Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 150824 February 4, 2008

LAND BANK OF THE PHILIPPINES, petitioner,

vs.
REPUBLIC OF THE PHILIPPINES, represented by the Director of Lands, respondent.

DECISION

REYES, R.T., J.:

FOREST lands are outside the commerce of man and unsusceptible of private appropriation in any form. 1

It is well settled that a certificate of title is void when it covers property of public domain classified as forest,
timber or mineral lands. Any title issued covering non-disposable lots even in the hands of an alleged innocent
purchaser for value shall be cancelled.2 The rule must stand no matter how harsh it may seem. Dura lex sed
lex.3 Ang batas ay maaaring mahigpit subalit ito ang mananaig.

Before Us is a petition for review on certiorari under Rule 45 filed by petitioner Land Bank of the Philippines (LBP)
appealing the: (1) Decision4 of the Court of Appeals (CA), dated August 23, 2001, in CA-G.R. CV No. 64121
entitled "Republic of the Philippines, represented by the Director of Lands v. Angelito Bugayong, et al."; and (2)
Resolution5of the same Court, dated November 12, 2001, denying LBP's motion for reconsideration.

The CA affirmed the Decision6 of the Regional Trial Court (RTC), dated July 9, 1996, declaring null and void
Original Certificate of Title (OCT) No. P-2823, as well as other titles originating from it, on the ground that at the
time it was issued, the land covered was still within the forest zone.7

The Facts

OCT No. P-2823 was issued on September 26, 1969 in favor of one Angelito C. Bugayong. Said mother title
emanated from Sales Patent No. 4576 issued in Bugayong's name on September 22, 1969. 8 It covered a parcel of
land located in Bocana, Kabacan, Davao City, with an area of 41,276 square meters. It was originally identified
and surveyed as Lot No. 4159 under Plan SI-(VIII-1), 328-D. Marshy and under water during high tide, it used to
be a portion of a dry river bed near the mouth of Davao River.9

The land was initially subdivided into four lots, viz.: Lot Nos. 4159-A, 4159-B, 4159-C and 4159-D under
Subdivision Plan (LRC) Psd-139511 approved by the Commissioner of Land Registration on April 23,
1971.10 Consequently, OCT No. P-2823 was cancelled and new Transfer Certificates of Title (TCTs) replaced it, all
in the name of Bugayong.

Bugayong sold all of the four lots to different persons. Lot No. 4159-A, which was then under TCT No. T-32769,
was sold to spouses Lourdes and Candido Du. Accordingly, said TCT was cancelled and replaced by TCT No. T-
42166 in the name of spouses Du.11

Afterwards, the spouses Du further caused the subdivision of the land covered by their TCT No. T-42166 into two
(2) lots. They sold one of said lots to spouses Felix and Guadalupe Dayola, who were issued TCT No. T-45586. The
other remaining lot, registered under TCT No. T-45587, was retained by and registered in the names of spouses
Du.12

Subsequently, Du spouses' TCT No. T-45587 was cancelled and was replaced by TCT No. T-57348 registered in the
name of Lourdes Farms, Inc. subject of this case.13 Lourdes Farms, Inc. mortgaged this property to petitioner LBP
on April 14, 1980.14

The validity of OCT No. P-2823, as well as its derivative TCTs, remained undisturbed until some residents of the
land it covered, particularly those along Bolton Diversion Road, filed a formal petition before the Bureau of Lands
on July 15, 1981.15

Investigation and ocular inspection were conducted by the Bureau of Lands to check the legitimacy of OCT No. P-
2823. They found out that: (1) at the time Sales Patent No. 4576 was issued to Bugayong, the land it covered was
still within the forest zone, classified under Project No. 1, LC-47 dated August 6, 1923; it was released as alienable
and disposable land only on March 25, 1981, pursuant to BFD Administrative Order No. 4-1585 and to the
provisions of Section 13, Presidential Decree (P.D.) No. 705;16 (2) the land was marshy and covered by sea water
during high tide; and (3) Bugayong was never in actual possession of the land.17

In view of the foregoing findings, the Bureau of Lands resolved that the sales patent in favor of Bugayong was
improperly and illegally issued and that the Director of Lands had no jurisdiction to dispose of the subject land.18

Upon recommendation of the Bureau of Lands, the Republic of the Philippines represented by the Director of
Lands, through the Office of the Solicitor General (OSG), instituted a complaint19 before the RTC in Davao, Branch
15, for the cancellation of title/patent and reversion of the land covered by OCT No. P-2823 into the mass of public
domain. The complaint, as amended,20 was filed against Bugayong and other present owners and mortgagees of
the land, such as Lourdes Farms, Inc. and the latter's mortgagee, petitioner LBP.

In its answer with cross-claim,21 LBP claimed that it is a mortgagee in good faith and for value. It prayed that
should TCT No. T-57348 of Lourdes Farms, Inc. be annulled by the court, Lourdes Farms, Inc. should be ordered
to pay its outstanding obligations to LBP or to provide a new collateral security.22

RTC Judgment

Eventually, the RTC rendered its judgment23 on July 9, 1996 determining that:

x x x The mistakes and the flaws in the granting of the title were made by the Bureau of Lands personnel
more particularly the Director of Lands who is the Officer charged with the following the provisions of the
Public Land Law. x x x.

It is clear that the mother Title, OCT–P-2823 in the name of defendant Bugayong was issued at a time
when the area was not yet released by the Bureau of Forestry to the Bureau of Lands.

The area covered by OCT No. P. 2823 was not yet declared by the Bureau of Lands alienable and
disposable when the said OCT was issued. The subdivision of the lot covered by OCT P-2823 into 4 lots
covered by TCT Nos. T-32768, 32769, 32756 and 32771 did not cure the defect. x x x.24

The RTC explained that titles issued to private parties by the Bureau of Lands are void ab initio if the land covered
by it is a forest land.25 It went further by stating that if the mother title is void, all titles arising from the mother
title are also void.26 It thus ruled in favor of the Republic with a fallo reading:

IN VIEW WHEREOF, judgment is hereby rendered declaring Original Certificate of Title No. P-2823 issued
in the name of defendant Angelito Bugayong null and void. The following Transfer Certificate of Titles
which were originally part of the lot covered by O.C.T. No. P-2823 are likewise declared void:

1.A. TCT No. 57348 in the name of defendant Lourdes Farms mortgaged to defendant Land Bank.

B. TCT No. 84749 in the name of defendants Johnny and Catherine Du mortgaged to defendant
Development Bank of the Philippines.

C. TCT No. 37386 in the name of defendants spouses Pahamotang mortgaged to defendant
Lourdes Du mortgaged with defendant Allied Bank.

E. TCT Nos. 68154 and 32768 in the names of defendants/spouses Maglana Santamaria.

2. All private defendants shall give to the Davao City Register of Deeds their titles, who shall
cancel the Transfer Certificate of Titles mentioned in paragraph number one.

3. Lot No. 4159, Plan SI (VIII-1) 328-D covered by O.C.T. P-2823 is hereby REVERTED to the
mass of public domain.

SO ORDERED.27 (Underscoring supplied)

Disagreeing with the RTC judgment, LBP appealed to the CA on October 31, 1996. It asserted in its appellant's
brief28 that it validly acquired mortgage interest or lien over the subject property because it was an innocent
mortgagee for value and in good faith.29 It also emphasized that it is a government financial institution.

CA Disposition
In a Decision30 dated August 23, 2001, the CA ruled against the appellants,31 disposing thus:

WHEREFORE, premises considered, the present appeals are hereby DISMISSED and the Decision of the
trial court in Civil Case No. 17516 is hereby AFFIRMED.32

The CA confirmed that the "evidence for the plaintiff clearly established that the land covered by OCT No. P-2823
issued pursuant to a sales patent granted to defendant Angelito C. Bugayong was still within the forestal zone at
the time of the grant of the said patent."33 It explained:

Forest lands or forest reserves, are incapable of private appropriation and possession thereof, however
long, cannot convert them into private properties. This is premised on the Regalian Doctrine enshrined not
only in the 1935 and 1973 Constitutions but also in the 1987 Constitution. Our Supreme Court has upheld
this rule consistently even in earlier cases. It has also been held that whatever possession of the
land prior to the date of release of forested land as alienable and disposable cannot be credited to the 30-
year requirement (now, since June 12, 1945) under Section 48(b) of the Public Land Act. It is only from
that date that the period of occupancy for purposes of confirmation of imperfect or incomplete title may be
counted. Since the subject land was declared as alienable and disposable only on March 25, 1981,
appellants and their predecessors-in-interest could not claim any vested right thereon prior to its release
from public forest zone.

The inclusion of forest land in a title, "whether title be issued during the Spanish regime or under the
Torrens system, nullifies the title." It is, of course, a well-recognized principle that the Director of Lands
(now Land Management Bureau) is bereft of any jurisdiction over public forest or any lands not capable of
registration. It is the Bureau of Forestry that has jurisdiction and authority over the demarcation,
protection, management, reproduction, occupancy and use of all public forests and forest reservations and
over the granting of licenses for the taking of products therefrom. And where the land applied for is part of
the public forest, the land registration court acquires no jurisdiction over the land, which is not yet
alienable and disposable.

Thus, notwithstanding the issuance of a sales patent over the subject parcel of land, the State may still
take action to have the same land reverted to the mass of public domain and the certificate of title
covering said forest land declared null and void for having been improperly and illegally issued. Titles
issued over non-alienable public lands have been held as void ab initio. The defense of indefeasibility of
title issued pursuant to such patent does not lie against the State. Public land fraudulently included in
patents or certificates of title may be recovered or reverted to the State in accordance with Section 101 of
the Public Land Act. In such cases, prescription does not lie against the State. Likewise, the government is
not estopped by such fraudulent or wrongful issuance of a patent over public forest land inasmuch as the
principle of estoppel does not operate against the Government for the acts of its agents. x x x.34 (Citations
omitted)

With respect to LBP's contention35 that it was a mortgagee in good faith and for value, the CA declared,
citing Republic v. Reyes36 that: "mortgagees of non-disposable lands where titles thereto were erroneously issued
acquire no protection under the land registration law. Appellants-mortgagees' proper recourse therefore is to
pursue their claims against their respective mortgagors and debtors."37

When LBP's motion for reconsideration was denied, it resorted to the petition at bar.

Issues

LBP seeks the reversal of the CA disposition on the following grounds –

A.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE PETITIONER LAND BANK OF THE
PHILIPPINES' MORTGAGE RIGHT AND INTEREST AS AN INNOCENT PURCHASER (MORTGAGEE) FOR VALUE
AND IN GOOD FAITH OVER THE SUBJECT LAND COVERED BY TCT NO. T-57348 IS VALID AND
SUBSISTING IN ACCORDANCE WITH THE LAW AND EXISTING JURISPRUDENCE IN OUR COUNTRY.

B.

THE COURT OF APPEALS ERRED IN NOT FINDING PETITIONER LAND BANK OF THE PHILIPPINES'
MORTGAGE RIGHT AND INTEREST OVER THE SUBJECT LAND AS VALID AND SUBSISTING UNDER THE
CONSTITUTIONAL GUARANTEE OF NON-IMPAIRMENT OF OBLIGATION OF CONTRACTS.

C.
 THE COURT OF APPEALS ERRED IN NOT AWARDING TO PETITIONER LAND BANK OF THE PHILIPPINES THE
RELIEF PRAYED FOR UNDER ITS CROSS-CLAIM AGAINST CO-DEFENDANT LOURDES FARMS, INC., THAT
IS, ORDERING SAID CO-DEFENDANT LOURDES FARMS, INC. TO PAY ITS OUTSTANDING OBLIGATION TO
THE LAND BANK COVERED BY THE SUPPOSED NULL AND VOID TCT NO. T-57348, OR TO PROVIDE A
SUBSTITUTE COLLATERAL IN LIEU OF SAID TCT NO. T-57348.38(Underscoring supplied)

Our Ruling

LBP has no valid and subsisting mortgagee's

interest over the land covered by TCT No. T-57348.

It has been established and admitted by LBP that: (1) the subject land mortgaged to it by Lourdes Farms, Inc. is
covered by TCT No. T-57348; and (2) the said TCT is derived from OCT No. P-2823 issued to Bugayong.39

It was further ascertained by the courts below that at the time OCT No. P-2823 was issued to Bugayong on
September 26, 1969, the land it covered was still within the forest zone. It was declared as alienable and
disposable only on March 25, 1981.40

Despite these established facts, LBP argues that its alleged interest as mortgagee of the subject land covered by
TCT No. T-57348 must be respected. It avers that TCT No. T-57348 is a Torrens title which has no written
indications of defect or vice affecting the ownership of Lourdes Farms, Inc. Hence, it posits that it was not and
could not have been required to explore or go beyond what the title indicates or to search for defects not indicated
in it.

LBP cites cases where the Court ruled that a party is not required to explore further than what the Torrens title
upon its face indicates in quest of any hidden defect of an inchoate right that may subsequently defeat his right to
it; and that a bank is not required before accepting a mortgage to make an investigation of the title of the
property being given as security. LBP submits that its right as a mortgagee is binding against the whole world and
may not be disregarded. 41

It further argues that review or reopening of registration is proscribed, as the title has become incontrovertible
pursuant to Section 32 of P.D. No. 1529; and that its mortgage rights and interest over the subject land is
protected by the constitutional guarantee of non-impairment of contracts.42

The contention that LBP has an interest over the subject land as a mortgagee has no merit. The mortgagor,
Lourdes Farms, Inc. from which LBP supposedly obtained its alleged interest has never been the owner of the
mortgaged land. Acquisition of the subject land by Lourdes Farms, Inc. is legally impossible as the land was
released as alienable and disposable only on March 25, 1981. Even at present, no one could have possessed the
same under a claim of ownership for the period of thirty (30) years required under Section 48(b) of
Commonwealth Act No. 141, as amended.43 Hence, LBP acquired no rights over the land.

Under Article 2085 of the Civil Code, it is essential that the mortgagor be the absolute owner of the thing
mortgaged, to wit:

ARTICLE 2085. The following requisites are essential to the contracts of pledge and mortgage:

(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged;

(3) That the persons constituting the pledge or mortgage have the free disposal of their property, and in
the absence thereof, that they be legally authorized for the purpose. (Emphasis ours)

Since Lourdes Farms, Inc. is not the owner of the land, it does not have the capacity to mortgage it to LBP. In De
la Cruz v. Court of Appeals,44 the Court declared:

While it is true that the mortgagees, having entered into a contract with petitioner as mortgagor, are
estopped from questioning the latter's ownership of the mortgaged property and his concomitant capacity
to alienate or encumber the same, it must be considered that, in the first place, petitioner did not possess
such capacity to encumber the land at the time for the stark reason that it had been classified as a forest
land and remained a part of the patrimonial property of the State. Assuming, without admitting, that the
mortgagees cannot subsequently question the fact of ownership of petitioner after having dealt with him in
that capacity, still, petitioner was never vested with the proprietary power to encumber the property. In
fact, even if the mortgagees continued to acknowledge petitioner as the owner of the disputed land, in the
eyes of the law, the latter can never be presumed to be owner.
As correctly pointed out by the OSG, mortgagees of non-disposable lands, titles to which were erroneously issued,
acquire no protection under the Land Registration Law.45

Even assuming that LBP was able to obtain its own TCT over the property by means of its mortgage contract with
Lourdes Farms, Inc., the title must also be cancelled as it was derived from OCT No. P-2823 which was not validly
issued to Bugayong. Forest lands cannot be owned by private persons. It is not registerable whether the title is a
Spanish title or a Torrens title.46 It is well settled that a certificate of title is void when it covers property of public
domain classified as forest or timber or mineral land. Any title issued covering non-disposable lots even in the
hands of an alleged innocent purchaser for value shall be cancelled.47

Moreover, the Court has already addressed the same issue in its Resolution of November 14, 2001 on the petition
filed by the Philippine National Bank (PNB) in G. R. No. 149568 entitled "Philippine National Bank v. Republic of the
Philippines represented by the Director of Lands," which also appealed the subject CA decision. PNB, like LBP, is
also a mortgagee of another derivative TCT of the same OCT No. 2823. Said resolution reads:

On September 22, 1969, Angelito C. Bugayong was issued a sales patent covering a 41,276 square meter
parcel of land in Bocana, Barrio Kabacan, Davao City by the Bureau of Lands. On the basis of the sales
patent, the Register of Deeds of Davao City issued OCT No. P-2823 to Bugayong. Bugayong later
subdivided the land into four lots, one of which (Lot No. 4159-B covered by TCT No. T-32770) was sold by
him to the spouses Reynaldo Rogacion and Corazon Pahamotang. After obtaining TCT No. T-37786 in their
names, the spouses mortgaged the lot to the Philippine National Bank (PNB). As they defaulted in the
payment of their loan, the PNB foreclosed the property and purchased it at the foreclosure sale as the
highest bidder. Eventually, the PNB consolidated its title.

Sometime in 1981, upon the petition of the residents of the land, the Bureau of Lands conducted an
investigation into the sales patent issued in favor of Angelito C. Bugayong and found the sales patent to
have been illegally issued because (1) the land was released as alienable and disposable only on March 25,
1981; previous to that, the land was within the forest zone; (2) the land is covered by sea water during
high tide; and (3) the patentee, Angelito C. Bugayong, had never been in actual possession of the land.

Based on this investigation, the government instituted the present suit in 1987 for cancellation of
title/patent and reversion of the parcel of land against Angelito C. Bugayong, the Rogacion spouses, and
the PNB, among others.

On July 6, 1996, the trial court rendered a decision declaring OCT No. P-2823 and all titles derived
therefrom null and void and ordering reversion of the subject property to the mass of the public domain.
On appeal, the Court of Appeals affirmed the trial court's decision. Hence, this petition.

First. Petitioner contends that it had a right to rely on TCT No. T-37786 showing the mortgagors Reynaldo
Rogacion and Corazon Pahamotang's ownership of the property.

The contention is without merit. It is well settled that a certificate of title is void when it covers property of
public domain classified as forest or timber or mineral lands. Any title issued covering non-disposable lots
even in the hands of an alleged innocent purchaser for value shall be cancelled (Republic v. Reyes, 155
SCRA 313 (1987)).

(Republic v. Court of Appeals, 148 SCRA 480 (1987)). In this case, petitioner does not dispute that its
predecessor-in-interest, Angelito C. Bugayong, had the subject property registered in his name when it
was forest land. Indeed, even if the subject property had been eventually segregated from the forest zone,
neither petitioner nor its predecessors-in-interest could have possessed the same under claim of
ownership for the requisite period of thirty (30) years because it was released as alienable and disposable
only on March 25, 1981.

Second. Petitioner's contention that respondent's action for reversion is barred by prescription for having
been filed nearly two decades after the issuance of Bugayong's sales patent is likewise without merit.
Prescription does not lie against the State for reversion of property which is part of the public forest or of a
forest reservation registered in favor of any party. Public land registered under the Land Registration Act
may be recovered by the State at any time (Republic v. Court of Appeals, 258 SCRA 223 (1996)).48

Contrary to the argument of LBP, since the title is void, it could not have become incontrovertible. Even
prescription may not be used as a defense against the Republic. On this aspect, the Court in Reyes v. Court of
Appeals,49 citing Republic v. Court of Appeals,50 held:

Petitioners' contention that the government is now estopped from questioning the validity of OCT No. 727
issued to them, considering that it took the government 45 years to assail the same, is erroneous. We
have ruled in a host of cases that prescription does not run against the government. In point is the case
of Republic v. Court of Appeals, wherein we declared:
 And in so far as the timeliness of the action of the Government is concerned, it is basic that
prescription does not run against the State x x x. The case law has also been:

When the government is the real party in interest, and is proceeding mainly to assert its
own rights and recover its own property, there can be no defense on the ground of laches
or limitation x x x.

Public land fraudulently included in patents or certificates of title may be recovered or

reverted to the State in accordance with Section 101 of the Public Land Act. Prescription
does not lie against the State in such cases for the Statute of Limitations does not run
against the State. The right of reversion or reconveyance to the State is not barred by
prescription. (Emphasis ours)

There is no impairment of contract but a valid

exercise of police power of the State.

The constitutional guarantee of non-impairment of contracts may not likewise be used by LBP to validate its
interest over the land as mortgagee. The State's restraint upon the right to have an interest or ownership over
forest lands does not violate the constitutional guarantee of non-impairment of contracts. Said restraint is a valid
exercise of the police power of the State. As explained by the Court in Director of Forestry v. Muñoz:51

The view this Court takes of the cases at bar is but in adherence to public policy that should be followed
with respect to forest lands. Many have written much, and many more have spoken, and quite often,
about the pressing need for forest preservation, conservation, protection, development and reforestation.
Not without justification. For, forests constitute a vital segment of any country's natural resources. It is of
common knowledge by now that absence of the necessary green cover on our lands produces a number of
adverse or ill effects of serious proportions. Without the trees, watersheds dry up; rivers and lakes which
they supply are emptied of their contents. The fish disappear. Denuded areas become dust bowls. As
waterfalls cease to function, so will hydroelectric plants. With the rains, the fertile topsoil is washed away;
geological erosion results. With erosion come the dreaded floods that wreak havoc and destruction to
property – crops, livestock, houses and highways – not to mention precious human lives. Indeed, the
foregoing observations should be written down in a lumberman's decalogue.

Because of the importance of forests to the nation, the State's police power has been wielded to regulate
the use and occupancy of forest and forest reserves.

To be sure, the validity of the exercise of police power in the name of the general welfare cannot be
seriously attacked. Our government had definite instructions from the Constitution's preamble to "promote
the general welfare." Jurisprudence has time and again upheld the police power over individual rights,
because of the general welfare. Five decades ago, Mr. Justice Malcolm made it clear that the "right of the
individual is necessarily subject to reasonable restraint by general law for the common good" and that the
"liberty of the citizen may be restrained in the interest of public health, or of the public order and safety,
or otherwise within the proper scope of the police power." Mr. Justice Laurel, about twenty years later,
affirmed the precept when he declared that "the state in order to promote the general welfare may
interfere with personal liberty, with property, and with business and occupations" and that "[p]ersons and
property may be subjected to all kinds of restraints and burdens, in order to secure the general comfort,
health, and prosperity of the state."Recently, we quoted from leading American case, which pronounced
that "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," and that, therefore, "[e]qually fundamental with the private right is that of the public to
regulate it in the common interest." (Emphasis ours and citations omitted)

In Edu v. Ericta,52 the Court defined police power as the authority of the state to enact legislation that may
interfere with personal liberty or property in order to promote the general welfare. It is the power to prescribe
regulations to promote the health, morals, peace, education, good order or safety, and general welfare of the
people. It is that inherent and plenary power of the State which enables it to prohibit all things hurtful to the
comfort, safety and welfare of society.53 It extends to all the great public needs and is described as the most
pervasive, the least limitable and the most demanding of the three inherent powers of the State, far outpacing
taxation and eminent domain.54 It is a ubiquitous and often unwelcome intrusion. Even so, as long as the activity
or the property has some relevance to the public welfare, its regulation under the police power is not only proper
but necessary.55

Preservation of our forest lands could entail intrusion upon contractual rights as in this case but it is justified by
the Latin maxims Salus populi est suprema lex and Sic utere tuo ut alienum non laedas, which call for the
subordination of individual interests to the benefit of the greater number. 56
While We sympathize with petitioner, We nonetheless cannot, in this instance, yield to compassion and equity. The
rule must stand no matter how harsh it may seem.57

We cannot resolve the cross-claim for lack of

factual basis. The cross-claim must be remanded
to the RTC for further proceedings.

LBP filed a cross-claim against Lourdes Farms, Inc. before the RTC.58 The cross-claim is for the payment of cross-
defendant Lourdes Farms, Inc.'s alleged obligation to LBP or its submission of a substitute collateral security in lieu
of the property covered by TCT No. T-57348.

However, the records do not show that Lourdes Farms, Inc. was required by the RTC to file an answer to the
cross-claim. Likewise, Lourdes Farms, Inc. was not notified of the proceedings before the CA. It was not also made
a party to this petition.

LPB now contends that the CA erred in not granting its cross-claim against Lourdes Farms, Inc. We are thus
confronted with the question: Should We now order Lourdes Farms, Inc. to comply with the demand of LBP?

We rule in the negative. It may be true that Lourdes Farms, Inc. still has an obligation to LBP but We cannot make
a ruling regarding the same for lack of factual basis. There is no evidence-taking on the cross-claim. No evidence
was adduced before the RTC or the CA regarding it. No factual finding or ruling was made by the RTC or the CA
about it.

It bears stressing that in a petition for review on certiorari, the scope of this Court's judicial review of decisions of
the CA is generally confined only to errors of law. Questions of fact are not entertained.59

Moreover, the failure to make a ruling on the cross-claim by the RTC was not assigned as an error in LBP's
appellant's brief60 before the CA. Hence, the CA cannot be faulted for not making a ruling on it.

As held in De Liano v. Court of Appeals,61 appellant has to specify in what aspect of the law or the facts the trial
court erred. The conclusion, therefore, is that appellant must carefully formulate his assignment of errors. Its
importance cannot be underestimated, as Section 8, Rule 51 of the Rules of Court will attest:

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.

Apparently, the cross-claim was taken for granted not only by the RTC but also by LBP. The cross-claim was not
included as a subject or issue in the pre-trial order and instead of asking that the same be heard, LBP filed a
motion62 to submit the main case for resolution. The main case was thus resolved by the RTC without touching on
the merits of the cross-claim.

On the other hand, while the CA did not make a categorical ruling on LBP's cross-claim, it pointed out that: (1) as
found by the RTC, there is a mortgage contract between LBP and Lourdes Farms, Inc., with LBP as mortgagee and
Lourdes Farms, Inc. as mortgagor; and (2) LBP's proper recourse is to pursue its claim against Lourdes Farms,
Inc.63

The CA thus impliedly ruled that LBP's cross-claim should not be included in this case. Instead of making a ruling
on the same, it recommended that LBP pursue its claim against Lourdes Farms, Inc.

All told, although the relationship between LBP and Lourdes Farms, Inc. as mortgagee and mortgagor was
established, the cross-claim of LBP against Lourdes Farms, Inc. was left unresolved.

The Court is not in a position to resolve the cross-claim based on the records. In order for the cross-claim to be
equitably decided, the Court, not being a trier of facts, is constrained to remand the case to the RTC for further
proceedings. Remand of the case for further proceedings is proper due to absence of a definitive factual
determination regarding the cross-claim.64

WHEREFORE, the appealed Decision of the Court of Appeals is hereby AFFIRMED with the MODIFICATION that
the cross-claim of petitioner Land Bank of the Philippines against Lourdes Farms, Inc. is REMANDED to the
Regional Trial Court, Branch 15, Davao City, for further proceedings.

SO ORDERED.
Ynares-Santiago, Chairperson, Austria-Martinez, Corona, Nachura, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 120365 December 17, 1996

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
WILSON B. QUE, accused-appellant

PUNO, J.:p

Accused-appellant Wilson B. Que appeals from his conviction for violation of Section 68 of Presidential Decree
(P.D.) 705 1 as amended by Executive Order (E.O.) 277. 2

The facts show that two weeks before March 8, 1994, SPO1 Dexter Corpuz, a member of the Provincial Task Force
on Illegal Logging, received an information that a ten-wheeler truck bearing plate number PAD-548 loaded with
illegally cut lumber will pass through Ilocos Norte. Acting on said information, members of the Provincial Task
Force went on patrol several times within the vicinity of General Segundo Avenue in Laoag City. 3

On March 8, 1994, SPO1 Corpuz, together with SPO1 Zaldy Asuncion and SPO1 Elmer Patoc went on patrol around
the area. At about 1:00 in the morning, they posted themselves at the corner of General Segundo Avenue and
Rizal Street. Thirty minutes later, they saw a ten-wheeler truck with plate number PAD-548 pass by. They followed
the truck and apprehended it at the Marcos Bridge. 4

There were three persons on board the truck: driver Wilfredo Cacao, accused-appellant Wilson Que, and an
unnamed person. The driver identified accused- appellant as the owner of the truck and the cargo. 5

SPO1 Corpuz checked the cargo and found that it contained coconut slabs. When interviewed, accused-appellant
told SPO1 Corpuz that there were sawn lumber inserted in between the coconut slabs. 6
SPO1 Corpuz asked accused-appellant for the cargo's supporting documents, specifically: (1) certificate of lumber
origin, (2) certificate of transport agreement, (3) auxiliary invoice, (4) receipt from the DENR, and (5) certification
from the forest ranger regarding the origin of the coconut slabs. Accused-appellant failed to present any of these
documents . All he could show was a certification 7 from the Community Environment and Natural Resources Office
(CENRO), Sanchez Mira, Cagayan that he legally acquired the coconut slabs. The certification was issued to
facilitate transport of the slabs from Sanchez Mira, Cagayan to San Vicente, Urdaneta, Pangasinan. 7

SPO1 Corpuz brought accused-appellant to the office of the Provincial Task Force at the provincial capitol. Again,
accused-appellant admitted to the members of the Provincial Task Force that there were sawn lumber under the
coconut slabs. 9

At 10:00 o'clock in the morning, the members of the Provincial Task Force, together with three CENRO personnel
examined the cargo. The examination confirmed that the cargo consisted of coconut slabs and sawn tanguile
lumber. The coconut slabs were piled at the sides of the truck, concealing the tanguile lumber. 10 When the CENRO
personnel inventoried and scaled the seized forest products, they counted two hundred fifty eight (258) pieces of
tanguile lumber with a total volume of 3,729.3 board feet (8.79 cubic meters) and total assessed value of
P93,232.50. 11

On June 23, 1994, accused-appellant was charged before the Regional Trial Court of Laoag with violation of
Section 68 of P.D. 705 as amended by E.O. 277. The Information alleged:

That on or about the 8th day of March, 1994, in the City of Laoag, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, being then the owner of an I(s)uzu
Ten wheeler Truck bearing Plate No. PAD-548, with intent of gain, did then and there willfully,
unlawfully and feloniously have in possession, control and custody 258 pieces of various sizes of
Forest Products chainsawn lumber (species of Tanguile) with a total volume of 3,729.3 bd. ft. or
equivalent to 8.79 cubic meters valued in the total amount of P93,232.50 at P25.00/bd. ft.,
necessary permit, license or authority to do so from the proper authorities, thus violating the
aforecited provision of the law, to the damage and prejudice of the government.

CONTRARY TO LAW. 12

Accused-appellant denied the charge against him. He claimed that he acquired the 258 pieces of tanguile lumber
from a legal source. During the trial, he presented the private land timber permits (PLTP) issued by the
Department
of Environment and Natural Resources (DENR) to Enrica Cayosa 13 and Elpidio Sabal. 14 The PLTP authorizes its
holder to cut, gather and dispose timber from the forest area covered by the permit. He alleged that the tanguile
lumber came from the forest area covered by the PLTP's of Cayosa and Sabal and that they were given to him by
Cayosa and Sabal as payment for his hauling services. 15

Accused-appellant also objected to the admission of the 258 pieces of lumber as evidence against him. He
contended that they were fruits of an illegal search and seizure and of an uncounselled extrajudicial admission.

The trial court found accused-appellant guilty and sentenced him to reclusion perpetua. It also ordered the
confiscation of the seized lumber and the ten-wheeler truck owned by accused-appellant. The dispositive portion of
the Decision 16 states:

WHEREFORE, judgment is hereby rendered declaring accused Wilson B. Que guilty beyond
reasonable doubt of the violation of Section 68 of PD 705, as amended by Executive Order No. 277
and he is hereby sentenced to suffer the penalty of RECLUSION PERPETUA, plus all the accessory
penalties provided by law. The bail bond filed for the provisional liberty of the accused is
CANCELLED.

The two hundred fifty-eight (258) pieces of lumber (tanguile specie) and the ten-wheeler truck
bearing plate No. PAD-548 which was used in the commission of the crime are hereby ordered
confiscated in favor of the government to be disposed of in accordance with law.

Costs against the accused.

SO ORDERED.17

Appellant now comes before us with the following assignment of

errors: 18

1. It was error for the Court to convict accused under Section 68, PD 705 as amended by EO 277
for possessing timber or other forest products without the legal documents as required under
 existing forest laws and regulations on the ground that since it is only in EO No. 277 where for the
first time mere possession of timber was criminalized, there are no existing forest laws and
regulations which required certain legal documents for possession of timber and other forest
products.

2. The Court erred in allowing evidence secured in violation of the constitutional rights of accused
against unlawful searches and seizures.

3. The Court erred in allowing evidence secured in violation of the constitutional rights of accused
under custodial investigation.

On the first assignment of error, appellant argues that he cannot be convicted for violation of Section 68 of P.D.
705 because E.O. 277 which amended Section 68 to penalize the possession of timber or other forest products
without the proper legal documents did not indicate the particular documents necessary to make the possession
legal. Neither did the other forest laws and regulations existing at the time of its enactment.

Appellant's argument deserves scant consideration. Section 68 of P.D. 705 provides:

Sec. 68. Cutting, Gathering and/or Collecting Timber, or other Forest Products Without License. —
Any person who shall cut, gather, collect, remove timber or other forest products from any forest
land, or timber from alienable or disposable public land, or from private land without any
authority, or possess timber or other forest products without the legal documents as required
under existing forest laws and regulations, shall be punished with the penalties imposed under
Articles 309 and 310 of the Revised Penal Code: Provided, That in the case of partnerships,
associations, or corporations, the officers who ordered the cutting, gathering, collection or
possession shall be liable and if such officers are aliens, they shall, in addition to the penalty, be
deported without further proceedings on the part of the Commission on Immigration and
Deportation.

The Court shall further order the confiscation in favor of the government of the timber or any
forest products cut, gathered, collected, removed, or possessed, as well as the machinery,
equipment, implements and tools illegally used in the area where the timber or forest products are
found. (emphasis supplied).

Appellant interprets the phrase "existing forest laws and regulations" to refer to those laws and regulations which
were already in effect at the time of the enactment of E.O. 277. The suggested interpretation is strained and
would render the law inutile. Statutory construction should not kill but give life to the law. The phrase should be
construed to refer to laws and regulations existing at the time of possession of timber or other forest products.
DENR Administrative Order No. 59 series of 1993 specifies the documents required for the transport of timber and
other forest products. Section 3 of the Administrative Order provides:

Section 3. Documents Required.

Consistent with the policy stated above, the movement of logs, lumber, plywood, veneer, non-
timber forest products and wood-based or nonwood-based products/commodities shall be covered
with appropriate Certificates of Origin, issued by authorized DENR officials, as specified in the
succeeding sections.

xxx xxx xxx

3.3 Lumber. Unless otherwise herein provided, the transport of lumber shall be accompanied by a
CERTIFICATE OF LUMBER ORIGIN (CLO) issued by the CENRO or his duly authorized
representative which has jurisdiction over the processing plant producing the said lumber or the
lumber firm authorized to deal in such commodities. In order to be valid, the CLO must be
supported by the company tally sheet or delivery receipt, and in case of sale, a lumber sales
invoice.

xxx xxx xxx

When apprehended on March 8, 1994, accused-appellant failed to present any certificate of origin of the 258
pieces of tanguile lumber. The trial court found:

xxx xxx xxx

. . . When apprehended by the police officers, the accused admittedly could not present a single
document to justify his possession of the subject lumber. . . .
Significantly, at the time the accused was apprehended by the police offices, he readily showed
documents to justify his possession of the coconut slabs. Thus, he showed a certification issued by
Remigio B. Rosario, Forest Ranger, of the DENR, CENRO, Sanchez Mira, Cagayan (Exhibit "E") and
a xerox copy of the original certificate of title covering the parcel of land where the coconut slabs
were cut.(Exhibit "F").

It is worthy to note that the certification dated March 7, 1994 states:

THIS IS TO CERTIFY that the one (1) truckload of coconut slabs to be transported
by Mr.Wilson Que on board truck bearing Plate No. PAD 548 were derived from
matured coconut palms gathered inside the private land of Miss Bonifacia Collado
under OCT No. P-11614(8) located at Nagrangtayan, Sanchez Mira, Cagayan.

This certification is being issued upon the request of Mr. Wilson Que for the
purpose of facilitating the transportation of said coconut slabs from Sanchez Mira,
Cagayan to San Vicente, Urdaneta, Pangasinan and is valid up to March 11, 1994
or upon discharge of its cargoes at its final destination, whichever comes first.

It is crystal clear, therefore, that the accused was given permit by the DENR to transport one (1)
truckload of coconut slabs only between March 7 to 11, 1994. The accused was apprehended
on March 8, 1994 aboard his truck bearing plate number PAD-548 which was loaded not only with
coconut slabs but with chainsawn lumber as well. Admittedly, the lumber could not be seen from
the outside. The lumber were placed in the middle and not visible unless the coconut slabs which
were placed on the top, sides and rear of the truck were removed.

Under these circumstances, the Court has no doubt that the accused was very much aware that he
needed documents to possess and transport the lumber (b)ut could not secure one and, therefore,
concealed the lumber by placing the same in such a manner that they could not be seen by police
authorities by merely looking at the cargo.

In this regard, the Court cannot give credence to his alleged letter dated March 3, 1994 addressed
to the OIC CENRO Officer, CENRO, Sanchez Mira, Cagayan informing the CENRO that he would be
transporting the subject lumber on March 7, 1994 from Sanchez Mira, Cagayan to Sto. Domingo,
Ilocos Sur but was returned to him for the reason that he did not need a permit to transport the
subject lumber. (Exhibits "8", "8-A").

While it is true that the letter indicates that it was received by CENRO on March 4, 1994, the Court
has doubts that this was duly filed with the concerned office. According to the accused, he filed the
letter in the morning of March 4 and returned in the afternoon of the same day. He was then
informed by an employee of the CENRO whom he did not identify that he did not need a permit to
transport the lumber because the lumber would be for personal used (sic) and ". . . came from
PLTP." (Ibid) The letter-request was returned to him.

The fact that the letter-request was returned to him creates doubts on the stance of the accused.
Documents or other papers, i.e., letter-request of this kind filed with a government agency are not
returned. Hence, when a person files or submits any document to a government agency, the
agency gets the original copy. The filer only gets a duplicate copy to show that he has filed such
document with the agency. Moreover, his avoidance as regards the identity of the employee of the
CENRO who allegedly returned the letter-request to him also creates doubts on his stance. Thus,
on cross-examination, the accused, when asked about the identity of the employee of the CENRO
who returned the letter-request to him answered that he could recognize the person ". . . but they
were already reshuffled." (TSN, February 8, 1995, p. 104) At one point, the accused also said that
he did not know if that person was an employee of the DENR. (Ibid, p. 105)

Be that as it may, the Court finds significance in the last paragraph of this letter-request, to wit:

xxx xxx xxx

Please consider this as my Certificate of Transport Agreement in view of the fact

that I am hauling and transporting my own lumber for my own needs.

Thus, the accused through this letter considered the same as his certificate of transport
agreement. Why then, if he was telling the truth, did he not take this letter with him when he
transported the lumber on March 7, 1994?

All these circumstances clearly show that the letter comes from a polluted source. 19
 xxx xxx xxx

Accused-appellant's possession of the subject lumber without any documentation clearly constitutes an
offense under Section 68 of P.D. 705.

We also reject appellant's argument that the law only penalizes possession of illegal forest products and that the
possessor cannot be held liable if he proves that the cutting, gathering, collecting or removal of such forest
products is legal. There are two (2) distinct and separate offenses punished under Section 68 of P.D. 705, to wit:

(1) Cutting, gathering, collecting and removing timber or other forest products from any forest
land, or timber from alienable or disposable public land, or from private land without any
authority; and

(2) Possession of timber or other forest products without the legal documents required under
existing forest laws and regulations.

In the first offense, one can raise as a defense the legality of the acts of cutting, gathering, collecting or removing
timber or other forest products by presenting the authorization issued by the DENR. In the second offense,
however, it is immaterial whether the cutting, gathering, collecting and removal of the forest products is legal or
not. Mere possession of forest products without the proper documents consummates the crime. Whether or not
the lumber comes from a legal source is immaterial because E.O 277 considers the mere possession of timber or
other forest products without the proper legal documents as malum prohibitum.

On the second and third assignment of error, appellant contends that the seized lumber are inadmissible in
evidence for being "fruits of a poisonous tree". Appellant avers that these pieces of lumber were obtained in
violation of his constitutional right against unlawful searches and seizures as well as his right to counsel.

We do not agree.

The rule on warrantless search and seizure of a moving vehicle was summarized by this court in People
vs. Bagista, 20 thus:

The general rule regarding searches and seizures can be stated in this manner: no person shall be
subjected to a search of his person, personal effects or belongings, or his residence except by
virtue of a search warrant or on the occasion of a lawful arrest. The basis for the rule can be found
in Article III, Section 2 of the 1987 Constitution, which states:

The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for any
purpose, shall be inviolable, and no search warrant or warrant of arrest shall issue
except upon probable cause to be determined personally by the judge after
examination under oath or affirmation of the complainant and witnesses he may
produce, and particularly describing the place to be searched, and the person or
things to be seized.

Article III, Section 3 (2) further ordains that any evidence obtained in violation of the
aforementioned right shall, among others, "be inadmissible for any purpose in any proceeding."

The constitutional proscription against warrantless searches and seizures admits of certain
exceptions. Aside from a search incident to a lawful arrest, a warrantless search had been upheld
in cases of moving vehicles, and the seizure of evidence in plain view.

With regard to the search of moving vehicles, this had been justified on the ground that the
mobility of motor vehicles makes it possible for the vehicle to be searched to move out of the
locality or jurisdiction in which the warrant must be sought.

This in no way, however, gives the police officers unlimited discretion to conduct warrantless
searches of automobiles in the absence of probable cause. When a vehicle is stopped and
subjected to an extensive search, such a warrantless search has been held to be valid as long as
the officers conducting the search have reasonable or probable cause to believe before search that
they will find the instrumentality or evidence pertaining to a crime, in the vehicle to be searched.
(citations omitted; emphasis supplied)

As in Bagista, the police officers in the case at bar had probable cause to search appellant's truck. A member of
the Provincial Task Force on Illegal Logging received a reliable information that a ten-wheeler truck bearing plate
number PAD-548 loaded with illegal lumber would pass through Ilocos Norte. Two weeks later, while members of
the Provincial Task Force were patrolling along General Segundo Avenue, they saw the ten-wheeler truck
described by the informant. When they apprehended it at the Marcos Bridge, accused-appellant, the owner of the
truck and the cargo, admitted that there were sawn lumber in between the coconut slabs. When the police officers
asked for the lumber's supporting documents, accused-appellant could not present any. The foregoing
circumstances are sufficient to prove the existence of probable cause which justified the extensive search of
appellant's truck even without a warrant. Thus, the 258 pieces of tanguile lumber were lawfully seized and were
thus properly admitted as evidence to prove the guilt of accused-appellant.

The foregoing disquisition renders unnecessary the issue of whether appellant's right to counsel under custodial
investigation was violated. The Resolution of the issue will not affect the finding of guilt of appellant.

IN VIEW WHEREOF, the instant appeal is DISMISSED. The Decision appealed from is AFFIRMED. Costs against
appellant.

SO ORDERED.

Regalado, Romero, Mendoza and Torres, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION
 REPUBLIC OF THE PHILIPPINES, represented by the G.R. No. 159308
Department of Environment and Natural Resources
(DENR), Present:

Petitioner, YNARES-SANTIAGO, J.,

- versus - Chairperson,

PAGADIAN CITY TIMBER CO., INC., AUSTRIA-MARTINEZ,

Respondent. CHICO-NAZARIO,

NACHURA, and

REYES, JJ.

Promulgated:

September 16, 2008

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court seeking to nullify and set aside the
Decision2 dated October 18, 2001 and the Resolution3 dated July 24, 2003 of the Court of Appeals in CA-G.R. SP
No. 59194 entitled "Pagadian City Timber Co., Inc. v. Antonio Cerilles, as Secretary of the Department of
Environment and Natural Resources (DENR) and Antonio Mendoza, as Regional Executive Director, DENR, Region
IX."

The antecedent facts are as follows:

On October 14, 1994, petitioner, through the DENR, and respondent Pagadian City Timber Co., Inc. executed
Industrial Forest Management Agreement (IFMA) No. R-9-0404 whereby petitioner, represented by then Regional
Executive Director (RED) for Region IX, Leonito C. Umali, authorized respondent, represented by its President
Filomena San Juan, to develop, utilize, and manage a specified forest area covering 1,999.14 hectares located in
Barangays Langapod, Cogonan, and Datagan, Municipality of Labangan, Zamboanga del Sur, for the production of
timber and other forest products subject to a production-sharing scheme.

Respondent later submitted the required Comprehensive Development and Management Plan (CDMP) which the
DENR approved on August 17, 1995.

On October 8, 1998, in response to the numerous complaints filed by members of the Subanen tribe regarding
respondent’s alleged failure to implement the CDMP, disrespect of their rights as an indigenous people, and the
constant threats and harassment by armed men employed by respondent, RED Antonio Mendoza, DENR Region IX,
issued Regional Special Order No. 217 creating a regional team to evaluate and assess IFMA No. R-9-040.

Thus, the DENR sent a letter dated October 22, 1998 to respondent, giving notice of the evaluation and
assessment to be conducted on the area from October 22-30, 1998 covering the years 1997 and 1998. In the
notice, the DENR requested any representative of the company to appear at the CENRO Office, Pagadian City, and
bring with him documents and maps concerning its IFMA operations.

On October 23, 1998, a DENR Evaluation Team composed of Aniceto Wenceslao (Forester, DENR, Zamboanga del
Sur), Isabelo Mangaya-ay (Intern Chief, RCBF/MCO), Philidor Lluisma (Forester II, Regional Office), Chanito Paul
Siton (C. Forester, CENRO-Pagadian City), Adelberto Roullo (Forester, CENRO, Pagadian City), and Francisco
Martin (Carto LEP, CENRO, Pagadian City) went to the IFMA site. After a briefing conference between the
Evaluation Team and respondent’s Operations Manager, Inocencio Santiago, actual field evaluation and
assessment followed.

On October 29, 1998, an exit conference and dialogue on post evaluation and assessment of IFMA R-9-04 was
held between DENR officials, namely, CENR Officer Maximo O. Dichoso, IFMA Regional Team Leader, Forester
Isabelo C. Mangaya-ay, and IFMA Regional Team Member, Forester Philidor O. Lluisma, and IFMA Representative
and Operations Manager Inocencio Santiago at the CENRO, Pagadian City.5 The exit conference was called to order
at 1:30 p.m. and was concluded at 3:00 p.m. Forester Mangaya-ay presented the representative results and
findings of the Evaluation Team, to wit:

The presiding officer started with the mango plantation in the Noran, Langapod side. That out of the estimated
number of seedlings planted of about 2,008 hills, within an equivalent area of 20 hectares, the result or finding of
the inventory conducted at 100% intensity is only 98 hills of seedlings survived including the doubtful and badly
deformed. The species planted along trails are Gmelina and Mahogany species. The said foot trail planted with the
aforementioned species starts from the entrance of the IFMA are where the notice billboard is posted up to the
only existing look-out tower. The estimated average of percent survival for Gmelina is more or less 30%. There
are also portions where higher percentage of survival is recorded at 56% and lower at 14%. There are areas
planted declared by Kagawad Cerning Becagas of Barangay Cogonan now covered by CSC. The areas covered by
CSC, a waiver is needed to be issued by the IFMA holder.

CENR Officer Maximo O. Dichoso commented that during a meeting held before, the IFMA holder was willing to
give up the said areas.

The presiding officer continued that on the courtesy call made to the Barangay Chairman of Barangay Cogonan,
Mr. Roberto Palaran recounted the assistance extended by the IFMA holder to his barangay as Community
Assistance/service which includes electric generator, handheld radio and laborers for the repair of Noburan –
Cogonan road and the repair of the hanging bridge at Sitio Tialaic to which the said Barangay Chairman issued a
duly signed certification to this effect.

With regards, the seedling stock within the nursery, there are approximately a total number of about 44,460
seedlings of Gmelina species. That the infrastructure implemented or constructed, there exist only one look-out
tower of the reported 4 look-out towers constructed. Moreover, the team had also noted only 1 bunkhouse and 1
stockroom or shedhouse. There is also 1 Multi-purpose shed and 1 dilapidated or neglected notice billboard poster
at the entrance trail leading to the IFMA area. That with regards the concrete monument, there are only 2
recorded. The other corners visible are those located at junctions of creeks and rivers. But the others cannot be
visibly or never planted for the same cannot be pinpointed or shown to the team allegedly for lack of knowledge
by the representative of the IFMA holder. Finally, the presiding officer reminded the herein IFMA representative
Mr. Inocencio Santiago that per actual survey, inspection and ground verification, the team believes that the other
reported areas planted are located outside the designated IFMA area particularly the Noburan and Langapod
sides.6

After the presentation, Mangaya-ay asked Santiago if he had comments, suggestions, or questions regarding the
matter and the manner of the conduct of the evaluation and assessment by the Evaluation Team. Santiago said he
had none, but requested a copy of the report of the Evaluation Team. Mangaya-ay informed him that it was only
RED Mendoza who may furnish him a copy of the report.

Later, the Evaluation Team submitted a report through a Memorandum7 dated November 6, 1998 to the DENR-
RED of Region 9, Zamboanga City, on the evaluation and assessment of respondent under IFMA No. R-9-040. The
said Memorandum stated –

In compliance with Regional Special Order No. 217, Series of 1998, please be informed that the herein information
is the result or findings of the team for the conduct of evaluation and assessment following the guidelines setforth
under Department Administrative Order (DAO) No. 11, Series of 1995 of Pagadian Timber Co., Inc. under IFMA
No. R9-040 against their actual accomplishment as mandated under the terms and conditions of the IFMA
including other applicable laws, rules and regulations of the department on the matter.

At the onset, the team conducted a briefing conference and dialogue with the IFMA holder, the CENR Officer of
Pagadian City and personnel concerned for the proper and orderly implementation and conduct of the evaluation
and assessment (please see attached).

The team was composed of the Regional Evaluating Team, the CENRO and PENRO representatives and the
representatives of the IFMA holder. The team proceeded to the western portion of the area of the herein IFMA
particularly Barangay Cogonan, Labangan, Zamboanga del Sur. The evaluation and assessment was then
conducted on the main nursery, the established plantation, the look-out towers, the boundary of ISF and claimed
or occupied areas, natural or residual forest, the IFMA boundary, monuments planted, foot trails, other
improvements introduced and the billboard and signboard posted. The inspection, evaluation and assessment
conducted were all undertaken in the presence of the IFMA holder, representatives, laborers and other personnel
on the area. (please see attached report, tall sheets, pictorials and map).

In the conduct of the same, the IFMA representatives or laborers that assisted the team could only show the
subject area under evaluation but the other areas alluded to as accomplished or undertaken by the company
appeared upon actual verification and inspection to be negative and non-existent thus dispelling their allegation.
With regard the information and dissemination conducted by the IFMA holder including other services extended to
the communities within the IFMA area and vicinities, it is noteworthy for recognition the donations made by the
company. (Please see attached minutes of the dialogue with the barangay officials of Barangay Cogonan and
pictorials).

The evaluation conducted on the nursery operations show that the facilities and other necessary implements were
generally below par. An inventory of the seedlings stock of pure Gmelina species have already lapsed its
plantability or have overgrown in the seedbed with an average grand total of about 44,460 within the established
2-hectare main nursery area. There was no other subsidiary nursery established in the area. Also noted is the
enrichment planting conducted along both sides of the foot-trail which extends approximately 18 kms. From the
entrance of the IFMA area going to the lookout tower of the four (4) lookout towers reported, only one (1) has
been noted remaining in the area and the rest were destroyed or burned (pls. see attached pictorials). The
signboard posted was unattended and in the state of disrepair. There were no monument planted or any marking
along the IFMA boundary and in residual forest except the monuments found in the ISF boundaries within the
IFMA area (please see attached pictorials). The plantation established is composed of Gmelina species with 4 x 4
spacing over a total of about 10.18 hectares. Basing on 5% estimate inventory, the result is 43% seedling
survival.

Thereafter, the team also conducted evaluation and assessment at the eastern portion particularly at Langapod,
Labangan, Zamboanga del Sur. The team inspected and verified on the ground the reported 20 hectares mango
plantation with a spacing of 10 x 10 meters at 100% intensity inventory. The accounted number of mango
seedlings planted of about 2,008 hills, only 98 seedlings survived. Wherefore, it generally represents 5% seedling
survival. (Please see attached)

Finally, the team conducted an exit conference with the CENR Officer, and the IFMA holder where the tentative
and general findings of the evaluation and assessment was laid-out and presented to the body. (Please see
attached)8

On the basis of such findings, the Evaluation Team made the following recommendations –

1. The lessee should be required to explain why they failed to develop their IFMA area (Plantation Development) in
accordance with the approved Comprehensive Development and Management Plan (CDMP);

2. The boundary and area coverage of IFMA No. R9-040 should be amended to exclude areas covered by
Certificates of Stewardship Contracts (CSC) under the ISF Program with an area of 226.17 hectares, other areas
previously identified as "occupied/claimed" and other conflict areas;

3. The amended boundary should be delineated/surveyed on the ground with a precise instrument and all corners
appropriately marked/monumented;

4. The company should hire a full time forester.9

Acting on the Memorandum dated November 6, 1998, RED Antonio M. Mendoza, DENR-IX, Zamboanga City,
submitted to the DENR Secretary a Memorandum10 dated April 7, 1999 regarding the performance evaluation of
IFMA No. R-9-040. The RED Memorandum reads –

This has reference with the instruction to validate the performance/accomplishment of IFMAs of Region IX,
Western Mindanao. Validation of IFMAs is in accordance with the existing policy of the DENR, to determine the
capabilities of the holders to develop their Lease areas in consonance with their submitted and approved
Comprehensive Development Management Plan.

xxxx

On 6 November 1998, Foresters Isabelo C. Mangaya-ay and Philidor Lluisma, pursuant to Regional Special Order
No. 217, Series of 1998, conducted the evaluation of the performance of IFMA No. R9-040 of Pagadian City Timber
Company, Inc. located at Langapod and Cogonan, Municipality of Labangan and Datagan, Municipality of Sominot,
all of Zamboanga del Sur. Result of the evaluation reveals that the holder violated the following DENR existing
Rules and Regulations particularly Section 26 of DAO 97-04 GROUNDS FOR CANCELLATION of IFMA which
provides that, "any of the following violations shall be sufficient grounds for the cancellation of IFMA."

1. Paragraph 26.5, Section 26, DAO 97-04, Series of 1997, provides that failure to implement the approved
Comprehensive Development and Management Plan.

As of 1998, the 4th year of existence of IFMA No. R9-040, the holder must have developed a total of 1,597.0
hectares as per approved CDMP. However, based on the report submitted by the Evaluation Team only 365.2
hectares was planted which are about 22.8%. During the evaluation, however, the IFMA representative could not
even pinpoint the planted areas.

Per report of the Pagadian CENRO Composite Monitoring Team conducted on 21 August 1998 the plantation area
was burned resulting to the damage of about 300 hectares leaving only about 20.0 hectares undamaged. No
report had been submitted/received since then.

In infrastructure, the holder managed to put up one (1) out of four (4) programmed look-out towers; developed
one (1) out of two (2) forest nurseries and constructed only 6 km. foot trail which is only about 27%
accomplishment of the whole infrastructure.

2. Paragraph 26.8 of Section 26, DAO 97-04, specifically provides that failure to implement or adopt agreements
made with communities and other relevant sectors.

Attached herewith, please find several petitions, sworn statements, affidavits and resolutions from various sectors
particularly the Subanen Communities (IP’s) within the area. The existence and approval of IFMA No. R9-040
contract is being protested and is demanding for its cancellation.

The primary complaint was a blatant disrespect to their rights as an Indigenous People and the non-peaceful co-
existence between them and the holder of the IFMA R9-040. Accordingly, they were constantly
threatened/harassed by armed men employed by the holder.

In the same Memorandum, RED Mendoza recommended to the DENR Secretary the cancellation of IFMA No. R-9-
040. 11

It appears that RED Mendoza issued a subsequent but similar Memorandum12 dated April 21, 1999 to the DENR
Secretary relative to IFMA No. R-9-040. It stated –

This has reference with the instruction to validate the performance/accomplishment of IFMAs of Region IX,
Western Mindanao. Validation of IFMAs is in accordance with the existing policy of the DENR to determine the
capabilities of the holders to develop their Lease areas in consonance with their approved Comprehensive
Development and Management Plan.

In furtherance thereto, Foresters Isabelo C. Mangaya-ay and Philidor Lluisma, pursuant to Regional Special Order
No. 217, Series of 1998, conducted the evaluation of the performance of IFMA No. R9-040 of Pagadian City Timber
Company, Inc. located at the Municipalities of Labangan, Datagan and Sominot, all of Zamboanga del Sur, on
November 6, 1998. Result of the evaluation revealed that the holder violated Rules and Regulations which are
sufficient ground for cancellation as stipulated under Section 26 of DAO 97-04, they are as follows

1. FAILURE TO IMPLEMENT THE APPROVED COMPREHENSIVE DEVELOPMENT AND MANAGEMENT PLAN.

Under the approved comprehensive and development plan, 1,597.0 ha of plantation should have been established
from the Approval of the CDMP. However, only 365.2 ha were reportedly planted from CY 1995 to 1997. This
represents only 28% of the targeted goal on plantation establishment.

Field validation of the reported established plantation revealed otherwise. The findings of the team are:

A. Portion of the area reported as established plantation by the IFMA holder is an ISF project with an area of
226.17 ha. These are covered with Certificate of Stewardship;

B. Locations and boundaries of reported plantations established from 1995 to 1997 cannot be located on the
ground by the team neither by the representative of the IFMA holder who accompanied the validating team; and

C. No plantation was established during CY 1998.

On Infrastructure, the holder constructed only one (1) lookout tower as against the goal of 4 towers; established
one (1) nursery as against the goal of two (2); and constructed only 6km foot trail. These represent only 27% of
the total infrastructure to be undertaken by the holder over the area.

2. FAILURE TO IMPLEMENT OR ADOPT AGREEMENT WITH COMMUNITIES AND OTHER RELEVANT SECTORS.

Attached herewith are copies of petitions, sworn statements, affidavit and resolutions from Subanen Communities
(IP’s) and other sectors in the area demanding the cancellation of IFMA R9-040.
The complaints and demand for cancellation by the people where the IFMA is located is a manifestation and proof
of non-social acceptance of the project by the residents in the locality.

In view of the above findings, IFMA No. R9-040 is hereby recommended for cancellation.13

Acting on the latter Memorandum from RED Mendoza, then DENR Secretary Antonio H. Cerilles, on June 7, 1999,
issued an Order14 canceling IFMA No. R-9-040 for failure to implement the approved CDMP and for failure of the
lessee to protect the area from forest fires. The dispositive portion of the Order reads:

WHEREFORE, premises considered, IFMA No. R9-040 issued to Pagadian City Timber Co., Inc. is hereby ordered
cancelled. The IFMA holder is hereby ordered to immediately vacate the area and to surrender/return copy of the
Agreement to the Regional Executive Director, DENR Region 9, Zamboanga City.

The RED concerned or his duly authorized representative is hereby directed to serve this Order; determine best
end use of the land; take appropriate measures to protect the same and inform this Office immediately of his
compliance.

SO ORDERED.15

On July 2, 1999, respondent’s President, Filomena S. San Juan, wrote DENR Secretary Cerilles that the company
was surprised to receive the Order of the cancellation of IFMA No. R-9-040 on June 22, 1999. She claimed that –

The DENR regional office is fully aware that the company is doing its best to manage and develop the area by
continually planting trees and protecting the area from forest fires and illegalities. No company would ever set fire
on its own plantation for obvious reasons. The company observed precautionary measures especially during the
time of the El Niño phenomenon. If there have been mistakes and miscommunications in the reports of the DENR
field officers, these could have been threshed out by a conference between DENR and the Pagadian Timber
Company Inc.

The company was not accorded due process before the order of cancellation was issued. The company was not
furnished copy of the evaluation and recommendation of the DENR Regional Executive Director of Region IX. Had
the company been given the opportunity to contest the findings, evaluation and recommendation of the said
office, the result would be otherwise.16

She appealed for the reconsideration of the Order asking that a re-investigation be conducted to comply with due
process.

Even as the said letter for reconsideration was not yet acted upon, respondent appealed to the Office of the
President (OP).

In the Resolution17 dated January 12, 2000, the OP affirmed the cancellation order based on the results of the
actual evaluation and assessment of the DENR team. It ruled that the cancellation of IFMA No. R-9-040 was
primarily and specifically governed by Section 26 of Department Administrative Order (DAO) 97-04. Relative to
respondent’s invocation of due process, the OP held that respondent was afforded the right to be heard when it
filed its motion for reconsideration and its subsequent appeal to the OP.

The motion for reconsideration filed by respondent of the January 12, 2000 Resolution was denied by the OP in the
Resolution18 dated May 8, 2000.

Respondent went up to the Court of Appeals (CA) via a petition for review with a prayer for the issuance of a writ
of preliminary injunction against the implementation of the assailed Order dated June 7, 1999.

In its Resolution dated January 17, 2001, the CA issued the writ of preliminary injunction prayed for, "directing
and ordering respondents (petitioner) and/or any other person acting under their command, authority and/or for
and in their behalf, to DESIST from implementing the assailed Order of cancellation dated June 7, 1999, and/or
taking over the IFMA premises of [respondent], pending the termination of this proceeding."

In its Decision19 dated October 18, 2001, the CA ruled in favor of respondents. In striking down the rulings of the
OP and the Order dated June 7, 1999, the CA declared that IFMA No. R-9-040 was a contract that could not be
unilaterally cancelled without infringing on the rights of respondent to due process and against impairment of
contracts. The appellate court agreed with respondent when the latter argued that it was entitled to the benefits of
Sections 3520 and 3621 of IFMA No. R-9-040 such that respondent should have been given 30 days, after due
notice, to remedy any breach or default of the provisions of the IFMA and/or that the dispute regarding the bases
for the cancellation of the IFMA should have first been submitted to arbitration.
Petitioner moved to reconsider the CA Decision. In the Resolution22 dated July 24, 2003, the motion was denied
for lack of merit. Hence, this petition based on the following grounds:

I. The Court of Appeals gravely erred in ruling that IFMA No. R9-040 is a contract and not a mere privilege granted
by the State to respondent.

II. The Court of Appeals seriously erred in ordaining that respondent can rightfully invoke prior resort to
arbitration or the option to mend its violations under IFMA No. R9-040.23

In essence, petitioner argues that an IFMA is not an ordinary contract which is protected by the Constitution
against impairment24 but a mere privilege granted by the State to qualified persons by means of a permit, license,
franchise, agreement, or other similar concessions, which in this case is the exploration, development and
utilization of the forest lands belonging to the State under its full control and supervision. Thus, the cancellation of
the IFMA does not amount to a rescission of a contract but a mere withdrawal of this privilege. As such, the due
process clause under the Constitution25 does not likewise apply since the IFMA area cannot be considered as
property of respondent. According to petitioner, IFMA No. R-9-040, with the forest lands covered by it, is imbued
with paramount considerations of public interest and public welfare such that whatever rights respondent may
have under it must yield to the police power of the State. In this sense, respondent cannot take refuge in Sections
35 and 36 of IFMA No. R-9-040 to prevent the IFMA’s cancellation.

Inasmuch as the grounds cited by petitioner are interrelated, they shall be jointly discussed hereunder.

The petition is impressed with merit.

IFMA No. R-9-040 is a license agreement under Presidential Decree (P.D.) No. 705 (Revised Forestry Code), the
law which is the very basis for its existence.26 Under Section 3, paragraph (dd) thereof, a license agreement is
defined as "a privilege27 granted by the State to a person to utilize forest resources within any forest land with the
right of possession and occupation thereof to the exclusion of others, except the government, but with the
corresponding obligation to develop, protect and rehabilitate the same in accordance with the terms and conditions
set forth in said agreement." This is evident in the following features, among others, of IFMA No. R-9-040, to wit:

1. The State agreed to devolve to the holder of IFMA No. R-9-040 the responsibility to manage the specified IFMA
area for a period of 25 years, specifically until October 14, 2019, which period is automatically renewable for
another 25 years thereafter;

2. The State imposed upon respondent, as holder of IFMA No. R-9-040, the conditions, the means, and the
manner by which the IFMA area shall be managed, developed, and protected;

3. The State, through the DENR Secretary, shall not collect any rental within the first five (5) years of the IFMA,
after which it shall be entitled to annual rental of fifty centavos (P0.50) per hectare from the sixth to the tenth
year thereof, and one peso (P1.00) per hectare thereafter;

4. The IFMA area, except only the trees and other crops planted and the permanent improvements constructed by
the IFMA holder, remains the property of the State; and

5. Upon cancellation of the IFMA through the fault of the holder, all improvements including forest plantations
existing within the IFMA area shall revert to and become the property of the State.

An IFMA has for its precursor the Timber License Agreement (TLA), one of the tenurial instruments issued by the
State to its grantees for the efficient management of the country’s dwindling forest resources. Jurisprudence has
been consistent in holding that license agreements are not contracts within the purview of the due process and the
non-impairment of contracts clauses enshrined in the Constitution. Our pronouncement in Alvarez v. PICOP
Resources, Inc.28 is enlightening –

In unequivocal terms, we have consistently held that such licenses concerning the harvesting of timber in the
country’s forests cannot be considered contracts that would bind the Government regardless of changes in policy
and the demands of public interest and welfare. (citing Oposa v. Factoran, Jr., G.R. No. 101083, July 30, 1993,
224 SCRA 792, 811) Such unswerving verdict is synthesized in Oposa v. Factoran, Jr., (id., at pp. 811, 812) where
we held:

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 petitioners, into every timber license must be read Section 20 of the Forestry Reform Code (P.D.
No. 705) which provides:

"x x x 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 x x x."

Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a contract, property or
a property right protected by the due process clause of the constitution. In Tan vs. Director of Forestry, [125
SCRA 302, 325 (1983)] this Court held:

"x x x 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). x x x"

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary [190 SCRA 673,
684 (1990):

"x x x 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.

Even assuming arguendo that an IFMA can be considered a contract or an agreement, we agree with the Office of
the Solicitor General that the alleged property rights that may have arisen from it are not absolute.

All Filipino citizens are entitled, by right, to a balanced and healthful ecology as declared under Section
16,29 Article II of the Constitution. This right carries with it the correlative duty to refrain from impairing the
environment,30 particularly our diminishing forest resources. To uphold and protect this right is an express policy
of the State.31 The DENR is the instrumentality of the State mandated to actualize this policy. It is "the primary
government agency responsible for the conservation, management, development and proper use of the country’s
environment and natural 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."32

Thus, private rights must yield when they come in conflict with this public policy and common interest. They must
give way to the police or regulatory power of the State, in this case through the DENR, to ensure that the terms
and conditions of existing laws, rules and regulations, and the IFMA itself are strictly and faithfully complied with.

Respondent was not able to overturn by sufficient evidence the presumption of regularity in the performance of
official functions of the Evaluation Team when the latter inspected, assessed, and reported the violations
respondent committed under DAO No. 97-04 which eventually led to the cancellation of IFMA No. R-9-040.

It is worthy to note that petitioner followed regular procedure regarding the assessment of IFMA No. R-9-040. It
gave notice of the evaluation on October 22, 1998 to be held within the period October 22-30, 1998. Respondent
admitted through the affidavits of its President,33 Operations Manager,34 and workers35 that an Evaluation Team
arrived at the IFMA area on October 23, 1998. On October 23, 1998, prior to the actual assessment, a briefing
was held on the conduct thereof in the presence of the IFMA representatives. On October 29, 1998, an exit
conference with IFMA Operations Manager Inocencio Santiago was held at the CENRO Office, Pagadian City, where
the results of the assessment were presented. That day, the DENR officials asked Santiago if he had any questions
or comments on the assessment results and on the manner the evaluation was conducted, but the latter replied
that he had none.

We do not understand why Santiago did not lift a finger or raise an objection to the assessment results, and only
much later in his Affidavit executed almost ten months thereafter, or on August 12, 1999, to claim so belatedly
that there was no notice given on October 22, 1998, that the Evaluation Team did not actually extensively inspect
the IFMA area on October 23, 1998, and that there was no proper exit conference held on October 29, 1998. The
same observation applies to respondent’s President herself, who instead claimed that she vehemently opposed the
appointment of then DENR Secretary Cerilles because he was bent on canceling the IFMA at all costs, prior to the
cancellation of IFMA No. R-9-040.

Besides, the detailed findings on the failure of respondent to implement its CDMP under its IFMA, as shown by the
November 6, 1998 Report of the Evaluation Team and the Memoranda dated April 7, 1999 and April 21, 1999,
together with all its attachments, belie respondent’s claim that there was no actual evaluation and assessment
that took place on October 23, 1998. That the Evaluation Report was dated November 6, 1998 does not
conclusively show that the evaluation was actually held on that date. Neither was this properly proven by the
Memoranda of RED Mendoza which stated that the evaluation was conducted on November 6, 1998, since RED
Mendoza could have been merely misled into such an assumption because of the date of the Evaluation Report.
The sweeping denials made by the IFMA representatives and their self-serving accomplishment reports cannot
prevail over the actual inspection conducted, the results of which are shown by documentary proof.

Respondent, likewise, cannot insist that, pursuant to Section 35 of IFMA No. R-9-040, it should have been given
notice of its breach of the IFMA and should have been given 30 days therefrom to remedy the breach. It is worthy
to note that Section 35 uses the word "may" which must be interpreted as granting petitioner the discretion
whether or not to give such notice and allow the option to remedy the breach. In this case, despite the lack of any
specific recommendation from the Evaluation Team for the cancellation of the IFMA, DENR Secretary Cerilles
deemed it proper to cancel the IFMA due to the extent and the gravity of respondent’s violations.

It is also futile for respondent to claim that it is entitled to an arbitration under Section 36 of IFMA No. R-9-040
before the license agreement may be canceled. A reading of the said Section shows that the dispute should be
based on the provisions of the IFMA to warrant a referral to arbitration of an irreconcilable conflict between the
IFMA holder and the DENR Secretary. In this case, the cancellation was grounded on Section 26 of DAO No. 97-04,
particularly respondent’s failure to implement the approved CDMP and its failure to implement or adopt
agreements made with communities and other relevant sectors. The contrary notwithstanding, what remains is
that respondent never refuted the findings of the Evaluation Team when given the opportunity to do so but waited
until IFMA No. R-9-040 was already cancelled before it made its vigorous objections as to the conduct of the
evaluation, harping only on its alleged right to due process.

Indeed, respondent was given the opportunity to contest the findings that caused the cancellation of its IFMA
when it moved to reconsider the Order of cancellation and when it filed its appeal and motion for reconsideration
before the OP.

The essence of due process is simply an opportunity to be heard, or as applied to administrative proceedings, an
opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of.
What the law prohibits is the absolute absence of the opportunity to be heard; hence, a party cannot feign denial
of due process where he had been afforded the opportunity to present his side.36

WHEREFORE, the Decision dated October 18, 2001 and the Resolution dated July 24, 2003 of the Court of Appeals
in CA-G.R. SP No. 59194 are REVERSED and SET ASIDE, and the Order dated June 7, 1999 of then DENR
Secretary Antonio Cerilles, and the Resolutions of the Office of the President dated January 12, 2000 and May 8,
2000 affirming the said Order, are REINSTATED and AFFIRMED. No pronouncement as to costs.

SO ORDERED.
SECOND DIVISION

G.R. No. 144640 June 26, 2006

RODOLFO TIGOY, Petitioner,

vs.
COURT OF APPEALS AND PEOPLE OF THE PHILIPPINES, Respondents.

DECISION

AZCUNA, J.:

This is a petition for review under Rule 45 of the Rules of Court assailing the decision and resolution, dated March
6, 2000 and August 23, 2000, respectively, of the Court of Appeals in CA-G.R. CR No. 20864 entitled "People of
the Philippines v. Nestor Ong and Rodolfo Tigoy," acquitting Nestor Ong for insufficiency of evidence, while
convicting Rodolfo Tigoy for violating Section 68 of Presidential Decree (P.D.) No. 705 or the Revised Forestry
Code of the Philippines, as amended by Executive Order (E.O.) No. 277, Series of 1987, in relation to Articles 309
and 310 of the Revised Penal Code.

The facts of the case are as follows:

On August 3, 1993, Nestor Ong, who had been engaged in the trucking business in Iligan City since 1986, was
allegedly introduced by his friend Gamad Muntod to Lolong Bertodazo who signified his intent to rent the trucks of
Ong to transport construction materials from Larapan, Lanao del Norte to Dipolog City. A Contract to Transport
was supposedly entered into between Ong and Bertodazo, the salient portions of which state:

1. That the party of the First Part is an owner of Cargo Trucks with place of business at Iligan City;

2. That the party of the Second Part is a businessman dealing in buy and sell of General Merchandise, dry
goods and construction materials;

3. That the party of the Second Part will engage the services of the two (2) cargo trucks of the party of the
First Part;

4. That the services agreed upon should be rendered by the party of the First Part on August 3, 1993 from
Larapan, Linamon, Lanao del Norte to Dipolog City for an agreed amount of TEN THOUSAND (P10,000.00)
Pesos per truck or a total of TWENTY THOUSAND (P20,000.00) Pesos, Philippine Currency for the carriage
of cement and other merchandise owned by the party of the Second Part;

5. That any legal controversy involving the cargo or of and when the cargo trucks are not actually used for
the purpose herein stipulated, it is agreed that the same is the sole responsibility of the party of the
Second Part without any liability of the party of the First Part.1

In the evening of October 3, 1993, Ong allegedly ordered Nestor Sumagang and petitioner Rodolfo Tigoy who had
been employed by him as truck drivers for two (2) years and ten (10) years, respectively, to bring the two trucks
to Lolong Bertodazo in Larapan, Lanao del Norte which is about fifteen (15) minutes away from Iligan City. He
instructed the two drivers to leave the trucks in Larapan for the loading of the construction materials by Lolong
Bertodazo, and to go back at dawn for the trip to Dipolog City. Thus, after meeting with Bertodazo, Sumagang and
petitioner Tigoy allegedly went home to return to Larapan at four o’clock in the morning the next day. When they
arrived, the trucks had been laden with bags of cement and were half-covered with canvas.2 Before departing,
they allegedly checked the motor oil, water, engine and tires of the trucks to determine if the same were in good
condition.

That same morning of October 4, 1993, Senior Inspector Rico Lacay Tome (then Deputy Chief of Police of Ozamis
City), while escorting Provincial Director Dionisio Coloma at the ICC Arts Center in Ozamis City, along with the
members of the Special Operation Group, received a dispatch from the 466th PNP Company situated at Barangay
Bongbong, Ozamis City, informing him that two trucks, a blue and green loaded with cement, that were going
towards Ozamis City did not stop at the checkpoint. Upon receiving the report, Tome, along with PO2 Peter Paul
Nuqui and PO3 Bienvenido Real, boarded their patrol vehicle, a mini cruiser jeep, to intercept the two trucks at
Lilian Terminal, Ozamis City.3

At the Lilian Terminal, PO2 Nuqui, who was the only one in uniform among the police officers, flagged down the
two trucks but the same just sped away and proceeded towards the direction of Oroquieta City. Aboard their patrol
vehicle, they chased the trucks and overtook the same at Barangay Manabay. They blocked the road with their
vehicle causing the two trucks to stop.

According to Senior Inspector Tome, he asked the driver who had alighted from the green truck why he did not
stop at the checkpoint but the latter did not answer. When he inquired what was loaded in the truck, the driver
replied that there is "S.O.P," which means grease money in street parlance.4 This raised the suspicion of Tome
that the trucks were loaded with "hot items."

Meanwhile, the blue truck which had been speeding behind the green truck and was being driven by Sumagang
was intercepted by PO3 Real. Upon inspection, the police officers discovered piles of sawn lumber beneath the
cement bags in both trucks. Tome inquired if the drivers had a permit for the lumber but the latter could not
produce any.

The drivers were brought and turned over to the investigator at the City Hall in Ozamis City. The truckmen,
namely, Felix Arante and Doro Lopez, and another passenger whom Tigoy identified as Lolong Bertodazo, who
were riding with them in the trucks, were not investigated. According to Nuqui, they did not notice that the group
had left. It was later learned that they were instructed by Sumagang to inform Nestor Ong of the incident.

Afterwards, the group of Tome proceeded back to the ICC Arts Center and informed the Provincial Director of the
apprehension. Meanwhile, the drivers, Tigoy and Sumagang, were detained at the Ozamis City Police Station while
Arante and Lopez were released.5

Meanwhile, Ermelo delos Santos, Chief of the Department of Environment and Natural Resources – Community
and Environment and Natural Resources Office (DENR-CENRO),6 after receiving a call from the Ozamis City Police
Station that two trucks were apprehended transporting sawn lumber without a permit and were brought to the
City Hall, sent Rolando Dingal, Forester of the DENR, together with Teodoro Echavez, Juanito Taruc and Lucio
Penaroya, to investigate.

Petitioner Tigoy and Sumagang presented to Dingal the registration papers of the two trucks and appearing
therein was the name of Nestor Ong as the owner. After ascertaining that the sawn lumber loaded on the two
trucks did not have supporting documents, Dingal and his companions scaled the subject lumber and prepared a
tally sheet. Loaded in the blue Nissan ten-wheeler truck were 229 pieces of lumber with a total volume of
6,232.46 board feet; and, in the green Isuzu eight-wheeler truck, 333 pieces of lumber with a total volume of
5,095.5 board feet.7Consequently, the lumber and the vehicles were seized upon the order of the DENR Regional
Executive Director.8

On October 6, 1993, an Information was filed against Nestor Ong, Sumagang, Lolong Bertodazo and petitioner
Tigoy for possession of forest products without legal permit, thus:

That on or about the 4th day of August, 1993 at Barangay Catadman, Ozamiz City, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused, conspiring and confederating together and
mutually helping each other, for a common design, did then and there willfully, unlawfully, feloniously and illegally
possess and transport without the necessary legal documents nor permit from the lawful authorities, sawn
dipterocarp lumbers (Philippine Mahogany), in the following manner, to wit: accused Nestor Ong, being the owner
of 2 ten wheeler trucks with Plate Nos. GDA-279 and PNH-364 facilitated and allowed the use and transport of
above-stated sawn [lumber] from Larapan, Lanao del Norte, but intercepted by the PNP authorities in Ozamiz City;
while the accused Lolong Bertodazo facilitated the loading and transport of said sawn lumbers, while accused
Nestor Sumagang y Lacson drove the Nissan 10 wheeler cargo truck bearing Plate No. GDA-279 which was loaded
with 333 pieces of said sawn dipterocarp lumbers (Philippine Mahogany) of assorted sizes equivalent [to] 5,095.5
board feet which was concealed under piled bags of cement, which lumbers [were] valued at P134, 242.36; while
accused Rodolfo Tigoy drove the 8 wheeler Isuzu truck bearing Plate No. ONH-364, which was loaded and
transported with 229 pieces of sawn dipterocarp lumbers (Philippine Mahogany) of assorted sizes equivalent to
6,232.46 board feet which was concealed under piled bags of cement which lumbers [were] valued at P92,316.77
or total value of P226,559.13, without, however, causing damage to the government, inasmuch as the aforestated
lumbers were recovered.

CONTRARY to Section 68 of Presidential Decree 705, as amended by Executive Order No. 277, Series of 1987, in
relation to Article 309 and 310 of the Revised Penal Code.9

Ong and petitioner Tigoy entered pleas of not guilty during the arraignment. Sumagang died after the case was
filed while the other co-accused, Lolong Bertodazo, was not arrested and has remained at large.
On October 11, 1996, the Regional Trial Court rendered its Decision, the dispositive portion of which reads:

WHEREFORE, finding accused Nestor Ong and Rodolfo Tigoy [GUILTY] beyond reasonable doubt of possession of
dipterocarp lumber [VALUED] at more than P22,000.00 without the legal documents as required by existing laws
and regulations, penalized as qualified theft, this Court sentences them to an indeterminate penalty of ten (10)
years and one (1) day of prision mayor to eighteen (18) years and three (3) months of reclusion temporal. The
lumber and the conveyances used are forfeited in favor of the government. With costs.

The DENR is ordered to sell/dispose of the lumber and conveyances in accordance with the existing laws,
WITHOUT DELAY. Let the Court of Appeals, Fourteenth Division, before which accused Ong’s appeal of this Court’s
denial of his action for replevin relative to his trucks is pending, be furnished with a copy of this judgment.

With costs.

SO ORDERED.10

Declaring that "constructive possession" of unlicensed lumber is not within the contemplation of Section 68 of P.D.
No. 705, and for failure by the prosecution to prove the complicity of Ong, the Court of Appeals rendered its
decision on March 6, 2000 modifying the ruling of the lower court, thus:

WHEREFORE, the judgment appealed from is hereby MODIFIED in that accused-appellant Nestor Ong is acquitted
for insufficiency of evidence and his two (2) trucks are ordered returned to him. The conviction of Rodolfo Tigoy is
upheld and the decision dated October 11, 1996 is AFFIRMED in all respects.

SO ORDERED.11

On March 24, 2000, petitioner filed with the Court of Appeals a Motion for Reconsideration praying for his acquittal
but the same was denied on August 23, 2000.

Hence, this petition, with the following assignment of errors:

THE COURT OF APPEALS ERRED IN FINDING "COLLUSION" BETWEEN LOLONG BERTODAZO AND PETITIONER
TIGOY;

II

THE COURT OF APPEALS ERRED IN COMPLETELY DISREGARDING THE AFFIDAVIT OF LOLONG BERTODAZO
AGAINST HIS PENAL INTEREST;

III

THE COURT OF APPEALS ERRED IN FINDING PETITIONER TIGOY TO HAVE KNOWLEDGE OF THE LUMBER HE WAS
TRANSPORTING; AND,

IV

THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER TIGOY HAD ACTUAL AND PHYSICAL POSSESSION
OF THE UNDOCUMENTED LUMBER.12

Stated otherwise, the core issue presented is whether or not petitioner Tigoy is guilty of conspiracy in possessing
or transporting lumber without the necessary permit in violation of the Revised Forestry Code of the Philippines.

Section 68 of P.D. No. 705, as amended by E.O. No. 277, otherwise known as the Revised Forestry Code of the
Philippines, provides:

Section 68. Cutting, Gathering and/or Collecting Timber or Other Forest Products Without License. – Any person
who shall cut, gather, collect, remove timber or other forest products from any forest land, or timber from
alienable or disposable public land, or from private land, without any authority, or possess timber or other forest
products without the legal documents as required under existing forest laws and regulations, shall be punished
with the penalties imposed under Articles 309 and 310 of the Revised Penal Code. . . .
There are two ways of violating Section 68 of the above Code: 1) by cutting, gathering and/or collecting timber or
other forest products without a license; and, 2) by possessing timber or other forest products without the required
legal documents.

Petitioner was charged with and convicted of transporting lumber without a permit which is punishable under
Section 68 of the Code. He, Sumagang and the rest of their companions were apprehended by the police
officers inflagrante delicto as they were transporting the subject lumber from Larapan to Dipolog City.

Petitioner maintains that he could not have conspired with Lolong Bertodazo as he did not know about the
unlicensed lumber in the trucks. He believed that what he was transporting were bags of cement in view of the
contract between Ong and Bertodazo. Also, he was not around when Bertodazo loaded the trucks with the lumber
hidden under the bags of cement.

This contention by petitioner, however, was not believed by the lower court. In declaring that petitioner connived
with Bertodazo in transporting the subject lumber, the court a quo noted:

x x x The evidence of the prosecution established that the two drivers of accused Ong refused to stop at a
checkpoint, a fact admitted by both in their affidavit, Exhs. "E" and "E-2". Likewise, the two drivers refused to stop
on the national highway near a bus terminal when required by a uniformed policeman. When finally accosted, one
of the drivers, whom witness Tome identified as the driver of the green truck, Sumagang, but who actually was
Tigoy (as he was the driver of the green truck and who came to the road block first, being the lead driver) offered
"S.O.P." which to witness Tome meant that the trucks were carrying "hot items."

Why would the drivers refuse to stop when required? Did they fear inspection of their cargo? Why would "S.O.P."
(which in street parlance is grease money) be offered to facilitate the passage of the trucks? The only logical
answer to all these questions is that the drivers knew that they were carrying contraband lumber. This Court
believes that the drivers had knowledge of the fact that they were transporting and were in possession of
undocumented lumber in violation of law.13

In offenses considered as mala prohibita or when the doing of an act is prohibited by a special law such as in the
present case, the commission of the prohibited act is the crime itself. It is sufficient that the offender has the
intent to perpetrate the act prohibited by the special law, and that it is done knowingly and consciously. 14

Direct proof of previous agreement to commit an offense is not necessary to prove conspiracy.15 Conspiracy may
be proven by circumstantial evidence.16 It may be deduced from the mode, method and manner by which the
offense is perpetrated, or inferred from the acts of the accused when such acts point to a joint purpose and
design, concerted action and community of interest.17 It is not even required that the participants have an
agreement for an appreciable period to commence it.18

Petitioner’s actions adequately show that he intentionally participated in the commission of the offense for which
he had been charged and found guilty by both the trial court and the Court of Appeals.

Finding that petitioner’s conviction was reached without arbitrariness and with sufficient basis, this Court upholds
the same. The Court accords high respect to the findings of facts of the trial court, its calibration of the collective
testimonies of the witnesses, its assessment of the probative weight of the evidence of the parties as well as its
conclusions19 especially when these are in agreement with those of the Court of Appeals, which is the case here.
As a matter of fact, factual findings of the trial court, when adopted and confirmed by the Court of Appeals, are
generally final and conclusive.20

WHEREFORE, the petition is DENIED and the Decision and Resolution, dated March 6, 2000 and August 23,
2000, respectively, of the Court of Appeals in CA-G.R. CR No. 20864 are hereby AFFIRMED.

Costs against petitioner.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 184098 November 25, 2008

AMADO TAOPA, petitioner,
vs.
PEOPLE OF THE PHILIPPINES, respondent.

RESOLUTION

CORONA, J.:

On April 2, 1996, the Community Environment and Natural Resources Office of Virac, Catanduanes seized a truck
loaded with illegally-cut lumber and arrested its driver, Placido Cuison. The lumber was covered with bundles of
abaca fiber to prevent detection. On investigation, Cuison pointed to petitioner Amado Taopa and a certain Rufino
Ogalesco as the owners of the seized lumber.

Taopa, Ogalesco and Cuison were thereafter charged with violating Section 68 of Presidential Decree (PD) No.
705,1 as amended, in the Regional Trial Court (RTC) of Virac, Catanduanes. The information against them read:

That on or about the 2nd day of April 1996 at around 9:00 o'clock in the morning at Barangay Capilihan,
Municipality of Virac, Province of Catanduanes, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused, with intent to possess, conspiring, confederating and helping one another, did then and
there, willfully, unlawfully, criminally possess, transport in a truck bearing Plate No. EAS 839 and have in their
control forest products, particularly one hundred thirteen (113) pieces of lumber of Philippine Mahogany Group
and Apitong species with an aggregate net volume of One Thousand Six Hundred Eighty Four (1,684) board feet
with an approximate value of Ninety-Nine Thousand One Hundred Twenty (Php99,120.00) Pesos, Philippine
Currency, without any authority and/or legal documents as required under existing forest laws and regulations,
prejudicial to the public interest.

ACTS CONTRARY TO LAW.2

Taopa, Ogalesco and Cuison pleaded not guilty on arraignment. After trial on the merits, the RTC found them
guilty as charged beyond reasonable doubt.3

Only Taopa and Cuison appealed the RTC decision to the Court of Appeals (CA). Cuison was acquitted but Taopa's
conviction was affirmed.4 The dispositive portion of the CA decision read:

WHEREFORE, the Decision appealed from is REVERSED with respect to accused-appellant Placido Cuison, who
is ACQUITTED of the crime charged on reasonable doubt, and MODIFIEDwith respect to accused-appellants
Amado Taopa and Rufino Ogalesco by reducing the penalty imposed on them to four (4) years, nine (9) months
and eleven (11) days of prision correccional, as minimum, to ten (10) years of prision mayor, as maximum.

SO ORDERED.5

In this petition,6 Taopa seeks his acquittal from the charges against him. He alleges that the prosecution failed to
prove that he was one of the owners of the seized lumber as he was not in the truck when the lumber was seized.

We deny the petition.

Both the RTC and the CA gave scant consideration to Taopa's alibi because Cuison's testimony proved Taopa's
active participation in the transport of the seized lumber. In particular, the RTC and the CA found that the truck
was loaded with the cargo in front of Taopa's house and that Taopa and Ogalesco were accompanying the truck
driven by Cuison up to where the truck and lumber were seized. These facts proved Taopa's (and Ogalesco's)
exercise of dominion and control over the lumber loaded in the truck. The acts of Taopa (and of his co-accused
Ogalesco) constituted possession of timber or other forest products without the required legal documents.
Moreover, the fact that Taopa and Ogalesco ran away at the mere sight of the police was likewise largely indicative
of guilt. We are thus convinced that Taopa and Ogalesco were owners of the seized lumber.

However, we disagree with both the RTC and CA as to the penalty imposed on Taopa.

Section 68 of PD 705, as amended,7 refers to Articles 309 and 310 of the Revised Penal Code (RPC) for the
penalties to be imposed on violators. Violation of Section 68 of PD 705, as amended, is punished as qualified
theft.8 The law treats cutting, gathering, collecting and possessing timber or other forest products without license
as an offense as grave as and equivalent to the felony of qualified theft.

Articles 309 and 310 read:

Art. 309. Penalties. - Any person guilty of theft shall be punished by:

1. The penalty of prision mayor in its minimum and medium periods, if the value of the thing stolen is more
12,000 pesos but does not exceed 22,000 pesos; but if the value of the thing stolen exceeds the latter
amount, the penalty shall be the maximum period of the one prescribed in this paragraph, and one
year for each additional ten thousand pesos, but the total of the penalty which may be imposed shall not
exceed twenty years. In such cases, and in connection with the accessory penalties which may be imposed and for
the purpose of the other provisions of this Code, the penalty shall be termed prision mayor or reclusion temporal,
as the case may be. (emphasis supplied)

2. xxx

Art. 310. Qualified theft. - The crime of theft shall be punished by the penalties next higher by two degrees
than those respectively specified in the next preceding articles xxx (emphasis supplied).

The actual market value of the 113 pieces of seized lumber was P67,630.9 Following Article 310 in relation to
Article 309, the imposable penalty should be reclusion temporal in its medium and maximum periods or a period
ranging from 14 years, eight months and one day to 20 years plus an additional period of four years for the excess
of P47,630.

The minimum term of the indeterminate sentence10 imposable on Taopa shall be the penalty next lower to that
prescribed in the RPC. In this case, the minimum term shall be anywhere between 10 years and one day to 14
years and eight months or prision mayor in its maximum period to reclusion temporal in its minimum period.

The maximum term shall be the sum of the additional four years and the medium period11 of reclusion temporal in
its medium and maximum periods or 16 years, five months and 11 days to 18 years, two months and 21 days
of reclusion temporal. The maximum term therefore may be anywhere between 16 years, five months and 11 days
of reclusion temporal to 22 years, two months and 21 days of reclusion perpetua.

WHEREFORE, the petition is hereby DENIED. The January 31, 2008 decision and July 28, 2008 resolution of the
Court of Appeals in CA-G.R. CR No. 30380 are AFFIRMED with MODIFICATION. Petitioner Amado Taopa is
hereby found GUILTY beyond reasonable doubt for violation of Section 68 of PD No. 705, as amended, and
sentenced to suffer the indeterminate penalty of imprisonment from 10 years and one day of prision mayor, as
minimum, to 20 years of reclusion temporal as maximum, with the accessory penalties provided for by law.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 111107 January 10, 1997

LOEONARDO A. PAAT, in his capacity as Officer-in-Charge (OIC), Regional Executive Director (RED),
Region 2 and JOVITO LAYUGAN, JR., in his capacity as Community Environment and Natural Resources
Officer (CENRO), both of the Department of Environment and Natural Resources (DENR), petitioners,
vs.
COURT OF APPEALS, HON. RICARDO A. BACULI in his capacity as Presiding Judge of Branch 2, Regional
Trial Court at Tuguegarao, Cagayan, and SPOUSES BIENVENIDO and VICTORIA DE
GUZMAN, respondents.

TORRES, JR., J.:

Without violating the principle of exhaustion of administrative remedies, may an action for replevin prosper to
recover a movable property which is the subject matter of an administrative forfeiture proceeding in the
Department of Environment and Natural Resources pursuant to Section 68-A of P.D. 705, as amended, entitled
The Revised Forestry Code of the Philippines?

Are the Secretary of DENR and his representatives empowered to confiscate and forfeit conveyances used in
transporting illegal forest products in favor of the government?

These are two fundamental questions presented before us for our resolution.

The controversy on hand had its incipiency on May 19, 1989 when the truck of private respondent Victoria de
Guzman while on its way to Bulacan from San Jose, Baggao, Cagayan, was seized by the Department of
Environment and Natural Resources (DENR, for brevity) personnel in Aritao, Nueva Vizcaya because the driver
could not produce the required documents for the forest products found concealed in the truck. Petitioner Jovito
Layugan, the Community Environment and Natural Resources Officer (CENRO) in Aritao, Cagayan, issued on May
23, 1989 an order of confiscation of the truck and gave the owner thereof fifteen (15) days within which to submit
an explanation why the truck should not be forfeited. Private respondents, however, failed to submit the required
explanation. On June 22, 1989,1 Regional Executive Director Rogelio Baggayan of DENR sustained petitioner
Layugan's action of confiscation and ordered the forfeiture of the truck invoking Section 68-A of Presidential
Decree No. 705 as amended by Executive Order No. 277. Private respondents filed a letter of reconsideration
dated June 28, 1989 of the June 22, 1989 order of Executive Director Baggayan, which was, however, denied in a
subsequent order of July 12, 1989.2 Subsequently, the case was brought by the petitioners to the Secretary of
DENR pursuant to private respondents' statement in their letter dated June 28, 1989 that in case their letter for
reconsideration would be denied then "this letter should be considered as an appeal to the Secretary." 3 Pending
resolution however of the appeal, a suit for replevin, docketed as Civil Case 4031, was filed by the private
respondents against petitioner Layugan and Executive Director Baggayan4 with the Regional Trial Court, Branch 2
of Cagayan,5 which issued a writ ordering the return of the truck to private respondents.6 Petitioner Layugan and
Executive Director Baggayan filed a motion to dismiss with the trial court contending, inter alia, that private
respondents had no cause of action for their failure to exhaust administrative remedies. The trial court denied the
motion to dismiss in an order dated December 28, 1989.7 Their motion for reconsideration having been likewise
denied, a petition for certiorariwas filed by the petitioners with the respondent Court of Appeals which sustained
the trial court's order ruling that the question involved is purely a legal question. 8 Hence, this present
petition,9 with prayer for temporary restraining order and/or preliminary injunction, seeking to reverse the
decision of the respondent Court of Appeals was filed by the petitioners on September 9, 1993. By virtue of the
Resolution dated September 27, 1993,10 the prayer for the issuance of temporary restraining order of petitioners
was granted by this Court.

Invoking the doctrine of exhaustion of administrative remedies, petitioners aver that the trial court could not
legally entertain the suit for replevin because the truck was under administrative seizure proceedings pursuant to
Section 68-A of P.D. 705, as amended by E.O. 277. Private respondents, on the other hand, would seek to avoid
the operation of this principle asserting that the instant case falls within the exception of the doctrine upon the
justification that (1) due process was violated because they were not given the chance to be heard, and (2) the
seizure and forfeiture was unlawful on the grounds: (a) that the Secretary of DENR and his representatives have
no authority to confiscate and forfeit conveyances utilized in transporting illegal forest products, and (b) that the
truck as admitted by petitioners was not used in the commission of the crime.

Upon a thorough and delicate scrutiny of the records and relevant jurisprudence on the matter, we are of the
opinion that the plea of petitioners for reversal is in order.

This Court in a long line of cases has consistently held that before a party is allowed to seek the intervention of the
court, it is a pre-condition that he should have availed of all the means of administrative processes afforded him.
Hence, if a remedy within the administrative machinery can still be resorted to by giving the administrative officer
concerned every opportunity to decide on a matter that comes within his jurisdiction then such remedy should be
exhausted first before court's judicial power can be sought, The premature invocation of court's intervention is
fatal to one's cause of action.11 Accordingly, absent any finding of waiver or estoppel the case is susceptible of
dismissal for lack of cause of
action.12 This doctrine of exhaustion of administrative remedies was not without its practical and legal reasons, for
one thing, availment of administrative remedy entails lesser expenses and provides for a speedier disposition of
controversies. It is no less true to state that the courts of justice for reasons of comity and convenience will shy
away from a dispute until the system of administrative redress has been completed and complied with so as to
give the administrative agency concerned every opportunity to correct its error and to dispose of the case.
However, we are not amiss to reiterate that the principle of exhaustion of administrative remedies as tested by a
battery of cases is not an ironclad rule. This doctrine is a relative one and its flexibility is called upon by the
peculiarity and uniqueness of the factual and circumstantial settings of a case. Hence, it is disregarded (1) when
there is a violation of due process,13 (2) when the issue involved is purely a legal question,14 (3) when the
administrative action is patently illegal amounting to lack or excess of jurisdiction,15 (4) when there is estoppel on
the part of the administrative agency concerned,16 (5) when there is irreparable injury,17 (6) when the respondent
is a department secretary whose acts as an alter ego of the President bears the implied and assumed approval of
the latter,18 (7) when to require exhaustion of administrative remedies would be unreasonable,19 (8) when it would
amount to a nullification of a claim,20 (9) when the subject matter is a private land in land case
proceedings,21 (10) when the rule does not provide a plain, speedy and adequate remedy, and (11) when there
are circumstances indicating the urgency of judicial intervention.22

In the case at bar, there is no question that the controversy was pending before the Secretary of DENR when it
was forwarded to him following the denial by the petitioners of the motion for reconsideration of private
respondents through the order of July 12, 1989. In their letter of reconsideration dated June 28, 1989,23 private
respondents clearly recognize the presence of an administrative forum to which they seek to avail, as they did
avail, in the resolution of their case. The letter, reads, thus:

xxx xxx xxx

If this motion for reconsideration does not merit your favorable action, then this letter should be
considered as an appeal to the
Secretary.24

It was easy to perceive then that the private respondents looked up to the Secretary for the review and disposition
of their case. By appealing to him, they acknowledged the existence of an adequate and plain remedy still
available and open to them in the ordinary course of the law. Thus, they cannot now, without violating the
principle of exhaustion of administrative remedies, seek court's intervention by filing an action for replevin for the
grant of their relief during the pendency of an administrative proceedings.

Moreover, it is important to point out that the enforcement of forestry laws, rules and regulations and the
protection, development and management of forest lands fall within the primary and special responsibilities of the
Department of Environment and Natural Resources. By the very nature of its function, the DENR should be given a
free hand unperturbed by judicial intrusion to determine a controversy which is well within its jurisdiction. The
assumption by the trial court, therefore, of the replevin suit filed by private respondents constitutes an unjustified
encroachment into the domain of the administrative agency's prerogative. The doctrine of primary jurisdiction
does not warrant a court to arrogate unto itself the authority to resolve a controversy the jurisdiction over which is
initially lodged with an administrative body of special competence. 25 In Felipe Ismael, Jr. and Co. vs. Deputy
Executive Secretary,26 which was reiterated in the recent case of Concerned Officials of MWSS vs. Vasquez,27 this
Court held:

Thus, while the administration grapples with the complex and multifarious problems caused by
unbriddled exploitation of these resources, the judiciary will stand clear. A long line of cases
establish the basic rule that the courts will not interfere in matters which are addressed to the
sound discretion of government agencies entrusted with the regulation of activities coming under
the special technical knowledge and training of such agencies.

To sustain the claim of private respondents would in effect bring the instant controversy beyond the pale of the
principle of exhaustion of administrative remedies and fall within the ambit of excepted cases heretofore stated.
However, considering the circumstances prevailing in this case, we can not but rule out these assertions of private
respondents to be without merit. First, they argued that there was violation of due process because they did not
receive the May 23, 1989 order of confiscation of petitioner Layugan. This contention has no leg to stand on. Due
process does not necessarily mean or require a hearing, but simply an opportunity or right to be heard. 28 One may
be heard, not solely by verbal presentation but also, and perhaps many times more creditably and practicable than
oral argument, through pleadings.29 In administrative proceedings moreover, technical rules of procedure and
evidence are not strictly applied; administrative process cannot be fully equated with due process in its strict
judicial sense.30 Indeed, deprivation of due process cannot be successfully invoked where a party was given the
chance to be heard on his motion for reconsideration,31 as in the instant case, when private respondents were
undisputedly given the opportunity to present their side when they filed a letter of reconsideration dated June 28,
1989 which was, however, denied in an order of July 12, 1989 of Executive Director Baggayan, In Navarro III
vs. Damasco,32 we ruled that :

The essence of due process is simply an opportunity to be heard, or as applied to administrative

proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of
the action or ruling complained of. A formal or trial type hearing is not at all times and in all
instances essential. The requirements are satisfied when the parties are afforded fair and
reasonable opportunity to explain their side of the controversy at hand. What is frowned upon is
the absolute lack of notice or hearing.

Second, private respondents imputed the patent illegality of seizure and forfeiture of the truck because the
administrative officers of the DENR allegedly have no power to perform these acts under the law. They insisted
that only the court is authorized to confiscate and forfeit conveyances used in transporting illegal forest products
as can be gleaned from the second paragraph of Section 68 of P.D. 705, as amended by E.O. 277. The pertinent
provision reads as follows:
 Sec. 68. . . .

xxx xxx xxx

The court shall further order the confiscation in favor of the government of the timber or any
forest products cut, gathered, collected, removed, or possessed, as well as
the machinery, equipments, implements and tools illegaly [sic] used in the area where the timber
or forest products are found. (Emphasis ours)

A reading, however, of the law persuades us not to go along with private respondents' thinking not only because
the aforequoted provision apparently does not mention nor include "conveyances" that can be the subject of
confiscation by the courts, but to a large extent, due to the fact that private respondents' interpretation of the
subject provision unduly restricts the clear intention of the law and inevitably reduces the other provision of
Section 68-A, which is quoted herein below:

Sec. 68-A. Administrative Authority of the Department or His Duly Authorized Representative To
Order Confiscation. In all cases of violation of this Code or other forest laws, rules and regulations,
the Department Head or his duly authorized representative, may order the confiscation of any
forest products illegally cut, gathered, removed, or possessed or abandoned, and all conveyances
used either by land, water or air in the commission of the offense and to dispose of the same in
accordance with pertinent laws, regulations and policies on the matter. (Emphasis ours)

It is, thus, clear from the foregoing provision that the Secretary and his duly authorized representatives are given
the authority to confiscate and forfeit any conveyances utilized in violating the Code or other forest laws, rules and
regulations. The phrase "to dispose of the same" is broad enough to cover the act of forfeiting conveyances in
favor of the government. The only limitation is that it should be made "in accordance with pertinent laws,
regulations or policies on the matter." In the construction of statutes, it must be read in such a way as to give
effect to the purpose projected in the statute.33 Statutes should be construed in the light of the object to be
achieved and the evil or mischief to be suppressed, and they should be given such construction as will advance the
object, suppress the mischief, and secure the benefits intended.34 In this wise, the observation of the Solicitor
General is significant, thus:

But precisely because of the need to make forestry laws "more responsive to present situations
and realities" and in view of the "urgency to conserve the remaining resources of the country,"
that the government opted to add Section 68-A. This amendatory provision is an administrative
remedy totally separate and distinct from criminal proceedings. More than anything else, it is
intended to supplant the inadequacies that characterize enforcement of forestry laws through
criminal actions. The preamble of EO 277-the law that added Section 68-A to PD 705-is most
revealing:

"WHEREAS, there is an urgency to conserve the remaining forest resources of the

country for the benefit and welfare of the present and future generations of
Filipinos;

WHEREAS, our forest resources may be effectively conserved and protected

through the vigilant enforcement and implementation of our forestry laws, rules
and regulations;

WHEREAS, the implementation of our forestry laws suffers from technical

difficulties, due to certain inadequacies in the penal provisions of the Revised
Forestry Code of the Philippines; and

WHEREAS, to overcome this difficulties, there is a need to penalize certain acts

more responsive to present situations and realities;"

It is interesting to note that Section 68-A is a new provision authorizing the DENR to confiscate,
not only "conveyances," but forest products as well. On the other hand, confiscation of forest
products by the "court" in a criminal action has long been provided for in Section 68. If as private
respondents insist, the power on confiscation cannot be exercised except only through the court
under Section 68, then Section 68-A would have no Purpose at all. Simply put, Section 68-A would
not have provided any solution to the problem perceived in EO 277, supra.35

Private respondents, likewise, contend that the seizure was illegal because the petitioners themselves admitted in
the Order dated July 12, 1989 of Executive Director Baggayan that the truck of private respondents was not used
in the commission of the crime. This order, a copy of which was given to and received by the counsel of private
respondents, reads in part, viz.:
 . . . while it is true that the truck of your client was not used by her in the commission of the
crime, we uphold your claim that the truck owner is not liable for the crime and in no case could a
criminal case be filed against her as provided under Article 309 and 310 of the Revised Penal Code.
. .36

We observed that private respondents misread the content of the aforestated order and obviously misinterpreted
the intention of petitioners. What is contemplated by the petitioners when they stated that the truck "was not used
in the commission of the crime" is that it was not used in the commission of the crime of theft, hence, in no case
can a criminal action be filed against the owner thereof for violation of Article 309 and 310 of the Revised Penal
Code. Petitioners did not eliminate the possibility that the truck was being used in the commission of another
crime, that is, the breach of Section 68 of P.D. 705 as amended by E.O. 277. In the same order of July 12, 1989,
petitioners pointed out:

. . . However, under Section 68 of P.D. 705 as amended and further amended by Executive Order
No. 277 specifically provides for the confiscation of the conveyance used in the transport of forest
products not covered by the required legal documents. She may not have been involved in the
cutting and gathering of the product in question but the fact that she accepted the goods for a fee
or fare the same is therefor liable. . .37

Private respondents, however, contended that there is no crime defined and punishable under Section 68 other
than qualified theft, so that, when petitioners admitted in the July 12, 1989 order that private respondents could
not be charged for theft as provided for under Articles 309 and 310 of the Revised Penal Code, then necessarily
private respondents could not have committed an act constituting a crime under Section 68. We disagree. For
clarity, the provision of Section 68 of P.D. 705 before its amendment by E.O. 277 and the provision of Section 1 of
E.O. No. 277 amending the aforementioned Section 68 are reproduced herein, thus:

Sec. 68. Cutting, gathering and/or collecting timber or other products without license. — Any
person who shall cut, gather, collect, or remove timber or other forest products from any forest
land, or timber from alienable and disposable public lands, or from private lands, without any
authority under a license agreement, lease, license or permit, shall be guilty of qualified theft as
defined and punished under Articles 309 and 310 of the Revised Penal Code . . . (Emphasis ours;
Section 68, P.D. 705 before its amendment by E.O. 277)

Sec. 1. Section 68 of Presidential Decree No. 705, as amended, is hereby amended to read as
follows:

Sec. 68. Cutting, gathering and/or collecting timber or other forest products
without license. — Any person who shall cut, gather, collect, remove timber or
other forest products from any forest land, or timber from alienable or disposable
public land, or from private land, without any authority, or possess timber or other
forest products without the legal documents as required under existing forest laws
and regulations, shall be punished with the penalties imposed under Articles 309
and 310 of the Revised Penal Code . . . (Emphasis ours; Section 1, E.O. No. 277
amending Section 68, P.D. 705 as amended)

With the introduction of Executive Order No. 277 amending Section 68 of P.D. 705, the act of cutting, gathering,
collecting, removing, or possessing forest products without authority constitutes a distinct offense independent
now from the crime of theft under Articles 309 and 310 of the Revised Penal Code, but the penalty to be imposed
is that provided for under Article 309 and 310 of the Revised Penal Code. This is clear from the language of
Executive Order No. 277 when it eliminated the phrase "shall be guilty of qualified theft as defined and punished
under Articles 309 and 310 of the Revised Penal Code" and inserted the words "shall be punished with the
penalties imposed under Article 309 and 310 of the Revised Penal Code". When the statute is clear and explicit,
there is hardly room for any extended court ratiocination or rationalization of the law. 38

From the foregoing disquisition, it is clear that a suit for replevin can not be sustained against the petitioners for
the subject truck taken and retained by them for administrative forfeiture proceedings in pursuant to Section 68-A
of the P.D. 705, as amended. Dismissal of the replevin suit for lack of cause of action in view of the private
respondents' failure to exhaust administrative remedies should have been the proper course of action by the lower
court instead of assuming jurisdiction over the case and consequently issuing the writ ordering the return of the
truck. Exhaustion of the remedies in the administrative forum, being a condition precedent prior to one's recourse
to the courts and more importantly, being an element of private respondents' right of action, is too significant to
be waylaid by the lower court.

It is worth stressing at this point, that a suit for replevin is founded solely on the claim that the defendant
wrongfully withholds the property sought to be recovered. It lies to recover possession of personal chattels that
are unlawfully detained.39 "To detain" is defined as to mean "to hold or keep in custody,"40 and it has been held
that there is tortious taking whenever there is an unlawful meddling with the property, or an exercise or claim of
dominion over it, without any pretense of authority or right; this, without manual seizing of the property is
sufficient.41 Under the Rules of Court, it is indispensable in replevin proceeding that the plaintiff must show by his
own affidavit that he is entitled to the possession of property, that the property is wrongfully detained by the
defendant, alleging the cause of detention, that the same has not been taken for tax assessment, or seized under
execution, or attachment, or if so seized, that it is exempt from such seizure, and the actual value of the
property.42 Private respondents miserably failed to convince this Court that a wrongful detention of the subject
truck obtains in the instant case. It should be noted that the truck was seized by the petitioners because it was
transporting forest products without the required permit of the DENR in manifest contravention of Section 68 of
P.D. 705 as amended by E.O 277. Section 68-A of P.D. 705, as amended, unquestionably warrants the
confiscation as well as the disposition by the Secretary of DENR or his duly authorized representatives of the
conveyances used in violating the provision of forestry laws. Evidently, the continued possession or detention of
the truck by the petitioners for administrative forfeiture proceeding is legally permissible, hence, no wrongful
detention exists in the case at bar.

Moreover, the suit for replevin is never intended as a procedural tool to question the orders of confiscation and
forfeiture issued by the DENR in pursuance to the authority given under P.D. 705, as amended. Section 8 of the
said law is explicit that actions taken by the Director of the Bureau of Forest Development concerning the
enforcement of the provisions of the said law are subject to review by the Secretary of DENR and that courts may
not review the decisions of the Secretary except through a special civil action for certiorari or prohibition. It reads:

Sec. 8. REVIEW — All actions and decisions of the Director are subject to review, motu propio or
upon appeal of any person aggrieved thereby, by the Department Head whose decision shall be
final and executory after the lapse of thirty (30) days from the receipt of the aggrieved party of
said decision, unless appealed to the President in accordance with Executive Order No. 19, Series
of 1966. The Decision of the Department Head may not be reviewed by the courts except through
a special civil action for certiorari or prohibition.

WHEREFORE, the Petition is GRANTED; the Decision of the respondent Court of Appeals dated October 16, 1991
and its Resolution dated July 14, 1992 are hereby SET ASIDE AND REVERSED; the Restraining Order promulgated
on September 27, 1993 is hereby made permanent; and the Secretary of DENR is directed to resolve the
controversy with utmost dispatch.

SO ORDERED.

Regalado, Romero, Puno and Mendoza, JJ., concur.