2. International Hardwood and Veneer Company of the Philippines vs.

University of the Philippines, et al

GR No. 521518 August 13, 1991
Summary:
Petitioner, 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 Respondent, UP. The land subject of
Petitioner’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.
Facts:
 Petitioner, 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 February 1, 1985 to cut, collect
and remove timber from a timber land in the provinces of Quezon and
Laguna.
 September 25, 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withdrawn from sale or settlement and were reserved for the UP College of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.
 July 11, 1964 – Still during the effectivity of the License Agreement, RA
3990 (AN ACT TO ESTABLISH A CENTRAL EXPERIMENT STATION FOR
THE UNIVERSITY OF THE PHILIPPINES) was enacted establishing a
central experiment station for UP for the colleges of agriculture, veterinary
medicine, arts and sciences. Under RA 3990 the land described in Proc. 791
was fully cede to UP, subject to any existing concessions, if any.
 On the strength of RA 3990, UP demanded from Hardwood:
1. Payment of forest charges due and demandable under the License
Agreement to UP, instead of the BIR
2. That the sale of any timber felled or cut by Hardwood within the land
described in RA 3990 be performed by UP personnel
 However, despite repeated demands, Hardwood refused to accede to UP’s
demands.
CFI Laguna:
 Petitioner filed 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 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:
 Elevated the case to the SC as the entire case hinges on the interpretation
and construction of Republic Act 3990 as it applies to a set of facts which are
not disputed by the parties and therefore, is a legal question.

Issue:
WON Republic Act No. 3990 empowers the respondent UP to scale, measure and
seal the timber cut by the petitioner within the tract of land referred to in said
act, and collect the corresponding forest charges.

Ruling:
Yes, RA 3990 3990 empowers to scale, measure and seal the timber cut by
the petitioner within the tract of land referred to in said act, and collect the
corresponding forest charges.

Sec. 2 of RA 3990 provides that the "reserved" area stated in Executive

Proclamation No. 791 was "ceded and transferred in full ownership to the
University of the Philippines subject to any existing concessions, if any."
Furthermore, Sec. 3 provides, in part, that “…any incidental receipts or income
therefrom shall pertain to the general fund of the University of the Philippines.”

In this case, the Philippines relinquished and conveyed its rights over the
area to UP, subject only to existing concession. This means that the right of
Hardwood as a timber licensee must not be affected, impaired, or diminished BUT
insofar as the Government is concerned, all its rights as grantor of the license were
effectively assigned, ceded and conveyed to UP. Therefore, Petitioner has the
correlative duty and obligation to pay the forest charges or royalties to the new
owner, UP.