Matuguina v.

CA
Facts:
Milagros Matuguina was a sole proprietor of Matuguina Logging Enterprises. On July 10, 1974,
matuguina Integrated Wood Products, Inc. was incorporated and Milagros Matiguina was
established as the major stockholder. Milagros then petitioned to have MLE be transferred to
MIWPI. While the petition is pending for approval, DAVENCOR filed a complaint against MLE has
intruded upon the area allotted for DAVENCORs timber business. After being found guilty as
charged by the Investigating Committee, they filed an appeal to the Ministry of Natural
Resources. During the pendency of the appeal, Milagrosa withdrew her share on the MIWIPI. The
Ministry of Natural Resources found MLE guilty as charged. In regards to this DAVENCOR
requested to issue a writ of execution against MIWPI and pay the value of 235.04 worth of
Timbers and the said writ was granted. MIWPI filed a petition for prohibition before the Davao
RTC and ruled in favor of the MIWPI. The decision was reversed by CA with the contention of
Sec. 61 of PD 705 the transferee shall assume all the obligations of the transferor. In due time,
petitioner filed a motion for reconsideration. Private respondents filed their opposition to the
same on April 2, 1991. In a Resolution dated April 12, 1991, the motion was denied by the
respondent Court, hence the petition are hereby restated.
Issues:
Whether transferee of a forest concession is liable for obligations arising from transferors illegal
encroachment into another forest concessionaire, which was committed prior to the transfer?
Held:
Principle: Construe using ordinary meaning & avoid absurdity.
Court held that the transferee is NOT liable and explained: Obligations construed to mean
obligations incurred by transferor in the ordinary course of business. Not those as a result of
transgressions of the law, as these are personal obligations of transferor.
Even if it is mandated in the above stated provision that the transferee shall assume all the
obligations of the transferor this does not mean that all obligations are assumed,
indiscriminately.
Invariably, it is not the letter, but the spirit of the law and intent of the legislature that is important.
When the interpretation of a statute according to the exact and literal import of its words would
lead to absurdity, it should be construed according to the spirit and reason, disregarding if
necessary the letter of the law.
In construing statutes, the terms used therein are generally to be given their ordinary meaning,
that is, such meaning which is ascribed to them when they are commonly used, to the end that
absurdity in the law must be avoided. The term obligations as used in the final clause of the
second paragraph of Section 61 of P.D. 705 is construed to mean those obligations incurred by
the transferor in the ordinary course of business. It cannot be construed to mean those
obligations or liabilities incurred by the transferor as a result of transgressions of the law, as these
are personal obligations of the transferor, and could not have been included in the term
obligations absent any modifying provision to that effect.


Mustang Lumber vs CA Digest
On 1 April 1990, acting on an information that a huge stockpile of narra flitches, shorts, and
slabs were seen inside the lumberyard of the petitioner in Valenzuela, Metro Manila, and the
SAID organized a team of foresters and policemen and sent it to conduct surveillance at the said
lumberyard. In the course thereof, the team members saw coming out from the lumberyard the
petitioner's truck, with Plate No. CCK-322, loaded with lauan and almaciga lumber of assorted
sizes and dimensions. Since the driver could not produce the required invoices and transport
documents, the team seized the truck together with its cargo and impounded them at the
DENR compound at Visayas Avenue, Quezon City. The team was not able to gain entry into the
premises because of the refusal of the owner. 2The special Action and investigation Division of
DENR also procured a search warrant from Judge Adriano Osorio of RTC Valenzuela, by virtue of
the warrant, the team seized for truckloads of narra woods including almaciaga and supa.
Moreover, the lumberyard of the petitioner was also placed under administrative seizure. For
failure to produce certificates of lumber origins, auxiliary invoices, tally sheets and delivery
receipts. Subsequently, the Sec of DENR Factoran issued an order confiscating the woods seized
in the truck of the petitioner as well as those found in their lumberyard

Issue:
Is lumber included in timber

Held:
Statute: Sec. 68 PD 705 - penalizes the cutting, gathering & or collecting timber or other forest products
without a license.
Is lumber included in timber
Reversing 1
st
ruling, SC says lumber is included in timber.
The Revised Forestry Code contains no definition of timber or lumber. Timber is included in definition of
forestry products par (q) Sec.3. Lumber - same definitions as processing plants
Processing plant is any mechanical set-up, machine or combination of machine used for processing of logs
& other forest raw materials into lumber veneer, plywood etc p. 183.
Simply means, lumber is a processed log or forest raw material. The Code uses lumber in ordinary common
usage. In 1993 ed. of Websters International Dictionary, lumber is defined as timber or logs after being
prepared for the market. Therefore, lumber is a processed log or timber. Sec 68 of PD 705 makes no
distinction between raw & processed timber.