G.R. No.

127882             December 1, 2004

LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., Represented by its Chairman F'LONG

PANGANIBAN, J.:

Facts: The constitutional provision allowing the President to enter into FTAA is a exception to the rule
that participation in the nation’s natural resources is reserved exclusively to Filipinos. Provision must be
construed strictly against their enjoyment by non-Filipinos.
RA 7942 (The Philippine Mining Act) took effect on April 9, 1995. Before the effectivity of RA 7942, or on
March 30, 1995, the President signed a Financial and Technical Assistance Agreement (FTAA) with
WMCP, a corporation organized under Philippine laws, covering close to 100,000 hectares of land in
South Cotabato, Sultan Kudarat, Davao del Sur and North Cotabato. On August 15, 1995, the
Environment Secretary Victor Ramos issued DENR Administrative Order 95-23, which was later repealed
by DENR Administrative Order 96-40, adopted on December 20, 1996.
Petitioners prayed that RA 7942, its implementing rules, and the FTAA between the government and
WMCP be declared unconstitutional on ground that they allow fully foreign owned corporations like
WMCP to exploit, explore and develop Philippine mineral resources in contravention of Article
XII Section 2 paragraphs 2 and 4 of the Charter.
In January 2001, WMC – a publicly listed Australian mining and exploration company – sold its whole
stake in WMCP to Sagittarius Mines, 60% of which is owned by Filipinos while 40% of which is owned by
Indophil Resources, an Australian company. DENR approved the transfer and registration of the FTAA in
Sagittarius‘ name but Lepanto Consolidated assailed the same. The latter case is still pending before the
Court of Appeals.
EO 279, issued by former President Aquino on July 25, 1987, authorizes the DENR to accept, consider
and evaluate proposals from foreign owned corporations or foreign investors for contracts or
agreements involving wither technical or financial assistance for large scale exploration, development
and utilization of minerals which upon appropriate recommendation of the (DENR) Secretary, the
President may execute with the foreign proponent. WMCP likewise contended that the annulment of
the FTAA would violate a treaty between the Philippines and Australia which provides for the protection
of Australian investments.
ISSUES:
1. Whether or not the Philippine Mining Act is unconstitutional for allowing fully foreign-owned
corporations to exploit the Philippine mineral resources. 2. Whether or not the FTAA between the
government and WMCP is a ―service contract that permits fully foreign owned companies to exploit
the Philippine mineral resources.
HELD:
First Issue: RA 7942 is Unconstitutional
RA 7942 or the Philippine Mining Act of 1995 is unconstitutional for permitting fully foreign owned
corporations to exploit the Philippine natural resources.
Article XII Section 2 of the 1987 Constitution retained the Regalian Doctrine which states that ―All lands
of the public domain, waters, minerals, coal, petroleum, and other minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are owned by the State. The same section also states that, ―the exploration
and development and utilization of natural resources shall be under the full control and supervision of
the State.
Conspicuously absent in Section 2 is the provision in the 1935 and 1973 Constitution authorizing the
State to grant licenses, concessions, or leases for the exploration, exploitation, development, or
utilization of natural resources. By such omission, the utilization of inalienable lands of the
public domain through license, concession or lease is no longer allowed under the 1987 Constitution.
Under the concession system, the concessionaire makes a direct equity investment for the purpose of
exploiting a particular natural resource within a given area. The concession amounts to complete control
by the concessionaire over the country‘s natural resource, for it is given exclusive and plenary rights to
exploit a particular resource at the point of extraction.
The 1987 Constitution, moreover, has deleted the phrase ―management or other forms of assistance in
the 1973 Charter. The present Constitution now allows only ―technical and financial assistance.
The management and the operation of the mining activities by foreign contractors, the primary feature
of the service contracts was precisely the evil the drafters of the 1987 Constitution sought to avoid.
The constitutional provision allowing the President to enter into FTAAs is an exception to the rule that
participation in the nation‘s natural resources is reserved exclusively to Filipinos. Accordingly, such
provision must be construed strictly against their enjoyment by non-Filipinos. Therefore, RA 7942 is
invalid insofar as the said act authorizes service contracts. Although the statute employs the phrase
―financial and technical agreements in accordance with the 1987 Constitution, its pertinent provisions
actually treat these agreements as service contracts that grant beneficial ownership to foreign
contractors contrary to the fundamental law.
The underlying assumption in the provisions of the law is that the foreign contractor manages the
mineral resources just like the foreign contractor in a service contract. By allowing foreign contractors to
manage or operate all the aspects of the mining operation, RA 7942 has, in effect,
conveyed beneficial ownership over the nation‘s mineral resources to these contractors, leaving the
State with nothing but bare title thereto.
The same provisions, whether by design or inadvertence, permit a circumvention of the constitutionally
ordained 60-40% capitalization requirement for corporations or associations engaged in the
exploitation, development and utilization of Philippine natural resources.
When parts of a statute are so mutually dependent and connected as conditions, considerations,
inducements or compensations for each other as to warrant a belief that the legislature intended them
as a whole, then if some parts are unconstitutional, all provisions that are thus dependent, conditional
or connected, must fail with them.
Under Article XII Section 2 of the 1987 Charter, foreign owned corporations are limited only to merely
technical or financial assistance to the State for large scale exploration, development and utilization of
minerals, petroleum and other mineral oils.
Second Issue: RP Government-WMCP FTAA is a Service Contract
The FTAA between he WMCP and the Philippine government is likewise unconstitutional since the
agreement itself is a service contract.
Section 1.3 of the FTAA grants WMCP a fully foreign owned corporation, the exclusive right to explore,
exploit, utilize and dispose of all minerals and by-products that may be produced from the contract
area. Section 1.2 of the same agreement provides that EMCP shall provide all financing,
technology, management, and personnel necessary for the Mining Operations.
These contractual stipulations and related provisions in the FTAA taken together, grant
WMCP beneficial ownership over natural resources that properly belong to the State and are intended
for the benefit of its citizens. These stipulations are abhorrent to the 1987 Constitution. They are
precisely the vices that the fundamental law seeks to avoid, the evils that it aims to suppress.
Consequently, the contract from which they spring must be struck down.

G.R. No. 137705               August 22, 2000

SERG'S PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners,

PANGANIBAN, J.:

Facts:
Respondent PCI Leasing and Finance, Inc, filed with the RTC-QC a complaint for a sum of money with an
application for a writ of replevin.
Respondent Judge issued a writ of replevin directing its sheriff to seize and deliver the machineries and
equipment to PCI after 5 days and upon the payment of the necessary expenses.
In the implementation of the said writ, the sheriff proceeded to petitioner’s factory, seized one
machinery with word that he would return for the other.
Petitioners filed a motion for special protective order, invoking the power of the court to control the
conduct of its officers and amend and control its processes, praying for a directive for the sheriff to defer
enforcement of the writ of replevin.
The motion was opposed by PCI Leasing, on the ground that the properties were still personal and
therefore still subject to seizure and a writ of replevin.
The sheriff again sought to enforce the writ of seizure and take possession of the remaining properties.
He was able to take two more, but was prevented by the workers from taking the rest.

Issue:
1.        Whether or not the machineries purchased and imported by Serg’s became real property by
virtue of immobilization.
2.        Whether or not the contract between the parties is valid.

Ruling:
The petition is not meritorious.
1.        No.
The machines that were subjects of the Writ of seizure were placed by petitioners in the factory built on
their own land. Indisputably, they were essential and principal elements of their chocolate-making
industry. Hence, although each of them was movable or personal property on its own, all of them have
become immobilized by destination because they are essential and principal elements in the industry. In
that sense petitioners are correct in arguing that the said machines are real property pursuant to Article
415 (5) of the Civil Code.
But the Court disagrees with the submission of the petitioners that the said machines are not proper
subject of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real property be considered as
personal. After agreeing to such stipulation, they are consequently stopped from claiming otherwise.
Under the principle of estoppels, a party to a contract is ordinarily precluded from denying the truth of
any material fact found therein.
Clearly then, petitioners are stopped from denying the characterization of the subject machines as
personal property. Under circumstances, they are proper subjects of the Writ of Seizure.
It should be stressed, however, that the Court’s holding-that the machines should be deemed personal
property pursuant to the Lease Agreement-is good only insofar as the contracting parties are concerned.
Hence, while the parties are bound by the Agreement, third persons acting in good faith are not affected
by its stipulation characterizing the subject machinery as personal. In any event, there is no showing that
any specific third party would be adversely affected.

2.        Yes.
It should be pointed out that the Court may rely on the Lease Agreement, for nothing on the record
shows that it has been nullified or annulled. In fact, petitioners assailed it first only in the RTC
proceedings, which had ironically been instituted by respondent. Accordingly, it must be presumed valid
and binding as the law between the parties.

Petition denied. Judgment affirmed.

Note:
Article 415. The following are immovable property:
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly to
meet the needs of the said industry or works.

G.R. No. L-64261 December 26, 1984

JOSE BURGOS, SR., JOSE BURGOS, JR., BAYANI SORIANO and J. BURGOS MEDIA
SERVICES, INC., petitioners,
vs.
THE CHIEF OF STAFF, ARMED FORCES OF THE PHILIPPINES, THE CHIEF, PHILIPPINE
CONSTABULARY, THE CHIEF LEGAL OFFICER, PRESIDENTIAL SECURITY COMMAND, THE
JUDGE ADVOCATE GENERAL, ET AL., respondents.

Lorenzo M. Tañada, Wigberto E. Tañada, Martiniano Vivo, Augusto Sanchez, Joker P. Arroyo,
Jejomar Binay and Rene Saguisag for petitioners.

The Solicitor General for respondents.

ESCOLIN, J.:

Facts:
Two warrants were issued against petitioners for the search on the premises of “Metropolitan Mail” and
“We Forum” newspapers and the seizure of items alleged to have been used in subversive activities.
Petitioners prayed that a writ of preliminary mandatory and prohibitory injunction be issued for the
return of the seized articles, and that respondents be enjoined from using the articles thus seized as
evidence against petitioner.
Petitioners questioned the warrants for the lack of probable cause and that the two warrants issued
indicated only one and the same address. In addition, the items seized subject to the warrant were real
properties.
 Issue: Whether or not the two warrants were valid to justify seizure of the items.
 Held:
The defect in the indication of the same address in the two warrants was held by the court as a
typographical error and immaterial in view of the correct determination of the place sought to be
searched set forth in the application. The purpose and intent to search two distinct premises was
evident in the issuance of the two warrant.
As to the issue that the  items seized were real properties, the court applied the principle in the case
of Davao Sawmill Co. v. Castillo, ruling “that machinery which is movable by nature becomes
immobilized when placed by the owner of the tenement, property or plant, but not so when placed by a
tenant, usufructuary, or any other person having only a temporary right, unless such person acted as the
agent of the owner.” In the case at bar, petitioners did not claim to be the owners of the land and/or
building on which the machineries were placed. This being the case, the machineries in question, while
in fact bolted to the ground remain movable property susceptible to seizure under a search warrant.
However, the Court declared the two warrants null and void.
 Probable cause for a search is defined as such facts and circumstances which would lead a reasonably
discreet and prudent man to believe that an offense has been committed and that the objects sought in
connection with the offense are in the place sought to be searched.
 The Court ruled that the affidavits submitted for the application of the warrant did not satisfy the
requirement of probable cause, the statements of the witnesses having been mere generalizations.
 Furthermore, jurisprudence tells of the prohibition on the issuance of general warrants. (Stanford vs.
State of Texas). The description and enumeration in the warrant of the items to be searched and seized
did not indicate with specification the subversive nature of the said items.

G.R. Nos. L-10817-18             February 28, 1958

ENRIQUE LOPEZ, petitioner,
vs.
VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.

Nicolas Belmonte and Benjamin T. de Peralta for petitioner.

FELIX, J.:

The Building is an immovable by itself, separate and distinct from the land from which it is attached.

FACTS:
Orosa invited Lopez to invest with him in building a theatre. Lopez supplied wood for the construction of
the said theatre. The materials totaled 62k but Orosa was only able to pay 20k thus leaving a balance of
almost 42k. Later on respondents acquired a bank loan of 30k, wherein Luzon Surety Company as their
surety and the land and buildings as mortgages. Petitioner sued to collect the unpaid materials and was
able to get a judgment against the respondents making them jointly liable to pay the remaining amount.
Also, he was able to obtain a materialman’s lien on the building of the theatre. The stocks amounting to
42k shall be sold in public auction in case the respondents default. Petitioner wasn’t happy because he
also wanted a lien on the land, urging that the judgment lien should include it since the building and the
land are inseparable.

ISSUE:
Whether or not the building and the land are inseperable and W/N petitioner can obtain a lien on the
land as well?

RULING:
NO to both! The contention that the lien executed in favor of the furnisher of the materials used for the
construction, repair or refection of a building is also extended to land on which the construction was
made is without merit, because while it is true that generally, real estate connotes the land and the
building constructed thereon, it is obvious that the inclusion of the building, separate and distinct from
the land in the enumeration (in the CC) of what may constitute real properties could mean only one
thing- that a building is by itself an immovable property.

The preference to unregistered lien is only with respect to the real estate upon which the refection or
work was made. The materialman’s lien could be charged only to the building for which the credit was
made or which received the benefit of refection.

Another good digest

G.R. Nos. L-10817-18             February 28, 1958

ENRIQUE LOPEZ, petitioner,
vs.
VICENTE OROSA, JR., and PLAZA THEATRE, INC., respondents.

Nicolas Belmonte and Benjamin T. de Peralta for petitioner.

FELIX, J.:

FACTS:
1. Lopez was engaged in business under the name Lopez-Castelo Sawmill.
2. Orosa, who lived in the same province as Lopez, one dayapproached Lopez and invited the latter to
make an investment inthe theatre business.
3. Orosa, his family and close friends apparently were forming acorporation named Plaza Theatre.
4. Lopez expressed his unwillingness to invest. Nonetheless, therewas an oral agreement between Lopez
and Orosa that Lopezwould be supplying the lumber for the construction of the [Link] terms were
the following: one, Orosa would be personallyliable for any account that the said construction would
incur; two,payment would be by demand and not by cash on delivery.
5. Pursuant to the agreement, Lopez delivered the lumber for theconstruction. Lopez was only paid one-
third of the total cost.
6. The land on which the building has been erected was previously owned by Orosa, which was later on
purchased by the corporation.
7. Due to the incessant demands of Lopez, the corporation mortgaged its properties.
8. On an earlier relevant date, the corporation obtained a loan with Luzon Surety Company as surety and
in turn, the corporation executed a mortgage over the land and building. In the registration of the land
under Act 496, such mortgage wasn’t revealed.
9. Also due to the demands of Lopez, Orosa issued a deed of assignment over his shares of stock in the
corporation.
10. As there was still an unpaid balance, Lopez filed a case against Orosa and Plaza theatre. He asked
that Orosa and Plaza theatre be held liable solidarily for the unpaid balance; and in case defendants
failed to pay, the land and building should be sold in public auction with the proceeds to be applied to
the balance; or
that the shares of stock be sold in public auction. Lopez also had lis pendens be annotated in the OCT.
11. The trial court decided that there was joint liability between defendants and that the materialman’s
lien was only confined tothe building.
ISSUES:
W/N the materialmen’s lien for the value of the materials used in the construction of the building
attaches to said structure alone and doesn’t extend to the land on which the building is adhered to?
HELD:
The contention that the lien executed in favor of the furnisher of materials used for the construction and
repair of a building is also extended to land on which the building was constructed is without merit. For
while it is true that generally, real estate connotes the land and the building constructed thereon, it is
obvious that the inclusion of the building in the enumeration of what may constitute real properties
could only mean one thing—that a building is by itself an immovable property. Moreover, in the absence
of
any specific provision to the contrary, a building is an immovable property irrespective of whether or not
said structure and the land on which it is adhered to belong to the same owner.
Appelant invoked Article 1923 of the Spanish Civil Code, which provides—“With respect to determinate
real property and real rights of the debtor, the following are preferred: xxx Credits for reflection, not
entered or recorded, and only with respect to other credits different from those mentioned in four next
preceding paragraphs.” Close examination of the abovementioned provision reveals that the law gives
preference to unregistered refectionary credits only with respect to the real estate upon which the
refectionary or work was made. This being so, the inevitable conclusion must be that the lien so created
attaches merely to the immovable property for the construction or repair of which the obligation was
incurred. Therefore, the lien in favor of appellant for the unpaid value of the lumber used in the
construction of the building attaches only to said structure and to no other property of the obligors.