LAND TITLES AND DEEDS
CASE DIGESTS
INTERNATIONAL HARDWOOD
AND VENEER COMPANY OF THE
PHILIPPINES v. UP
August 13, 1991
Davide, Jr., J
Luciano, Noel Christian O.
SUMMARY: International Hardwood was the grantee of a License
Agreement effective until 1985. On 1961, Proc. 791 segregates from
the public domain parcels of land and reserved them for use by UP.
The land subject of Hardwoods timber concession was covered by
said Proclamation. On 1964, RA 3990 was enacted fully ceding
ownership over the land described in Proc. 791 to UP. UP sought to
collect forestry charges from Hardwood and demanded that the latter
subject itself to the control and supervision of UP. Hardwood resisted
and filed a petition for declaratory relief.
The SC held that UP has the right to enjoy and dispose of the thing
without other limitations than those established by law. In this case,
that exception is made for Hardwood as licensee or grantee of the
concession, which has been given the license to cut, collect, and
remove timber from the area ceded and transferred to UP until
February 1985. However, Hardwood has the correlative duty and
obligation to pay the forest charges or royalties to the new owner, UP
DOCTRINE: The Philippines relinquished and conveyed its rights
over the area to UP. Thus, UP became the owner of the land, subject
only to existing concession. Since there is an express proviso on
existing concessions, this means that the right of Hardwood as a
timber licensee must not be affected, impaired, or diminished; it must
be respected BUT insofar as the Government is concerned, all its
rights as grantor of the license were effectively assigned, ceded and
conveyed to U.P
Having been effectively segregated and removed from the public
domain or from a public forest and, in effect, converted into a
registered private woodland, the authority and jurisdiction of the
Bureau of Forestry over it were likewise terminated. BIR also lost
authority to measure the timber cut from the subject area and to
collect forestry charges and other fees thereon because of this full
transfer.
FACTS: International Hardwood is engaged in the manufacture,
processing, and exportation of plywood. It was granted by the
Government an exclusive license for 25 years expiring on Feb 1985 to
cut, collect and remove timber from a timber land in the provinces of
Quezon and Laguna.
Sometime on 1961, during the effectivity of the License Agreement, the
President issued Executive Proclamation No. 791. Under this
proclamation, certain parcels of land of the public domain in Quezon
and Laguna were withdrawn from sale or settlement and were reserved
for the UP College of Agriculture as experiment station for the college.
On 1964, still during the effectivity of the License Agreement, RA 3990
was enacted establishing a central experiment station for UP for the
colleges of agriculture, veterinary medicine, arts and sciences. Under
RA 3990 the land described in Proc. 791 was fully cede to UP, subject to
any existing concessions, if any.
On the strength of RA 3990, UP demanded from Hardwood:
1. Payment of forest charges due and demandable under the
License Agreement to UP, instead of the BIR
2. That the sale of any timber felled or cut by Hardwood within
the land described in RA 3990 be performed by UP personnel
However, despite repeated demands, Hardwood refused to accede to
UPs demands.
International Hardwood filed before the CFI a petition for declaratory
relief seeking a declaration that UP does NOT have the right to:
1. Supervise and regulate the cutting and removal of timber and
other forest products,
2. Scale, measure and seal the timber cut and/or
3. Collect forest charges, reforestation fees and royalties from
Hardwood and/or

4. Impose any other duty or burden upon the latter in that
portion of its concession covered by a License Agreement,
ceded in full ownership to UP by RA 3990
Hardwood also prayed for an injunction and P100,000 in
damages.
UP filed its Answer:
1. Interposed affirmative defenses of improper venue and that the
petition states no cause of action
2. Set up counterclaim for payment of forest charges on the forest
products cut and felled within the area ceded to UP under RA
3990
CFI DECISION: CFI rendered judgment in favor of Hardwood:
1. RA 3990 does not empower UP to scale, measure, and seal the
timber cut by International Hardwood within the tract of land
and collect the corresponding charges prescribed by NIRC
2. Dismissed UPs counterclaim
CA DECISION: Elevated the case to the SC as the case involves purely
legal questions.
ISSUE: WON UP as owner had the right to scale, measure, and seal the
timber cut by Hardwood and collect forestry charges thereon.
HELD: YES, by virtue of the full cession of ownership to UP.
I. Arguments of the Parties
A. UP asserts that:
1. Under RA 3990, the Philippines may effect collection of
forest charges through UP because the License
Agreement does not expressly provide that they be
paid to the BIR
2. UP is vested with administrative jurisdiction over and
has ownership over the land in question. Thus, it
acquired full control and benefit of the timber and
other resources in the area
3. UP is entitled to the income derived from the tract of
land ceded to it by RA 3990
LAND TITLES AND DEEDS
CASE DIGESTS
4.UP is duty bound to operate and maintain a central
experiment station
5. Supervision of the License Agreement in favor of
Hardwood by UP was intended by RA 3990
6. BIR and the Bureau Of Forestry issued specific rulings
recognizing the authority of UP to collect royalties and
charges
B. Hardwood contends:
1. UP has not been granted by RA 3990 the authority to
collect forest charges or the authority to supervise the
operation of the timber concession
2. Cession of the land was expressly made subject to any
concession, if any
3. Rulings of BIR and Bureau of Forestry are incorrect
4. It has acquired vested right to operate the timber
concession under the supervision and control of the
Bureau of Forestry
II. Discussion on the effect of the laws
A. The laws:
1. Under Proc. 791 a parcel of land of the public domain
was withdrawn from sale or settlement and was
reserved for the UP College of Agriculture as
experiment station, subject to private rights, if any
2. Under RA 3990 the very same lot referred to in Proc.
791 was ceded fully to UP, subject to any existing
concessions, if any
B. Effect of the laws on the concession of Hardwood:
1. When RA 3990 ceded the property to UP, the
Philippines completely removed it from the public
domain and segregated the areas covered by the
timber license from the public forest
2. The Philippines relinquished and conveyed its rights
over the area to UP
a. Thus, UP became the owner of the land, subject
only to existing concession
3. Since there is an express proviso on existing
concessions, this means that the right of Hardwood as
a timber licensee must not be affected, impaired, or
diminished; it must be respected
 LAND TITLES AND DEEDS
CASE DIGESTS

4. BUT insofar as the Government is concerned, all its

rights as grantor of the license were effectively
assigned, ceded and conveyed to UP
a. Having been effectively segregated and removed
from the public domain or from a public forest
and, in effect, converted into a registered private
woodland, the authority and jurisdiction of the
Bureau of Forestry over it were likewise
terminated
b. BIR also lost authority to measure the timber cut
from the subject area and to collect forestry
charges and other fees thereon because of this full
transfer.

III. As owner, UP has the right to enjoy and dispose of the thing
without other limitations than those established by law. In this
case, that exception is made for Hardwood as licensee or
grantee of the concession, which has been given the license to
cut, collect, and remove timber from the area ceded and
transferred to UP until February 1985.
A. However, Hardwood has the correlative duty and
obligation to pay the forest charges or royalties to the new
owner, UP
B. Thus, the charges should not be paid to the Government
but to UP.
C. It follows then that respondent UP is entitled to supervise,
through its duly appointed personnel, the logging, felling
and removal of timber within the area covered by R.A. No.
3990

DISPOSITIVE: Judgment is rendered reversing the decision of the trial

court. Thus:
1. Forest charges due from and payable by petitioner for timber
cut pursuant to its License Agreement within the area ceded
and transferred to UP pursuant to R.A. No. 3990 shall be paid to
UP;
2. UP is entitled to supervise, through its duly appointed
personnel, the logging, felling and removal of timber within the
aforesaid area covered by R.A. No. 3990.