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