accion subrogatoria); and (3) seek rescission of the
contracts executed by the debtor in fraud of their rights (accion
pauliana).25chanroblesvirtualawlibrary
With respect to an accion pauliana, it is required that the ultimate facts
constituting the following requisites must all be alleged in the complaint,
viz.:chanroblesvirtualawlibrary

14

1) That the plaintiff asking for rescission, has credit prior to the alienation,
although demandable later;cralawlibrary
2) That the debtor has made a subsequent contract conveying a patrimonial
benefit to a third person;cralawlibrary
3) That the creditor has no other legal remedy to satisfy his claim, but would
benefit by rescission of the conveyance to the third person;cralawlibrary
4) That act being impugned is fraudulent; and
5) That the third person who received the property conveyed, if by onerous
title, has been an accomplice in the fraud.26chanroblesvirtualawlibrary
A cursory reading of the allegations of ASB's complaint would show that it
failed to allege the ultimate facts constituting its cause of action and the
prerequisites that must be complied before the same may be instituted.
ASB, without availing of the first and second remedies, that is, exhausting
the properties of CTS, Henry H. Furigay and Genilda C. Furigay or their
transmissible rights and actions, simply undertook the third measure and
filed an action for annulment of the donation. This cannot be done. The
Court hereby quotes with approval the thorough discourse of the CA on this
score:27chanroblesvirtualawlibrary
To answer the issue of prescription, the case of Khe Hong Cheng vs. Court of
Appeals (G.R. NO. 144169, March 28, 2001) is pertinent. In said case,
Philam filed an action for collection against Khe Hong Cheng. While the case
was still pending, or on December 20, 1989, Khe Hong Cheng, executed
deeds of donations over parcels of land in favor of his children, and on
December 27, 1989, said deeds were registered. Thereafter, new titles were
issued in the names of Khe Hong Cheng's children. Then, the decision
became final and executory. But upon enforcement of writ of execution,
Philam found out that Khe Hong Cheng no longer had any property in his
name. Thus, on February 25, 1997, Philam filed an action for rescission of
the deeds of donation against Khe Hong Cheng alleging that such was made
in fraud of creditors. However, Khe Hong Cheng moved for the dismissal of
the action averring that it has already prescribed since the four-year
prescriptive period for filing an action for rescission pursuant to Article 1389
of the Civil Code commenced to run from the time the deeds of donation
were registered on December 27, 1989. Khe Hong Cheng averred that
registration amounts to constructive notice and since the complaint was filed
15

only on February 25, 1997, or more than four (4) years after said
registration, the action was already barred by prescription. The trial court
ruled that the complaint had not yet prescribed since the prescriptive period
began to run only from December 29, 1993, the date of the decision of the
trial court. Such decision was affirmed by this court but reckoned the accrual
of Philam's cause of action in January 1997, the time when it first learned
that the judgment award could not be satisfied because the judgment
creditor, Khe Hong Cheng, had no more properties in his name. Hence, the
case reached the Supreme Court which ruled that the action for rescission
has not yet prescribed, ratiocinating as follows:chanroblesvirtualawlibrary
"Essentially, the issue for resolution posed by petitioners is this: When did
the four (4) year prescriptive period as provided for in Article 1389 of the
Civil Code for respondent Philam to file its action for rescission of the subject
deeds of donation commence to run?
The petition is without merit.
Article 1389 of the Civil Code simply provides that, The action to claim
rescission must be commenced within four years. Since this provision of law
is silent as to when the prescriptive period would commence, the general
rule, i.e, from the moment the cause of action accrues, therefore, applies.
Article
1150
of
the
Civil
Code
is
particularly
instructive:chanroblesvirtualawlibrary
ARTICLE 1150. The time for prescription for all kinds of actions, when there
is no special provision which ordains otherwise, shall be counted from the
day they may be brought.
Indeed, this Court enunciated the principle that it is the legal possibility of
bringing the action which determines the starting point for the computation
of the prescriptive period for the action. Article 1383 of the Civil Code
provides as follows:chanroblesvirtualawlibrary
ARTICLE 1383. An action for rescission is subsidiary; it cannot be instituted
except when the party suffering damage has no other legal means to obtain
reparation for the same.
It is thus apparent that an action to rescind or an accion pauliana must be of
last resort, availed of only after all other legal remedies have been
exhausted and have been proven futile. For an accion pauliana to accrue, the
following requisites must concur:chanroblesvirtualawlibrary

16

1) That the plaintiff asking for rescission, has a credit prior to the alienation,
although demandable later; 2) That the debtor has made a subsequent
contract conveying a patrimonial benefit to a third person; 3) That the
creditor has no other legal remedy to satisfy his claim, but would benefit by
rescission of the conveyance to the third person; 4) That the act being
impugned is fraudulent; 5) That the third person who received the property
conveyed, if by onerous title, has been an accomplice in the fraud.
We quote with approval the following disquisition of the CA on the
matter:chanroblesvirtualawlibrary
An accion pauliana accrues only when the creditor discovers that he has no
other legal remedy for the satisfaction of his claim against the debtor other
than an accion pauliana. The accion pauliana is an action of a last resort. For
as long as the creditor still has a remedy at law for the enforcement of his
claim against the debtor, the creditor will not have any cause of action
against the creditor for rescission of the contracts entered into by and
between the debtor and another person or persons. Indeed, an accion
pauliana presupposes a judgment and the issuance by the trial court of a
writ of execution for the satisfaction of the judgment and the failure of the
Sheriff to enforce and satisfy the judgment of the court. It presupposes that
the creditor has exhausted the property of the debtor. The date of the
decision of the trial court against the debtor is immaterial. What is important
is that the credit of the plaintiff antedates that of the fraudulent alienation by
the debtor of his property. After all, the decision of the trial court against the
debtor will retroact to the time when the debtor became indebted to the
creditor.
Petitioners, however, maintain that the cause of action of respondent Philam
against them for the rescission of the deeds of donation accrued as early as
December 27, 1989, when petitioner Khe Hong Cheng registered the subject
conveyances with the Register of Deeds. Respondent Philam allegedly had
constructive knowledge of the execution of said deeds under Section 52 of
Presidential
Decree
No.
1529,
quoted
infra,
as
follows:chanroblesvirtualawlibrary
SECTION 52. Constructive knowledge upon registration. Every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry
affecting registered land shall, if registered, filed or entered in the Office of
the Register of Deeds for the province or city where the land to which it
relates lies, be constructive notice to all persons from the time of such
registering, filing, or entering.

17

Petitioners argument that the Civil Code must yield to the Mortgage and
Registration Laws is misplaced, for in no way does this imply that the specific
provisions of the former may be all together ignored. To count the four year
prescriptive period to rescind an allegedly fraudulent contract from the date
of registration of the conveyance with the Register of Deeds, as alleged by
the petitioners, would run counter to Article 1383 of the Civil Code as well as
settled jurisprudence. It would likewise violate the third requisite to file an
action for rescission of an allegedly fraudulent conveyance of property, i.e.,
the creditor has no other legal remedy to satisfy his claim.
An accion pauliana thus presupposes the following: 1) A judgment; 2) the
issuance by the trial court of a writ of execution for the satisfaction of the
judgment, and 3) the failure of the sheriff to enforce and satisfy the
judgment of the court. It requires that the creditor has exhausted the
property of the debtor. The date of the decision of the trial court is
immaterial. What is important is that the credit of the plaintiff antedates that
of the fraudulent alienation by the debtor of his property. After all, the
decision of the trial court against the debtor will retroact to the time when
the debtor became indebted to the creditor.
xxx
Even if respondent Philam was aware, as of December 27, 1989, that
petitioner Khe Hong Cheng had executed the deeds of donation in favor of
his children, the complaint against Butuan Shipping Lines and/or petitioner
Khe Hong Cheng was still pending before the trial court. Respondent Philam
had no inkling, at the time, that the trial court's judgment would be in its
favor and further, that such judgment would not be satisfied due to the
deeds of donation executed by petitioner Khe Hong Cheng during the
pendency of the case. Had respondent Philam filed his complaint on
December 27, 1989, such complaint would have been dismissed for being
premature. Not only were all other legal remedies for the enforcement of
respondent Philam's claims not yet exhausted at the time the deeds of
donation were executed and registered. Respondent Philam would also not
have been able to prove then that petitioner Khe Hong Cheng had no more
property other than those covered by the subject deeds to satisfy a
favorable judgment by the trial court.
xxx
As mentioned earlier, respondent Philam only learned about the unlawful
conveyances made by petitioner Khe Hong Cheng in January 1997 when its
counsel accompanied the sheriff to Butuan City to attach the properties of
18

petitioner Khe Hong Cheng. There they found that he no longer had any
properties in his name. It was only then that respondent
Philam's action for rescission of the deeds of donation accrued because then
it could be said that respondent Philam had exhausted all legal means to
satisfy the trial court's judgment in its favor. Since respondent Philam filed
its complaint for accion pauliana against petitioners on February 25, 1997,
barely a month from its discovery that petitioner Khe Hong Cheng had no
other property to satisfy the judgment award against him, its action for
rescission of the subject deeds clearly had not yet prescribed."
From the foregoing, it is clear that the four-year prescriptive period
commences to run neither from the date of the registration of the deed
sought to be rescinded nor from the date the trial court rendered its decision
but from the day it has become clear that there are no other legal remedies
by which the creditor can satisfy his claims. [Emphases in the original]
In all, it is incorrect for ASB to argue that a complaint need not allege all the
elements constituting its cause of action since it would simply adduce proof
of the same during trial. "Nothing is more settled than the rule that in a
motion to dismiss for failure to state a cause of action, the inquiry is "into
the sufficiency, not the veracity, of the material allegations." 28 The inquiry is
confined to the four comers of the complaint, and no other.29 Unfortunately
for ASB, the Court finds the allegations of its complaint insufficient in
establishing its cause of action and in apprising the respondents of the same
so that they could defend themselves intelligently and effectively pursuant to
their right to due process. It is a rule of universal application that courts of
justice are constituted to adjudicate substantive rights. While courts should
consider public policy and necessity in putting an end to litigations speedily
they must nevertheless harmonize such necessity with the fundamental right
of litigants to due process.
WHEREFORE, the petition is DENIED.
SO ORDERED.
Clidoro vs Jalmanzar
THIRD DIVISION
G.R. No. 176598

July 9, 2014

19

PETRONIO CLIDORO, DIONISIO CLIDORO, LOLITA CLIDORO, CALIXTO CARD

ANO, JR., LOURDES CLIDORO-LARIN, MATEO CLIDORO and MARLIZA
CLIDORO-DE
UNA, Petitioners,
vs.
AUGUSTO JALMANZAR, GREGORIO CLIDORO, JR., SENECA CLIDOROCIOCSON, MONSERAT CLIDORO-QUIDAY, CELESTIAL CLIDORO-BINASA,
APOLLO CLIDORO, ROSALIE CLIDORO-CATOLICO, SOPHIE CLIDORO, and JOSE
CLIDORO, JR., Respondents.
DECISION
PERALTA, J.:
This deals with the Petition for Review on Certiorari under Rule 45 of the Rules of Court
praying that the Decision1of the Court of Appeals (CA), dated October 17, 2006, and its
Resolution2 dated February 6, 2007, denying herein petitioner's motion for
reconsideration of the Decision, be reversed and set aside.
The antecedent facts, as set forth in the CA Decision, are undisputed, to wit:
The instant appeal stemmed from a complaint, docketed as Civil Case No. T-2275 for
revival of judgment filed by Rizalina Clidoro, et al. against Onofre Clidoro, et al., praying
that the Decisiondated November 13, 1995 of the Court of Appeals (CA) in CA-G.R. CV
No. 19831, which affirmed with modification the RTC Decision dated March 10, 1988 in
Civil Case No. T-98 for partition, berevived and that the corresponding writ of execution
be issued. The dispositive portion ofthe CA Decision reads:
The estate of the late Mateo Clidoro, excepting that described in paragraph (i) of the
Complaint, is hereby ordered partitioned in the following manner:
1. One-fifth portion to the Plaintiffs-Appellees, by right of representation to the hereditary
share of Gregorio Clidoro, Sr.;
2. One-fifth portion to Defendant-Appellant Antonio Clidoro or his legal heirs;
3. One-fifth portion to Appellant Josaphat Clidoro;
4. One-fifth portion to Appellant Aida Clidoro; 5. One-tenth portion to Gregoria Clidoro,
as her legitime in the hereditary share of Onofre Clidoro; and
6. One-tenth portion to Catalino Morate, as successor-ininterest to the legitime of
Consorcia Clidoro.
SO ORDERED.

20

On September 3, 2003, defendants-appellees except Gregoria Clidoro-Palanca, moved

to dismiss the said complaint on the following grounds: "1.) The petition, not being
brought up against the real partiesin-interest, is dismissible for lack of cause of action;
2.) The substitution of the parties defendant is improper and is not in accordance with
the rules; 3.) Even if the decision is ordered revived, the same cannot be executed
since the legal requirements of Rule 69, Section 3 of the 1997 Rules of Civil Procedure
has not been complied with; and 4.) The Judgment of the Honorable Court ordering
partition is merely interlocutory as it leaves something more to be done to complete the
disposition of the case."
After the filing of plaintiffs-appellants' Comment/Opposition to the Motion to Dismiss,
defendants-appellees' Reply, plaintiffs-appellants' Rejoinder and defendantsinterestedparties' Sur-Rejoinder, the RTC issued the assailed Order dated December 8,
2003 dismissing the instant complaint for lack of cause of action, the pertinent portion of
which reads:
"xxx
The complaint shows that most of the parties-plaintiffs, partiesdefendants and interested
parties are already deceased and have no more natural or material existence. This is
contrary to the provision of the Rules (Sec. 1, Rule 3, 1997 Rules of Civil Procedure).
They could no longer be considered as the real parties-in-interest. Besides, pursuant to
Sec. 3, Rule 3 (1997 Rules of Civil Procedure), where the action is allowed to be
prosecuted or defended by a representative or someone acting in fiduciary capacity, the
beneficiary shall be included in the title of the case. In the instant case the beneficiaries
are already deceased persons. Also, the Complaint states thatthey were the original
parties in Civil Case No. T-98 for Partition, but this is not so (paragraph 2). Some of the
parties are actually not parties to the original case, but representing the original parties
who are indicated as deceased.
From the foregoing, the Court finds the instant complaint to be flawed in form and
substance. The suit is not brought by the real parties-ininterest, thus a motion to dismiss
on the ground that the complaint states no cause of action is proper (Section 1(g), Rule
16).
WHEREFORE, the instant complaint is ordered DISMISSED for lack of cause of action.
SO ORDERED."
Plaintiffs-appellants moved for reconsideration of the foregoing Order with prayer to
admit the attached Amended Complaint impleading the additional heirs of the interested
party Josaphat Clidoro and the original plaintiffs Rizalina Clidoro-Jalmanzar, Cleneo
Clidoro and Aristoteles Clidoro. The same was,however, denied in the second assailed
order. x x x3

21

Respondents then appealed to the CA, and on October 17, 2006, the CA promulgated
its Decision reversing and setting aside the Orders of the RTC, and remanding the case
to the RTC for further proceedings. Petitioners motion for reconsideration of the
Decision was denied per Resolution dated February 6, 2007.
Hence, the present petition where the following issues are raised:
A. THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER THAT THERE
WAS NO PROPER SUBSTITUTION OF PARTIES IN THE INSTANT ACTION FOR
REVIVAL OF JUDGMENT.
B. THE HONORABLE COURT OF APPEALS ERRED IN CONSIDERING THE
RESPONDENTS AS WELL AS THE PETITIONERS AS THE REAL PARTIES-ININTEREST.
C. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT AMENDMENT
TO PLEADINGS WAS PROPERLY MADE AND IS APPLICABLE TO THE INSTANT
ACTION.
D. THE HONORABLE COURT OFAPPEALS ERRED IN RULING THAT THERE WAS
MERE MISJOINDER OF PARTIES IN THE INSTANT ACTION.4
The petition deserves scant consideration.
Reduced to its essence, the pivotal issue here is whether the complaint for revival of
judgment may be dismissed for lack of cause of action as it was not brought by or
against the real parties-in-interest.
First of all, the Court emphasizes that lack of cause of action is not enumerated under
Rule 16 of the Rules of Court as one of the grounds for the dismissal of a complaint. As
explained in Vitangcol v. New Vista Properties, Inc.,5 to wit:
Lack of cause of action is, however, not a ground for a dismissal of the complaint
through a motion to dismiss under Rule 16 of the Rules of Court, for the determination
of a lack of cause of action can only be made during and/or after trial. What is
dismissible via that mode is failure of the complaint to state a cause of action. Sec. 1(g)
of Rule 16 of the Rules of Court provides that a motion may be made on the ground
"that the pleading asserting the claim states no cause of action."
The rule is that in a motion to dismiss, a defendant hypothetically admits the truth ofthe
material allegations of the ultimate facts contained in the plaintiff's complaint. When a
motion to dismiss is grounded on the failure tostate a cause of action, a ruling thereon
should, as rule, be based only on the facts alleged in the complaint.x x x
xxxx

22

In a motion to dismiss for failureto state a cause of action, the focus is on the
sufficiency, not the veracity, of the material allegations. The test of sufficiency of facts
alleged in the complaint constituting a cause of action lies on whether or not the court,
admitting the facts alleged, could render a valid verdict in accordance with the prayer of
the complaint.x x x6
Again, in Manaloto v. Veloso III,7 the Court reiterated as follows:
When the ground for dismissal is that the complaint states no cause of action, such fact
can be determined only from the facts alleged in the complaint and fromno other, and
the court cannot consider other matters aliunde. The test, therefore, is whether,
assuming the allegations of fact in the complaint to be true, a valid judgment could be
rendered in accordance withthe prayer stated therein. 8
In this case, it was alleged in the complaint for revival of judgment that the parties
therein were also the parties inthe action for partition. Applying the foregoing test of
hypothetically admitting this allegation in the complaint, and not looking into the veracity
of the same, it would then appear that the complaint sufficiently stated a cause of action
as the plaintiffs in the complaint for revival of judgment (hereinafter respondents), as the
prevailing parties in the action for partition, had a right to seek enforcement of the
decision in the partition case.
It should be borne in mind that the action for revival of judgment is a totally separate
and distinct case from the original Civil Case No. T-98 for Partition. As explained in
Saligumba v. Palanog,9 to wit:
An action for revival of judgment is no more than a procedural means of securing the
execution of a previous judgment which has become dormant after the passage of five
years without it being executed upon motion of the prevailing party. It isnot intended to
re-open any issue affecting the merits of the judgment debtor's case nor the propriety or
correctness of the first judgment. An action for revival of judgment is a new and
independent action, different and distinct fromeither the recovery of property case or the
reconstitution case [in this case, the original action for partition], wherein the cause of
action is the decision itself and not the merits of the action upon which the judgment
sought to be enforced is rendered. x x x10
With the foregoing in mind, it is understandable that there would be instances where the
parties in the original case and in the subsequent action for revival of judgment would
not be exactly the same. The mere fact that the names appearing as parties in the the
complaint for revival of judgment are different from the names of the parties in the
original case would not necessarily mean that theyare not the real parties-in-interest.
What is important is that, as provided in Section 1, Rule 3 of the Rules of Court, they
are "the party who stands to be benefited or injured by the judgment in the suit, or the
party entitled to the avails of the suit." Definitely, as the prevailing parties in the previous
case for partition, the plaintiffs in the case for revival of judgment would be benefited by
the enforcement of the decision in the partition case.
23

Moreover, it would appear that petitioners are mistaken in alleging that respondents are
not the real parties-in-interest. The complaint for revival of judgment impleaded the
following parties:
[[reference
- http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/july2014/176598.pdf]]

PLAINTIFFS

DEFENDANTS

1. Rizalina Clidoro (deceased)

1. Onofre Clidoro (deceased) rep.

rep. herein by Augusto Jalmanzar

by Gregoria Clidoro-Palanca
(daughter)

2. Gregorio Clidoro, Jr.

2. Antonio Clidoro (deceased)

herein rep. by Petronio Clidoro,

3. Urbana Costales (deceased)

3. Carmen Clidoro-Cardano, rep.

by Calixto Cardano, Jr. (husband)

4. Cleneo Clidoro (deceased)

4. Dionisio Clidoro

5. Seneca Clidoro Ciocson

5. Lourdes Clidoro-Lari

6. Monserrat Clidoro

6. Lolita Clidoro

7. Celestial Clidoro

7. Mateo Clidoro

24

8. Aristoteles Clidoro (deceased)

INTERESTED PARTIES

9. Apollo Clidoro

1. AidaClidoro (deceased)

10. Rosalie Clidoro

2. Josaphat Clidoro (deceased),

herein rep. by Marliza Clidoro-De
Una

11. Sophie Clidoro

12. Jose Clidoro, Jr.

On the other hand, the parties to the original case for partition are named as follows:
[[reference
- http://sc.judiciary.gov.ph/pdf/web/viewer.html?
file=/jurisprudence/2014/july2014/176598.pdf]]

PLAINTIFFS

DEFENDANTS

1. Rizalina Clidoro

1. Onofre Clidoro

2. Gregorio Clidoro, Jr.

2. Antonio Clidoro

3. Sofia Cerdena

INTERESTED PARTIES

4. Urbana Costales

1. Aida Clidoro
25

5. Cleneo Seneca

2. Josaphat Clidoro

6. Monserrat Clidoro

7. Celestial Clidoro

8. Aristoteles Clidoro

9. Apollo Clidoro

10. Rosalie Clidoro

A comparison of the foregoing would show that almost all of the plaintiffs in the original
case for partition, in whose favor the court adjudged certain shares in the estate of
deceased Mateo Clidoro, are also the plaintiffs in the action for revival of judgment.
Meanwhile, the defendants impleaded in the action for revival are allegedly the
representatives of the defendants in the original case, and this appears to hold water, as
Gregoria ClidoroPalanca, named as the representative of defendant Onofre Clidoro in
the complaint for revival of judgment, was also mentioned and awarded a portion of the
estate in the judgment in the original partition case. In fact, the trial court itself stated in
its Order11 of dismissal dated December 8, 2003, that "[s]ome of the parties are actually
not parties to the original case, but representing the original parties who are indicated
as deceased."
In Basbas v. Sayson,12 the Court pointed out that even just one of the co-owners, by
himself alone, can bring an action for the recovery of the coowned property, even
through an action for revival of judgment, because the enforcement of the judgment
would result in such recovery of property. Thus, as in Basbas, it is not necessary in this
case that all of the parties, in whose favor the case for partition was adjudged, be made
plaintiffs to the action for revival of judgment. Any which one of said prevailing parties,

26

who had an interest in the enforcement of the decision, may file the complaint for revival
of judgment, even just by himself.
Verily, the trial court erred in dismissing the complaint for revival of judgment on the
ground of lack of, or failure to state a cause of action. The allegations in the complaint,
regarding the parties' interest in having the decision in the partition case executed or
implemented, sufficiently state a cause of action. The question of whether respondents
were the real partiesin-interest who had the right to seek execution of the final and
executory judgment in the partition case should have been threshed out in a full-blown
trial.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals, dated
October 17, 2006, and its Resolution dated February 6, 2007 in CA-G.R. No. 82209, are
hereby AFFIRMED in toto.
SO ORDERED.
LPB vs Cacayuran
SPECIAL SECOND DIVISION
G.R. No. 191667, April 22, 2015
LAND BANK OF THE
CACAYURAN, Respondent,
MUNICIPALITY
AMENDED

OF

PHILIPPINES, Petitioner, v. EDUARDO

AGOO,

LA

M.

UNION, Intervenor.

DECISION

PERLAS-BERNABE, J.:
Before the Court are the following motions: (a) the Motion for
Reconsideration1 dated May 22, 2013, filed by petitioner Land Bank of the
Philippines (LBP) assailing the Decision2 dated April 17, 2013 of the Court
(April 17, 2013 Decision), which upheld the Decision 3 dated March 26, 2010
of the Court of Appeals (CA) in CA-G.R. CV. No. 89732 affirming with
modification the Decision4 dated April 10, 2007 of the Regional Trial Court of
Agoo, La Union, Branch 31 in Civil Case No. A-2473; (b) the Motion for
Leave to Intervene with Pleading-in-Intervention Attached 5 dated July 8,
2013, filed by the Municipality of Agoo, La Union (Municipality) praying that
it be allowed to intervene in this case; and (c) the Motion for
Reconsideration-in-Intervention6 dated July 8, 2013, filed by the Municipality

27

seeking that the Court set aside its April 17, 2013 Decision and promulgate a
new one in its stead dismissing the case (subject motions).
The Facts
The instant case arose from two (2) loans (Subject Loans) entered into by
the Municipality with LBP in order to finance the Redevelopment Plan of the
Agoo Public Plaza (Public Plaza). Through Resolution Nos. 68-2005 7 and 1392005,8 the Sangguniang Bayan of the Municipality (Sangguniang Bayan)
authorized its then-Mayor Eufranio Eriguel (Mayor Eriguel) to enter into a
P4,000,000.00-loan with LBP, the proceeds of which were used to construct
ten (10) kiosks at the Public Plaza. Around a year later, the SB issued
Resolution Nos. 58-20069 and 128-2006,10 this time authorizing Mayor
Eriguel to obtain a P28,000,000.00-loan from LBP for the construction of a
commercial center named "Agoo People's Center" within the premises of the
Public Plaza. In order to secure the Subject Loans, the Municipality used as
collateral, among others, a 2,323.75-square meter lot situated at the south
eastern
portion
of
the
Public
Plaza
(Plaza
Lot). 11
However, a group of residents, led by respondent Eduardo M. Cacayuran
(Cacayuran), opposed the redevelopment of the Public Plaza, as well as the
funding therefor thru the Subject Loans, claiming that these were "highly
irregular, violative of the law, and detrimental to public interests, and will
result to wanton desecration of the [Public Plaza]." 12 Further, Cacayuran
requested the municipal officers to furnish him with the various documents
relating to the Public Plaza's redevelopment, which, however, went
unheeded.13 Thus, Cacayuran, invoking his right as a taxpayer, filed a
complaint14 against LBP and various officers of the Municipality, including
Mayor Eriguel (but excluding the Municipality itself as party-defendant),
assailing the validity of the aforesaid loan agreements and praying that the
commercialization
of
the
Public
Plaza
be
enjoined. 15
Initially, the municipal officers moved for the outright dismissal of the
complaint, which was denied, thus constraining them to file their respective
answers. For its part, LBP asserted, inter alia, that Cacayuran did not have
any cause of action since he was not privy to the loan agreements entered
into
by
LBP
and
the
Municipality.16
During the pendency of the proceedings, the construction of the Agoo
People's Center was completed. Later on, the Sangguniang Bayan passed
Municipal Ordinance No. 02-200717 declaring the area where such building
stood as patrimonial property of the Municipality.18
The RTC Ruling
28

In a Decision19 dated April 10, 2007, the RTC declared the Subject Loans null
and void, finding that the resolutions approving the procurement of the
same were passed in a highly irregular manner and thus, ultra vires. As
such, it pronounced that the Municipality was not bound by the Subject
Loans and that the municipal officers should, instead, be held personally
liable for the same. Further, it ruled that since the Plaza Lot is a property for
public use, it cannot be used as collateral for the Subject Loans. 20
Aggrieved, LBP and the municipal officers appealed 21 to the CA. However, the
appeal of the municipal officers was deemed abandoned and dismissed for
their failure to file an appellants' brief despite due notice. 22 Thus, only LBP's
appeal was given due course by the CA.23
The CA Ruling
In a Decision24 dated March 26, 2010, the CA affirmed the ruling of the RTC,
with modification excluding then-Vice Mayor Antonio Eslao from personal
liability arising from the Subject Loans. It held that: (a) Cacayuran had locus
standi to file the instant complaint, considering that he is a resident of the
Municipality and the issue at hand involved public interest of transcendental
importance; (b) Resolution Nos. 68-2005, 138-2005, 58-2006, 126-2006
were invalidly passed due to non-compliance with certain provisions of
Republic Act No. 7160,25 otherwise known as the Local Government Code of
1991 (LGC); (c) the Plaza Lot is property of public dominion, and thus,
cannot be used as collateral; and (d) the procurement of the Subject Loans
were ultra vires acts for having been entered into without proper authority
and that the collaterals used therefor constituted improper disbursement of
public
funds.26
Dissatisfied, LBP filed a petition for review on certiorari27 before this Court.
Proceedings Before the Court
In a Decision28 dated April 17, 2013 the Court denied LBP's petition, and
accordingly, affirmed the ruling of the CA. Agreeing with the CA, the Court
held that: (a) Cacayuran had legal standing to institute a taxpayer's
suit;29 (b) Resolution Nos. 68-2005, 139-2005, 58-2006, 126-2006 cannot
be relied upon to validate the Subject Loans, as the LGC requires the passing
of an ordinance in order for any loan agreement to be valid; 30 and (c) the
procurement of the Subject Loans are ultra viresacts of the municipal
officers who approved the same, and thus, liability therefor shall devolve
upon
them.31

29

Undaunted, LBP moved for reconsideration, basically reiterating its earlier

position that Cacayuran had no legal standing to sue, and that Resolution
Nos. 68-2005, 139-2005, 58-2006, and 126-2006 may be relied upon in
validating
the
Subject
Loans.32
Meanwhile, the Municipality filed a Motion for Leave to Intervene with
Pleading-In-Intervention Attached33 dated July 8, 2013 and a Motion for
Reconsideration in-Intervention34 of even date, praying that it be included as
a party-litigant to the instant case. It contends that as a contracting party to
the Subject Loans, it is an indispensable party to the action filed by
Cacayuran. As such, there cannot be any "real disposition" of the instant suit
by
reason
of
its
exclusion
from
the
same.
In opposition,35 Cacayuran maintains that LBP did not raise any new matter
to warrant reconsideration of the April 17, 2013 Decision. Anent the
Municipality's motion to intervene, Cacayuran insists that the Municipality is
not a real party-in-interest to the instant case as his complaint is against the
municipal officers in their personal capacity for their ultra vires acts which
are
not
binding
on
the
Municipality.
Finally, in its Comment on the Motion for Leave to Intervene and Motion for
Reconsideration-in-Intervention36 dated May 6, 2014, LBP agrees with the
Municipality that the latter is an indispensable party to the instant case and
as such, should be included herein.
The Issue Before the Court
The core issue for the Court's resolution is whether or not the Municipality
should be deemed as an indispensable party to the instant case, and thus,
be ordered impleaded herein.
The Court's Ruling
The

Court

rules

in

the

affirmative.

Section 7, Rule 3 of the Rules of Court mandates that all indispensable

parties should be joined in a suit, viz.:
SEC. 7. Compulsory joinder of indispensable parties. - Parties-in-interest
without whom no final determination can be had of an action shall be joined
either as plaintiffs or defendants.
"An indispensable party is one whose interest will be affected by the court's
action in the litigation, and without whom no final determination of the case
30

can be had. The party's interest in the subject matter of the suit and in the
relief sought are so inextricably intertwined with the other parties' that his
legal presence as a party to the proceeding is an absolute necessity. In his
absence, there cannot be a resolution of the dispute of the parties before the
court which is effective, complete, or equitable." 37 Thus, the absence of an
indispensable party renders all subsequent actions of the court null and void,
for want of authority to act, not only as to the absent parties but even as to
those
present.38
Nevertheless, it must be stressed that the failure to implead any
indispensable party to a suit does not necessarily result in the outright
dismissal of the complaint. In Heirs of Mesina v. Heirs of Fian, Sr.39 the Court
definitively explained that in instances of non-joinder of indispensable
parties, the proper remedy is to implead them and not to dismiss the case:
The non-joinder of indispensable parties is not a ground for the
dismissal of an action. At any stage of a judicial proceeding and/or at such
times as are just, parties may be added on the motion of a party or on the
initiative of the tribunal concerned. If the plaintiff refuses to implead an
indispensable party despite the order of the court, that court may dismiss
the complaint for the plaintiffs failure to comply with the order.The remedy
is to implead the non-party claimed to be indispensable. 40(Emphases
and underscoring supplied)
In this case, a judicious review of the records reveals that Cacayuran's
complaint against LBP and the municipal officers primarily prays that the
commercialization of the Public Plaza be enjoined and also, that the Subject
Loans be declared null and void for having been unlawfully entered into by
the said officers. However, Cacayuran failed to implead in his complaint the
Municipality, a real party-in-interest41 and an indispensable party that stands
to be directly affected by any judicial resolution on the case, considering
that: (a) the contracting parties to the Subject Loans are LBP and the
Municipality; and (b) the Municipality owns the Public Plaza as well as the
improvements constructed thereon, including the Agoo People's Center. As
the Municipality aptly points out:42
3. To recapitulate: The case had its beginnings in the two (2) Loans
obtained by [the Municipality] from [LBP] and by the Board Resolutions
passed and adopted by the Sangguniang Bayan of Agoo, La Union, together
with
the
Mayor
and
Vice-Mayor
of
the
Municipality.
x

3d. The two (2) Loans were covered and evidenced by separate Loan
31

Agreements and Mortgage/Assignment Documents. The parties which

entered into and executed the covering documents were [LBP] as
lender
and
[the
Municipality]
as
borrower.
3e. When the construction was about 40% complete, [Cacayuran] as a
taxpayer filed the case against the: (i) Mayor; (ii) Vice-Mayor; and (iii) Ten
(10) Members [of] the Sangguniang Bayan [of] Agoo, La Union, as
defendants. [The Municipality] was excluded, and was not impleaded as a
defendant
in
the
case.
x

Indeed, [the Municipality! Ion whose lands stands and is found the
Agoo Public Plaza, where the Kiosks and Commercial Building were
under construction and which constructions were sought to be
restrained] stands to be benefited or injured by the judgment in the
case so filed or the party entitled to the avails of the case and is,
therefore,
the
real
party-in-interest.
x

3k. Without having to say so, the RTC dispositions as affirmed with
modification by the CA Decision which, in turn was affirmed by the
SC Decision must not be binding upon [the Municipality], the real
party-in-interest, the indispensable party in fact, not impleaded as
defendant in this case.43(Emphases and underscoring supplied).
The Court observes that it is only now that the issue of the Municipality's
exclusion from the instant case, despite its status as an indispensable party,
became apparent. This recent finding may be credited to the fact that the
initial parties before the Court, i.e., LBP and Cacayuran, have dissimilar
interests from that of the Municipality, and, hence, had no incentive to raise
the issue of the latter's status as an indispensable party. On the one hand,
Cacayuran's interest to the case is centered on the declaration of nullity of
the Subject Loans, as well as the enjoinment of the commercialization of the
Public Plaza; and on the other hand, LBP's interest to the case is anchored
on its capacity as creditor to the Subject Loans. To the mind of the Court,
the municipal officers would have been in the best position to raise this
issue; however, they were unable to do so because their appeal before the
CA was deemed abandoned for their failure to file an appellants' brief on
time.
Be that as it may, the Court is not precluded from taking cognizance of the
Municipality's status as an indispensable party even at this stage of the
32

proceedings. Indeed, the presence of indispensable parties is necessary to

vest the court with jurisdiction44 and, corollarily, the issue on jurisdiction may
be raised at any stage of the proceedings. 45 Thus, as it has now come to the
fore that any resolution of this case would not be possible and, hence, not
attain any real finality due to the non-joinder of the Municipality, the Court is
constrained to set aside all subsequent actuations of the courts a quo in this
case, including that of the Court's, and remand the case all the way back to
the RTC for the inclusion of all indispensable parties to the case and its
immediate disposition on the merits. 46 With this, the propriety of the
Municipality's
present
intervention
is
now
mooted.
WHEREFORE, the subject motions are PARTLY GRANTED. The Decision
dated April 17, 2013 of the Court, which upheld the Decision dated March
26, 2010 of the Court of Appeals in CA-G.R. CV. No. 89732 affirming with
modification the Decision dated April 10, 2007 of the Regional Trial Court of
Agoo, La Union, Branch 31 in Civil Case No. A-2473 is hereby SET ASIDE.
Accordingly, the instant case is REMANDED to the court a quo, which is
hereby DIRECTED to order respondent Eduardo M. Cacayuran to implead all
indispensable parties and thereafter, PROCEED with the resolution of the
case
on
the
merits WITH
DISPATCH.
SO ORDERED.

Resident Marine mamals vs Reyes

EN BANC
G.R. No. 180771, April 21, 2015
RESIDENT MARINE MAMMALS OF THE PROTECTED SEASCAPE TANON
STRAIT, E.G., TOOTHED WHALES, DOLPHINS, PORPOISES, AND
OTHER CETACEAN SPECIES, JOINED IN AND REPRESENTED HEREIN
BY HUMAN BEINGS GLORIA ESTENZO RAMOS AND ROSE-LIZA
EISMA-OSORIO, IN THEIR CAPACITY AS LEGAL GUARDIANS OF THE
LESSER LIFE-FORMS AND AS RESPONSIBLE STEWARDS OF GOD'S
CREATIONS, Petitioners, v. SECRETARY ANGELO REYES, IN HIS
CAPACITY AS SECRETARY OF THE DEPARTMENT OF ENERGY (DOE),
SECRETARY JOSE L. ATIENZA, IN HIS CAPACITY AS SECRETARY OF
THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES
(DENR), LEONARDO R. SIBBALUCA, DENR REGIONAL DIRECTORREGION VII AND IN HIS CAPACITY AS CHAIRPERSON OF THE TANON
STRAIT PROTECTED SEASCAPE MANAGEMENT BOARD, BUREAU OF
33

FISHERIES AND AQUATIC RESOURCES (BFAR), DIRECTOR MALCOLM

I. SARMIENTO, JR., BFAR REGIONAL DIRECTOR FOR REGION VII
ANDRES M. BOJOS, JAPAN PETROLEUM EXPLORATION CO., LTD.
(JAPEX), AS REPRESENTED BY ITS PHILIPPINE AGENT, SUPPLY
OILFIELD
SERVICES,
INC., Respondents.
G.R.

No.

181527

CENTRAL VISAYAS FISHERFOLK DEVELOPMENT CENTER (FIDEC),

CERILO D. ENGARCIAL, RAMON YANONG, FRANCISCO LABID, IN
THEIR PERSONAL CAPACITY AND AS REPRESENTATIVES OF THE
SUBSISTENCE
FISHERFOLKS
OF
THE
MUNICIPALITIES
OF
ALOGUINSAN AND PINAMUNGAJAN, CEBU, AND THEIR FAMILIES,
AND THE PRESENT AND FUTURE GENERATIONS OF FILIPINOS
WHOSE RIGHTS ARE SIMILARLY AFFECTED, Petitioners,v. SECRETARY
ANGELO REYES, IN HIS CAPACITY AS SECRETARY OF THE
DEPARTMENT OF ENERGY (DOE), JOSE L. ATIENZA, IN HIS CAPACITY
AS SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES (DENR), LEONARDO R. SIBBALUCA, IN HIS
CAPACITY AS DENR REGIONAL DIRECTOR-REGION VII AND AS
CHAIRPERSON OF THE TAON STRAIT PROTECTED SEASCAPE
MANAGEMENT BOARD, ALAN ARRANGUEZ, IN HIS CAPACITY AS
DIRECTOR ENVIRONMENTAL MANAGEMENT BUREAU-REGION VII,
DOE REGIONAL DIRECTOR FOR REGION VIII1 ANTONIO LABIOS,
JAPAN
PETROLEUM
EXPLORATION
CO.,
LTD.
(JAPEX),
AS
REPRESENTED BY ITS PHILIPPINE AGENT, SUPPLY OILFIELD
SERVICES, INC., Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before Us are two consolidated Petitions filed under Rule 65 of the 1997
Rules of Court, concerningService Contract No. 46 (SC-46), which
allowed the exploration, development, and exploitation of petroleum
resources within Taon Strait, a narrow passage of water situated between
the
islands
of
Negros
and
Cebu.2
The Petition docketed as G.R. No. 180771 is an original Petition
for Certiorari, Mandamus, and Injunction, which seeks to enjoin respondents
from implementing SC-46 and to have it nullified for willful and gross
violation of the 1987 Constitution and certain international and municipal
laws.3

34

Likewise, the Petition docketed as G.R. No. 181527 is an original Petition

for Certiorari, Prohibition, and Mandamus, which seeks to nullify the
Environmental Compliance Certificate (ECC) issued by the Environmental
Management Bureau (EMB) of the Department of Environment and Natural
Resources (DENR), Region VII in connection with SC-46; to prohibit
respondents from implementing SC-46; and to compel public respondents to
provide petitioners access to the pertinent documents involving the Taon
Strait Oil Exploration Project.4
ANTECEDENT FACTS AND PROCEEDINGS
Petitioners in G.R. No. 180771, collectively referred to as the "Resident
Marine Mammals" in the petition, are the toothed whales, dolphins,
porpoises, and other cetacean species, which inhabit the waters in and
around the Taon Strait. They are joined by Gloria Estenzo Ramos (Ramos)
and Rose-Liza Eisma-Osorio (Eisma-Osorio) as their legal guardians and as
friends (to be collectively known as "the Stewards") who allegedly empathize
with, and seek the protection of, the aforementioned marine species. Also
impleaded as an unwilling co-petitioner is former President Gloria
Macapagal-Arroyo, for her express declaration and undertaking in the ASEAN
Charter
to
protect
the
Taon
Strait,
among
others.5
Petitioners in G.R. No. 181527 are the Central Visayas Fisherfolk
Development Center (FIDEC), a non-stock, non-profit, non-governmental
organization, established for the welfare of the marginal fisherfolk in Region
VII; and Cerilo D. Engarcial (Engarcial), Ramon Yanong (Yanong) and
Francisco Labid (Labid), in their personal capacities and as representatives of
the subsistence fisherfolk of the municipalities of Aloguinsan and
Pinamungajan,
Cebu.
Named as respondents in both petitions are the late Angelo T. Reyes, as then
Secretary of the Department of Energy (DOE); Jose L. Atienza, as then
Secretary of the DENR; Leonardo R. Sibbaluca, as then DENR-Regional
Director for Region VII and Chairman of the Taon Strait Protected Seascape
Management Board; Japan Petroleum Exploration Co., Ltd. (JAPEX), a
company organized and existing under the laws of Japan with a Philippine
branch office; and Supply Oilfield Services, Inc. (SOS), as the alleged
Philippine
agent
of
JAPEX.
In G.R. No. 181527, the following were impleaded as additional public
respondents: Alan C. Arranguez (Arranguez) and Antonio Labios (Labios), in
their capacities as then Director of the EMB, Region VII and then Regional
Director
of
the
DOE,
Region
VII,
respectively.6

35

On June 13, 2002, the Government of the Philippines, acting through the
DOE, entered into a Geophysical Survey and Exploration Contract-102
(GSEC-102) with JAPEX. This contract involved geological and geophysical
studies of the Taon Strait. The studies included surface geology, sample
analysis, and reprocessing of seismic and magnetic data. JAPEX, assisted by
DOE, also conducted geophysical and satellite surveys, as well as oil and gas
sampling
in
Taon
Strait.7
On December 21, 2004, DOE and JAPEX formally converted GSEC-102 into
SC-46 for the exploration, development, and production of petroleum
resources in a block covering approximately 2,850 square kilometers
offshore
the
Taon
Strait.8
From May 9 to 18, 2005, JAPEX conducted seismic surveys in and around
the Taon Strait. A multi-channel sub-bottom profiling covering
approximately 751 kilometers was also done to determine the area's
underwater
composition.9
JAPEX committed to drill one exploration well during the second sub-phase
of the project. Since the well was to be drilled in the marine waters of
Aloguinsan and Pinamungajan, where the Taon Strait was declared a
protected seascape in 1988,10 JAPEX agreed to comply with the
Environmental Impact Assessment requirements pursuant to Presidential
Decree No. 1586, entitled "Establishing An Environmental Impact Statement
System, Including Other Environmental Management Related Measures And
For
Other
Purposes."11
On January 31, 2007, the Protected Area Management Board 12 of the Taon
Strait (PAMB-Taon Strait) issued Resolution No. 2007-001, 13 wherein it
adopted the Initial Environmental Examination (IEE) commissioned by
JAPEX, and favorably recommended the approval of JAPEX's application for
an
ECC.
On March 6, 2007, the EMB of DENR Region VII granted an ECC to the DOE
and JAPEX for the offshore oil and gas exploration project in Taon
Strait.14 Months later, on November 16, 2007, JAPEX began to drill an
exploratory well, with a depth of 3,150 meters, near Pinamungajan town in
the western Cebu Province.15 This drilling lasted until February 8, 2008. 16
It was in view of the foregoing state of affairs that petitioners applied to this
Court for redress, via two separate original petitions both dated December
17, 2007, wherein they commonly seek that respondents be enjoined from
implementing SC-46 for, among others, violation of the 1987 Constitution.

36

On March 31, 2008, SOS filed a Motion to Strike17 its name as a respondent
on the ground that it is not the Philippine agent of JAPEX. In support of its
motion, it submitted the branch office application of JAPEX, 18 wherein the
latter's resident agent was clearly identified. SOS claimed that it had acted
as a mere logistics contractor for JAPEX in its oil and gas exploration
activities
in
the
Philippines.
Petitioners Resident Marine Mammals and Stewards opposed SOS's motion
on the ground that it was premature, it was pro-forma, and it was patently
dilatory. They claimed that SOS admitted that "it is in law a (sic) privy to
JAPEX" since it did the drilling and other exploration activities in Taon Strait
under the instructions of its principal, JAPEX. They argued that it would be
premature to drop SOS as a party as JAPEX had not yet been joined in the
case; and that it was "convenient" for SOS to ask the Court to simply drop
its name from the parties when what it should have done was to either notify
or ask JAPEX to join it in its motion to enable proper substitution. At this
juncture, petitioners Resident Marine Mammals and Stewards also asked the
Court to implead JAPEX Philippines as a corespondent or as a substitute for
its
parent
company,
JAPEX.19
On April 8, 2008, the Court resolved to consolidate G.R. No. 180771 and
G.R.
No.
181527.
On May 26, 2008, the FIDEC manifested 20 that they were adopting in
toto the Opposition to Strike with Motion to Implead filed by petitioners
Resident Marine Mammals and Stewards in G.R. No. 180771.
On June 19, 2008, public respondents filed their Manifestation 21 that they
were not objecting to SOS's Motion to Strike as it was not JAPEX's resident
agent. JAPEX during all this time, did not file any comment at all.
Thus, on February 7, 2012, this Court, in an effort to ensure that all the
parties were given ample chance and opportunity to answer the issues
herein, issued a Resolution directing the Court's process servicing unit to
again serve the parties with a copy of the September 23, 2008 Resolution of
the Court, which gave due course to the petitions in G.R. Nos. 180771 and
181527, and which required the parties to submit their respective
memoranda.
The
February
7,
2012
Resolution22 reads
as
follows:chanroblesvirtuallawlibrary
G.R. No. 180771 (Resident Marine Mammals of the Protected Seascape
Taon Strait,e.g., Toothed Whales, Dolphins, Porpoises and Other Cetacean
Species, et al. vs. Hon. Angelo Reyes, in his capacity as Secretary of the
Department of Energy, et al.) andG.R. No. 181527 (Central Visayas
Fisherfolk Development Center, et al. vs. Hon. Angelo Reyes, et al.). - The
37

Court Resolved to direct the Process Servicing Unit to RE-SEND the

resolution dated September 23, 2008 to the following parties and counsel,
together with this resolution:chanroblesvirtuallawlibrary
Atty. Aristeo th
20 Floor Pearlbank Centre
O. Cario
Counsel
for
Respondent
146 Valero Street
Supply
Oilfield
Salcedo Village, Makati City
Services, Inc.
JAPEX
Philippines
Ltd.

20th Floor Pearlbank Centre

146 Valero Street
Salcedo Village, Makati City

JAPEX
Philippines
19th Floor Pearlbank Centre
Ltd.
c/o Atty. Maria
146 Valero Street
Farah Z.G.
NicolasSalcedo Village, Makati City
Suchianco
Atty.
Maria
Suite 2404 Discovery Centre
Farah Z.G.
Nicolas25 ADB Avenue
Suchianco
Resident Agent
Ortigas Center, Pasig City
of JAPEX
Philippines Ltd.
This Resolution was personally served to the above parties, at the above
addresses on February 23, 2012. On March 20, 2012, JAPEX Philippines, Ltd.
(JAPEX PH), by way of special appearance, filed a Motion to Admit 23 its
Motion for Clarification,24 wherein JAPEX PH requested to be clarified as to
whether or not it should deem the February 7, 2012 Resolution as this
Court's Order of its inclusion in the case, as it has not been impleaded. It
also alleged that JAPEX PH had already stopped exploration activities in the
Taon Strait way back in 2008, rendering this case moot.
On March 22, 2012, JAPEX PH, also by special appearance, filed a Motion for
Extension of Time25 to file its Memorandum. It stated that since it received
the February 7, 2012 Resolution on February 23, 2012, it had until March
38

22, 2012 to file its Memorandum. JAPEX PH then asked for an additional
thirty days, supposedly to give this Court some time to consider its Motion
for
Clarification.
On April 24, 2012, this Court issued a Resolution 26 granting JAPEX PH's
Motion to Admit its Motion for Clarification. This Court, addressing JAPEX
PH's Motion for Clarification, held:chanroblesvirtuallawlibrary
With regard to its Motion for Clarification (By Special Appearance) dated
March 19, 2012, this Court considers JAPEX Philippines. Ltd. as a real partyin-interest in these cases. Under Section 2, Rule 3 of the 1997 Rules of
Court, a real party-in-interest is the party who stands to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of the
suit. Contrary to JAPEX Philippines, Ltd.'s allegation that it is a completely
distinct corporation, which should not be confused with JAPEX Company,
Ltd., JAPEX Philippines, Ltd. is a mere branch office, established by JAPEX
Company, Ltd. for the purpose of carrying out the latter's business
transactions here in the Philippines. Thus, JAPEX Philippines, Ltd., has no
separate personality from its mother foreign corporation, the party
impleaded
in
this
case.
Moreover, Section 128 of the Corporation Code provides for the
responsibilities and duties of a resident agent of a foreign
corporation:chanroblesvirtuallawlibrary
SECTION 128. Resident agent; service of process. The Securities and
Exchange Commission shall require as a condition precedent to the issuance
of the license to transact business in the Philippines by any foreign
corporation that such corporation file with the Securities and Exchange
Commission a written power of attorney designating some person who must
be a resident of the Philippines, on whom any summons and other legal
processes may be served in all actions or other legal proceedings against
such corporation, and consenting that service upon such resident agent shall
be admitted and held as valid as if served upon the duly authorized officers
of the foreign corporation at its home office. Any such foreign corporation
shall likewise execute and file with the Securities and Exchange Commission
an agreement or stipulation, executed by the proper authorities of said
corporation,
in
form
and
substance
as
follows:
"The (name of foreign corporation) does hereby stipulate and agree, in
consideration of its being granted by the Securities and Exchange
Commission a license to transact business in the Philippines, that if at any
time said corporation shall cease to transact business in the Philippines, or
shall be without any resident agent in the Philippines on whom any
summons or other legal processes may be served, then in any action or
proceeding arising out of any business or transaction which occurred in the
39

Philippines, service of any summons or other legal process may be made

upon the Securities and Exchange Commission and that such service shall
have the same force and effect as if made upon the duly-authorized officers
of
the
corporation
at
its
home
office."
Whenever such service of summons or other process shall be made upon the
Securities and Exchange Commission, the Commission shall, within ten (10)
days thereafter, transmit by mail a copy of such summons or other legal
process to the corporation at its home or principal office. The sending of
such copy by the Commission shall be a necessary part of and shall complete
such service. All expenses incurred by the Commission for such service shall
be paid in advance by the party at whose instance the service is made.
In case of a change of address of the resident agent, it shall be his or its
duty to immediately notify in writing the Securities and Exchange
Commission of the new address.
It is clear from the foregoing provision that the function of a resident agent
is to receive summons or legal processes that may be served in all actions or
other legal proceedings against the foreign corporation. These cases have
been prosecuted in the name of JAPEX Company, Ltd., and JAPEX Philippines
Ltd., as its branch office and resident agent, had been receiving the various
resolutions from this Court, as evidenced by Registry Return Cards signed by
its representatives.
And in the interest of justice, this Court resolved to grant JAPEX PH's motion
for extension of time to file its memorandum, and was given until April 21,
2012, as prayed for, within which to comply with the submission. 27
Without filing its Memorandum, JAPEX PH, on May 14, 2012, filed a motion,
asking this Court for an additional thirty days to file its Memorandum, to be
counted from May 8, 2012. It justified its request by claiming that this
Court's April 24, 2012 Resolution was issued past its requested deadline for
filing,
which
was
on
April
21,
2012.28
On June 19, 2012, this Court denied JAPEX PH's second request for
additional time to file its Memorandum and dispensed with such filing.
Since petitioners had already filed their respective memoranda, 29 and public
respondents had earlier filed a Manifestation30 that they were adopting their
Comment dated March 31, 2008 as their memorandum, this Court submitted
the case for decision.chanRoblesvirtualLawlibrary
Petitioners' Allegations
Protesting the adverse ecological impact of JAPEX's oil exploration activities
40

in the Taon Strait, petitioners Resident Marine Mammals and Stewards aver
that a study made after the seismic survey showed that the fish catch was
reduced drastically by 50 to 70 percent. They claim that before the seismic
survey, the average harvest per day would be from 15 to 20 kilos; but after
the activity, the fisherfolk could only catch an average of 1 to 2 kilos a day.
They attribute this "reduced fish catch" to the destruction of the "payao" also
known as the "fish aggregating device" or "artificial reef." 31Petitioners
Resident Marine Mammals and Stewards also impute the incidences of "fish
kill"32observed by some of the local fisherfolk to the seismic survey. And they
further allege that the ECC obtained by private respondent JAPEX is invalid
because public consultations and discussions with the affected stakeholders,
a pre-requisite to the issuance of the ECC, were not held prior to the ECC's
issuance.
In its separate petition, petitioner FIDEC confirms petitioners Resident
Marine Mammals and Stewards' allegations of reduced fish catch and lack of
public consultations or discussions with the fisherfolk and other stakeholders
prior to the issuance of the ECC. Moreover, it alleges that during the seismic
surveys and drilling, it was barred from entering and fishing within a 7kilometer radius from the point where the oilrig was located, an area greater
than the 1.5-kilometer radius "exclusion zone" stated in the IEE. 33 It also
agrees in the allegation that public respondents DENR and EMB abused their
discretion when they issued an ECC to public respondent DOE and private
respondent JAPEX without ensuring the strict compliance with the procedural
and substantive requirements under the Environmental Impact Assessment
system, the Fisheries Code, and their implementing rules and
regulations.34 It further claims that despite several requests for copies of all
the documents pertaining to the project in Taflon Strait, only copies of the
PAMB-Taon Strait Resolution and the ECC were given to the fisherfolk. 35
Public Respondents' Counter-Allegations
Public respondents, through the Solicitor General, contend that petitioners
Resident Marine Mammals and Stewards have no legal standing to file the
present petition; that SC-46 does not violate the 1987 Constitution and the
various laws cited in the petitions; that the ECC was issued in accordance
with existing laws and regulations; that public respondents may not be
compelled by mandamus to furnish petitioners copies of all documents
relating to SC-46; and that all the petitioners failed to show that they are
entitled to injunctive relief. They further contend that the issues raised in
these petitions have been rendered moot and academic by the fact that SC46 had been mutually terminated by the parties thereto effective June 21,
2008.36

41

ISSUES
The following are the issues posited by petitioners Resident Marine Mammals
and Stewards in G.R. No. 180771:chanroblesvirtuallawlibrary
I.

WHETHER OR NOT PETITIONERS HAVE LOCUS STANDI TO FILE THE

INSTANT PETITION;

II.

WHETHER OR NOT SERVICE CONTRACT NO. 46 IS VIOLAT[IVE] OF

THE 1987 PHILIPPINE CONSTITUTION AND STATUTES;

III.

WHETHER OR NOT THE ON-GOING EXPLORATION AND PROPOSED

EXPLOITATION FOR OIL AND NATURAL GAS AT, AROUND, AND
UNDERNEATH THE MARINE WATERS OF THE TANON STRAIT
PROTECTED SEASCAPE IS INCONSISTENT WITH THE PHILIPPINE
COMMITMENTS TO INTERNATIONAL ENVIRONMENTAL LAWS AND
INSTRUMENTS; AND

IV.

WHETHER OR NOT THE ISSUANCE OF THE ENVIRONMENTAL

COMPLIANCE CERTIFICATE (ECC) IN ENVIRONMENTALLY CRITICAL
AREAS AND HABITATS OF MARINE WILDLIFE AND ENDANGERED
SPECIES IS LEGAL AND PROPER.37

Meanwhile, in G.R. No. 181527, petitioner FIDEC presented the following

issues for our consideration:chanroblesvirtuallawlibrary
I.

WHETHER OR NOT SERVICE CONTRACT NO. 46 EXECUTED BETWEEN

RESPONDENTS DOE AND JAPEX SHOULD BE NULLIFIED AND SET
ASIDE FOR BEING IN DIRECT VIOLATION OF SPECIFIC PROVISIONS
OF THE 1987 PHILIPPINE CONSTITUTION AND APPLICABLE LAWS;

II.

WHETHER
OR
NOT
THE
OFF-SHORE
OIL
EXPLORATION
CONTEMPLATED UNDER SERVICE CONTRACT NO. 46 IS LEGALLY
PERMISSIBLE WITHOUT A LAW BEING DULY PASSED EXPRESSLY FOR
THE PURPOSE;

III.

WHETHER OR NOT THE OIL EXPLORATION BEING CONDUCTED

WITHIN THE TANON STRAIT PROTECTED SEASCAPE VIOLATES THE
RIGHTS AND LEGAL PROTECTION GRANTED TO PETITIONERS UNDER
THE CONSTITUTION AND APPLICABLE LAWS.

IV.

WHETHER OR NOT THE ISSUANCE OF THE ENVIRONMENTAL

COMPLIANCE CERTIFICATE (ECC) FOR SUCH AN ENVIRONMENTALLY
CRITICAL PROJECT INSIDE AN ENVIRONMENTALLY CRITICAL AREA
42

SUCH AS THE TANON STRAIT PROTECTED SEASCAPE CONFORMED TO

LAW AND EXISTING RULES AND REGULATIONS ON THE MATTER.
V.

WHETHER OR NOT THE RESPONDENTS MAY BE COMPELLED BY

MANDAMUS TO FURNISH PETITIONERS WITH COPIES OF THE
DOCUMENTS PERTAINING TO THE TANON STRAIT OIL EXPLORATION
PROJECT.38

In these consolidated petitions, this Court has determined that the various
issues raised by the petitioners may be condensed into two primary issues:
I.
II.

Procedural Issue: Locus Standi of the Resident Marine Mammals and

Stewards, petitioners in G.R. No. 180771; and
Main Issue: Legality of Sendee Contract No. 46.

DISCUSSION
At the outset, this Court makes clear that the '"moot and academic principle'
is not a magical formula that can automatically dissuade the courts in
resolving a case." Courts have decided cases otherwise moot and academic
under
the
following
exceptions:
1)

There

is

grave

violation

of

the

Constitution;

2) The exceptional character of the situation and the paramount public

interest
is
involved;
3) The constitutional issue raised requires formulation of controlling
principles to guide the bench, the bar, and the public; and
4)

The

case

is

capable

of

repetition

yet

evading

review. 39

In this case, despite the termination of SC-46, this Court deems it necessary
to resolve these consolidated petitions as almost all of the foregoing
exceptions are present in this case. Both petitioners allege that SC-46 is
violative of the Constitution, the environmental and livelihood issues raised
undoubtedly affect the public's interest, and the respondents' contested
actions are capable of repetition.chanRoblesvirtualLawlibrary
Procedural

Issues

Locus Standi of Petitioners Resident Marine Mammals and Stewards

43

The Resident Marine Mammals, through the Stewards, "claim" that they have
the legal standing to file this action since they stand to be benefited or
injured by the judgment in this suit. 40 Citing Oposa v. Factoran, Jr.,41 they
also assert their right to sue for the faithful performance of international and
municipal environmental laws created in their favor and for their benefit. In
this regard, they propound that they have the right to demand that they be
accorded the benefits granted to them in multilateral international
instruments that the Philippine Government had signed, under the concept
of
stipulation pour
autrui.42
For their part, the Stewards contend that there should be no question of
their right to represent the Resident Marine Mammals as they have stakes in
the case as forerunners of a campaign to build awareness among the
affected residents of Taon Strait and as stewards of the environment since
the primary steward, the Government, had failed in its duty to protect the
environment
pursuant
to
the
public
trust
doctrine. 43
Petitioners Resident Marine Mammals and Stewards also aver that this Court
may lower the benchmark in locus standi as an exercise of epistolary
jurisdiction.44
In opposition, public respondents argue that the Resident Marine Mammals
have no standing because Section 1, Rule 3 of the Rules of Court requires
parties
to
an
action
to
be
either
natural
or
juridical
persons, viz.:chanroblesvirtuallawlibrary
Section 1. Who may be parties; plaintiff and defendant. - Only natural or
juridical persons, or entities authorized by law may be parties in a civil
action. The term "plaintiff may refer to the claiming party, the counterclaimant, the cross-claimant, or the third (fourth, etc.)-party plaintiff. The
term "defendant" may refer to the original defending party, the defendant in
a counterclaim, the cross-defendant, or the third (fourth, etc.)-party
defendant.
The public respondents also contest the applicability of Oposa, pointing out
that the petitioners therein were all natural persons, albeit some of them
were
still
unborn.45
As regards the Stewards, the public respondents likewise challenge their
claim of legal standing on the ground that they are representing animals,
which cannot be parties to an action. Moreover, the public respondents argue
that the Stewards are not the real parties-in-interest for their failure to show
how they stand to be benefited or injured by the decision in this case. 46
Invoking the alter ego principle in political law, the public respondents claim
44

that absent any proof that former President Arroyo had disapproved of their
acts in entering into and implementing SC-46, such acts remain to be her
own.47
The public respondents contend that since petitioners Resident Marine
Mammals and Stewards' petition was not brought in the name of a real
party-in-interest, it should be dismissed for failure to state a cause of
action.48
The issue of whether or not animals or even inanimate objects should be
given legal standing in actions before courts of law is not new in the field of
animal rights and environmental law. Petitioners Resident Marine Mammals
and Stewards cited the 1972 United States case Sierra Club v. Rogers C.B.
Morton,49 wherein Justice William O. Douglas, dissenting to the conventional
thought on legal standing, opined:chanroblesvirtuallawlibrary
The critical question of "standing" would be simplified and also put neatly in
focus if we fashioned a federal rule that allowed environmental issues to be
litigated before federal agencies or federal courts in the name of the
inanimate object about to be despoiled, defaced, or invaded by roads and
bulldozers and where injury is the subject of public outrage, x x x.
Inanimate objects are sometimes parties in litigation. A ship has a legal
personality, a fiction found useful for maritime purposes. The corporation
sole - a creature of ecclesiastical law - is an acceptable adversary and large
fortunes ride on its cases. The ordinary corporation is a "person" for
purposes of the adjudicatory processes, whether it represents proprietary,
spiritual,
aesthetic,
or
charitable
causes.
So it should be as respects valleys, alpine meadows, rivers, lakes, estuaries,
beaches, ridges, groves of trees, swampland, or even air that feels the
destructive pressures of modern technology and modem life. The river, for
example, is the living symbol of all the life it sustains or nourishesfish,
aquatic insects, water ouzels, otter, fisher, deer, elk, bear, and all other
animals, including man, who are dependent on it or who enjoy it for its
sight, its sound, or its life. The river as plaintiff speaks for the ecological unit
of life that is part of it. Those people who have a meaningful relation to that
body of waterwhether it be a fisherman, a canoeist, a zoologist, or a
loggermust be able to speak for the values which the river represents and
which are threatened with destruction.50(Citations omitted.)
The primary reason animal rights advocates and environmentalists seek to
give animals and inanimate objects standing is due to the need to comply
with the strict requirements in bringing a suit to court. Our own 1997 Rules
of Court demand that parties to a suit be either natural or juridical persons,
or entities authorized by law. It further necessitates the action to be brought
45

in the name of the real party-in-interest,

representative, viz.:chanroblesvirtuallawlibrary
Rule
Parties to Civil Actions

even

if

filed

by

a
3

Section 1. Who may be parties; plaintiff and defendant. - Only natural or

juridical persons, or entities authorized by law may be parties in a civil
action. The term "plaintiff may refer to the claiming party, the counterclaimant, the cross-claimant, or the third (fourth, etc.)-party plaintiff. The
term "defendant" may refer to the original defending party, the defendant in
a counterclaim, the cross-defendant, or the third (fourth, etc.)-party
defendant.
Sec. 2. Parties in interest. - A real party in interest is the party who stands
to be benefited or injured by the judgment in the suit, or the party entitled
to the avails of the suit. Unless otherwise authorized by law or these Rules,
every action must be prosecuted or defended in the name of the real party
in
interest.
Sec. 3. Representatives as parties. - Where the action is allowed to be
prosecuted or defended by a representative or someone acting in a fiduciary
capacity, the beneficiary shall be included in the title of the case and shall be
deemed to be the real party in interest. A representative may be a trustee of
an express trust, a guardian, an executor or administrator, or a party
authorized by law or these Rules. An agent acting in his own name and for
the benefit of an undisclosed principal may sue or be sued without joining
the principal except when the contract involves things belonging to the
principal.
It had been suggested by animal rights advocates and environmentalists
that not only natural and juridical persons should be given legal standing
because of the difficulty for persons, who cannot show that they by
themselves are real parties-in-interests, to bring actions in representation of
these animals or inanimate objects. For this reason, many environmental
cases have been dismissed for failure of the petitioner to show that he/she
would be directly injured or affected by the outcome of the case. However, in
our jurisdiction, locus standi in environmental cases has been given a more
liberalized approach. While developments in Philippine legal theory and
jurisprudence have not progressed as far as Justice Douglas's paradigm of
legal standing for inanimate objects, the current trend moves towards
simplification of procedures and facilitating court access in environmental
cases.
Recently, the Court passed the landmark Rules of Procedure for
Environmental Cases,51 which allow for a "citizen suit," and permit any
46

Filipino citizen to file an action before our courts for violations of our
environmental laws:chanroblesvirtuallawlibrary
SEC. 5. Citizen suit. - Any Filipino citizen in representation of others,
including minors or generations yet unborn, may file an action to
enforce rights or obligations under environmental laws. Upon the
filing of a citizen suit, the court shall issue an order which shall contain a
brief description of the cause of action and the reliefs prayed for, requiring all
interested parties to manifest their interest to intervene in the case within
fifteen (15) days from notice thereof. The plaintiff may publish the order
once in a newspaper of a general circulation in the Philippines or furnish all
affected
barangays
copies
of
said
order.
Citizen suits filed under R.A. No. 8749 and R.A. No. 9003 shall be governed
by their respective provisions.52 (Emphasis ours.)
Explaining the rationale for this rule, the Court, in the Annotations to the
Rules
of
Procedure
for
Environmental
Cases,
commented:chanroblesvirtuallawlibrary
Citizen suit. To further encourage the protection of the environment, the
Rules enable litigants enforcing environmental rights to file their cases as
citizen suits. This provision liberalizes standing for all cases filed enforcing
environmental laws and collapses the traditional rule on personal and direct
interest, on the principle that humans are stewards of nature. The
terminology of the text reflects the doctrine first enunciated in Oposa v.
Factoran, insofar as it refers to minors and generations yet
unborn.53(Emphasis supplied, citation omitted.)
Although this petition was filed in 2007, years before the effectivity of the
Rules of Procedure for Environmental Cases, it has been consistently held
that rules of procedure "may be retroactively applied to actions pending and
undetermined at the time of their passage and will not violate any right of a
person who may feel that he is adversely affected, inasmuch as there is no
vested
rights
in
rules
of
procedure." 54
Elucidating on this doctrine, the Court, in Systems Factors Corporation v.
National Labor Relations Commission55 held that:chanroblesvirtuallawlibrary
Remedial statutes or statutes relating to remedies or modes of procedure,
which do not create new or take away vested rights, but only operate in
furtherance of the remedy or confirmation of rights already existing, do not
come within the legal conception of a retroactive law, or the general rule
against retroactive operation of statutes. Statutes regulating the procedure
of the courts will be construed as applicable to actions pending and
undetermined at the time of their passage. Procedural laws are retroactive in
that sense and to that extent, x x x.
Moreover, even before the Rules of Procedure for Environmental Cases
became effective, this Court had already taken a permissive position on the
47

issue of locus standi in environmental cases. InOposa, we allowed the suit to

be brought in the name of generations yet unborn "based on the concept of
intergenerational responsibility insofar as the right to a balanced and
healthful ecology is concerned." 56 Furthermore, we said that the right to a
balanced and healthful ecology, a right that does not even need to be stated
in our Constitution as it is assumed to exist from the inception of
humankind, carries with it the correlative duty to refrain from impairing the
environment.57
In light of the foregoing, the need to give the Resident Marine Mammals
legal standing has been eliminated by our Rules, which allow any Filipino
citizen, as a steward of nature, to bring a suit to enforce our environmental
laws. It is worth noting here that the Stewards are joined as real parties in
the Petition and not just in representation of the named cetacean species.
The Stewards, Ramos and Eisma-Osorio, having shown in their petition that
there may be possible violations of laws concerning the habitat of the
Resident Marine Mammals, are therefore declared to possess the legal
standing to file this petition.chanRoblesvirtualLawlibrary
Impleading Former President
Unwilling Co-Petitioner

Gloria

Macapagal-Arroyo

as

an

Petitioners Stewards in G.R. No. 180771 impleaded as an unwilling copetitioner former President Gloria Macapagal-Arroyo for the following
reasons, which we quote:chanroblesvirtuallawlibrary
Her Excellency Gloria Macapagal-Arroyo, also of legal age, Filipino and
resident of Malacaang Palace, Manila Philippines. Steward Gloria
Macapagal-Arroyo happens to be the incumbent President of the Philippine
Islands. She is personally impleaded in this suit as an unwilling co-petitioner
by reason of her express declaration and undertaking under the recently
signed ASEAN Charter to protect Your Petitioners' habitat, among others.
She is meantime dominated as an unwilling co-petitioner due to lack of
material time in seeking her signature and imprimatur hereof and due to
possible legal complications that may hereafter arise by reason of her official
relations with public respondents under the alter ego principle in political
law.58cralawlawlibrary
This
is
incorrect.
Section 10, Rule 3 of the Rules of Court provides:chanroblesvirtuallawlibrary
Sec. 10. Unwilling co-plaintiff. - If the consent of any party who should be
joined as plaintiff can not be obtained, he may be made a defendant and the
reason therefor shall be stated in the complaint.
Under the foregoing rule, when the consent of a party who should be joined
as a plaintiff cannot be obtained, he or she may be made a party defendant
48

to the case. This will put the unwilling party under the jurisdiction of the
Court, which can properly implead him or her through its processes. The
unwilling party's name cannot be simply included in a petition, without his or
her knowledge and consent, as such would be a denial of due process.
Moreover, the reason cited by the petitioners Stewards for including former
President Macapagal-Arroyo in their petition, is not sufficient to implead her
as an unwilling co-petitioner. Impleading the former President as an
unwilling co-petitioner, for an act she made in the performance of the
functions of her office, is contrary to the public policy against embroiling the
President in suits, "to assure the exercise of Presidential duties and functions
free from any hindrance or distraction, considering that being the Chief
Executive of the Government is a job that, aside from requiring all of the
office
holder's
time,
also
demands
undivided
attention." 59
Therefore, former President Macapagal-Arroyo cannot be impleaded as one
of the petitioners in this suit. Thus, her name is stricken off the title of this
case.chanRoblesvirtualLawlibrary
Main
Legality

of

Service
Section
2,
1987 Constitution

Service

Contract

Contract
Article

No.
XII

No.

Issue:
46

46 vis-a-vis
of
the

Petitioners maintain that SC-46 transgresses the Jura Regalia Provision or

paragraph 1, Section 2, Article XII of the 1987 Constitution because JAPEX is
100% Japanese-owned.60 Furthermore, the FIDEC asserts that SC-46 cannot
be considered as a technical and financial assistance agreement validly
executed under paragraph 4 of the same provision. 61 The petitioners claim
that La Bugal-B'laan Tribal Association, Inc. v. Ramos 62 laid down the
guidelines for a valid service contract, one of which is that there must exist a
general law for oil exploration before a service contract may be entered into
by the Government. The petitioners posit that the service contract in La
Bugal is presumed to have complied with the requisites of (a) legislative
enactment of a general law after the effectivity of the 1987 Constitution
(such as Republic Act No. 7942, or the Philippine Mining Law of 1995,
governing mining contracts) and (b) presidential notification. The petitioners
thus allege that the ruling in La Bugal, which involved mining contracts
under Republic Act No. 7942, does not apply in this case. 63 The petitioners
also argue that Presidential Decree No. 87 or the Oil Exploration and
Development Act of 1972 cannot legally justify SC-46 as it is deemed to
have been repealed by the 1987 Constitution and subsequent laws, which
49

enunciate new policies concerning the environment. 64In addition, petitioners

in G.R. No. 180771 claim that paragraphs 2 and 3 of Section 2, Article XII of
the 1987 Constitution mandate the exclusive use and enjoyment by the
Filipinos of our natural resources, 65 and paragraph 4 does not speak of
service contracts but of FTAAs or Financial Technical Assistance
Agreements.66
The public respondents again controvert the petitioners' claims and
asseverate that SC-46 does not violate Section 2, Article XII of the 1987
Constitution. They hold that SC-46 does not fall under the coverage of
paragraph 1 but instead, under paragraph 4 of Section 2, Article XII of the
1987 Constitution on FTAAs. They also insist that paragraphs 2 and 3, which
refer to the grant of exclusive fishing right to Filipinos, are not applicable to
SC-46 as the contract does not grant exclusive fishing rights to JAPEX nor
does it otherwise impinge on the FIDEC's right to preferential use of
communal marine and fishing resources.67
Ruling
of
the
On
the
legality
of
Service
Contract
vis-a-vis Section 2, Article XII of the 1987 Constitution

No.

Court
46

The petitioners insist that SC-46 is null and void for having violated Section
2,
Article
XII
of
the
1987
Constitution,
which
reads
as
follows:chanroblesvirtuallawlibrary
Section 2. All lands of the public domain, waters, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by
the State. With the exception of agricultural lands, all other natural
resources shall not be alienated. The exploration, development, and
utilization of natural resources shall be under the full control and supervision
of the State. The State may directly undertake such activities, or it may
enter into co-production, joint venture, or production-sharing agreements
with Filipino citizens, or corporations or associations at least sixty per
centum of whose capital is owned by such citizens. Such agreements may be
for a period not exceeding twenty-five years, renewable for not more than
twenty-five years, and under such terms and conditions as may be provided
by law. In cases of water rights for irrigation, water supply, fisheries, or
industrial uses other than the development of water power, beneficial use
may
be
the
measure
and
limit
of
the
grant.
The State shall protect the nation's marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and
enjoyment
exclusively
to
Filipino
citizens.

50

The Congress may, by law, allow small-scale utilization of natural resources

by Filipino citizens, as well as cooperative fish farming, with priority to
subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons.
The President may enter into agreements with foreign-owned
corporations involving either technical or financial assistance for
large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms and
conditions provided by law, based on real contributions to the
economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of local
scientific
and
technical
resources.
The President shall notify the Congress of every contract entered
into in accordance with this provision, within thirty days from its
execution. (Emphases ours.)
This Court has previously settled the issue of whether service contracts are
still allowed under the 1987 Constitution. In La Bugal, we held that the
deletion of the words "service contracts" in the 1987 Constitution did not
amount to a ban on them per se. In fact, in that decision, we quoted in
length, portions of the deliberations of the members of the Constitutional
Commission (ConCom) to show that in deliberating on paragraph 4, Section
2, Article XII, they were actually referring to service contracts as understood
in the 1973 Constitution, albeit with safety measures to eliminate or
minimize the abuses prevalent during the martial law regime, to
wit:chanroblesvirtuallawlibrary
Summation
of
the
ConCom
Deliberations
At this point, we sum up the matters established, based on a careful reading
of
the
ConCom
deliberations,
as
follows:
In their deliberations on what was to become paragraph 4, the framers used
the termservice contracts in referring to agreements x x x involving either
technical
or
financial
assistance.
They spoke of service contracts as the concept was understood in the 1973
Constitution.
It was obvious from their discussions that they were not about to ban or
eradicateservice
contracts.
Instead, they were plainly crafting provisions to put in place safeguards that
would eliminate or minimize the abuses prevalent during the marital law
regime. In brief, they were going to permit service contracts with foreign
51

corporations as contractors, but with safety measures to prevent abuses, as

an exception to the general norm established in the first paragraph of
Section 2 of Article XII. This provision reserves or limits to Filipino citizens
and corporations at least 60 percent of which is owned by such citizens
the exploration, development and utilization of natural resources.
This provision was prompted by the perceived insufficiency of Filipino capital
and the felt need for foreign investments in the EDU of minerals and
petroleum
resources.
The framers for the most part debated about the sort of safeguards that
would be considered adequate and reasonable. But some of them, having
more "radical" leanings, wanted to ban service contracts altogether; for
them, the provision would permit aliens to exploit and benefit from the
nation's natural resources, which they felt should be reserved only for
Filipinos.
In the explanation of their votes, the individual commissioners were heard
by the entire body. They sounded off their individual opinions, openly
enunciated their philosophies, and supported or attacked the provisions with
fervor.
Everyone's
viewpoint
was
heard.
In the final voting, the Article on the National
including paragraph 4 allowing service contracts
an exception to the general norm in paragraph
article was resoundingly approved by a
abstentions.

Economy and Patrimony

with foreign corporations as
1 of Section 2 of the same
vote of 32 to 7, with 2

Agreements Involving Technical Or Financial Assistance Are Service

Contracts
with
Safeguards
From the foregoing, we are impelled to conclude that the phrase agreements
involving either technical or financial assistance, referred to in paragraph 4,
are in fact service contracts. But unlike those of the 1973 variety, the new
ones are between foreign corporations acting as contractors on the one
hand; and on the other, the government as principal or "owner" of the
works. In the new service contracts, the foreign contractors provide capital,
technology and technical know-how, and managerial expertise in the
creation and operation of large-scale mining/extractive enterprises; and the
government, through its agencies (DENR, MGB), actively exercises control
and supervision over the entire operation.68cralawlawlibrary
In summarizing the matters discussed in the ConCom, we established that
paragraph 4, with the safeguards in place, is the exception to

52

paragraph 1, Section 2 of Article XII. The following are the safeguards

this Court enumerated in La Bugal:chanroblesvirtuallawlibrary
Such service contracts may be entered into only with respect to minerals,
petroleum and other mineral oils. The grant thereof is subject to several
safeguards,
among
which
are
these
requirements:
(1) The service contract shall be crafted in accordance with a general law
that will set standard or uniform terms, conditions and requirements,
presumably to attain a certain uniformity in provisions and avoid the possible
insertion
of
terms
disadvantageous
to
the
country.
(2) The President shall be the signatory for the government because,
supposedly before an agreement is presented to the President for signature,
it will have been vetted several times over at different levels to ensure that it
conforms
to
law
and
can
withstand
public
scrutiny.
(3) Within thirty days of the executed agreement, the President shall report
it to Congress to give that branch of government an opportunity to look over
the agreement and interpose timely objections, if any.69cralawlawlibrary
Adhering to the aforementioned guidelines, this Court finds that SC-46 is
indeed null and void for noncompliance with the requirements of the 1987
Constitution.
1.

The

General

Law

on

Oil

Exploration

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

indigenous petroleum in the Philippines are governed by Presidential Decree
No. 87 or the Oil Exploration and Development Act of 1972. This was
enacted by then President Ferdinand Marcos to promote the discovery and
production of indigenous petroleum through the utilization of government
and/or local or foreign private resources to yield the maximum benefit to the
Filipino people and the revenues to the Philippine Government. 70
Contrary to the petitioners' argument, Presidential Decree No. 87, although
enacted in 1972, before the adoption of the 1987 Constitution, remains to be
a valid law unless otherwise repealed, to wit:chanroblesvirtuallawlibrary
ARTICLE XVIII - TRANSITORY PROVISIONS
Section 3. All existing laws, decrees, executive orders, proclamations,
letters of instructions, and other executive issuances not inconsistent with
this Constitution shall remain operative until amended, repealed, or revoked.
If there were any intention to repeal Presidential Decree No. 87, it would
have been done expressly by Congress. For instance, Republic Act No. 7160,
more popularly known as the Local Government Code of 1991, expressly
53

repealed a number of laws, including a specific provision in Presidential

Decree No. 87, viz.:chanroblesvirtuallawlibrary
SECTION 534. Repealing Clause. (a) Batas Pambansa Blg. 337, otherwise
known as the "Local Government Code," Executive Order No. 112 (1987),
and
Executive
Order
No.
319
(1988)
are
hereby
repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees,
orders, instructions, memoranda and issuances related to or concerning the
barangay
are
hereby
repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding
hospital fund; Section 3, a (3) and b (2) of Republic Act No. 5447 regarding
the Special Education Fund; Presidential Decree No. 144 as amended by
Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as
amended; Presidential Decree No. 436 as amended by Presidential Decree
No. 558; and Presidential Decree Nos. 381, 436, 464, 477, 526, 632, 752,
and 1136 are hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs
locally-funded
projects.
(e) The following provisions are hereby repealed or amended insofar as they
are inconsistent with the provisions of this Code: Sections 2, 16 and 29 of
Presidential Decree No. 704; Section 12 of Presidential Decree No. 87,
as amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of
Presidential Decree No. 463, as amended; and Section 16 of Presidential
Decree
No.
972,
as
amended,
and
(f) All general and special laws, acts, city charters, decrees, executive
orders, proclamations and administrative regulations, or part or parts
thereof which are inconsistent with any of the provisions of this Code are
hereby repealed or modified accordingly. (Emphasis supplied.)
This Court could not simply assume that while Presidential Decree No. 87
had not yet been expressly repealed, it had been impliedly repealed. As we
held in Villarea v. The Commission on Audit,71 "[i]mplied repeals are not
lightly presumed." It is a settled rule that when laws are in conflict with one
another, every effort must be exerted to reconcile them. In Republic of the
Philippines
v.
Marcopper
Mining
Corporation,72 we
said:chanroblesvirtuallawlibrary
The two laws must be absolutely incompatible, and a clear finding thereof
must surface, before the inference of implied repeal may be drawn. The rule
is expressed in the maxim, interpretare et concordare leqibus est optimus
interpretendi, i.e., every statute must be so interpreted and brought into
accord with other laws as to form a uniform system of jurisprudence. The
54

fundament is that the legislature should be presumed to have known the

existing laws on the subject and not have enacted conflicting statutes.
Hence, all doubts must be resolved against any implied repeal, and all
efforts should be exerted in order to harmonize and give effect to all laws on
the subject. (Citation omitted.)
Moreover, in cases where the statute seems to be in conflict with the
Constitution, but a construction that it is in harmony with the Constitution is
also possible, that construction should be preferred. 73This Court,
in Pangandaman v. Commission on Elections 74 expounding on this point,
pronounced:chanroblesvirtuallawlibrary
It is a basic precept in statutory construction that a statute should be
interpreted in harmony with the Constitution and that the spirit, rather than
the letter of the law determines its construction; for that reason, a statute
must be read according to its spirit and intent, x x x. (Citation omitted.)
Consequently, we find no merit in petitioners' contention that SC-46 is
prohibited on the ground that there is no general law prescribing the
standard or uniform terms, conditions, and requirements for service
contracts
involving
oil
exploration
and
extraction.
But note must be made at this point that while Presidential Decree No. 87
may serve as the general law upon which a service contract for petroleum
exploration and extraction may be authorized, as will be discussed below,
the exploitation and utilization of this energy resource in the present case
may be allowed only through a law passed by Congress, since the Taon
Strait
is
a
NIPAS75 area.
2. President was not the signatory to SC-46 and the same was not
submitted
to
Congress
While the Court finds that Presidential Decree No. 87 is sufficient to satisfy
the requirement of a general law, the absence of the two other conditions,
that the President be a signatory to SC-46, and that Congress be notified of
such
contract,
renders
it
null
and
void.
As SC-46 was executed in 2004, its terms should have conformed not only to
the provisions of Presidential Decree No. 87, but also to those of the 1987
Constitution. The Civil Code provides:chanroblesvirtuallawlibrary
ARTICLE 1306. The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs, public order, or public policy.
(Italics ours.)
In Heirs of San Miguel v. Court of Appeals,76 this Court held
that:chanroblesvirtuallawlibrary

55

It is basic that the law is deemed written into every contract. Although a
contract is the law between the parties, the provisions of positive law which
regulate contracts are deemed written therein and shall limit and govern the
relations between the parties, x x x. (Citations omitted.)
Paragraph 4, Section 2, Article XII of the 1987 Constitution requires that the
President himself enter into any service contract for the exploration of
petroleum. SC-46 appeared to have been entered into and signed only by
the DOE through its then Secretary, Vicente S. Perez, Jr., contrary to the said
constitutional requirement. Moreover, public respondents have neither shown
nor alleged that Congress was subsequently notified of the execution of such
contract.
Public respondents' implied argument that based on the "alter ego principle,"
their acts are also that of then President Macapagal-Arroyo's, cannot apply in
this case. In Joson v. Torres,77 we explained the concept of the alter ego
principle or the doctrine of qualified political agency and its limit in this
wise:chanroblesvirtuallawlibrary
Under this doctrine, which recognizes the establishment of a single
executive, all executive and administrative organizations are adjuncts of the
Executive Department, the heads of the various executive departments are
assistants and agents of the Chief Executive, and, except in cases where
the Chief Executive is required by the Constitution or law to act in
person or the exigencies of the situation demand that he act
personally, the multifarious executive and administrative functions of the
Chief Executive are performed by and through the executive departments,
and the acts of the Secretaries of such departments, performed and
promulgated in the regular course of business, are, unless disapproved or
reprobated by the Chief Executive presumptively the acts of the Chief
Executive. (Emphasis ours, citation omitted.)
While the requirements in executing service contracts in paragraph 4,
Section 2 of Article XII of the 1987 Constitution seem like mere formalities,
they, in reality, take on a much bigger role. As we have explained in La
Bugal, they are the safeguards put in place by the framers of the
Constitution to "eliminate or minimize the abuses prevalent during the
martial law regime."78 Thus, they are not just mere formalities, which will
only render a contract unenforceable but not void, if not complied with. They
are requirements placed, not just in an ordinary statute, but in the
fundamental law, the non-observance of which will nullify the contract.
Elucidating on the concept of a "constitution," this Court, in Manila Prince
Hotel
v.
Government
Service
Insurance
79
System, held:chanroblesvirtuallawlibrary
A constitution is a system of fundamental laws for the governance and
administration of a nation. It is supreme, imperious, absolute and
unalterable except by the authority from which it emanates. It has been
56

defined as the fundamental and paramount law of the nation. It prescribes

the permanent framework of a system of government, assigns to the
different departments their respective powers and duties, and establishes
certain fixed principles on which government is founded. The fundamental
conception in other words is that it is a supreme law to which all other laws
must conform and in accordance with which all private rights must be
determined and all public authority administered. Under the doctrine of
constitutional supremacy, if a law or contract violates any norm of
the constitution that law or contract whether promulgated by the
legislative or by the executive branch or entered into by private
persons for private purposes is null and void and without any force
and effect. Thus,since the Constitution is the fundamental, paramount and
supreme law of the nation, it is deemed written in every statute and
contract. (Emphasis ours.)
As this Court has held in La Bugal, our Constitution requires that the
President himself be the signatory of service agreements with foreign-owned
corporations involving the exploration, development, and utilization of our
minerals, petroleum, and other mineral oils. This power cannot be taken
lightly.
In this case, the public respondents have failed to show that the President
had any participation in SC-46. Their argument that their acts are actually
the acts of then President Macapagal-Arroyo, absent proof of her
disapproval, must fail as the requirement that the President herself enter
into these kinds of contracts is embodied not just in any ordinary statute,
but in the Constitution itself. These service contracts involving the
exploitation, development, and utilization of our natural resources are of
paramount interest to the present and future generations. Hence, safeguards
were put in place to insure that the guidelines set by law are meticulously
observed and likewise to eradicate the corruption that may easily penetrate
departments and agencies by ensuring that the President has authorized or
approved
of
these
service
contracts
herself.
Even under the provisions of Presidential Decree No. 87, it is required that
the Petroleum Board, now the DOE, obtain the President's approval for the
execution of any contract under said statute, as shown in the following
provision:chanroblesvirtuallawlibrary
SECTION 5. Execution of contract authorized in this Act. - Every contract
herein authorized shall, subject to the approval of the President, be executed
by the Petroleum Board created in this Act, after due public notice prequalification and public bidding or concluded through negotiations. In case
bids are requested or if requested no bid is submitted or the bids submitted
are rejected by the Petroleum Board for being disadvantageous to the
Government, the contract may be concluded through negotiation.
57

In opening contract areas and in selecting the best offer for petroleum
operations, any of the following alternative procedures may be resorted to
by the Petroleum Board, subject to prior approval of the President [.]
Even if we were inclined to relax the requirement in La Bugal to harmonize
the 1987 Constitution with the aforementioned provision of Presidential
Decree No. 87, it must be shown that the government agency or subordinate
official has been authorized by the President to enter into such service
contract for the government. Otherwise, it should be at least shown that the
President subsequently approved of such contract explicitly. None of these
circumstances is evident in the case at bar.chanRoblesvirtualLawlibrary
Service Contract No. 46 vis-a-vis Other Laws
Petitioners in G.R. No. 180771 claim that SC-46 violates Section 27 of
Republic Act. No. 9147 or the Wildlife Resources Conservation and Protection
Act, which bans all marine exploration and exploitation of oil and gas
deposits. They also aver that Section 14 of Republic Act No. 7586 or the
National Integrated Protected Areas System Act of 1992 (NIPAS Act), which
allows the exploration of protected areas for the purpose of informationgathering, has been repealed by Section 27 of Republic Act No. 9147. The
said petitioners further claim that SC-46 is anathema to Republic Act No.
8550 or the Philippine Fisheries Code of 1998, which protects the rights of
the fisherfolk in the preferential use of municipal waters, with the exception
being
limited
only
to
research
and
survey
activities. 80
The FIDEC, for its part, argues that to avail of the exceptions under Section
14 of the NIPAS Act, the gathering of information must be in accordance
with a DENR-approved program, and the exploitation and utilization of
energy resources must be pursuant to a general law passed by Congress
expressly for that purpose. Since there is neither a DENR-approved program
nor a general law passed by Congress, the seismic surveys and oil drilling
operations were all done illegally.81 The FIDEC likewise contends that SC-46
infringes on its right to the preferential use of the communal fishing waters
as it is denied free access within the prohibited zone, in violation not only of
the Fisheries Code but also of the 1987 Constitutional provisions on
subsistence fisherfolk and social justice. 82 Furthermore, the FIDEC believes
that the provisions in Presidential Decree No. 87, which allow offshore
drilling even in municipal waters, should be deemed to have been rendered
inoperative by the provisions of Republic Act No. 8550 and Republic Act No.
7160, which reiterate the social justice provisions of the Constitution. 83
The public respondents invoke the rules on statutory construction and argue
that Section 14 of the NIPAS Act is a more particular provision and cannot be
58

deemed to have been repealed by the more general prohibition in Section 27

of Republic Act No. 9147. They aver that Section 14, under which SC-46
falls, should instead be regarded as an exemption to Section 27. 84
Addressing the claim of petitioners in G.R. No. 180771 that there was a
violation of Section 27 of Republic Act No. 9147, the public respondents
assert that what the section prohibits is the exploration of minerals, which as
defined in the Philippine Mining Act of 1995, exclude energy materials such
as coal, petroleum, natural gas, radioactive materials and geothermal
energy. Thus, since SC-46 involves oil and gas exploration, Section 27 does
not
apply.85
The public respondents defend the validity of SC-46 and insist that it does
not grant exclusive fishing rights to JAPEX; hence, it does not violate the rule
on preferential use of municipal waters. Moreover, they allege that JAPEX
has not banned fishing in the project area, contrary to the FIDEC's claim.
The public respondents also contest the attribution of the declining fish catch
to the seismic surveys and aver that the allegation is unfounded. They claim
that according to the Bureau of Fisheries and Aquatic Resources' fish catch
data, the reduced fish catch started in the 1970s due to destructive fishing
practices.86
Ruling
of
the
Court
On the legality of Service Contract No. 46 vis-a-vis Other Laws
Although we have already established above that SC-46 is null and void for
being violative of the 1987 Constitution, it is our duty to still rule on the
legality of SC-46 vis-a-vis other pertinent laws, to serve as a guide for the
Government when executing service contracts involving not only the Taon
Strait, but also other similar areas. While the petitioners allege that SC-46 is
in violation of several laws, including international ones, their arguments
focus primarily on the protected status of the Taon Strait, thus this Court
will concentrate on those laws that pertain particularly to the Taon Strait as
a
protected
seascape.
The Taon Strait is a narrow passage of water bounded by the islands of
Cebu in the East and Negros in the West. It harbors a rich biodiversity of
marine life, including endangered species of dolphins and whales. For this
reason, former President Fidel V. Ramos declared the Taon Strait as a
protected seascape in 1998 by virtue of Proclamation No. 1234 - Declaring
the Taon Strait situated in the Provinces of Cebu, Negros Occidental and
Negros Oriental as a Protected Area pursuant to the NIP AS Act and shall be
known as Taon Strait Protected Seascape. During former President Joseph
E. Estrada's time, he also constituted the Taon Strait Commission via
59

Executive Order No. 76 to ensure the optimum and sustained use of the
resources in that area without threatening its marine life. He followed this
with Executive Order No. 177,87 wherein he included the mayor of Negros
Occidental Municipality/City as a member of the Taon Strait Commission, to
represent the LGUs concerned. This Commission, however, was subsequently
abolished in 2002 by then President Gloria Macapagal-Arroyo, via Executive
Order
No.
72.88
True to the constitutional policy that the "State shall protect and advance the
right of the people to a balanced and healthful ecology in accord with the
rhythm and harmony of nature,"89 Congress enacted the NIPAS Act to secure
the perpetual existence of all native plants and animals through the
establishment of a comprehensive system of integrated protected areas.
These areas possess common ecological values that were incorporated into a
holistic plan representative of our natural heritage. The system encompasses
outstandingly remarkable areas and biologically important public lands that
are habitats of rare and endangered species of plants and animals,
biogeographic zones and related ecosystems, whether terrestrial, wetland, or
marine.90 It classifies and administers all the designated protected areas to
maintain essential ecological processes and life-support systems, to preserve
genetic diversity, to ensure sustainable use of resources found therein, and
to maintain their natural conditions to the greatest extent possible. 91 The
following categories of protected areas were established under the NIPAS
Act:chanroblesvirtuallawlibrary
a. Strict nature reserve;
b. Natural park;
c. Natural monument;
d. Wildlife sanctuary;
e. Protected landscapes and seascapes;
f. Resource reserve;
g. Natural biotic areas; and
h. Other categories established by law, conventions or international
agreements which the Philippine Government is a signatory.92
Under Section 4 of the NIPAS Act, a protected area refers to portions of land
and water, set aside due to their unique physical and biological significance,
60

managed to enhance biological diversity and protected against human

exploitation.
The Taon Strait, pursuant to Proclamation No. 1234, was set aside and
declared a protected area under the category of Protected Seascape. The
NIPAS Act defines a Protected Seascape to be an area of national
significance characterized by the harmonious interaction of man and land
while providing opportunities for public enjoyment through recreation and
tourism within the normal lifestyle and economic activity of this areas; 93 thus
a management plan for each area must be designed to protect and enhance
the permanent preservation of its natural conditions. 94 Consistent with this
endeavor is the requirement that an Environmental Impact Assessment
(EIA) be made prior to undertaking any activity outside the scope of the
management plan. Unless an ECC under the EIA system is obtained, no
activity inconsistent with the goals of the NIPAS Act shall be implemented. 95
The Environmental Impact Statement System (EISS) was established in
1978 under Presidential Decree No. 1586. It prohibits any person,
partnership or corporation from undertaking or operating any declared
environmentally critical project or areas without first securing an ECC issued
by the President or his duly authorized representative. 96 Pursuant to the
EISS, which called for the proper management of environmentally critical
areas,97 Proclamation No. 214698 was enacted, identifying the areas and
types of projects to be considered as environmentally critical and within the
scope of the EISS, while DENR Administrative Order No. 2003-30 provided
for
its
Implementing
Rules
and
Regulations
(IRR).
DENR Administrative Order No. 2003-30 defines an environmentally critical
area as "an area delineated as environmentally sensitive such that
significant environmental impacts are expected if certain types of proposed
projects or programs are located, developed, or implemented in it"; 99 thus,
before a project, which is "any activity, regardless of scale or magnitude,
which may have significant impact on the environment," 100 is undertaken in
it, such project must undergo an EIA to evaluate and predict the likely
impacts of all its stages on the environment. 101 An EIA is described in detail
as follows:chanroblesvirtuallawlibrary
h. Environmental Impact Assessment (EIA) - process that involves
evaluating and predicting the likely impacts of a project (including
cumulative impacts) on the environment during construction,
commissioning, operation and abandonment. It also includes designing
appropriate preventive, mitigating and enhancement measures
addressing these consequences to protect the environment and the
community's welfare. The process is undertaken by, among others, the
project proponent and/or EIA Consultant, EMB, a Review Committee,
61

affected communities and other stakeholders.102

Under Proclamation No. 2146, the Taon Strait is an environmentally
critical area, having been declared as a protected area in 1998;
therefore, any activity outside the scope of its management plan
may only be implemented pursuant to an ECC secured after
undergoing an EIA to determine the effects of such activity on its
ecological
system.
The public respondents argue that they had complied with the procedures in
obtaining an ECC103 and that SC-46 falls under the exceptions in Section 14
of
the
NIPAS
Act,
due
to
the
following
reasons:
1) The Taon Strait is not a strict nature reserve or natural park;
2) Exploration is only for the purpose of gathering information on possible
energy
resources;
and
3) Measures are undertaken to ensure that the exploration is being done
with
the
least
damage
to
surrounding
areas. 104
We do not agree with the arguments raised by the public respondents.
Sections 12 and 14 of the NIPAS Act read:chanroblesvirtuallawlibrary
SECTION 12. Environmental Impact Assessment. - Proposals for activities
which are outside the scope of the management plan for protected areas
shall be subject to an environmental impact assessment as required by law
before they are adopted, and the results thereof shall be taken into
consideration
in
the
decision-making
process.
No actual implementation of such activities shall be allowed without the
required Environmental Compliance Certificate (ECC) under the Philippine
Environmental Impact Assessment (EIA) system. In instances where such
activities are allowed to be undertaken, the proponent shall plan and carry
them out in such manner as will minimize any adverse effects and take
preventive and remedial action when appropriate. The proponent shall be
liable for any damage due to lack of caution or indiscretion.
SECTION 14. Survey for Energy Resources. - Consistent with the policies
declared in Section 2 hereof, protected areas, except strict nature reserves
and natural parks, may be subjected to exploration only for the purpose of
gathering information on energy resources and only if such activity is carried
out with the least damage to surrounding areas. Surveys shall be conducted
only in accordance with a program approved by the DENR, and the result of
such surveys shall be made available to the public and submitted to the
62

President for recommendation to Congress. Any exploitation and utilization

of energy resources found within NIPAS areas shall be allowed only through
a law passed by Congress.
It is true that the restrictions found under the NIPAS Act are not without
exceptions. However, while an exploration done for the purpose of
surveying for energy resources is allowed under Section 14 of the
NIPAS Act, this does not mean that it is exempt from the
requirement to undergo an EIA under Section 12. In Sotto v.
Sotto,105 this Court explained why a statute should be construed as a
whole:chanroblesvirtuallawlibrary
A statute is passed as a whole and not in parts or sections and is animated
by one general purpose and intent. Consequently each part or section should
be construed in connection with every other part or section and so as to
produce a harmonious whole. It is not proper to confine the attention to the
one section to be construed. It is always an unsafe way of construing a
statute or contract to divide it by a process of etymological dissection, into
separate words, and then apply to each, thus separated from its context,
some particular definition given by lexicographers, and then reconstruct the
instrument upon the basis of these definitions. An instrument must always
be construed as a whole, and the particular meaning to be attached to any
word or phrase is usually to be ascertained from the context, the nature of
the subject treated of and the purpose or intention of the parties who
executed the contract, or of the body which enacted or framed the statute or
constitution, x x x.
Surveying for energy resources under Section 14 is not an
exemption from complying with the EIA requirement in Section 12;
instead, Section 14 provides for additional requisites before any
exploration for energy resources may be done in protected areas.
The rationale for such additional requirements are incorporated in Section 2
of the NIPAS Act, to wit:chanroblesvirtuallawlibrary
SECTION 2. Declaration of Policy - Cognizant of the profound impact of
man's activities on all components of the natural environment particularly
the effect of increasing population, resource exploitation and industrial
advancement amd recognizing the critical importance of protecting and
maintaining the natural biological and physical diversities of the environment
notably on areas with biologically unique features to sustain human life and
development, as well as plant and animal life, it is hereby declared the policy
of the State to secure for the Filipino people of present and future
generations the perpetual existence of all native plants and animals through
the establishment of a comprehensive system of integrated protected areas
within the classification of national park as provided for in the Constitution.
It is hereby recognized that these areas, although distinct in features,
63

possess common ecological values that may be incorporated into a holistic

plan representative of our natural heritage; that effective administration of
this area is possible only through cooperation among national government,
local government and concerned private organizations; that the use and
enjoyment of these protected areas must be consistent with the principles of
biological
diversity
and
sustainable
development.
To this end, there is hereby established a National Integrated Protected
Areas System (NIPAS), which shall encompass outstandingly remarkable
areas and biologically important public lands that are habitats of rare and
endangered species of plants and animals, biogeographic zones and related
ecosystems, whether terrestrial, wetland or marine, all of which shall be
designated as "protected areas."
The public respondents themselves admitted that JAPEX only started to
secure an ECC prior to the second sub-phase of SC-46, which required the
drilling of an oil exploration well. This means that when the seismic surveys
were done in the Taon Strait, no such environmental impact evaluation was
done. Unless seismic surveys are part of the management plan of the Taon
Strait, such surveys were dona in violation of Section 12 of the NIPAS Act
and
Section
4
of
Presidential
Decree
No.
1586,
which
provides:chanroblesvirtuallawlibrary
Section 4. Presidential Proclamation of Environmentally Critical Areas and
Projects. - The President of the Philippines may, on his own initiative or upon
recommendation of the National Environmental Protection Council, by
proclamation declare certain projects, undertakings or areas in the country
as environmentally critical. No person, partnership or corporation shall
undertake or operate any such declared environmentally critical project or
area without first securing an Environmental Compliance Certificate issued
by the President or his duly authorized representative. For the proper
management of said critical project or area, the President may by his
proclamation reorganize such government offices, agencies, institutions,
corporations or instrumentalities including the re-alignment of government
personnel,
and
their
specific
functions
and
responsibilities.
For the same purpose as above, the Ministry of Human Settlements shall:
(a) prepare the proper land or water use pattern for said critical project(s) or
area(s); (b) establish ambient environmental quality standards; (c) develop
a program of environmental enhancement or protective measures against
calamitous factors such as earthquakes, floods, water erosion and others,
and (d) perform such other functions as may be directed by the President
from time to time.
The respondents' subsequent compliance with the EISS for the second subphase of SC-46 cannot and will not cure this violation. The following
penalties are provided for under Presidential Decree No. 1586 and the NIPAS
64

Act.
Section 9 of Presidential Decree No. 1586 provides for the penalty involving
violations of the ECC requirement:chanroblesvirtuallawlibrary
Section 9. Penalty for Violation. - Any person, corporation or partnership
found violating Section 4 of this Decree, or the terms and conditions in the
issuance of the Environmental Compliance Certificate, or of the standards,
rules and regulations issued by the National Environmental Protection
Council pursuant to this Decree shall be punished by the suspension or
cancellation of his/its certificates and/or a fine in an amount not to
exceed Fifty Thousand Pesos (P50,000.00) for every violation
thereof, at the discretion of the National Environmental Protection
Council. (Emphasis supplied.)
Violations of the NIPAS Act entails the following fines and/or imprisonment
under Section 21:chanroblesvirtuallawlibrary
SECTION 21. Penalties. - Whoever violates this Act or any rules and
regulations issued by the Department pursuant to this Act or whoever is
found guilty by a competent court of justice of any of the offenses in the
preceding section shall be fined in the amount of not less than Five
thousand pesos (P5,000) nor more than Five hundred thousand
pesos (P500,000), exclusive of the value of the thing damaged or
imprisonment for not less than one (1) year but not more than six
(6) years, or both, as determined by the court: Provided, that, if the
area requires rehabilitation or restoration as determined by the
court, the offender shall be required to restore or compensate for
the restoration to the damages: Provided, further, that court shall
order the eviction of the offender from the land and the forfeiture in
favor of the Government of all minerals, timber or any species
collected or removed including all equipment, devices and firearms
used in connection therewith, and any construction or improvement
made thereon by the offender. If the offender is an association or
corporation, the president or manager shall be directly responsible for the
act of his employees and laborers: Provided, finally, that the DENR may
impose administrative fines and penalties consistent with this Act.
(Emphases supplied.)
Moreover, SC-46 was not executed for the mere purpose of gathering
information on the possible energy resources in the Taon Strait as it also
provides for the parties' rights and obligations relating to extraction and
petroleum production should oil in commercial quantities be found to exist in
the area. While Presidential Decree No. 87 may serve as the general
law upon which a service contract for petroleum exploration and
extraction may be authorized, the exploitation and utilization of this
energy resource in the present case may be allowed only through a
law passed by Congress, since the Taon Strait is a NIPAS
65

area.106Since there is no such law specifically allowing oil exploration

and/or extraction in the Taon Strait, no energy resource
exploitation and utilization may be done in said protected seascape.
In view of the foregoing premises and conclusions, it is no longer necessary
to discuss the other issues raised in these consolidated petitions.cralawred
WHEREFORE, the
Petitions
in G.R. Nos.
180771 and 181527
are GRANTED, Service Contract No. 46 is hereby declared NULL AND
VOID for violating the 1987 Constitution, Republic Act No. 7586, and
Presidential
Decree
No.
1586.
SO ORDERED.chanroblesvirtuallawlibrary
Holy Trinity vs Dela Cruz
FIRST DIVISION
G.R. No. 200454, October 22, 2014
HOLY
TRINITY
REALTY
CORPORATION, Petitioner, v. VICTORIO
MANALAYSAY,
RICARDO
MARCELO,
GUZMAN, Respondents.

&
DEVELOPMENT
DELA
CRUZ,
LORENZO
JR.
AND
LEONCIO
DE

DECISION
BERSAMIN, J.:
Land on which no agricultural activity is being conducted is not subject to
the coverage of either Presidential Decree No. 27 or Republic Act No. 6657
(Comprehensive Agrarian Reform Law).
The Case
The petitioner appeals the decision promulgated on July 27, 2011, 1 whereby
the Court of Appeals (CA) reversed the decision issued by the Office of the
President (OP) on March 1, 2010,2 and reinstated the order of the OICRegional Director of the Department of Agrarian Reform in Regional Office III
rendered on August 18, 2006.3
Antecedents
Subject of the controversy is a parcel of land located in Brgy. Dakila,
66

Malolos, Bulacan (Dakila property) registered in the name of Freddie

Santiago under Transfer Certificate of Title (TCT) No. T-103698 of the
Registry of Deeds of Bulacan with an area of 212,500 square meters. The
Dakila property used to be tenanted by Susana Surio, Cipriano Surio, Alfonso
Espiritu, Agustin Surio, Aurelio Surio, Pacifico Eugenio, Godofredo Alcoriza,
Lorenza Angeles, Ramon Manalad, Toribio Hernandez, Emerciana
Montealegre, Pedro Manalad, Celerino Ramos and Cecilia L. Martin, 4 but in
August 1991, these tenants freely and voluntarily relinquished their tenancy
rights in favor of Santiago through their respective sinumpaang pahayag5 in
exchange for some financial assistance and individual homelots titled and
distributed in their names, as follows:6
TCT No.
T-73006
T-73007
T-73008
T-73009
T-73010
T-73011
T-73012
T-73013
T-73014

T-73015
T-73016
T-73017

T-73018
T-73019
T-73020
T-73021

Name of Tenant/Successor
Susana Surio
Cipriano Surio
Alfonso Espiritu
Agustin Surio
Aurelio Surio
Pacifico Eugenio
Godofredo Alcoriza
Lorenza Angeles
Ramon Manalad
Toribio M. Hernandez
Emerciana Montealegre
Pedro Manalad
Celerino Ramos
Cecilia L. Martin
Pablo dela Cruz

Area (sq. m.)

186
150
300
300
264
300
300
300
300
300
300
300
300
300

Aurelio dela Cruz

Julita Leoncio
Anicia L. de Guzman
Ramon Centeno
Miguel Centeno
TOTAL

300
300

300

300
300
4,500

On September 17, 1992, the petitioner purchased the remaining 208,050

square meters of the Dakila property from Santiago,7 and later caused the
67

transfer of the title to its name as well as subdivided the Dakila property into
six lots,8 to wit:chanRoblesvirtualLawlibrary
TCT No.
81618
81619
81620
81621
73022
73023
TOTAL

Area (sq. m.)

50,000
50,000
50,000
54,810
2,401
839
208,050

The petitioner then developed the property by dumping filling materials on

the topsoil, and by erecting a perimeter fence and steel gate. It established
its
field
office
on
the
property.9
On March 4, 1998, the Sanggunian Bayan ng Malolos passed Municipal
Resolution No. 16-98 reclassifying four of the six subdivided lots belonging
to the petitioner, to wit:chanRoblesvirtualLawlibrary
MUNICIPAL RESOLUTION NO. 16-98
A RESOLUTION RE-CLASSIFYING AS RESIDENTIAL LOTS THE FOUR (4)
PARCELS OF LAND SEPARATELY COVERED BY TCT NO. 81618, TCT NO.
81619, TCT NO.81620 AND TCT NO. 81621 CONTAINING AN AREA OF
50,000 SQ MTS, 50,000 SQ. MTS, 50,000 SQ M (sic) AND 54,810 SQ M (sic)
RESPECTIVELY ALL LOCATED AT DAKILA, MALOLOS, BULACAN REGISTERED
IN THE NAME OF THE HOLY TRINITY REALTY AND DEVELOPMENT
CORPORATION
WHEREAS, Ms. Jennifer M. Romero, Auditor Representative of Holy Trinity
Realty and Development Corporation in [her] letter to the Sangguniang
Bayan made a request for re-classification of four parcel(s) of land registered
in the name of Holy Trinity and Development Corporation under TCT NO.
81618, TCT NO. 81619, TCT NO.81620 AND TCT NO. 81621 with an area of
50,000 sq. m., 50,000 sq. m., 50,000 sq. m. AND 54,810 sq. m. respectively
all
located
at
Dakila,
Malolos,
Bulacan.
WHEREAS, after an ocular inspection of the subject lots and matured
deliberation, the Sangguniang Bayan found merit in the request for the
following reasons, thus:

68

1.

The

Properties

are

untenanted;cralawlawlibrary

2. That they are not fitted (sic) for agricultural use for lack of sufficient
irrigation;cralawlawlibrary
3. There are improvements already introduce[d] on the property by its
owner
like
construction
of
subdivision
roads;cralawlawlibrary
4. Lack of oppositor to the intend[ed] subdivision project on the properties
by
its
owner;cralawlawlibrary
5. That they are more suitable for residential use considering their location
vi[s]--vi[s] with (sic) the residential lots in the area.
NOW THEREFORE, on motion of Hon. Romeo L. Maclang as seconded by all
Sangguniang
Bayan
members
present,
RESOLVED, as is hereby resolved to re-classify into residential properties
four (4) parcels of land separately covered by TCT NO. 81618, TCT NO.
81619, TCT NO.81620 AND TCT NO. 81621 of the Registry of Deeds of
Bulacan, containing an area of 50,000 sq. m. respectively, registered in
ownership of Holy Trinity and Development Corporation located and adjacent
to one another in Barangay Dakila of this Municipality pursuant to the power
vested to this Sangguniang [sic] by the Local Government Code of the
Philippines.
RESOLVED further that the owner and/or developer of the said property shall
provide adequate [illegible] to protect the adjacent lots and its owners from
any inconvenience and prejudice caused by the development of the above
mentioned
property.
APPROVED.10
Consequently, the Municipal Planning and Development Office (MPDO) of
Malolos, Bulacan issued a Certificate of Eligibility for Conversion (Certificate
of Zoning Conformance),11 as well as a Preliminary Approval and Locational
Clearance in favor of the petitioner for its residential subdivision project on
the
Dakila
property.12
On August 23, 1999, the petitioner purchased from Santiago another parcel
of land with an area of 25,611 located in Barangay Sumapang Matanda,
Malolos, Bulacan (Sumapang Matanda property) and covered by TCT No. T103697
of
the
Registry
of
Deeds
of
Bulacan. 13

69

In April 2006, a certain Silvino Manalad and the alleged heirs of Felix Surio
wrote to the Provincial Agrarian Reform Officer (PARO) of Bulacan to request
an investigation of the sale of the Dakila property.14 This was followed by the
letter request of Sumapang Matanda Barangay Agrarian Reform Council
(BARC) Chairman Numeriano L. Enriquez to place the Dakila property within
the coverage of Operation Land Transfer (OLT) pursuant to Presidential
Decree No. 27, which was docketed as A-0302-0608-06, A.R. Case No. LSD032406.15
Several days later, the DAR Provincial Office of Bulacan filed a petition to
annul the sale of the Dakila property with the Provincial Agrarian Reform
Adjudicator (PARAD) of Bulacan, docketed as DARAB Case No. R-03-02287306.
Ruling of the DAR Regional Office
On August 18, 2006, the OIC-Regional Director in San Fernando, Pampanga
issued an order granting the letter request of BARC Chairman Enriquez in A0302-0608-06, A.R. Case No. LSD-032406,16viz:chanRoblesvirtualLawlibrary
WHEREFORE, in the light of the foregoing premises and for the reason
indicated therein, this Office resolves to give due course to this instant
request. Accordingly, the MARO and PARO concerned are hereby DIRECTED
to place within the ambit of PD 27/RA 6657 the following titles TCT Nos. T81618, T-81619, T-81620, T-81621, T-81622 and T-73023, all situated at
Sumapang Matanda, Malolos City, Bulacan, registered in the name of Holy
Trinity Realty and Development Corporation for distribution to qualified
farmer
beneficiary
(sic).
Finally, the DAR reserves the right to cancel or withdraw this Order in case of
misrepresentation of facts material to its issuance and for violation of
pertinent agrarian laws including applicable implementing guidelines or rules
and
regulations.
SO ORDERED.17
The OIC-Regional Director opined that the sale of the Dakila property was a
prohibited transaction under Presidential Decree No. 27, Section 6 of
Republic Act No. 665718 and DAR Administrative Order No. 1, Series of 1989;
and that the petitioner was disqualified from acquiring land under Republic
Act
No.
6657
because
it
was
a
corporation. 19
Aggrieved, the petitioner assailed the order through its Motion to
Withdraw/Quash/Set Aside,20 citing lack of jurisdiction and denial of due
70

process. It argued that the letter request was in the nature of a collateral
attack
on
its
title.
Pending resolution of the Motion to Withdraw/Quash/Set Aside, the Register
of Deeds issued emancipation patents (EPs) pursuant to the order of the
OIC-Regional Director. The petitioners titles were canceled and EPs were
issued to the respondents as follows:21
TCT No.

Emancipation
Beneficiary/ies
Patent No.
00783329
Victorio dela Cruz
00783330
Lorenzo Manalaysay
00783331
Ricardo Marcelo, Jr.
00783332
Leoncio de Guzman

T-2007-EP22
T-2008-EP23
T-2009-EP24
T-2010EP25cralawred
T-2011-EP26
00783334
27
T-2012-EP
00783333

Gonzalo Caspe

Area (sqm)
50,000
50,000
50,000
54,810
2,401
839

Almost two months after the EPs were issued, the OIC-Regional Director
denied the petitioners motion for reconsideration. 28
Ruling of the DAR Secretary
The petitioner appealed to the DAR Secretary, submitting that: (1) the letter
request for coverage under Presidential Decree No. 27 and the subsequent
filing of the petition for annulment of sale in the DARAB constituted forum
shopping;
and
(2)
the
EPs
were
prematurely
issued.
On November 22, 2007, DAR Secretary Nasser C. Pangandaman issued an
order denying the appeal,29 and holding that forum shopping was not
committed because the causes of action in the letter request and the action
for cancellation of the deed of sale before the DARAB were distinct and
separate; that the EPs were regularly issued; and that the resolution of the
DARAB would not in any manner affect the validity of the EPs.
Ruling on the petitioners motion for reconsideration, the DAR Secretary said
that the Dakila property was not exempt from the coverage of Presidential
Decree No. 27 and Republic Act No. 6657 because Municipal Resolution No.
16-98 did not change or reclassify but merely re-zoned the Dakila property.30
Ruling of the Office of the President
On March 1, 2010, the Office of the President (OP) reversed the ruling of
71

DAR Secretary Pangandaman upon its finding that the Dakila property had
ceased to be suitable for agriculture, and had been reclassified as residential
land pursuant to Municipal Resolution No. 16-98, thus: 31
We

find

merit

in

the

appeal.

Under Section 3 (c) of RA 6657, agricultural lands refer to lands devoted to

agriculture as conferred in the said law and not classified as industrial land.
Agricultural lands are only those lands which are arable or suitable lands that
do
not
include
commercial,
industrial
and
residential
lands.
In this case, the subject landholdings are not agricultural lands but rather
residential lands. The lands are located in a residential area. Likewise, there
are agricultural activities within or near the area. Even today, the areas in
question continued (sic) to be developed as a residential community, albeit
at a snails pace. This can be readily gleaned from the fact that both the City
Assessor of Malolos and the Provincial Assessor of Bulacan have considered
these
lands
as
residential
for
taxation
purposes.
Based on the foregoing, it is clear that appellants landholding cannot in any
language be considered as agricultural lands. These lots were intended for
residential use. They ceased to be agricultural lands upon approval of
Municipal Resolution No. 16-98. The authority of the municipality (now City)
of Malolos to issue zoning classification is an exercise of its police power, not
the power of eminent domain. Section 20, Chapter 2, Title I of RA 7160
specifically empowers municipal and/or city councils to adopt zoning and
subdivision ordinances or regulations within its territorial jurisdiction. A
zoning ordinance/resolution prescribes, defines, and apportions a given
political subdivision into specific land uses as present and future projection
of needs. The power of the local government to convert or reclassify
agricultural lands to non-agricultural lands is not subject to the approval of
the
Department
of
Agrarian
Reform.
It bears stressing that in his Decision dated April 30, 2002, as affirmed by
the Department of Agrarian Reform Adjudication Board (DARAB) in its
Resolution dated March 17, 2006, Bulacan Provincial Adjudicator Toribio Ilao,
Jr., declared that the properties were not tenanted and/or agricultural and
that the alleged farmers-occupants are mere squatters thereto. These
decision and resolution were not appealed by the farmers-occupants and, as
such, it became final and executory. By declaring, in its assailed Order of
November 22, 2007, that the properties subject of the suit, were agricultural
lands, the DAR Secretary thereby reversed the said DARAB rulings, issued
more than a year before, and nullified Resolution No. 16-98 of the Municipal
Council of Malolos, approved nine (9) years earlier, on March 4, 1998. Thus,
72

the DAR Secretary acted with grave abuse of discretion amounting to excess
or
lack
of
jurisdiction.
IN VIEW OF THE FOREGOING, the appeal is hereby GRANTED. Accordingly,
the November 22, 2007 Order and February 22, 2008 Resolution of the
Department of Agrarian Reform are hereby REVERSED and SET ASIDE.
SO ORDERED.32
The respondents moved to reconsider, but the OP denied their motion for
reconsideration. Hence, they appealed to the CA by petition for review.33
Ruling of the CA
In the now assailed decision promulgated on July 27, 2011, 34 the CA
reversed and set aside the decision of the OP. It declared that prior to the
effectivity of Republic Act No. 6657 on June 15, 1988 and even after the
passage of Municipal Resolution No. 16-98 on March 4, 1998, the Dakila
property was an agricultural land; that there was no valid reclassification
because Section 20 of Republic Act No. 7160 (The Local Government Code)
and Memorandum Circular No. 54 required an ordinance, not a resolution;
and that findings of the DAR on the Dakila property being an agricultural
land should be respected,35 subject to the clarification to the effect that its
determination was only limited to the issue of whether the Dakila property
was an agricultural land covered by Republic Act No. 6657.
The petitioner sought reconsideration but its motion for that purpose was
denied.36
Hence, this appeal by petition for review on certiorari.
Issues
The
petitioner
presents
the
following
consideration:chanRoblesvirtualLawlibrary

issues

for

our

I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRONEOUSLY
OMITTED TO RULE UPON, ALBEIT WITHOUT CITING ANY VALID REASONS,
THE VARIOUS INTERRELATED ISSUES PROFFERED IN PETITIONERS
COMMENT RELATIVE TO DARS INCLUSION OF THE SUBJECT DAKILA
PROPERTY UNDER THE COVERAGE OF THE AGRARIAN REFORM LAW, TO
WIT: A.) RESPONDENT-GRANTEES OF EMANCIPATION PATENTS FROM DAR
73

ARE NOT LEGITIMATE TENANTS OF THE DAKILA PROPERTY; B.) THE SALE
AND TRANSFER OF TITLES IN THE NAME OF PETITIONER HAVE NOT
HERETOFORE BEEN NULLIFIED EITHER BY THE DARAB CENTRAL OFFICE OR
THE REGULAR COURTS; C.) THE BONAFIDE TENANTS OF THE DAKILA
PROPERTY HAVE VALIDLY SURRENDERED THEIR TENANCY RIGHTS IN FAVOR
OF PETITIONERS PREDECESSOR-IN-INTEREST; D.) THE DAKILA PROPERTY
WAS NO LONGER TENANTED AND, FURTHER, WAS NO LONGER SUITABLE TO
AGRICULTURE, AT THE TIME OF ITS COVERAGE UNDER AGRARIAN REFORM,
ITS ACTUAL USE BEING ALREADY RESIDENTIAL
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS LIKEWISE ERRED
IN FAILING TO RULE ON THE ILLEGALITY OF THE MANNER BY WHICH THE
DAR CAUSED THE SUMMARY COVERAGE OF THE DAKILA PROPERTY UNDER
THE CARP, ITS EXTRA-JUDICIAL CANCELLATION OF PETITIONERS TITLES
WITHOUT DUE PROCESS OF LAW, AND ITS PREMATURE ISSUANCE OF
EMANCIPATION PATENTS IN FAVOR OF RESPONDENTS
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRONEOUSLY
APPLIED THE PROVISIONS OF RA 6657 IN RESOLVING THE SUBJECT
PETITION, EVEN THOUGH THE DAR PLACED THE SUBJECT DAKILA
PROPERTY UNDER THE COVERAGE OF PRESIDENTIAL DECREE NO. 27
IV.
WHETHER OR NOT HEREIN RESPONDENTS PETITION FOR REVIEW A QUO
OUGHT TO HAVE BEEN DISMISSED OUTRIGHT BY THE HONORABLE COURT
OF APPEALS FOR FAILURE TO COMPLY WITH SECTION 4, RULE 7 OF THE
1997 REVISED RULES OF CIVIL PROCEDURE.37
The petitioner argues that the CA ignored issues vital to the complete
determination of the parties respective rights over the Dakila property.
Firstly, the CA should have ruled on the propriety of issuing the EPs. In view
of the pending petition before the DARAB, the DAR should have withheld the
issuance of the EPs. Even granting that a final decision had already been
rendered by the DARAB, the issuance of the EPs remained premature
inasmuch as the DAR had not yet commenced any court proceedings for the
cancellation of the petitioners title. Accordingly, the petitioners title
remained indefeasible and could not be disturbed by the collateral orders by
the
OIC-Regional
Director
and
the
DAR
Secretary.
74

Secondly, the petitioner was deprived of due process because the

requirements of notice and the conduct of a public hearing and a field
investigation were not strictly complied with by the DAR pursuant to Republic
Act No. 6657 and DAR Administrative Order No. 12, Series of 1998.
Thirdly, the CA erred in placing the Dakila property under the coverage of
Republic Act No. 6657 when the order of the OIC-Regional Director applied
the provisions of Presidential Decree No. 27. The two laws should be
differentiated from each other; on one hand, Presidential Decree No. 27
required the beneficiary to be a tenant-farmer of an agricultural land
devoted to rice or corn, while on the other Republic Act No. 6657 was
relatively broader and covered all public and private agricultural lands
regardless of the tenurial arrangement and the commodity produced.
Lastly, the CA should have dismissed the respondents petition for review
due to its defective certification, pointing to the verification having been
executed by the respondents despite the letter request having been signed
by BARC Chairman Enriquez; and assailing the verification for containing the
statement that the allegations therein were based on their knowledge and
belief instead of their personal knowledge and authentic records as
required
by
the Rules
of
Court.
The respondents countered that: (1) the CA correctly set aside the issue of
whether or not they were qualified beneficiaries, because that was not the
issue raised in the letter request; (2) the CA could not have ruled on the
validity of the sale of the Dakila property in light of the pending action in the
DARAB; (3) it was within the jurisdiction of the DAR to determine whether or
not the respondents were qualified beneficiaries; (4) the waivers by the
tenants were illegal; and (5) the issuance of the EPs was a necessary
consequence of placing the Dakila property under the coverage of
Presidential
Decree
No.
27.
In view of the foregoing, the Court needs to consider and resolve the
following:chanRoblesvirtualLawlibrary
1. Did the CA gravely err in limiting its decision to the issue of whether or
not the Dakila property was subject to the coverage of Republic Act
No. 6657?
2. Was the Dakila property agricultural land within the coverage of
Republic Act No. 6657 or Presidential Decree No. 27?

75

3. Was the issuance of the EPs pursuant to the August 16, 2006 order of
the DAR Regional Office proper?
Ruling
We reverse the CA, and reinstate the decision of the OP.
I.
Procedural Issue
We first

resolve

the

issue

of

the

supposedly

defective

verification.

The verification of a petition is intended to secure an assurance that the

allegations contained in the petition have been made in good faith, are true
and correct and not merely speculative. 38 This requirement affects the form
of the pleading, and its non-compliance will not render the pleading
defective. It is a formal, not a jurisdictional requisite. 39 The courts may order
the correction of the pleading if the verification is lacking, and may even act
on an unverified pleading if doing so will serve the ends of justice. 40
Under the foregoing, the CA rightly allowed the petition for review of the
respondents despite the statement that the allegations therein were based
on their knowledge and belief. We underscore that the defect was even
lifted upon the voluntary submission by the respondents themselves of their
corrected verification in order to comply with the Rules of Court.
We cannot also subscribe to the argument that the respondents were not
appropriate parties to sign the verification. They were, considering that when
the DAR issued the EPs, they became the real parties in interest in the
proceedings, giving them the requisite personality to sign the verification.
Moreover, there is no question that the party himself need not sign the
verification, for it was enough that the partys representative, lawyer, or any
person who personally knew the truth of the facts alleged in the pleadings
could sign the verification.41 In any event, the respondents, as the identified
beneficiaries, had legal standing and interest to intervene to protect their
rights or interests under Republic Act No. 6657. This is clear from Section 19
of Republic Act No. 9700,42 which amended Republic Act No. 6657 by adding
Section 50-A, to wit:chanRoblesvirtualLawlibrary
Section 19. Section 50 of Republic Act No. 6657, as amended, is hereby
further amended by adding Section 50-A to read as follows:
Section 50-A. Exclusive Jurisdiction on Agrarian Dispute. x x x

76

In cases where regular courts or quasi-judicial bodies have competent

jurisdiction, agrarian reform beneficiaries or identified beneficiaries and/or
their associations shall have legal standing and interest to intervene
concerning their individual or collective rights and/or interests under the
CARP.
xxxx
II.
Courts
can
pass
related to the issues raised by the parties

upon

matters

As a general rule, appellate courts are precluded from discussing and delving
into issues that are not raised by the parties. The pertinent rule is Section 8,
Rule 51 of the Rules of Court, to wit:chanRoblesvirtualLawlibrary
Section 8. Questions that may be decided. No error which does not affect
the jurisdiction over the subject matter or the validity of the judgment
appealed from or the proceedings therein will be considered unless stated in
the assignment of errors, or closely related to or dependent on an assigned
error and properly argued in the brief, save as the court may pass upon plain
errors and clerical errors.
In Philippine National Bank v. Rabat,43 the Court explained how this rule
operates, thus:chanRoblesvirtualLawlibrary
In his book, Mr. Justice Florenz D. Regalado commented on this section,
thus:chanRoblesvirtualLawlibrary
1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now
includes some substantial changes in the rules on assignment of errors. The
basic procedural rule is that only errors claimed and assigned by a party will
be considered by the court, except errors affecting its jurisdiction over the
subject matter. To this exception has now been added errors affecting
the validity of the judgment appealed from or the proceedings
therein.
Also, even if the error complained of by a party is not expressly
stated in his assignment of errors but the same is closely related to
or dependent on an assigned error and properly argued in his brief,
such error may now be considered by the court. These changes are
of
jurisprudential
origin.
2. The procedure in the Supreme Court being generally the same as that in
77

the Court of Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule
56), it has been held that the latter is clothed with ample authority to review
matters, even if they are not assigned as errors on appeal, if it finds that
their consideration is necessary in arriving at a just decision of the case.
Also, an unassigned error closely related to an error properly assigned (PCIB
vs. CA, et al., L-34931, Mar. 18, 1988), or upon which the determination of
the question raised by error properly assigned is dependent, will be
considered by the appellate court notwithstanding the failure to assign it as
error (Ortigas, Jr. vs. Lufthansa German Airlines, L-28773, June 30, 1975;
Soco vs. Militante, et al., G.R. No. 58961, June 28, 1983).
It may also be observed that under Sec. 8 of this Rule, the appellate court is
authorized to consider a plain error, although it was not specifically assigned
by the appellant (Dilag vs. Heirs of Resurreccion, 76 Phil. 649), otherwise it
would be sacrificing substance for technicalities.44 (Emphasis supplied)
Conformably with the foregoing, the CA is vested with sufficient authority
and discretion to review matters, not assigned as errors on appeal, if it finds
that consideration thereof is necessary in arriving at a complete and just
resolution of the case or to serve the interests of justice or to avoid
dispensing piecemeal justice.45 In fact, the CA is possessed with inherent
authority to review unassigned errors that are closely related to an error
properly raised, or upon which the determination of the error properly
assigned is dependent, or where it finds that consideration thereof is
necessary
in
arriving
at
a
just
decision
of
the
case. 46
It cannot be gainsaid that the validity of the EPs was closely intertwined with
the issue of whether the Dakila property was covered by the agrarian reform
laws. When the CA declared that the Dakila property came within the
coverage of Republic Act No. 6657, the CA barely scraped the surface and
left more questions unresolved rather than writing finis on the matter. To
recall, this case originated from the letter of BARC Chairman Enriquez
requesting that the Dakila property be placed under the OLT pursuant to
Presidential Decree No. 27. But, as the petitioner correctly argues, the two
laws, although similarly seeking to alleviate the plight of landless farmers or
farmworkers from the bondage of tilling the soil, are distinct from each
other. Republic Act No. 6657 is broader in scope than Presidential Decree No.
27, for the former applies to all agricultural lands in which agricultural
activities are conducted, while the latter requires that the covered
agricultural land be tenanted and primarily devoted to rice or corn
cultivation.
In Sigre
v.
Court
of
stated:chanRoblesvirtualLawlibrary

Appeals,47 the

78

Court

also

[T]he Court need not belabor the fact that R.A. 6657 or the CARP Law
operates distinctly from P.D. 27. R.A. 6657 covers all public and private
agricultural land including other lands of the public domain suitable for
agriculture as provided for in Proclamation No. 131 and Executive Order No.
229; while, P.D. 27 covers rice and corn lands. On this score, E.O. 229,
which provides for the mechanism of the Comprehensive Agrarian Reform
Program, specifically states: (P)residential Decree No. 27, as amended,
shall continue to operate with respect to rice and corn lands, covered
thereunder. x x x It cannot be gainsaid, therefore, that R.A. 6657 did not
repeal or supersede, in any way, P.D. 27. And whatever provisions of P.D. 27
that are not inconsistent with R.A. 6657 shall be suppletory to the latter, and
all rights acquired by the tenant-farmer under P.D. 27 are retained even with
the passage of R.A. 6657.48
In addition, the tenurial instruments issued to agrarian reform beneficiaries
differ under these laws. Ownership of the beneficiary under Presidential
Decree No. 27 is evidenced by an EP while a certificate of land ownership
award (CLOA) is issued under Republic Act No. 6657. For this reason, the CA
could not have simply set aside the issue of whether the EPs issued to the
respondents were validly made by the DAR considering its declaration that
the Dakila property was subject to Republic Act No. 6657.
III.
The
Dakila
property
was
not
an
agricultural
within the coverage of R.A. No. 6657 or P.D. No. 27

land

The CA declared that the Dakila property as an agricultural land; and that
there was no valid reclassification under Municipal Resolution No. 16-98
because
the
law
required
an
ordinance,
not
a
resolution.
We

agree

in

part

with

the

CA.

Under Republic Act No. 7160, local government units, such as the
Municipality of Malolos, Bulacan, are vested with the power to reclassify
lands. However, Section 20, Chapter II, Title I of Republic Act No. 7160
ordains:chanRoblesvirtualLawlibrary
Section 20. Reclassification of Lands. (a) A city or municipality
may, through an ordinance passed by the sanggunian after
conducting public hearings for the purpose, authorize the
reclassification of agricultural lands and provide for the manner of their
utilization or disposition in the following cases: (1) when the land ceases to
be economically feasible and sound for agricultural purposes as determined
by the Department of Agriculture or (2) where the land shall have
79

substantially greater economic value for residential, commercial, or industrial

purposes, as determined by the sanggunian concerned: x x x. (Emphasis
supplied)
Clearly, an ordinance is required in order to reclassify agricultural lands, and
such may only be passed after the conduct of public hearings.
The petitioner claims the reclassification on the basis of Municipal Resolution
No. 16-98. Given the foregoing clarifications, however, the resolution was
ineffectual for that purpose. A resolution was a mere declaration of the
sentiment or opinion of the lawmaking body on a specific matter that was
temporary in nature, and differed from an ordinance in that the latter was a
law by itself and possessed a general and permanent character.49 We also
note that the petitioner did not show if the requisite public hearings were
conducted at all. In the absence of any valid and complete reclassification,
therefore, the Dakila property remained under the category of an agricultural
land.
Nonetheless, the Dakila property was not an agricultural land subject to the
coverage of Republic Act No. 6657 or Presidential Decree No. 27.
Verily, the basic condition for land to be placed under the coverage of
Republic Act No. 6657 is that it must either be primarily devoted to or be
suitable for agriculture.50 Perforce, land that is not devoted to agricultural
activity is outside the coverage of Republic Act No. 6657. 51 An agricultural
land, according to Republic Act No. 6657, is one that is devoted to
agricultural activity and not classified as mineral, forest, residential,
commercial or industrial land.52Agricultural activity includes the cultivation
of the soil, planting of crops, growing of fruit trees, raising livestock, poultry
or fish, including the harvesting of such farm products; and other farm
activities and practices performed by a farmer in conjunction with such
farming operations done by persons whether natural or juridical.53
Consequently, before land may be placed under the coverage of Republic Act
No. 6657, two requisites must be met, namely: (1) that the land must be
devoted to agricultural activity; and (2) that the land must not be classified
as mineral, forest, residential, commercial or industrial land. Considering
that the Dakila property has not been classified as mineral, forest,
residential, commercial or industrial, the second requisite is satisfied. For the
first requisite to be met, however, there must be a showing that agricultural
activity
is
undertaken
on
the
property.
It is not difficult to see why Republic Act No. 6657 requires agricultural
activity in order to classify land as agricultural. The spirit of agrarian reform
80

laws is not to distribute lands per se, but to enable the landless to own land
for cultivation. This is why the basic qualification laid down for the intended
beneficiary is to show the willingness, aptitude and ability to cultivate and
make the land as productive as possible. 54 This requirement conforms with
the policy direction set in the 1987 Constitution to the effect that agrarian
reform laws shall be founded on the right of the landless farmers and
farmworkers to own, directly or collectively, the lands they till. 55 In Luz
Farms v. Secretary of the Department of Agrarian Reform,56 we even said
that the framers of the Constitution limited agricultural lands to the arable
and
suitable
agricultural
lands.
Here, no evidence was submitted to show that any agricultural activity like
cultivation of the land, planting of crops, growing of fruit trees, raising of
livestock, or poultry or fish, including the harvesting of such farm products,
and other farm activities and practices were being performed on the Dakila
property in order to subject it to the coverage of Republic Act No. 6657. We
take particular note that the previous tenants had themselves declared that
they were voluntarily surrendering their tenancy rights because the land was
not conducive to farming by reason of its elevation, among others. 57 Also
notable is the second Whereas Clause of Municipal Resolution No. 16-98,
which mentioned that the Dakila property was not fit for agricultural use due
to lack of sufficient irrigation and that it was more suitable for residential
use, thus:chanRoblesvirtualLawlibrary
WHEREAS, after an ocular inspection of the subject lots and matured
deliberation, the Sangguniang Bayan found merit in the request for the
following reasons, thus:
1.
The
properties
are
untenanted;cralawlawlibrary
2. That they are not fitted [sic] for agricultural use for lack of
sufficient
irrigation;
3. There are improvements already introduce[d] on the property by its
owner
like
construction
of
subdivision
roads;cralawlawlibrary
4. Lack of oppositor to the intend[ed] subdivision project on the properties
by
its
owner;cralawlawlibrary
5. That they are more suitable for residential use considering their location
viz-a-viz (sic) with (sic) the residential lots in the area.58(Emphasis supplied)
The terse statement by the OIC-Regional Director that the Dakila property
would still be subject to Republic Act No. 6657 should Presidential Decree
No. 27 be inapplicable59 did not meet the requirements under Republic Act
81

No. 6657. Section 7 of Republic Act No. 6657 identified rice and corn lands
subject to Presidential Decree No. 27 for priority distribution in the first
phase and implementation of the CARP. Insofar as the interplay of these two
laws was concerned, the Court has said that during the effectivity of the
Republic Act No. 6657 and in the event of incomplete acquisition under
Presidential Decree No. 27, the former should apply, with the provisions of
the latter and Executive Order No. 228 60 having only suppletory effect.61
Even if we supplemented the provisions of Presidential Decree No. 27, the
outcome is still the same, because the Dakila property was still not within
the scope of the law. For land to be covered under Presidential Decree No.
27, it must be devoted to rice or corn crops, and there must be a system of
share-crop or lease-tenancy obtaining therein. If either requisite is absent,
the land must be excluded. Hence, exemption from coverage followed when
the land was not devoted to rice or corn even if it was tenanted; or the land
was untenanted even though it was devoted to rice or corn. 62Based on these
conditions, the DAR Regional Office erred in subjecting the Dakila property
under
the
OLT.
The first requirement, that the land be devoted to rice or corn cultivation,
was not sufficiently established. In this regard, the OIC-Regional Director
inaccurately based his holding on the report submitted by the Legal Services
Division that
[P]ortion of the property embraced under TCT No. 103697 with an area
of 2.5611 hectares more or less, was placed under PD [No.] 27 and
subsequently an approved survey plan (Psd-03-020270) has been prepared
which was then the basis of the issuance of titles in favor of Felix Surio and
Silvino Manalad under EP Nos. 345262 and 342561. On the other hand,
the land subject of this controversy was, likewise, subdivided and now
covered by an approved plan ASP No. Psd-031410-066532. 63
What can be gathered from the report of the Legal Services Division was
that the land owned by the petitioner and covered by Presidential Decree No.
27 was the Sumapang Matanda property under TCT No. 103697. As to the
Dakila property, we can only infer from the report that it was merely
subdivided. The report did not mention whatsoever the agricultural activities
performed in the Dakila property. Nor was there a finding that the Dakila
property was devoted to either rice or corn cultivation as to justify its
coverage under Presidential Decree No. 27. Such a finding was necessary,
for the Court has observed in Solmayor v. Arroyo:64
Although this Court will not disregard the evidence presented by petitioners
that the land is devoted to rice and corn crops in 1993, when the ocular
82

inspection by the DAR personnel was conducted, it must be noted that

around the time of the passage of Presidential Decree No. 27 up to 1978,
when the subject property was placed under the coverage of Operation Land
Transfer, the available evidence issued and certified by the different
government agencies, closer in time to the mentioned time frame will show
that respondents property has, indeed, been classified as within the
residential and commercial zones of Davao City. It cannot escape the notice
of this Court that more than a decade before the issuance of the said ocular
investigation report stating that the land is devoted to agricultural
production, government agencies equipped with the technical expertise to
determine the proper classification of the subject land have already
determined that the land is part of the residential and commercial zones of
Davao City making it suitable for other urban use. Therefore, it is only
reasonable to conclude, based on the certification of various executive
agencies issued when this controversy arose, that at the time of the passage
of Presidential Decree No. 27, respondents property was not agricultural. 65
For land to come within the coverage of the OLT, indeed, there must be a
showing that it is devoted to the cultivation of rice or corn, and there must
be a system of share-crop or lease tenancy obtaining on October 21, 1972,
the time when Presidential Decree No. 27 took effect. 66 Unfortunately, no
such evidence was presented, nor was there any field investigation
conducted to verify whether or not the landholding was primarily devoted to
the cultivation of rice or corn. Accordingly, the Dakila property should be
excluded
from
the
OLT.
The DAR Secretary affirmed the validity of the EPs in favor of the
respondents only pursuant to the Order of the Regional Director. 67 We
note, however, that the evidence to establish in the proceedings below that
they or their predecessors had been tenants of the petitioners predecessorin-interest to make them the rightful beneficiaries of the Dakila property was
severely wanting. For tenancy to exist, there must be proof that: (1) the
parties are the landholder and the tenant; (2) the subject is agricultural
land; (3) there is consent; (4) the purpose is agricultural production; (5)
there is consideration;68 and (6) there is a sharing of the harvests. All these
requisites are necessary to create a tenancy relationship, and the absence of
one or more of them will not make the alleged tenant a de
facto tenant.69 Unless a person has established his status as a de
jure tenant, he is not entitled to security of tenure; nor is he covered by the
land reform program of the Government under the existing tenancy
laws.70 Here, the consent to establish a tenant-landlord relationship was
manifestly absent. In view of the petitioners repeated denial of the tenancy,
the respondents ought then to establish the tenancy relationship, but did not
do so. Tenancy could not be presumed, but must be established by
83

evidence; its mere allegation is neither evidence nor equivalent to proof of

its
existence.71
There was also no showing that the respondents were engaged in any
agricultural activities, or agreed with Santiago or the petitioner on the
sharing of harvests. The OIC-Regional Director obviously disregarded the
affidavit of Barangay Captain Felino M. Teodoro of Dakila, Malolos, Bulacan
stating that the respondents were never the actual farmers on the Dakila
property.72
IV.
The petitioner was deprived of due process
The petitioner posits that it was denied due process by the failure of the
OIC-Regional Director to see to the compliance with the procedures outlined
by Republic Act No. 6657 and Presidential Decree No. 27. It claims that the
OIC-Regional
Director
resorted
to
procedural
shortcuts
and
73
irregularities in
issuing
the
EPs
to
the
respondents.
We

agree

with

the

petitioners

position.

In Reyes v. Barrios,74 we identified the procedural requirements that must be

followed prior to the issuance of an EP, viz:chanRoblesvirtualLawlibrary
The Primer on Agrarian Reform enumerates the steps in transferring the land
to the tenant-tiller, thus:
a. First step: the identification of tenants, landowners, and the land covered
by
OLT.
b. Second step: land survey and sketching of the actual cultivation of the
tenant to determine parcel size, boundaries, and possible land
use;cralawlawlibrary
c. Third step: the issuance of the Certificate of Land Transfer (CLT). To
ensure accuracy and safeguard against falsification, these certificates are
processed
at the National Computer Center (NCC)
at Camp
Aguinaldo;cralawlawlibrary
d. Fourth step: valuation
computation;cralawlawlibrary

of

the

land

covered

for

amortization

e. Fifth step: amortization payments of tenant-tillers over fifteen (15) year

period;
and

84

f. Sixth step: the issuance of the Emancipation Patent.

Thus, there are several steps to be undertaken before an Emancipation
Patent
can
be
issued.
x
x
x.
x

Furthermore, there are several supporting documents which a tenant-farmer

must submit before he can receive the Emancipation Patent, such as:
a. Application for issuance of Emancipation Patent;cralawlawlibrary
b.

Applicant's

(owner's)

copy

of

Certificate

of

Land

Transfer.

c. Certification of the landowner and the Land Bank of the Philippines that
the applicant has tendered full payment of the parcel of land as described in
the
application
and
as
actually
tilled
by
him;cralawlawlibrary
d. Certification by the President of the Samahang Nayon or by the head of
farmers' cooperative duly confirmed by the municipal district officer (MDO)
of the Ministry of Local Government and Community Development (MLGCD)
that the applicant is a full-fledged member of a duly registered farmers'
cooperative
or
a
certification
to
these
effect;cralawlawlibrary
e. Copy of the technical (graphical) description of the land parcel applied for
prepared by the Bureau of Land Sketching Team (BLST) and approved by the
regional
director
of
the
Bureau
of
Lands;cralawlawlibrary
f. Clearance from the MAR field team (MARFT) or the MAR District Office
(MARDO) legal officer or trial attorney; or in their absence, a clearance by
the MARFT leader to the effect that the land parcel applied for is not subject
of adverse claim, duly confirmed by the legal officer or trial attorney of the
MAR
Regional
Office
or, in
their
absence,
by
the
regional
director;cralawlawlibrary
g. Xerox copy of Official Receipts or certification by the municipal treasurer
showing that the applicant has fully paid or has effected up-to-date payment
of the realty taxes due on the land parcel applied for; and
h. Certification by the MARFT leader whether applicant has acquired farm
machineries from the MAR and/or from other government agencies.
Majority of these supporting documents are lacking in this case. Hence, it
was improper for the DARAB to order the issuance of the Emancipation
Patent in favor of respondent without the required supporting documents

85

and without following the requisite procedure before an Emancipation Patent

may be validly issued.75
Furthermore, Section 16 of Republic Act No. 6657 outlines the procedure in
acquiring
private
lands
subject
to
its
coverage, viz:chanRoblesvirtualLawlibrary
Section 16. Procedure for Acquisition of Private Lands. - For purposes of
acquisition of private lands, the following procedures shall be
followed:chanRoblesvirtualLawlibrary
(a) After having identified the land, the landowners and the beneficiaries,
the DAR shall send its notice to acquire the land to the owners thereof, by
personal delivery or registered mail, and post the same in a conspicuous
place in the municipal building and barangay hall of the place where the
property is located. Said notice shall contain the offer of the DAR to pay a
corresponding value in accordance with the valuation set forth in Sections
17,
18
and
other
pertinent
provisions
hereof.
(b) Within thirty (30) days from the date of receipt of written notice by
personal delivery or registered mail, the landowners, his administrator or
representative shall inform the DAR of his acceptance or rejection of the
former.
(c) If the landowner accepts the offer of the DAR, the Land Bank of the
Philippines shall pay the landowner the purchase price of the land within
thirty (30) days after he executes and delivers a deed of transfer in favor of
the Government and surrenders the Certificate of Title and other muniments
of
title.
(d) In case of rejection or failure to reply, the DAR shall conduct summary
administrative proceedings to determine the compensation for the land by
requiring the landowner, the LBP and other interested parties to submit
evidence as to the just compensation for the land, within fifteen (15) days
from the receipt of notice. After the expiration of the above period, the
matter is deemed submitted for decision. The DAR shall decide the case
within
thirty
(30)
days
after
it
is
submitted
for
decision.
(e) Upon receipt by the landowner of the corresponding payment or in case
of rejection or no response from the landowner, upon the deposit with an
accessible bank designated by the DAR of the compensation in cash or in
LBP bonds in accordance with this Act, the DAR shall take immediate
possession of the land and shall request the proper Register of Deeds to
issue a Transfer Certificate of Title (TCT) in the name of the Republic of the
86

Philippines. The DAR shall thereafter proceed with the redistribution of the
land
to
the
qualified
beneficiaries.
(f) Any party who disagrees with the decision may bring the matter to the
court of proper jurisdiction for final determination of just compensation.
Under Republic Act No. No. 6657 and DAR A.O. No. 12, Series of 1989, two
notices should be sent to the landowner the first, the notice of coverage;
and
the
other,
the
notice
of
acquisition.
The Court cannot consider and declare the proceedings conducted by the
OIC-Regional Director as a substantial compliance with the notice
requirements. Compliance with such requirements, being necessary to
render the implementation of the CARP valid, was mandatory. As the Court
observed inRoxas & Co., Inc. v. Court of Appeals:76
For a valid implementation of the CAR Program, two notices are required:
(1) theNotice of Coverage and letter of invitation to a preliminary
conference sent to the landowner, the representatives of the BARC,
LBP, farmer beneficiaries and other interested parties pursuant to
DAR A.O. No. 12, Series of 1989; and (2)the Notice of
Acquisition sent to the landowner under Section 16 of the CARL.
The importance of the first notice, i.e., the Notice of Coverage and
the letter of invitation to the conference, and its actual conduct
cannot be understated. They are steps designed to comply with the
requirements of administrative due process. The implementation of
the CARL is an exercise of the States police power and the power of
eminent domain. To the extent that the CARL prescribes retention
limits to the landowners, there is an exercise of police power for the
regulation of private property in accordance with the Constitution.
But where, to carry out such regulation, the owners are deprived of
lands they own in excess of the maximum area allowed, there is also
a taking under the power of eminent domain. The taking
contemplated is not a mere limitation of the use of the land. What is
required is the surrender of the title to and physical possession of
the said excess and all beneficial rights accruing to the owner in
favor of the farmer beneficiary. The Bill of Rights provides that "[n]o
person shall be deprived of life, liberty or property without due
process of law." The CARL was not intended to take away property
without due process of law. The exercise of the power of eminent
domain requires that due process be observed in the taking of
private
property.

87

Clearly then, the notice requirements under the CARL are not confined to the
Notice of Acquisition set forth in Section 16 of the law. They also include the
Notice of Coverage first laid down in DAR A. O. No. 12, Series of 1989 and
subsequently amended in DAR A. O. No. 9, Series of 1990 and DAR A. O. No.
1, Series of 1993. This Notice of Coverage does not merely notify the
landowner that his property shall be placed under CARP and that he is
entitled to exercise his retention right; it also notifies him, pursuant to DAR
A. O. No. 9, Series of 1990, that a public hearing shall be conducted where
he and representatives of the concerned sectors of society may attend to
discuss the results of the field investigation, the land valuation and other
pertinent matters. Under DAR A. O. No. 1, Series of 1993, the Notice of
Coverage also informs the landowner that a field investigation of his
landholding shall be conducted where he and the other representatives may
be present.77 (Emphasis supplied)
The procedures provided by Section 16 of Republic Act No. 6657 and its
relevant DAR administrative issuances are to ensure the compliance with the
due process requirements of the law. The result of their non-compliance is to
deprive the landowner of its constitutional right to due process.
The Court has carefully explained in Roxas & Co., Inc. v. Court of
Appeals that the taking under the CARL is an exercise of police power as well
as of eminent domain. The taking of the landholding by the State effectively
results in the surrender by the landowner of its title and physical possession
to the beneficiaries. Hence, compensation should be given to the landowner
prior to the taking. This is the clear-cut directive of Section 16(e) of Republic
Act No. 6657 which mandates the DAR to take immediate possession of the
land only after full payment and to thereafter request the Register of Deeds
to transfer title in the name of the Republic of the Philippines, and later on to
the
intended
beneficiaries.
However, there was no evidence of payment prior to the cancellation of the
petitioners TCTs submitted here. The requirement of prior payment was
found in Republic Act No. 6657 and Presidential Decree No. 27, under which
full payment by the intended beneficiary was a condition prior to the award
of an EP. We have explicitly pronounced in Corua v. Cinamin78 that the
emancipation of tenants does not come free. The transfer of lands under
Presidential Decree No. 27 remained subject to the terms and conditions
provided
in
said
law.
In Paris
v.
Alfeche,79 we
said:chanRoblesvirtualLawlibrary
x x x. Section 2 of PD 266 states:
88

After the tenant-farmer shall have fully complied with the requirements for
a grant of title under Presidential Decree No. 27, an Emancipation Patent
and/or Grant shall be issued by the Department of Agrarian Reform on the
basis
of
a
duly
approved
survey
plan.
On the other hand, paragraphs
follows:chanRoblesvirtualLawlibrary

and

of

PD

27

reads

as

For the purpose of determining the cost of the land to be transferred to the
tenant-farmer pursuant to this Decree, the value of the land shall be
equivalent to two and one-half (2 ) times the average harvest of three
normal crop years immediately preceding the promulgation of this
Decree;cralawlawlibrary
The total cost of the land, including interest at the rate of six (6) per
centum per annum, shall be paid by the tenant in fifteen (15) years of
fifteen (15) equal annual amortizations[.]
Although, under the law, tenant farmers are already deemed owners
of the land they till, they are still required to pay the cost of the
land, including interest, within fifteen years before the title is
transferred to them.80 (Emphasis supplied)
The unquestioned non-compliance with the procedures set by Republic Act
No. 6657 and its relevant rules and regulations further denied to the
petitioner the exercise of its right of retention. 81 In doing so, the OICRegional Director disregarded this constitutionally guaranteed right. We
cannot understate the value of the right of retention as the means to
mitigate the effects of compulsory land acquisition by balancing the rights of
the landowner and the tenant and by implementing the doctrine that social
justice is not meant to perpetrate an injustice against the landowner.82
We also consider the manner by which the Dakila property was apportioned
to the respondents highly suspect. It appears from the face of the EPs that
the individual lots were allocated based on how the landholding was
subdivided by the petitioner. Moreover, all the respondents were awarded
lots exceeding three hectares in violation of Section 23 of Republic Act No.
6657, which provides that [n]o qualified beneficiary may own more than
three
(3)
hectares
of
agricultural
land.
In fine, the order of the OIC-Regional Director was patently null and void.
The denial of due process to the petitioner sufficed to cast the impress of
nullity on the official act thereby taken. A decision rendered without due
process is void ab initio and may be attacked directly or collaterally.83 All the
89

resulting acts were also null and void. Consequently, the EPs awarded to the
respondents
should
be
nullified.
WHEREFORE,
the
Court GRANTS the
petition
for
review
on certiorari; REVERSES and SETS ASIDEthe decision promulgated on July
27, 2011 by the Court of Appeals; REINSTATES the assailed decision of the
Office of the President issued on March 1, 2010; DIRECTS the cancellation
of Emancipation Patents No. 00783329, No. 00783330, No. 0078331, No.
0078332, No. 0078333, and No. 0078334 issued to the respondents for
being NULL and VOID; and ORDERS the respondents to pay the costs of
suit.
SO ORDERED.

Sps Hing vs Choachuy

SECOND DIVISION
G.R. No. 179736

June 26, 2013

SPOUSES
BILL
AND
VICTORIA
HING, Petitioners,
vs.
ALEXANDER CHOACHUY, SR. and ALLAN CHOACHUY, Respondents.
DECISION
DEL CASTILLO, J.:
"The concept of liberty would be emasculated if it does not likewise compel respect for
one's personality as a unique individual whose claim to privacy and non-interference
demands respect."1
This Petition for Review on Certiorari 2 under Rule 45 of the Rules of Court assails the
July 10, 2007 Decision3and the September 11, 2007 Resolution 4 of the Court of Appeals
(CA) in CA-G.R. CEB-SP No. 01473.
Factual Antecedents
On August 23, 2005, petitioner-spouses Bill and Victoria Hing filed with the Regional
Trial Court (RTC) of Mandaue City a Complaint 5 for Injunction and Damages with prayer
for issuance of a Writ of Preliminary Mandatory Injunction/Temporary Restraining Order
(TRO), docketed as Civil Case MAN-5223 and raffled to Branch 28, against
respondents Alexander Choachuy, Sr. and Allan Choachuy.
90

Petitioners alleged that they are the registered owners of a parcel of land (Lot 1900-B)
covered by Transfer Certificate of Title (TCT) No. 42817 situated in Barangay Basak,
City of Mandaue, Cebu;6 that respondents are the owners of Aldo Development &
Resources, Inc. (Aldo) located at Lots 1901 and 1900-C, adjacent to the property of
petitioners;7 that respondents constructed an auto-repair shop building (Aldo Goodyear
Servitec) on Lot 1900-C; that in April 2005, Aldo filed a case against petitioners for
Injunction and Damages with Writ of Preliminary Injunction/TRO, docketed as Civil Case
No. MAN-5125;8 that in that case, Aldo claimed that petitioners were constructing a
fence without a valid permit and that the said construction would destroy the wall of its
building, which is adjacent to petitioners property; 9 that the court, in that case, denied
Aldos application for preliminary injunction for failure to substantiate its
allegations;10 that, in order to get evidence to support the said case, respondents on
June 13, 2005 illegally set-up and installed on the building of Aldo Goodyear Servitec
two video surveillance cameras facing petitioners property; 11 that respondents, through
their employees and without the consent of petitioners, also took pictures of petitioners
on-going construction;12 and that the acts of respondents violate petitioners right to
privacy.13 Thus, petitioners prayed that respondents be ordered to remove the video
surveillance cameras and enjoined from conducting illegal surveillance. 14
In their Answer with Counterclaim,15 respondents claimed that they did not install the
video surveillance cameras,16 nor did they order their employees to take pictures of
petitioners construction.17 They also clarified that they are not the owners of Aldo but
are mere stockholders.18
Ruling of the Regional Trial Court
On October 18, 2005, the RTC issued an Order 19 granting the application for a TRO.
The dispositive portion of the said Order reads:
WHEREFORE, the application for a Temporary Restraining Order or a Writ of
Preliminary Injunction is granted. Upon the filing and approval of a bond by petitioners,
which the Court sets at P50,000.00, let a Writ of Preliminary Injunction issue against the
respondents Alexander Choachuy, Sr. and Allan Choachuy. They are hereby directed to
immediately remove the revolving camera that they installed at the left side of their
building overlooking the side of petitioners lot and to transfer and operate it elsewhere
at the back where petitioners property can no longer be viewed within a distance of
about 2-3 meters from the left corner of Aldo Servitec, facing the road.
IT IS SO ORDERED.20
Respondents moved for a reconsideration21 but the RTC denied the same in its
Order22 dated February 6, 2006.23 Thus:
WHEREFORE, the Motion for Reconsideration is hereby DENIED for lack of merit.
Issue a Writ of Preliminary Injunction in consonance with the Order dated 18 October
2005.
91

IT IS SO ORDERED.24
Aggrieved, respondents filed with the CA a Petition for Certiorari 25 under Rule 65 of the
Rules of Court with application for a TRO and/or Writ of Preliminary Injunction.
Ruling of the Court of Appeals
On July 10, 2007, the CA issued its Decision 26 granting the Petition for Certiorari. The
CA ruled that the Writ of Preliminary Injunction was issued with grave abuse of
discretion because petitioners failed to show a clear and unmistakable right to an
injunctive writ.27 The CA explained that the right to privacy of residence under Article
26(1) of the Civil Code was not violated since the property subject of the controversy is
not used as a residence.28 The CA alsosaid that since respondents are not the owners
of the building, they could not have installed video surveillance cameras. 29 They are
mere stockholders of Aldo, which has a separate juridical personality. 30 Thus, they are
not the proper parties.31 The fallo reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us
GRANTING the petition filed in this case. The assailed orders dated October 18, 2005
and February 6, 2006 issued by the respondent judge are hereby ANNULLED and SET
ASIDE.
SO ORDERED.32
Issues
Hence, this recourse by petitioners arguing that:
I.
THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT ANNULLED AND SET
ASIDE THE ORDERS OF THE RTC DATED 18 OCTOBER 2005 AND 6 FEBRUARY
2006 HOLDING THAT THEY WERE ISSUED WITH GRAVE ABUSE OF DISCRETION.
II.
THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT RULED THAT
PETITIONER SPOUSES HING ARE NOT ENTITLED TO THE WRIT OF
PRELIMINARY INJUNCTION ON THE GROUND THAT THERE IS NO VIOLATION OF
THEIR CONSTITUTIONAL AND CIVIL RIGHT TO PRIVACY DESPITE THE FACTUAL
FINDINGS OF THE RTC, WHICH RESPONDENTS CHOACHUY FAILED TO REFUTE,
THAT THE ILLEGALLY INSTALLED SURVEILLANCE CAMERAS OF RESPONDENTS
CHOACH[U]Y WOULD CAPTURE THE PRIVATE ACTIVITIES OF PETITIONER
SPOUSES HING, THEIR CHILDREN AND EMPLOYEES.
III.
92

THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT RULED THAT SINCE

THE OWNER OF THE BUILDING IS ALDO DEVELOPMENT AND RESOURCES, INC.
THEN TO SUE RESPONDENTS CHOACHUY CONSTITUTES A PURPORTEDLY
UNWARRANTED PIERCING OF THE CORPORATE VEIL.
IV.
THE X X X CA COMMITTED A REVERSIBLE ERROR WHEN IT IGNORED THE
SERIOUS FORMAL DEFICIENCIES OF BOTH THE PETITION AND THE MOTION
FOR RECONSIDERATION DATED 15 MARCH 2006 OF RESPONDENTS
CHOACHUY AND GAVE X X X THEM DUE COURSE AND CONSIDERATION.33
Essentially, the issues boil down to (1) whether there is a violation of petitioners right to
privacy, and (2) whether respondents are the proper parties to this suit.
Petitioners Arguments
Petitioners insist that they are entitled to the issuance of a Writ of Preliminary Injunction
because respondents installation of a stationary camera directly facing petitioners
property and a revolving camera covering a significant portion of the same property
constitutes a violation of petitioners right to privacy.34 Petitioners cite Article 26(1) of the
Civil Code, which enjoins persons from prying into the private lives of others. 35 Although
the said provision pertains to the privacy of anothers residence, petitioners opine that it
includes business offices, citing Professor Arturo M. Tolentino. 36 Thus, even assuming
arguendo that petitioners property is used for business, it is still covered by the said
provision.37
As to whether respondents are the proper parties to implead in this case, petitioners
claim that respondents and Aldo are one and the same, and that respondents only want
to hide behind Aldos corporate fiction. 38 They point out that if respondents are not the
real owners of the building, where the video surveillance cameras were installed, then
they had no business consenting to the ocular inspection conducted by the court. 39
Respondents Arguments
Respondents, on the other hand, echo the ruling of the CA that petitioners cannot
invoke their right to privacy since the property involved is not used as a
residence.40 Respondents maintain that they had nothing to do with the installation of
the video surveillance cameras as these were installed by Aldo, the registered owner of
the building,41 as additional security for its building. 42 Hence, they were wrongfully
impleaded in this case.43
Our Ruling
The Petition is meritorious.

93

The right to privacy is the right to be let alone.

The right to privacy is enshrined in our Constitution 44 and in our laws. It is defined as
"the right to be free from unwarranted exploitation of ones person or from intrusion into
ones private activities in such a way as to cause humiliation to a persons ordinary
sensibilities."45 It is the right of an individual "to be free from unwarranted publicity, or to
live without unwarranted interference by the public in matters in which the public is not
necessarily concerned."46 Simply put, the right to privacy is "the right to be let alone." 47
The Bill of Rights guarantees the peoples right to privacy and protects them against the
States abuse of power. In this regard, the State recognizes the right of the people to be
secure in their houses. No one, not even the State, except "in case of overriding social
need and then only under the stringent procedural safeguards," can disturb them in the
privacy of their homes.48
The right to privacy under Article 26(1)
of the Civil Code covers business offices
where the public are excluded
therefrom and only certain individuals
are allowed to enter.
Article 26(1) of the Civil Code, on the other hand, protects an individuals right to privacy
and provides a legal remedy against abuses that may be committed against him by
other individuals. It states:
Art. 26. Every person shall respect the dignity, personality, privacy and peace of mind of
his neighbors and other persons. The following and similar acts, though they may not
constitute a criminal offense, shall produce a cause of action for damages, prevention
and other relief:
(1) Prying into the privacy of anothers residence;
xxxx
This provision recognizes that a mans house is his castle, where his right to privacy
cannot be denied or even restricted by others. It includes "any act of intrusion into,
peeping or peering inquisitively into the residence of another without the consent of the
latter."49 The phrase "prying into the privacy of anothers residence," however, does not
mean that only the residence is entitled to privacy. As elucidated by Civil law expert
Arturo M. Tolentino:

94

Our Code specifically mentions "prying into the privacy of anothers residence." This
does not mean, however, that only the residence is entitled to privacy, because the law
covers also "similar acts." A business office is entitled to the same privacy when the
public is excluded therefrom and only such individuals as are allowed to enter may
come in. x x x50 (Emphasis supplied)
Thus, an individuals right to privacy under Article 26(1) of the Civil Code should not be
confined to his house or residence as it may extend to places where he has the right to
exclude the public or deny them access. The phrase "prying into the privacy of anothers
residence," therefore, covers places, locations, or even situations which an individual
considers as private. And as long as his right is recognized by society, other individuals
may not infringe on his right to privacy. The CA, therefore, erred in limiting the
application of Article 26(1) of the Civil Code only to residences.
The
privacy"
whether
to privacy.

test
there

"reasonable
is
is
a

expectation
used
to
violation
of

of
determine
the
right

In ascertaining whether there is a violation of the right to privacy, courts use the
"reasonable expectation of privacy" test. This test determines whether a person has a
reasonable expectation of privacy and whether the expectation has been violated. 51 In
Ople v. Torres,52 we enunciated that "the reasonableness of a persons expectation of
privacy depends on a two-part test: (1) whether, by his conduct, the individual has
exhibited an expectation of privacy; and (2) this expectation is one that society
recognizes as reasonable." Customs, community norms, and practices may, therefore,
limit or extend an individuals "reasonable expectation of privacy." 53 Hence, the
reasonableness of a persons expectation of privacy must be determined on a case-tocase basis since it depends on the factual circumstances surrounding the case. 54
In this day and age, video surveillance cameras are installed practically everywhere for
the protection and safety of everyone. The installation of these cameras, however,
should not cover places where there is reasonable expectation of privacy, unless the
consent of the individual, whose right to privacy would be affected, was obtained. Nor
should these cameras be used to pry into the privacy of anothers residence or business
office as it would be no different from eavesdropping, which is a crime under Republic
Act No. 4200 or the Anti-Wiretapping Law.
In this case, the RTC, in granting the application for Preliminary Injunction, ruled that:
After careful consideration, there is basis to grant the application for a temporary
restraining order. The operation by respondents of a revolving camera, even if it were
mounted on their building, violated the right of privacy of petitioners, who are the owners
of the adjacent lot. The camera does not only focus on respondents property or the roof
of the factory at the back (Aldo Development and Resources, Inc.) but it actually spans
through a good portion of the land of petitioners.
95

Based on the ocular inspection, the Court understands why petitioner Hing was so
unyielding in asserting that the revolving camera was set up deliberately to monitor the
on[-]going construction in his property. The monitor showed only a portion of the roof of
the factory of Aldo. If the purpose of respondents in setting up a camera at the back is to
secure the building and factory premises, then the camera should revolve only towards
their properties at the back. Respondents camera cannot be made to extend the view to
petitioners lot. To allow the respondents to do that over the objection of the petitioners
would violate the right of petitioners as property owners. "The owner of a thing cannot
make use thereof in such a manner as to injure the rights of a third person." 55
The RTC, thus, considered that petitioners have a "reasonable expectation of privacy" in
their property, whether they use it as a business office or as a residence and that the
installation of video surveillance cameras directly facing petitioners property or covering
a significant portion thereof, without their consent, is a clear violation of their right to
privacy. As we see then, the issuance of a preliminary injunction was justified. We need
not belabor that the issuance of a preliminary injunction is discretionary on the part of
the court taking cognizance of the case and should not be interfered with, unless there
is grave abuse of discretion committed by the court. 56 Here, there is no indication of any
grave abuse of discretion. Hence, the CA erred in finding that petitioners are not entitled
to an injunctive writ.
This brings us to the next question: whether respondents are the proper parties to this
suit.
A
real
party
defendant
is
one
who
has
a
correlative
legal
obligation
to
redress
a
wrong
done
to
the
plaintiff
by
reason
of
the
defendant's
act
or
omission
which
had
violated
the
legal
right
of
the
former.
Section 2, Rule 3 of the Rules of Court provides:
SEC. 2. Parties-in-interest. A real party-in-interest is the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the avails of the
suit. Unless otherwise authorized by law or these Rules, every action must be
prosecuted or defended in the name of the real party-in-interest.
A real party defendant is "one who has a correlative legal obligation to redress a wrong
done to the plaintiff by reason of the defendants act or omission which had violated the
legal right of the former."57
In ruling that respondents are not the proper parties, the CA reasoned that since they do
not own the building, they could not have installed the video surveillance
cameras.58 Such reasoning, however, is erroneous. The fact that respondents are not

96

the registered owners of the building does not automatically mean that they did not
cause the installation of the video surveillance cameras.
In their Complaint, petitioners claimed that respondents installed the video surveillance
cameras in order to fish for evidence, which could be used against petitioners in another
case.59 During the hearing of the application for Preliminary Injunction, petitioner Bill
testified that when respondents installed the video surveillance cameras, he
immediately broached his concerns but they did not seem to care, 60 and thus, he
reported the matter to the barangay for mediation, and eventually, filed a Complaint
against respondents before the RTC. 61 He also admitted that as early as 1998 there has
already been a dispute between his family and the Choachuy family concerning the
boundaries of their respective properties. 62 With these factual circumstances in mind,
we believe that respondents are the proper parties to be impleaded.
Moreover, although Aldo has a juridical personality separate and distinct from its
stockholders, records show that it is a family-owned corporation managed by the
Choachuy family.63
Also quite telling is the fact that respondents, notwithstanding their claim that they are
not owners of the building, allowed the court to enter the compound of Aldo and conduct
an ocular inspection. The counsel for respondents even toured Judge Marilyn LaguraYap inside the building and answered all her questions regarding the set-up and
installation of the video surveillance cameras. 64 And when respondents moved for
reconsideration of the Order dated October 18, 2005 of the RTC, one of the arguments
they raised is that Aldo would suffer damages if the video surveillance cameras are
removed and transferred.65 Noticeably, in these instances, the personalities of
respondents and Aldo seem to merge.
All these taken together lead us to the inevitable conclusion that respondents are
merely using the corporate fiction of Aldo as a shield to protect themselves from this
suit. In view of the foregoing, we find that respondents are the proper parties to this suit.
WHEREFORE, the Petition is hereby GRANTED. The Decision dated July 10, 2007 and
the Resolution dated September 11, 2007 of the Court of Appeals in CA-G.R. CEB-SP
No. 01473 are hereby REVERSED and SET ASIDE. The Orders dated October 18,2005
and February 6, 200[6] of Branch 28 of the Regional Trial Court of Mandaue City in Civil
Case No. MAN-5223 are hereby REINSTATED and AFFIRMED.
SO ORDERED.
Aguilar vs OPallick
SECOND DIVISION
G.R. No. 182280

July 29, 2013

97

TERESA C. AGUILAR, CESAR D. RAAGAS, VILLAMOR VILLEGAS, and THE

REGISTER
OF
DEEDS
FOR
THE
CITY
OF
MAKATI,* Petitioners,
vs.
MICHAEL J. O'PALLICK, Respondent.
DECISION
DEL CASTILLO, J.:
"The principle that a person cannot be prejudiced by a ruling rendered in an action or
proceeding in which he was not made a party conforms to the constitutional guarantee
of due process of law."1
This Petition for Review on Certiorari 2 assails the October 25, 2007 Decision 3 of the
Court of Appeals (CA) in CA-G.R. CV No. 83027 which set aside the December 8, 2003
Order4 of the Regional Trial Court, Makati City, Branch 61, in Civil Case No. 01-572, as
well as the CA Resolution5 dated March 12, 2008 denying petitioners Motion for
Reconsideration.6
Factual Antecedents
On March 20, 1995, a Contract To Sell 7 was executed between Primetown Property
Group, Inc. (PPGI) on the one hand, and Reynaldo Poblete and Tomas Villanueva
(Poblete and Villanueva) on the other, over Unit 3301 of the Makati Prime Citadel
Condominium in Makati City (the unit), and covered by Condominium Certificate of Title
No. 25156 (CCT No. 25156).8 Poblete and Villanueva in turn executed in favor of herein
respondent Michael J. OPallick (OPallick) a Deed of Assignment 9 covering the unit. In
October 1995, PPGI issued a Deed of Sale 10 in favor of OPallick after the latter paid the
purchase price in full.
Although OPallick took possession of the unit, the Deed of Sale in his favor was never
registered nor annotated on CCT No. 25156.
Meanwhile, in a case between PPGI and herein petitioner Teresa C. Aguilar (Aguilar)
filed in the Housing and Land Use Regulatory Board (HLURB), 11 Aguilar was able to
obtain a final and executory Decision 12 in her favor, and as a result, Sheriff Cesar D.
Raagas (Raagas) of the Regional Trial Court (RTC) of Makati City, caused several
properties of PPGI to be levied, including the herein subject condominium unit. The sale
at public auction was scheduled to be held on March 30, 2000. 13 Raagas issued a
Sheriffs Notice of Sale dated February 17, 2000, posted it, and sent a copy thereof to
PPGI.14 The notice was likewise published.15 But before the scheduled auction sale, or
on March 21, 2000, OPallick filed an Affidavit of Third-Party Claim. 16 Raagas conducted
the public auction sale on March 30, 2000, 17 where Aguilar was declared the highest
bidder for the subject unit. A certificate of sale was issued in her favor.

98

Because PPGI failed to redeem the property, a final Deed of Sale 18 was issued in favor
of Aguilar on April 20, 2001. CCT No. 25156 was cancelled, and CCT No. 74777 was
issued in her name.19 Aguilar moved for the issuance of a Writ of Possession, 20 and in a
December 21, 2001 Order, the HLURB granted the motion. 21
On April 6, 2001, OPallick instituted Civil Case No. 01-572 with the RTC Makati 22 for
quieting of title and to set aside the levy on execution of the subject unit, to annul the
certificate of sale issued in favor of Aguilar, as well as to recover the unit. In his
Complaint23 against Aguilar and Raagas, OPallick claimed that when PPGI executed a
Deed of Sale in his favor, all rights and interests over the unit were transferred to him,
and the subsequent levy and sale thereof to Aguilar created a cloud on his title. In
addition, OPallick prayed for moral damages, attorneys fees and costs of litigation.
Petitioners sought the dismissal of the case, arguing essentially that when the levy and
sale on execution were conducted, PPGI remained the registered owner of the unit, and
the title covering the same remained clean and free of annotations indicating claims by
third persons, including OPallick; and that OPallicks unregistered Deed of Sale cannot
bind and prejudice third parties, including Aguilar.
Eventually, the case was re-raffled to Branch 61 of the RTC Makati. OPallick likewise
filed an Amended Complaint,24 impleading Villamor Villegas25 (Villegas) and the Office of
the Makati Register of Deeds, and alleging further that at the time of the levy, Aguilar
knew that PPGI no longer owned the unit, as she had been informed of such fact by
PPGI during the proceedings in the HLURB case; that Aguilar obtained her title through
unlawful means; that his eviction from the premises was illegal; that he suffered actual
damages in the amount ofP4,953,410.00;26 that as a result of the eviction of his tenant,
he suffered unrealized monthly rental income in the amount of P30,000.00;27 and that he
should be awarded exemplary damages. 28 OPallick also prayed for the cancellation of
Aguilars CCT No. 74777.
During the proceedings, petitioners filed a Motion to Dismiss 29 on the ground that the
trial court had no jurisdiction over the subject matter of the case; and that since the
subject matter was a condominium unit, the HLURB possessed exclusive jurisdiction
over the dispute. A Motion for Preliminary Hearing on the Affirmative Defenses 30 was
likewise filed. Despite Opposition,31 the motion was granted, and a hearing thereon was
conducted.
Ruling of the Regional Trial Court
On December 8, 2003, the trial court issued the assailed Order 32 dismissing Civil Case
No. 01-572. The trial court held that it had no jurisdiction to annul the levy and sale on
execution ordered by the HLURB, an agency under the Office of the President. The trial
court concluded that because the Office of the President is a co-equal body, it had no
power to interfere with the latters decisions nor could it issue injunctive relief to enjoin
the execution of decisions of any of its administrative agencies; the case for quieting of

99

title or reconveyance constitutes such prohibited interference. The dispositive portion of

the Order reads:
WHEREFORE, premises considered, the court finds for the defendants and hereby
DISMISSES the case.
SO ORDERED.33
OPallicks Motion for Reconsideration 34 was denied,35 thus he interposed an appeal with
the CA.
Ruling of the Court of Appeals
In CA-G.R. CV No. 83027, the CA sustained OPallicks argument that since he was not
a party to the HLURB case, he could not be bound by its disposition as well as the
incidents and actions taken therein; thus, he had the right to file a separate action to
protect and vindicate his claim. It held that since the execution sale proceeded despite
OPallicks third-party claim, the latter had no other recourse but to file an independent
vindicatory action to prove his claim. Citing the Courts pronouncement in The
Consolidated Bank & Trust Corporation (Solidbank) v. Court of Appeals, 36 the appellate
court held that "the issue as to whether or not there was illegal levy on properties on
execution can be threshed out in a separate action." The appellate court likewise
echoed Spouses Estonina v. Court of Appeals, 37 stating that the filing of an independent
action with a court other than that which issued the Writ of Execution may be allowed
where the plaintiff in the independent action is a stranger to the case where the Writ of
Execution was issued. The CA thus ordered the remand of the case to the RTC, viz:
WHEREFORE, the appealed Order of Branch 61, Regional Trial Court of Makati City
dated 8 December 2003, is hereby SET ASIDE. ACCORDINGLY, the instant case is
REMANDED to said court for trial on the merits.
SO ORDERED.38
Unable to obtain a reconsideration of the appellate courts Decision, petitioners filed the
present Petition.
Issues
Petitioners argue that the CA erred in ruling that:
RESPONDENT WAS NOT A PARTY TO THE PROCEEDINGS BETWEEN
AGUILAR AND PPGI.
THE AFFIDAVIT OF THIRD-PARTY CLAIM WAS SERVED BY RESPONDENT
ON PETITIONER AGUILAR.

100

THERE WAS ILLEGAL LEVY ON THE PROPERTY UNDER EXECUTION,

THUS THE SAME MAY BE THRESHED OUT IN A SEPARATE ACTION.
THE ESTONINA CASE APPLIES TO THE PRESENT CASE.
THE CASE SHOULD BE REMANDED TO BRANCH 61, RTC MAKATI FOR
TRIAL ON THE MERITS.39
Petitioners Arguments
Petitioners argue that Aguilars title had been the subject of final determination in G.R.
No. 157801,40 where this Court held that Aguilar is the absolute owner of the unit, and is
entitled to a writ of possession over the same.
Petitioners add that contrary to OPallicks claim, Aguilar was never served a copy of his
third-party claim, and came to know of it only on October 11, 2001 while following up on
the consolidation of her title.
Petitioners also argue that because PPGI remained the registered owner of the unit and
title was never transferred to OPallick, there was no irregularity in the conduct of the
levy and execution sale thereof, as well as the registration thereof and the subsequent
cancellation of CCT No. 25156 and issuance of CCT No. 74777 in Aguilars name.
Petitioners further contend that a remand of the case is unnecessary on account of the
ruling of this Court in G.R. No. 157801, which declared Aguilar as the absolute owner of
the subject unit; thus, remanding the case for further proceedings would only render the
final and executory Decision in G.R. No. 157801 nugatory. Besides, the trial court has
no power over the HLURB because the latter is a quasi-judicial agency co-equal with
the former.
Finally, petitioners claim that OPallicks proper recourse, if there be any, is to go after
PPGI, presumably to sue for damages.
Petitioners thus pray that the CA Decision be reversed, and that the December 8, 2003
Order of the Makati RTC be accordingly reinstated.
Respondents Arguments
Respondent, on the other hand, insists that petitioners committed procedural lapses
with regard to the Petition, which lacks an affidavit of proof of service and a certification
against non-forum shopping, which warrant dismissal.
Respondent further supports the ruling of the CA that the case for quieting of title must
subsist and he must be given the opportunity to be heard, since he was not impleaded
in the HLURB case where his claim over the subject unit could have been litigated.

101

As regards the disposition of this Court in G.R. No. 157801, respondent cites the
Courts pronouncement therein that the issue of whether title or ownership had been
wrongfully vested in Aguilar as a result of her purchase of the subject unit at the
execution sale may be raised in a separate proceeding; that is, that Aguilars title may
be questioned precisely in a proceeding such as one for quieting of title.
Respondent further argues that Aguilars claim that she was not served a copy of his
third-party claim, and came to know about it only on October 11, 2001 while following up
on the consolidation of her title, is a matter best resolved after trial on the merits in Civil
Case No. 01-572.
Finally, respondent insists that Aguilar is not a buyer in good faith.
Our Ruling
The Petition must be denied.
The Court finds it unnecessary to address the procedural issues raised by the
respondent, considering its resolve to deny the Petition for lack of merit. For this case,
we shall afford the party litigants the amplest opportunity for the proper and just
determination of their cause, free from the constraints of technicalities.
It is true, as OPallick claims, that in G.R. No. 157801 the Court did not foreclose the
possibility that a separate action questioning Aguilars title may be instituted, either by
PPGI or anyone claiming a right to the subject condominium unit. Thus, we held:
Fourth. The buyer in a foreclosure sale becomes the absolute owner of the property
purchased if it is not redeemed during the period of one year after the registration of the
sale. The issuance of the writ of possession had become ministerial x x x on the part of
HLURB since the respondent Aguilar had sufficiently shown her proof of title over the
subject condominium. Being the registered owner of the condominium unit, she is
entitled to its possession. The case at bar is akin to foreclosure proceedings where the
issuance of a writ of possession becomes a ministerial act of the court after title to the
property has been consolidated in the mortgage.
It must be stressed that the Register of Deeds had already cancelled CCT No. 25156
and issued CCT No. 74777 in the name of the respondent. Thus, the argument of the
petitioner [PPGI] that the title or ownership had been wrongfully vested with the
respondent is a collateral attack on the latters title which is more appropriate in a direct
proceeding.41 (Emphasis and words in parentheses supplied)
Thus, contrary to petitioners claim, this Courts pronouncement in G.R. No. 157801 can
in no way constitute a final determination of OPallicks claim. In his Amended
Complaint, OPallick averred that Aguilar obtained her title through unlawful means.
More particularly, he prayed for the nullification of Aguilars CCT No. 74777. Clearly,

102

therefore, although captioned as one for Quieting of Title, OPallicks suit is actually a
suit for annulment of title. Basic is the rule that
"the cause of action in a Complaint is not determined by the designation given to it by
the parties. The allegations in the body of the Complaint define or describe it. The
designation or caption is not controlling more than the allegations in the Complaint. It is
not even an indispensable part of the Complaint." 42
"The principle that a person cannot be prejudiced by a ruling rendered in an action or
proceeding in which he was not made a party conforms to the constitutional guarantee
of due process of law."43 Thus, we agree with the CAs pronouncement that since
respondent was not impleaded in the HLURB case, he could not be bound by the
decision rendered therein. Because he was not impleaded in said case; he was not
given the opportunity to present his case therein. But, more than the fact that OPallick
was not impleaded in the HLURB case, he had the right to vindicate his claim in a
separate action, as in this case. As a prior purchaser of the very same condominium
unit, he had the right to be heard on his claim.
Finally, the CAs application of the Consolidated Bank & Trust Corporation 44 and
Spouses Estonina45 cases are likewise well-taken, and may be viewed in light of the fact
that what OPallick instituted was a case for annulment of title, which could remain
pending independently of the proceedings in the HLURB.
WHEREFORE, premises considered, the Petition is DENIED. The assailed October 25,
2007 Decision and the March 12, 2008 Resolution of the Court of Appeals in CA-G.R.
CV No. 83027 are AFFIRMED.
SO ORDERED.
Oposa vs Factoran

EN BANC

G.R. No. 101083 July 30, 1993

JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all surnamed OPOSA,
minors, and represented by their parents ANTONIO and RIZALINA OPOSA,
ROBERTA NICOLE SADIUA, minor, represented by her parents CALVIN and
ROBERTA SADIUA, CARLO, AMANDA SALUD and PATRISHA, all surnamed
FLORES, minors and represented by their parents ENRICO and NIDA FLORES,
GIANINA DITA R. FORTUN, minor, represented by her parents SIGRID and
DOLORES FORTUN, GEORGE II and MA. CONCEPCION, all surnamed MISA,
103

minors and represented by their parents GEORGE and MYRA MISA, BENJAMIN
ALAN V. PESIGAN, minor, represented by his parents ANTONIO and ALICE
PESIGAN, JOVIE MARIE ALFARO, minor, represented by her parents JOSE and
MARIA VIOLETA ALFARO, MARIA CONCEPCION T. CASTRO, minor, represented
by her parents FREDENIL and JANE CASTRO, JOHANNA DESAMPARADO,
minor, represented by her parents JOSE and ANGELA DESAMPRADO, CARLO
JOAQUIN T. NARVASA, minor, represented by his parents GREGORIO II and
CRISTINE CHARITY NARVASA, MA. MARGARITA, JESUS IGNACIO, MA. ANGELA
and MARIE GABRIELLE, all surnamed SAENZ, minors, represented by their
parents ROBERTO and AURORA SAENZ, KRISTINE, MARY ELLEN, MAY, GOLDA
MARTHE and DAVID IAN, all surnamed KING, minors, represented by their
parents MARIO and HAYDEE KING, DAVID, FRANCISCO and THERESE VICTORIA,
all surnamed ENDRIGA, minors, represented by their parents BALTAZAR and
TERESITA ENDRIGA, JOSE MA. and REGINA MA., all surnamed ABAYA, minors,
represented by their parents ANTONIO and MARICA ABAYA, MARILIN, MARIO, JR.
and MARIETTE, all surnamed CARDAMA, minors, represented by their parents
MARIO and LINA CARDAMA, CLARISSA, ANN MARIE, NAGEL, and IMEE LYN, all
surnamed OPOSA, minors and represented by their parents RICARDO and
MARISSA OPOSA, PHILIP JOSEPH, STEPHEN JOHN and ISAIAH JAMES, all
surnamed QUIPIT, minors, represented by their parents JOSE MAX and VILMI
QUIPIT, BUGHAW CIELO, CRISANTO, ANNA, DANIEL and FRANCISCO, all
surnamed BIBAL, minors, represented by their parents FRANCISCO, JR. and
MILAGROS BIBAL, and THE PHILIPPINE ECOLOGICAL NETWORK,
INC., petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his capacity as the
Secretary of the Department of Environment and Natural Resources, and THE
HONORABLE ERIBERTO U. ROSARIO, Presiding Judge of the RTC, Makati,
Branch 66, respondents.
Oposa Law Office for petitioners.
The Solicitor General for respondents.

DAVIDE, JR., J.:

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

104

The controversy has its genesis in Civil Case No. 90-77 which was filed before Branch
66 (Makati, Metro Manila) of the Regional Trial Court (RTC), National Capital Judicial
Region. The principal plaintiffs therein, now the principal petitioners, are all minors duly
represented and joined by their respective parents. Impleaded as an additional plaintiff
is the Philippine Ecological Network, Inc. (PENI), a domestic, non-stock and non-profit
corporation organized for the purpose of, inter alia, engaging in concerted action geared
for the protection of our environment and natural resources. The original defendant was
the Honorable Fulgencio S. Factoran, Jr., then Secretary of the Department of
Environment and Natural Resources (DENR). His substitution in this petition by the new
Secretary, the Honorable Angel C. Alcala, was subsequently ordered upon proper
motion by the petitioners. 1 The complaint 2 was instituted as a taxpayers' class suit 3 and
alleges that the plaintiffs "are all citizens of the Republic of the Philippines, taxpayers,
and entitled to the full benefit, use and enjoyment of the natural resource treasure that is
the country's virgin tropical forests." The same was filed for themselves and others who
are equally concerned about the preservation of said resource but are "so numerous
that it is impracticable to bring them all before the Court." The minors further asseverate
that they "represent their generation as well as generations yet unborn." 4 Consequently,
it is prayed for that judgment be rendered:
. . . ordering defendant, his agents, representatives and other persons
acting in his behalf to
(1) Cancel all existing timber license agreements in the country;
(2) Cease and desist from receiving, accepting, processing, renewing or
approving new timber license agreements.
and granting the plaintiffs ". . . such other reliefs just and equitable under the
premises." 5
The complaint starts off with the general averments that the Philippine archipelago of
7,100 islands has a land area of thirty million (30,000,000) hectares and is endowed
with rich, lush and verdant rainforests in which varied, rare and unique species of flora
and fauna may be found; these rainforests contain a genetic, biological and chemical
pool which is irreplaceable; they are also the habitat of indigenous Philippine cultures
which have existed, endured and flourished since time immemorial; scientific evidence
reveals that in order to maintain a balanced and healthful ecology, the country's land
area should be utilized on the basis of a ratio of fifty-four per cent (54%) for forest cover
and forty-six per cent (46%) for agricultural, residential, industrial, commercial and other
uses; the distortion and disturbance of this balance as a consequence of deforestation
have resulted in a host of environmental tragedies, such as (a) water shortages
resulting from drying up of the water table, otherwise known as the "aquifer," as well as
of rivers, brooks and streams, (b) salinization of the water table as a result of the
intrusion therein of salt water, incontrovertible examples of which may be found in the
island of Cebu and the Municipality of Bacoor, Cavite, (c) massive erosion and the
consequential loss of soil fertility and agricultural productivity, with the volume of soil
105

eroded estimated at one billion (1,000,000,000) cubic meters per annum

approximately the size of the entire island of Catanduanes, (d) the endangering and
extinction of the country's unique, rare and varied flora and fauna, (e) the disturbance
and dislocation of cultural communities, including the disappearance of the Filipino's
indigenous cultures, (f) the siltation of rivers and seabeds and consequential destruction
of corals and other aquatic life leading to a critical reduction in marine resource
productivity, (g) recurrent spells of drought as is presently experienced by the entire
country, (h) increasing velocity of typhoon winds which result from the absence of
windbreakers, (i) the floodings of lowlands and agricultural plains arising from the
absence of the absorbent mechanism of forests, (j) the siltation and shortening of the
lifespan of multi-billion peso dams constructed and operated for the purpose of
supplying water for domestic uses, irrigation and the generation of electric power, and
(k) the reduction of the earth's capacity to process carbon dioxide gases which has led
to perplexing and catastrophic climatic changes such as the phenomenon of global
warming, otherwise known as the "greenhouse effect."
Plaintiffs further assert that the adverse and detrimental consequences of continued and
deforestation are so capable of unquestionable demonstration that the same may be
submitted as a matter of judicial notice. This notwithstanding, they expressed their
intention to present expert witnesses as well as documentary, photographic and film
evidence in the course of the trial.
As their cause of action, they specifically allege that:
CAUSE OF ACTION
7. Plaintiffs replead by reference the foregoing allegations.
8. Twenty-five (25) years ago, the Philippines had some sixteen (16)
million hectares of rainforests constituting roughly 53% of the country's
land mass.
9. Satellite images taken in 1987 reveal that there remained no more than
1.2 million hectares of said rainforests or four per cent (4.0%) of the
country's land area.
10. More recent surveys reveal that a mere 850,000 hectares of virgin oldgrowth rainforests are left, barely 2.8% of the entire land mass of the
Philippine archipelago and about 3.0 million hectares of immature and
uneconomical secondary growth forests.
11. Public records reveal that the defendant's, predecessors have granted
timber license agreements ('TLA's') to various corporations to cut the
aggregate area of 3.89 million hectares for commercial logging purposes.

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A copy of the TLA holders and the corresponding areas covered is hereto
attached as Annex "A".
12. At the present rate of deforestation, i.e. about 200,000 hectares per
annum or 25 hectares per hour nighttime, Saturdays, Sundays and
holidays included the Philippines will be bereft of forest resources after
the end of this ensuing decade, if not earlier.
13. The adverse effects, disastrous consequences, serious injury and
irreparable damage of this continued trend of deforestation to the plaintiff
minor's generation and to generations yet unborn are evident and
incontrovertible. As a matter of fact, the environmental damages
enumerated in paragraph 6 hereof are already being felt, experienced and
suffered by the generation of plaintiff adults.
14. The continued allowance by defendant of TLA holders to cut and
deforest the remaining forest stands will work great damage and
irreparable injury to plaintiffs especially plaintiff minors and their
successors who may never see, use, benefit from and enjoy this rare
and unique natural resource treasure.
This act of defendant constitutes a misappropriation and/or impairment of
the natural resource property he holds in trust for the benefit of plaintiff
minors and succeeding generations.
15. Plaintiffs have a clear and constitutional right to a balanced and
healthful ecology and are entitled to protection by the State in its capacity
as the parens patriae.
16. Plaintiff have exhausted all administrative remedies with the
defendant's office. On March 2, 1990, plaintiffs served upon defendant a
final demand to cancel all logging permits in the country.
A copy of the plaintiffs' letter dated March 1, 1990 is hereto attached as
Annex "B".
17. Defendant, however, fails and refuses to cancel the existing TLA's to
the continuing serious damage and extreme prejudice of plaintiffs.
18. The continued failure and refusal by defendant to cancel the TLA's is
an act violative of the rights of plaintiffs, especially plaintiff minors who
may be left with a country that is desertified (sic), bare, barren and devoid
of the wonderful flora, fauna and indigenous cultures which the Philippines
had been abundantly blessed with.

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19. Defendant's refusal to cancel the aforementioned TLA's is manifestly

contrary to the public policy enunciated in the Philippine Environmental
Policy which, in pertinent part, states that it is the policy of the State
(a) to create, develop, maintain and improve conditions under which man
and nature can thrive in productive and enjoyable harmony with each
other;
(b) to fulfill the social, economic and other requirements of present and
future generations of Filipinos and;
(c) to ensure the attainment of an environmental quality that is conductive
to a life of dignity and well-being. (P.D. 1151, 6 June 1977)
20. Furthermore, defendant's continued refusal to cancel the
aforementioned TLA's is contradictory to the Constitutional policy of the
State to
a. effect "a more equitable distribution of opportunities, income and
wealth" and "make full and efficient use of natural resources (sic)."
(Section 1, Article XII of the Constitution);
b. "protect the nation's marine wealth." (Section 2, ibid);
c. "conserve and promote the nation's cultural heritage and resources
(sic)" (Section 14, Article XIV,id.);
d. "protect and advance the right of the people to a balanced and healthful
ecology in accord with the rhythm and harmony of nature." (Section 16,
Article II, id.)
21. Finally, defendant's act is contrary to the highest law of humankind
the natural law and violative of plaintiffs' right to self-preservation and
perpetuation.
22. There is no other plain, speedy and adequate remedy in law other
than the instant action to arrest the unabated hemorrhage of the country's
vital life support systems and continued rape of Mother Earth. 6
On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to
Dismiss the complaint based on two (2) grounds, namely: (1) the plaintiffs have no
cause of action against him and (2) the issue raised by the plaintiffs is a political
question which properly pertains to the legislative or executive branches of
Government. In their 12 July 1990 Opposition to the Motion, the petitioners maintain
that (1) the complaint shows a clear and unmistakable cause of action, (2) the motion is

108

dilatory and (3) the action presents a justiciable question as it involves the defendant's
abuse of discretion.
On 18 July 1991, respondent Judge issued an order granting the aforementioned
motion to dismiss. 7 In the said order, not only was the defendant's claim that the
complaint states no cause of action against him and that it raises a political question
sustained, the respondent Judge further ruled that the granting of the relief prayed for
would result in the impairment of contracts which is prohibited by the fundamental law of
the land.
Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the
Revised Rules of Court and ask this Court to rescind and set aside the dismissal order
on the ground that the respondent Judge gravely abused his discretion in dismissing the
action. Again, the parents of the plaintiffs-minors not only represent their children, but
have also joined the latter in this case. 8
On 14 May 1992, We resolved to give due course to the petition and required the
parties to submit their respective Memoranda after the Office of the Solicitor General
(OSG) filed a Comment in behalf of the respondents and the petitioners filed a reply
thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause of action
as it contains sufficient allegations concerning their right to a sound environment based
on Articles 19, 20 and 21 of the Civil Code (Human Relations), Section 4 of Executive
Order (E.O.) No. 192 creating the DENR, Section 3 of Presidential Decree (P.D.) No.
1151 (Philippine Environmental Policy), Section 16, Article II of the 1987 Constitution
recognizing the right of the people to a balanced and healthful ecology, the concept of
generational genocide in Criminal Law and the concept of man's inalienable right to selfpreservation and self-perpetuation embodied in natural law. Petitioners likewise rely on
the respondent's correlative obligation per Section 4 of E.O. No. 192, to safeguard the
people's right to a healthful environment.
It is further claimed that the issue of the respondent Secretary's alleged grave abuse of
discretion in granting Timber License Agreements (TLAs) to cover more areas for
logging than what is available involves a judicial question.
Anent the invocation by the respondent Judge of the Constitution's non-impairment
clause, petitioners maintain that the same does not apply in this case because TLAs are
not contracts. They likewise submit that even if TLAs may be considered protected by
the said clause, it is well settled that they may still be revoked by the State when the
public interest so requires.
On the other hand, the respondents aver that the petitioners failed to allege in their
complaint a specific legal right violated by the respondent Secretary for which any relief
is provided by law. They see nothing in the complaint but vague and nebulous
allegations concerning an "environmental right" which supposedly entitles the
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petitioners to the "protection by the state in its capacity as parens patriae." Such
allegations, according to them, do not reveal a valid cause of action. They then reiterate
the theory that the question of whether logging should be permitted in the country is a
political question which should be properly addressed to the executive or legislative
branches of Government. They therefore assert that the petitioners' resources is not to
file an action to court, but to lobby before Congress for the passage of a bill that would
ban logging totally.
As to the matter of the cancellation of the TLAs, respondents submit that the same
cannot be done by the State without due process of law. Once issued, a TLA remains
effective for a certain period of time usually for twenty-five (25) years. During its
effectivity, the same can neither be revised nor cancelled unless the holder has been
found, after due notice and hearing, to have violated the terms of the agreement or
other forestry laws and regulations. Petitioners' proposition to have all the TLAs
indiscriminately cancelled without the requisite hearing would be violative of the
requirements of due process.
Before going any further, We must first focus on some procedural matters. Petitioners
instituted Civil Case No. 90-777 as a class suit. The original defendant and the present
respondents did not take issue with this matter. Nevertheless, We hereby rule that the
said civil case is indeed a class suit. The subject matter of the complaint is of common
and general interest not just to several, but to all citizens of the Philippines.
Consequently, since the parties are so numerous, it, becomes impracticable, if not
totally impossible, to bring all of them before the court. We likewise declare that the
plaintiffs therein are numerous and representative enough to ensure the full protection
of all concerned interests. Hence, all the requisites for the filing of a valid class suit
under Section 12, Rule 3 of the Revised Rules of Court are present both in the said civil
case and in the instant petition, the latter being but an incident to the former.
This case, however, has a special and novel element. Petitioners minors assert that
they represent their generation as well as generations yet unborn. We find no difficulty
in ruling that they can, for themselves, for others of their generation and for the
succeeding generations, file a class suit. Their personality to sue in behalf of the
succeeding generations can only be based on the concept of intergenerational
responsibility insofar as the right to a balanced and healthful ecology is concerned.
Such
a
right,
as
hereinafter
expounded,
considers
the "rhythm and harmony of nature." Nature means the created world in its
entirety. 9 Such rhythm and harmony indispensably include, inter alia, the judicious
disposition, utilization, management, renewal and conservation of the country's forest,
mineral, land, waters, fisheries, wildlife, off-shore areas and other natural resources to
the end that their exploration, development and utilization be equitably accessible to the
present as well as future generations. 10 Needless to say, every generation has a
responsibility to the next to preserve that rhythm and harmony for the full enjoyment of a
balanced and healthful ecology. Put a little differently, the minors' assertion of their right
to a sound environment constitutes, at the same time, the performance of their
obligation to ensure the protection of that right for the generations to come.
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The locus standi of the petitioners having thus been addressed, We shall now proceed
to the merits of the petition.
After a careful perusal of the complaint in question and a meticulous consideration and
evaluation of the issues raised and arguments adduced by the parties, We do not
hesitate to find for the petitioners and rule against the respondent Judge's challenged
order for having been issued with grave abuse of discretion amounting to lack of
jurisdiction. The pertinent portions of the said order reads as follows:
xxx xxx xxx
After a careful and circumspect evaluation of the Complaint, the Court
cannot help but agree with the defendant. For although we believe that
plaintiffs have but the noblest of all intentions, it (sic) fell short of alleging,
with sufficient definiteness, a specific legal right they are seeking to
enforce and protect, or a specific legal wrong they are seeking to prevent
and redress (Sec. 1, Rule 2, RRC). Furthermore, the Court notes that the
Complaint is replete with vague assumptions and vague conclusions
based on unverified data. In fine, plaintiffs fail to state a cause of action in
its Complaint against the herein defendant.
Furthermore, the Court firmly believes that the matter before it, being
impressed with political color and involving a matter of public policy, may
not be taken cognizance of by this Court without doing violence to the
sacred principle of "Separation of Powers" of the three (3) co-equal
branches of the Government.
The Court is likewise of the impression that it cannot, no matter how we
stretch our jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to
cancel all existing timber license agreements in the country and to cease
and desist from receiving, accepting, processing, renewing or approving
new timber license agreements. For to do otherwise would amount to
"impairment of contracts" abhored (sic) by the fundamental law. 11
We do not agree with the trial court's conclusions that the plaintiffs failed to allege with
sufficient definiteness a specific legal right involved or a specific legal wrong committed,
and that the complaint is replete with vague assumptions and conclusions based on
unverified data. A reading of the complaint itself belies these conclusions.
The complaint focuses on one specific fundamental legal right the right to a balanced
and healthful ecology which, for the first time in our nation's constitutional history, is
solemnly incorporated in the fundamental law. Section 16, Article II of the 1987
Constitution explicitly provides:

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Sec. 16. The State shall protect and advance the right of the people to a
balanced and healthful ecology in accord with the rhythm and harmony of
nature.
This right unites with the right to health which is provided for in the
preceding section of the same article:
Sec. 15. The State shall protect and promote the right to health of the
people and instill health consciousness among them.
While the right to a balanced and healthful ecology is to be found under the Declaration
of Principles and State Policies and not under the Bill of Rights, it does not follow that it
is less important than any of the civil and political rights enumerated in the latter. Such a
right belongs to a different category of rights altogether for it concerns nothing less than
self-preservation and self-perpetuation aptly and fittingly stressed by the petitioners
the advancement of which may even be said to predate all governments and
constitutions. As a matter of fact, these basic rights need not even be written in the
Constitution for they are assumed to exist from the inception of humankind. If they are
now explicitly mentioned in the fundamental charter, it is because of the well-founded
fear of its framers that unless the rights to a balanced and healthful ecology and to
health are mandated as state policies by the Constitution itself, thereby highlighting their
continuing importance and imposing upon the state a solemn obligation to preserve the
first and protect and advance the second, the day would not be too far when all else
would be lost not only for the present generation, but also for those to come
generations which stand to inherit nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it the correlative duty to
refrain from impairing the environment. During the debates on this right in one of the
plenary sessions of the 1986 Constitutional Commission, the following exchange
transpired between Commissioner Wilfrido Villacorta and Commissioner Adolfo Azcuna
who sponsored the section in question:
MR. VILLACORTA:
Does this section mandate the State to provide sanctions
against all forms of pollution air, water and noise
pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful (sic)
environment necessarily carries with it the correlative duty of
not impairing the same and, therefore, sanctions may be
provided for impairment of environmental balance. 12

112

The said right implies, among many other things, the judicious management and
conservation of the country's forests.
Without such forests, the ecological or environmental balance would be
irreversiby disrupted.
Conformably with the enunciated right to a balanced and healthful ecology and the right
to health, as well as the other related provisions of the Constitution concerning the
conservation, development and utilization of the country's natural resources, 13 then
President Corazon C. Aquino promulgated on 10 June 1987 E.O. No. 192, 14 Section 4
of which expressly mandates that the Department of Environment and Natural
Resources "shall be the primary government agency responsible for the conservation,
management, development and proper use of the country's environment and natural
resources, specifically forest and grazing lands, mineral, resources, including those in
reservation and watershed areas, and lands of the public domain, as well as the
licensing and regulation of all natural resources as may be provided for by law in order
to ensure equitable sharing of the benefits derived therefrom for the welfare of the
present and future generations of Filipinos." Section 3 thereof makes the following
statement of policy:
Sec. 3. Declaration of Policy. It is hereby declared the policy of the
State to ensure the sustainable use, development, management, renewal,
and conservation of the country's forest, mineral, land, off-shore areas and
other natural resources, including the protection and enhancement of the
quality of the environment, and equitable access of the different segments
of the population to the development and the use of the country's natural
resources, not only for the present generation but for future generations as
well. It is also the policy of the state to recognize and apply a true value
system including social and environmental cost implications relative to
their utilization, development and conservation of our natural resources.
This policy declaration is substantially re-stated it Title XIV, Book IV of the Administrative
Code of 1987, 15specifically in Section 1 thereof which reads:
Sec. 1. Declaration of Policy. (1) The State shall ensure, for the benefit
of the Filipino people, the full exploration and development as well as the
judicious disposition, utilization, management, renewal and conservation
of the country's forest, mineral, land, waters, fisheries, wildlife, off-shore
areas and other natural resources, consistent with the necessity of
maintaining a sound ecological balance and protecting and enhancing the
quality of the environment and the objective of making the exploration,
development and utilization of such natural resources equitably accessible
to the different segments of the present as well as future generations.

113

(2) The State shall likewise recognize and apply a true value system that
takes into account social and environmental cost implications relative to
the utilization, development and conservation of our natural resources.
The above provision stresses "the necessity of maintaining a sound ecological balance
and protecting and enhancing the quality of the environment." Section 2 of the same
Title, on the other hand, specifically speaks of the mandate of the DENR; however, it
makes particular reference to the fact of the agency's being subject to law and higher
authority. Said section provides:
Sec. 2. Mandate. (1) The Department of Environment and Natural
Resources shall be primarily responsible for the implementation of the
foregoing policy.
(2) It shall, subject to law and higher authority, be in charge of carrying out
the State's constitutional mandate to control and supervise the exploration,
development, utilization, and conservation of the country's natural
resources.
Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives which
will serve as the bases for policy formulation, and have defined the powers and
functions of the DENR.
It may, however, be recalled that even before the ratification of the 1987 Constitution,
specific statutes already paid special attention to the "environmental right" of the
present and future generations. On 6 June 1977, P.D. No. 1151 (Philippine
Environmental Policy) and P.D. No. 1152 (Philippine Environment Code) were issued.
The former "declared a continuing policy of the State (a) to create, develop, maintain
and improve conditions under which man and nature can thrive in productive and
enjoyable harmony with each other, (b) to fulfill the social, economic and other
requirements of present and future generations of Filipinos, and (c) to insure the
attainment of an environmental quality that is conducive to a life of dignity and wellbeing." 16 As its goal, it speaks of the "responsibilities of each generation as trustee and
guardian of the environment for succeeding generations." 17 The latter statute, on the
other hand, gave flesh to the said policy.
Thus, the right of the petitioners (and all those they represent) to a balanced and
healthful ecology is as clear as the DENR's duty under its mandate and by virtue of
its powers and functions under E.O. No. 192 and the Administrative Code of 1987 to
protect and advance the said right.
A denial or violation of that right by the other who has the corelative duty or obligation to
respect or protect the same gives rise to a cause of action. Petitioners maintain that the
granting of the TLAs, which they claim was done with grave abuse of discretion, violated
their right to a balanced and healthful ecology; hence, the full protection thereof requires
that no further TLAs should be renewed or granted.
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A cause of action is defined as:

. . . an act or omission of one party in violation of the legal right or rights of
the other; and its essential elements are legal right of the plaintiff,
correlative obligation of the defendant, and act or omission of the
defendant in violation of said legal right. 18
It is settled in this jurisdiction that in a motion to dismiss based on the ground that the
complaint fails to state a cause of action, 19 the question submitted to the court for
resolution involves the sufficiency of the facts alleged in the complaint itself. No other
matter should be considered; furthermore, the truth of falsity of the said allegations is
beside the point for the truth thereof is deemed hypothetically admitted. The only issue
to be resolved in such a case is: admitting such alleged facts to be true, may the court
render a valid judgment in accordance with the prayer in the complaint? 20 InMilitante
vs. Edrosolano, 21 this Court laid down the rule that the judiciary should "exercise the
utmost care and circumspection in passing upon a motion to dismiss on the ground of
the absence thereof [cause of action] lest, by its failure to manifest a correct
appreciation of the facts alleged and deemed hypothetically admitted, what the law
grants or recognizes is effectively nullified. If that happens, there is a blot on the legal
order. The law itself stands in disrepute."
After careful examination of the petitioners' complaint, We find the statements under the
introductory affirmative allegations, as well as the specific averments under the subheading CAUSE OF ACTION, to be adequate enough to show, prima facie, the claimed
violation of their rights. On the basis thereof, they may thus be granted, wholly or partly,
the reliefs prayed for. It bears stressing, however, that insofar as the cancellation of the
TLAs is concerned, there is the need to implead, as party defendants, the grantees
thereof for they are indispensable parties.
The foregoing considered, Civil Case No. 90-777 be said to raise a political question.
Policy formulation or determination by the executive or legislative branches of
Government is not squarely put in issue. What is principally involved is the enforcement
of a right vis-a-vis policies already formulated and expressed in legislation. It must,
nonetheless, be emphasized that the political question doctrine is no longer, the
insurmountable obstacle to the exercise of judicial power or the impenetrable shield that
protects executive and legislative actions from judicial inquiry or review. The second
paragraph of section 1, Article VIII of the Constitution states that:
Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part
of any branch or instrumentality of the Government.
Commenting on this provision in his book, Philippine Political Law, 22 Mr. Justice Isagani
A. Cruz, a distinguished member of this Court, says:
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The first part of the authority represents the traditional concept of judicial
power, involving the settlement of conflicting rights as conferred as law.
The second part of the authority represents a broadening of judicial power
to enable the courts of justice to review what was before forbidden
territory, to wit, the discretion of the political departments of the
government.
As worded, the new provision vests in the judiciary, and particularly the
Supreme Court, the power to rule upon even the wisdom of the decisions
of the executive and the legislature and to declare their acts invalid for
lack or excess of jurisdiction because tainted with grave abuse of
discretion. The catch, of course, is the meaning of "grave abuse of
discretion," which is a very elastic phrase that can expand or contract
according to the disposition of the judiciary.
In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for this Court, noted:
In the case now before us, the jurisdictional objection becomes even less
tenable and decisive. The reason is that, even if we were to assume that
the issue presented before us was political in nature, we would still not be
precluded from revolving it under the expanded jurisdiction conferred upon
us that now covers, in proper cases, even the political question. Article VII,
Section 1, of the Constitution clearly provides: . . .
The last ground invoked by the trial court in dismissing the complaint is the nonimpairment of contracts clause found in the Constitution. The court a quo declared that:
The Court is likewise of the impression that it cannot, no matter how we
stretch our jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to
cancel all existing timber license agreements in the country and to cease
and desist from receiving, accepting, processing, renewing or approving
new timber license agreements. For to do otherwise would amount to
"impairment of contracts" abhored (sic) by the fundamental law. 24
We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a
sweeping pronouncement. In the first place, the respondent Secretary did not, for
obvious reasons, even invoke in his motion to dismiss the non-impairment clause. If he
had done so, he would have acted with utmost infidelity to the Government by providing
undue and unwarranted benefits and advantages to the timber license holders because
he would have forever bound the Government to strictly respect the said licenses
according to their terms and conditions regardless of changes in policy and the
demands of public interest and welfare. He was aware that as correctly pointed out by
the petitioners, into every timber license must be read Section 20 of the Forestry
Reform Code (P.D. No. 705) which provides:

116

. . . Provided, That when the national interest so requires, the President

may amend, modify, replace or rescind any contract, concession, permit,
licenses or any other form of privilege granted herein . . .
Needless to say, all licenses may thus be revoked or rescinded by executive
action. It is not a contract, property or a property right protested by the due
process clause of the Constitution. In Tan vs. Director of Forestry, 25 this Court
held:
. . . A timber license is an instrument by which the State regulates the
utilization and disposition of forest resources to the end that public welfare
is promoted. A timber license is not a contract within the purview of the
due process clause; it is only a license or privilege, which can be validly
withdrawn whenever dictated by public interest or public welfare as in this
case.
A license is merely a permit or privilege to do what otherwise would be
unlawful, and is not a contract between the authority, federal, state, or
municipal, granting it and the person to whom it is granted; neither is it
property or a property right, nor does it create a vested right; nor is it
taxation (37 C.J. 168). Thus, this Court held that the granting of license
does not create irrevocable rights, neither is it property or property rights
(People vs. Ong Tin, 54 O.G. 7576).
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive
Secretary: 26
. . . Timber licenses, permits and license agreements are the principal
instruments by which the State regulates the utilization and disposition of
forest resources to the end that public welfare is promoted. And it can
hardly be gainsaid that they merely evidence a privilege granted by the
State to qualified entities, and do not vest in the latter a permanent or
irrevocable right to the particular concession area and the forest products
therein. They may be validly amended, modified, replaced or rescinded by
the Chief Executive when national interests so require. Thus, they are not
deemed contracts within the purview of the due process of law clause
[See Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also,
Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983, 125
SCRA 302].
Since timber licenses are not contracts, the non-impairment clause, which reads:
Sec. 10. No law impairing, the obligation of contracts shall be passed.
cannot be invoked.

117

27

In the second place, even if it is to be assumed that the same are contracts, the instant
case does not involve a law or even an executive issuance declaring the cancellation or
modification of existing timber licenses. Hence, the non-impairment clause cannot as
yet be invoked. Nevertheless, granting further that a law has actually been passed
mandating cancellations or modifications, the same cannot still be stigmatized as a
violation of the non-impairment clause. This is because by its very nature and purpose,
such as law could have only been passed in the exercise of the police power of the
state for the purpose of advancing the right of the people to a balanced and healthful
ecology, promoting their health and enhancing the general welfare. In Abe vs. Foster
Wheeler
Corp. 28 this Court stated:
The freedom of contract, under our system of government, is not meant to
be absolute. The same is understood to be subject to reasonable
legislative regulation aimed at the promotion of public health, moral, safety
and welfare. In other words, the constitutional guaranty of non-impairment
of obligations of contract is limited by the exercise of the police power of
the State, in the interest of public health, safety, moral and general
welfare.
The reason for this is emphatically set forth in Nebia vs. New York, 29 quoted
in Philippine American Life Insurance Co. vs. Auditor General, 30 to wit:
Under our form of government the use of property and the making of
contracts are normally matters of private and not of public concern. The
general rule is that both shall be free of governmental interference. But
neither property rights nor contract rights are absolute; for government
cannot exist if the citizen may at will use his property to the detriment of
his fellows, or exercise his freedom of contract to work them harm. Equally
fundamental with the private right is that of the public to regulate it in the
common interest.
In short, the non-impairment clause must yield to the police power of the state.

31

Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause
could apply with respect to the prayer to enjoin the respondent Secretary from receiving,
accepting, processing, renewing or approving new timber licenses for, save in cases
of renewal, no contract would have as of yet existed in the other instances. Moreover,
with respect to renewal, the holder is not entitled to it as a matter of right.
WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED,
and the challenged Order of respondent Judge of 18 July 1991 dismissing Civil Case
No. 90-777 is hereby set aside. The petitioners may therefore amend their complaint to
implead as defendants the holders or grantees of the questioned timber license
agreements.

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No pronouncement as to costs.
SO ORDERED.

119