PEZA Authority Over Building Permits Prevails Over Ancestral Land Claims in Economic Zones

The Supreme Court has settled a significant question for property owners and indigenous peoples' claimants alike: who has the authority to issue building permits within economic zones, and can a Certificate of Ancestral Land Claim (CALC) override that authority? In Philippine Economic Zone Authority v. Carantes (G.R. No. 181274, June 23, 2010), the Court ruled that the Philippine Economic Zone Authority (PEZA) holds exclusive authority over building permits within its zones—and that a mere CALC does not grant the right to construct permanent structures without complying with applicable laws.

The Facts of the Case

The respondents, heirs of Maximino Carantes, possessed a 30,368-square meter parcel of land in Loakan Road, Baguio City. In 1997, they obtained Certificate of Ancestral Land Claim No. CAR-CALC-022 from the Department of Environment and Natural Resources (DENR). Armed with this certificate, they secured building and fencing permits from the Building Official of Baguio City and began constructing a residential building.

However, PEZA's Zone Administrator wrote to the respondents, informing them that their house overlapped PEZA's territorial boundary. PEZA advised them to demolish the structure within sixty days, or PEZA would do so at their expense. Instead of complying, the respondents filed a petition for injunction before the Regional Trial Court of Baguio City, which ruled in their favor. The Court of Appeals affirmed, holding that the respondents' rights under their CALC were vested and could not be disturbed by the proclamation that included the land within the Baguio City Economic Zone.

The Issue Presented

The central question before the Supreme Court was whether PEZA could require the respondents to demolish structures built within the Baguio City Economic Zone without permits issued by PEZA itself.

The Supreme Court's Ruling

The Court reversed the lower courts and ruled in favor of PEZA, establishing two crucial principles.

First, a CALC does not confer the right to build permanent structures. The Court examined the DENR administrative rules governing ancestral land claims, which define the rights of ancestral land claimants. Under these rules, a CALC holder's rights are limited to occupying and cultivating the land, subject to existing laws, rules, and regulations. The Court noted that, unlike ancestral domain claimants who may reside peacefully within their domain, ancestral land claimants have no similar right to build permanent structures. Such an act of ownership pertains only to one who holds a Certificate of Ancestral Land Title.

The Court also cited its earlier ruling in Philippine Economic Zone Authority v. Borreta (G.R. No. 142669, March 15, 2006), where a similar claim involving the same CALC was rejected. The Court found no reason to depart from that ruling.

Second, PEZA has exclusive authority to issue building permits within its zones. Section 6 of Presidential Decree No. 1716, which amended P.D. No. 66, expressly vests in the PEZA Administrator the administration and enforcement of the National Building Code (P.D. No. 1096) in all zones and areas owned or administered by the Authority. This includes the power to appoint building officials who shall issue building permits within the zones. This function was carried over to PEZA through Executive Order No. 282 and remains consistent with Republic Act No. 7916.

Complementing this, Section 14(i) of R.A. No. 7916 empowers the PEZA Director General to require owners of structures constructed without the necessary permit—whether on public or private lands—to demolish them within sixty days after notice. Upon failure to comply, PEZA may summarily cause demolition at the owner's expense.

The Procedural Dimension

The Court also addressed the Office of the Solicitor General's late filing of the petition, which was almost three months beyond the reglementary period. While acknowledging that the OSG's inadvertence and staffing shortages did not excuse the delay, the Court relaxed the procedural rules in the interest of substantial justice. The Court reasoned that allowing the lower court's decision to stand would set a precedent that would sanction a violation of substantive law.

Practical Takeaways

• CALC holders cannot build permanent structures on ancestral lands. A Certificate of Ancestral Land Claim grants only the right to occupy and cultivate the land, not to construct buildings or other permanent improvements.
• PEZA has exclusive permitting authority within economic zones. Local building officials have no jurisdiction to issue building permits for structures within PEZA-administered areas, regardless of the land's ownership status.
• Demolition authority is real. PEZA may require demolition of unauthorized structures and can summarily remove them at the owner's expense if the owner fails to comply within sixty days.
• Procedural lapses may be excused in exceptional cases. While the Court relaxed the rules here to prevent a substantive injustice, litigants should not rely on such leniency; the OSG's negligence was specifically noted as inexcusable.
• Ownership and permitting are separate questions. Even if a claimant establishes ownership of land within an economic zone, compliance with the National Building Code and PEZA's permitting requirements remains mandatory.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.