Cases For ENLAW

Republic of the Philippines
SUPREME COURT
Manila
Environment and Natural Resources (DENR), Petitioner,

vs.
PAPER INDUSTRIES CORP. OF THE PHILIPPINES
(PICOP), Respondent.
EN BANC
RESOLUTION
G.R. No. 162243
December 3, 2009
CHICO-NAZARIO, J.:
HON. HEHERSON ALVAREZ substituted by HON.

ELISEA G. GOZUN, in her capacity as Secretary of the
Department of Environment and Natural Resources,
Petitioner,
vs.
PICOP RESOURCES, INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 164516
PICOP RESOURCES, INC., Petitioner,
vs.
HON. HEHERSON ALVAREZ substituted by HON.
ELISEA G. GOZUN, in her capacity as Secretary of the
Department of Environment and Natural Resources
Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 171875
THE HON. ANGELO T. REYES (formerly Hon. Elisea G.
Gozun), in his capacity as Secretary of the Department of
The cause of action of PICOP Resources, Inc. (PICOP) in its

Petition for Mandamus with the trial court is clear: the
government is bound by contract, a 1969 Document signed by
then President Ferdinand Marcos, to enter into an Integrated
Forest Management Agreement (IFMA) with PICOP. Since the
remedy of mandamus lies only to compel an officer to perform a
ministerial duty, and since the 1969 Document itself has a
proviso requiring compliance with the laws and the Constitution,
the issues in this Motion for Reconsideration are the following:
(1) firstly, is the 1969 Document a contract enforceable under
the Non-Impairment Clause of the Constitution, so as to make
the signing of the IFMA a ministerial duty? (2) secondly, did
PICOP comply with all the legal and constitutional requirements
for the issuance of an IFMA?
To recall, PICOP filed with the Department of Environment and
Natural Resources (DENR) an application to have its Timber
License Agreement (TLA) No. 43 converted into an IFMA. In
the middle of the processing of PICOPs application, however,
PICOP refused to attend further meetings with the DENR.
Instead, on 2 September 2002, PICOP filed before the Regional
Trial Court (RTC) of Quezon City a Petition for Mandamus 1
against then DENR Secretary Heherson T. Alvarez. PICOP seeks
the issuance of a privileged writ of mandamus to compel the
DENR Secretary to sign, execute and deliver an IFMA to

PICOP, as well as to
July 29, 1969 between the government and PICOPs

predecessor-in-interest; and
[I]ssue the corresponding IFMA assignment number on the area

covered by the IFMA, formerly TLA No. 43, as amended; b) to
issue the necessary permit allowing petitioner to act and harvest
timber from the said area of TLA No. 43, sufficient to meet the
raw material requirements of petitioners pulp and paper mills in
accordance with the warranty and agreement of July 29, 1969
between the government and PICOPs predecessor-in-interest;
and c) to honor and respect the Government Warranties and
contractual obligations to PICOP strictly in accordance with the
warranty and agreement dated July 29, [1969] between the
government and PICOPs predecessor-in-interest. x x x.2
3. to honor and respect the Government Warranties and

contractual obligations to PICOP strictly in accordance with the
warranty and agreement dated July 29, 1999 (sic) between the
government and PICOPs predecessor-in-interest (Exhibits "H",
"H-1" to "H-5", particularly the following:
On 11 October 2002, the RTC rendered a Decision granting

PICOPs Petition for Mandamus, thus:
WHEREFORE, premises considered, the Petition for Mandamus
is hereby GRANTED.
The Respondent DENR Secretary Hon. Heherson Alvarez is
hereby ordered:
a) the area coverage of TLA No. 43, which forms part and parcel
of the government warranties;
b) PICOP tenure over the said area of TLA No. 43 and exclusive
right to cut, collect and remove sawtimber and pulpwood for the
period ending on April 26, 1977; and said period to be renewable
for [an]other 25 years subject to compliance with constitutional
and statutory requirements as well as with existing policy on
timber concessions; and
c) The peaceful and adequate enjoyment by PICOP of the area as
described and specified in the aforesaid amended Timber
License Agreement No. 43.
1. to sign, execute and deliver the IFMA contract and/or

documents to PICOP and issue the corresponding IFMA
assignment number on the area covered by the IFMA, formerly
TLA No. 43, as amended;
The Respondent Secretary Alvarez is likewise ordered to pay

petitioner the sum of P10 million a month beginning May 2002
until the conversion of TLA No. 43, as amended, to IFMA is
formally effected and the harvesting from the said area is
granted.3
2. to issue the necessary permit allowing petitioner to act and

harvest timber from the said area of TLA No. 43, sufficient to
meet the raw material requirements of petitioners pulp and
paper mills in accordance with the warranty and agreement of
On 25 October 2002, the DENR Secretary filed a Motion for

Reconsideration.4 In a 10 February 2003 Order, the RTC denied
the DENR Secretarys Motion for Reconsideration and granted
PICOPs Motion for the Issuance of Writ of Mandamus and/or
Writ of Mandatory Injunction.5 The fallo of the 11 October 2002

Decision was practically copied in the 10 February 2003 Order,
although there was no mention of the damages imposed against
then DENR Secretary Alvarez.6 The DENR Secretary filed a
Notice of Appeal7 from the 11 October 2002 Decision and the 10
February 2003 Order.
On 19 February 2004, the Seventh Division of the Court of
Appeals affirmed8 the Decision of the RTC, to wit:
WHEREFORE, the appealed Decision is hereby AFFIRMED
with modification that the order directing then DENR Secretary
Alvarez "to pay petitioner-appellee the sum of P10 million a
month beginning May, 2002 until the conversion to IFMA of
TLA No. 43, as amended, is formally effected and the harvesting
from the said area is granted" is hereby deleted. 9
Challenging the deletion of the damages awarded to it, PICOP
filed a Motion for Partial Reconsideration10 of this Decision,
which was denied by the Court of Appeals in a 20 July 2004
Resolution.11
The DENR Secretary and PICOP filed with this Court separate
Petitions for Review of the 19 February 2004 Court of Appeals
Decision. These Petitions were docketed as G.R. No. 162243
and No. 164516, respectively. These cases were consolidated
with G.R. No. 171875, which relates to the lifting of a Writ of
Preliminary Injunction enjoining the execution pending appeal
of the foregoing Decision.
On 29 November 2006, this Court rendered the assailed
Decision on the Consolidated Petitions:
WHEREFORE, the Petition in G.R. No. 162243 is GRANTED.

The Decision of the Court of Appeals insofar as it affirmed the
RTC Decision granting the Petition for Mandamus filed by
Paper Industries Corp. of the Philippines (PICOP) is hereby
REVERSED and SET ASIDE. The Petition in G.R. No. 164516
seeking the reversal of the same Decision insofar as it nullified
the award of damages in favor of PICOP is DENIED for lack of
merit. The Petition in G.R. No. 171875, assailing the lifting of
the Preliminary Mandatory Injunction in favor of the Secretary
of Environment and Natural Resources is DISMISSED on the
ground of mootness.12
On 18 January 2006, PICOP filed the instant Motion for
Reconsideration, based on the following grounds:
I.
THE HONORABLE COURT ERRED IN HOLDING THAT
THE CONTRACT WITH PRESIDENTIAL WARRANTY
SIGNED BY THE PRESIDENT OF THE REPUBLIC ON 29
JUNE 1969 ISSUED TO PICOP IS A MERE PERMIT OR
LICENSE AND IS NOT A CONTRACT, PROPERTY OR
PROPERTY RIGHT PROTECTED BY THE DUE PROCESS
CLAUSE OF THE CONSTITUTION
II.
THE EVALUATION OF PICOPS MANAGEMENT OF THE
TLA 43 NATURAL FOREST CLEARLY SHOWED
SATISFACTORY PERFORMANCE FOR KEEPING THE
NATURAL FOREST GENERALLY INTACT AFTER 50
YEARS OF FOREST OPERATIONS. THIS COMPLETES
THE REQUIREMENT FOR AUTOMATIC CONVERSION
UNDER SECTION 9 OF DAO 99-53.

III.
AND APPROVAL FROM THE SANGUNIAN CONCERNED,

AS REQUIRED BY SECTION 27 OF THE REPUBLIC ACT
NO. 7160, OTHERWISE KNOWN AS THE LOCAL
GOVERNMENT CODE OF 1991.
WITH DUE RESPECT, THE HONORABLE COURT, IN

REVERSING THE FINDINGS OF FACTS OF THE TRIAL
COURT
AND
THE
COURT
OF
APPEALS,
MISAPPRECIATED THE EVIDENCE, TESTIMONIAL AND
DOCUMENTARY, WHEN IT RULED THAT:
PCIOP FAILED TO SECURE SOCIAL ACCEPTABILITY

UNDER PRESIDENTIAL DECREE NO. 1586.
i.
IV
PICOP FAILED TO SUBMIT A FIVE-YEAR FOREST

PROTECTION
PLAN
AND
A
SEVEN-YEAR
REFORESTATION PLAN FOR THE YEARS UNDER
REVIEW.
THE MOTIVATION OF ALVAREZ IN RECALLING THE

CLEARANCE FOR AUTOMATIC CONVERSION HE
ISSUED ON 25 OCTOBER 2001 WAS NOT DUE TO ANY
SHORTCOMING FROM PICOP BUT DUE TO HIS
DETERMINATION TO EXCLUDE 28,125 HECTARES FROM
THE CONVERSION AND OTHER THINGS.
ii.
PICOP FAILED TO COMPLY WITH THE PAYMENT OF
FOREST CHARGES.
iii.
PICOP DID NOT COMPLY WITH THE REQUIREMENT FOR
A CERTIFICATION FROM THE NCIP THAT THE AREA OF
TLA 43 DOES NOT OVERLAP WITH ANY ANCESTRAL
DOMAIN.
iv.
PICOP FAILED TO HAVE PRIOR CONSULTATION WITH
v.
On 15 December 2008, on Motion by PICOP, the Third Division

of this Court resolved to refer the consolidated cases at bar to the
Court en banc. On 16 December 2008, this Court sitting en banc
resolved to accept the said cases and set them for oral
arguments. Oral arguments were conducted on 10 February
2009.
PICOPs Cause of Action: Matters PICOP Should Have Proven
to Be Entitled to a Writ of Mandamus
In seeking a writ of mandamus to compel the issuance of an
IFMA in its favor, PICOP relied on a 29 July 1969 Document,
the so-called Presidential Warranty approved by then President
Ferdinand E. Marcos in favor of PICOPs predecessor-in-
interest, Bislig Bay Lumber Company, Inc. (BBLCI). PICOPs

cause of action is summarized in paragraphs 1.6 and 4.19 of its
Petition for Mandamus:
sign and execute the IFMA contract of PICOP even as the latter
has complied with all the legal requirements for the automatic
conversion of TLA No. 43, as amended, into an IFMA.
1.6 Respondent Secretary impaired the obligation of contract

under the said Warranty and Agreement of 29 July 1969 by
refusing to respect the tenure; and its renewal for another twenty
five (25) years, of PICOP over the area covered by the said
Agreement which consists of permanent forest lands with an
aggregate area of 121,587 hectares and alienable and disposable
lands with an aggregate area of approximately 21,580 hectares,
and petitioners exclusive right to cut, collect and remove
sawtimber and pulpwood therein and the peaceful and adequate
enjoyment of the said area as described and specified in
petitioners Timber License Agreement (TLA) No. 43
guaranteed by the Government, under the Warranty and
Agreement of 29 July 1969.13
II
4.19 Respondent is in violation of the Constitution and has

impaired the obligation of contract by his refusal to respect: a)
the tenurial rights of PICOP over the forest area covered by TLA
No. 43, as amended and its renewal for another twenty five (25)
years; b) the exclusive right of PICOP to cut, collect and remove
sawtimber and pulpwood therein; and c) PICOPs peaceful and
adequate enjoyment of the said area which the government
guaranteed under the Warranty and Agreement of 29 July 1969.14
Respondent Secretary acted with grave abuse of discretion

and/or in excess of jurisdiction in refusing to sign and execute
PICOPs IFMA contract, notwithstanding that PICOP had
complied with all the requirements for Automatic Conversion
under DAO 99-53, as in fact Automatic Conversion was already
cleared in October, 2001, and was a completed process.
III
Respondent Secretary has impaired the obligation of contract
under a valid and binding warranty and agreement of 29 July
1969 between the government and PICOPs predecessor-ininterest, by refusing to respect: a) the tenure of PICOP, and its
renewal for another twenty five (25) years, over the TLA No.43
area covered by said agreement; b) the exclusive right to cut,
collect and remove sawtimber and pulpwood timber; and c) the
peaceful and adequate enjoyment of the said area.
IV
As a result of respondent Secretarys unlawful refusal and/or

neglect to sign and deliver the IFMA contract, and violation of
the constitutional rights of PICOP against non-impairment of the
obligation of contract (Sec. 10, Art. III, 1997 [sic] Constitution),
PICOP suffered grave and irreparable damages.15
Respondent secretary has unlawfully refused and/or neglected to
Petitions for Mandamus are governed by Rule 65 of the Rules of
The grounds submitted by PICOP in its Petition for Mandamus

are as follows:
Court, Section 3 of which provides:

SEC. 3. Petition for mandamus.When any tribunal,
corporation, board, officer or person unlawfully neglects the
performance of an act which the law specifically enjoins as a
duty resulting from an office, trust, or station, or unlawfully
excludes another from the use and enjoyment of a right or office
to which such other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary course of law, the
person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that
judgment be rendered commanding the respondent, immediately
or at some other time to be specified by the court, to do the act
required to be done to protect the rights of the petitioner, and to
pay the damages sustained by the petitioner by reason of the
wrongful acts of the respondent. (Emphasis supplied.)
PICOP is thus asking this Court to conclude that the DENR
Secretary is specifically enjoined by law to issue an IFMA in its
favor. An IFMA, as defined by DENR Administrative Order
(DAO) No. 99-53,16 is [A] production-sharing contract entered into by and between the
DENR and a qualified applicant wherein the DENR grants to the
latter the exclusive right to develop, manage, protect and utilize
a specified area of forestland and forest resource therein for a
period of 25 years and may be renewed for another 25-year
period, consistent with the principle of sustainable development
and in accordance with an approved CDMP, and under which
both parties share in its produce.17
PICOP stresses the word "automatic" in Section 9 of this DAO
No. 99-53:
Sec. 9. Qualifications of Applicants. The applicants for IFMA

shall be:
(a) A Filipino citizen of legal age; or,
(b) Partnership, cooperative or corporation whether public or
private, duly registered under Philippine laws.
However, in the case of application for conversion of TLA into
IFMA, an automatic conversion after proper evaluation shall be
allowed, provided the TLA holder shall have signified such
intention prior to the expiry of the TLA, PROVIDED further,
that the TLA holder has showed satisfactory performance and
have complied in the terms of condition of the TLA and
pertinent rules and regulations. (Emphasis supplied.)18
This administrative regulation provision allowing automatic
conversion after proper evaluation can hardly qualify as a law,
much less a law specifically enjoining the execution of a
contract. To enjoin is "to order or direct with urgency; to instruct
with authority; to command."19 "Enjoin is a mandatory word, in
legal parlance, always; in common parlance, usually." 20 The
word "allow," on the other hand, is not equivalent to the word
"must," and is in no sense a command.21
As an extraordinary writ, the remedy of mandamus lies only to
compel an officer to perform a ministerial duty, not a
discretionary one; mandamus will not issue to control the
exercise of discretion of a public officer where the law imposes
upon him the duty to exercise his judgment in reference to any
manner in which he is required to act, because it is his judgment
that is to be exercised and not that of the court.22
The execution of agreements, in itself, involves the exercise of

discretion. Agreements are products of negotiations and mutual
concessions, necessitating evaluation of their provisions on the
part of both parties. In the case of the IFMA, the evaluation on
the part of the government is specifically mandated in the aforequoted Section 3 of DAO No. 99-53. This evaluation necessarily
involves the exercise of discretion and judgment on the part of
the DENR Secretary, who is tasked not only to negotiate the
sharing of the profit arising from the IFMA, but also to evaluate
the compliance with the requirements on the part of the
applicant.
Furthermore, as shall be discussed later, the period of an IFMA
that was merely automatically converted from a TLA in
accordance with Section 9, paragraph 2 of DAO No. 99-53
would only be for the remaining period of the TLA. Since the
TLA of PICOP expired on 26 April 2002, the IFMA that could
have been granted to PICOP via the automatic conversion
provision in DAO No. 99-53 would have expired on the same
date, 26 April 2002, and the PICOPs Petition for Mandamus
would have become moot.
This is where the 1969 Document, the purported Presidential
Warranty, comes into play. When PICOPs application was
brought to a standstill upon the evaluation that PICOP had yet to
comply with the requirements for such conversion, PICOP
refused to attend further meetings with the DENR and instead
filed a Petition for Mandamus, insisting that the DENR
Secretary had impaired the obligation of contract by his refusal
to respect: a) the tenurial rights of PICOP over the forest area
covered by TLA No. 43, as amended, and its renewal for another
twenty-five (25) years; b) the exclusive right of PICOP to cut,
collect and remove sawtimber and pulpwood therein; and c)
PICOPs peaceful and adequate enjoyment of the said area

which the government guaranteed under the Warranty and
Agreement of 29 July 1969. 23
PICOP is, thus, insisting that the government is obligated by
contract to issue an IFMA in its favor because of the 1969
Document.
A contract, being the law between the parties, can indeed, with
respect to the State when it is a party to such contract, qualify as
a law specifically enjoining the performance of an act. Hence, it
is possible that a writ of mandamus may be issued to PICOP, but
only if it proves both of the following:
1) That the 1969 Document is a contract recognized under the
non-impairment clause; and
2) That the 1969 Document specifically enjoins the government
to issue the IFMA.
If PICOP fails to prove any of these two matters, the grant of a
privileged writ of mandamus is not warranted. This was why we
pronounced in the assailed Decision that the overriding
controversy involved in the Petition was one of law.24 If PICOP
fails to prove any of these two matters, more significantly its
assertion that the 1969 Document is a contract, PICOP fails to
prove its cause of action.25 Not even the satisfactory compliance
with all legal and administrative requirements for an IFMA
would save PICOPs Petition for Mandamus.
The reverse, however, is not true. The 1969 Document expressly
states that the warranty as to the tenure of PICOP is "subject to
compliance with constitutional and statutory requirements as
well as with existing policy on timber concessions." Thus, if

PICOP proves the two above-mentioned matters, it still has to
prove compliance with statutory and administrative requirements
for the conversion of its TLA into an IFMA.
Exhaustion of Administrative Remedies
PICOP uses the same argument that the government is bound
by contract to issue the IFMA in its refusal to exhaust all
administrative remedies by not appealing the alleged illegal nonissuance of the IFMA to the Office of the President. PICOP
claimed in its Petition for Mandamus with the trial court that:
1.10 This petition falls as an exception to the exhaustion of
administrative remedies. The acts of respondent DENR
Secretary complained of in this petition are patently illegal; in
derogation of the constitutional rights of petitioner against nonimpairment of the obligation of contracts; without jurisdiction,
or in excess of jurisdiction or so capriciously as to constitute an
abuse of discretion amounting to excess or lack of jurisdiction;
and moreover, the failure or refusal of a high government
official such as a Department head from whom relief is brought
to act on the matter was considered equivalent to exhaustion of
administrative remedies (Sanoy v. Tantuico, 50 SCRA 455
[1973]), and there are compelling and urgent reasons for judicial
intervention (Bagatsing v. Ramirez, 74 SCRA 306 [1976]).
Thus, if there has been no impairment of the obligation of
contracts in the DENR Secretarys non-issuance of the IFMA,
the proper remedy of PICOP in claiming that it has complied
with all statutory and administrative requirements for the
issuance of the IFMA should have been with the Office of the
President. This makes the issue of the enforceability of the 1969
Document as a contract even more significant.

The Nature and Effects of the Purported 29 July 1969
Presidential Warranty
Base Metals Case
PICOP challenges our ruling that the 1969 Document is not a
contract. Before we review this finding, however, it must be
pointed out that one week after the assailed Decision, another
division of this Court promulgated a Decision concerning the
very same 1969 Document. Thus, in PICOP Resources, Inc. v.
Base Metals Mineral Resources Corporation,26 five other Justices
who were still unaware of this Divisions Decision,27 came up
with the same conclusion as regards the same issue of whether
former President Marcoss Presidential Warranty is a contract:
Finally, we do not subscribe to PICOPs argument that the
Presidential Warranty dated September 25, 1968 is a contract
protected by the non-impairment clause of the 1987
Constitution.
An examination of the Presidential Warranty at once reveals that
it simply reassures PICOP of the governments commitment to
uphold the terms and conditions of its timber license and
guarantees PICOPs peaceful and adequate possession and
enjoyment of the areas which are the basic sources of raw
materials for its wood processing complex. The warranty covers
only the right to cut, collect, and remove timber in its concession
area, and does not extend to the utilization of other resources,
such as mineral resources, occurring within the concession.
The Presidential Warranty cannot be considered a contract
distinct from PTLA No. 47 and FMA No. 35. We agree with the
OSGs position that it is merely a collateral undertaking which
cannot amplify PICOPs rights under its timber license. Our
definitive ruling in Oposa v. Factoran that a timber license is not
a contract within the purview of the non-impairment clause is
edifying. We declared:
Needless to say, all licenses may thus be revoked or rescinded by
executive action. It is not a contract, property or a property right
protected by the due process clause of the Constitution. In Tan
vs. Director of Forestry, this Court held:
"x x x A timber license is an instrument by which the State
regulates the utilization and disposition of forest resources to the
end that public welfare is promoted. A timber license is not a
contract within the purview of the due process clause; it is only a
license or a privilege, which can be validly withdrawn whenever
dictated by public interest or public welfare as in this case.
and disposition of forest resources to the end that public welfare

is promoted. And it can hardly be gainsaid that they merely
evidence a privilege granted by the State to qualified entities,
and do not vest in the latter a permanent or irrevocable right to
the particular concession area and the forest products therein.
They may be validly amended, modified, replaced or rescinded
by the Chief Executive when national interests so require. Thus,
they are not deemed contracts within the purview of the due
process of law clause [See Sections 3(ee) and 20 of Pres. Decree
No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No.
L-24548, October 27, 1983, 125 SCRA 302]."
Since timber licenses are not contracts, the non-impairment
clause, which reads:
"SEC. 10. No law impairing the obligation of contracts shall be
passed."
cannot be invoked.
A license is merely a permit or privilege to do what otherwise

would be unlawful, and is not a contract between the authority,
federal, state, or municipal, granting it and the person to whom it
is granted; neither is it a property or a property right, nor does it
create a vested right; nor is it taxation' (C.J. 168). Thus, this
Court held that the granting of license does not create
irrevocable rights, neither is it property or property rights
(People vs. Ong Tin, 54 O.G. 7576). x x x"
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co.,
Inc. vs. Deputy Executive Secretary:
"x x x Timber licenses, permits and license agreements are the
principal instruments by which the State regulates the utilization
The Presidential Warranty cannot, in any manner, be construed

as a contractual undertaking assuring PICOP of exclusive
possession and enjoyment of its concession areas. Such an
interpretation would result in the complete abdication by the
State in favor of PICOP of the sovereign power to control and
supervise the exploration, development and utilization of the
natural resources in the area.28
The Motion for Reconsideration was denied with finality on 14
February 2007. A Second Motion for Reconsideration filed by
PICOP was denied on 23 May 2007.
PICOP insists that the pronouncement in Base Metals is a mere
obiter dictum, which would not bind this Court in resolving this
Motion for Reconsideration. In the oral arguments, however,
upon questioning from the ponente himself of Base Metals, it
was agreed that the issue of whether the 1969 Document is a
contract was necessary in the resolution of Base Metals:
ATTY. AGABIN:
JUSTICE TINGA:
And therefore any ruling on the part of the Court on that issue
could not be an obiter dictum.
And do you confirm that one of the very issues raised by PICOP
in that case [PICOP Resources Inc. v. Base Metal Mineral
Resources Corporation] revolves around its claim that a
Presidential Warranty is protected by the non-impairment
c[l]ause of the Constitution.
Yes, Your Honor.

JUSTICE TINGA:
ATTY. AGABIN:
Yes, I believe that statement was made by the Court, your Honor.
Your Honor, actually we believe that the basic issue in that case
was whether or not Base Metals could conduct mining activities
underneath the forest reserve allotted to PICOP and the
Honorable Court ruled that the Mining Act of 1995 as well as the
Department Order of DENR does not disallow mining activity
under a forest reserve.
JUSTICE TINGA:
JUSTICE TINGA:
Yes. And that claim on the part of PICOP necessarily implies

that the Presidential Warranty according to PICOP is a contract
protected by the non-impairment clause.
But it was PICOP itself which raised the claim that a Presidential
Warranty is a contract. And therefore be, should be protected on
the under the non-impairment clause of the Constitution.
ATTY. AGABIN:
ATTY. AGABIN:
Yes, Your Honor.
Yes, Your Honor. Except that
JUSTICE TINGA:
JUSTICE TINGA:
Essentially, the PICOP raised the issue of whether the

Presidential Warranty is a contract or not.
So, how can you say now that the Court merely uttered,
declared, laid down an obiter dictum in saying that the
ATTY. AGABIN:
Presidential Warranty is not a contract, and it is not being a

contract, it is not prohibited by the non-impairment clause.
License for that matter is not a contract protected by the nonimpairment laws.
ATTY. AGABIN:
ATTY. AGABIN:
This Honorable Court could have just ruled, held that the mining
law allows mining activities under a forest reserve without
deciding on that issue that was raised by PICOP, your Honor,
and therefore we believe.
Well, it is our submission, your Honor, that it is obiter because,

that issue even a phrase by PICOP was not really fully argued by
the parties for the Honorable Court and it seems from my
reading at least it was just an aside given by the Honorable Court
to decide on that issue raised by PICOP but it was not necessary
to the decision of the court.
JUSTICE TINGA:
It could have been better if PICOP has not raised that issue and
had not claimed that the Presidential Warranty is not a contract.
JUSTICE TINGA:
It was not necessary[?]
ATTY. AGABIN:
ATTY. AGABIN:
Well, that is correct, your Honor except that the Court could
have just avoided that question. Because
To the decision of the Court.
JUSTICE TINGA:
JUSTICE TINGA:
Why[?]
It was.
ATTY. AGABIN:
ATTY. AGABIN:
It already settled the issue, the basic issue.
It was not necessary.
JUSTICE TINGA:
JUSTICE TINGA:
Yes, because the Court in saying that merely reiterated a number

of rulings to the effect that the Presidential Warranty, a Timber
It was.
ATTY. AGABIN:
[unreadable word] Bldg.

Makati, Rizal
Yes.
S i r s:
JUSTICE TINGA:
And PICOP devoted quite a number of pages in [its]
memorandum to that issue and so did the Court [in its Decision].
ATTY. AGABIN:
Anyway, your Honor, we beg the Court to revisit, not to
29
Interpretation of the 1969 Document That Would Be in Harmony

with the Constitution
To remove any doubts as to the contents of the 1969 Document,
the purported Presidential Warranty, below is a complete text
thereof:
Department of Agriculture and Natural Resources
OFFICE OF THE SECRETARY
Diliman, Quezon City
This has reference to the request of the Board of Investments

through its Chairman in a letter dated July 16, 1969 for a
warranty on the boundaries of your concession area under
Timber License Agreement No. 43, as amended.
We are made to understand that your company is committed to
support the first large scale integrated wood processing complex
hereinafter called: "The Project") and that such support will be
provided not only in the form of the supply of pulpwood and
other wood materials from your concession but also by making
available funds generated out of your own operations, to
supplement PICOPs operational sources of funds and other
financial arrangements made by him. In order that your company
may provide such support effectively, it is understood that you
will call upon your stockholders to take such steps as may be
necessary to effect a unification of managerial, technical,
economic and manpower resources between your company and
PICOP.
July 29, 1969
It is in the public interest to promote industries that will enhance

the proper conservation of our forest resources as well as insure
the maximum utilization thereof to the benefit of the national
economy. The administration feels that the PICOP project is one
such industry which should enjoy priority over the usual logging
operations hitherto practiced by ordinary timber licensees: For
this reason, we are pleased to consider favorably the request.
Bislig Bay Lumber Co., Inc.
We confirm that your Timber License Agreement No. 43, as
D-53, Licenses (T.L.A. No. 43)

Bislig Bay Lumber Co., Inc.
(Bislig, Surigao)
amended (copy of which is attached as Annex "A" hereof which

shall form part and parcel of this warranty) definitely establishes
the boundary lines of your concession area which consists of
permanent forest lands with an aggregate area of 121,587
hectares and alienable or disposable lands with an aggregate area
of approximately 21,580 hectares.
APPROVED:
We further confirm that your tenure over the area and exclusive
right to cut, collect and remove sawtimber and pulpwood shall
be for the period ending on April 26, 1977; said period to be
renewable for other 25 years subject to compliance with
constitutional and statutory requirements as well as with existing
policy on timber concessions.
BISLIG BAY LBR. CO., INC.
The peaceful and adequate enjoyment by you of your area as

described and specified in your aforesaid amended Timber
License Agreement No. 43 is hereby warranted provided that
pertinent laws, regulations and the terms and conditions of your
license agreement are observed.
Very truly yours,
(Sgd.) FERNANDO LOPEZ
Secretary of Agriculture
and Natural Resources
Encl.:
RECOMMENDED BY:
(Sgd.) JOSE VIADO
Acting Director of Forestry
(Sgd.) FERDINAND E. MARCOS

President of the Philippines
ACCEPTED:
By:
(Sgd.) JOSE E. SORIANO
President
PICOP interprets this document in the following manner:
6.1 It is clear that the thrust of the government warranty is to
establish a particular area defined by boundary lines of TLA No.
43 for the PICOP Project. In consideration for PICOPs
commitment to pursue and establish the project requiring huge
investment/funding from stockholders and lending institutions,
the government provided a warranty that ensures the continued
and exclusive right of PICOP to source its raw materials needs
from the forest and renewable trees within the areas established.
6.2 As a long-term support, the warranty covers the initial
twenty five (25) year period and is renewable for periods of
twenty five (25) years provided the project continues to exist and
operate. Very notably, the wording of the Presidential Warranty
connotes that for as long as the holder complies with all the legal
requirements, the term of the warranty is not limited to fifty (50)
years but other twenty five (25) years.
6.3 Note must be made that the government warranted that

PICOPs tenure over the area and exclusive right to cut, collect
and remove saw timber and pulpwood shall be for the period
ending on 26 April 1977 and said period to be renewable for
other 25 years subject to "compliance with constitutional and
statutory requirements as well as existing policy on timber
requirements". It is clear that the renewal for other 25 years, not
necessarily for another 25 years is guaranteed. This explains
why on 07 October 1977, TLA No. 43, as amended, was
automatically renewed for another period of twenty five (25)
years to expire on 26 April 2002.30
PICOPs interpretation of the 1969 Document cannot be
sustained. PICOPs claim that the term of the warranty is not
limited to fifty years, but that it extends to other fifty years,
perpetually, violates Section 2, Article XII of the Constitution
which provides:
Section 2. All lands of the public domain, waters, minerals, coal,
petroleum, and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and other
natural resources are owned by the State. With the exception of
agricultural lands, all other natural resources shall not be
alienated. The exploration, development, and utilization of
natural resources shall be under the full control and supervision
of the State. The State may directly undertake such activities, or
it may enter into co-production, joint venture, or productionsharing agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital is owned
by such citizens. Such agreements may be for a period not
exceeding twenty-five years, renewable for not more than
twenty-five years, and under such terms and conditions as may
be provided by law.In cases of water rights for irrigation, water
supply fisheries, or industrial uses other than the development of

water power, beneficial use may be the measure and limit of the
grant.
Mr. Justice Dante O. Tingas interpretation of the 1969
Document is much more in accord with the laws and the
Constitution. What one cannot do directly, he cannot do
indirectly. Forest lands cannot be alienated in favor of private
entities. Granting to private entities, via a contract, a permanent,
irrevocable, and exclusive possession of and right over forest
lands is tantamount to granting ownership thereof. PICOP, it
should be noted, claims nothing less than having exclusive,
continuous and uninterrupted possession of its concession
areas,31 where all other entrants are illegal,32 and where so-called
"illegal settlers and squatters" are apprehended.33
IFMAs are production-sharing agreements concerning the
development and utilization of natural resources. As such, these
agreements "may be for a period not exceeding twenty-five
years, renewable for not more than twenty-five years, and under
such terms and conditions as may be provided by law." Any
superior "contract" requiring the State to issue TLAs and IFMAs
whenever they expire clearly circumvents Section 2, Article XII
of the Constitution, which provides for the only permissible
schemes wherein the full control and supervision of the State are
not derogated: co-production, joint venture, or productionsharing agreements within the time limit of twenty-five years,
renewable for another twenty-five years.
On its face, the 1969 Document was meant to expire on 26 April
2002, upon the expiration of the expected extension of the
original TLA period ending on 26 April 1977:
policy on timber concessions.1avvphi1
JUSTICE CARPIO:
Any interpretation extending the application of the 1969

Document beyond 26 April 2002 and any concession that may
be granted to PICOP beyond the said date would violate the
Constitution, and no amount of legal hermeneutics can change
that. Attempts of PICOP to explain its way out of this
Constitutional provision only led to absurdities, as exemplified
in the following excerpt from the oral arguments:
Yes, Your Honor.
JUSTICE CARPIO:
The maximum trend of agreement to develop and utilize natural
resources like forest products is 25 years plus another 25 years
or a total of 50 years correct?
ATTY. AGABIN
Yes, Your Honor.
JUSTICE CARPIO:
That is true for the 1987, 1973, 1935 Constitution, correct?
ATTY. AGABIN:
Yes, Your Honor.
The TLA here, TLA 43, expired, the first 25 years expired in
1977, correct?
ATTY. AGABIN:
JUSTICE CARPIO:
And it was renewed for another 25 years until 2002, the 50th
year?
ATTY. AGABIN:
Yes, Your Honor.
JUSTICE CARPIO:
Now, could PICOP before the end of the 50th year lets say in
2001, one year before the expiration, could it have asked for an
extension of another 25 years of its TLA agreement[?]
ATTY. AGABIN:
I believe so, Your Honor.
JUSTICE CARPIO:
But the Constitution says, maximum of fifty years. How could
you ask for another 25 years of its TLA.
ATTY. AGABIN:
The Constitution itself provides that vested rights should be .
Well, your Honor, we believe on a question like this, this

Honorable Court should balance the interest.
JUSTICE CARPIO:
JUSTICE CARPIO:
The Constitution is very clear, you have only a maximum of 50
years, 25 plus another 25. PICOP could never have applied for
an extension, for a third 25-year term whether under the 1935
Constitution, the 1973 Constitution and the 1987 Constitution,
correct?
If it is not in violation of specific provision of the Constitution.

The Constitution says, 25 years plus another 25 years, thats the
end of it. You mean to say that a President of the Philippines can
give somebody 1,000 years license?
ATTY. AGABIN:
Well, that is not our position, Your Honor. Because our position
is that .
ATTY. AGABIN:
JUSTICE CARPIO:
Your Honor, except that we are invoking the warranty, the terms
of the warranty.
JUSTICE CARPIO:
My question is, what is the maximum term, you said 50 years.

So, my next question is, can PICOP apply for an extension of
another 25 years after 2002, the 50th year?
Can the warranty prevail over the Constitution?
ATTY. AGABIN:
ATTY. AGABIN:
Yes, based on the contract of warranty, Your Honor, because the

contract of warranty.
Well, it is a vested right, your Honor.

JUSTICE CARPIO:
JUSTICE CARPIO:
Yes, but whatever it is, can it prevail over the Constitution?
ATTY. AGABIN:
But in the PICOP license it is very clear, it says here, provision

28, it says the license agreement is for a total of 50 years. I mean
it is very simple, the President or even Congress cannot pass a
law extending the license, whatever kind of license to utilize
natural resources for more than fifty year[s]. I mean even the law
cannot do that. It cannot prevail over the Constitution. Is that

correct, Counsel?
venture, co-production and production sharing are what is

referred to in the constitution, Your Honor, and still covered
ATTY. AGABIN:
JUSTICE CARPIO:
It is correct, Your Honor, except that in this case, what is actually

our application is that the law provides for the conversion of
existing TLA into IFMA.
Yes, but it is covered by same 25 year[s], you mean to say

people now can circumvent the 50 year maximum term by
calling their TLA as IFMA and after fifty years calling it ISMA,
after another 50 years call it MAMA.
JUSTICE CARPIO:
ATTY. AGABIN:
So, they file the petition for conversion before the end of the
50th year for IFMA.
Yes, Your Honor. Because
ATTY. AGABIN:
JUSTICE CARPIO:
Yes, Your Honor.
It can be done.
JUSTICE CARPIO:
ATTY. AGABIN:
But IFMA is the same, it is based on Section 2, Article 12 of the

Constitution, develop and utilize natural resources because as
you said when the new constitution took effect we did away with
the old licensing regime, we have now co-production, a
production sharing, joint venture, direct undertaking but still the
same developing and utilizing the natural resources, still comes
from section 2, Art. 12 of the Constitution. It is still a license but
different format now.
That is provided for by the department itself.34
ATTY. AGABIN:
DAO No. 99-53 was issued to change the means by which the
government enters into an agreement with private entities for the
utilization of forest products. DAO No. 99-53 is a late response
It is correct, Your Honor, except that the regimes of joint
PICOP is, in effect, arguing that the DENR issued DAO No. 9953 in order to provide a way to circumvent the provisions of the
Constitution limiting agreements for the utilization of natural
resources to a maximum period of fifty years. Official duties are,
however, disputably considered to be regularly performed, 35 and
good faith is always presumed.
to the change in the constitutional provisions on natural

resources from the 1973 Constitution, which allowed the
granting of licenses to private entities,36 to the present
Constitution, which provides for co-production, joint venture, or
production-sharing agreements as the permissible schemes
wherein private entities may participate in the utilization of
forest products. Since the granting of timber licenses ceased to
be a permissible scheme for the participation of private entities
under the present Constitution, their operations should have
ceased upon the issuance of DAO No. 99-53, the rule regulating
the schemes under the present Constitution. This would be
iniquitous to those with existing TLAs that would not have
expired yet as of the issuance of DAO No. 99-53, especially
those with new TLAs that were originally set to expire after 10
or even 20 or more years. The DENR thus inserted a provision in
DAO No. 99-53 allowing these TLA holders to finish the period
of their TLAs, but this time as IFMAs, without the rigors of
going through a new application, which they have probably just
gone through a few years ago.
Yes, Your Honor.

ASSOCIATE JUSTICE DE CASTRO:
Dont you think that will, in effect, be invidious discrimination
with respect to other applicants if you are granted a fresh period
of twenty-five years extendible to another twenty-five years?
DEAN AGABIN:
Such an interpretation would not only make DAO No. 99-53

consistent with the provisions of the Constitution, but would also
prevent possible discrimination against new IFMA applicants:
I dont think it would be, Your Honor, considering that the IFMA
is different regime from the TLA. And not only that, there are
considerations of public health and ecology which should come
into play in this case, and which we had explained in our
opening statement and, therefore the provision of the
Constitution on the twenty-five limits for renewal of coproduction, joint venture and production sharing agreements,
should be balanced with other values stated in the Constitution,
like the value of balanced ecology, which should be in harmony
with the rhythm of nature, or the policy of forest preservation in
Article XII, Section 14 of the Constitution. These are all
important policy considerations which should be balanced
against the term limits in Article II of the Constitution.
I ask this question because of your interpretation that the period

of the IFMA, if your TLA is converted into IFMA, would cover
a new a fresh period of twenty-five years renewable by another
period of twenty-five years.
The provision of this Administrative Order regarding automatic

conversion may be reasonable, if, I want to know if you agree
with me, if we limit this automatic conversion to the remaining
period of the TLA, because in that case there will be a valid
ground to make a distinction between those with existing TLA
and those who are applying for the first time for IFMA?
DEAN AGABIN:
DEAN AGABIN:
Well, Your Honor, we beg to disagree, because as I said TLAs
are completely different from IFMA. The TLA has no
production sharing or co-production agreement or condition. All
that the licensee has to do is, to pay forest charges, taxes and
other impositions from the local and national government. On
the other hand, the IFMAs contained terms and conditions which
are completely different, and that they either impose coproduction, production sharing or joint venture terms. So its a
completely different regime, Your Honor.
Precisely, that is the reason why there should be an evaluation of
what you mentioned earlier of the development plan.
DEAN AGABIN:
Yes, Your Honor.
So it will be reasonable to convert a TLA into an IFMA without
considering the development plan submitted by other applicants
or the development plan itself of one seeking conversion into
IFMA if it will only be limited to the period, the original period
of the TLA. But once you go beyond the period of the TLA, then
you will be, the DENR is I think should evaluate the different
proposals of the applicants if we are thinking of a fresh period of
twenty-five years, and which is renewable under the
Constitution by another twenty-five years. So the development
plan will be important in this case, the submission of the
development plan of the different applicants must be considered.

So I dont understand why you mentioned earlier that the
development plan will later on be a subject matter of negotiation
between the IFMA grantee and the government. So it seems that
it will be too late in the day to discuss that if you have already
converted the TLA into IFMA or if the government has already
granted the IFMA, and then it will later on study the
development plan, whether it is viable or not, or it is sustainable
or not, and whether the development plan of the different
applicants are, are, which of the development plan of the
different applicants is better or more advantageous to the
government.37
PICOP insists that the alleged Presidential Warranty, having
been signed on 29 July 1969, could not have possibly considered
the limitations yet to be imposed by future issuances, such as the
1987 Constitution. However, Section 3, Article XVIII of said
Constitution, provides:
Section 3. All existing laws, decrees, executive orders,
proclamations, letters of instructions, and other executive
issuances not inconsistent with this Constitution shall remain
operative until amended, repealed, or revoked.
In the recent case Sabio v. Gordon,38 we ruled that "(t)he clear
import of this provision is that all existing laws, executive
orders, proclamations, letters of instructions and other executive
issuances inconsistent or repugnant to the Constitution are
repealed."
When a provision is susceptible of two interpretations, "the one
that will render them operative and effective and harmonious
with other provisions of law"39 should be adopted. As the
interpretations in the assailed Decision and in Mr. Justice Tingas

ponencia are the ones that would not make the subject
Presidential Warranty unconstitutional, these are what we shall
adopt.
Purpose of the 1969 Document: Assurance That the Boundaries
of Its Concession Area Would Not Be Altered Despite the
Provision in the TLA that the DENR Secretary Can Amend Said
Boundaries
In the assailed Decision, we ruled that the 1969 Document
cannot be considered a contract that would bind the government
regardless of changes in policy and the demands of public
interest and social welfare. PICOP claims this conclusion "did
not take into consideration that PICOP already had a valid and
current TLA before the contract with warranty was signed in
1969."40 PICOP goes on: "The TLA is a license that equips any
TLA holder in the country for harvesting of timber. A TLA is
signed by the Secretary of the DANR now DENR. The Court
ignored the significance of the need for another contract with the
Secretary of the DANR but this time with the approval of the
President of the Republic."41 PICOP then asks us: "If
PICOP/BBLCI was only an ordinary TLA holder, why will it go
through the extra step of securing another contract just to harvest
timber when the same can be served by the TLA signed only by
the Secretary and not requiring the approval of the President of
the Republic(?)"42
The answer to this query is found in TLA No. 43 itself wherein,
immediately after the boundary lines of TLA No. 43 were
established, the following conditions were given:
This license is granted to the said party of the second part upon
the following express conditions:

I. That authority is granted hereunder to the party of the second
part43 to cut, collect or remove firewood or other minor forest
products from the area embraced in this license agreement
except as hereinafter provided.
II. That the party of the first part44 may amend or alter the
description of the boundaries of the area covered by this license
agreement to conform with official surveys and that the decision
of the party of the first part as to the exact location of the said
boundaries shall be final.
III. That if the party of the first part deems it necessary to
establish on the ground the boundary lines of the area granted
under this license agreement, the party of the second part shall
furnish to the party of the first part or its representatives as many
laborers as it needs and all the expenses to be incurred on the
work including the wages of such laborers shall be paid by the
party of the second part.45
Thus, BBLCI needed an assurance that the boundaries of its
concession area, as established in TLA No. 43, as amended,
would not be altered despite this provision. Hence, BBLCI
endeavored to obtain the 1969 Document, which provides:
We confirm that your Timber License Agreement No. 43, as
amended (copy of which is attached as Annex "A" hereof which
shall form part and parcel of this warranty) definitely establishes
the boundary lines of your concession area which consists of
permanent forest lands with an aggregate area of 121,587
hectares and alienable or disposable lands with an aggregate area
of approximately 21,580 hectares.
policy on timber concessions.
The peaceful and adequate enjoyment by you of your area as
described and specified in your aforesaid amended Timber
License Agreement No. 43 is hereby warranted provided that
pertinent laws, regulations and the terms and conditions of your
license agreement are observed.46
In Koa v. Court of Appeals,47 we ruled that a warranty is a
collateral undertaking and is merely part of a contract. As a
collateral undertaking, it follows the principal wherever it goes.
When this was pointed out by the Solicitor General, PICOP
changed its designation of the 1969 Document from
"Presidential Warranty" or "government warranty" in all its
pleadings prior to our Decision, to "contract with warranty" in its
Motion for Reconsideration. This, however, is belied by the
statements in the 29 July 1969 Document, which refers to itself
as "this warranty."
Re: Allegation That There Were Mutual Contract Considerations
Had the 29 July 1969 Document been intended as a contract, it
could have easily said so. More importantly, it could have
clearly defined the mutual considerations of the parties thereto.
It could have also easily provided for the sanctions for the
breach of the mutual considerations specified therein. PICOP
had vigorously argued that the 1969 Document was a contract
because of these mutual considerations, apparently referring to
the following paragraph of the 1969 Document:

We are made to understand that your company is committed to
support the first large scale integrated wood processing complex
hereinafter called: "The Project") and that such support will be
provided not only in the form of the supply of pulpwood and
other wood materials from your concession but also by making
available funds generated out of your own operations, to
supplement PICOPs operational surces (sic) of funds and other
financial arrangements made by him. In order that your company
may provide such support effectively, it is understood that you
will call upon your stockholders to take such steps as may be
necessary to effect a unification of managerial, technical,
economic and manpower resources between your company and
PICOP.1avvphi1
This provision hardly evinces a contract consideration (which, in
PICOPs interpretation, is in exchange for the exclusive and
perpetual tenure over 121,587 hectares of forest land and 21,580
hectares of alienable and disposable lands). As elucidated by
PICOP itself in bringing up the Investment Incentives Act which
we shall discuss later, and as shown by the tenor of the 1969
Document, the latter document was more of a conferment of an
incentive for BBLCIs investment rather than a contract creating
mutual obligations on the part of the government, on one hand,
and BBLCI, on the other. There was no stipulation providing for
sanctions for breach if BBLCIs being "committed to support the
first large scale integrated wood processing complex" remains a
commitment. Neither did the 1969 Document give BBLCI a
period within which to pursue this commitment.
According to Article 1350 of the Civil Code, "(i)n onerous
contracts the cause is understood to be, for each contracting
party, the prestation or promise of a thing or service by the

other."48 Private investments for ones businesses, while indeed
eventually beneficial to the country and deserving to be given
incentives, are still principally and predominantly for the benefit
of the investors. Thus, the "mutual" contract considerations by
both parties to this alleged contract would be both for the benefit
of one of the parties thereto, BBLCI, which is not obligated by
the 1969 Document to surrender a share in its proceeds any more
than it is already required by its TLA and by the tax laws.
PICOPs argument that its investments can be considered as
contract consideration derogates the rule that "a license or a
permit is not a contract between the sovereignty and the licensee
or permittee, and is not a property in the constitutional sense, as
to which the constitutional proscription against the impairment
of contracts may extend." All licensees obviously put up
investments, whether they are as small as a tricycle unit or as big
as those put up by multi-billion-peso corporations. To construe
these investments as contract considerations would be to
abandon the foregoing rule, which would mean that the State
would be bound to all licensees, and lose its power to revoke or
amend these licenses when public interest so dictates.
The power to issue licenses springs from the States police
power, known as "the most essential, insistent and least limitable
of powers, extending as it does to all the great public needs." 49
Businesses affecting the public interest, such as the operation of
public utilities and those involving the exploitation of natural
resources, are mandated by law to acquire licenses. This is so in
order that the State can regulate their operations and thereby
protect the public interest. Thus, while these licenses come in the
form of "agreements," e.g., "Timber License Agreements," they
cannot be considered contracts under the non-impairment
clause.50
PICOP found this argument "lame," arguing, thus:
43. It is respectfully submitted that the aforesaid pronouncement
in the Decision is an egregious and monumental error.
44. The Decision could not dismiss as "preposterous" the mutual
covenants in the Presidential Warranty which calls for a huge
investment of Php500 million at that time in 1969 out of which
Php268,440,000 raised from domestic foreign lending institution
to establish the first large scale integrated wood processing
complex in the Philippines.
45. The Decision puts up a lame explanation that "all licensees
put up investments in pursuing their business"
46. Now there are about a hundred timber licenses issued by the
Government thru the DENR, but these are ordinary timber
licenses which involve the mere cutting of timber in the
concession area, and nothing else. Records in the DENR shows
that no timber licensee has put up an integrated large wood
processing complex in the Philippines except PICOP.51
PICOP thus argues on the basis of quantity, and wants us to
distinguish between the investment of the tricycle driver and that
of the multi-billion corporation. However, not even billions of
pesos in investment can change the fact that natural resources
and, therefore, public interest are involved in PICOPs venture,
consequently necessitating the full control and supervision by
the State as mandated by the Constitution. Not even billions of
pesos in investment can buy forest lands, which is practically
what PICOP is asking for by interpreting the 1969 Document as
a contract giving it perpetual and exclusive possession over such

lands. Among all TLA holders in the Philippines, PICOP has, by
far, the largest concession area at 143,167 hectares, a land area
more than the size of two Metro Manilas. 52 How can it not
expect to also have the largest investment?
Investment Incentives Act
PICOP then claims that the contractual nature of the 1969
Document was brought about by its issuance in accordance with
and pursuant to the Investment Incentives Act. According to
PICOP:
The conclusion in the Decision that to construe PICOPs
investments as a consideration in a contract would be to
stealthily render ineffective the principle that a license is not a
contract between the sovereignty and the licensee is so flawed
since the contract with the warranty dated 29 July 1969 was
issued by the Government in accordance with and pursuant to
Republic Act No. 5186, otherwise known as "The Investment
Incentives Act."53
PICOP then proceeds to cite Sections 2 and 4(d) and (e) of said
act:
Section 2. Declaration of Policy To accelerate the sound
development of the national economy in consonance with the
principles and objectives of economic nationalism, and in
pursuance of a planned, economically feasible and practicable
dispersal of industries, under conditions which will encourage
competition and discharge monopolies, it is hereby declared to
be the policy of the state to encourage Filipino and foreign
investments, as hereinafter set out, in projects to develop
agricultural, mining and manufacturing industries which

increase national income most at the least cost, increase exports,
bring about greater economic stability, provide more
opportunities for employment, raise the standards of living of the
people, and provide for an equitable distribution of wealth. It is
further declared to be the policy of the state to welcome and
encourage foreign capital to establish pioneer enterprises that are
capital intensive and would utilize a substantial amount of
domestic raw materials, in joint venture with substantial Filipino
capital, whenever available.
Section 4. Basic Rights and Guarantees. All investors and
enterprises are entitled to the basic rights and guarantees
provided in the constitution. Among other rights recognized by
the Government of the Philippines are the following:
xxxx
d) Freedom from Expropriation. There shall be no
expropriation by the government of the property represented by
investments or of the property of enterprises except for public
use or in the interest of national welfare and defense and upon
payment of just compensation. x x x.
e) Requisition of Investment. There shall be no requisition of
the property represented by the investment or of the property of
enterprises, except in the event of war or national emergency and
only for the duration thereof. Just compensation shall be
determined and paid either at the time of requisition or
immediately after cessation of the state of war or national
emergency. Payments received as compensation for the
requisitioned property may be remitted in the currency in which
the investment was originally made and at the exchange rate
prevailing at the time of remittance, subject to the provisions of

Section seventy-four of republic Act Numbered Two hundred
sixty-five.
Section 2 speaks of the policy of the State to encourage Filipino
and foreign investments. It does not speak of how this policy can
be implemented. Implementation of this policy is tackled in
Sections 5 to 12 of the same law,54which PICOP failed to
mention, and for a good reason. None of the 24 incentives
enumerated therein relates to, or even remotely suggests that,
PICOPs proposition that the 1969 Document is a contract.
PICOP could indeed argue that the enumeration is not exclusive.
Certainly, granting incentives to investors, whether included in
the enumeration or not, would be an implementation of this
policy. However, it is presumed that whatever incentives may be
given to investors should be within the bounds of the laws and
the Constitution. The declaration of policy in Section 2 cannot,
by any stretch of the imagination, be read to provide an
exception to either the laws or, heaven forbid, the Constitution.
Exceptions are never presumed and should be convincingly
proven. Section 2 of the Investment Incentives Act cannot be
read as exempting investors from the Constitutional provisions
(1) prohibiting private ownership of forest lands; (2) providing
for the complete control and supervision by the State of
exploitation activities; or (3) limiting exploitation agreements to
twenty-five years, renewable for another twenty-five years.
Section 4(d) and (e), on the other hand, is a recognition of rights
already guaranteed under the Constitution. Freedom from
expropriation is granted under Section 9 of Article III 55 of the
Constitution, while the provision on requisition is a negative
restatement of Section 6, Article XII.56
Refusal to grant perpetual and exclusive possession to PICOP of

its concession area would not result in the expropriation or
requisition of PICOPs property, as these forest lands belong to
the State, and not to PICOP. This is not changed by PICOPs
allegation that:
Since it takes 35 years before the company can go back and
harvest their residuals in a logged-over area, it must be assured
of tenure in order to provide an inducement for the company to
manage and preserve the residuals during their growth period.
This is a commitment of resources over a span of 35 years for
each plot for each cycle. No company will undertake the
responsibility and cost involved in policing, preserving and
managing residual forest areas until it were sure that it had firm
title to the timber.57
The requirement for logging companies to preserve and maintain
forest areas, including the reforestation thereof, is one of the
prices a logging company must pay for the exploitation thereof.
Forest lands are meant to be enjoyed by countless future
generations of Filipinos, and not just by one logging company.
The requirements of reforestation and preservation of the
concession areas are meant to protect them, the future
generations, and not PICOP. Reforestation and preservation of
the concession areas are not required of logging companies so
that they would have something to cut again, but so that the
forest would remain intact after their operations. That PICOP
would not accept the responsibility to preserve its concession
area if it is not assured of tenure thereto does not speak well of
its corporate policies.
Conclusion
In sum, PICOP was not able to prove either of the two things it
needed to prove to be entitled to a Writ of Mandamus against the
DENR Secretary. The 1969 Document is not a contract
recognized under the non-impairment clause and, even if we
assume for the sake of argument that it is, it did not enjoin the
government to issue an IFMA in 2002 either. These are the
essential elements in PICOPs cause of action, and the failure to
prove the same warrants a dismissal of PICOPs Petition for
Mandamus, as not even PICOPs compliance with all the
administrative and statutory requirements can save its Petition
now.
Whether PICOP Has Complied with the Statutory and
Administrative Requirements for the Conversion of the TLA to
an IFMA
In the assailed Decision, our ruling was based on two distinct
grounds, each one being sufficient in itself for us to rule that
PICOP was not entitled to a Writ of Mandamus: (1) the 1969
Document, on which PICOP hinges its right to compel the
issuance of an IFMA, is not a contract; and (2) PICOP has not
complied with all administrative and statutory requirements for
the issuance of an IFMA.
When a court bases its decision on two or more grounds, each is
as authoritative as the other and neither is obiter dictum. 58 Thus,
both grounds on which we based our ruling in the assailed
Decision would become judicial dictum, and would affect the
rights and interests of the parties to this case unless corrected in
this Resolution on PICOPs Motion for Reconsideration.
Therefore, although PICOP would not be entitled to a Writ of
Mandamus even if the second issue is resolved in its favor, we
should nonetheless resolve the same and determine whether
PICOP has indeed complied with all administrative and statutory

requirements for the issuance of an IFMA.
While the first issue (on the nature of the 1969 Document) is
entirely legal, this second issue (on PICOPs compliance with
administrative and statutory requirements for the issuance of an
IFMA) has both legal and factual sub-issues. Legal sub-issues
include whether PICOP is legally required to (1) consult with
and acquire an approval from the Sanggunian concerned under
Sections 26 and 27 of the Local Government Code; and (2)
acquire a Certification from the National Commission on
Indigenous Peoples (NCIP) that the concession area does not
overlap with any ancestral domain. Factual sub-issues include
whether, at the time it filed its Petition for Mandamus, PICOP
had submitted the required Five-Year Forest Protection Plan and
Seven-Year Reforestation Plan and whether PICOP had paid all
forest charges.
For the factual sub-issues, PICOP invokes the doctrine that
factual findings of the trial court, especially when upheld by the
Court of Appeals, deserve great weight. However, deserving of
even greater weight are the factual findings of administrative
agencies that have the expertise in the area of concern. The
contentious facts in this case relate to the licensing, regulation
and management of forest resources, the determination of which
belongs exclusively to the DENR:
SECTION 4. Mandate. The Department shall be the primary
government agency responsible for the conservation,
management, development and proper use of the countrys
environment and natural resources, specifically forest and
grazing lands, mineral resources, including those in reservation
and watershed areas, and lands of the public domain, as well as
the licensing and regulation of all natural resources as may be

provided for by law in order to ensure equitable sharing of the
benefits derived therefrom for the welfare of the present and
future generations of Filipinos.59
When parties file a Petition for Certiorari against judgments of
administrative agencies tasked with overseeing the
implementation of laws, the findings of such administrative
agencies are entitled to great weight. In the case at bar, PICOP
could not have filed a Petition for Certiorari, as the DENR
Secretary had not yet even determined whether PICOP should be
issued an IFMA. As previously mentioned, when PICOPs
application was brought to a standstill upon the evaluation that
PICOP had yet to comply with the requirements for the issuance
of an IFMA, PICOP refused to attend further meetings with the
DENR and instead filed a Petition for Mandamus against the
latter. By jumping the gun, PICOP did not diminish the weight
of the DENR Secretarys initial determination.
Forest Protection and Reforestation Plans
The Performance Evaluation Team tasked to appraise PICOPs
performance on its TLA No. 43 found that PICOP had not
submitted its Five-Year Forest Protection Plan and its SevenYear Reforestation Plan.60
In its Motion for Reconsideration, PICOP asserts that, in its
Letter of Intent dated 28 August 2000 and marked as Exhibit L
in the trial court, there was a reference to a Ten-Year Sustainable
Forest Management Plan (SFMP), in which a Five-Year Forest
Protection Plan and a Seven-Year Reforestation Plan were
allegedly incorporated. PICOP submitted a machine copy of a
certified photocopy of pages 50-67 and 104-110 of this SFMP in
its Motion for Reconsideration. PICOP claims that the existence

of this SFMP was repeatedly asserted during the IFMA
application process.61
Upon examination of the portions of the SFMP submitted to us,
we cannot help but notice that PICOPs concept of forest
protection is the security of the area against "illegal" entrants
and settlers. There is no mention of the protection of the wildlife
therein, as the focus of the discussion of the silvicultural
treatments and the SFMP itself is on the protection and
generation of future timber harvests. We are particularly
disturbed by the portions stating that trees of undesirable quality
shall be removed.
However, when we required the DENR Secretary to comment on
PICOPs Motion for Reconsideration, the DENR Secretary did
not dispute the existence of this SFMP, or question PICOPs
assertion that a Ten-Year Forest Protection Plan and a Ten-Year
Reforestation Plan are already incorporated therein. Hence, since
the agency tasked to determine compliance with IFMA
administrative requirements chose to remain silent in the face of
allegations of compliance, we are constrained to withdraw our
pronouncement in the assailed Decision that PICOP had not
submitted a Five-Year Forest Protection Plan and a Seven-Year
Reforestation Plan for its TLA No. 43. As previously mentioned,
the licensing, regulation and management of forest resources are
the primary responsibilities of the DENR.62
The compliance discussed above is, of course, only for the
purpose of determining PICOPs satisfactory performance as a
TLA holder, and covers a period within the subsistence of
PICOPs TLA No. 43. This determination, therefore, cannot
prohibit the DENR from requiring PICOP, in the future, to
submit proper forest protection and reforestation plans covering

the period of the proposed IFMA.
officers, the positive and categorical evidence presented by the

DENR Secretary was more convincing with respect to the issue
of payment of forestry charges:
Forest Charges
In determining that PICOP did not have unpaid forest charges,
the Court of Appeals relied on the assumption that if it were true
that PICOP had unpaid forest charges, it should not have been
issued an approved Integrated Annual Operation Plan (IAOP) for
the year 2001-2002 by Secretary Alvarez himself.63
In the assailed Decision, we held that the Court of Appeals had
been selective in its evaluation of the IAOP, as it disregarded the
part thereof that shows that the IAOP was approved subject to
several conditions, not the least of which was the submission of
proof of the updated payment of forest charges from April 2001
to June 2001.64 We also held that even if we considered for the
sake of argument that the IAOP should not have been issued if
PICOP had existing forestry accounts, the issuance of the IAOP
could not be considered proof that PICOP had paid the same.
Firstly, the best evidence of payment is the receipt thereof.
PICOP has not presented any evidence that such receipts were
lost or destroyed or could not be produced in court.65 Secondly,
the government cannot be estopped by the acts of its officers. If
PICOP has been issued an IAOP in violation of the law,
allegedly because it may not be issued if PICOP had existing
forestry accounts, the government cannot be estopped from
collecting such amounts and providing the necessary sanctions
therefor, including the withholding of the IFMA until such
amounts are paid.
We therefore found that, as opposed to the Court of Appeals
findings, which were based merely on estoppel of government
1. Forest Management Bureau (FMB) Senior Forest

Management Specialist (SFMS) Ignacio M. Evangelista testified
that PICOP had failed to pay its regular forest charges covering
the period from 22 September 2001 to 26 April 2002 in the total
amount of P15,056,054.0566 PICOP also allegedly paid late most
of its forest charges from 1996 onwards, by reason of which,
PICOP is liable for a surcharge of 25% per annum on the tax due
and interest of 20% per annum which now amounts to
P150,169,485.02.67Likewise, PICOP allegedly had overdue and
unpaid silvicultural fees in the amount of P2,366,901.00 as of 30
August 2002.68 Summing up the testimony, therefore, it was
alleged that PICOP had unpaid and overdue forest charges in the
sum of P167,592,440.90 as of 10 August 2002.69
2. Collection letters were sent to PICOP, but no official receipts
are extant in the DENR record in Bislig City evidencing
payment of the overdue amount stated in the said collection
letters.70 There were no official receipts for the period covering
22 September 2001 to 26 April 2002.
We also considered these pieces of evidence more convincing
than the other ones presented by PICOP:
1. PICOP presented the certification of Community Environment
and Natural Resources Office (CENRO) Officer Philip A.
Calunsag, which refers only to PICOPs alleged payment of
regular forest charges covering the period from 14 September
2001 to 15 May 2002.71 We noted that it does not mention
similar payment of the penalties, surcharges and interests that
PICOP incurred in paying late several forest charges, which fact

was not rebutted by PICOP.
2. The 27 May 2002 Certification by CENRO Calunsag
specified only the period covering 14 September 2001 to 15 May
2002 and the amount of P53,603,719.85 paid by PICOP without
indicating the corresponding volume and date of production of
the logs. This is in contrast to the findings of SFMS Evangelista,
which cover the period from CY 1996 to 30 August 2002 and
includes penalties, interests, and surcharges for late payment
pursuant to DAO 80, series of 1987.
charges for 10 January 2001 to 20 December 2002, including the

period during which SFMS Evangelista claims PICOP did not
pay forest charges (22 September 2001 to 26 April 2002).
Before proceeding any further, it is necessary for us to point out
that, as with our ruling on the forest protection and reforestation
plans, this determination of compliance with the payment of
forest charges is exclusively for the purpose of determining
PICOPs satisfactory performance on its TLA No. 43. This
cannot bind either party in a possible collection case that may
ensue.
3. The 21 August 2002 PICOP-requested certification issued by

Bill Collector Amelia D. Arayan, and attested to by CENRO
Calunsag himself, shows that PICOP paid only regular forest
charges for its log production covering 1 July 2001 to 21
September 2001. However, there were log productions after 21
September 2001, the regular forest charges for which have not
been paid, amounting to P15,056,054.05.72The same certification
shows delayed payment of forest charges, thereby corroborating
the testimony of SFMS Evangelista and substantiating the
imposition of penalties and surcharges.
An evaluation of the DENR Secretarys position on this matter

shows a heavy reliance on the testimony of SFMS Evangelista,
making it imperative for us to strictly scrutinize the same with
respect to its contents and admissibility.
In its Motion for Reconsideration, PICOP claims that SFMS

Evangelista is assigned to an office that has nothing to do with
the collection of forest charges, and that he based his testimony
on the Memoranda of Forest Management Specialist II (FMS II)
Teofila Orlanes and DENR, Bislig City Bill Collector Amelia D.
Arayan, neither of whom was presented to testify on his or her
Memorandum. PICOP also submitted an Addendum to Motion
for Reconsideration, wherein it appended certified true copies of
CENRO Summaries with attached Official Receipts tending to
show that PICOP had paid a total of P81,184,747.70 in forest
1. In order for the DENR to be able to exercise closer and more

effective supervision, management and control over the forest
resources within the areas covered by TLA No. 43, PTLA No. 47
and IFMA No. 35 of the PICOP Resources, Inc., (PRI) and, at
the same time, provide greater facility in the delivery of DENR
services to various publics, the aforesaid forest holdings of PRI
are hereby placed under the exclusive jurisdiction of DENR
Region No. XIII with the CENR Office at Bislig, Surigao del
Sur, as directly responsible thereto. x x x.
PICOP claims that SFMS Evangelistas office has nothing to do

with the collection of forest charges. According to PICOP, the
entity having administrative jurisdiction over it is CENRO,
Bislig City by virtue of DENR Administrative Order No. 96-36,
dated 20 November 1996, which states:
We disagree. Evangelista is an SFMS assigned at the Natural

Forest Management Division of the FMB, DENR. In
Evangelistas aforementioned affidavit submitted as part of his
direct examination, Evangelista enumerated his duties and
functions as SFMS:
1. As SFMS, I have the following duties and functions:
a) To evaluate and act on cases pertaining to forest management
referred to in the Natural forest Management Division;
b) To monitor, verify and validate forest management and related
activities by timber licences as to their compliance to approved
plans and programs;
c) To conduct investigation and verification of compliance by
timber licenses/permittees to existing DENR rules and
regulations;
d) To gather field data and information to be used in the
formulation of forest policies and regulations; and
e) To perform other duties and responsibilities as may be
directed by superiors.73
PICOP also alleges that the testimony of SFMS Evangelista was
based on the aforementioned Memoranda of Orlanes and Arayan
and that, since neither Orlanes nor Arayan was presented as a
witness, SFMS Evangelistas testimony should be deemed
hearsay. SFMS Evangelistas 1 October 2002 Affidavit, 74 which
was offered as part of his testimony, provides:
2. Sometime in September, 2001 the DENR Secretary was

furnished a copy of forest Management Specialist II (FMS II)
Teofila L. Orlanes Memorandum dated September 24, 2001
concerning unopaid forest charges of PICOP. Attached to the
said Memorandum was a Memorandum dated September 19,
2001 of Amelia D. Arayan, Bill collector of the DENR R13-14,
Bislig City. Copies of the said Memoranda are attached as
Annexes 1 and 2, respectively.
3. The said Memoranda were referred to the FMB Director for
appropriate action.
4. Thus, on August 5, 2002, I was directed by the FMB Director
to proceed to Region 13 to gather forestry-related data and
validate the report contained in the Memoranda of Ms. Orlanes
and Arayan.
5. On August 6, 2002, I proceeded to DENR Region 13 in Bislig
City. A copy of my Travel Order is attached as Annex 3.
6. Upon my arrival at CENRO, Bislig, surigao del Sur, I
coordinated with CENRO Officer Philip A. Calunsag and
requested him to make available to me the records regarding the
forest products assessments of PICOP.
7. After I was provided with the requested records, I evaluated
and collected the data.
8. After the evaluation, I found that the unpaid forest charges
adverted to in the Memoranda of Mr. Orlanes and Arayan
covering the period from May 8, 2001 to July 7, 2001 had
already been paid but late. I further found out that PICOP had
not paid its forest charges covering the period from September
22, 2001 to April 26, 2002 in the total amount of

P15,056,054.05.
9. I also discovered that from 1996 up to august 30, 2002,
PICOP paid late some of its forest charges in 1996 and
consistently failed to pay late its forest charges from 1997 up to
the present time.
10. Under Section 7.4 of DAO No. 80 Series of 197\87 and
Paragraph (4a), Section 10 of BIR revenue Regulations No. 2-81
dated November 18, 1980, PICOP is mandated to pay a
surcharge of 25% per annum of the tax due and interest of 20%
per annum for late payment of forest charges.
11. The overdue unpaid forest charges of PICOP as shown in the
attached tabulation marked as Annex 4 hereof is
P150,169,485.02. Likewise, PICOP has overdue and unpaid
silvicultural fees in the amount ofP2,366,901.00 from 1996 to
the present.
12. In all, PICOP has an outstanding and overdue total
obligation of P167,592,440.90 as of August 30, 2002 based on
the attached tabulation which is marked as Annex 5 hereof.75
Clearly, SFMS Evangelista had not relied on the Memoranda of
Orlanes and Arayan. On the contrary, he traveled to Surigao del
Sur in order to verify the contents of these Memoranda. SFMS
Evangelista, in fact, revised the findings therein, as he
discovered that certain forest charges adverted to as unpaid had
already been paid.
This does not mean, however, that SFMS Evangelistas
testimony was not hearsay. A witness may testify only on facts
of which he has personal knowledge; that is, those derived from

his perception, except in certain circumstances allowed by the
Rules.76 Otherwise, such testimony is considered hearsay and,
hence, inadmissible in evidence.77
SFMS Evangelista, while not relying on the Memoranda of
Orlanes and Arayan, nevertheless relied on records, the
preparation of which he did not participate in.78 These records
and the persons who prepared them were not presented in court,
either. As such, SFMS Evangelistas testimony, insofar as he
relied on these records, was on matters not derived from his own
perception, and was, therefore, hearsay.
Section 44, Rule 130 of the Rules of Court, which speaks of
entries in official records as an exception to the hearsay rule,
cannot excuse the testimony of SFMS Evangelista. Section 44
provides:
SEC. 44. Entries in official records. Entries in official records
made in the performance of his duty by a public officer of the
Philippines, or by a person in the performance of a duty
specially enjoined by law, are prima facie evidence of the facts
therein stated.
In Africa v. Caltex,79 we enumerated the following requisites for
the admission of entries in official records as an exception to the
hearsay rule: (1) the entries were made by a public officer or a
private person in the performance of a duty; (2) the performance
of the duty is especially enjoined by law; (3) the public officer or
the private person had sufficient knowledge of the facts stated by
him, which must have been acquired by him personally or
through official information.
The presentation of the records themselves would, therefore,

have been admissible as an exception to the hearsay rule even if
the public officer/s who prepared them was/were not presented
in court, provided the above requisites could be adequately
proven. In the case at bar, however, neither the records nor the
persons who prepared them were presented in court. Thus, the
above requisites cannot be sufficiently proven. Also, since
SFMS Evangelista merely testified based on what those records
contained, his testimony was hearsay evidence twice removed,
which was one step too many to be covered by the officialrecords exception to the hearsay rule.
SFMS Evangelistas testimony of nonpayment of forest charges
was, furthermore, based on his failure to find official receipts
corresponding to billings sent to PICOP. As stated above, PICOP
attached official receipts in its Addendum to Motion for
Reconsideration to this Court. While this course of action is
normally irregular in judicial proceedings, we merely stated in
the assailed Decision that "the DENR Secretary has adequately
proven that PICOP has, at this time, failed to comply with
administrative and statutory requirements for the conversion of
TLA No. 43 into an IFMA,"80 and that "this disposition confers
another chance to comply with the foregoing requirements."81
In view of the foregoing, we withdraw our pronouncement that
PICOP has unpaid forestry charges, at least for the purpose of
determining compliance with the IFMA requirements.
NCIP Certification
The Court of Appeals held that PICOP need not comply with
Section 59 of Republic Act No. 8371, which requires prior
certification from the NCIP that the areas affected do not overlap
with any ancestral domain before any IFMA can be entered into
by the government. According to the Court of Appeals, Section
59 should be interpreted to refer to ancestral domains that have
been duly established as such by the continuous possession and
occupation of the area concerned by indigenous peoples since
time immemorial up to the present. The Court of Appeals held
that PICOP had acquired property rights over TLA No. 43 areas,
being in exclusive, continuous and uninterrupted possession and
occupation of these areas since 1952 up to the present.
In the assailed Decision, we reversed the findings of the Court of
Appeals. Firstly, the Court of Appeals ruling defies the settled
jurisprudence we have mentioned earlier, that a TLA is neither a
property nor a property right, and that it does not create a vested
right.82
Secondly, the Court of Appeals resort to statutory construction
is misplaced, as Section 59 of Republic Act No. 8379 is clear
and unambiguous:
SEC. 59. Certification Precondition. All departments and other
governmental agencies shall henceforth be strictly enjoined from
issuing, renewing or granting any concession, license or lease, or
entering into any production-sharing agreement, without prior
certification from the NCIP that the area affected does not
overlap with any ancestral domain. Such certification shall only
be issued after a field-based investigation is conducted by the
Ancestral Domains Office of the area concerned: Provided, That
no certification shall be issued by the NCIP without the free and
prior informed and written consent of the ICCs/IPs concerned:
Provided, further, That no department, government agency or
government-owned or controlled corporation may issue new
concession, license, lease, or production sharing agreement
while there is a pending application for a CADT: Provided,

finally, That the ICCs/IPs shall have the right to stop or suspend,
in accordance with this Act, any project that has not satisfied the
requirement of this consultation process.
PICOP had tried to put a cloud of ambiguity over Section 59 of
Republic Act No. 8371 by invoking the definition of Ancestral
Domains in Section 3(a) thereof, wherein the possesssion by
Indigenous
Cultural
Communities/Indigenous
Peoples
(ICCs/IPs) must have been continuous to the present. However,
we noted the exception found in the very same sentence invoked
by PICOP:
a) Ancestral domains Subject to Section 56 hereof, refers to all
areas generally belonging to ICCs/IPs comprising lands, inland
waters, coastal areas, and natural resources therein, held under a
claim of ownership, occupied or possessed by ICCs/IPs, by
themselves or through their ancestors, communally or
individually since time immemorial, continuously to the present
except when interrupted by war, force majeure or displacement
by force, deceit, stealth or as a consequence of government
projects or any other voluntary dealings entered into by
government and private individuals/corporations, and which are
necessary to ensure their economic, social and cultural welfare.
It shall include ancestral lands, forests, pasture, residential,
agricultural, and other lands individually owned whether
alienable and disposable or otherwise, hunting grounds, burial
grounds, worship areas, bodies of water, mineral and other
natural resources, and lands which may no longer be exclusively
occupied by ICCs/IPs but from which they traditionally had
access to for their subsistence and traditional activities,
particularly the home ranges of ICCs/IPs who are still nomadic
and/or shifting cultivators;
Ancestral domains, therefore, remain as such even when

possession or occupation of these areas has been interrupted by
causes provided under the law, such as voluntary dealings
entered
into
by
the
government
and
private
individuals/corporations. Consequently, the issuance of TLA No.
43 in 1952 did not cause the ICCs/IPs to lose their possession or
occupation over the area covered by TLA No. 43.
Thirdly, we held that it was manifestly absurd to claim that the
subject lands must first be proven to be part of ancestral domains
before a certification that the lands are not part of ancestral
domains can be required, and invoked the separate opinion of
now Chief Justice Reynato Puno in Cruz v. Secretary of
DENR83:
As its subtitle suggests, [Section 59 of R.A. No. 8371] requires
as a precondition for the issuance of any concession, license or
agreement over natural resources, that a certification be issued
by the NCIP that the area subject of the agreement does not lie
within any ancestral domain. The provision does not vest the
NCIP with power over the other agencies of the State as to
determine whether to grant or deny any concession or license or
agreement. It merely gives the NCIP the authority to ensure that
the ICCs/IPs have been informed of the agreement and that their
consent thereto has been obtained. Note that the certification
applies to agreements over natural resources that do not
necessarily lie within the ancestral domains. For those that are
found within the said domains, Sections 7(b) and 57 of the IPRA
apply.
PICOP rejects the entire disposition of this Court on the matter,
relying on the following theory:
84. It is quite clear that Section 59 of R.A. 8371 does not apply
to the automatic conversion of TLA 43 to IFMA.
First, the automatic conversion of TLA 43 to an IFMA is not a
new project. It is a mere continuation of the harvesting process
in an area that PICOP had been managing, conserving and
reforesting for the last 50 years since 1952. Hence any pending
application for a CADT within the area, cannot affect much less
hold back the automatic conversion. That the government now
wishes to change the tenurial system to an IFMA could not
change the PICOP project, in existence and operating for the last
30 (sic) years, into a new one.84
PICOPs position is anything but clear. What is clearly provided
for in Section 59 is that it covers "issuing, renewing or granting
(of) any concession, license or lease, or entering into any
production sharing agreement." PICOP is implying that, when
the government changed the tenurial system to an IFMA,
PICOPs existing TLA would just be upgraded or modified, but
would be the very same agreement, hence, dodging the inclusion
in the word "renewing." However, PICOP is conveniently
leaving out the fact that its TLA expired in 2002. If PICOP really
intends to pursue the argument that the conversion of the TLA
into an IFMA would not create a new agreement, but would only
be a modification of the old one, then it should be willing to
concede that the IFMA expired as well in 2002. An automatic
modification would not alter the terms and conditions of the
TLA except when they are inconsistent with the terms and
conditions of an IFMA. Consequently, PICOPs concession
period under the renewed TLA No. 43, which is from the year
1977 to 2002, would remain the same.
PICOP cannot rely on a theory of the case whenever such theory
is beneficial to it, but refute the same whenever the theory is

damaging to it. In the same way, PICOP cannot claim that the
alleged Presidential Warranty is "renewable for other 25 years"
and later on claim that what it is asking for is not a renewal.
Extensions of agreements must necessarily be included in the
term renewal. Otherwise, the inclusion of "renewing" in Section
59 would be rendered inoperative.
PICOP further claims:
85. Verily, in interpreting the term "held under claim of
ownership," the Supreme Court could not have meant to include
claims that had just been filed and not yet recognized under the
provisions of DENR Administrative Order No. 2 Series of 1993,
nor to any other community / ancestral domain program prior to
R.A. 8371.
xxxx
87. One can not imagine the terrible damage and chaos to the
country, its economy, its people and its future if a mere claim
filed for the issuance of a CADC or CADT will already provide
those who filed the application, the authority or right to stop the
renewal or issuance of any concession, license or lease or any
production-sharing agreement. The same interpretation will give
such applicants through a mere application the right to stop or
suspend any project that they can cite for not satisfying the
requirements of the consultation process of R.A. 8371. If such
interpretation gets enshrined in the statures of the land, the
unscrupulous and the extortionists can put any ongoing or future
project or activity to a stop in any part of the country citing their
right from having filed an application for issuance of a CADC or
CADT claim and the legal doctrine established by the Supreme
Court in this PICOP case.85
x x x x.
We are not sure whether PICOPs counsels are deliberately

trying to mislead us, or are just plainly ignorant of basic precepts
of law. The term "claim" in the phrase "claim of ownership" is
not a document of any sort. It is an attitude towards something.
The phrase "claim of ownership" means "the possession of a
piece of property with the intention of claiming it in hostility to
the true owner."86 It is also defined as "a partys manifest
intention to take over land, regardless of title or right." 87 Other
than in Republic Act No. 8371, the phrase "claim of ownership"
is thoroughly discussed in issues relating to acquisitive
prescription in Civil Law.
88. The DENR issued a total of 73 CADCs as of December 11,

1996. The DENR Undersecretary for Field Operations had
recommended another 11 applications for issuance of CADCs.
None of the CADCs overlap the TLA 43 area.
Before PICOPs counsels could attribute to us an assertion that a

mere attitude or intention would stop the renewal or issuance of
any concession, license or lease or any production-sharing
agreement, we should stress beforehand that this attitude or
intention must be clearly shown by overt acts and, as required by
Section 3(a), should have been in existence "since time
immemorial, continuously to the present except when
interrupted by war, force majeure or displacement by force,
deceit, stealth or as a consequence of government projects or any
other voluntary dealings entered into by government and private
individuals/corporations."
Another argument of PICOP involves the claim itself that there
was no overlapping:
Second, there could be no overlapping with any Ancestral
Domain as proven by the evidence presented and testimonies
rendered during the hearings in the Regional Trial Court. x x x.
89. However former DENR Secretary Alvarez, in a

memorandum dated 13 September, 2002 addressed to PGMA,
insisted that PICOP had to comply with the requirement to
secure a Free and Prior Informed Concent because CADC 095
was issued covering 17,112 hectares of TLA 43.
90. This CADC 095 is a fake CADC and was not validly
released by the DENR. While the Legal Department of the
DENR was still in the process of receiving the filings for
applicants and the oppositors to the CADC application, PICOP
came across filed copies of a CADC 095 with the PENRO of
Davao Oriental as part of their application for a Community
Based Forest Management Agreement (CBFMA). Further
research came across the same group filing copies of the alleged
CADC 095 with the Mines and Geosciences Bureau in Davao
City for a mining agreement application. The two applications
had two different versions of the CADCs second page. One had
Mr. Romeo T. Acosta signing as the Social reform Agenda
Technical Action Officer, while the other had him signing as the
Head, Community-Based Forest Management Office. One had
the word "Eight" crossed out and "Seven" written to make it
appear that the CADC was issued on September 25, 1997, the
other made it appear that there were no alterations and the date
was supposed to be originally 25 September 1997.
What is required in Section 59 of Republic Act No. 8379 is a
Certification from the NCIP that there was no overlapping with

any Ancestral Domain. PICOP cannot claim that the DENR
gravely abused its discretion for requiring this Certification, on
the ground that there was no overlapping. We reiterate that it is
manifestly absurd to claim that the subject lands must first be
proven to be part of ancestral domains before a certification that
they are not can be required. As discussed in the assailed
Decision, PICOP did not even seek any certification from the
NCIP that the area covered by TLA No. 43, subject of its IFMA
conversion, did not overlap with any ancestral domain.88
Sanggunian Consultation and Approval
While PICOP did not seek any certification from the NCIP that
the formers concession area did not overlap with any ancestral
domain, PICOP initially sought to comply with the requirement
under Sections 26 and 27 of the Local Government Code to
procure prior approval of the Sanggunians concerned. However,
only one of the many provinces affected approved the issuance
of an IFMA to PICOP. Undaunted, PICOP nevertheless
submitted to the DENR the purported resolution 89 of the
Province of Surigao del Sur indorsing the approval of PICOPs
application for IFMA conversion, apparently hoping either that
the disapproval of the other provinces would go unnoticed, or
that the Surigao del Sur approval would be treated as sufficient
compliance.
Surprisingly, the disapproval by the other provinces did go
unnoticed before the RTC and the Court of Appeals, despite the
repeated assertions thereof by the Solicitor General. When we
pointed out in the assailed Decision that the approval must be by
all the Sanggunians concerned and not by only one of them,
PICOP changed its theory of the case in its Motion for
Reconsideration, this time claiming that they are not required at

all to procure Sanggunian approval.
Sections 2(c), 26 and 27 of the Local Government Code provide:
SEC. 2. x x x.
xxxx
(c) It is likewise the policy of the State to require all national
agencies and offices to conduct periodic consultations with
appropriate local government units, nongovernmental and
peoples organizations, and other concerned sectors of the
community before any project or program is implemented in
their respective jurisdictions.
SEC. 26. Duty of National Government Agencies in the
Maintenance of Ecological Balance. It shall be the duty of
every national agency or government-owned or controlled
corporation authorizing or involved in the planning and
implementation of any project or program that may cause
pollution, climatic change, depletion of non-renewable
resources, loss of crop land, rangeland, or forest cover, and
extinction of animal or plant species, to consult with the local
government units, nongovernmental organizations, and other
sectors concerned and explain the goals and objectives of the
project or program, its impact upon the people and the
community in terms of environmental or ecological balance, and
the measures that will be undertaken to prevent or minimize the
adverse effects thereof.
SEC. 27. Prior Consultations Required. No project or program
shall be implemented by government authorities unless the
consultations mentioned in Sections 2(c) and 26 hereof are

complied with, and prior approval of the sanggunian concerned
is obtained: Provided, That occupants in areas where such
projects are to be implemented shall not be evicted unless
appropriate relocation sites have been provided, in accordance
with the provisions of the Constitution.
As stated in the assailed Decision, the common evidence of the
DENR Secretary and PICOP, namely, the 31 July 2001
Memorandum of Regional Executive Director (RED) Elias D.
Seraspi, Jr., enumerated the local government units and other
groups which had expressed their opposition to PICOPs
application for IFMA conversion:
7. During the conduct of the performance evaluation of TLA No.
43 issues complaints against PRI were submitted thru
Resolutions and letters. It is important that these are included in
this report for assessment of what are their worth, viz:
7.4 Resolution No. 4, S-2001 of Sitio Linao, San Jose, Bislig

City (ANNEX I) requesting not to renew TLA 43 over the 900
hectares occupied by them.
7.5 Resolution No. 22, S-2001 (ANNEX J) of the Sanguniang
Bayan, Lingig, Surigao del Sur not to grant the conversion of
TLA 43 citing the plight of former employees of PRI who were
forced to enter and farm portion of TLA No. 43, after they were
laid off.
7.6 SP Resolution No. 2001-113 and CDC Resolution Nos. 092001 of the Sanguniang Panglungsod of Bislig City (ANNEXES
K & L) requesting to exclude the area of TLA No. 43 for
watershed purposes.
7.7 Resolution No. 2001-164, dated June 01, 2001 (ANNEX M)
Sanguniang Panglungsod of Bislig City opposing the conversion
of TLA 43 to IFMA for the reason that IFMA do not give
revenue benefits to the City.90
xxxx
7.2 Joint Resolution (unnumbered), dated March 19, 2001 of the
Barangay Council and Barangay Tribal Council of Simulao,
Boston, Davao Oriental (ANNEX F) opposing the conversion of
TLA No. 43 into IFMA over the 17,112 hectares allegedly
covered with CADC No. 095.
7.3 Resolution Nos. 10, s-2001 and 05, s-2001 (ANNEXES G &
H) of the Bunawan Tribal Council of Elders (BBMTCE)
strongly demanding none renewal of PICOP TLA. They claim to
be the rightful owner of the area it being their alleged ancestral
land.
PICOP had claimed that it complied with the Local Government

Code requirement of obtaining prior approval of the Sanggunian
concerned by submitting a purported resolution91 of the Province
of Surigao del Sur indorsing the approval of PICOPs
application for IFMA conversion. We ruled that this cannot be
deemed sufficient compliance with the foregoing provision.
Surigao del Sur is not the only province affected by the area
covered by the proposed IFMA. As even the Court of Appeals
found, PICOPs TLA No. 43 traverses the length and breadth not
only of Surigao del Sur but also of Agusan del Sur, Compostela
Valley and Davao Oriental.92
On Motion for Reconsideration, PICOP now argues that the
requirement under Sections 26 and 27 does not apply to it:

97. PICOP is not a national agency. Neither is PICOP
government owned or controlled. Thus Section 26 does not
apply to PICOP.
98. It is very clear that Section 27 refers to projects or programs
to be implemented by government authorities or governmentowned and controlled corporations. PICOPs project or the
automatic conversion is a purely private endevour. First the
PICOP project has been implemented since 1969. Second, the
project was being implemented by private investors and
financial institutions.
99. The primary government participation is to warrant and
ensure that the PICOP project shall have peaceful tenure in the
permanent forest allocated to provide raw materials for the
project. To rule now that a project whose foundations were
commenced as early as 1969 shall now be subjected to a 1991
law is to apply the law retrospectively in violation of Article 4 of
the Civil Code that laws shall not be applied retroactively.
100. In addition, under DAO 30, Series of 1992, TLA and IFMA
operations were not among those devolved function from the
National Government / DENR to the local government unit.
Under its Section 03, the devolved function cover only:
a) Community Based forestry projects.
b) Communal forests of less than 5000 hectares
c) Small watershed areas which are sources of local water
supply.93
We have to remind PICOP again of the contents of Section 2,

Article XII of the Constitution:
Section 2. All lands of the public domain, waters, minerals, coal,
of the State. The State may directly undertake such activities, or
be provided by law. In cases of water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of
grant.
All projects relating to the exploration, development and
utilization of natural resources are projects of the State. While
the State may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose
capital is owned by these citizens, such as PICOP, the projects
nevertheless remain as State projects and can never be purely
private endeavors.
Also, despite entering into co-production, joint venture, or
production-sharing agreements, the State remains in full control
and supervision over such projects. PICOP, thus, cannot limit

government participation in the project to being merely its
bouncer, whose primary participation is only to "warrant and
ensure that the PICOP project shall have peaceful tenure in the
permanent forest allocated to provide raw materials for the
project."
PICOP is indeed neither a national agency nor a governmentowned or controlled corporation. The DENR, however, is a
national agency and is the national agency prohibited by Section
27 from issuing an IFMA without the prior approval of the
Sanggunian concerned. As previously discussed, PICOPs
Petition for Mandamus can only be granted if the DENR
Secretary is required by law to issue an IFMA. We, however, see
here the exact opposite: the DENR Secretary was actually
prohibited by law from issuing an IFMA, as there had been no
prior approval by all the other Sanggunians concerned.
As regards PICOPs assertion that the application to them of a
1991 law is in violation of the prohibition against the nonretroactivity provision in Article 4 of the Civil Code, we have to
remind PICOP that it is applying for an IFMA with a term of
2002 to 2027. Section 2, Article XII of the Constitution allows
exploitation agreements to last only "for a period not exceeding
twenty-five years, renewable for not more than twenty-five
years." PICOP, thus, cannot legally claim that the projects term
started in 1952 and extends all the way to the present.
Finally, the devolution of the project to local government units is
not required before Sections 26 and 27 would be applicable.
Neither Section 26 nor 27 mentions such a requirement.
Moreover, it is not only the letter, but more importantly the spirit
of Sections 26 and 27, that shows that the devolution of the
project is not required. The approval of the Sanggunian

concerned is required by law, not because the local government
has control over such project, but because the local government
has the duty to protect its constituents and their stake in the
implementation of the project. Again, Section 26 states that it
applies to projects that "may cause pollution, climatic change,
depletion of non-renewable resources, loss of crop land,
rangeland, or forest cover, and extinction of animal or plant
species." The local government should thus represent the
communities in such area, the very people who will be affected
by flooding, landslides or even climatic change if the project is
not properly regulated, and who likewise have a stake in the
resources in the area, and deserve to be adequately compensated
when these resources are exploited.
Indeed, it would be absurd to claim that the project must first be
devolved to the local government before the requirement of the
national government seeking approval from the local
government can be applied. If a project has been devolved to the
local government, the local government itself would be
implementing the project. That the local government would need
its own approval before implementing its own project is patently
silly.
EPILOGUE AND DISPOSITION
PICOPc cause of action consists in the allegation that the
DENR Secretary, in not issuing an IFMA, violated its
constitutional right against non-impairment of contracts. We
have ruled, however, that the 1969 Document is not a contract
recognized under the non-impairment clause, much less a
contract specifically enjoining the DENR Secretary to issue the
IFMA. The conclusion that the 1969 Document is not a contract
recognized under the non-impairment clause has even been

disposed of in another case decided by another division of this
Court, PICOP Resources, Inc. v. Base Metals Mineral Resources
Corporation,94 the Decision in which case has become final and
executory. PICOPs Petition for Mandamus should, therefore,
fail.
Furthermore, even if we assume for the sake of argument that
the 1969 Document is a contract recognized under the nonimpairment clause, and even if we assume for the sake of
argument that the same is a contract specifically enjoining the
DENR Secretary to issue an IFMA, PICOPs Petition for
Mandamus must still fail. The 1969 Document expressly states
that the warranty as to the tenure of PICOP is "subject to
compliance with constitutional and statutory requirements as
well as with existing policy on timber concessions." Thus, if
PICOP proves the two above-mentioned matters, it still has to
prove compliance with statutory and administrative requirements
for the conversion of its TLA into an IFMA.
While we have withdrawn our pronouncements in the assailed
Decision that (1) PICOP had not submitted the required forest
protection and reforestation plans, and that (2) PICOP had
unpaid forestry charges, thus effectively ruling in favor of
PICOP on all factual issues in this case, PICOP still insists that
the requirements of an NCIP certification and Sanggunian
consultation and approval do not apply to it. To affirm PICOPs
position on these matters would entail nothing less than
rewriting the Indigenous Peoples Rights Act and the Local
Government Code, an act simply beyond our jurisdiction.
WHEREFORE, the Motion for Reconsideration of PICOP
Resources, Inc. is DENIED.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 157882
March 30, 2006
DIDIPIO
EARTH-SAVERS
MULTI-PURPOSE
ASSOCIATION, INCORPORATED (DESAMA), MANUEL
BUTIC, CESAR MARIANO, LAURO ABANCE, BEN
TAYABAN,
ANTONIO
DINGCOG,
TEDDY
B.
KIMAYONG, ALONZO ANANAYO, ANTONIO MALANUYA, JOSE BAHAG, ANDRES INLAB, RUFINO
LICYAYO,
ALFREDO
CULHI,
CATALILNA
INABYUHAN, GUAY DUMMANG, GINA PULIDO,
EDWIN ANSIBEY, CORAZON SICUAN, LOPEZ
DUMULAG, FREDDIE AYDINON, VILMA JOSE,
FLORENTINA MADDAWAT, LINDA DINGCOG, ELMER
SICUAN, GARY ANSIBEY, JIMMY MADDAWAT, JIMMY
GUAY, ALFREDO CUT-ING, ANGELINA UDAN, OSCAR
INLAB, JUANITA CUT-ING, ALBERT PINKIHAN,
CECILIA TAYABAN, CRISTA BINWAK, PEDRO DUGAY,
SR., EDUARDO ANANAYO, ROBIN INLAB, JR.,
LORENZO PULIDO, TOMAS BINWAG, EVELYN BUYA,
JAIME DINGCOG, DINAOAN CUT-ING, PEDRO
DONATO, MYRNA GUAY, FLORA ANSIBEY, GRACE
DINAMLING, EDUARDO MENCIAS, ROSENDA JACOB,
SIONITA DINGCOG, GLORIA JACOB, MAXIMA GUAY,
RODRIGO
PAGGADUT,
MARINA
ANSIBEY,
TOLENTINO INLAB, RUBEN DULNUAN, GERONIMO
LICYAYO, LEONCIO CUMTI, MARY DULNUAN,
FELISA BALANBAN, MYRNA DUYAN, MARY MALANUYA, PRUDENCIO ANSIBEY, GUILLERMO GUAY,
MARGARITA CULHI, ALADIN ANSIBEY, PABLO
DUYAN, PEDRO PUGUON, JULIAN INLAB, JOSEPH
NACULON, ROGER BAJITA, DINAON GUAY, JAIME
ANANAYO, MARY ANSIBEY, LINA ANANAYO, MAURA
DUYAPAT, ARTEMEO ANANAYO, MARY BABLING,
NORA ANSIBEY, DAVID DULNUAN, AVELINO
PUGUON, LUCAS GUMAWI, LUISA ABBAC, CATHRIN
GUWAY, CLARITA TAYABAN, FLORA JAVERA, RANDY
SICOAN, FELIZA PUTAKI, CORAZON P. DULNUAN,
NENA D. BULLONG, ERMELYN GUWAY, GILBERT
BUTALE, JOSEPH B. BULLONG, FRANCISCO
PATNAAN, JR., SHERWIN DUGAY, TIRSO GULLINGAY,
BENEDICT T. NABALLIN, RAMON PUN-ADWAN,
ALFONSO DULNUAN, CARMEN D. BUTALE, LOLITA
ANSIBEY, ABRAHAM DULNUAN, ARLYNDA BUTALE,
MODESTO A. ANSIBEY, EDUARDO LUGAY, ANTONIO
HUMIWAT, ALFREDO PUMIHIC, MIKE TINO, TONY
CABARROGUIS, BASILIO TAMLIWOK, JR., NESTOR
TANGID, ALEJO TUGUINAY, BENITO LORENZO,
RUDY BAHIWAG, ANALIZA BUTALE, NALLEM
LUBYOC, JOSEPH DUHAYON, RAFAEL CAMPOL,
MANUEL PUMALO, DELFIN AGALOOS, PABLO
CAYANGA, PERFECTO SISON, ELIAS NATAMA, LITO
PUMALO, SEVERINA DUGAY, GABRIEL PAKAYAO,
JEOFFREY SINDAP, FELIX TICUAN, MARIANO S.
MADDELA, MENZI TICAWA, DOMINGA DUGAY, JOE
BOLINEY, JASON ASANG, TOMMY ATENYAYO, ALEJO
AGMALIW, DIZON AGMALIW, EDDIE ATOS, FELIMON
BLANCO, DARRIL DIGOY, LUCAS BUAY, ARTEMIO

BRAZIL, NICANOR MODI, LUIS REDULFIN, NESTOR
JUSTINO, JAIME CUMILA, BENEDICT GUINID,
EDITHA ANIN,
INOH-YABAN
BANDAO,
LUIS
BAYWONG, FELIPE DUHALNGON, PETER BENNEL,
JOSEPH T. BUNGGALAN, JIMMY B. KIMAYONG,
HENRY PUGUON,
PEDRO
BUHONG,
BUGAN
NADIAHAN, SR., MARIA EDEN ORLINO, SPC, PERLA
VISSORO, and BISHOP RAMON VILLENA, Petitioners,
vs.
ELISEA GOZUN, in her capacity as SECRETARY of the
DEPARTMENT OF ENVIRONMENT and NATURAL
RESOURCES (DENR), HORACIO RAMOS, in his capacity
as Director of the Mines and Geosciences Bureau (MGBDENR), ALBERTO ROMULO, in his capacity as the
Executive Secretary of the Office of the President,
RICHARD N. FERRER, in his capacity as Acting
Undersecretary of the Office of the President, IAN HEATH
SANDERCOCK, in his capacity as President of CLIMAXARIMCO Mining Corporation.Respondents.
DECISION
CHICO-NAZARIO, J.:
This petition for prohibition and mandamus under Rule 65 of the
Rules of Court assails the constitutionality of Republic Act No.
7942 otherwise known as the Philippine Mining Act of 1995,
together with the Implementing Rules and Regulations issued
pursuant thereto, Department of Environment and Natural

Resources (DENR) Administrative Order No. 96-40, s. 1996
(DAO 96-40) and of the Financial and Technical Assistance
Agreement (FTAA) entered into on 20 June 1994 by the
Republic of the Philippines and Arimco Mining Corporation
(AMC), a corporation established under the laws of Australia
and owned by its nationals.
On 25 July 1987, then President Corazon C. Aquino
promulgated Executive Order No. 279 which authorized the
DENR Secretary to accept, consider and evaluate proposals from
foreign-owned corporations or foreign investors for contracts of
agreements involving either technical or financial assistance for
large-scale exploration, development, and utilization of minerals,
which, upon appropriate recommendation of the Secretary, the
President may execute with the foreign proponent.
On 3 March 1995, then President Fidel V. Ramos signed into law
Rep. Act No. 7942 entitled, "An Act Instituting A New System
of Mineral Resources Exploration, Development, Utilization and
Conservation," otherwise known as the Philippine Mining Act of
1995.
On 15 August 1995, then DENR Secretary Victor O. Ramos
issued DENR Administrative Order (DAO) No. 23, Series of
1995, containing the implementing guidelines of Rep. Act No.
7942. This was soon superseded by DAO No. 96-40, s. 1996,
which took effect on 23 January 1997 after due publication.
Previously, however, or specifically on 20 June 1994, President
Ramos executed an FTAA with AMC over a total land area of
37,000 hectares covering the provinces of Nueva Vizcaya and
Quirino. Included in this area is Barangay Dipidio, Kasibu,
Nueva Vizcaya.
Subsequently, AMC consolidated with Climax Mining Limited
to form a single company that now goes under the new name of
Climax-Arimco Mining Corporation (CAMC), the controlling
99% of stockholders of which are Australian nationals.
On 7 September 2001, counsels for petitioners filed a demand
letter addressed to then DENR Secretary Heherson Alvarez, for
the cancellation of the CAMC FTAA for the primary reason that
Rep. Act No. 7942 and its Implementing Rules and Regulations
DAO 96-40 are unconstitutional. The Office of the Executive
Secretary was also furnished a copy of the said letter. There
being no response to both letters, another letter of the same
content dated 17 June 2002 was sent to President Gloria
Macapagal Arroyo. This letter was indorsed to the DENR
Secretary and eventually referred to the Panel of Arbitrators of
the Mines and Geosciences Bureau (MGB), Regional Office No.
02, Tuguegarao, Cagayan, for further action.
On 12 November 2002, counsels for petitioners received a letter
from the Panel of Arbitrators of the MGB requiring the
petitioners to comply with the Rules of the Panel of Arbitrators
before the letter may be acted upon.
Yet again, counsels for petitioners sent President Arroyo another
demand letter dated 8 November 2002. Said letter was again
forwarded to the DENR Secretary who referred the same to the
MGB, Quezon City.
In a letter dated 19 February 2003, the MGB rejected the
demand of counsels for petitioners for the cancellation of the
CAMC FTAA.1avvphil.net
Petitioners thus filed the present petition for prohibition and

mandamus, with a prayer for a temporary restraining order. They
pray that the Court issue an order:
control and supervision over natural resources.
1. enjoining public respondents from acting on any application

for FTAA;
Whether or not the respondents interpretation of the role of

wholly foreign and foreign-owned corporations in their
involvement in mining enterprises, violates paragraph 4, section
2, Article XII of the Constitution.
2. declaring unconstitutional the Philippine Mining Act of 1995

and its Implementing Rules and Regulations;
IV
V
3. canceling the FTAA issued to CAMC.
In their memorandum petitioners pose the following issues:
I
Whether or not Republic Act No. 7942 and the CAMC FTAA
are void because they allow the unjust and unlawful taking of
property without payment of just compensation , in violation of
Section 9, Article III of the Constitution.
II
Whether or not the Mining Act and its Implementing Rules and
Regulations are void and unconstitutional for sanctioning an
unconstitutional administrative process of determining just
compensation.
III
Whether or not the State, through Republic Act No. 7942 and the
CAMC FTAA, abdicated its primary responsibility to the full
WHETHER OR NOT THE 1987

PROHIBITS SERVICE CONTRACTS.1
CONSTITUTION
Before going to the substantive issues, the procedural question

raised by public respondents shall first be dealt with. Public
respondents are of the view that petitioners eminent domain
claim is not ripe for adjudication as they fail to allege that
CAMC has actually taken their properties nor do they allege that
their property rights have been endangered or are in danger on
account of CAMCs FTAA. In effect, public respondents insist
that the issue of eminent domain is not a justiciable controversy
which this Court can take cognizance of.
A justiciable controversy is defined as a definite and concrete
dispute touching on the legal relations of parties having adverse
legal interests which may be resolved by a court of law through
the application of a law.2 Thus, courts have no judicial power to
review cases involving political questions and as a rule, will
desist from taking cognizance of speculative or hypothetical
cases, advisory opinions and cases that have become moot. 3 The
Constitution is quite explicit on this matter.4 It provides that
judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally

demandable and enforceable. Pursuant to this constitutional
mandate, courts, through the power of judicial review, are to
entertain only real disputes between conflicting parties through
the application of law. For the courts to exercise the power of
judicial review, the following must be extant (1) there must be
an actual case calling for the exercise of judicial power; (2) the
question must be ripe for adjudication; and (3) the person
challenging must have the "standing."5
An actual case or controversy involves a conflict of legal rights,
an assertion of opposite legal claims, susceptible of judicial
resolution as distinguished from a hypothetical or abstract
difference or dispute.6 There must be a contrariety of legal rights
that can be interpreted and enforced on the basis of existing law
and jurisprudence.
has no standing.10
In the instant case, there exists a live controversy involving a
clash of legal rights as Rep. Act No. 7942 has been enacted,
DAO 96-40 has been approved and an FTAAs have been entered
into. The FTAA holders have already been operating in various
provinces of the country. Among them is CAMC which operates
in the provinces of Nueva Vizcaya and Quirino where numerous
individuals including the petitioners are imperiled of being
ousted from their landholdings in view of the CAMC FTAA. In
light of this, the court cannot await the adverse consequences of
the law in order to consider the controversy actual and ripe for
judicial intervention.11 Actual eviction of the land owners and
occupants need not happen for this Court to intervene. As held in
Pimentel, Jr. v. Hon. Aguirre12:
Closely related to the second requisite is that the question must

be ripe for adjudication. A question is considered ripe for
adjudication when the act being challenged has had a direct
adverse effect on the individual challenging it.7
By the mere enactment of the questioned law or the approval of

the challenged act, the dispute is said to have ripened into a
judicial controversy even without any other overt act. Indeed,
even a singular violation of the Constitution and/or the law is
enough to awaken judicial duty.13
The third requisite is legal standing or locus standi. It is defined

as a personal or substantial interest in the case such that the party
has sustained or will sustain direct injury as a result of the
governmental act that is being challenged, alleging more than a
generalized grievance.8 The gist of the question of standing is
whether a party alleges "such personal stake in the outcome of
the controversy as to assure that concrete adverseness which
sharpens the presentation of issues upon which the court
depends for illumination of difficult constitutional questions."9
Unless a person is injuriously affected in any of his
constitutional rights by the operation of statute or ordinance, he
Petitioners embrace various segments of the society. These

include Didipio Earth-Savers Multi-Purpose Association, Inc.,
an organization of farmers and indigenous peoples organized
under Philippine laws, representing a community actually
affected by the mining activities of CAMC, as well as other
residents of areas affected by the mining activities of CAMC.
These petitioners have the standing to raise the constitutionality
of the questioned FTAA as they allege a personal and substantial
injury.14 They assert that they are affected by the mining
activities of CAMC. Likewise, they are under imminent threat of
being displaced from their landholdings as a result of the
implementation of the questioned FTAA. They thus meet the

appropriate case requirement as they assert an interest adverse to
that of respondents who, on the other hand, claim the validity of
the assailed statute and the FTAA of CAMC.
Besides, the transcendental importance of the issues raised and
the magnitude of the public interest involved will have a bearing
on the countrys economy which is to a greater extent dependent
upon the mining industry. Also affected by the resolution of this
case are the proprietary rights of numerous residents in the
mining contract areas as well as the social existence of
indigenous peoples which are threatened. Based on these
considerations, this Court deems it proper to take cognizance of
the instant petition.
Having resolved the procedural question, the constitutionality of
the law under attack must be addressed squarely.
First Substantive Issue: Validity of Section 76 of Rep. Act No.
7942 and DAO 96-40
In seeking to nullify Rep. Act No. 7942 and its implementing
rules DAO 96-40 as unconstitutional, petitioners set their sight
on Section 76 of Rep. Act No. 7942 and Section 107 of DAO
96-40 which they claim allow the unlawful and unjust "taking"
of private property for private purpose in contradiction with
Section 9, Article III of the 1987 Constitution mandating that
private property shall not be taken except for public use and the
corresponding payment of just compensation. They assert that
public respondent DENR, through the Mining Act and its
Implementing Rules and Regulations, cannot, on its own, permit
entry into a private property and allow taking of land without
payment of just compensation.
Interpreting Section 76 of Rep. Act No. 7942 and Section 107 of

DAO 96-40, juxtaposed with the concept of taking of property
for purposes of eminent domain in the case of Republic v. Vda.
de Castellvi,15 petitioners assert that there is indeed a "taking"
upon entry into private lands and concession areas.
Republic v. Vda. de Castellvi defines "taking" under the concept
of eminent domain as entering upon private property for more
than a momentary period, and, under the warrant or color of
legal authority, devoting it to a public use, or otherwise
informally appropriating or injuriously affecting it in such a way
as to substantially oust the owner and deprive him of all
beneficial enjoyment thereof.
From the criteria set forth in the cited case, petitioners claim that
the entry into a private property by CAMC, pursuant to its
FTAA, is for more than a momentary period, i.e., for 25 years,
and renewable for another 25 years; that the entry into the
property is under the warrant or color of legal authority pursuant
to the FTAA executed between the government and CAMC; and
that the entry substantially ousts the owner or possessor and
deprives him of all beneficial enjoyment of the property. These
facts, according to the petitioners, amount to taking. As such,
petitioners question the exercise of the power of eminent domain
as unwarranted because respondents failed to prove that the
entry into private property is devoted for public use.
Petitioners also stress that even without the doctrine in the
Castellvi case, the nature of the mining activity, the extent of the
land area covered by the CAMC FTAA and the various rights
granted to the proponent or the FTAA holder, such as (a) the
right of possession of the Exploration Contract Area, with full
right of ingress and egress and the right to occupy the same; (b)
the right not to be prevented from entry into private lands by

surface owners and/or occupants thereof when prospecting,
exploring and exploiting for minerals therein; (c) the right to
enjoy easement rights, the use of timber, water and other natural
resources in the Exploration Contract Area; (d) the right of
possession of the Mining Area, with full right of ingress and
egress and the right to occupy the same; and (e) the right to
enjoy easement rights, water and other natural resources in the
Mining Area, result in a taking of private property.
circumstances would compel the government to regulate by

purchase."
Petitioners quickly add that even assuming arguendo that there is

no absolute, physical taking, at the very least, Section 76
establishes a legal easement upon the surface owners, occupants
and concessionaires of a mining contract area sufficient to
deprive them of enjoyment and use of the property and that such
burden imposed by the legal easement falls within the purview
of eminent domain.
Taking in Eminent Domain Distinguished from Regulation in

Police Power
Public respondents are inclined to believe that by entering

private lands and concession areas, FTAA holders do not oust
the owners thereof nor deprive them of all beneficial enjoyment
of their properties as the said entry merely establishes a legal
easement upon surface owners, occupants and concessionaires of
a mining contract area.
To further bolster their claim that the legal easement established

is equivalent to taking, petitioners cite the case of National
Power Corporation v. Gutierrez16 holding that the easement of
right-of-way imposed against the use of the land for an indefinite
period is a taking under the power of eminent domain.
The power of eminent domain is the inherent right of the state

(and of those entities to which the power has been lawfully
delegated) to condemn private property to public use upon
payment of just compensation.17 On the other hand, police power
is the power of the state to promote public welfare by restraining
and regulating the use of liberty and property.18 Although both
police power and the power of eminent domain have the general
welfare for their object, and recent trends show a mingling 19 of
the two with the latter being used as an implement of the former,
there are still traditional distinctions between the two.
Traversing petitioners assertion, public respondents argue that

Section 76 is not a taking provision but a valid exercise of the
police power and by virtue of which, the state may prescribe
regulations to promote the health, morals, peace, education,
good order, safety and general welfare of the people. This
government regulation involves the adjustment of rights for the
public good and that this adjustment curtails some potential for
the use or economic exploitation of private property. Public
respondents concluded that "to require compensation in all such
Property condemned under police power is usually noxious or

intended for a noxious purpose; hence, no compensation shall be
paid.20 Likewise, in the exercise of police power, property rights
of private individuals are subjected to restraints and burdens in
order to secure the general comfort, health, and prosperity of the
state. Thus, an ordinance prohibiting theaters from selling tickets
in excess of their seating capacity (which would result in the
diminution of profits of the theater-owners) was upheld valid as
this would promote the comfort, convenience and safety of the
customers.21 In U.S. v. Toribio,22 the court upheld the provisions

of Act No. 1147, a statute regulating the slaughter of carabao for
the purpose of conserving an adequate supply of draft animals,
as a valid exercise of police power, notwithstanding the property
rights impairment that the ordinance imposed on cattle owners.
A zoning ordinance prohibiting the operation of a lumber yard
within certain areas was assailed as unconstitutional in that it
was an invasion of the property rights of the lumber yard owners
in People v. de Guzman.23 The Court nonetheless ruled that the
regulation was a valid exercise of police power. A similar ruling
was arrived at in Seng Kee S Co. v. Earnshaw and Piatt 24 where
an ordinance divided the City of Manila into industrial and
residential areas.
A thorough scrutiny of the extant jurisprudence leads to a cogent
deduction that where a property interest is merely restricted
because the continued use thereof would be injurious to public
welfare, or where property is destroyed because its continued
existence would be injurious to public interest, there is no
compensable taking.25However, when a property interest is
appropriated and applied to some public purpose, there is
compensable taking.26
According to noted constitutionalist, Fr. Joaquin Bernas, SJ, in
the exercise of its police power regulation, the state restricts the
use of private property, but none of the property interests in the
bundle of rights which constitute ownership is appropriated for
use by or for the benefit of the public. 27 Use of the property by
the owner was limited, but no aspect of the property is used by
or for the public.28 The deprivation of use can in fact be total and
it will not constitute compensable taking if nobody else acquires
use of the property or any interest therein.29
If, however, in the regulation of the use of the property,

somebody else acquires the use or interest thereof, such
restriction constitutes compensable taking. Thus, in City
Government of Quezon City v. Ericta,30 it was argued by the
local government that an ordinance requiring private cemeteries
to reserve 6% of their total areas for the burial of paupers was a
valid exercise of the police power under the general welfare
clause. This court did not agree in the contention, ruling that
property taken under the police power is sought to be destroyed
and not, as in this case, to be devoted to a public use. It further
declared that the ordinance in question was actually a taking of
private property without just compensation of a certain area
from a private cemetery to benefit paupers who are charges of
the local government. Being an exercise of eminent domain
without provision for the payment of just compensation, the
same was rendered invalid as it violated the principles governing
eminent domain.
In People v. Fajardo,31 the municipal mayor refused Fajardo
permission to build a house on his own land on the ground that
the proposed structure would destroy the view or beauty of the
public plaza. The ordinance relied upon by the mayor prohibited
the construction of any building that would destroy the view of
the plaza from the highway. The court ruled that the municipal
ordinance under the guise of police power permanently divest
owners of the beneficial use of their property for the benefit of
the public; hence, considered as a taking under the power of
eminent domain that could not be countenanced without
payment of just compensation to the affected owners. In this
case, what the municipality wanted was to impose an easement
on the property in order to preserve the view or beauty of the
public plaza, which was a form of utilization of Fajardos
property for public benefit.32
While the power of eminent domain often results in the

appropriation of title to or possession of property, it need not
always be the case. Taking may include trespass without actual
eviction of the owner, material impairment of the value of the
property or prevention of the ordinary uses for which the
property was intended such as the establishment of an
easement.33 In Ayala de Roxas v. City of Manila,34 it was held
that the imposition of burden over a private property through
easement was considered taking; hence, payment of just
compensation is required. The Court declared:
And, considering that the easement intended to be established,
whatever may be the object thereof, is not merely a real right
that will encumber the property, but is one tending to prevent the
exclusive use of one portion of the same, by expropriating it for
public use which, be it what it may, can not be accomplished
unless the owner of the property condemned or seized be
previously and duly indemnified, it is proper to protect the
appellant by means of the remedy employed in such cases, as it
is only adequate remedy when no other legal action can be
resorted to, against an intent which is nothing short of an
arbitrary restriction imposed by the city by virtue of the coercive
power with which the same is invested.
And in the case of National Power Corporation v. Gutierrez,35
despite the NPCs protestation that the owners were not totally
deprived of the use of the land and could still plant the same
crops as long as they did not come into contact with the wires,
the Court nevertheless held that the easement of right-of-way
was a taking under the power of eminent domain. The Court
said:
In the case at bar, the easement of right-of-way is definitely a
taking under the power of eminent domain. Considering the

nature and effect of the installation of 230 KV Mexico-Limay
transmission lines, the limitation imposed by NPC against the
use of the land for an indefinite period deprives private
respondents of its ordinary use.
A case exemplifying an instance of compensable taking which
does not entail transfer of title is Republic v. Philippine Long
Distance
Telephone
Co.36
Here,
the
Bureau
of
Telecommunications, a government instrumentality, had
contracted with the PLDT for the interconnection between the
Government Telephone System and that of the PLDT, so that the
former could make use of the lines and facilities of the PLDT. In
its desire to expand services to government offices, the Bureau
of Telecommunications demanded to expand its use of the PLDT
lines. Disagreement ensued on the terms of the contract for the
use of the PLDT facilities. The Court ruminated:
Normally, of course, the power of eminent domain results in the
taking or appropriation of title to, and possession of, the
expropriated property; but no cogent reason appears why said
power may not be availed of to impose only a burden upon the
owner of the condemned property, without loss of title and
possession. It is unquestionable that real property may, through
expropriation, be subjected to an easement right of way.37
In Republic v. Castellvi,38 this Court had the occasion to spell
out the requisites of taking in eminent domain, to wit:
(1) the expropriator must enter a private property;
(2) the entry must be for more than a momentary period.
(3) the entry must be under warrant or color of legal authority;

(4) the property must be devoted to public use or otherwise
informally appropriated or injuriously affected;
(5) the utilization of the property for public use must be in such
a way as to oust the owner and deprive him of beneficial
enjoyment of the property.
As shown by the foregoing jurisprudence, a regulation which
substantially deprives the owner of his proprietary rights and
restricts the beneficial use and enjoyment for public use amounts
to compensable taking. In the case under consideration, the entry
referred to in Section 76 and the easement rights under Section
75 of Rep. Act No. 7942 as well as the various rights to CAMC
under its FTAA are no different from the deprivation of
proprietary rights in the cases discussed which this Court
considered as taking. Section 75 of the law in question reads:
Easement Rights. - When mining areas are so situated that for
purposes of more convenient mining operations it is necessary to
build, construct or install on the mining areas or lands owned,
occupied or leased by other persons, such infrastructure as roads,
railroads, mills, waste dump sites, tailing ponds, warehouses,
staging or storage areas and port facilities, tramways, runways,
airports, electric transmission, telephone or telegraph lines, dams
and their normal flood and catchment areas, sites for water
wells, ditches, canals, new river beds, pipelines, flumes, cuts,
shafts, tunnels, or mills, the contractor, upon payment of just
compensation, shall be entitled to enter and occupy said mining
areas or lands.
Section 76 provides:
Entry into private lands and concession areas Subject to prior

notification, holders of mining rights shall not be prevented from
entry into private lands and concession areas by surface owners,
occupants, or concessionaires when conducting mining
operations therein.
The CAMC FTAA grants in favor of CAMC the right of
possession of the Exploration Contract Area, the full right of
ingress and egress and the right to occupy the same. It also
bestows CAMC the right not to be prevented from entry into
private lands by surface owners or occupants thereof when
prospecting, exploring and exploiting minerals therein.
The entry referred to in Section 76 is not just a simple right-ofway which is ordinarily allowed under the provisions of the
Civil Code. Here, the holders of mining rights enter private lands
for purposes of conducting mining activities such as exploration,
extraction and processing of minerals. Mining right holders
build mine infrastructure, dig mine shafts and connecting
tunnels, prepare tailing ponds, storage areas and vehicle depots,
install their machinery, equipment and sewer systems. On top of
this, under Section 75, easement rights are accorded to them
where they may build warehouses, port facilities, electric
transmission, railroads and other infrastructures necessary for
mining operations. All these will definitely oust the owners or
occupants of the affected areas the beneficial ownership of their
lands. Without a doubt, taking occurs once mining operations
commence.
Section 76 of Rep. Act No. 7942 is a Taking Provision
Moreover, it would not be amiss to revisit the history of mining
laws of this country which would help us understand Section 76
of Rep. Act No. 7942.

This provision is first found in Section 27 of Commonwealth Act
No. 137 which took effect on 7 November 1936, viz:
Before entering private lands the prospector shall first apply in
writing for written permission of the private owner, claimant, or
holder thereof, and in case of refusal by such private owner,
claimant, or holder to grant such permission, or in case of
disagreement as to the amount of compensation to be paid for
such privilege of prospecting therein, the amount of such
compensation shall be fixed by agreement among the prospector,
the Director of the Bureau of Mines and the surface owner, and
in case of their failure to unanimously agree as to the amount of
compensation, all questions at issue shall be determined by the
Court of First Instance.
Similarly, the pertinent provision of Presidential Decree No.
463, otherwise known as "The Mineral Resources Development
Decree of 1974," provides:
SECTION 12. Entry to Public and Private Lands. A person
who desires to conduct prospecting or other mining operations
within public lands covered by concessions or rights other than
mining shall first obtain the written permission of the
government official concerned before entering such lands. In the
case of private lands, the written permission of the owner or
possessor of the land must be obtained before entering such
lands. In either case, if said permission is denied, the Director, at
the request of the interested person may intercede with the
owner or possessor of the land. If the intercession fails, the
interested person may bring suit in the Court of First Instance of
the province where the land is situated. If the court finds the
request justified, it shall issue an order granting the permission

after fixing the amount of compensation and/or rental due the
owner or possessor: Provided, That pending final adjudication of
such amount, the court shall upon recommendation of the
Director permit the interested person to enter, prospect and/or
undertake other mining operations on the disputed land upon
posting by such interested person of a bond with the court which
the latter shall consider adequate to answer for any damage to
the owner or possessor of the land resulting from such entry,
prospecting or any other mining operations.
Hampered by the difficulties and delays in securing surface
rights for the entry into private lands for purposes of mining
operations, Presidential Decree No. 512 dated 19 July 1974 was
passed into law in order to achieve full and accelerated mineral
resources development. Thus, Presidential Decree No. 512
provides for a new system of surface rights acquisition by
mining prospectors and claimants. Whereas in Commonwealth
Act No. 137 and Presidential Decree No. 463 eminent domain
may only be exercised in order that the mining claimants can
build, construct or install roads, railroads, mills, warehouses and
other facilities, this time, the power of eminent domain may now
be invoked by mining operators for the entry, acquisition and use
of private lands, viz:
SECTION 1. Mineral prospecting, location, exploration,
development and exploitation is hereby declared of public use
and benefit, and for which the power of eminent domain may be
invoked and exercised for the entry, acquisition and use of
private lands. x x x.
The evolution of mining laws gives positive indication that
mining operators who are qualified to own lands were granted
the authority to exercise eminent domain for the entry,

acquisition, and use of private lands in areas open for mining
operations. This grant of authority extant in Section 1 of
Presidential Decree No. 512 is not expressly repealed by Section
76 of Rep. Act No. 7942; and neither are the former statutes
impliedly repealed by the former. These two provisions can
stand together even if Section 76 of Rep. Act No. 7942 does not
spell out the grant of the privilege to exercise eminent domain
which was present in the old law.
It is an established rule in statutory construction that in order
that one law may operate to repeal another law, the two laws
must be inconsistent.39 The former must be so repugnant as to be
irreconciliable with the latter act. Simply because a latter
enactment may relate to the same subject matter as that of an
earlier statute is not of itself sufficient to cause an implied repeal
of the latter, since the new law may be cumulative or a
continuation of the old one. As has been the ruled, repeals by
implication are not favored, and will not be decreed unless it is
manifest that the legislature so intended. 40 As laws are presumed
to be passed with deliberation and with full knowledge of all
existing ones on the subject, it is but reasonable to conclude that
in passing a statute it was not intended to interfere with or
abrogate any former law relating to the same matter, unless the
repugnancy between the two is not only irreconcilable, but also
clear and convincing, and flowing necessarily from the language
used, unless the later act fully embraces the subject matter of the
earlier, or unless the reason for the earlier act is beyond
peradventure removed.41 Hence, every effort must be used to
make all acts stand and if, by any reasonable construction, they
can be reconciled, the latter act will not operate as a repeal of the
earlier.
Considering that Section 1 of Presidential Decree No. 512

granted the qualified mining operators the authority to exercise
eminent domain and since this grant of authority is deemed
incorporated in Section 76 of Rep. Act No. 7942, the inescapable
conclusion is that the latter provision is a taking provision.
While this Court declares that the assailed provision is a taking
provision, this does not mean that it is unconstitutional on the
ground that it allows taking of private property without the
determination of public use and the payment of just
compensation.
The taking to be valid must be for public use. 42 Public use as a
requirement for the valid exercise of the power of eminent
domain is now synonymous with public interest, public benefit,
public welfare and public convenience.43It includes the broader
notion of indirect public benefit or advantage. Public use as
traditionally understood as "actual use by the public" has already
been abandoned.44
Mining industry plays a pivotal role in the economic
development of the country and is a vital tool in the
governments thrust of accelerated recovery.45 The importance of
the mining industry for national development is expressed in
Presidential Decree No. 463:
WHEREAS, mineral production is a major support of the
national economy, and therefore the intensified discovery,
exploration, development and wise utilization of the countrys
mineral resources are urgently needed for national development.
Irrefragably, mining is an industry which is of public benefit.
That public use is negated by the fact that the state would be
taking private properties for the benefit of private mining firms
or mining contractors is not at all true. In Heirs of Juancho
Ardona v. Reyes,46 petitioners therein contended that the
promotion of tourism is not for public use because private
concessionaires would be allowed to maintain various facilities
such as restaurants, hotels, stores, etc., inside the tourist area.
The Court thus contemplated:
The rule in Berman v. Parker [348 U.S. 25; 99 L. ed. 27] of
deference to legislative policy even if such policy might mean
taking from one private person and conferring on another private
person applies as well in the Philippines.
All obligations, payments and expenses arising from, or incident

to, such agreements or acquisition of right shall be for the
account of the CONTRACTOR and shall be recoverable as
Operating Expense.
According to petitioners, the government is reduced to a subcontractor upon the request of the private respondent, and on
account of the foregoing provision, the contractor can compel
the government to exercise its power of eminent domain thereby
derogating the latters power to expropriate property.
Petitioners further maintain that the states discretion to decide

when to take private property is reduced contractually by
Section 13.5 of the CAMC FTAA, which reads:
The provision of the FTAA in question lays down the ways and
means by which the foreign-owned contractor, disqualified to
own land, identifies to the government the specific surface areas
within the FTAA contract area to be acquired for the mine
infrastructure.48 The government then acquires ownership of the
surface land areas on behalf of the contractor, through a
voluntary transaction in order to enable the latter to proceed to
fully implement the FTAA. Eminent domain is not yet called for
at this stage since there are still various avenues by which
surface rights can be acquired other than expropriation. The
FTAA provision under attack merely facilitates the
implementation of the FTAA given to CAMC and shields it from
violating the Anti-Dummy Law. Hence, when confronted with
the same question in La Bugal-BLaan Tribal Association, Inc. v.
Ramos,49 the Court answered:
If the CONTRACTOR so requests at its option, the

GOVERNMENT shall use its offices and legal powers to assist
in the acquisition at reasonable cost of any surface areas or
rights required by the CONTRACTOR at the CONTRACTORs
cost to carry out the Mineral Exploration and the Mining
Operations herein.
Clearly, petitioners have needlessly jumped to unwarranted

conclusions, without being aware of the rationale for the said
provision. That provision does not call for the exercise of the
power of eminent domain -- and determination of just
compensation is not an issue -- as much as it calls for a qualified
party to acquire the surface rights on behalf of a foreign-owned
". . . Once the object is within the authority of Congress, the

means by which it will be attained is also for Congress to
determine. Here one of the means chosen is the use of private
enterprise for redevelopment of the area. Appellants argue that
this makes the project a taking from one businessman for the
benefit of another businessman. But the means of executing the
project are for Congress and Congress alone to determine, once
the public purpose has been established. x x x"47
contractor.
Second Substantive Issue: Power of Courts to Determine Just

Compensation
Rather than having the foreign contractor act through a dummy

corporation, having the State do the purchasing is a better
alternative. This will at least cause the government to be aware
of such transaction/s and foster transparency in the contractors
dealings with the local property owners. The government, then,
will not act as a subcontractor of the contractor; rather, it will
facilitate the transaction and enable the parties to avoid a
technical violation of the Anti-Dummy Law.
Closely-knit to the issue of taking is the determination of just

compensation. It is contended that Rep. Act No. 7942 and
Section 107 of DAO 96-40 encroach on the power of the trial
courts to determine just compensation in eminent domain cases
inasmuch as the same determination of proper compensation are
cognizable only by the Panel of Arbitrators.
There is also no basis for the claim that the Mining Law and its
implementing rules and regulations do not provide for just
compensation in expropriating private properties. Section 76 of
Rep. Act No. 7942 and Section 107 of DAO 96-40 provide for
the payment of just compensation:
The question on the judicial determination of just compensation

has been settled in the case of Export Processing Zone Authority
v. Dulay50 wherein the court declared that the determination of
just compensation in eminent domain cases is a judicial function.
Even as the executive department or the legislature may make
the initial determinations, the same cannot prevail over the
courts findings.
Section 76. xxx Provided, that any damage to the property of the
surface owner, occupant, or concessionaire as a consequence of
such operations shall be properly compensated as may be
provided for in the implementing rules and regulations.
Section 107. Compensation of the Surface Owner and OccupantAny damage done to the property of the surface owners,
occupant, or concessionaire thereof as a consequence of the
mining operations or as a result of the construction or
installation of the infrastructure mentioned in 104 above shall be
properly and justly compensated.
Such compensation shall be based on the agreement entered into
between the holder of mining rights and the surface owner,
occupant or concessionaire thereof, where appropriate, in
accordance with P.D. No. 512. (Emphasis supplied.)
Implementing Section 76 of Rep. Act No. 7942, Section 105 of

DAO 96-40 states that holder(s) of mining right(s) shall not be
prevented from entry into its/their contract/mining areas for the
purpose of exploration, development, and/or utilization. That in
cases where surface owners of the lands, occupants or
concessionaires refuse to allow the permit holder or contractor
entry, the latter shall bring the matter before the Panel of
Arbitrators for proper disposition. Section 106 states that
voluntary agreements between the two parties permitting the
mining right holders to enter and use the surface owners lands
shall be registered with the Regional Office of the MGB. In
connection with Section 106, Section 107 provides that the
compensation for the damage done to the surface owner,
occupant or concessionaire as a consequence of mining
operations or as a result of the construction or installation of the
infrastructure shall be properly and justly compensated and that

such compensation shall be based on the agreement between the
holder of mining rights and surface owner, occupant or
concessionaire, or where appropriate, in accordance with
Presidential Decree No. 512. In cases where there is
disagreement to the compensation or where there is no
agreement, the matter shall be brought before the Panel of
Arbitrators. Section 206 of the implementing rules and
regulations provides an aggrieved party the remedy to appeal the
decision of the Panel of Arbitrators to the Mines Adjudication
Board, and the latters decision may be reviewed by the Supreme
Court by filing a petition for review on certiorari.51
An examination of the foregoing provisions gives no indication
that the courts are excluded from taking cognizance of
expropriation cases under the mining law. The disagreement
referred to in Section 107 does not involve the exercise of
eminent domain, rather it contemplates of a situation wherein the
permit holders are allowed by the surface owners entry into the
latters lands and disagreement ensues as regarding the proper
compensation for the allowed entry and use of the private lands.
Noticeably, the provision points to a voluntary sale or
transaction, but not to an involuntary sale.
The legislature, in enacting the mining act, is presumed to have
deliberated with full knowledge of all existing laws and
jurisprudence on the subject. Thus, it is but reasonable to
conclude that in passing such statute it was in accord with the
existing laws and jurisprudence on the jurisdiction of courts in
the determination of just compensation and that it was not
intended to interfere with or abrogate any former law relating to
the same matter. Indeed, there is nothing in the provisions of the
assailed law and its implementing rules and regulations that
exclude the courts from their jurisdiction to determine just

compensation in expropriation proceedings involving mining
operations. Although Section 105 confers upon the Panel of
Arbitrators the authority to decide cases where surface owners,
occupants, concessionaires refuse permit holders entry, thus,
necessitating involuntary taking, this does not mean that the
determination of the just compensation by the Panel of
Arbitrators or the Mines Adjudication Board is final and
conclusive. The determination is only preliminary unless
accepted by all parties concerned. There is nothing wrong with
the grant of primary jurisdiction by the Panel of Arbitrators or
the Mines Adjudication Board to determine in a preliminary
matter the reasonable compensation due the affected landowners
or occupants.52 The original and exclusive jurisdiction of the
courts to decide determination of just compensation remains
intact despite the preliminary determination made by the
administrative agency. As held in Philippine Veterans Bank v.
Court of Appeals53:
The jurisdiction of the Regional Trial Courts is not any less
"original and exclusive" because the question is first passed
upon by the DAR, as the judicial proceedings are not a
continuation of the administrative determination.
Third Substantive Issue: Sufficient Control by the State Over
Mining Operations
Anent the third issue, petitioners charge that Rep. Act No. 7942,
as well as its Implementing Rules and Regulations, makes it
possible for FTAA contracts to cede over to a fully foreignowned corporation full control and management of mining
enterprises, with the result that the State is allegedly reduced to a
passive regulator dependent on submitted plans and reports, with
weak review and audit powers. The State is not acting as the
supposed owner of the natural resources for and on behalf of the
Filipino people; it practically has little effective say in the
decisions made by the enterprise. In effect, petitioners asserted
that the law, the implementing regulations, and the CAMC
FTAA cede beneficial ownership of the mineral resources to the
foreign contractor.
It must be noted that this argument was already raised in La
Bugal-BLaan Tribal Association, Inc. v. Ramos,54where the
Court answered in the following manner:
RA 7942 provides for the states control and supervision over
mining operations. The following provisions thereof establish
the mechanism of inspection and visitorial rights over mining
operations and institute reportorial requirements in this manner:
1. Sec. 8 which provides for the DENRs power of over-all
supervision and periodic review for "the conservation,
management, development and proper use of the States mineral
resources";
2. Sec. 9 which authorizes the Mines and Geosciences Bureau
(MGB) under the DENR to exercise "direct charge in the
administration and disposition of mineral resources", and
empowers the MGB to "monitor the compliance by the
contractor of the terms and conditions of the mineral
agreements", "confiscate surety and performance bonds", and
deputize whenever necessary any member or unit of the Phil.
National Police, barangay, duly registered non-governmental
organization (NGO) or any qualified person to police mining
activities;
3. Sec. 66 which vests in the Regional Director "exclusive

jurisdiction over safety inspections of all installations, whether
surface or underground", utilized in mining operations.
4. Sec. 35, which incorporates into all FTAAs the following
terms, conditions and warranties:
"(g) Mining operations shall be conducted in accordance with
the provisions of the Act and its IRR.
"(h) Work programs and minimum expenditures commitments.
xxxx
"(k) Requiring proponent to effectively use appropriate antipollution technology and facilities to protect the environment
and restore or rehabilitate mined-out areas.
"(l) The contractors shall furnish the Government records of
geologic, accounting and other relevant data for its mining
operation, and that books of accounts and records shall be open
for inspection by the government. x x x.
"(m) Requiring the proponent to dispose of the minerals at the
highest price and more advantageous terms and conditions.
xxxx
"(o) Such other terms and conditions consistent with the
Constitution and with this Act as the Secretary may deem to be
for the best interest of the State and the welfare of the Filipino
people."
The foregoing provisions of Section 35 of RA 7942 are also

reflected and implemented in Section 56 (g), (h), (l), (m) and (n)
of the Implementing Rules, DAO 96-40.
Moreover, RA 7942 and DAO 96-40 also provide various
stipulations confirming the governments control over mining
enterprises:
The contractor is to relinquish to the government those portions
of the contract area not needed for mining operations and not
covered by any declaration of mining feasibility (Section 35-e,
RA 7942; Section 60, DAO 96-40).
The contractor must comply with the provisions pertaining to
mine safety, health and environmental protection (Chapter XI,
RA 7942; Chapters XV and XVI, DAO 96-40).
For violation of any of its terms and conditions, government
may cancel an FTAA. (Chapter XVII, RA 7942; Chapter XXIV,
DAO 96-40).
An FTAA contractor is obliged to open its books of accounts and
records for 0inspection by the government (Section 56-m, DAO
96-40).
An FTAA contractor has to dispose of the minerals and byproducts at the highest market price and register with the MGB a
copy of the sales agreement (Section 56-n, DAO 96-40).
MGB is mandated to monitor the contractors compliance with
the terms and conditions of the FTAA; and to deputize, when
necessary, any member or unit of the Philippine National Police,
the barangay or a DENR-accredited nongovernmental
organization to police mining activities (Section 7-d and -f,

DAO 96-40).
An FTAA cannot be transferred or assigned without prior
approval by the President (Section 40, RA 7942; Section 66,
DAO 96-40).
A mining project under an FTAA cannot proceed to the
construction/development/utilization
stage,
unless
its
Declaration of Mining Project Feasibility has been approved by
government (Section 24, RA 7942).
The Declaration of Mining Project Feasibility filed by the
contractor cannot be approved without submission of the
following documents:
1. Approved mining project feasibility study (Section 53-d, DAO
96-40)
2. Approved three-year work program (Section 53-a-4, DAO 9640)
3. Environmental compliance certificate (Section 70, RA 7942)
4. Approved environmental protection and enhancement
program (Section 69, RA 7942)
5. Approval by the Sangguniang Panlalawigan/Bayan/Barangay
(Section 70, RA 7942; Section 27, RA 7160)
6. Free and prior informed consent by the indigenous peoples
concerned, including payment of royalties through a
Memorandum of Agreement (Section 16, RA 7942; Section 59,

RA 8371)
11. Social development

12. Explosives consumption
The FTAA contractor is obliged to assist in the development of

its mining community, promotion of the general welfare of its
inhabitants, and development of science and mining technology
(Section 57, RA 7942).
The FTAA contractor is obliged to submit reports (on quarterly,
semi-annual or annual basis as the case may be; per Section 270,
DAO 96-40), pertaining to the following:
1. Exploration
2. Drilling
3. Mineral resources and reserves
4. Energy consumption
5. Production
6. Sales and marketing
7. Employment
8. Payment of taxes, royalties, fees and other Government
Shares
9. Mine safety, health and environment
10. Land use
An FTAA pertaining to areas within government reservations

cannot be granted without a written clearance from the
government agencies concerned (Section 19, RA 7942; Section
54, DAO 96-40).
An FTAA contractor is required to post a financial guarantee
bond in favor of the government in an amount equivalent to its
expenditures obligations for any particular year. This
requirement is apart from the representations and warranties of
the contractor that it has access to all the financing, managerial
and technical expertise and technology necessary to carry out the
objectives of the FTAA (Section 35-b, -e, and -f, RA 7942).
Other reports to be submitted by the contractor, as required
under DAO 96-40, are as follows: an environmental report on
the rehabilitation of the mined-out area and/or mine waste/tailing
covered area, and anti-pollution measures undertaken (Section
35-a-2); annual reports of the mining operations and records of
geologic accounting (Section 56-m); annual progress reports and
final report of exploration activities (Section 56-2).
Other programs required to be submitted by the contractor,
pursuant to DAO 96-40, are the following: a safety and health
program (Section 144); an environmental work program
(Section 168); an annual environmental protection and
enhancement program (Section 171).
The foregoing gamut of requirements, regulations, restrictions
and limitations imposed upon the FTAA contractor by the statute
and regulations easily overturns petitioners contention. The

setup under RA 7942 and DAO 96-40 hardly relegates the State
to the role of a "passive regulator" dependent on submitted plans
and reports. On the contrary, the government agencies concerned
are empowered to approve or disapprove -- hence, to influence,
direct and change -- the various work programs and the
corresponding minimum expenditure commitments for each of
the exploration, development and utilization phases of the
mining enterprise.
sunk into a mining project.
Once these plans and reports are approved, the contractor is

bound to comply with its commitments therein. Figures for
mineral production and sales are regularly monitored and
subjected to government review, in order to ensure that the
products and by-products are disposed of at the best prices
possible; even copies of sales agreements have to be submitted
to and registered with MGB. And the contractor is mandated to
open its books of accounts and records for scrutiny, so as to
enable the State to determine if the government share has been
fully paid.
In other words, the FTAA contractor is not free to do whatever it

pleases and get away with it; on the contrary, it will have to
follow the government line if it wants to stay in the enterprise.
Ineluctably then, RA 7942 and DAO 96-40 vest in the
government more than a sufficient degree of control and
supervision over the conduct of mining operations.
The State may likewise compel the contractors compliance with

mandatory requirements on mine safety, health and
environmental protection, and the use of anti-pollution
technology and facilities. Moreover, the contractor is also
obligated to assist in the development of the mining community
and to pay royalties to the indigenous peoples concerned.
In interpreting the first and fourth paragraphs of Section 2,

Article XII of the Constitution, petitioners set forth the argument
that foreign corporations are barred from making decisions on
the conduct of operations and the management of the mining
project. The first paragraph of Section 2, Article XII reads:
Cancellation of the FTAA may be the penalty for violation of

any of its terms and conditions and/or noncompliance with
statutes or regulations. This general, all-around, multipurpose
sanction is no trifling matter, especially to a contractor who may
have yet to recover the tens or hundreds of millions of dollars
x x x The exploration, development, and utilization of natural

resources shall be under the full control and supervision of the
State. The State may directly undertake such activities, or it may
enter into co-production, joint venture, or production sharing
agreements with Filipino citizens, or corporations or associations
at least sixty percentum of whose capital is owned by such
Overall, considering the provisions of the statute and the

regulations just discussed, we believe that the State definitely
possesses the means by which it can have the ultimate word in
the operation of the enterprise, set directions and objectives, and
detect deviations and noncompliance by the contractor; likewise,
it has the capability to enforce compliance and to impose
sanctions, should the occasion therefor arise.
Fourth Substantive Issue: The Proper Interpretation of the

Constitutional Phrase "Agreements Involving Either Technical
or Financial Assistance
citizens. Such agreements may be for a period not exceeding

twenty five years, renewable for not more than twenty five
years, and under such terms and conditions as may be provided
by law x x x.
The fourth paragraph of Section 2, Article XII provides:
The President may enter into agreements with foreign-owned
corporations involving either technical or financial assistance for
large scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms
and conditions provided by law, based on real contributions to
the economic growth and general welfare of the country x x x.
Petitioners maintain that the first paragraph bars aliens and
foreign-owned corporations from entering into any direct
arrangement with the government including those which involve
co-production, joint venture or production sharing agreements.
They likewise insist that the fourth paragraph allows foreignowned corporations to participate in the large-scale exploration,
development and utilization of natural resources, but such
participation, however, is merely limited to an agreement for
either financial or technical assistance only.
Again, this issue has already been succinctly passed upon by this
Court in La Bugal-BLaan Tribal Association, Inc. v. Ramos. 55 In
discrediting such argument, the Court ratiocinated:
Petitioners claim that the phrase "agreements x x x involving
either technical or financial assistance" simply means technical
assistance or financial assistance agreements, nothing more and
nothing else. They insist that there is no ambiguity in the phrase,
and that a plain reading of paragraph 4 quoted above leads to the
inescapable conclusion that what a foreign-owned corporation

may enter into with the government is merely an agreement for
either financial or technical assistance only, for the large-scale
exploration, development and utilization of minerals, petroleum
and other mineral oils; such a limitation, they argue, excludes
foreign management and operation of a mining enterprise.
This restrictive interpretation, petitioners believe, is in line with
the general policy enunciated by the Constitution reserving to
Filipino citizens and corporations the use and enjoyment of the
countrys natural resources. They maintain that this Courts
Decision of January 27, 2004 correctly declared the WMCP
FTAA, along with pertinent provisions of RA 7942, void for
allowing a foreign contractor to have direct and exclusive
management of a mining enterprise. Allowing such a privilege
not only runs counter to the "full control and supervision" that
the State is constitutionally mandated to exercise over the
exploration, development and utilization of the countrys natural
resources; doing so also vests in the foreign company "beneficial
ownership" of our mineral resources. It will be recalled that the
Decision of January 27, 2004 zeroed in on "management or
other forms of assistance" or other activities associated with the
"service contracts" of the martial law regime, since "the
management or operation of mining activities by foreign
contractors, which is the primary feature of service contracts,
was precisely the evil that the drafters of the 1987 Constitution
sought to eradicate."
xxxx
We do not see how applying a strictly literal or verba legis
interpretation of paragraph 4 could inexorably lead to the
conclusions arrived at in the ponencia. First, the drafters choice
of words -- their use of the phraseagreements x x x involving

either technical or financial assistance -- does not indicate the
intent to exclude other modes of assistance. The drafters opted to
use involving when they could have simply said agreements
forfinancial or technical assistance, if that was their intention to
begin with. In this case, the limitation would be very clear and
no further debate would ensue.
In contrast, the use of the word "involving" signifies the
possibility of the inclusion of other forms of assistance or
activities having to do with, otherwise related to or compatible
with financial or technical assistance. The word "involving" as
used in this context has three connotations that can be
differentiated thus:one, the sense of "concerning," "having to do
with," or "affecting"; two, "entailing," "requiring," "implying" or
"necessitating"; and three, "including," "containing" or
"comprising."
Plainly, none of the three connotations convey a sense of
exclusivity. Moreover, the word "involving," when understood in
the sense of "including," as in including technical or financial
assistance, necessarily implies that there are activities other than
those that are being included. In other words, if an agreement
includes technical or financial assistance, there is apart from
such assistance -- something else already in, and covered or may
be covered by, the said agreement.
In short, it allows for the possibility that matters, other than
those explicitly mentioned, could be made part of the agreement.
Thus, we are now led to the conclusion that the use of the word
"involving" implies that these agreements with foreign
corporations are not limited to mere financial or technical
assistance. The difference in sense becomes very apparent when
we juxtapose "agreements for technical or financial assistance"

against "agreements including technical or financial assistance."
This much is unalterably clear in a verba legisapproach.
Second, if the real intention of the drafters was to confine
foreign corporations to financial or technical assistance and
nothing more, their language would have certainly been so
unmistakably restrictive and stringent as to leave no doubt in
anyones mind about their true intent. For example, they would
have used the sentence foreign corporations are absolutely
prohibited from involvement in the management or operation of
mining or similar ventures or words of similar import. A search
for such stringent wording yields negative results. Thus, we
come to the inevitable conclusion that there was a conscious
and deliberate decision to avoid the use of restrictive wording
that bespeaks an intent not to use the expression "agreements
x x x involving either technical or financial assistance" in an
exclusionary and limiting manner.
Fifth
Substantive
Deconstitutionalized
Issue:
Service
Contracts
Not
Lastly, petitioners stress that the service contract regime under

the 1973 Constitution is expressly prohibited under the 1987
Constitution as the term service contracts found in the former
was deleted in the latter to avoid the circumvention of
constitutional prohibitions that were prevalent in the 1987
Constitution. According to them, the framers of the 1987
Constitution only intended for foreign-owned corporations to
provide either technical assistance or financial assistance. Upon
perusal of the CAMC FTAA, petitioners are of the opinion that
the same is a replica of the service contract agreements that the
present constitution allegedly prohibit.
Again, this contention is not well-taken. The mere fact that the
term service contracts found in the 1973 Constitution was not
carried over to the present constitution, sans any categorical
statement banning service contracts in mining activities, does
not mean that service contracts as understood in the 1973
Constitution was eradicated in the 1987 Constitution. 56 The 1987
Constitution allows the continued use of service contracts with
foreign corporations as contractors who would invest in and
operate and manage extractive enterprises, subject to the full
control and supervision of the State; this time, however, safety
measures were put in place to prevent abuses of the past
regime.57 We ruled, thus:
discussions of the provision dealing with agreements x x x

involving either technical or financial assistance, which
ultimately became paragraph 4 of Section 2 of Article XII of the
Constitution. Beyond any doubt, the members of the ConCom
were actually debating about the martial-law-era service
contracts for which they were crafting appropriate safeguards.
To our mind, however, such intent cannot be definitively and

conclusively established from the mere failure to carry the same
expression or term over to the new Constitution, absent a more
specific, explicit and unequivocal statement to that effect. What
petitioners seek (a complete ban on foreign participation in the
management of mining operations, as previously allowed by the
earlier Constitutions) is nothing short of bringing about a
momentous sea change in the economic and developmental
policies; and the fundamentally capitalist, free-enterprise
philosophy of our government. We cannot imagine such a
radical shift being undertaken by our government, to the great
prejudice of the mining sector in particular and our economy in
general, merely on the basis of the omission of the terms service
contract from or the failure to carry them over to the new
Constitution. There has to be a much more definite and even
unarguable basis for such a drastic reversal of policies.
Mr. Gascon said, "I felt that if we would constitutionalize any

provision on service contracts, this should always be with the
concurrence of Congress and not guided only by a general law
to be promulgated by Congress." Mr. Garcia explained, "Service
contracts are given constitutional legitimization in Sec. 3, even
when they have been proven to be inimical to the interests of the
nation, providing, as they do, the legal loophole for the
exploitation of our natural resources for the benefit of foreign
interests." Likewise, Mr. Tadeo cited inter alia the fact that
service contracts continued to subsist, enabling foreign interests
to benefit from our natural resources. It was hardly likely that
these gentlemen would have objected so strenuously, had the
provision called for mere technical or financial assistance
and nothing more.
xxxx
The foregoing are mere fragments of the framers lengthy
In the voting that led to the approval of Article XII by the

ConCom, the explanations given by Commissioners Gascon,
Garcia and Tadeo indicated that they had voted to reject this
provision on account of their objections to the
"constitutionalization" of the "service contract" concept.
The deliberations of the ConCom and some commissioners

explanation of their votes leave no room for doubt that the
service contract concept precisely underpinned the
commissioners understanding of the "agreements involving
either technical or financial assistance."
xxxx
From the foregoing, we are impelled to conclude that the phrase
agreements involving either technical or financial assistance,
referred to in paragraph 4, are in fact service contracts. But
unlike those of the 1973 variety, the new ones are between
foreign corporations acting as contractors on the one hand; and
on the other, the government as principal or "owner" of the
works. In the new service contracts, the foreign contractors
provide capital, technology and technical know-how, and
managerial expertise in the creation and operation of large-scale
mining/extractive enterprises; and the government, through its
agencies (DENR, MGB), actively exercises control and
supervision over the entire operation.
xxxx
It is therefore reasonable and unavoidable to make the following
conclusion, based on the above arguments. As written by the
framers and ratified and adopted by the people, the Constitution
allows the continued use of service contracts with foreign
corporations -- as contractors who would invest in and operate
and manage extractive enterprises, subject to the full control and
supervision of the State -- sans the abuses of the past regime.
The purpose is clear: to develop and utilize our mineral,
petroleum and other resources on a large scale for the immediate
and tangible benefit of the Filipino people.58
WHEREFORE, the instant petition for prohibition and
mandamus is hereby DISMISSED. Section 76 of Republic Act
No. 7942 and Section 107 of DAO 96-40; Republic Act No.
7942 and its Implementing Rules and Regulations contained in
DAO 96-40 insofar as they relate to financial and technical
assistance agreements referred to in paragraph 4 of Section 2 of

Article
XII
of
the
Constitution
are
NOT
UNCONSTITUTIONAL.
SO ORDERED.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 149927
March 30, 2004
REPUBLIC OF THE PHILIPPINES, Represented by the

Department of Environment and Natural Resources (DENR)
Under then Minister ERNESTO R. MACEDA; and Former
Government Officials CATALINO MACARAIG,
FULGENCIO S. FACTORAN, ANGEL C. ALCALA, BEN
MALAYANG, ROBERTO PAGDANGANAN, MARIANO Z.
VALERA and ROMULO SAN JUAN, petitioners,
vs.
ROSEMOOR MINING AND DEVELOPMENT
CORPORATION, PEDRO DEL CONCHA, and
ALEJANDRO and RUFO DE GUZMAN, respondents.
DECISION
PANGANIBAN, J.:
A mining license that contravenes a mandatory provision of the
law under which it is granted is void. Being a mere privilege, a
license does not vest absolute rights in the holder. Thus, without
offending the due process and the non-impairment clauses of the
Constitution, it can be revoked by the State in the public interest.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of

Court, seeking to nullify the May 29, 2001 Decision 2 and the
September 6, 2001 Resolution3 of the Court of Appeals (CA) in
CA-GR SP No. 46878. The CA disposed as follows:
"WHEREFORE, premises considered, the appealed Decision is
hereby AFFIRMED in toto."4
The questioned Resolution denied petitioners Motion for
Reconsideration.
4. Ordering the cancellation of the bond filed by the Petitioners

in the sum of 1 Million.
5. Allowing the petitioners to present evidence in support of the
damages they claim to have suffered from, as a consequence of
the summary cancellation of License No. 33 pursuant to the
agreement of the parties on such dates as maybe set by the
Court; and
On the other hand, trial courts Decision, which was affirmed by

the CA, had disposed as follows:
6. Denying for lack of merit the motions for contempt, it

appearing that actuations of the respondents were not
contumacious and intended to delay the proceedings or
undermine the integrity of the Court.
"WHEREFORE, judgment is hereby rendered as follows:
No pronouncement yet as to costs."5
1. Declaring that the cancellation of License No. 33 was done

without jurisdiction and in gross violation of the Constitutional
right of the petitioners against deprivation of their property
rights without due process of law and is hereby set aside.
2. Declaring that the petitioners right to continue the
exploitation of the marble deposits in the area covered by
License No. 33 is maintained for the duration of the period of its
life of twenty-five (25) years, less three (3) years of continuous
operation before License No. 33 was cancelled, unless sooner
terminated for violation of any of the conditions specified
therein, with due process.
3. Making the Writ of preliminary injunction and the Writ of
Preliminary Mandatory Injunction issued as permanent.
The Facts
The CA narrated the facts as follows:
"The four (4) petitioners, namely, Dr. Lourdes S. Pascual, Dr.
Pedro De la Concha, Alejandro De La Concha, and Rufo De
Guzman, after having been granted permission to prospect for
marble deposits in the mountains of Biak-na-Bato, San Miguel,
Bulacan, succeeded in discovering marble deposits of high
quality and in commercial quantities in Mount Mabio which
forms part of the Biak-na-Bato mountain range.
"Having succeeded in discovering said marble deposits, and as a
result of their tedious efforts and substantial expenses, the
petitioners applied with the Bureau of Mines, now Mines and
Geosciences Bureau, for the issuance of the corresponding
license to exploit said marble deposits.
xxxxxxxxx
"After compliance with numerous required conditions, License
No. 33 was issued by the Bureau of Mines in favor of the herein
petitioners.
xxxxxxxxx
"Shortly after Respondent Ernesto R. Maceda was appointed
Minister of the Department of Energy and Natural Resources
(DENR), petitioners License No. 33 was cancelled by him
through his letter to ROSEMOOR MINING AND
DEVELOPMENT CORPORATION dated September 6, 1986
for the reasons stated therein. Because of the aforesaid
cancellation, the original petition was filed and later substituted
by the petitioners AMENDED PETITION dated August 21,
1991 to assail the same.
"Also after due hearing, the prayer for injunctive relief was
granted in the Order of this Court dated February 28, 1992.
Accordingly, the corresponding preliminary writs were issued
after the petitioners filed their injunction bond in the amount of
ONE MILLION PESOS (P1,000,000.00).
xxxxxxxxx
"On September 27, 1996, the trial court rendered the herein
questioned decision."6
The trial court ruled that the privilege granted under
respondents license had already ripened into a property right,
which was protected under the due process clause of the
Constitution. Such right was supposedly violated when the
license was cancelled without notice and hearing. The

cancellation was said to be unjustified, because the area that
could be covered by the four separate applications of
respondents was 400 hectares. Finally, according to the RTC,
Proclamation No. 84, which confirmed the cancellation of the
license, was an ex post facto law; as such, it violated Section 3
of Article XVIII of the 1987 Constitution.
On appeal to the Court of Appeals, herein petitioners asked
whether PD 463 or the Mineral Resources Development Decree
of 1974 had been violated by the award of the 330.3062 hectares
to respondents in accordance with Proclamation No. 2204. They
also questioned the validity of the cancellation of respondents
Quarry License/Permit (QLP) No. 33.
Ruling of the Court of Appeals
Sustaining the trial court in toto, the CA held that the grant of the
quarry license covering 330.3062 hectares to respondents was
authorized by law, because the license was embraced by four (4)
separate applications -- each for an area of 81 hectares.
Moreover, it held that the limitation under Presidential Decree
No. 463 -- that a quarry license should cover not more than 100
hectares in any given province -- was supplanted by Republic
Act No. 7942,7 which increased the mining areas allowed under
PD 463.
It also ruled that the cancellation of respondents license without
notice and hearing was tantamount to a deprivation of property
without due process of law. It added that under the clause in the
Constitution dealing with the non-impairment of obligations and
contracts, respondents license must be respected by the State.
Hence, this Petition.8

Issues
Petitioners submit the following issues for the Courts
consideration:
"(1) [W]hether or not QLP No. 33 was issued in blatant
contravention of Section 69, P.D. No. 463; and (2) whether or
not Proclamation No. 84 issued by then President Corazon
Aquino is valid. The corollary issue is whether or not the
Constitutional prohibition against ex post facto law applies to
Proclamation No. 84"9
The Courts Ruling
The Petition has merit.
First Issue:
Validity of License
Respondents contend that the Petition has no legal basis, because
PD 463 has already been repealed.10 In effect, they ask for the
dismissal of the Petition on the ground of mootness.
PD 463, as amended, pertained to the old system of exploration,
development and utilization of natural resources through
licenses, concessions or leases.11 While these arrangements were
provided under the 193512 and the 197313 Constitutions, they
have been omitted by Section 2 of Article XII of the 1987
Constitution.14
With the shift of constitutional policy toward "full control and

supervision of the State" over natural resources, the Court in
Miners Association of the Philippines v. Factoran Jr. 15 declared
the provisions of PD 463 as contrary to or violative of the
express mandate of the 1987 Constitution. The said provisions
dealt with the lease of mining claims; quarry permits or licenses
covering privately owned or public lands; and other related
provisions on lease, licenses and permits.
RA 7942 or the Philippine Mining Act of 1995 embodies the
new constitutional mandate. It has repealed or amended all laws,
executive orders, presidential decrees, rules and regulations -- or
parts thereof -- that are inconsistent with any of its provisions.16
It is relevant to state, however, that Section 2 of Article XII of
the 1987 Constitution does not apply retroactively to a "license,
concession or lease" granted by the government under the 1973
Constitution or before the effectivity of the 1987 Constitution on
February 2, 1987.17 As noted in Miners Association of the
Philippines v. Factoran Jr., the deliberations of the Constitutional
Commission18 emphasized the intent to apply the said
constitutional provision prospectively.
While RA 7942 has expressly repealed provisions of mining
laws that are inconsistent with its own, it nonetheless respects
previously issued valid and existing licenses, as follows:
"SECTION 5. Mineral Reservations. When the national
interest so requires, such as when there is a need to preserve
strategic raw materials for industries critical to national
development, or certain minerals for scientific, cultural or
ecological value, the President may establish mineral
reservations upon the recommendation of the Director through
the Secretary. Mining operations in existing mineral reservations

and such other reservations as may thereafter be established,
shall be undertaken by the Department or through a contractor:
Provided, That a small scale-mining cooperative covered by
Republic Act No. 7076 shall be given preferential right to apply
for a small-scale mining agreement for a maximum aggregate
area of twenty-five percent (25%) of such mineral reservation,
subject to valid existing mining/quarrying rights as provided
under Section 112 Chapter XX hereof. All submerged lands
within the contiguous zone and in the exclusive economic zone
of the Philippines are hereby declared to be mineral reservations.
"x x x x x x x x x
"SECTION 7. Periodic Review of Existing Mineral
Reservations. The Secretary shall periodically review existing
mineral reservations for the purpose of determining whether
their continued existence is consistent with the national interest,
and upon his recommendation, the President may, by
proclamation, alter or modify the boundaries thereof or revert
the same to the public domain without prejudice to prior existing
rights."
"SECTION 18. Areas Open to Mining Operations. Subject to
any existing rights or reservations and prior agreements of all
parties, all mineral resources in public or private lands, including
timber or forestlands as defined in existing laws, shall be open to
mineral agreements or financial or technical assistance
agreement applications. Any conflict that may arise under this
provision shall be heard and resolved by the panel of
arbitrators."
"SECTION 19. Areas Closed to Mining Applications. -- Mineral
agreement or financial or technical assistance agreement

applications shall not be allowed:
(a) In military and other government reservations, except upon
prior written clearance by the government agency concerned;
(b) Near or under public or private buildings, cemeteries,
archeological and historic sites, bridges, highways, waterways,
railroads, reservoirs, dams or other infrastructure projects, public
or private works including plantations or valuable crops, except
upon written consent of the government agency or private entity
concerned;
(c) In areas covered by valid and existing mining rights;
(d) In areas expressly prohibited by law;
(e) In areas covered by small-scale miners as defined by law
unless with prior consent of the small-scale miners, in which
case a royalty payment upon the utilization of minerals shall be
agreed upon by the parties, said royalty forming a trust fund for
the socioeconomic development of the community concerned;
and
(f) Old growth or virgin forests, proclaimed watershed forest
reserves, wilderness areas, mangrove forests, mossy forests,
national parks, provincial/municipal forests, parks, greenbelts,
game refuge and bird sanctuaries as defined by law and in areas
expressly prohibited under the National Integrated Protected
Areas System (NIPAS) under Republic Act No. 7586,
Department Administrative Order No. 25, series of 1992 and
other laws."
"SECTION 112. Non-impairment of Existing Mining/ Quarrying

Rights. All valid and existing mining lease contracts,
permits/licenses, leases pending renewal, mineral productionsharing agreements granted under Executive Order No. 279, at
the date of effectivity of this Act, shall remain valid, shall not be
impaired, and shall be recognized by the Government: Provided,
That the provisions of Chapter XIV on government share in
mineral production-sharing agreement and of Chapter XVI on
incentives of this Act shall immediately govern and apply to a
mining lessee or contractor unless the mining lessee or
contractor indicates his intention to the secretary, in writing, not
to avail of said provisions: Provided, further, That no renewal of
mining lease contracts shall be made after the expiration of its
term: Provided, finally, That such leases, production-sharing
agreements, financial or technical assistance agreements shall
comply with the applicable provisions of this Act and its
implementing rules and regulations.
"SECTION 113. Recognition of Valid and Existing Mining
Claims and Lease/Quarry Application. Holders of valid and
existing mining claims, lease/quarry applications shall be given
preferential rights to enter into any mode of mineral agreement
with the government within two (2) years from the promulgation
of the rules and regulations implementing this Act."
(Underscoring supplied)
Section 3(p) of RA 7942 defines an existing mining/quarrying
right as "a valid and subsisting mining claim or permit or quarry
permit or any mining lease contract or agreement covering a
mineralized area granted/issued under pertinent mining laws."
Consequently, determining whether the license of respondents
falls under this definition would be relevant to fixing their
entitlement to the rights and/or preferences under RA 7942.
Hence, the present Petition has not been mooted.

Petitioners submit that the license clearly contravenes Section 69
of PD 463, because it exceeds the maximum area that may be
granted. This incipient violation, according to them, renders the
license void ab initio.
Respondents, on the other hand, argue that the license was
validly granted, because it was covered by four separate
applications for areas of 81 hectares each.
The license in question, QLP No. 33,19 is dated August 3, 1982,
and it was issued in the name of Rosemoor Mining Development
Corporation. The terms of the license allowed the corporation to
extract and dispose of marbleized limestone from a 330.3062hectare land in San Miguel, Bulacan. The license is, however,
subject to the terms and conditions of PD 463, the governing law
at the time it was granted; as well as to the rules and regulations
promulgated thereunder.20 By the same token, Proclamation No.
2204 -- which awarded to Rosemoor the right of development,
exploitation, and utilization of the mineral site -- expressly
cautioned that the grant was subject to "existing policies, laws,
rules and regulations."21
The license was thus subject to Section 69 of PD 463, which
reads:
"Section 69. Maximum Area of Quarry License
Notwithstanding the provisions of Section 14 hereof, a quarry
license shall cover an area of not more than one hundred (100)
hectares in any one province and not more than one thousand
(1,000) hectares in the entire Philippines." (Italics supplied)
The language of PD 463 is clear. It states in categorical and

mandatory terms that a quarry license, like that of respondents,
should cover a maximum of 100 hectares in any given province.
This law neither provides any exception nor makes any
reference to the number of applications for a license. Section 69
of PD 463 must be taken to mean exactly what it says. Where
the law is clear, plain, and free from ambiguity, it must be given
its literal meaning and applied without attempted
interpretation.22
Moreover, the lower courts ruling is evidently inconsistent with
the fact that QLP No. 33 was issued solely in the name of
Rosemoor Mining and Development Corporation, rather than in
the names of the four individual stockholders who are
respondents herein. It likewise brushes aside a basic postulate
that a corporation has a separate personality from that of its
stockholders.23
The interpretation adopted by the lower courts is contrary to the
purpose of Section 69 of PD 463. Such intent to limit, without
qualification, the area of a quarry license strictly to 100 hectares
in any one province is shown by the opening proviso that reads:
"Notwithstanding the provisions of Section 14 hereof x x x." The
mandatory nature of the provision is also underscored by the use
of the word shall. Hence, in the application of the 100-hectareper-province limit, no regard is given to the size or the number
of mining claims under Section 14, which we quote:
"SECTION 14. Size of Mining Claim. -- For purposes of
registration of a mining claim under this Decree, the Philippine
territory and its shelf are hereby divided into meridional blocks
or quadrangles of one-half minute (1/2) of latitude and
longitude, each block or quadrangle containing area of eighty-
one (81) hectares, more or less.

"A mining claim shall cover one such block although a lesser
area may be allowed if warranted by attendant circumstances,
such as geographical and other justifiable considerations as may
be determined by the Director: Provided, That in no case shall
the locator be allowed to register twice the area allowed for lease
under Section 43 hereof." (Italics supplied)
Clearly, the intent of the law would be brazenly circumvented by
ruling that a license may cover an area exceeding the maximum
by the mere expediency of filing several applications. Such
ruling would indirectly permit an act that is directly prohibited
by the law.
Second Issue:
Validity of Proclamation No. 84
Petitioners also argue that the license was validly declared a
nullity and consequently withdrawn or terminated. In a letter
dated September 15, 1986, respondents were informed by then
Minister Ernesto M. Maceda that their license had illegally been
issued, because it violated Section 69 of PD 463; and that there
was no more public interest served by the continued existence or
renewal of the license. The latter reason, they added, was
confirmed by the language of Proclamation No. 84. According to
this law, public interest would be served by reverting the parcel
of land that was excluded by Proclamation No. 2204 to the
former status of that land as part of the Biak-na-Bato national
park.
They also contend that Section 74 of PD 463 would not apply,
because Minister Macedas letter did not cancel or revoke QLP
No. 33, but merely declared the latters nullity. They further
argue that respondents waived notice and hearing in their
application for the license.
Forestry26 with regard to a timber license, a pronouncement that

was reiterated in Ysmael v. Deputy Executive Secretary,27 the
pertinent portion of which reads:
On the other hand, respondents submit that, as provided for in

Section 74 of PD 463, their right to due process was violated
when their license was cancelled without notice and hearing.
They likewise contend that Proclamation No. 84 is not valid for
the following reasons: 1) it violates the clause on the nonimpairment of contracts; 2) it is an ex post facto law and/or a bill
of attainder; and 3) it was issued by the President after the
effectivity of the 1987 Constitution.
"x x x. Timber licenses, permits and license agreements are the

principal instruments by which the State regulates the utilization
and disposition of forest resources to the end that public welfare
is promoted. And it can hardly be gainsaid that they merely
evidence a privilege granted by the State to qualified entities,
and do not vest in the latter a permanent or irrevocable right to
the particular concession area and the forest products therein.
They may be validly amended, modified, replaced or rescinded
by the Chief Executive when national interests so require. Thus,
they are not deemed contracts within the purview of the due
process of law clause [See Sections 3(ee) and 20 of Pres. Decree
No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No.
L-24548, October 27, 1983, 125 SCRA 302]."28 (Italics supplied)
This Court ruled on the nature of a natural resource exploration

permit, which was akin to the present respondents license, in
Southeast Mindanao Gold Mining Corporation v. Balite Portal
Mining Cooperative,24which held:
"x x x. As correctly held by the Court of Appeals in its
challenged decision, EP No. 133 merely evidences a privilege
granted by the State, which may be amended, modified or
rescinded when the national interest so requires. This is
necessarily so since the exploration, development and utilization
of the countrys natural mineral resources are matters impressed
with great public interest. Like timber permits, mining
exploration permits do not vest in the grantee any permanent or
irrevocable right within the purview of the non-impairment of
contract and due process clauses of the Constitution, since the
State, under its all-encompassing police power, may alter,
modify or amend the same, in accordance with the demands of
the general welfare."25
This same ruling had been made earlier in Tan v. Director of
In line with the foregoing jurisprudence, respondents license

may be revoked or rescinded by executive action when the
national interest so requires, because it is not a contract, property
or a property right protected by the due process clause of the
Constitution.29 Respondents themselves acknowledge this
condition of the grant under paragraph 7 of QLP No. 33, which
we quote:
"7. This permit/license may be revoked or cancelled at any time
by the Director of Mines and Geo-Sciences when, in his opinion
public interests so require or, upon failure of the
permittee/licensee to comply with the provisions of Presidential
Decree No. 463, as amended, and the rules and regulations
promulgated thereunder, as well as with the terms and conditions
specified herein; Provided, That if a permit/license is cancelled,
or otherwise terminated, the permittee/licensee shall be liable for

all unpaid rentals and royalties due up to the time of the
termination or cancellation of the permit/license[.]"30 (Italics
supplied)
The determination of what is in the public interest is necessarily
vested in the State as owner of all mineral resources. That
determination was based on policy considerations formally
enunciated in the letter dated September 15, 1986, issued by then
Minister Maceda and, subsequently, by the President through
Proclamation No. 84. As to the exercise of prerogative by
Maceda, suffice it to say that while the cancellation or
revocation of the license is vested in the director of mines and
geo-sciences, the latter is subject to the formers control as the
department head. We also stress the clear prerogative of the
Executive Department in the evaluation and the consequent
cancellation of licenses in the process of its formulation of
policies with regard to their utilization. Courts will not interfere
with the exercise of that discretion without any clear showing of
grave abuse of discretion.31
Moreover, granting that respondents license is valid, it can still
be validly revoked by the State in the exercise of police power.32
The exercise of such power through Proclamation No. 84 is
clearly in accord with jura regalia, which reserves to the State
ownership of all natural resources.33 This Regalian doctrine is an
exercise of its sovereign power as owner of lands of the public
domain and of the patrimony of the nation, the mineral deposits
of which are a valuable asset.34
Proclamation No. 84 cannot be stigmatized as a violation of the
non-impairment clause. As pointed out earlier, respondents
license is not a contract to which the protection accorded by the
non-impairment clause may extend.35 Even if the license were, it

is settled that provisions of existing laws and a reservation of
police power are deemed read into it, because it concerns a
subject impressed with public welfare. 36 As it is, the nonimpairment clause must yield to the police power of the state.37
We cannot sustain the argument that Proclamation No. 84 is a
bill of attainder; that is, a "legislative act which inflicts
punishment without judicial trial."38 Its declaration that QLP No.
33 is a patent nullity39 is certainly not a declaration of guilt.
Neither is the cancellation of the license a punishment within the
purview of the constitutional proscription against bills of
attainder.
Too, there is no merit in the argument that the proclamation is an
ex post facto law. There are six recognized instances when a law
is considered as such: 1) it criminalizes and punishes an action
that was done before the passing of the law and that was
innocent when it was done; 2) it aggravates a crime or makes it
greater than it was when it was committed; 3) it changes the
punishment and inflicts one that is greater than that imposed by
the law annexed to the crime when it was committed; 4) it alters
the legal rules of evidence and authorizes conviction upon a less
or different testimony than that required by the law at the time of
the commission of the offense; 5) it assumes the regulation of
civil rights and remedies only, but in effect imposes a penalty or
a deprivation of a right as a consequence of something that was
considered lawful when it was done; and 6) it deprives a person
accused of a crime of some lawful protection to which he or she
become entitled, such as the protection of a former conviction or
an acquittal or the proclamation of an amnesty.40 Proclamation
No. 84 does not fall under any of the enumerated categories;
hence, it is not an ex post facto law.
It is settled that an ex post facto law is limited in its scope only

to matters criminal in nature.41 Proclamation 84, which merely
restored the area excluded from the Biak-na-Bato national park
by canceling respondents license, is clearly not penal in
character.
Finally, it is stressed that at the time President Aquino issued
Proclamation No. 84 on March 9, 1987, she was still validly
exercising legislative powers under the Provisional Constitution
of 1986.42 Section 1 of Article II of Proclamation No. 3, which
promulgated the Provisional Constitution, granted her legislative
power "until a legislature is elected and convened under a new
Constitution." The grant of such power is also explicitly
recognized and provided for in Section 6 of Article XVII of the
1987 Constitution.43
disposition, exploitation, development, or utilization shall be

limited to citizens of the Philippines, or to corporations or
associations at least sixty per centum of the capital of which is
owned by such citizens, subject to any existing right, grant,
lease, or concession at the time of the inauguration of the
Government established under this Constitution. Natural
resources, with the exception of public agricultural land, shall
not be alienated, and no license, concession, or lease for the
exploitation, development, or utilization of any of the natural
resources shall be granted for a period exceeding twenty-five
years, except as to water rights for irrigation, water supply,
fisheries, or industrial uses other than the development of water
power, in which cases beneficial use may be the measure and
limit of the grant." (Italics supplied)
13
WHEREFORE, this Petition is hereby GRANTED and the

appealed Decision of the Court of Appeals SET ASIDE. No
costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and
Azcuna, JJ., concur.
FOOTNOTES:
Section 1, Article XIII of the 1935 Constitution, reads:
"SECTION 1. All agricultural, timber, and mineral lands of the
public domain, waters, minerals, coal, petroleum, and other
mineral oils, all forces of potential energy, and other natural
resources of the Philippines belong to the State, and their
Section 8, Article XIV of the 1973 Constitution, is quoted

thus:
"SEC. 8. All lands of the public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces of potential energy,
fisheries, wildlife, and other natural resources of the Philippines
belong to the State. With the exception of agricultural, industrial
or commercial, residential and resettlement lands of the public
domain, natural resources shall not be alienated, and no license,
concession, or lease for the exploration, development,
exploitation, or utilization of any of the natural resources shall
be granted for a period exceeding twenty-five years, renewable
for not more than twenty-five years, except as to water rights for
irrigation, water supply, fisheries, or industrial uses other than
the development of water power, in which cases beneficial use
may be the measure and limit of the grant." (Italics supplied)
14
The pertinent provision of Section 2 of Article XII of the 1987
Constitution provides:
"Sec. 2. All lands of the public domain, waters, minerals, coal,
of the State. The State may directly undertake such activities or
be provided by law. In case of water rights for irrigation, water
grant.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 162331
November 20, 2006
LEPANTO CONSOLIDATED MINING CO., Petitioner,

vs.
WMC RESOURCES INTL. PTY. LTD., WMC
PHILIPPINES, INC. and SAGITTARIUS MINES, INC.,
Respondents.
DECISION
CHICO-NAZARIO, J.:
Before Us is a Petition for Review on Certiorari under Rule 45
of the Rules of Civil Procedure, assailing the Decision 1 of the
Court of Appeals in CA-G.R. SP No. 74161, dated 21 November
2003, which dismissed herein petitioners Petition for Review of
the Decision2 of the Office of the President dated 23 July 2002
affirming in totothe Order3 of the Secretary of the Department of
Environment and Natural Resources (DENR) dated 18
December 2001 approving the application for and the
consequent registration of FTAA No. 02-95-XI from WMC
Philippines to Sagittarius Mines, Inc.
On 22 March 1995, the Philippine Government and WMC

Philippines, the local wholly-owned subsidiary of WMC
Resources International Pty. Ltd. (WMC Resources) executed a
Financial and Technical Assistance Agreement, denominated as
the Columbio FTAA No. 02-95-XI (Columbio FTAA) for the
purpose of large scale exploration, development, and
commercial exploration of possible mineral resources in an
initial contract area of 99,387 hectares located in the provinces
of South Cotabato, Sultan Kudarat, Davao del Sur, and North
Cotabato in accordance with Executive Order No. 279 and
Department Administrative Order No. 63, Series of 1991.
The Columbio FTAA is covered in part by 156 mining claims
held under various Mineral Production Sharing Agreements
(MPSA) by Southcot Mining Corporation, Tampakan Mining
Corporation, and Sagittarius Mines, Inc. (collectively called the
Tampakan Companies), in accordance with the Tampakan
Option Agreement entered into by WMC Philippines and the
Tampakan Companies on 25 April 1991, as amended by
Amendatory Agreement dated 15 July 1994, for purposes of
exploration of the mining claims in Tampakan, South Cotabato.
The Option Agreement, among other things, provides for the
grant of the right of first refusal to the Tampakan Companies in
case WMC Philippines desires to dispose of its rights and
interests in the mining claims covering the area subject of the
agreement.
WMC Resources subsequently divested itself of its rights and
interests in the Columbio FTAA, and on 12 July 2000 executed a
Sale and Purchase Agreement with petitioner Lepanto over its
entire shareholdings in WMC Philippines, subject to the exercise
of the Tampakan Companies exercise of their right of first
refusal to purchase the subject shares. On 28 August 2000,
petitioner sought the approval of the 12 July 2000 Agreement

from the DENR Secretary.
In an Agreement dated 6 October 2000, however, the Tampakan
Companies sought to exercise its right of first refusal. Thus, in a
letter dated 13 October 2000, petitioner assailed the Tampakan
Companies exercise of its right of first refusal, alleging that the
Tampakan Companies failed to match the terms and conditions
set forth in the 12 July 2000 Agreement.
Thereafter, petitioner filed a case4 for Injunction, Specific
Performance, Annulment of Contracts and Contractual
Interference with the Regional Trial Court of Makati, Branch
135, against WMC Resources, WMC Philippines, and the
Tampakan Companies. WMC Philippines and the Tampakan
Companies moved for the dismissal of said case. Said Motion to
Dismiss having been denied, WMC Philippines challenged the
order dismissing the Motion on appeal5 before the Court of
Appeals which subsequently ordered the dismissal of the case on
the ground of forum shopping in this wise:
Nevertheless, the Court finds that private respondent is guilty of
forum-shopping. There is forum-shopping whenever, as a result
of an adverse opinion in one forum, a party seeks a favorable
opinion (other than by appeal or certiorari) in another. The
principle applies not only with respect to suits filed in courts but
also in connection with litigation commenced in the courts while
an administrative processes and in anticipation of an unfavorable
administrative ruling and a favorable court ruling.
In this case, petitioners argue that private respondent is guilty of
forum shopping for having lodged the complain before
respondent Court pending action by the Secretary of the DENR
through the Mines and Geo-Sciences Bureau (MGB) on its

approval of the Sale and Purchase Agreement dated July 12,
2000. Private respondent on the other hand, opposes the
foregoing contention arguing that the MGB will be merely
exercising its administrative not quasi-judicial power.
The action before respondent court was filed by private
respondent to compel petitioner WMC Resources to convey its
equity in WMC Phils. and Hillcrest to the former. Meanwhile, in
the case before the MGB, private respondent sought the approval
of Sale and that the MGBs authority over the case is purely
administrative, but further review shows that private respondent
raised contentious issues which need resolution by the MGB
before it can recommend any approval to the Secretary of the
DENR. Particularly, in its letter dated October 13, 2000 to the
Secretary of the DENR, private respondent posed its objection to
the approval of the Sales and Purchase agreements between
WMC Resources and the Tampakan Companies, asserting that
the latter failed to validly exercise its right of first refusal. Also,
in its letter to the Director of the MGB dated December 8, 2000,
private respondent spelled out in detail its reasons for objecting
to the agreement between WMC Resources and the Tampakan
Companies, and in the same breath, argued for the approval of
its own contract. And because of the opposing claims posited by
private respondent and petitioners, the MGB was constrained to
require the parties to submit their respective comments. At the
juncture, the MGBs authority ceased to be administrative.
Evidently, the MGB has to review all these opposing contentions
and resolve the same. A resolution of the MGB on which
contract to recommend or endorse to the Secretary of the DENR
for approval will necessarily include a declaration on the validity
of the different Sale and Purchase Agreements executed between
the disagreeing parties, as well as on the exercise of the
Tampakan Companies exercise of its right of first refusal and its

qualification as a contractor under the FTAA. Even the MGB is
aware that the dispute revolves around these sales and purchase
agreements. Hence, it cannot be gainsaid that the MGB will be
exercising its quasi-judicial powers in resolving the conflict
before it. Whether the MGB can validly exercise such
jurisdiction over the controversy is another issue but nonetheless
immaterial in determining whether private respondent is guilty
of forum-shopping. What is determinative is the filing of two (2)
separate actions in different for a based principally on the same
cause on the supposition that one or the other court would make
a favorable disposition. Thus, it is not highly unlikely that
respondent Court and MGB will come up with conflicting
pronouncements on the dispute, thereby creating a quandary as
to which one will prevail. Private respondents act undisputably
constitutes a clear case of forum-shopping, a ground for
summary dismissal with prejudice of the action. The respondent
court committed grave abuse of discretion in refusing to dismiss
Civil Case No. 01-087 on ground of forum-shopping.6
With the denial of petitioners Motion for Reconsideration,
case7 was elevated to this Court. In a Decision dated
September 2003, the Court affirmed the Decision of
appellate court and dismissed the petition. In said Decision,
Court elucidated that:
the
24
the
the
True, the questioned agreements of sale between petitioner and

WMC on one hand and between WMC and the Tampakan
Companies on the other pertain to transfer of shares of stock
from one entity to another. But said shares of stock represent
ownership of mining rights or interest in mining agreements.
Hence, the power of the MGB to rule on the validity of the
questioned agreements of sale, which was raised by petitioner
before the DENR, is inextricably linked to the very nature of

such agreements over which the MGB has jurisdiction under the
law. Unavoidably, there is identity of reliefs that petitioner seeks
from both the MGB and the RTC.
Forum shopping exists when both actions involve the same
transactions, same essential facts and circumstances and raise
identical causes of actions, subject matter, and issues. Such
elements are evidently present in both the proceedings before the
MGB and before the trial court. The case instituted with the RTC
was thus correctly ordered dismissed by the appellate court on
the ground of forum shopping. Besides, not only did petitioner
commit forum shopping but it also failed to exhaust
administrative remedies by opting to go ahead in seeking reliefs
from the court even while those same reliefs were appropriately
awaiting resolution by the MGB.8
In the interim, on 10 January 2001, contending that the 12 July
Agreement between petitioner and WMC Philippines had
expired due to failure to meet the necessary preconditions for its
validity, WMC Resources and the Tampakan Companies
executed another Sale and Purchase Agreement, where
Sagittarius Mines, Inc. was designated assignee and corporate
vehicle which would acquire the shareholdings and undertake
the Columbio FTAA activities. On 15 January 2001, Sagittarius
Mines, Inc. increased its authorized capitalization to P250
million. Subsequently, WMC Resources and Sagittarius Mines,
Inc. executed a Deed of Absolute Sale of Shares of Stocks on 23
January 2001.
After due consideration and evaluation of the financial and
technical qualifications of Sagittarius Mines, Inc., the DENR
Secretary approved the transfer of the Columbio FTAA from
WMC Philippines to Sagittarius Mines, Inc. in the assailed

Order. According to said Order, pursuant to Section 66 of
Department Administrative Order No. 96-40, as amended,
Sagittarius Mines, Inc. meets the qualification requirements as
Contractor-Transferee of FTAA No. 02-95-XI, and that the
application for transfer of said FTAA went thru the procedure
and other requirements set forth under the law.
Aggrieved by the transfer of the Columbio FTAA in favor of
Sagittarius Mines, Inc., petitioner filed a Petition for Review of
the Order of the DENR Secretary with the Office of the
President. Petitioner assails the validity of the 18 December
2001 Order on the ground that: 1) it violates the constitutional
right of Lepanto to due process; 2) it preempts the resolution of
very crucial legal issues pending with the regular courts; and 3)
it blatantly violates Section 40 of the Mining Act.
In a Decision dated 23 July 2002, the Office of the President
dismissed the petition in this wise:
At the outset, it bears emphasis that quite contrary to the
argument of petitioner Lepanto, the above Order of the DENR
Secretary is not violative of the Mining Law. Since the subject
Columbio FTAA was granted in accordance with the pertinent
provisions of Executive Order No. 279 and Department
Administrative Order No. 63 on 22 March 1995, or prior to the
effectivity of the Philippine Mining Act of 1995, especially as it
highlights the non-impairment of existing mining and/or
quarrying rights, under Section 14.1 (b) thereof, only the consent
of DENR Secretary is required. To hold otherwise would be to
unduly impose a burden on transferor WMC and thereby restrict
its freedom to dispose of or alienate this property right without
due process. Thus, under the Revised Implementing Rules and
Regulations of the Philippine Mining Act of 1995, Chapter XXX

thereof expressly echoes the guaranty:
"Section 272. Non-Impairment of Existing Mining/Quarrying
Rights.- All valid and existing mining lease contracts,
permits/licenses, leases pending renewal, Mineral Production
Sharing Agreements, FTAA granted under Executive Order No.
279, at the date of the Act shall remain valid, shall not be
impaired and shall be recognized by the Government x x x.
x x x Provided, finally, That this provision is applicable only to
all FTAA/MPSA applications filed under Department
Administrative Order No. 63 prior to the effectivity of the act
and these implementing rules and regulations."
As correctly stated by the MGB Director and affirmed by the
DENR Secretary, Section 14.1 of the Columbio FTAA provides
that the FTAA may be transferred provided that the Secretary
consents to the same. Pursuant to Section 112 of the Mining Act
and Section 272 of DAO No. 96-40, as amended, on nonimpairment of existing mining rights, the subject application for
transfer of the Columbio FTAA to Sagittarius requires only the
approval of the DENR Secretary.
Moreover, there is no merit in petitioner Lepantos argument that
the DENR Secretary and consequently, this Office, has no
jurisdiction over the subject matter in issue. The assailed Order
of the DENR Secretary was pursuant to the latters exercise of
the well-entrenched doctrine of primary jurisdiction of
administrative agencies.
By virtue of the operation of the doctrine of primary jurisdiction,
"courts cannot and will not determine a controversy involving a
question which is within the jurisdiction of an administrative

tribunal, especially where the question demands the exercise of
sound administrative discretion requiring the special knowledge,
experience and services of the tribunal to determine technical
and intricate matters of fact and where a uniformity of ruling is
essential to comply with the purposes regulatory statute
administered." (Province of Zamboanga del Norte v. Court of
Appeals, 342 SCRA 549 [2000]; Factoran v. Court of Appeals,
320 SCRA 530 [1999]; Brett v. Intermediate Appellate Court,
191 SCRA 687 [1990]; Qualitrans Limousine Service, Inc. v.
Royal Class Limousine Service, 179 SCRA 569 [1989]). Thus,
even though an action may be lodged in court that is ostensibly
for annulment or "rescission of what appears to be an ordinary
civil contract cognizable by a civil court," the doctrine of
primary jurisdiction still applies. (Industrial Enterprises, Inc. v.
Court of Appeals, 184 SCRA 426 [1990]).
Section 4, Chapter 1, Title XIV, Book IV of the Administrative
Code of 1987 specifies the powers and functions of the DENR.
Also, the Philippine Mining Act of 1995 provides that the DENR
"shall be the primary government agency responsible for the
conservation, management, development, and proper use of the
States mineral resources including those in reservations,
watershed areas, and lands of the public domain. The Secretary
shall have the authority to enter into mineral agreements on
behalf of the Government upon the recommendation of the
Director, promulgate such rules and regulations as may be
necessary to implement the intent and provisions of this Act."
(Chapter II, Section 8). Since an FTAA is "a contract involving
financial or technical assistance for large-scale exploration,
development and utilization of mineral resources" (Ibid.,
Chapter 1, Section 3 [r]), any issue affecting the same is
indubitably within the primary jurisdiction of the DENR, as in
fact, the government enters into FTAAs through the DENR

(Ibid., Chapter VI, Section 33).
There is no dispute that the instant case involves and requires the
special technical knowledge and expertise of the DENR. In the
determination by the DENR of a "qualified person" pursuant to
the Philippine Mining Act of 1995, such person must possess the
technical and financial capability to undertake mineral resources
development". (Chapter I, Section 3 [aq]) Obviously, this
determination peculiarly lies within the expertise of the DENR.
The validity of the successive transfers is not a civil issue,
contrary to the allegation of petitioner Lepanto, because validity
of transfer depends on technical qualifications of the transferee
and compliance with the DENR requirements on qualifications,
all of which require administrative expertise. Notably,
petitioner Lepanto is estopped from assailing the primary
jurisdiction of the DENR since petitioner Lepanto itself
anchored its Petition (cf. pp. 4-5) on the contention that,
allegedly, "the Tampakan Companies failed to match the
terms and conditions of the July 12 Agreement with
petitioner Lepanto in that they did not possess the financial
and technical qualifications under the Mining Act and its
Implementing Rules". Petitioner Lepantos objections
therefore go into the very qualifications of a transferee which
is a technical issue.
This contention is a recognition by petitioner Lepanto itself of
the fact that the crucial and determinative issue in the instant
case is grounded on the financial and technical qualifications of
a transferee, which issue, indisputably, is within the exclusive
domain and expertise of the DENR and not of the courts.
xxxx
Moreover, petitioner Lepanto, by its conduct, is again
estopped from assailing the DENRs jurisdiction after
actively participating in the proceedings therein and seeking
affirmative relief. A party who invoked the jurisdiction [of] a
tribunal and actively participated in the proceedings therein
cannot impugn such jurisdiction when faced with an adverse
decision. (cf. Briad Agro Development Corporation v. dela
Serna, 174 SCRA 524 [1989]).9 [Emphasis ours]
With the denial of its Motion for Reconsideration, petitioner
lodged an appeal before the Court of Appeals which was
consequently dismissed by the appellate court in the herein
assailed Decision. According to the Court of Appeals:
Petitioner forcefully argues that the DENR Secretary had
usurped the power of the President of the Philippines to approve
the transfer of FTAA, as under the provision of Section 40 of the
Philippine Mining Act of 1995, any transfer or assignment of an
FTAA has to be approved not by the DENR Secretary but by the
President.
The argument does not wash.
The issue hinges on the applicability of Section 40 of RA 7942
or the Philippine Mining Act of 1995, which took force on 14
April 1995, on the transfer of FTAA from WMC to the
Tampakan Companies, particularly the Sagittarius Mines, Inc.
The said law provides:
"Sec. 40. Assignment/Transfer A financial or technical
assistance agreement may be assigned or transferred, in whole or

in part, to a qualified person subject to the prior approval of the
President: Provided, that the President shall notify Congress of
every financial or technical assistance agreement assigned or
converted in accordance with this provision within thirty (30)
days from the date of approval."
However, the above provision does not apply to the Columbio
FTAA which was entered into by and between the Philippine
Government and WMCP on 22 March 1995, or prior to the
effectivity of RA No. 7942. Section 14.1 of the Columbio FTAA,
under which the Tampakan Companies claim their rights to first
refusal, reads:
"14.1 Assignment
"The Contractor may assign, transfer, convey or otherwise
dispose of all or any part of its interest in the Agreement
provided that such assignment, transfer, conveyance or
disposition does not infringe any Philippine law applicable to
foreign ownership:
(a) to an Affiliate provided that it gives notice of such
assignment to the Secretary within 30 days after such
assignment; or
(b) to any third party provided that the Secretary consents to the
same, which consent shall not be unreasonably withheld."
Section 10, Article III of the Philippine Constitution enjoins
Congress from passing a law impairing the obligation of
contracts. It is axiomatic that a law that impairs an obligation of
contract also violates the due process clause. The obligation of
an existing contract is impaired when its terms and conditions

are changed by law, ordinance, or any issuance having the force
of law, thereby weakening the position or diminishing the rights
of a party to the contract. The extent of the change is not
material. It is not a question of degree or manner or cause, but of
encroaching in any respect on its obligations or dispensing with
any part of its force. Impairment has also been predicated on
laws which, without destroying contracts, derogate from
substantial contractual rights.
The condition of RA No. 7942 requiring the further approval of
the President, if made to apply retroactively to the Columbio
FTAA, would impair the obligation of contracts simply because
it constitutes a restriction on the right of the contractor to assign
or transfer its interest in an FTAA. In other words, it diminished
the vested rights of the contractor to assign or transfer its
interests on mere approval of the DENR Secretary. The
restriction is therefore substantive, and not merely procedural,
contrary to the contention of petitioner.
xxxx
Likewise militating against the petitioners side is the doctrine
that statutes are to be construed as having only a prospective
operation unless the purpose and intention of the Legislature to
give them a retrospective effect is expressly declared or is
necessarily implied from the language used. In case of doubt, the
doubt must be resolved against the retrospective effect. At any
rate, even if RA No. 7942 be accorded a retroactive effect, this
does notipso facto permit the application of the requirement of
securing a prior presidential consent to the transfer of FTAA, for,
to iterate, this would impair the obligation of contract. In such a
case, the correct application of RA No. 7942 is for the provisions
to [be] made to apply on existing FTAAs only if the same would

not result in impairment of obligation of contracts.
Act of 1995 to the Columbio FTAA, a valid agreement

concluded prior to the naissance of said piece of legislation.
This is as it should be. To hold otherwise would be to unduly

impose a burden on transferor WMC and thereby restrict its
freedom to dispose of or alienate its property right without due
process. It constitutes impairment of obligation of contracts,
which the Fundamental Law enjoins, and contravenes the
doctrine of prospective application of laws.10
This posture of petitioner would clearly contradict the

established legal doctrine that statutes are to be construed as
having only a prospective operation unless the contrary is
expressly stated or necessarily implied from the language used
in the law. As reiterated in the case of Segovia v. Noel, 11 a sound
cannon of statutory construction is that a statute operates
prospectively only and never retroactively, unless the legislative
intent to the contrary is made manifest either by the express
terms of the statute or by necessary implication.
Hence, the instant Petition.

The pivotal issue to be resolved herein involves the propriety of
the application to the Columbio FTAA of Republic Act No. 7942
or the Philippine Mining Act of 1995, particularly Section 40
thereof requiring the approval of the President of the assignment
or transfer of financial or technical assistance agreements.
Petitioner maintains that respondents failed to comprehend the
express language of Section 40 of the Philippine Mining Act of
1995 requiring the approval of the President on the transfer or
assignment of a financial or technical assistance agreement.
To resolve this matter, it is imperative at this point to stress the
fact that the Columbio FTAA was entered into by the Philippine
Government and WMC Philippines on 22 March 1995,
undoubtedly before the Philippine Mining Act of 1995 took
effect on 14 April 1995. Furthermore, it is undisputed that said
FTAA was granted in accordance with Executive Order No. 279
and Department Administrative Order No. 63, Series of 1991,
which does not contain any similar condition on the transfer or
assignment of financial or technical assistance agreements. Thus,
it would seem that what petitioner would want this Court to
espouse is the retroactive application of the Philippine Mining
Article 4 of the Civil Code provides that: "Laws shall not have a
retroactive effect unless therein otherwise provided." According
to this provision of law, in order that a law may have retroactive
effect it is necessary that an express provision to this effect be
made in the law, otherwise nothing should be understood which
is not embodied in the law.12 Furthermore, it must be borne in
mind that a law is a rule established to guide our actions without
no binding effect until it is enacted, wherefore, it has no
application to past times but only to future time, and that is why
it is said that the law looks to the future only and has no
retroactive effect unless the legislator may have formally given
that effect to some legal provisions.13
In the case at bar, there is an absence of either an express
declaration or an implication in the Philippine Mining Act of
1995 that the provisions of said law shall be made to apply
retroactively, therefore, any section of said law must be made to
apply only prospectively, in view of the rule that a statute ought
not to receive a construction making it act retroactively, unless
the words used are so clear, strong, and imperative that no other
meaning can be annexed to them, or unless the intention of the

legislature cannot be otherwise satisfied.14
Be that as it may, assuming for the sake of argument that We are
to apply the Philippine Mining Act of 1995 retrospectively to the
Columbio FTAA, the lack of presidential approval will not be
fatal as to render the transfer illegal, especially since, as in the
instant case, the alleged lack of presidential approval has been
remedied when petitioner appealed the matter to the Office of
the President which approved the Order of the DENR Secretary
granting the application for transfer of the Columbio FTAA to
Sagittarius Mines, Inc. As expounded by the Court in the
Resolution of the Motion for Reconsideration in the La BugalBLaan Tribal Association, Inc. v. Ramos[15]case, involving the
same FTAA subject of the instant case:
x x x Moreover, when the transferee of an FTAA is another
foreign corporation, there is a logical application of the
requirement of prior approval by the President of the Republic
and notification to Congress in the event of assignment or
transfer of an FTAA. In this situation, such approval and
notification are appropriate safeguards, considering that the new
contractor is the subject of a foreign government.1wphi1
On the other hand, when the transferee of the FTAA
happens to be a Filipino corporation, the need for such
safeguard is not critical; hence, the lack of prior approval
and notification may not be deemed fatal as to render the
transfer invalid. Besides, it is not as if approval by the
President is entirely absent in this instance. x x x That case
involved the review of the Decision of the Court of Appeals
dated November 21, 2003 in CA G.R. SP No. 74161, which
affirmed the DENR Order dated December 31, 2001 and the
Decision of the Office of the President dated July 23, 2002, both
approving the assignment of the WMCP FTAA to
Sagittarius.16 (Emphasis ours.)
Furthermore, if petitioner was indeed of the mind that Section 40
of the Philippine Mining Act of 1995 is applicable to the
Columbio FTAA, thus necessitating the approval of the
President for the validity of its transfer or assignment, it would
seem contradictory that petitioner sought the approval of the
DENR Secretary, and not that of the President, of its 12 July
2000 Sale and Purchase Agreement with WMC Resources.
Hence, it may be glimpsed from the very act of petitioner that it
recognized that the provision of the Columbio FTAA regarding
the consent of the DENR Secretary with respect to the transfer
of said FTAA must be upheld.
It is engrained in jurisprudence that the constitutional prohibition
on the impairment of the obligation of contract does not prohibit
every change in existing laws,17 and to fall within the
prohibition, the change must not only impair the obligation of
the existing contract, but the impairment must be substantial.18
Substantial impairment as conceived in relation to impairment of
contracts has been explained in the case of Clemons v. Nolting, 19
which stated that: a law which changes the terms of a legal
contract between parties, either in the time or mode of
performance, or imposes new conditions, or dispenses with those
expressed, or authorizes for its satisfaction something different
from that provided in its terms, is law which impairs the
obligation of a contract and is therefore null and void. Section 40
of the Philippine Mining Act of 1995 requiring the approval of
the President with respect to assignment or transfer of FTAAs, if
made applicable retroactively to the Columbio FTAA, would be
tantamount to an impairment of the obligations under said
contract as it would effectively restrict the right of the parties

thereto to assign or transfer their interests in the said FTAA.
By imposing a new condition apart from those already contained
in the agreement, before the parties to the Columbio FTAA may
assign or transfer its rights and interest in the said agreement,
Section 40 of the Philippine Mining Act of 1995, if made to
apply to the Columbio FTAA,
will effectively modify the terms of the original contract and
thus impair the obligations of the parties thereto and restrict the
exercise of their vested rights under the original agreement. Such
modification to the Columbio FTAA, particularly in the
conditions imposed for its valid transfer is equivalent to an
impairment of said contract violative of the Constitution.
WHEREFORE, premises considered, the instant petition is
hereby DENIED. The Decision of the Court of Appeals in CA
G.R. SP No. 74161 dated 21 November 2003 is hereby
AFFIRMED. Costs against petitioner.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
Before us is a petition for review[1] on certiorari assailing the

decision[2] dated May 28, 2001 of the Regional Trial Court of
Davao City, Branch 33, which granted the writ of mandamus and
injunction in favor of respondent, the City of Davao, and against
petitioner, the Republic, represented by the Department of
Environment and Natural Resources (DENR). The trial court
also directed petitioner to issue a Certificate of Non-Coverage in
favor of respondent.
The antecedent facts of the case are as follows:
FIRST DIVISION
[G.R. No. 148622. September 12, 2002]
REPUBLIC OF THE PHILIPPINES, represented by HON.
HEHERSON T. ALVAREZ, in his capacity as Secretary of
the
DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES (DENR), CLARENCE L. BAGUILAT, in his
capacity as the Regional Executive Director of DENR-Region
XI
and ENGR. BIENVENIDO L. LIPAYON, in his capacity as
the
Regional Director of the DENR-ENVIRONMENTAL
MANAGEMENT BUREAU (DENR-EMB), Region XI,
petitioners, vs.
THE CITY OF DAVAO, represented by BENJAMIN C. DE
GUZMAN, City Mayor, respondent.
DECISION
YNARES-SANTIAGO, J.:
On August 11, 2000, respondent filed an application for a

Certificate of Non-Coverage (CNC) for its proposed project, the
Davao City Artica Sports Dome, with the Environmental
Management Bureau (EMB), Region XI. Attached to the
application were the required documents for its issuance,
namely, a) detailed location map of the project site; b) brief
project description; and c) a certification from the City Planning
and Development Office that the project is not located in an
environmentally critical area (ECA). The EMB Region XI
denied the application after finding that the proposed project was
within an environmentally critical area and ruled that, pursuant
to Section 2, Presidential Decree No. 1586, otherwise known as
the Environmental Impact Statement System, in relation to
Section 4 of Presidential Decree No, 1151, also known as the
Philippine Environment Policy, the City of Davao must undergo
the environmental impact assessment (EIA) process to secure an
Environmental Compliance Certificate (ECC), before it can
proceed with the construction of its project.
Believing that it was entitled to a Certificate of NonCoverage, respondent filed a petition for mandamus and
injunction with the Regional Trial Court of Davao, docketed as
Civil Case No. 28,133-2000. It alleged that its proposed project

was neither an environmentally critical project nor within an
environmentally critical area; thus it was outside the scope of the
EIS system. Hence, it was the ministerial duty of the DENR,
through the EMB-Region XI, to issue a CNC in favor of
respondent upon submission of the required documents.
The Regional Trial Court rendered judgment in favor of
respondent, the dispositive portion of which reads as follows:
the EIS law. Only agencies and instrumentalities of the national

government, including government owned or controlled
corporations, as well as private corporations, firms and entities
are mandated to go through the EIA process for their proposed
projects which have significant effect on the quality of the
environment. A local government unit, not being an agency or
instrumentality of the National Government, is deemed excluded
under the principle of expressio unius est exclusio alterius.
1) directing the respondents to issue in favor of the petitioner

City of Davao a Certificate of Non-Coverage, pursuant to
Presidential Decree No. 1586 and related laws, in connection
with the construction by the City of Davao of the Artica Sports
Dome;
The trial court also declared, based on the certifications of

the DENR-Community Environment and Natural Resources
Office (CENRO)-West, and the data gathered from the
Philippine Institute of Volcanology and Seismology
(PHIVOLCS), that the site for the Artica Sports Dome was not
within an environmentally critical area. Neither was the project
an environmentally critical one. It therefore becomes mandatory
for the DENR, through the EMB Region XI, to approve
respondents application for CNC after it has satisfied all the
requirements for its issuance. Accordingly, petitioner can be
compelled by a writ of mandamus to issue the CNC, if it refuses
to do so.
2) making the preliminary injunction issued on December 12,

2000 permanent.
Petitioner filed a motion for reconsideration, however, the

same was denied. Hence, the instant petition for review.
Costs de oficio.
With the supervening change of administration, respondent,

in lieu of a comment, filed a manifestation expressing its
agreement with petitioner that, indeed, it needs to secure an ECC
for its proposed project. It thus rendered the instant petition
moot and academic. However, for the guidance of the
implementors of the EIS law and pursuant to our symbolic
function to educate the bench and bar,[4] we are inclined to
address the issue raised in this petition.
WHEREFORE, finding the petition to be meritorious, judgment

granting the writ of mandamus and injunction is hereby rendered
in favor of the petitioner City of Davao and against respondents
Department of Environment and Natural Resources and the other
respondents by:
SO ORDERED.[3]
The trial court ratiocinated that there is nothing in PD 1586,
in relation to PD 1151 and Letter of Instruction No. 1179
(prescribing guidelines for compliance with the EIA system),
which requires local government units (LGUs) to comply with
Section 15 of Republic Act 7160,[5] otherwise known as the

Local Government Code, defines a local government unit as a
body politic and corporate endowed with powers to be exercised
by it in conformity with law. As such, it performs dual functions,
governmental and proprietary. Governmental functions are those
that concern the health, safety and the advancement of the public
good or welfare as affecting the public generally.[6] Proprietary
functions are those that seek to obtain special corporate benefits
or earn pecuniary profit and intended for private advantage and
benefit.[7] When exercising governmental powers and performing
governmental duties, an LGU is an agency of the national
government.[8] When engaged in corporate activities, it acts as an
agent of the community in the administration of local affairs.[9]
Found in Section 16 of the Local Government Code is the
duty of the LGUs to promote the peoples right to a balanced
ecology.[10] Pursuant to this, an LGU, like the City of Davao, can
not claim exemption from the coverage of PD 1586. As a body
politic endowed with governmental functions, an LGU has the
duty to ensure the quality of the environment, which is the very
same objective of PD 1586.
Further, it is a rule of statutory construction that every part
of a statute must be interpreted with reference to the context, i.e.,
that every part must be considered with other parts, and kept
subservient to the general intent of the enactment.[11] The trial
court, in declaring local government units as exempt from the
coverage of the EIS law, failed to relate Section 2 of PD 1586 [12]
to the following provisions of the same law:
WHEREAS, the pursuit of a comprehensive and integrated
environmental protection program necessitates the establishment
and institutionalization of a system whereby the exigencies of
socio-economic undertakings can be reconciled with the

requirements of environmental quality; x x x.
Section 1. Policy. It is hereby declared the policy of the State to
attain and maintain a rational and orderly balance between socioeconomic growth and environmental protection.
xxxxxxxxx
Section 4. Presidential Proclamation of Environmentally
Critical Areas and Projects. The President of the Philippines
may, on his own initiative or upon recommendation of the
National Environmental Protection Council, by proclamation
declare certain projects, undertakings or areas in the country as
environmentally critical. No person, partnership or corporation
shall undertake or operate any such declared environmentally
critical project or area without first securing an Environmental
Compliance Certificate issued by the President or his duly
authorized representative. For the proper management of said
critical project or area, the President may by his proclamation
reorganize such government offices, agencies, institutions,
corporations or instrumentalities including the realignment of
government personnel, and their specific functions and
responsibilities.
Section 4 of PD 1586 clearly states that no person,
partnership or corporation shall undertake or operate any such
declared environmentally critical project or area without first
securing an Environmental Compliance Certificate issued by the
President or his duly authorized representative. [13] The Civil
Code defines a person as either natural or juridical. The state and
its political subdivisions, i.e., the local government units [14] are
juridical persons.[15] Undoubtedly therefore, local government
units are not excluded from the coverage of PD 1586.

Lastly, very clear in Section 1 of PD 1586 that said law
intends to implement the policy of the state to achieve a balance
between socio-economic development and environmental
protection, which are the twin goals of sustainable development.
The above-quoted first paragraph of the Whereas clause stresses
that this can only be possible if we adopt a comprehensive and
integrated environmental protection program where all the
sectors of the community are involved, i.e., the government and
the private sectors. The local government units, as part of the
machinery of the government, cannot therefore be deemed as
outside the scope of the EIS system.[16]
The foregoing arguments, however, presuppose that a
project, for which an Environmental Compliance Certificate is
necessary, is environmentally critical or within an
environmentally critical area. In the case at bar, respondent has
sufficiently shown that the Artica Sports Dome will not have a
significant negative environmental impact because it is not an
environmentally critical project and it is not located in an
environmentally critical area. In support of this contention,
respondent submitted the following:
1. Certification from the City Planning and Development Office
that the project is not located in an environmentally critical area;
2. Certification from the Community Environment and Natural
Resources Office (CENRO-West) that the project area is within
the 18-30% slope, is outside the scope of the NIPAS (R.A.
7586), and not within a declared watershed area; and
3. Certification from PHILVOCS that the project site is thirty-
seven (37) kilometers southeast of the southernmost extension of

the Davao River Fault and forty-five (45) kilometers west of the
Eastern Mindanao Fault; and is outside the required minimum
buffer zone of five (5) meters from a fault zone.
The trial court, after a consideration of the evidence, found
that the Artica Sports Dome is not within an environmentally
critical area. Neither is it an environmentally critical project. It is
axiomatic that factual findings of the trial court, when fully
supported by the evidence on record, are binding upon this Court
and will not be disturbed on appeal.[17] This Court is not a trier of
facts.[18]
There are exceptional instances when this Court may
disregard factual findings of the trial court, namely: a) when the
conclusion is a finding grounded entirely on speculations,
surmises, or conjectures; b) when the inference made is
manifestly mistaken, absurd, or impossible; c) where there is a
grave abuse of discretion; d) when the judgment is based on a
misapprehension of facts; e) when the findings of fact are
conflicting; f) when the Court of Appeals, in making its findings,
went beyond the issues of the case and the same are contrary to
the admissions of both appellant and appellee; g) when the
findings of the Court of Appeals are contrary to those of the trial
court; h) when the findings of fact are conclusions without
citation of specific evidence on which they are based; i) when
the finding of fact of the Court of Appeals is premised on the
supposed absence of evidence but is contradicted by the
evidence on record; and j) when the Court of Appeals manifestly
overlooked certain relevant facts not disputed by the parties and
which, if properly considered, would justify a different
conclusion.[19] None of these exceptions, however, obtain in this
case.
The Environmental Impact Statement System, which

ensures environmental protection and regulates certain
government activities affecting the environment, was established
by Presidential Decree No. 1586. Section 2 thereof states:
There is hereby established an Environmental Impact Statement
System founded and based on the environmental impact
statement required under Section 4 of Presidential Decree No.
1151, of all agencies and instrumentalities of the national
government, including government-owned or controlled
corporations, as well as private corporations, firms and entities,
for every proposed project and undertaking which significantly
affect the quality of the environment.
Section 4 of PD 1151, on the other hand, provides:
Environmental Impact Statements. Pursuant to the above
enunciated policies and goals, all agencies and instrumentalities
of the national government, including government-owned or
controlled corporations, as well as private corporations, firms
and entities shall prepare, file and include in every action,
project or undertaking which significantly affects the quality of
the environment a detailed statement on
(a) the environmental impact of the proposed action, project or
undertaking
the environment are consistent with the maintenance and

enhancement of the long-term productivity of the same; and
(e) whenever a proposal involves the use of depletable or
nonrenewable resources, a finding must be made that such use
and commitment are warranted.
Before an environmental impact statement is issued by a lead
agency, all agencies having jurisdiction over, or special expertise
on, the subject matter involved shall comment on the draft
environmental impact statement made by the lead agency within
thirty (30) days from receipt of the same.
Under Article II, Section 1, of the Rules and Regulations
Implementing PD 1586, the declaration of certain projects or
areas as environmentally critical, and which shall fall within the
scope of the Environmental Impact Statement System, shall be
by Presidential Proclamation, in accordance with Section 4 of
PD 1586 quoted above.
Pursuant thereto, Proclamation No. 2146 was issued on
December 14, 1981, proclaiming the following areas and types
of projects as environmentally critical and within the scope of
the Environmental Impact Statement System established under
PD 1586:
A. Environmentally Critical Projects
(b) any adverse environmental effect which cannot be avoided

should the proposal be implemented
I. Heavy Industries
(c) alternative to the proposed action
a. Non-ferrous metal industries
(d) a determination that the short-term uses of the resources of
b. Iron and steel mills
a. Major dams
c. Petroleum and petro-chemical industries including oil

and gas
b. Major power plants (fossil-fueled, nuclear fueled,

hydroelectric or geothermal)
d. Smelting plants
c. Major reclamation projects
II. Resource Extractive Industries
d. Major roads and bridges
a. Major mining and quarrying projects
B. Environmentally Critical Areas
b. Forestry projects
1. All areas declared by law as national parks, watershed

reserves, wildlife preserves and sanctuaries;
1.Logging
2. Areas set aside as aesthetic potential tourist spots;
2.Major wood processing projects
3.Introduction of fauna
public/private forests
(exotic-animals)
4. Forest occupancy
5. Extraction of mangrove products
6. Grazing
in
3. Areas which constitute the habitat for any endangered or

threatened species of indigenous Philippine Wildlife (flora
and fauna);
4. Areas of unique historic, archaeological, or scientific
interests;
5. Areas which are traditionally occupied by cultural
communities or tribes;
1. Dikes for/and fishpond development projects
6. Areas frequently visited and/or hard-hit by natural

calamities (geologic hazards, floods, typhoons, volcanic
activity, etc.);
III. Infrastructure Projects
7. Areas with critical slopes;
c. Fishery Projects
8. Areas classified as prime agricultural lands;
a. with 50% and above live coralline cover;
9. Recharged areas of aquifers;
b. spawning and nursery grounds for fish;
10. Water bodies characterized by one or any combination of the

following conditions;
c. which act as natural breakwater of coastlines.

In this connection, Section 5 of PD 1586 expressly states:
a. tapped for domestic purposes

b. within the controlled and/or protected areas declared
by appropriate authorities
c. which support wildlife and fishery activities
11. Mangrove areas characterized by one or any combination of
the following conditions:
a. with primary pristine and dense young growth;
b. adjoining mouth of major river systems;
c. near or adjacent to traditional productive fry or
fishing grounds;
d. which act as natural buffers against shore erosion,
strong winds and storm floods;
e. on which people are dependent for their livelihood.
12. Coral reefs, characterized by one or any combinations of the
following conditions:
Environmentally Non-Critical Projects. All other projects,

undertakings and areas not declared by the President as
environmentally critical shall be considered as non-critical and
shall not be required to submit an environmental impact
statement. The National Environmental Protection Council, thru
the Ministry of Human Settlements may however require noncritical projects and undertakings to provide additional
environmental safeguards as it may deem necessary.
The Artica Sports Dome in Langub does not come close to
any of the projects or areas enumerated above. Neither is it
analogous to any of them. It is clear, therefore, that the said
project is not classified as environmentally critical, or within an
environmentally critical area. Consequently, the DENR has no
choice but to issue the Certificate of Non-Coverage. It becomes
its ministerial duty, the performance of which can be compelled
by writ of mandamus, such as that issued by the trial court in the
case at bar.
WHEREFORE, in view of the foregoing, the instant
petition is DENIED. The decision of the Regional Trial Court of
Davao City, Branch 33, in Civil Case No. 28,133-2000, granting
the writ of mandamus and directing the Department of
Environment and Natural Resources to issue in favor of the City
of Davao a Certificate of Non-Coverage, pursuant to Presidential
Decree No. 1586 and related laws, in connection with the

construction of the Artica Sports Dome, is AFFIRMED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, and Carpio, JJ.,
concur.
PROVINCE OF RIZAL, MUNICIPALITY OF SAN

MATEO,
PINTONG
BOCAUE
MULTIPURPOSE
COOPERATIVE, CONCERNED CITIZENS OF RIZAL,
INC., ROLANDO E. VILLACORTE, BERNARDO
HIDALGO, ANANIAS EBUENGA, VILMA T. MONTAJES,
FEDERICO MUNAR, JR., ROLANDO BEAS, SR., ET
AL., and KILOSBAYAN, INC., Petitioners,
vs.
EXECUTIVE
SECRETARY,
SECRETARY
OF
ENVIRONMENT & NATURAL RESOURCES, LAGUNA
LAKE DEVELOPMENT AUTHORITY, SECRETARY OF
PUBLIC WORKS & HIGHWAYS, SECRETARY OF
BUDGET & MANAGEMENT, METRO MANILA
DEVELOPMENT AUTHORITY and THE HONORABLE
COURT OF APPEALS, Respondents.
DECISION
CHICO-NAZARIO, J.:
The earth belongs in usufruct to the living.1

SUPREME COURT
EN BANC
G.R. No. 129546 December 13, 2005
At the height of the garbage crisis plaguing Metro Manila and its
environs, parts of the Marikina Watershed Reservation were set
aside by the Office of the President, through Proclamation No.
635 dated 28 August 1995, for use as a sanitary landfill and
similar waste disposal applications. In fact, this site, extending to
more or less 18 hectares, had already been in operation since 19
February 19902 for the solid wastes of Quezon City, Marikina,
San Juan, Mandaluyong, Pateros, Pasig, and Taguig.3
This is a petition filed by the Province of Rizal, the municipality
of San Mateo, and various concerned citizens for review on
certiorari of the Decision of the Court of Appeals in CA-G.R.

SP No. 41330, denying, for lack of cause of action, the petition
for certiorari, prohibition and mandamus with application for a
temporary restraining order/writ of preliminary injunction
assailing the legality and constitutionality of Proclamation No.
635.
The facts are documented in painstaking detail.
On 17 November 1988, the respondent Secretaries of the
Department of Public Works and Highways (DPWH) and the
Department of Environment and Natural Resources (DENR) and
the Governor of the Metropolitan Manila Commission (MMC)
entered into a Memorandum of Agreement (MOA), 4 which
provides in part:
1. The DENR agrees to immediately allow the utilization by the
Metropolitan Manila Commission of its land property located at
Pintong Bocaue in San Mateo, Rizal as a sanitary landfill site,
subject to whatever restrictions that the government impact
assessment might require.
2. Upon signing of this Agreement, the DPWH shall commence
the construction/development of said dumpsite.
3. The MMC shall: a) take charge of the relocation of the
families within and around the site; b) oversee the development
of the areas as a sanitary landfill; c) coordinate/monitor the
construction of infrastructure facilities by the DPWH in the said
site; and d) ensure that the necessary civil works are properly
undertaken to safeguard against any negative environmental
impact in the area.
On 7, 8 and 10 February 1989, the Sangguniang Bayan of San

Mateo wrote Gov. Elfren Cruz of the MMC, Sec. Fiorello Estuar
of the DPWH, the Presidential Task Force on Solid Waste
Management, Executive Secretary Catalino Macaraig, and Sec.
Fulgencio Factoran, Jr., pointing out that it had recently passed a
Resolution banning the creation of dumpsites for Metro Manila
garbage within its jurisdiction, asking that their side be heard,
and that the addressees "suspend and temporarily hold in
abeyance all and any part of your operations with respect to the
San Mateo Landfill Dumpsite." No action was taken on these
letters.
It turns out that the land subject of the MOA of 17 November
1988 and owned by the DENR was part of the Marikina
Watershed Reservation Area. Thus, on 31 May 1989, forest
officers of the Forest Engineering and Infrastructure Unit of the
Community Environment and Natural Resource Office,
(CENRO) DENR-IV, Rizal Province, submitted a Memorandum5
on the "On-going Dumping Site Operation of the MMC inside
(the) Upper Portion of Marikina Watershed Reservation, located
at Barangay Pintong Bocaue, San Mateo, Rizal, and nearby
localities." Said Memorandum reads in part:
Observations:
3.1 The subject area is arable and agricultural in nature;
3.2 Soil type and its topography are favorable for agricultural
and forestry productions;
...
3.5 Said Dumping Site is observed to be confined within the
said Watershed Reservation, bearing in the northeastern part of

Lungsod Silangan Townsite Reservation. Such illegal Dumping
Site operation inside (the) Watershed Reservation is in
violation of P.D. 705, otherwise known as the Revised
Forestry Code,as amended. . .
Recommendations:
5.1 The MMC Dumping Site Inside Marikina Watershed
Reservation, particularly at Brgy. Pintong Bocaue, San Mateo,
Rizal and at Bo. Pinugay, Baras/Antipolo, Rizal which are the
present garbage zones must totally be stopped and
discouraged without any political intervention and delay in
order to save our healthy ecosystems found therein, to avoid
much destruction, useless efforts and lost (sic) of millions of
public funds over the land in question; (Emphasis ours)
On 19 June 1989, the CENRO submitted another Investigation
Report6 to the Regional Executive Director which states in part
that:
1. About two (2) hectares had been excavated by bulldozers and
garbage dumping operations are going on.
2. The dumping site is without the concurrence of the Provincial
Governor, Rizal Province and without any permit from DENR
who has functional jurisdiction over the Watershed Reservation;
and
3. About 1,192 families residing and cultivating areas covered
by four (4) Barangays surrounding the dumping site will
adversely be affected by the dumping operations of MMC
including their sources of domestic water supply. x x x x
On 22 January 1990, the CENRO submitted still another

Investigation Report7 to the Regional Executive Director which
states that:
Findings show that the areas used as Dumping Site of the MMC
are found to be within the Marikina Watershed which are part of
the Integrated Social Forestry Project (ISF) as per recorded
inventory of Forest Occupancy of this office.
It also appears that as per record, there was no permit issued to
the MMC to utilize these portions of land for dumping purposes.
It is further observed that the use of the areas as dumping site
greatly affects the ecological balance and environmental factors
in this community.
On 19 February 1990, the DENR Environmental Management
Bureau, through Undersecretary for Environment and Research
Celso R. Roque, granted the Metro Manila Authority (MMA
[formerly MMC]) an Environmental Compliance Certificate
(ECC) for the operation of a two-and-a-half-hectare garbage
dumpsite.
The ECC was sought and granted to comply with the
requirement of Presidential Decree No. 1586 "Establishing an
Environmental Impact Statement System," Section 4 of which
states in part that, "No persons, partnership or corporation shall
undertake or operate any such declared environmentally critical
project or area without first securing an Environmental
Compliance Certificate." Proclamation No. 2146, passed on 14
December 1981, designates "all areas declared by law as
national parks, watershed reserves, wildlife preserves, and
sanctuaries" as "Environmentally Critical Areas."
On 09 March 1990, respondent Laguna Lake Development

Authority (LLDA), through its Acting General Manager, sent a
letter8 to the MMA, which reads in part:
Through this letter we would like to convey our reservation on
the choice of the sites for solid waste disposal inside the
watershed of Laguna Lake. As you may already know, the
Metropolitan Waterworks and Sewerage System (MWSS)
has scheduled the abstraction of water from the lake to serve
the needs of about 1.2 million residents of Muntinlupa,
Paranaque, Las Pinas and Bacoor, Cavite by 1992.
Accordingly, the Laguna Lake Development Authority (LLDA)
is accelerating its environmental management program to
upgrade the water quality of the lake in order to make it
suitable as a source of domestic water supplythe whole year
round. The said program regards dumpsites as incompatible
within the watershed because of the heavy pollution,
including the risk of diseases, generated by such activities
which would negate the governments efforts to upgrade the
water quality of the lake. Consequently, please consider our
objection to the proposed location of the dumpsites within the
watershed. (Emphasis supplied by petitioners)
On 31 July 1990, less than six months after the issuance of the
ECC, Undersecretary Roque suspended the ECC in a letter 9
addressed to the respondent Secretary of DPWH, stating in part
that:
Upon site investigation conducted by Environmental
Management Bureau staff on development activities at the San
Mateo Landfill Site, it was ascertained that ground slumping
and erosion have resulted from improper development of the
site. We believe that this will adversely affect the environmental
quality in the area if the proper remedial measures are not

instituted in the design of the landfill site. This is therefore
contradictory to statements made in the Environmental Impact
Statement (EIS) submitted that above occurrences will be
properly mitigated.
In view of this, we are forced to suspend the Environmental
Compliance Certificate (ECC) issued until appropriate modified
plans are submitted and approved by this Office for
implementation. (Emphasis ours)
On 21 June 1993, the Acting Mayor of San Mateo, Enrique
Rodriguez, Jr., Barangay Captain Dominador Vergara, and
petitioner Rolando E. Villacorte, Chairman of the Pintong
Bocaue Multipurpose Cooperative (PBMC) wrote 10then
President Fidel V. Ramos expressing their objections to the
continued operation of the MMA dumpsite for causing
"unabated pollution and degradation of the Marikina Watershed
Reservation."
On 14 July 1993, another Investigation Report11 submitted by the
Regional Technical Director to the DENR Undersecretary for
Environment and Research contained the following findings and
recommendations:
Remarks and Findings:
....
5. Interview with Mr. Dayrit, whose lot is now being endangered
because soil erosion have (sic) caused severe siltation and
sedimentation of the Dayrit Creek which water is greatly
polluted by the dumping of soil bulldozed to the creek;
6. Also interview with Mrs. Vilma Montajes, the multi-grade

teacher of Pintong Bocaue Primary School which is located only
about 100 meters from the landfill site. She disclosed that bad
odor have (sic) greatly affected the pupils who are sometimes
sick with respiratory illnesses. These odors show that MMA
have (sic) not instituted/sprayed any disinfectant chemicals to
prevent air pollution in the area. Besides large flies (Bangaw) are
swarming all over the playground of the school. The teacher also
informed the undersigned that plastic debris are being blown
whenever the wind blows in their direction.
7. As per investigation report there are now 15 hectares being
used as landfill disposal sites by the MMA. The MMA is
intending to expand its operation within the 50 hectares.
8. Lots occupied within 50 hectares are fully planted with fruit
bearing trees like Mangoes, Santol, Jackfruit, Kasoy, Guyabano,
Kalamansi and Citrus which are now bearing fruits and being
harvested and marketed to nearby San Mateo Market and
Masinag Market in Antipolo.
....
Recommendations:
1. As previously recommended, the undersigned also strongly
recommend(s) that the MMA be made to relocate the landfill site
because the area is within the Marikina Watershed Reservation
and Lungsod Silangan. The leachate treatment plant ha(s) been
eroded twice already and contaminated the nearby creeks which
is the source of potable water of the residents. The contaminated
water also flows to Wawa Dam and Boso-boso River which also
flows to Laguna de Bay.
2. The proposed Integrated Social Forestry Project be pushed

through or be approved. ISF project will not only uplift the
socio-economic conditions of the participants but will enhance
the rehabilitation of the Watershed considering that fruit bearing
trees are vigorously growing in the area. Some timber producing
species are also planted like Mahogany and Gmelina Arboiea.
There are also portions where dipterocarp residuals abound in
the area.
3. The sanitary landfill should be relocated to some other area, in
order to avoid any conflict with the local government of San
Mateo and the nearby affected residents who have been in the
area for almost 10-20 years.
On 16 November 1993, DENR Secretary Angel C. Alcala sent
MMA Chairman Ismael A. Mathay, Jr. a letter 12stating that "after
a series of investigations by field officials" of the DENR, the
agency realized that the MOA entered into on 17 November
1988 "is a very costly error because the area agreed to be a
garbage dumpsite is inside the Marikina Watershed
Reservation." He then strongly recommended that all facilities
and infrastructure in the garbage dumpsite in Pintong Bocaue be
dismantled, and the garbage disposal operations be transferred to
another area outside the Marikina Watershed Reservation to
protect "the health and general welfare of the residents of San
Mateo in particular and the residents of Metro Manila in
general."
On 06 June 1995, petitioner Villacorte, Chairman of the PBMC,
wrote13 President Ramos, through the Executive Secretary,
informing the President of the issues involved, that the dumpsite
is located near three public elementary schools, the closest of
which is only fifty meters away, and that its location "violates
the municipal zoning ordinance of San Mateo and, in truth, the

Housing and Land Use Regulatory Board had denied the then
MMA chairmans application for a locational clearance on this
ground."
On 21 August 1995, the Sangguniang Bayan of San Mateo
issued a Resolution14 "expressing a strong objection to the
planned expansion of the landfill operation in Pintong Bocaue
and requesting President Ramos to disapprove the draft
Presidential Proclamation segregating 71.6 Hectares from
Marikina Watershed Reservation for the landfill site in Pintong
Bocaue, San Mateo, Rizal."
Despite the various objections and recommendations raised by
the government agencies aforementioned, the Office of the
President, through Executive Secretary Ruben Torres, signed and
issued Proclamation No. 635 on 28 August 1995, "Excluding
from the Marikina Watershed Reservation Certain Parcels of
Land Embraced Therein for Use as Sanitary Landfill Sites and
Similar Waste Disposal Under the Administration of the
Metropolitan Manila Development Authority." The pertinent
portions thereof state:
WHEREAS, to cope with the requirements of the growing
population in Metro Manila and the adjoining provinces and
municipalities, certain developed and open portions of the
Marikina Watershed Reservation, upon the recommendation of
the Secretary of the Department of Environment and Natural
Resources should now be excluded form the scope of the
reservation;
WHEREAS, while the areas delineated as part of the Watershed
Reservations are intended primarily for use in projects and/or
activities designed to contain and preserve the underground

water supply, other peripheral areas had been included within the
scope of the reservation to provide for such space as may be
needed for the construction of the necessary structures, other
related facilities, as well as other priority projects of government
as may be eventually determined;
WHEREAS, there is now an urgent need to provide for, and
develop, the necessary facilities for the disposal of the waste
generated by the population of Metro Manila and the adjoining
provinces and municipalities, to ensure their sanitary and /or
hygienic disposal;
WHEREAS, to cope with the requirements for the development
of the waste disposal facilities that may be used, portions of the
peripheral areas of the Marikina Watershed Reservation, after
due consideration and study, have now been identified as
suitable sites that may be used for the purpose;
WHEREAS, the Secretary of the Department of Environment
and Natural Resources has recommended the exclusion of these
areas that have been so identified from the Marikina Watershed
Reservation so that they may then be developed for the purpose;
NOW, THEREFORE, for and in consideration of the aforecited
premises, I, Fidel V. Ramos, President of the Philippines, by
virtue of the powers vested in me by law, do hereby ordain:
Section 1. General That certain parcels of land, embraced by
the Marikina Watershed Reservation, were found needed for use
in the solid waste disposal program of the government in
Metropolitan Manila, are hereby excluded from that which is
held in reserve and are now made available for use as sanitary
landfill and such other related waste disposal applications.

Section 2. Purpose The areas being excluded from the
Marikina Watershed Reservation are hereby placed under the
administration of the Metropolitan Manila Development
Authority, for development as Sanitary Landfill, and/or for use
in the development of such other related waste disposal facilities
that may be used by the cities and municipalities of Metro
Manila and the adjoining province of Rizal and its
municipalities.
Section 3. Technical Description Specifically, the areas being
hereby excluded from the Marikina Watershed Reservation
consist of two (2) parcels, with an aggregate area of
approximately ONE MILLION SIXTY THOUSAND FIVE
HUNDRED TWENTY NINE (1,060,529) square meters more or
less, as follows: x x x x
Section 4. Reservations The development, construction, use
and/or operation of any facility that may be established within
the parcel of land herein excluded from the Marikina Watershed
Reservation shall be governed by existing laws, rules and
regulations pertaining to environmental control and
management. When no longer needed for sanitary landfill
purposes or the related waste disposal activities, the parcels of
land subject of this proclamation shall revert back as part of the
Marikina Watershed Reservation, unless otherwise authorized.
On 06 September 1995, Director Wilfrido S. Pollisco of the
Protected Areas and Wildlife Bureau wrote the DENR Secretary
to express the bureaus stand against the dumpsite at Pintong
Bocaue, and that "it is our view . . . that the mere presence of a
garbage dumpsite inside a watershed reservation is definitely not
compatible with the very purpose and objectives for which the
reservation was established."
On 24 November 1995, the petitioners Municipality of San
Mateo and the residents of Pintong Bocaue, represented by
former Senator Jovito Salonga, sent a letter to President Ramos
requesting him to reconsider Proclamation No. 635. Receiving
no reply, they sent another letter on 02 January 1996 reiterating
their previous request.
On 04 March 1996, then chairman of the Metro Manila
Development Authority (MMDA [formerly MMA]) Prospero I.
Oreta addressed a letter to Senator Salonga, stating in part that:
.
2. Considering the circumstances under which we are pursuing
the project, we are certain you will agree that, unless we are
prepared with a better alternative, the project simply has to be
pursued in the best interest of the greater majority of the
population, particularly their health and welfare."
2.1 The San Mateo Sanitary Landfill services, at least, 38% of
the waste disposal site requirements of Metro Manila where an
estimated 9 million population reside.
2.2 Metro Manila is presently estimated to be generating, at
least, 15,700 cubic meters of household or municipal waste, a
1.57 hectare of land area will be filled in a months time with a
pile 31 meters high of garbage, or in a year, the accumulated
volume will require 18.2 hectares.
....
4. The sanitary landfill projects are now on their fifth year of

implementation. The amount of effort and money already
invested in the project by the government cannot easily be
disregarded, much more set aside in favor of the few
settlers/squatters who chose to ignore the earlier notice given to
them that the area would be used precisely for the development
of waste disposal sites, and are now attempting to arouse
opposition to the project.
usually made only two (2) trips daily. During the rainy season, it
could only be reached by equipping the vehicle with tire chains
to traverse the slippery muddy trail roads.
4.21.3 There was, at least, seventy-three (73) hectares available
at the site.
4.2 There is no place within the jurisdiction of Metro Manila,

with an area big enough to accommodate at least 3 to 5 years of
waste disposal requirements. x x x x
4.3 While the site was within the Marikina Watershed

Reservation under the administration of the DENR, the site was
located at the lower periphery of the buffer zone; was evaluated
to be least likely to affect the underground water supply; and
could, in fact, be excluded from the reservation.
4.21 The present site at San Mateo was selected because, at the
time consideration was being made, and up to the present, it is
found to have the attributes that positively respond to the criteria
established:
4.31 It was determined to be far from the main water

containment area for it to pose any immediate danger of
contaminating the underground water, in case of a failure in any
of the mitigating measures that would be installed.
4.21.1 The site was a government property and would not

require any outlay for it to be acquired.
4.32 It was likewise too far from the nearest body of water, the
Laguna Lake, and the distance, plus the increasing accumulation
of water from other tributaries toward the lake, would serve to
dilute and mitigate any contamination it may emit, in case one
happened.
4.21.2 It is far from any sizeable community/settlements that

could be affected by the development that would be introduced
and yet, was within economic hauling distance from the areas
they are designed to serve.
4.21.21 At the time it was originally decided to locate the
landfills at the present site, there were not more that fifteen (15)
settlers in the area and they had hardly established themselves.
The community settlements were located far from the site.
4.21.22 The area was hardly accessible, especially to any public
transport. The area was being served by a public utility jeep that
4.33 To resolve the recurring issue regarding its being located

within the Marikina Watershed Reservation, the site had been
recommended by the DENR, and approved by the President, to
already be excluded from the Marikina Watershed reservation
and placed under the administration of MMDA, since the site
was deemed to form part of the land resource reserve then
commonly referred to as buffer zone.
5. Contrary to the impression that you had been given, relocating
the site at this point and time would not be easy, if not
impracticable, because aside from the investments that had been
made in locating the present site, further investments have been
incurred in:
6.1 We are still hard pressed to achieve advanced development

on the sites to assure against any possible crisis in garbage from
again being experienced in Metro Manila, aside from having to
look for the additional sites that may be used after the capacities
shall have been exhausted.
5.1 The conduct of the technical studies for the development

being implemented. Through a grant-in-aid from the World
Bank, US$600,000 was initially spent for the conduct of the
necessary studies on the area and the design of the landfill. This
was augmented by, at least, another P1.5 million from the
government for the studies to be completed, or a total cost at the
time (1990) of approximately P20 million.
6.2 Faced with the prospects of having the 15,700 cubic meters
of garbage generated daily strewn all over Metro Manila, we are
certain you will agree that it would be futile to even as much as
consider a suspension of the waste disposal operations at the
sanitary landfills.
5.2. Additionally, the government has spent approximately P33

million in improving on the roadway to make the site accessible
from the main road/highway.
On 22 July 1996, the petitioners filed before the Court of

Appeals a civil action for certiorari, prohibition andmandamus
with application for a temporary restraining order/writ of
preliminary injunction. The hearing on the prayer for
preliminary injunction was held on 14 August 1996.
5.3 To achieve the necessary economies in the development of

the site, the utilities had been planned so that their use could be
maximized. These include the access roads, the drainage system,
the leacheate collection system, the gas collection system, and
the waste water treatment system. Their construction are
designed so that instead of having to construct independent units
for each area, the use of existing facilities can be maximized
through a system of interconnection. On the average, the
government is spending P14.8 million to develop a hectare of
sanitary landfill area.
6. Despite the preparations and the investments that are now
being made on the project, it is estimated that the total available
area, at an accelerated rate of disposal, assuming that all open
dump sites were to be closed, will only last for 39 months.
On 13 June 1997, the court a quo rendered a Decision,15 the

dispositive part of which reads:
WHEREFORE, the petition for certiorari, prohibition and
mandamus with application for a temporary restraining
order/writ of preliminary injunction for lack of cause of action,
is hereby DENIED.16
Hence, this petition for review on certiorari of the above
decision on the following grounds:
I
The Court of Appeals erred and abused its discretion in
deliberately ignoring the significant fact that Presidential
Proclamation No. 635 was based on a brazen forgery it was

supposedly issued, as stated in the proclamation itself and
repeatedly asserted by respondents in their comment, on the
basis of the alleged recommendation of the DENR Secretary
dated June 26, 1995 but which assertion was denounced by the
then Secretary Angel C. Alcala himself in a sworn statement
dated September 18, 1996 and again during the special hearing
of the case in the Court of Appeals on November 13, 1996 as a
forgery since his signature on the alleged recommendation had
been falsified, as now admitted by respondents themselves in
their comment filed with the Court of Appeals, through the
Office of the Solicitor General.
II
The Court of Appeals erred and abused its discretion in
completely ignoring the significant fact that the respondents are
operating the landfill based on a spurious Environmental
Compliance Certificate.
III
The Court of Appeals erred in ruling that the respondents did not
violate R.A. 7586 when they issued and implemented
Proclamation No. 635 considering that the withdrawal or
disestablishment of a protected area or the modification of the
Marikina Watershed can only be done by an act of Congress.
IV
The Court of Appeals erred and abused its discretion when it
deliberately and willfully brushed aside the unanimous findings
and adverse recommendations of responsible government
agencies and non-partisan officials concerned with

environmental protection in favor of the self-serving, gratuitous
assertions found in the unsolicited, partisan letter of former
Malabon Mayor, now Chairman Prospero Oreta of the MMDA
who is an interested party in this case.
V
The Court of Appeals erred when it readily swallowed
respondents assertion that the San Mateo Dumpsite "is located
in the Buffer Zone of the reservation" and is therefore outside
of its boundaries, and even declared in its decision that it took
"serious note" of this particular argument.
VI
The Court of Appeals erred and abused its discretion when it
encroached on the function of Congress by expressing its
unjustified fear of mini-smokey mountains proliferating in
Metro Manila and justifying its decision in favor of "an
integrated system of solid waste management like the San Mateo
Landfill.
On 05 January 1998, while the appeal was pending, the
petitioners filed a Motion for Temporary Restraining Order,17
pointing out that the effects of the El Nio phenomenon would
be aggravated by the relentless destruction of the Marikina
Watershed Reservation. They noted that respondent MMDA had,
in the meantime, continued to expand the area of the dumpsite
inside the Marikina Watershed Reservation, cutting down
thousands of mature fruit trees and forest trees, and leveling hills
and mountains to clear the dumping area. Garbage disposal
operations were also being conducted on a 24-hour basis, with
hundreds of metric tons of wastes being dumped daily, including

toxic and infectious hospital wastes, intensifying the air, ground
and water pollution.18
The petitioners reiterated their prayer that respondent MMDA be
temporarily enjoined from further dumping waste into the site
and from encroaching into the area beyond its existing perimeter
fence so as not to render the case moot and academic.
On 28 January 1999, the petitioners filed a Motion for Early
Resolution,19 calling attention to the continued expansion of the
dumpsite by the MMDA that caused the people of Antipolo to
stage a rally and barricade the Marcos Highway to stop the
dump trucks from reaching the site for five successive days from
16 January 1999. On the second day of the barricade, all the
municipal mayors of the province of Rizal openly declared their
full support for the rally, and notified the MMDA that they
would oppose any further attempt to dump garbage in their
province.20
As a result, MMDA officials, headed by then Chairman Jejomar
Binay, agreed to abandon the dumpsite after six months. Thus,
the municipal mayors of Rizal, particularly the mayors of
Antipolo and San Mateo, agreed to the use of the dumpsite until
that period, which would end on 20 July 1999.21
On 13 July 1999, the petitioners filed an Urgent Second Motion
for Early Resolution22 in anticipation of violence between the
conflicting parties as the date of the scheduled closure of the
dumpsite neared.
On 19 July 1999, then President Joseph E. Estrada, taking
cognizance of the gravity of the problems in the affected areas
and the likelihood that violence would erupt among the parties
involved, issued a Memorandum ordering the closure of the
dumpsite on 31 December 2000.23 Accordingly, on 20 July 1999,
the Presidential Committee on Flagship Programs and Projects
and the MMDA entered into a MOA with the Provincial
Government of Rizal, the Municipality of San Mateo, and the
City of Antipolo, wherein the latter agreed to further extend the
use of the dumpsite until its permanent closure on 31 December
2000.24
On 11 January 2001, President Estrada directed Department of
Interior and Local Government Secretary Alfredo Lim and
MMDA Chairman Binay to reopen the San Mateo dumpsite "in
view of the emergency situation of uncollected garbage in Metro
Manila, resulting in a critical and imminent health and sanitation
epidemic."25
Claiming the above events constituted a "clear and present
danger of violence erupting in the affected areas," the petitioners
filed an Urgent Petition for Restraining Order 26 on 19 January
2001.
On 24 January 2001, this Court issued the Temporary
Restraining Order prayed for, "effective immediately and until
further orders."27
Meanwhile, on 26 January 2001, Republic Act No. 9003,
otherwise known as "The Ecological Solid Waste Management
Act of 2000," was signed into law by President Estrada.
Thus, the petitioners raised only two issues in their
Memorandum28 of 08 February 2005: 1) whether or not
respondent MMDA agreed to the permanent closure of the San
Mateo Landfill as of December 2000, and 2) whether or not the

permanent closure of the San Mateo landfill is mandated by Rep.
Act No. 9003.
We hold that the San Mateo Landfill will remain permanently
closed.
Although the petitioners may be deemed to have waived or
abandoned the issues raised in their previous pleadings but not
included in the memorandum,29 certain events we shall relate
below have inclined us to address some of the more pertinent
issues raised in the petition for the guidance of the herein
respondents, and pursuant to our symbolic function to educate
the bench and bar.30
The law and the facts indicate that a mere MOA does not
guarantee the dumpsites permanent closure.
The rally and barricade staged by the people of Antipolo on 28
January 1999, with the full support of all the mayors of Rizal
Province caused the MMDA to agree that it would abandon the
dumpsite after six months. In return, the municipal mayors
allowed the use of the dumpsite until 20 July 1999.
On 20 July 1999, with much fanfare and rhetoric, the
Presidential Committee on Flagship Programs and Projects and
the MMDA entered into a MOA with the Provincial Government
of Rizal, the Municipality of San Mateo, and the City of
Antipolo, whereby the latter agreed to an extension for the use of
the dumpsite until 31 December 2000, at which time it would be
permanently closed.
Despite this agreement, President Estrada directed Department
of Interior and Local Government Secretary Alfredo Lim and

MMDA Chairman Binay to reopen the San Mateo dumpsite on
11 January 2001, "in view of the emergency situation of
uncollected garbage in Metro Manila, resulting in a critical and
imminent health and sanitation epidemic;" our issuance of a
TRO on 24 January 2001 prevented the dumpsites reopening.
Were it not for the TRO, then President Estradas instructions
would have been lawfully carried out, for as we observed in
Oposa v. Factoran, the freedom of contract is not absolute.
Thus:
.. In Abe vs. Foster Wheeler Corp., this Court stated: "The
freedom of contract, under our system of government, is not
meant to be absolute. The same is understood to be subject to
reasonable legislative regulation aimed at the promotion of
public health, moral, safety and welfare. In other words, the
constitutional guaranty of non-impairment of obligations of
contract is limited by the exercise of the police power of the
State, in the interest of public health, safety, moral and general
welfare." The reason for this is emphatically set forth inNebia
vs. New York, quoted in Philippine American Life Insurance Co.
vs. Auditor General, to wit: "'Under our form of government the
use of property and the making of contracts are normally matters
of private and not of public concern. The general rule is that both
shall be free of governmental interference. But neither property
rights nor contract rights are absolute; for government cannot
exist if the citizen may at will use his property to the detriment of
his fellows, or exercise his freedom of contract to work them
harm. Equally fundamental with the private right is that of the
public to regulate it in the common interest.'" In short, the nonimpairment clause must yield to the police power of the state.
(Citations omitted, emphasis supplied)
We thus feel there is also the added need to reassure the

residents of the Province of Rizal that this is indeed a final
resolution of this controversy, for a brief review of the records of
this case indicates two self-evident facts.First, the San Mateo
site has adversely affected its environs, and second, sources of
water should always be protected.
As to the first point, the adverse effects of the site were reported
as early as 19 June 1989, when the Investigation Report of the
Community Environment and Natural Resources Officer of
DENR-IV-1 stated that the sources of domestic water supply of
over one thousand families would be adversely affected by the
dumping operations.31The succeeding report included the
observation that the use of the areas as dumping site greatly
affected the ecological balance and environmental factors of the
community.32 Respondent LLDA in fact informed the MMA that
the heavy pollution and risk of disease generated by dumpsites
rendered the location of a dumpsite within the Marikina
Watershed Reservation incompatible with its program of
upgrading the water quality of the Laguna Lake.33
The DENR suspended the sites ECC after investigations
revealed ground slumping and erosion had resulted from
improper development of the site.34 Another Investigation
Report35 submitted by the Regional Technical Director to the
DENR reported respiratory illnesses among pupils of a primary
school located approximately 100 meters from the site, as well
as the constant presence of large flies and windblown debris all
over the schools playground. It further reiterated reports that the
leachate treatment plant had been eroded twice already,
contaminating the nearby creeks that were sources of potable
water for the residents. The contaminated water was also found
to flow to the Wawa Dam and Boso-boso River, which in turn
empties into Laguna de Bay.

This brings us to the second self-evident point. Water is life, and
must be saved at all costs. In Collado v. Court of Appeals,36 we
had occasion to reaffirm our previous discussion in Sta. Rosa
Realty Development Corporation v. Court of Appeals,37 on the
primordial importance of watershed areas, thus: "The most
important product of a watershed is water, which is one of the
most important human necessities. The protection of watersheds
ensures an adequate supply of water for future generations and
the control of flashfloods that not only damage property but also
cause loss of lives. Protection of watersheds is an
"intergenerational" responsibility that needs to be answered
now.38
Three short months before Proclamation No. 635 was passed to
avert the garbage crisis, Congress had enacted the National
Water Crisis Act39 to "adopt urgent and effective measures to
address the nationwide water crisis which adversely affects the
health and well-being of the population, food production, and
industrialization process. One of the issues the law sought to
address was the "protection and conservation of watersheds."40
In other words, while respondents were blandly declaring that
"the reason for the creation of the Marikina Watershed
Reservation, i.e., to protect Marikina River as the source of
water supply of the City of Manila, no longer exists," the rest of
the country was gripped by a shortage of potable water so
serious, it necessitated its own legislation.
Respondents actions in the face of such grave environmental
consequences defy all logic. The petitioners rightly noted that
instead of providing solutions, they have, with unmitigated
callousness, worsened the problem. It is this readiness to wreak

irrevocable damage on our natural heritage in pursuit of what is
expedient that has compelled us to rule at length on this issue.
We ignore the unrelenting depletion of our natural heritage at
our peril.
I.
The Reorganization Act of the DENR Defines and
Limits Its Powers over the Countrys Natural Resources
The respondents next point out that the Marikina Watershed
Reservation, and thus the San Mateo Site, is located in the public
domain. They allege that as such, neither the Province of Rizal
nor the municipality of San Mateo has the power to control or
regulate its use since properties of this nature belong to the
national, and not to the local governments.
It is ironic that the respondents should pursue this line of
reasoning.
In Cruz v. Secretary of Environment and Natural Resources,41 we
had occasion to observe that "(o)ne of the fixed and dominating
objectives of the 1935 Constitutional Convention was the
nationalization and conservation of the natural resources of the
country. There was an overwhelming sentiment in the
convention in favor of the principle of state ownership of natural
resources and the adoption of the Regalian doctrine. State
ownership of natural resources was seen as a necessary starting
point to secure recognition of the states power to control their
disposition, exploitation, development, or utilization."42
The Regalian doctrine was embodied in the 1935 Constitution,

in Section 1 of Article XIII on "Conservation and Utilization of
Natural Resources." This was reiterated in the 1973 Constitution
under Article XIV on the "National Economy and the Patrimony
of the Nation," and reaffirmed in the 1987 Constitution in
Section 2 of Article XII on "National Economy and Patrimony,"
to wit:
Sec. 2. All lands of the public domain, waters, minerals, coal,
alienated. The exploration, development and utilization of
of the State. The State may directly undertake such activities or
be provided by law. In cases of water rights for irrigation, water
grant.43
Clearly, the state is, and always has been, zealous in preserving
as much of our natural and national heritage as it can, enshrining
as it did the obligation to preserve and protect the same within
the text of our fundamental law.
It was with this objective in mind that the respondent DENR was
mandated by then President Corazon C. Aquino, under Section 4

of Executive Order No. 192, 44 otherwise known as "The
Reorganization Act of the Department of Environment and
Natural Resources," to be "the primary government agency
responsible for the conservation, management, development
and proper use of the countrys environment and natural
resources, specifically forest and grazing lands, mineral
resources, including those in reservation and watershed areas,
and lands of the public domain. It is also responsible for the
licensing and regulation of all natural resources as may be
provided for by law in order to ensure equitable sharing of the
benefits derived therefrom for the welfare of the present and
future generations of Filipinos."
We expounded on this matter in the landmark case of Oposa v.
Factoran,45 where we held that the right to a balanced and
healthful ecology is a fundamental legal right that carries with it
the correlative duty to refrain from impairing the environment.
This right implies, among other things, the judicious
management and conservation of the countrys resources, which
duty is reposed in the DENR under the aforequoted Section 4 of
Executive Order No. 192. Moreover:
Section 3 (of E. O. No. 192) makes the following statement of
policy:
SEC. 3. Declaration of Policy. - It is hereby declared the policy
of the State to ensure the sustainable use, development,
management, renewal, and conservation of the country's forest,
mineral, land, off-shore areas and other natural resources,
including the protection and enhancement of the quality of the
environment, and equitable access of the different segments of
the population to the development and use of the country's
natural resources, not only for the present generation but for
future generations as well. It is also the policy of the state to
recognize and apply a true value system including social and
environmental cost implications relative to their utilization;
development and conservation of our natural resources.
(Emphasis ours)
This policy declaration is substantially re-stated in Title XIV,
Book IV of the Administrative Code of 1987, specifically in
Section 1 thereof which reads:
SEC. 1. Declaration of Policy. - (1) The State shall ensure, for
the benefit of the Filipino people, the full exploration and
development as well as the judicious disposition, utilization,
management, renewal and conservationof the country's forest,
mineral, land, waters, fisheries, wildlife, off-shore areas and
other natural resources,consistent with the necessity of
maintaining a sound ecological balance and protecting and
enhancing the quality of the environment and the objective of
making the exploration, development and utilization of such
natural resources equitably accessible to the different segments
of the present as well as future generations.
(2) The State shall likewise recognize and apply a true value
system that takes into account social and environmental cost
implications relative to the utilization, development and
conservation of our natural resources.
The above provision stresses "the necessity of maintaining a
sound ecological balance and protecting and enhancing the
quality of the environment."46 (Emphasis ours.)
In sum, the Administrative Code of 1987 and Executive Order
No. 192 entrust the DENR with the guardianshipand

safekeeping of the Marikina Watershed Reservation and our
other natural treasures. However, although the DENR, an agency
of the government, owns the Marikina Reserve and has
jurisdiction over the same, this power is not absolute, but is
defined by the declared policies of the state, and is subject to the
law and higher authority.Section 2, Title XIV, Book IV of the
Administrative Code of 1987, while specifically referring to the
mandate of the DENR, makes particular reference to the
agencys being subject to law and higher authority, thus:
SEC. 2. Mandate. - (1) The Department of Environment and
Natural Resources shall be primarily responsible for the
implementation of the foregoing policy.
(2) It shall, subject to law and higher authority, be in charge of
carrying out the State's constitutional mandate to control and
supervise the exploration, development, utilization, and
conservation of the country's natural resources.
With great power comes great responsibility. It is the height of
irony that the public respondents have vigorously arrogated to
themselves the power to control the San Mateo site, but have
deftly ignored their corresponding responsibility as guardians
and protectors of this tormented piece of land.
passed also violates Rep. Act No. 7160, or the Local

Government Code.
Contrary to the averment of the respondents, Proclamation No.
635, which was passed on 28 August 1995, is subject to the
provisions of the Local Government Code, which was approved
four years earlier, on 10 October 1991.
Section 2(c) of the said law declares that it is the policy of the
state " to require all national agencies and offices to conduct
periodic consultations with appropriate local government units,
non-governmental and people's organizations, and other
concerned sectors of the community before any project or
program is implemented in their respective jurisdictions."
Likewise, Section 27 requires prior consultations before a
program shall be implemented by government authorities and
the prior approval of the sanggunian is obtained.
During the oral arguments at the hearing for the temporary
restraining order, Director Uranza of the MMDA Solid Waste
Management Task Force declared before the Court of Appeals
that they had conducted the required consultations. However, he
added that "(t)his is the problem, sir, the officials we may have
been talking with at the time this was established may no longer
be incumbent and this is our difficulty now. That is what we are
trying to do now, a continuing dialogue." 47
II.
The Local Government Code Gives to Local Government Units
All the Necessary Powers to Promote the General Welfare of
Their Inhabitants
The circumstances under which Proclamation No. 635 was
The ambivalent reply of Director Uranza was brought to the fore

when, at the height of the protest rally and barricade along
Marcos Highway to stop dump trucks from reaching the site, all
the municipal mayors of the province of Rizal openly declared
their full support for the rally and notified the MMDA that they
would oppose any further attempt to dump garbage in their
province. 48
The municipal mayors acted within the scope of their powers,
and were in fact fulfilling their mandate, when they did this.
Section 16 allows every local government unit to "exercise the
powers expressly granted, those necessarily implied therefrom,
as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential
to the promotion of the general welfare," which involve, among
other things, "promot(ing) health and safety, enhance(ing) the
right of the people to a balanced ecology, and preserv(ing) the
comfort and convenience of their inhabitants. "
In Lina , Jr. v. Pao,49 we held that Section 2 (c), requiring
consultations with the appropriate local government units,
should apply to national government projects affecting the
environmental or ecological balance of the particular community
implementing the project. Rejecting the petitioners contention
that Sections 2(c) and 27 of the Local Government Code applied
mandatorily in the setting up of lotto outlets around the country,
we held that:
From a careful reading of said provisions, we find that these
apply only to national programs and/or projects which are to be
implemented in a particular local community. Lotto is neither a
program nor a project of the national government, but of a
charitable institution, the PCSO. Though sanctioned by the
national government, it is far fetched to say that lotto falls within
the contemplation of Sections 2 (c) and 27 of the Local
Government Code.
Section 27 of the Code should be read in conjunction with
Section 26 thereof. Section 26 reads:
SECTION 26. Duty of National Government Agencies in the

Maintenance of Ecological Balance. It shall be the duty of every
national agency or government-owned or controlled corporation
authorizing or involved in the planning and implementation of
any project or program that may cause pollution, climatic
change, depletion of non-renewable resources, loss of crop land,
range-land, or forest cover, and extinction of animal or plant
species, to consult with the local government units,
nongovernmental organizations, and other sectors concerned and
explain the goals and objectives of the project or program, its
impact upon the people and the community in terms of
environmental or ecological balance, and the measures that will
be undertaken to prevent or minimize the adverse effects thereof.
Thus, the projects and programs mentioned in Section 27
should be interpreted to mean projects and programs whose
effects are among those enumerated in Section 26 and 27, to
wit, those that: (1) may cause pollution; (2) may bring about
climatic change; (3) may cause the depletion of nonrenewable resources; (4) may result in loss of crop land,
range-land, or forest cover; (5) may eradicate certain animal
or plant species from the face of the planet; and (6) other
projects or programs that may call for the eviction of a
particular group of people residing in the locality where
these will be implemented. Obviously, none of these effects
will be produced by the introduction of lotto in the province of
Laguna. (emphasis supplied)
We reiterated this doctrine in the recent case of Bangus Fry
Fisherfolk v. Lanzanas,50 where we held that there was no
statutory requirement for the sangguniang bayan of Puerto
Galera to approve the construction of a mooring facility, as
Sections 26 and 27 are inapplicable to projects which are not
environmentally critical.
Moreover, Section 447, which enumerates the powers, duties
and functions of the municipality, grants thesangguniang bayan
the power to, among other things, "enact ordinances, approve
resolutions and appropriate funds for the general welfare of the
municipality and its inhabitants pursuant to Section 16 of th(e)
Code." These include:
(1) Approving ordinances and passing resolutions to protect the
environment and impose appropriate penalties for acts
which endanger the environment, such as dynamite fishing
and other forms of destructive fishing, illegal logging and
smuggling of logs, smuggling of natural resources products and
of endangered species of flora and fauna, slash and burn
farming, and such other activities which result in pollution,
acceleration of eutrophication of rivers and lakes, or of
ecological imbalance; [Section 447 (1)(vi)]
for under Section 17 of this Code, and in addition to said

services and facilities, providing for the establishment,
maintenance, protection, and conservation of communal
forests and watersheds, tree parks, greenbelts, mangroves,
and other similar forest development projects .and, subject
to existing laws, establishing and providing for the maintenance,
repair and operation of an efficient waterworks system to supply
water for the inhabitants and purifying the source of the water
supply; regulating the construction, maintenance, repair and use
of hydrants, pumps, cisterns and reservoirs; protecting the
purity and quantity of the water supply of the municipality
and, for this purpose, extending the coverage of appropriate
ordinances over all territory within the drainage area of said
water supply and within one hundred (100) meters of the
reservoir, conduit, canal, aqueduct, pumping station, or
watershed used in connection with the water service; and
regulating the consumption, use or wastage of water." [Section
447 (5)(i) & (vii)]
(2) Prescribing reasonable limits and restraints on the use of

property within the jurisdiction of the municipality, adopting
a comprehensive land use plan for the municipality, reclassifying
land within the jurisdiction of the city, subject to the pertinent
provisions of this Code, enacting integrated zoning
ordinancesin consonance with the approved comprehensive
land use plan, subject to existing laws, rules and regulations;
establishing fire limits or zones, particularly in populous centers;
and regulating the construction, repair or modification of
buildings within said fire limits or zones in accordance with the
provisions of this Code; [Section 447 (2)(vi-ix)]
Under the Local Government Code, therefore, two requisites

must be met before a national project that affects the
environmental and ecological balance of local communities can
be implemented: prior consultation with the affected local
communities, and prior approval of the project by the
appropriate sanggunian. Absent either of these mandatory
requirements, the projects implementation is illegal.
(3) Approving ordinances which shall ensure the efficient and

effective delivery of the basic services and facilities as provided
Solid Waste Management Act of 2000
III.
Waste Disposal Is Regulated by the Ecological
The respondents would have us overlook all the abovecited laws

because the San Mateo site is a very expensive - and necessary fait accompli. The respondents cite the millions of pesos and
hundreds of thousands of dollars the government has already
expended in its development and construction, and the lack of
any viable alternative sites.
The Court of Appeals agreed, thus:
During the hearing on the injunction, questions were also asked.
"What will happen if the San Mateo Sanitary Landfill is closed?
Where will the daily collections of garbage be disposed of and
dumped?" Atty. Mendoza, one of the lawyers of the petitioners,
answered that each city/municipality must take care of its own.
Reflecting on that answer, we are troubled: will not the
proliferation of separate open dumpsites be a more serious
health hazard (which ha(s) to be addressed) to the residents of
the community? What with the galloping population growth and
the constricting available land area in Metro Manila? There
could be a mini-Smokey Mountain in each of the ten cities
comprising Metro Manila, placing in danger the health and
safety of more people. Damage to the environment could be
aggravated by the increase in number of open dumpsites. An
integrated system of solid waste management, like the San
Mateo Sanitary Landfill, appears advisable to a populous
metropolis like the Greater Metro Manila Area absent access to
better technology.51
We acknowledge that these are valid concerns. Nevertheless, the
lower court should have been mindful of the legal truism that it
is the legislature, by its very nature, which is the primary judge
of the necessity, adequacy, wisdom, reasonableness and
expediency of any law.52
Moreover, these concerns are addressed by Rep. Act No. 9003.

Approved on 26 January 2001, "The Ecological Solid Waste
Management Act of 2000" was enacted pursuant to the declared
policy of the state "to adopt a systematic, comprehensive and
ecological solid waste management system which shall ensure
the protection of public health and environment, and utilize
environmentally sound methods that maximize the utilization of
valuable resources and encourage resource conservation and
recovery."53 It requires the adherence to a Local Government
Solid Waste Management Plan with regard to the collection and
transfer, processing, source reduction, recycling, composting and
final disposal of solid wastes, the handling and disposal of
special wastes, education and public information, and the
funding of solid waste management projects.
The said law mandates the formulation of a National Solid Waste
Management Framework, which should include, among other
things, the method and procedure for the phaseout and the
eventual closure within eighteen months from effectivity of the
Act in case of existing open dumps and/or sanitary landfills
located within an aquifer, groundwater reservoir or
watershed area.54 Any landfills subsequently developed must
comply with the minimum requirements laid down in Section
40, specifically that the site selected must be consistent with
the overall land use plan of the local government unit, and
that the site must be located in an area where the landfills
operation will not detrimentally affect environmentally
sensitive resources such as aquifers, groundwater reservoirs or
watershed areas.55
This writes finis to any remaining aspirations respondents may
have of reopening the San Mateo Site. Having declared
Proclamation No. 635 illegal, we see no compelling need to
tackle the remaining issues raised in the petition and the parties
respective memoranda.
A final word. Laws pertaining to the protection of the
environment were not drafted in a vacuum. Congress passed
these laws fully aware of the perilous state of both our economic
and natural wealth. It was precisely to minimize the adverse
impact humanitys actions on all aspects of the natural world, at
the same time maintaining and ensuring an environment under
which man and nature can thrive in productive and enjoyable
harmony with each other, that these legal safeguards were put in
place. They should thus not be so lightly cast aside in the face of
what is easy and expedient.
WHEREFORE, the petition is GRANTED. The Decision of the
Court of Appeals in CA-G.R. SP No. 41330, dated 13 June 1997,
is REVERSED and SET ASIDE. The temporary restraining
order issued by the Court on 24 January 2001 is hereby made
permanent.
SO ORDERED.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 131442
July 10, 2003
BANGUS FRY FISHERFOLK, DIWATA MAGBUHOS,

ANGELITA BINAY, ELMA GARCIA, VIRGILIO
PANGUIO, ARSENIO CASTILLO, ARIEL PANGUIO,
ANTONIO PANGUIO, ANTONIO BUNQUIN, GENEROSO
BUNQUIN, CHARLIE DIMAYACYAC, RENATO
PANGUIO, ATILANO BUNQUIN, CARLOS CHAVEZ,
JUAN DIMAYACYAC, FILEMON BUNQUIN, MARIO
MAGBUHOS, MAURO MAGBUHOS, NORA
MAGBUHOS, JEOVILYN, GENALYN and JORVAN
QUIMUEL, minors, represented by their parents
FELICIANA and SABINO QUIMUEL, MARICAR
MAGBUHOS, minor, represented by her parents
CARMELITA and ANTONIO MAGBUHOS, MARLO
BINAY, minor, represented by his parents EFRENITA and
CHARLITO BINAY, and the BANGUS, BANGUS FRY and
other MARINE LIFE OF MINOLO COVE, petitioners,
vs.
THE HONORABLE ENRICO LANZANAS as Judge of the
Regional Trial Court of Manila, Branch VII, THE
DEPARTMENT OF ENVIRONMENT AND NATURAL
RESOURCES Region IV, represented by its Regional
Executive Director and its Regional Director for
Environment, THE NATIONAL POWER CORPORATION,
ORIENTAL MINDORO ELECTRIC COOPERATIVE,
PROVINCIAL GOVERNMENT OF ORIENTAL
MINDORO, herein represented by GOVERNOR
RODOLFO VALENCIA, PUERTO GALERA MAYOR
GREGORIO DELGADO, VICE MAYOR ARISTEO
ATIENZA, and MEMBERS OF THE SANGGUNIANG
BAYAN OF PUERTO GALERA, JUAN ASCAN, JR.,
RAFAEL ROMEY, CENON SALCEDO, JERRY DALISAY,
SIMON BALITAAN, RENATO CATAQUIS, MARCELINO
BANAAG, DANIEL ENRIQUEZ, AMELYN MARCO,
GABRIEL ILAGAN, MUNICIPAL ENGINEER RODEL
RUBIO, and MUNICIPAL PLANNING and
DEVELOPMENT COORDINATOR WILHELMINA
LINESES, respondents.
CARPIO, J.:
The Case
This is a petition for review 1 of the Order2 dated 7 November
1997 of the Regional Trial Court of Manila, Branch 7 ("Manila
RTC"), dismissing petitioners' complaint for lack of cause of
action and lack of jurisdiction.
The Facts
On 30 June 1997, Regional Executive Director Antonio G.

Principe ("RED Principe") of Region IV, Department of
Environment and Natural Resources ("DENR"), issued an
Environmental Clearance Certificate ("ECC") in favor of
respondent National Power Corporation ("NAPOCOR"). The
ECC authorized NAPOCOR to construct a temporary mooring
facility in Minolo Cove, Sitio Minolo, Barangay San Isidro,
Puerto Galera, Oriental Mindoro. The Sangguniang Bayan of
Puerto Galera has declared Minolo Cove, a mangrove area and
breeding ground for bangus fry, an eco-tourist zone.3
The mooring facility would serve as the temporary docking site
of NAPOCOR's power barge, which, due to turbulent waters at
its former mooring site in Calapan, Oriental Mindoro, required
relocation to a safer site like Minolo Cove. The 14.4 megawatts
power barge would provide the main source of power for the
entire province of Oriental Mindoro pending the construction of
a land-based power plant in Calapan, Oriental Mindoro. The
ECC for the mooring facility was valid for two years counted
from its date of issuance or until 30 June 1999.4
Petitioners, claiming to be fisherfolks from Minolo, San Isidro,
Puerto Galera,5 sought reconsideration of the ECC issuance.
RED Principe, however, denied petitioners' plea on 15 July
1997. On 21 July 1997, petitioners filed a complaint with the
Regional Trial Court of Manila, Branch 7, for the cancellation of
the ECC and for the issuance of a writ of injunction to stop the
construction of the mooring facility. Impleaded as defendants
were the following: (1) NAPOCOR, (2) RED Principe, (3)
DENR Region IV Technical Director for Environment Oscar
Dominguez, (4) Oriental Mindoro Electric Cooperative
("ORMECO"), which is engaged in the distribution of electricity
in Oriental Mindoro, and (5) certain officials of Puerto Galera. 6
Petitioners subsequently amended their complaint to include as

additional defendants the elective officials of Oriental Mindoro
represented by then Governor Rodolfo G. Valencia. Petitioners
further prayed for the demolition of mooring structures that
respondents had already built.
motion and dismissed petitioners' complaint.
On 28 July 1997, prior to the filing of the amended complaint,

the trial court issued a 20-day temporary restraining order
enjoining the construction of the mooring facility. However, the
trial court lifted the same on 6 August 1997 on NAPOCOR's
manifestation that the provincial government of Oriental
Mindoro was the one undertaking the construction of the
mooring facility.7
The trial court's order dismissing the complaint reads in part:
On 28 August 1997, before filing their answers, respondents

ORMECO and the provincial officials of Oriental Mindoro
moved to dismiss the complaint. These respondents claimed that
petitioners failed to exhaust administrative remedies, rendering
the complaint without cause of action. They also asserted that
the Manila RTC has no jurisdiction to enjoin the construction of
the mooring facility in Oriental Mindoro, which lies outside the
Manila RTC's territorial jurisdiction.
Petitioners opposed the motion on the ground that there was no
need to exhaust administrative remedies. They argued that the
issuance of the ECC was in patent violation of Presidential
Decree No. 1605, 8 Sections 26 and 27 of Republic Act No.
7160,9 and the provisions of DENR Department Administrative
Order No. 96-37 ("DAO 96-37") on the documentation of ECC
applications. Petitioners also claimed that the implementation of
the ECC was in patent violation of its terms.
In its order of 7 November 1997, the trial court granted the
Hence, this petition.

The Ruling of the Trial Court
After careful evaluation and analysis, this Court finds the

Motion to Dismiss tenable and meritorious.
Petitioners have clearly failed to exhaust all administrative
remedies before taking this legal action in Court x x x.
It is x x x worth mentioning that the decision of the Regional
Director may still be x x x elevated to the Office of the Secretary
of the DENR to fully comply with the process of exhaustion of
administrative remedies. And well settled is the rule in our
jurisdiction that before bringing an action in or resorting to the
Courts of Justice, all remedies of administrative character
affecting or determinative of the controversy at that level should
first be exhausted by the aggrieved party (Pestanas vs. Dyogi, L25786, February 27, 1978). And petitioners' failure to exhaust
administrative remedies renders his [sic] petition dismissible
(Chia vs. Acting Collector of Customs, 177 SCRA 755). And a
dismissal on the ground of failure to exhaust administrative
remedies is tantamount to a dismissal based on lack of cause of
action (Baguiro vs. Basa, Jr., 214 SCRA 437; Pineda vs. CFI of
Davao, 111 Phil. 643; Sarabia vs. Secretary of Agriculture &
Natural Resources, L-16002, May 23, 1961; Gone, et al. vs.
District Engineer, et. al., L-22782, August 29, 1975; Abe-Abe, et
al. vs. Manta, et. al., L-4827, May 31, 1979) although it does not
affect the jurisdiction of the court over the subject matter (Mun.
of La Trinidad, et al. vs. CFI of Baguio-Benguet, et al., L-33889,

June 28, 1983).
Moreover, this Court finds the Opposition of the Petitioners
highly untenable and bereft of merits that the controverted act in
question is patently illegal and there was an immediate need for
judicial intervention.
The ECC in question was issued by the Regional Office of the
DENR which has jurisdiction and authority over the same . . ..
And corollary to this, the issue as to whether or not the Minolo
Cove is within the enclosed coves and waters embraced by
Puerto Galera bay and protected by Medio island is a clear
question of fact which the DENR may appropriately resolve
before resorting to [the] Court[s].
1818, Executive Order No. 380 dated November 27, 1989, and
Circular No. 2-91 of the Supreme Court that the National Power
Corporation (NPC) is a public utility, created under special
legislation, engaged in the generation and distribution of electric
power and energy. The mooring site of NPC in Puerto Galera,
Oriental Mindoro is one of its infrastructure projects falling
within the mantle of Executive Order No. 380, November 27,
1989 x x x.
And as held by the Supreme Court in the case of National
Power Corporation vs. Honorable Abraham P. Vera, et al., 170
SCRA 721, courts are without jurisdiction to issue injunctive
writs against [the] National Power Corporation. The latter enjoys
the protective mantle of P.D. 1818, (Circular No. 2-91).
xxx
This Court is likewise aware and cognizant of its territorial

jurisdiction in the enforcement of Writ of Injunction. That truly,
[a] writ of injunction can only be enforced within [the] territorial
jurisdiction of this Court but not for acts which are being or
about to be committed outside its territorial jurisdiction. Thus,
inPhilippine National Bank vs. Pineda, 197 SCRA 1, the
Honorable Supreme Court ruled: "Regional Trial Courts can
only enforce their writs of injunction within their respective
designated territories. Furthermore, we find the issuance of the
preliminary injunction directed against the Provincial Sheriff of
Negros Occidental a jurisdictional paux [sic] pas (from Black
Dictionary means jurisdictional falsity) as the Courts of First
Instance now Regional Trial Court[s], can only enforce their
writs of injunction within their respective designated territories.
And finally, this Court is not unmindful of the relevant and
square application in the case at bar of Presidential Decree No.
xxx
xxx
Injunction in this case is not a mere ancillary [sic] writ but the
main action itself together with the Annulment of the
Environmental Clearance Certificate (ECC). Even assuming
arguendo that the court [can] annul the ECC how can the latter
enforce the same against the Provincial Government of Oriental
Mindoro which was impleaded by the petitioners as a necessary
party together with the Oriental Mindoro Electric Cooperative
and the government officials of Puerto Galera, Oriental
Mindoro, whose acts and functions are being performed outside
the territorial jurisdiction of this court? x x x Indisputably, the
injunction and annulment of ECC as prayed for in the petition
are inseparable x x x.
The conclusion, therefore, is inescapable that petitioners have
failed to exhaust all the available administrative remedies and
this Court has no jurisdiction to issue the injunctive writ prayed
for in the Amended [Complaint].10

The Issue
The issue is whether the trial court erred in dismissing
petitioners' complaint for lack of cause action and lack of
jurisdiction.
The Ruling of the Court
The petition has no merit.
Jurisdiction of the Manila RTC over the Case
Jurisdiction over the subject matter of a case is conferred by law.
Such jurisdiction is determined by the allegations in the
complaint, irrespective of whether the plaintiff is entitled to all
or some of the reliefs sought.11
A perusal of the allegations in the complaint shows that
petitioners' principal cause of action is the alleged illegality of
the issuance of the ECC. The violation of laws on environmental
protection and on local government participation in the
implementation of environmentally critical projects is an issue
that involves the validity of NAPOCOR's ECC. If the ECC is
void, then as a necessary consequence, NAPOCOR or the
provincial government of Oriental Mindoro could not construct
the mooring facility. The subsidiary issue of non-compliance
with pertinent local ordinances in the construction of the
mooring facility becomes immaterial for purposes of granting
petitioners' main prayer, which is the annulment of the ECC.
Thus, if the court has jurisdiction to determine the validity of the
issuance of the ECC, then it has jurisdiction to hear and decide
petitioners' complaint.
Petitioners' complaint is one that is not capable of pecuniary
estimation. It falls within the exclusive and original jurisdiction
of the Regional Trial Courts under Section 19(1) of Batas
Pambansa Blg. 129, as amended by Republic Act No. 7691. The
question of whether petitioners should file their complaint in the
Regional Trial Court of Manila or Oriental Mindoro then
becomes a matter of venue, to be determined by the residence of
the parties.12
Petitioners' main prayer is the annulment of the ECC. The
principal respondent, DENR Region IV, has its main office at the
L & S Building, Roxas Boulevard, Manila. Regional Executive
Director Principe of the DENR Region IV, who issued the ECC,
holds office there. Plainly, the principal respondent resides in
Manila, which is within the territorial jurisdiction of the Manila
RTC. Thus, petitioners filed their complaint in the proper venue.
On the other hand, the jurisdiction of Regional Trial Courts to
issue injunctive writs is limited to acts committed or about to be
committed within their judicial region.13 Moreover, Presidential
Decree No. 1818 ("PD No. 1818") prohibited 14 courts from
issuing injunctive writs against government infrastructure
projects like the mooring facility in the present case. Republic
Act No. 8975 ("RA No. 8975"), which took effect on 26
November 2000, superseded PD No. 1818 and delineates more
clearly the coverage of the prohibition, reserves the power to
issue such writs exclusively with this Court, and provides
penalties for its violation.15 Obviously, neither the Manila RTC
nor the Oriental Mindoro RTC can issue an injunctive writ to
stop the construction of the mooring facility. Only this Court can
do so under PD No. 1818 and later under RA No. 8975. Thus,
the question of whether the Manila RTC has jurisdiction over the
complaint considering that its injunctive writ is not enforceable
in Oriental Mindoro is academic.
located within an environmentally critical area under

Presidential Proclamation No. 2146, issued on 14 December
1981.20
Clearly, the Manila RTC has jurisdiction to determine the

validity of the issuance of the ECC, although it could not issue
an injunctive writ against the DENR or NAPOCOR. However,
since the construction of the mooring facility could not proceed
without a valid ECC, the validity of the ECC remains the
determinative issue in resolving petitioners' complaint.
The rules on administrative appeals from rulings of the DENR

Regional Directors on the implementation of PD No. 1586 are
found in Article VI of DAO 96-37, which provides:
Exhaustion of Administrative Remedies

The settled rule is before a party may seek the intervention of the
courts, he should first avail of all the means afforded by
administrative processes. Hence, if a remedy within the
administrative machinery is still available, with a procedure
prescribed pursuant to law for an administrative officer to decide
the controversy, a party should first exhaust such remedy before
resorting to the courts. The premature invocation of a court's
intervention renders the complaint without cause of action and
dismissible on such ground.16
RED Principe of the DENR Region IV Office issued the ECC
based on (1) Presidential Decree No. 1586 ("PD No. 1586") and
its implementing rules establishing the Environmental Impact
Statement System, (2) DAO 96-3717 and (3) the Procedural
Manual of DAO 96-37. Section 418 of PD No. 1586 requires a
proponent of an environmentally critical project, or a project
located within an environmentally critical area as declared by
the President, to secure an ECC prior to the project's operation. 19
NAPOCOR thus secured the ECC because the mooring facility
in Minolo Cove, while not an environmentally critical project, is
SECTION 1.0. Appeal to the Office of the Secretary. Any

party aggrieved by the final decision of the RED may, within 15
days from receipt of such decision, file an appeal with the Office
of the Secretary. The decision of the Secretary shall be
immediately executory.
SECTION 2.0. Grounds for Appeal. The grounds for appeal
shall be limited to grave abuse of discretion and serious errors in
the findings of fact which would cause grave or irreparable
injury to the aggrieved party. Frivolous appeals shall not be
countenanced.
SECTION 3.0. Who May Appeal. The proponent or any
stakeholder, including but not limited to, the LGUs concerned
and affected communities, may file an appeal.
The DENR Procedural Manual for DAO 96-37 explains these
provisions thus:
Final decisions of the RED may be appealed. These decisions
include those relating to the issuance or non-issuance of an
ECC, and the imposition of fines and penalties. By inference, the
decision of the Secretary on the issuance or non-issuance of the
ECC may also be appealed based on this provision.Resort to
courts prior to availing of this remedy would make the
appellant's action dismissible on the ground of non-exhaustion

of administrative remedies.
The right to appeal must be exercised within 15 days from
receipt by the aggrieved party of such decision. Failure to file
such appeal within the requisite period will result in the finality
of the RED's or Secretary's decision(s), which can no longer be
disturbed.
An appeal shall not stay the effectivity of the RED's decision,
unless the Secretary directs otherwise.
The right to appeal does not prevent the aggrieved party from
first resorting to the filing of a motion for reconsideration with
the RED, to give the RED an opportunity to re-evaluate his
decision. (Emphasis added)
Instead of following the foregoing procedure, petitioners
bypassed the DENR Secretary and immediately filed their
complaint with the Manila RTC, depriving the DENR Secretary
the opportunity to review the decision of his subordinate, RED
Principe. Under the Procedural Manual for DAO 96-37 and
applicable jurisprudence, petitioners' omission renders their
complaint dismissible for lack of cause of action.21
Consequently, the Manila RTC did not err in dismissing
petitioners' complaint for lack of cause of action.
On the Alleged Patent Illegality of the ECC
Petitioners nevertheless contend that they are exempt from filing
an appeal with the DENR Secretary because the issuance of the
ECC was in patent violation of existing laws and regulations.
These are (1) Section 1 of Presidential Decree No. 1605, as
amended, (2) Sections 26 and 27 of Republic Act No. 7160

(Local Government Code of 1991), and (3) the provisions of
DAO 96-37 on the documentary requirements for the zoning
permit and social acceptability of the mooring facility.
Petitioners' contention is without merit. While the patent
illegality of an act exempts a party from complying with the rule
on exhaustion Of administrative remedies,22 this does not apply
in the present case.
Presidential Decree No. 1605
Presidential Decree No. 1605 ("PD No. 1605"), 23 as amended by
Presidential Decrees Nos. 1605-A and 1805, declares as
ecologically threatened zone "the coves and waters embraced by
Puerto Galera Bay as protected by Medio Island." This decree
provides in part:
Section 1. Any provision of law to the contrary notwithstanding,
the construction of marinas, hotels, restaurants, other
commercial structures; commercial or semi-commercial wharfs
[sic]; commercial docking within the enclosed coves of Puerto
Galera; the destruction of its mangrove stands; the devastation
of its corals and coastline by large barges, motorboats, tugboat
propellers, and any form of destruction by other human
activities are hereby prohibited.
Section 2. x x x
No permit for the construction of any wharf, marina, hotel,
restaurants and other commercial structures in Puerto Galera
shall be issued without prior approval of the Office of the
President upon the recommendation of the Philippine Tourism
Authority. (Emphasis supplied)

NAPOCOR claims that since Minolo Cove lies outside of
"Puerto Galera Bay as protected by Medio Island", 24 PD No.
1605 does not apply to this case. However, petitioners assert that
Minolo Cove is one of the "enclosed coves of Puerto Galera" 25
and thus protected under PD No. 1605. This is a question of fact
that the DENR Secretary should have first resolved. In any
event, there is no dispute that NAPOCOR will use the mooring
facility for its power barge that will supply 14.4 megawatts of
electricity to the entire province of Oriental Mindoro, including
Puerto Galera. The mooring facility is obviously a governmentowned public infrastructure intended to serve a basic need of the
people of Oriental Mindoro. The mooring facility is not a
"commercial structure; commercial or semi-commercial wharf or
commercial docking" as contemplated in Section 1 of PD No.
1605. Therefore, the issuance of the ECC does not violate PD
No. 1605 which applies only to commercial structures like
wharves, marinas, hotels and restaurants.
Sections 26 and 27 of RA No. 7160
Congress introduced Sections 26 and 27 in the Local
Government Code to emphasize the legislative concern "for the
maintenance of a sound ecology and clean environment." 26
These provisions require every national government agency or
government-owned and controlled corporation to hold prior
consultations with the local government unit concerned and to
secure the prior approval of its sanggunian before implementing
"any project or program that may cause pollution, climatic
change, depletion of non-renewable resources, loss of cropland,
rangeland, or forest cover and extinction of animal or plant
species." Sections 26 and 27 respectively provide:
Section 26. Duty of National Government Agencies in the

Maintenance of Ecological Balance. It shall be the duty of
every national agency or government-owned or controlled
corporation authorized or involved in the planning and
implementation of any project or program that may cause
pollution, climatic change, depletion of non-renewable
resources, loss of crop land, rangeland, or forest cover and
extinction of animal or plant species, to consult with the local
government units, non-governmental organizations, and other
sectors concerned and explain the goals and objectives of the
project or program, its impact upon the people and the
community in terms of environmental or ecological balance, and
the measures that will be undertaken to prevent or minimize the
adverse effects thereof.
Section 27. Prior Consultations Required. No project or
program shall be implemented by government authorities unless
the consultations mentioned in Section . . . 26 hereof are
complied with, and prior approval of the sanggunian concerned
is obtained: Provided, That occupants in areas where such
projects are to be implemented shall not be evicted unless
appropriate relocation sites have been provided, in accordance
with the provisions of the Constitution.
In Lina, Jr. v. Pao,27 the Court interpreted these provisions in
this manner:
Section 27 of the Code should be read in conjunction with
Section 26 thereof x x x.
Thus, the projects and programs mentioned in Section 27 should
be interpreted to mean projects and programs whose effects are
among those enumerated in Sections 26 and 27, to wit, those
that: (1) may cause pollution; (2) may bring about climatic
change; (3) may cause the depletion of non-renewable resources;
(4) may result in loss of crop land, rangeland, or forest cover; (5)
may eradicate certain animal or plant species; and (6) other
projects or programs that may call for the eviction of a particular
group of people residing in the locality where these will be
implemented.
Again, Sections 26 and 27 do not apply to this case because as
petitioners admit,28 the mooring facility itself is not
environmentally critical and hence does not belong to any of the
six types of projects mentioned in the law. There is no statutory
requirement for the concerned sanggunian to approve the
construction of the mooring facility. It is another matter if the
operation of the power barge is at issue. As an environmentally
critical project that causes pollution, the operation of the power
barge needs the prior approval of the concerned sanggunian.
However, what is before this Court is only the construction of
the mooring facility, not the operation of the power barge. Thus,
the issuance of the ECC does not violate Sections 26 and 27 of
RA No. 7160.
Documentary Requirements for ECC Applications
Under DAO 96-37, an ECC applicant for a project located
within an environmentally critical area is required to submit an
Initial Environment Examination, which must contain a brief
description of the environmental setting and a documentation of
the consultative process undertaken, when appropriate.29 As part
of the description of the environmental setting, the ECC
applicant must submit a certificate of locational clearance or
zoning certificate.
Petitioners further contend that NAPOCOR, in applying for the

ECC, did not submit to the DENR Region IV Office the
documents proving the holding of consultations and the issuance
of a locational clearance or zoning certificate. Petitioners assert
that this omission renders the issuance of the ECC patently
illegal.
The contention is also without merit. While such documents are
part of the submissions required from a project proponent, their
mere absence does not render the issuance of the ECC patently
illegal. To justify non-exhaustion of administrative remedies due
to the patent illegality of the ECC, the public officer must have
issued the ECC "[without any] semblance of compliance, or
even an attempt to comply, with the pertinent laws; when
manifestly, the officer has acted without jurisdiction or has
exceeded his jurisdiction, or has committed a grave abuse of
discretion; or when his act is clearly and obviously devoid of
any color of authority."30
RED Principe, as chief of DENR Region IV, is the officer duly
authorized under DAO 96-3731 to issue ECCs for projects
located within environmentally critical areas. RED Principe
issued the ECC on the recommendation of Amelia Supetran, the
Director of the Environmental Management Bureau. Thus, RED
Principe acted with full authority pursuant to DENR regulations.
Moreover, the legal presumption is that he acted with the
requisite authority.32 This clothes RED Principe's acts with
presumptive validity and negates any claim that his actions are
patently illegal or that he gravely abused his discretion. While
petitioners may present proof to the contrary, they must do so
before the proper administrative forum before resorting to
judicial remedies.
On the Alleged Non-Compliance with the Terms of the ECC

Lastly, petitioners claim that they are justified in immediately
seeking judicial recourse because NAPOCOR is guilty of
violating the conditions of the ECC, which requires it to secure a
separate ECC for the operation of the power barge. The ECC
also mandates NAPOCOR to secure the usual local government
permits, like zoning and building permits, from the municipal
government of Puerto Galera.
The contention is similarly without merit. The fact that
NAPOCOR's ECC is subject to cancellation for non-compliance
with its conditions does not justify petitioners' conduct in
ignoring the procedure prescribed in DAO 96-37 on appeals
from the decision of the DENR Executive Director. Petitioners
vigorously insist that NAPOCOR should comply with the
requirements of consultation and locational clearance prescribed
in DAO 96-37. Ironically, petitioners themselves refuse to abide
with the procedure for filing complaints and appealing decisions
laid down in DAO 96-37.
DAO 96-37 provides for a separate administrative proceeding to
address complaints for the cancellation of an ECC. Under Article
IX of DAO 96-37, complaints to nullify an ECC must undergo
an administrative investigation, after which the hearing officer
will submit his report to the EMB Director or the Regional
Executive Director, who will then render his decision. The
aggrieved party may file an appeal to the DENR Secretary, who
has authority to issue cease and desist orders. Article IX also
classifies the types of violations covered under DAO 96-37,
including projects operating without an ECC or violating the
conditions of the ECC. This is the applicable procedure to
address petitioners' complaint on NAPOCOR's alleged
violations and not the filing of the instant case in court.

A Final Word
The Court commends petitioners for their courageous efforts to
safeguard and maintain the ecological balance of Minolo Cove.
This Court recognizes the utmost importance of protecting the
environment.33 Indeed, we have called for the vigorous
prosecution of violators of environmental laws.34 Legal actions
to achieve this end, however, must be done in accordance with
established rules of procedure that were intended, in the first
place, to achieve orderly and efficient administration of justice.
WHEREFORE, we DENY the petition for lack of merit.
SO ORDERED.
Davide, Jr., C .J ., Vitug, Ynares-Santiago and Azcuna, JJ .,
concur.

Cases For ENLAW

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Cases For ENLAW

Enviado por

Direitos autorais:

Formatos disponíveis

Republic of the Philippines

Environment and Natural Resources (DENR), Petitioner,

HON. HEHERSON ALVAREZ substituted by HON.

The cause of action of PICOP Resources, Inc. (PICOP) in its

DENR Secretary to sign, execute and deliver an IFMA to

July 29, 1969 between the government and PICOPs

[I]ssue the corresponding IFMA assignment number on the area

3. to honor and respect the Government Warranties and

On 11 October 2002, the RTC rendered a Decision granting

1. to sign, execute and deliver the IFMA contract and/or

The Respondent Secretary Alvarez is likewise ordered to pay

2. to issue the necessary permit allowing petitioner to act and

On 25 October 2002, the DENR Secretary filed a Motion for

Writ of Mandatory Injunction.5 The fallo of the 11 October 2002

WHEREFORE, the Petition in G.R. No. 162243 is GRANTED.

UNDER SECTION 9 OF DAO 99-53.

AND APPROVAL FROM THE SANGUNIAN CONCERNED,

WITH DUE RESPECT, THE HONORABLE COURT, IN

PCIOP FAILED TO SECURE SOCIAL ACCEPTABILITY

PICOP FAILED TO SUBMIT A FIVE-YEAR FOREST

THE MOTIVATION OF ALVAREZ IN RECALLING THE

On 15 December 2008, on Motion by PICOP, the Third Division

interest, Bislig Bay Lumber Company, Inc. (BBLCI). PICOPs

1.6 Respondent Secretary impaired the obligation of contract

4.19 Respondent is in violation of the Constitution and has

Respondent Secretary acted with grave abuse of discretion

As a result of respondent Secretarys unlawful refusal and/or

Respondent secretary has unlawfully refused and/or neglected to

Petitions for Mandamus are governed by Rule 65 of the Rules of

The grounds submitted by PICOP in its Petition for Mandamus

Court, Section 3 of which provides:

Sec. 9. Qualifications of Applicants. The applicants for IFMA

The execution of agreements, in itself, involves the exercise of

PICOPs peaceful and adequate enjoyment of the said area

well as with existing policy on timber concessions." Thus, if

Document as a contract even more significant.

and disposition of forest resources to the end that public welfare

A license is merely a permit or privilege to do what otherwise

The Presidential Warranty cannot, in any manner, be construed

Yes, Your Honor.

Yes. And that claim on the part of PICOP necessarily implies

Yes, Your Honor.

Yes, Your Honor. Except that

Essentially, the PICOP raised the issue of whether the

Presidential Warranty is not a contract, and it is not being a

Well, it is our submission, your Honor, that it is obiter because,

To the decision of the Court.

It already settled the issue, the basic issue.

It was not necessary.

Yes, because the Court in saying that merely reiterated a number

[unreadable word] Bldg.

Interpretation of the 1969 Document That Would Be in Harmony

This has reference to the request of the Board of Investments

July 29, 1969

It is in the public interest to promote industries that will enhance

Bislig Bay Lumber Co., Inc.

We confirm that your Timber License Agreement No. 43, as

D-53, Licenses (T.L.A. No. 43)

amended (copy of which is attached as Annex "A" hereof which

BISLIG BAY LBR. CO., INC.

The peaceful and adequate enjoyment by you of your area as

(Sgd.) FERDINAND E. MARCOS

6.3 Note must be made that the government warranted that