G.R. No. 181274 - Philippine Economic Zone Authority vs. Carantes

Case Summary (G.R. No. 181274)

Factual Background

Respondents were in possession of a 30,368-square meter parcel of land located in Loakan Road, Baguio City. On June 20, 1997, they obtained Certificate of Ancestral Land Claim (CALC) No. CAR-CALC-022 from the Department of Environment and Natural Resources (DENR). On the strength of this CALC, respondents secured a building permit and a fencing permit from Baguio City Building Official Teodoro G. Barrozo. Respondents thereafter fenced the premises and began constructing a residential building.

On February 9, 1999, respondents received a letter from Digna D. Torres, Zone Administrator of PEZA, informing them that the house they built had overlapped PEZA’s territorial boundary. Torres advised respondents to demolish the structure within sixty (60) days from notice. The letter warned that, upon failure, PEZA would undertake demolition at respondents’ expense.

Without responding to the PEZA notice, respondents filed a petition for injunction before the RTC of Baguio City, seeking a temporary restraining order (TRO) and a writ of preliminary injunction. The RTC issued a TRO on April 8, 1999, directing PEZA to cease and desist from threatening demolition before respondents’ application for a writ of preliminary injunction could be heard. On September 19, 2001, the RTC ordered the parties to maintain the status quo pending resolution. On October 2, 2001, the RTC granted the petition for injunction and ordered the issuance of a writ enjoining PEZA from dispossessing or disturbing respondents’ peaceful possession and occupation of the land.

RTC’s Ruling Granting Injunction

The RTC held that respondents were entitled to possess, occupy, and cultivate the subject lots based on their CALC. It reasoned that, by definition under R.A. No. 8371, ancestral land is segregated from lands of the public domain, such that respondents’ rights over the land were already vested and could not be disturbed by Proclamation No. 1825, which included the area within an export processing zone.

Court of Appeals Proceedings and Decision

On appeal, the Court of Appeals affirmed the RTC ruling in a Decision dated October 26, 2007. The appellate court echoed the trial court’s declaration that the lots were set aside from the lands of the public domain and that respondents were entitled to protection against PEZA’s threatened action.

Issues Raised by Petitioner PEZA

PEZA challenged the CA decision on two issues. First, it questioned whether PEZA or the City Engineer/City Building Official of Baguio City had legal authority to issue building and fencing permits for constructions within the PEZA-BCEZ. Second, it questioned whether respondents’ CALC was sufficient to disregard the provisions of the National Building Code of the Philippines.

The Court framed the essential inquiry as whether PEZA could require respondents to demolish the structures they had built within the territory of PEZA-BCEZ despite respondents’ possession of permits and a CALC.

Procedural Lapse on the Timeliness of the Petition

Before the Court addressed the merits, the Office of the Solicitor General (OSG) for PEZA explained the delay in filing the petition. It stated that it received the CA decision on November 7, 2007, but filed the petition only on February 1, 2008, or almost three (3) months later. The OSG attributed the delay to the inadvertence of a temporarily designated OIC, who allegedly noted receipt but did not realize the decision was adverse to PEZA, and to the scarcity of lawyers in its division.

The Court reiterated that an appeal must be perfected within the reglementary period, and that a Rule 45 petition must be filed within fifteen (15) days from notice of the judgment or final order. It recognized that government counsel should act with promptness and utmost diligence and that such neglect generally binds a party. Nonetheless, the Court decided to overlook the procedural lapse because substantial justice required it, especially where an unchecked decision would effectively sanction a violation of substantive law.

Governing Standards for Injunction

The Court discussed that injunction directs a party to either do a particular act (mandatory injunction) or refrain from doing it (prohibitory injunction). As a main action, injunction seeks a permanent restraint through a final injunction in the judgment. Under Section 9, Rule 58 of the 1997 Rules of Civil Procedure, two requisites had to concur for injunction: (1) a right to be protected, and (2) acts violative of that right. In actions involving realty, the plaintiff generally had to establish title or right for preliminary relief, and injunction would not issue to protect a right not in esse.

PEZA’s Authority vs. Respondents’ Reliance on CALC

The Court held that the RTC and CA misapplied the nature and extent of rights conferred by a CALC. The Court emphasized that PEZA did not assert an adverse claim over the subject land and did not dispute that respondents held building and fencing permits. The question was whether respondents could build within PEZA-BCEZ based on their CALC and the permits.

The Court relied on PEZA v. Borreta (G.R. No. 142669, March 15, 2006), where CAR-CALC-022 had been invoked by Benedicto Carantes to construct structures in a case involving the same CALC. There, the Court refused to recall a writ of demolition and held that the applicant for a certificate of ownership of ancestral land had not acquired a vested right as owner sufficient to exclude land from PEZA areas. The Court found no reason to depart from that ruling and treated respondents as similarly situated because, as holders of a CALC, they possessed no greater rights than those recognized under DENR Department Administrative Order (DAO) No. 02, Series of 1993, particularly Section 2 on the Rights and Responsibilities of Ancestral Land Claimants.

The Court explained that Section 2 grants only limited rights, including the right to peacefully occupy and cultivate the land and to utilize natural resources subject to existing laws, rules, and regulations. It contrasted ancestral land claimants’ rights with those of ancestral domain claimants who, under DENR DAO No. 02, Series of 1993 and Par. 1, Section 1 of Article VII, may have broader rights that include residing peacefully within the domain. The Court concluded that Section 2 did not authorize ancestral land claimants to build permanent structures, an act of ownership that pertains to a recognized right arising from a certificate of ancestral land title.

Even assuming respondents established ownership, the Court further held that they could not fence or build without complying with applicable laws and regulations, particularly the National Building Code.

Necessity of Building and Fencing Permits Under the National Building Code

The Court cited Section 301 of P.D. No. 1096, which required any person, including government agencies, to obtain a building permit before erecting, constructing, altering, repairing, moving, converting, or demolishing any building or structure. It also required that a fencing permit be secured from the Building Official concerned before fences may be installed.

The Court then addressed PEZA’s insistence that its own building officials, not the local building officials of Baguio City, administered the National Building Code provisions in areas owned and administered by PEZA. It relied on Section 205 of P.D. No. 1096 on the general responsibility of Building Officials and recognized that the law allowed designation by the Secretary due to service exigencies. However, the Court explained that PEZA’s specialized regime governed the administration and enforcement of the National Building Code within its areas, as this was maintained and not repealed.

The Court traced the legal framework: P.D. No. 1716 amended P.D. No. 66, and R.A. No. 7916 evolved EPZA into PEZA. The Court referenced Executive Order No. 282 of October 30, 1995, which assumed EPZA functions by PEZA insofar as consistent with PEZA’s powers. Among those functions was the administration and enforcement of the National Building Code in zones and areas owned or administered by EPZA, expressly provided in Section 6 of P.D. No. 1716. The Court quoted Section 6, holding that administration and enforcement of P.D. No. 1096 in all zones and areas owned or administered by the Authority vested in the Administrator or his duly authorized representative, who would appoint EPZA-qualified personnel as Building Officials charged with issuing building permits, and that the fees collected would accrue to the Authority.

Complementing this, the Court invoked Section 14(i) of R.A. No. 7916, which empowered the Director General to require owners to remove or demolish houses, buildings, or structures constructed without the necessary permit. The provision authorized removal or demolition at the expense of the owner upon failure to act within sixty (60) days.

Fencing Permits on Ancestral Lands Within PEZA Areas

The Court recognized that fencing permits on ancestral lands generally depended on DENR rules, specifically DENR-Circular No. 03-90. It noted that the circular provided, in Section 12, that the Special Task Force could recommend to the City/Municipal Mayor’s Office issuance of a fencing permit over areas actually occupied at the time of filing. The Court treated this as the general rule.

However, the Court held that within the premises of PEZA, fencing and building permits had to align with the Authority’s building-permit administration. It

Case Syllabus (G.R. No. 181274)

Philippine Economic Zone Authority (PEZA), represented by Director General Lilia B. De Lima, filed a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, to reverse a Court of Appeals (CA) decision and a Regional Trial Court (RTC) order granting injunction.
Joseph Jude Carantes, Rose Carantes, and the other heirs of Maximino Carantes opposed the petition and relied on their Certificate of Ancestral Land Claim (CALC) and the permits they obtained to fence and construct on the land.
The CA affirmed the RTC’s grant of an injunction, and PEZA sought Supreme Court review.
The Supreme Court granted the petition, reversed and set aside the CA decision, and ordered the respondents to demolish their residential building within sixty (60) days from notice.

Parties and Procedural Posture

PEZA was the petitioner before the Supreme Court.
The respondents were the petitioners for injunction before the RTC and the respondents before the CA.
The RTC granted respondents’ petition for injunction, issuing a writ of injunction restraining PEZA from disturbing respondents’ possession and occupation.
The CA affirmed the RTC’s order and decision in CA-G.R. CV No. 73230.
PEZA filed a Rule 45 petition with the Supreme Court after the CA decision.
The petition raised both procedural and substantive issues, including the timeliness of the filing.

Key Factual Allegations

Respondents were in possession of a thirty thousand thirty-eight (30,368)-square meter parcel of land located in Loakan Road, Baguio City.
On June 20, 1997, respondents obtained CALC No. CAR-CALC-022 from the Department of Environment and Natural Resources (DENR).
On the strength of the CALC, respondents secured a building permit and a fencing permit from the Building Official of Baguio City, identified as Teodoro G. Barrozo.
Respondents fenced the premises and began constructing a residential building.
Respondents received a letter dated February 9, 1999 from PEZA’s Zone Administrator, Digna D. Torres, stating that respondents’ house overlapped PEZA’s territorial boundary.
The letter advised respondents to demolish the house within sixty (60) days from notice, or PEZA would undertake demolition at respondents’ expense.
Without addressing PEZA’s demand, respondents filed a petition for injunction and sought a TRO and writ of preliminary injunction before the RTC of Baguio City.
The RTC issued a TRO on April 8, 1999 enjoining PEZA from threatening demolition before respondents’ prayer for a writ of preliminary injunction could be heard.
The RTC later issued an order directing the parties to maintain status quo pending resolution.
On October 2, 2001, the RTC granted respondents’ petition and issued a writ of injunction enjoining PEZA and those acting for PEZA from dispossessing, notifying, or disturbing respondents’ peaceful possession and occupation of the land.
The CA affirmed that judgment.

Issues Raised on Review

PEZA questioned whether PEZA or the City Engineer of Baguio City had the legal authority to issue building and fencing permits for constructions within the PEZA-BCEZ.
PEZA also questioned whether respondents’ CALC was sufficient to disregard the requirements of the National Building Code of the Philippines.
The Supreme Court framed the pivotal question as whether PEZA could require respondents to demolish structures built within PEZA-BCEZ.
The procedural dimension asked whether PEZA’s Supreme Court petition was filed within the reglementary period.

Procedural Timeliness and Discretion

The CA decision was received by the OSG on November 7, 2007.
The OSG filed PEZA’s Rule 45 petition only on February 1, 2008, or almost three (3) months after receipt of the CA decision.
Respondents argued that the petition was filed late.
PEZA explained the delay by citing the inadvertence of a temporarily-designated OIC of Division XV and the limited number of lawyers available to manage the division’s docket.
The Supreme Court reiterated that an appeal must be perfected within the statutory period or the judgment becomes final and executory.
The Court reiterated that a Rule 45 petition must be filed within fifteen (15) days from notice of the judgment or final order, or from denial of a timely motion for reconsideration or new trial.
The Court held that, while procedural rules may be relaxed for persuasive reasons to relieve a litigant from injustice not commensurate with noncompliance, the OSG should still show promptness and utmost diligence.
The Court nevertheless overlooked the procedural lapse because strict adherence would allow a precedent that would sanction a violation of substantive law.
The Court treated the case as warranting review in the interest of substantial justice.

Governing Standards for Injunction

The Court explained that injunction is a judicial writ directing a party either to perform an act (mandatory injunction) or refrain from doing an act (prohibitory injunction).
As a main action, an injunction may permanently enjoin the defendant through a final injunction contained in the judgment.
The Court cited Section 9, Rule 58 of the 1997 Rules of Civil Procedure, as amended, for the rule that a court grants a final injunction only if the applicant is entitled to permanently enjoin the act or acts after trial.
The Court emphasized that two requisites must concur for injunction to issue: (one) there must be a right to be protected, and (two) the acts against which the injunction is directed are violative of that right.
For realty cases, the Court held that preliminary injunction lies only after the plaintiff fully establishes title or right through a proper action, and a temporary injunction requires a prima facie showing of a right to final relief.
The Court stated that preliminary injunction will not issue to protect a right not in esse.
The Court treated these principles as equally relevant to actions seeking permanent injunction.

Rights of Ancestral Land Claimants

The Court addressed respondents’ reliance on CALC No. CAR-CALC-022 to justify fencing and construction within PEZA-BCEZ.
The RTC and CA had ruled that, by the definition of ancestral land under Republic Act (R.A.) No. 8371 or the Indigenous Peoples Rights Act of 1997, the lots had been segregated from lands of the public domain.
The trial court and CA concluded that Proclamation No. 1825 could not disturb respondents’ rights because the land was already outside the public domain.
The Supreme Court disagreed in application to the present case and anchored its analysis on the nature of the right conferred by a CALC.
The Court relied on its prior ruling in PEZA v. Borreta, where CAR-CALC-022 was invoked by Benedicto Carantes to put up structures.
In PEZA v. Borreta, the Court held that a CALC holder was only a mere applicant for issuance of a certificate of ownership of ancestral land and yet had to acquire a vested right as an owner so as to exclude the land from PEZA areas.
The Court held respondents here were similarly situated and therefore acquired no greater rights than those enumerated for ancestral land c