EN
BANC
|
HON. HEHERSON ALVAREZ
substituted by HON. ELISEA G. GOZUN, in her capacity as Secretary of the
Department of Environment and Natural Resources, Petitioner, - versus
- PICOP RESOURCES, INC., Respondent. x - - - - - - - - - - - - - - - - - - - - - - - - -x PICOP
RESOURCES, INC.,
Petitioner, - versus
- 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 THE HON. ANGELO
T. REYES (formerly Hon. Elisea G. Gozun), in his capacity as Secretary of the
Department of Environment and Natural Resources (DENR),
Petitioner, - versus
- PAPER INDUSTRIES CORP. OF THE
Respondent.
|
|
G.R. No. 162243 G.R. No. 164516 G.R. No. 171875 Present: PUNO, C.J., CARPIO,
CARPIO
MORALES, CHICO-NAZARIO,
VELASCO,
JR., NACHURA,* LEONARDO-DE
CASTRO, BRION,
PERALTA,
BERSAMIN, ABAD,
and VILLARAMA,
JR., JJ., Promulgated: December 3, 2009 |
x- - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - -x
CHICO-NAZARIO, J.:
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 PICOP’s
application, however, PICOP refused to attend further meetings with the
DENR. Instead, on
[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
petitioner’s pulp and paper mills in accordance with the warranty and agreement
of July 29, 1969 between the government and PICOP’s 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 PICOP’s predecessor-in-interest. x x x.[2]
On
WHEREFORE, premises
considered, the Petition for Mandamus is hereby GRANTED.
The Respondent DENR
Secretary Hon. Heherson Alvarez is hereby ordered:
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;
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 petitioner’s pulp and paper mills in accordance with the warranty and
agreement of July 29, 1969 between the government and PICOP’s predecessor-in-interest;
and
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 PICOP’s predecessor-in-interest (Exhibits
“H”, “H-1” to “H-5”, particularly the following:
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.
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]
On
On
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
Reconsideration[10]
of this Decision, which was denied by the Court of Appeals in a
The DENR
Secretary and PICOP filed with this Court separate Petitions for Review of the
On
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
I.
THE HONORABLE COURT ERRED IN HOLDING THAT THE CONTRACT
WITH PRESIDENTIAL WARRANTY SIGNED BY THE PRESIDENT OF THE REPUBLIC ON
II.
THE EVALUATION OF PICOP’S MANAGEMENT OF THE TLA 43
III.
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:
i.
PICOP FAILED TO SUBMIT A
ii.
PICOP FAILED TO COMPLY WITH THE PAYMENT OF
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 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.
v.
PCIOP FAILED TO SECURE SOCIAL ACCEPTABILITY UNDER
PRESIDENTIAL DECREE NO. 1586.
IV
THE MOTIVATION OF ALVAREZ IN RECALLING THE CLEARANCE
FOR AUTOMATIC CONVERSION HE ISSUED ON
On
PICOP’s
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
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
petitioner’s 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 petitioner’s Timber License Agreement (TLA) No. 43 guaranteed by
the Government, under the Warranty and Agreement of 29 July 1969.[13]
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) PICOP’s peaceful and adequate enjoyment of the said
area which the government guaranteed under the Warranty and Agreement of 29
July 1969.[14]
The grounds submitted by PICOP in its
Petition for Mandamus are as follows:
I
Respondent secretary has unlawfully refused and/or
neglected to 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.
II
Respondent Secretary acted with grave abuse of
discretion and/or in excess of jurisdiction in refusing to sign and execute
PICOP’s 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 PICOP’s predecessor-in-interest, 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 Secretary’s 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]
Petitions for Mandamus are governed
by Rule 65 of the Rules of 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 afore-quoted 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
This is where the 1969 Document, the
purported Presidential Warranty, comes into play. When PICOP’s 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) PICOP’s 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 PICOP’s 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
non-issuance 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 non-impairment 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 Secretary’s 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
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 Division’s Decision,[27]
came up with the same conclusion as regards the same issue of whether former
President Marcos’s Presidential Warranty is a contract:
Finally, we do not subscribe to PICOP’s argument that
the Presidential Warranty dated
An examination of the Presidential Warranty at once
reveals that it simply reassures PICOP of the government’s commitment to uphold the
terms and conditions of its timber license and guarantees PICOP’s 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 OSG’s position that it is
merely a collateral undertaking which cannot amplify PICOP’s 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.
‘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 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,
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.
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
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:
JUSTICE TINGA:
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.
ATTY. AGABIN:
Yes,
I believe that statement was made by the Court, your Honor.
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.
ATTY. AGABIN:
Yes,
Your Honor.
JUSTICE TINGA:
Essentially,
the PICOP raised the issue of whether the Presidential Warranty is a contract
or not.
ATTY. AGABIN:
Yes,
Your Honor.
JUSTICE TINGA:
And
therefore any ruling on the part of the Court on that issue could not be an obiter dictum.
ATTY. AGABIN:
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:
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:
Yes,
Your Honor. Except that…
JUSTICE TINGA:
So,
how can you say now that the Court merely uttered, declared, laid down an obiter dictum in saying that the
Presidential Warranty is not a contract, and it is not being a contract, it is
not prohibited by the non-impairment clause.
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….
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.
ATTY. AGABIN:
Well,
that is correct, your Honor except that the Court could have just avoided that
question. Because…
JUSTICE TINGA:
Why[?]
ATTY. AGABIN:
It
already settled the issue, the basic issue.
JUSTICE TINGA:
Yes,
because the Court in saying that merely reiterated a number of rulings to the
effect that the Presidential Warranty, a Timber License for that matter is not
a contract protected by the non-impairment laws.
ATTY. AGABIN:
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
was not necessary[?]
ATTY. AGABIN:
To
the decision of the Court.
JUSTICE TINGA:
It
was.
ATTY. AGABIN:
It
was not necessary.
JUSTICE TINGA:
It
was.
ATTY. AGABIN:
Yes.
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:
Republic of the
Department of Agriculture and Natural Resources
OFFICE OF THE SECRETARY
Diliman,
D-53, Licenses (T.L.A. No. 43)
Bislig Bay Lumber Co., Inc.
(Bislig, Surigao)
Bislig Bay Lumber Co., Inc.
[unreadable word] Bldg.
S i r s:
This has reference to the request of the Board of
Investments through its Chairman in a letter dated
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 PICOP’s 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.
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.
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.
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
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
APPROVED:
(Sgd.) FERDINAND E. MARCOS
President of the
ACCEPTED:
BISLIG BAY
LBR. CO., INC.
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 PICOP’s 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 PICOP’s 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
PICOP’s interpretation of the 1969
Document cannot be sustained. PICOP’s
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 production-sharing 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. Tinga’s
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.
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 production-sharing 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
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
Any interpretation extending the
application of the 1969 Document beyond
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.
JUSTICE CARPIO:
The
TLA here, TLA 43, expired, the first 25 years expired in 1977, correct?
ATTY. AGABIN:
Yes,
Your Honor.
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 let’s 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:
Well,
your Honor, we believe on a question like this, this Honorable Court should
balance the interest.
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?
ATTY. AGABIN:
Your
Honor, except that we are invoking the warranty, the terms of the warranty….
JUSTICE CARPIO:
Can
the warranty prevail over the Constitution?
ATTY. AGABIN:
Well,
it is a vested right, your Honor.
JUSTICE CARPIO:
Yes,
but whatever it is, can it prevail over the Constitution?
ATTY. AGABIN:
The
Constitution itself provides that vested rights should be ….
JUSTICE CARPIO:
If it
is not in violation of specific provision of the Constitution. The Constitution says, 25 years plus another
25 years, that’s the end of it. You mean
to say that a President of the
ATTY. AGABIN:
Well,
that is not our position, Your Honor.
Because our position is that ….
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?
ATTY. AGABIN:
Yes,
based on the contract of warranty, Your Honor, because the contract of
warranty….
JUSTICE CARPIO:
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?
ATTY. AGABIN:
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.
JUSTICE CARPIO:
So,
they file the petition for conversion before the end of the 50th
year for IFMA.
ATTY. AGABIN:
Yes,
Your Honor.
JUSTICE CARPIO:
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.
ATTY. AGABIN:
It is
correct, Your Honor, except that the regimes of joint venture, co-production
and production sharing are what is referred to in the constitution, Your Honor,
and still covered…
JUSTICE CARPIO:
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.
ATTY. AGABIN:
Yes,
Your Honor. Because…
JUSTICE CARPIO:
It
can be done.
ATTY. AGABIN:
That
is provided for by the department itself.[34]
PICOP is, in effect, arguing that the
DENR issued DAO No. 99-53 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.
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 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.
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:
ASSOCIATE JUSTICE DE CASTRO:
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.
DEAN AGABIN:
Yes,
Your Honor.
ASSOCIATE JUSTICE DE CASTRO:
Don’t
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:
I
don’t 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 co-production, 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.
ASSOCIATE JUSTICE DE CASTRO:
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:
Well,
Your Honor, we beg to disagree, because as I said TLA’s 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 co-production, production sharing or joint venture terms. So it’s a completely different regime, Your
Honor.
ASSOCIATE JUSTICE DE CASTRO:
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.
ASSOCIATE JUSTICE DE CASTRO:
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 don’t 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
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 Tinga’s 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 part[43] 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 part[44] 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.
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
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
Re: Allegation That There Were Mutual Contract Considerations
Had the
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 PICOP’s 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.
This provision hardly evinces a
contract consideration (which, in PICOP’s 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 BBLCI’s 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 BBLCI’s 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 one’s 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.
PICOP’s 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 State’s 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
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
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 PICOP’s 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
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
PICOP’s 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
x x x x
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,[54]
which PICOP failed to mention, and for a good reason. None of the 24 incentives enumerated therein
relates to, or even remotely suggests that, PICOP’s 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 PICOP’s property, as these forest lands belong
to the State, and not to PICOP. This is
not changed by PICOP’s 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.
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 PICOP’s cause of action, and the failure to prove the same warrants
a dismissal of PICOP’s Petition for Mandamus, as not even PICOP’s 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 PICOP’s 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 PICOP’s
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 country’s
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
PICOP’s 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 Secretary’s initial
determination.
The
Performance Evaluation Team tasked to appraise PICOP’s performance on its TLA
No. 43 found that PICOP had not submitted its Five-Year Forest Protection Plan
and its Seven-Year 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 PICOP’s 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 PICOP’s Motion for Reconsideration, the DENR
Secretary did not dispute the existence of this SFMP, or question PICOP’s 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 PICOP’s satisfactory performance as
a TLA holder, and covers a period within the subsistence of PICOP’s 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.
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 officers, the positive and categorical evidence presented by the
DENR Secretary was more convincing with respect to the issue of payment of
forestry charges:
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 P15,056,054.05[66] 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.[67] Likewise, PICOP allegedly had overdue and
unpaid silvicultural fees in the amount of P2,366,901.00 as of P167,592,440.90
as of
2.
Collection
letters were sent to PICOP, but no official receipts are extant in the DENR
record in
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 PICOP’s alleged
payment of regular forest charges covering the period from
2.
The
3.
The
P15,056,054.05.[72] The same certification shows delayed payment
of forest charges, thereby corroborating the testimony of SFMS Evangelista and
substantiating the imposition of penalties and surcharges.
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 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 PICOP’s satisfactory performance on its TLA No. 43. This cannot bind either party in a possible
collection case that may ensue.
An evaluation of the DENR
Secretary’s 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.
PICOP claims that SFMS Evangelista’s
office has nothing to do with the collection of forest charges. According to PICOP, the entity having
administrative jurisdiction over it is CENRO,
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.
We
disagree. Evangelista is an SFMS
assigned at the Natural Forest Management Division of the FMB, DENR. In Evangelista’s 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 Evangelista’s testimony should be deemed hearsay. SFMS Evangelista’s
2. Sometime in September, 2001 the DENR Secretary was
furnished a copy of forest Management Specialist II (FMS II) Teofila L.
Orlanes’ Memorandum dated
3. The said Memoranda were referred to the FMB
Director for appropriate action.
4. Thus, on
5. On
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 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 of P2,366,901.00 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 Evangelista’s 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 Evangelista’s 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
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 official-records exception to the hearsay rule.
SFMS Evangelista’s
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 DENR[83]:
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]
PICOP’s
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, PICOP’s 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, PICOP’s 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.
x x x x
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]
We are not sure whether PICOP’s
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 party’s 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.
Before PICOP’s 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.
x x x x.
88. The DENR
issued a total of 73 CADCs as of
89. However
former DENR Secretary Alvarez, in a memorandum dated
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
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 former’s 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 PICOP’s
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.
x x x x
(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 people’s
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
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:
x x x x
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.
7.4
Resolution No. 4,
S-2001 of Sitio Linao,
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. 09-2001 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
PICOP had claimed that it
complied with the Local Government Code requirement of obtaining prior approval
of the Sanggunian concerned by submitting a purported resolution[91]
of the
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
government-owned and controlled corporations.
PICOP’s 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, 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 production-sharing 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.
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 government-owned 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,
PICOP’s 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 PICOP’s assertion that the
application to them of a 1991 law is in violation of the prohibition against
the non-retroactivity 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
project’s 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
PICOP’c 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. PICOP’s 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
non-impairment 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,
PICOP’s 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 PICOP’s 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-NAZARIOAssociate Justice |
WE
CONCUR:
|
ANTONIO
T. CARPIO Associate Justice |
RENATO C. CORONA
Associate Justice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONCHITA CARPIO MORALES
Associate Justice |
PRESBITERO J. VELASCO, JR.
Associate Justice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No part
|
|
|
ANTONIO EDUARDO B. NACHURA Associate Justice |
TERESITA
J. LEONARDO-DE CASTRO Associate Justice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTURO D.
BRION Associate Justice |
DIOSDADO
M. PERALTA Associate Justice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LUCAS P.
BERSAMIN Associate Justice
|
MARIANO C.
Associate Justice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROBERTO A. ABAD
Associate Justice |
MARTIN S.
VILLARAMA, JR. Associate Justice |
Pursuant
to Article VIII, Section 13 of the Constitution, it is hereby certified that
the conclusions in the above Resolution were reached in consultation before the
case was assigned to the writer of the opinion of the Court.
|
|
REYNATO S. PUNOChief Justice
|
* No part.
[1] Records, pp. 1-38.
[2]
[3] Rollo (G.R. No. 162243), pp. 221-222.
[4] Records, Vol. 2, pp. 393-456.
[5] Records, Vol. 4, pp. 1349-1575.
[6] The dispositive portion of the
WHEREFORE, premises considered, the Motion
for Reconsideration dated
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 IFMA, formerly TLA No. 43, as
amended;
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 petitioner’s pulp
and paper mills in accordance with the warranty and agreement of July 29, 1969
between the government and PICOP’s predecessor-in-interest; and
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 PICOP’s predecessor-in-interest (Exhibits “H”, “H-1” to
“H-5”, particularly the following:
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 another 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. (Records, Vol. 4, pp. 1374-1375)
[7] Records, Vol. 2, p. 611.
[8] Rollo (G.R. No. 162243), pp. 229-258. Penned by Associate Justice Ruben T. Reyes, with Associate Justices Edgardo P. Cruz and Noel G. Tijam concurring; rollo (G.R. No. 162243), pp. 229-258.
[9] Rollo (G.R. No. 162243), p. 257.
[10] Rollo (G.R. No. 164516), pp. 107-119.
[11]
[12]
[13] PICOP’s Petition for Mandamus; records, p. 5.
[14]
[15]
[16] Regulations Governing the Integrated Forest Management Program (IFMP); records, pp. 41-55.
[17] Records, p. 43.
[18]
[19] 14A Words and Phrases, West Publishing Co., p. 290 (1952), citing Lawrence v. Cooke, N.Y., 32 Hun 126, 134.
[20]
[21] 3 Words and Phrases, West Publishing Co., p. 344 (1953), citing Giffin v. Petree, 46 S.W. 2d 609, 618, 226 Mo. App. 718.
[22] Akbayan-Youth v. Commission on Elections, 407 Phil. 618, 646 (2001).
[23] PICOP’s Petition for Mandamus; records, p. 20.
[24] Decision, p. 26.
[25] The nature of PICOP’s Petition for Mandamus reads in full:
NATURE OF THE PETITION/COMPLAINT
1. This is a Special Civil Action for Mandamus, with prayer for issuance of Writ of Preliminary Prohibitory and Mandatory Injunction with Damages under Rule 65 of the 1997 Rules of Civil Procedure, as amended.
1.1 Petitioner invokes the jurisdiction of this Honorable Court conferred by Batas Pambansa Blg. 129, The Judiciary Reorganization Act of 1980, under Sections 21 thereof:
“Sec. 21. Original Jurisdiction in other cases. Regional Trial Court shall exercise original jurisdiction:
(1) In the issuance of writs of certiorari, prohibition mandamus, quo warranto, habeas corpus and injunction which may be enforced in any part of their respective regions; xxx (underscoring supplied).
1.2 Petitioner brings the instant petition for the grant of the privileged writ of mandamus, with prayer for the issuance of provisional remedies of preliminary prohibitory and mandatory injunction pendente lite against respondent Secretary for illegal acts which impinge on and violate the constitutional rights of petitioner, and respondent Secretary has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction.
1.3 Appropriateness of Recourse to Mandamus. The 1997 Rules of Civil Procedure, as amended, under Rule 65, Sec. 3 thereof provides relief against official acts by public officers which are illegal and traduces fundamental rights of a party aggrieved, or acts done without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction. Thus:
“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 person 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 damages sustained by the petitioner by reason of the wrongful acts of the respondent.” (Emphasis supplied)
1.4 The jurisdiction of this Honorable Court to adjudicate the matters raised in this petition and to issue the privileged writ of mandamus is a settled matter. In Tañada v. Angara, 272 SCRA 18 [1997], the Supreme Court held:
The jurisdiction of this Court to adjudicate the matters raised in the petition is clearly set out in the 1987 Constitution, as follows:
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government.
The foregoing text emphasizes the judicial department’s duty and power to strike down grave abuse of discretion on the part of any branch or instrumentality of government including Congress. It is innovation in our political law. As explained by former Chief Justice Roberto Concepcion, the judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction. This is not a judicial power but a duty to pass judgment on matters of this nature.
As this Court has repeatedly and firmly emphasized in many cases, it will not shirk, digress from or abandon its sacred duty and authority to uphold the Constitution in matters that involve grave abuse of discretion brought before it in appropriate cases, committed by any officer, agency, instrumentality or department of the government.
As the petition alleges grave abuse of discretion and as there is no other plain, speedy or adequate remedy in the ordinary course of law, we have no hesitation at all in holding that this petition should be given due course and the vital questions raised therein ruled upon under Rule 65 of the Rules of Court. Indeed, certiorari, prohibition and mandamus are appropriate remedies to raise constitutional issues and to review and/or prohibit/nullify, when proper, acts of legislative and executive officials. On this, we have no equivocation.
1.5 By this privileged writ of mandamus, petitioner seeks to:
1.5.1 Compel respondent Department of Environment and Natural Resources (DENR) Secretary Heherson T. Alvarez to execute and deliver the Integrated Forestry Management Agreement (IFMA for short), and issue the corresponding IFMA number assignment to petitioner and to which it has a clear legal right and respondent has the legal duty to perform.
Respondent DENR Secretary has unlawfully refused and neglected and continue to unlawfully refuse and neglect, to issue the IFMA and corresponding IFMA number assignment to PICOP, the performance of which the law specifically enjoins as a duty resulting from his office. Respondent Secretary Alvarez in refusing to sign, execute and deliver the IFMA and corresponding IFMA assignment number to PICOP has acted without jurisdiction or in excess of jurisdiction or so capriciously as to constitute an abuse of discretion amounting to excess or lack of jurisdiction.
1.5.2
Compel respondent DENR Secretary to abide by and
respect the obligation of contract embodied under a letter warranty and
agreement entered into by and between the Government and PICOP’s predecessor-in-interest
dated
“This has reference to the
request of the Board of Investment through its Chairman in a letter dated
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 PICOP’s 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 in unification of managerial, technical, economical and manpower resources between your company and PICOP.
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 licenses for this reason, we are pleased to consider favorably the request.
We confirm that your Timber License Agreement No. 43, as amended, (copy of which is attached as Annex “A”) hereof attached to 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.
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
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.”
Copy of which is attached as Annex “A”.
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 other twenty five (25) years, of PICOP over the area covered by said Agreement 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, and petitioner’s 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 petitioner’s Timber License Agreement (TLA) No. 43 guaranteed by the Government, under the Warranty and Agreement of 29 July 1969.
1.7 The Bill of Rights of the 1987 Constitution guarantees the non-impairment of the obligation of contract, providing in Sec. 10, Art. III thereof that:
“Sec. 10. No law impairing the obligation of contracts shall be passed.”
1.8 The obligation of a contract is the law or duty which binds the parties to perform their agreement according to its terms or intent (Sturgess v. Crownshields, 4 Wheat 122). The treaties on the Constitution state the scope of terms “law” and “contract”, to mean:
(1) The law, the enactment of which is prohibited, includes executive and administrative orders issued by heads of departments, and ordinances enacted by local governments. (citing Lim v. Secretary of Agriculture, 34 SCRA 751 [1970]).
(2) The contract, the obligation of which is secured against impairment by the Constitution, includes contracts entered into by the Government (citing Maddumba v. GSIS, 182 SCRA 281 [1990]). An example of impairment by law is when a tax exemption based on a contract entered into by the government is revoked by a letter taxing statute (citing Casanova v. Hord, 8 Phil. 125 [1907]).
(3)
The State when contracting does
so upon the same terms as a private individual or corporation and may not plead
its sovereignty as justification in impairing a contractual obligation which it
has assumed (citing
(4) In a Contract, a party acquires a right and the other assumed an obligation arising from the same (Art. 1305, New Civil Code). A contract is the law between the contracting parties, their assigns, and their heirs (Arts. 1159, 1311 par. 1, Civil Code) (De Leon, Philippine Constitutional Law, Principles and Cases, 1999 Ed., pp. 682, 283).
As used in the Constitution, the word “Contracts” includes other arrangement not normally considered to be contracts such as a legislative grant of a public land to particular individuals, such that a subsequent attempt by the State to annul the title of purchasers in good faith from the grantee would be unconstitutional (citing Fletcher v. Peck, 10 US 87). (ibid., p. 6).
1.9 There is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law except the privileged writ of mandamus prayed for in this petition.
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 non-impairment 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]). (PICOP’s Petition for Mandamus, Records pp. 1-6.)
[26] G.R. No. 163509, 6 December 2006, 510 SCRA 400, penned by Associate Justice Dante O. Tinga with Associate Justices Leo A. Quisumbing, Antonio T. Carpio, Conchita Carpio Morales, and Presbitero J. Velasco, Jr., concurring.
[27] That the erstwhile Third Division of this Court was still unaware of this Division’s Decision is shown by the following excerpts in its Decision:
PICOP brings to the Court’s attention the case of PICOP Resources, Inc. v. Hon. Heherson T. Alvarez, wherein the Court of Appeals ruled that the Presidential Warranty issued to PICOP for its TLA No. 43 dated July 29, 1969, a TLA distinct from PTLA No. 47 involved in this case, is a valid contract involving mutual prestations on the part of the Government and PICOP.
x x x x
The case of PICOP Resources, Inc.
v. Hon. Heherson T. Alvarez, supra, cited by PICOP cannot be relied upon to
buttress the latter’s claim that a presidential warranty is a valid and
subsisting contract between PICOP and the Government because the decision of the
appellate court in that case is still pending review before the Court’s Second
Division. (
[28]
[29] TSN, Oral Arguments, pp. 174-181.
[30] PICOP’s Petition for Mandamus; records, pp. 26-27.
[31] PICOP’s Memorandum, p. 101; rollo, p. 1262.
[32] PICOP’s Motion for Reconsideration,
p. 50; rollo, p. 1391a; TSN,
[33]
[34] Oral
Arguments,
[35] RULES OF COURT, Section 3(m), Rule 131.
[36] Article
XIV, Section 8, 1973 Constitution provides:
Section 8. All lands of public
domain, waters, minerals, coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, wildlife, and other natural resources of the
[37] Oral Arguments,
[38] G.R. No. 174340,
[39] Javellana v. Tayo, 116 Phil. 1342, 1351 (1962).
[40] PICOP’s Motion for Reconsideration, p. 16; rollo, p. 1385.
[41]
[42]
[43] PICOP (CA rollo, p. 176).
[44] Secretary of Agriculture and Natural Resources (id.).
[45] Timber License Agreement No. 43; CA rollo, p. 177.
[46] CA rollo, pp. 323-324.
[47] G.R. No. 84847,
[48] Quirino v. Palarca, 139 Phil. 488, 492 (1969).
[49] Ermita-Malate
Hotel and Motel Operators Association, Inc. v. City Mayor of
[50] The definition in DAO No. 99-53 that an IFMA is a “production sharing contract” has not been assailed as unconstitutional, thus prohibiting us from determining its constitutionality. Nonetheless, a mere designation in an administrative rule cannot alter the legal nature thereof.
[51] PICOP’s Motion for Reconsideration, p. 21; rollo, p. 1386.
[52] The land area of Metro Manila is
63,600 hectares, or 636 square kilometers.
Metro
[53] PICOP’s Motion for Reconsideration, pp. 22-23; rollo, pp. 1386a-1386b.
[54] SECTION 5. Incentives
to Investors in a Registered
(a) Protection of Patents and Other Proprietary Rights. — The right to be protected from infringement of patents, trademarks, copyright, trade names, and other proprietary rights, where such patents, trade marks, copyright, trade names, and other proprietary rights have been registered with the Board and the appropriate agencies of the Government of the Philippines.
(b) Capital Gains Tax Exemption. — Exemption from income tax on that portion of the gains realized from the sale, disposition, or transfer of capital assets, as defined in Section thirty-four of the National Internal Revenue Code, that corresponds to the portion of the proceeds of the sale that is invested in new issues of capital stock of a registered enterprise within six months from the date the gains were realized: Provided, (1) that the said sale, disposition or transfer and the investment of the proceeds thereof have been registered with the Board and the Bureau of Internal Revenue; and (2) that the shares of stock representing the investment are not disposed of, transferred, assigned, or conveyed for a period of five years from the date the investment was made. If such shares of stock are disposed of within the said period of five (5) years, all taxes due on the gains realized from the original transfer, sale or disposition of the capital assets shall immediately become due and payable.
SECTION 6. Incentives to Philippine Nationals Investing in Pioneer Enterprises. — In addition to the incentives provided in the preceding sections, Philippine Nationals investing in a pioneer enterprise shall be granted the following incentives benefits:
(a) Tax Allowance for Investments. — An investment allowance to the extent of his actual investment, paid in cash or property shall be allowed as a deduction from his taxable income but not to exceed ten per cent thereof: Provided, (1) That the investment is made in a subscription of shares in the original and/or increased capital stock of a pioneer enterprise within seven years from the date of registration; (2) that the shares are held for a period of not less than three years and; (3) that the investment is registered with the Board. If the shares are disposed of within the said three year period, the tax payer shall lose the benefit of this deduction, his income tax liability shall be recomputed, and he shall pay whatever additional sum be due plus interest thereon, within thirty days from the date of disposition.
(b) Capital Gains Tax Exemption. — Exemption from income tax on the portion of the gains realized from the sale, disposition, or transfer of capital assets, as defined in Section thirty-four of the National Internal Revenue Code, that corresponds to the portion of the proceeds of the sale that is invested in new issues of capital stock of, or in the purchase of stock owned by foreigners in, pioneer enterprises, within six months from the date the gains were realized: Provided, (1) That such sale, disposition or transfer and the investment of the proceeds thereof are registered with the Board and the Bureau of Internal Revenue; and (2) that the shares of stock representing the investment are not disposed of, transferred, assigned or conveyed for a period of three (3) years from the date the investment was made. If said shares of stock are disposed of within the said period of three (3) years, all taxes due on the gains realized from the original transfer, sale or disposition of the capital assets shall immediately become due and payable.
(c) Tax
Exemption on
SECTION
7. Incentives to a Registered
(a) Deduction of Organizational and Pre-Operating Expenses. — All capitalized organizational and pre-operating expenses attributable to the establishment of a registered enterprise may be deducted from its taxable income over a period of not more than ten years beginning with the month the enterprise begins operations, provided the taxpayer indicates the desired amortization period at the time of the filing of the income tax returns for the first taxable year. For the purpose of this provision, organizational and pre-operating expenses shall include expenses for pre-investment studies, start up costs, costs of initial recruitment and training, and similar expenses.
(b) Accelerated Depreciation. — At the option of the taxpayer and in accordance with the procedure established by the Bureau of Internal Revenue, fixed assets may be (1) depreciated to the extent of not more than twice as fast as normal rate of depreciation or depreciated at normal rate of depreciation if expected life is ten years or less; or (2) depreciated over any number of years between five years and expected life if the latter is more than ten (10) years; and the depreciation thereon allowed as a deduction from taxable income: Provided, That the taxpayer notifies the Bureau of Internal Revenue at the beginning of the depreciation period which depreciation rate allowed by this section will be used by it.
(c) Net Operating Loss Carry-over. — A net operating loss incurred in any of the first ten years of operations may be carried over as a deduction from taxable income for the six years immediately following the year of such loss. The entire amount of the loss shall be carried over to the first of the six taxable years following the loss, and any portion of such loss which exceeds the taxable income of such first year shall be deducted in like manner from the taxable income of the next remaining five years. The net operating loss shall be computed in accordance with the provisions of the National Internal Revenue Code, any provision of this Act to the contrary notwithstanding, except that income not taxable either in whole or in part under this or other laws shall be included in gross income.
(d) Tax Exemption on Imported Capital Equipment. — Within seven years from the date of registration of the enterprise, importation of machinery and equipment, and spare parts shipped with such machinery and equipment, shall not be subject to tariff duties and compensating tax: Provided, That said machinery, equipment and spare parts: (1) are not manufactured domestically in reasonable quantity and quality at reasonable prices; (2) are directly and actually needed and will be used exclusively by the registered enterprise in the manufacture of its products; (3) are covered by shipping documents in the name of the registered enterprise to whom the shipment will be delivered direct by customs authorities; (4) the prior approval of the Board was obtained by the registered enterprise before the importation of such machinery, equipment and spare parts; and (5) the registered enterprise chooses not to avail of the privileges granted by Republic Act Numbered Thirty-one hundred twenty-seven, as amended. If the registered enterprise sells, transfers, or disposes of these machinery, equipment and spare parts without the prior approval of the Board within five (5) years from the date of acquisition, the registered enterprise shall pay twice the amount of the tax exemption given it. However, the Board shall allow and approve the sale, transfer, or disposition of the said items within the said period of five (5) years if made: (1) to another registered enterprise; (2) for reasons of proven technical obsolescence; or (3) for purposes of replacement to improve and/or expand the operations of the enterprise.
(e) Tax Credit on Domestic Capital Equipment. — A tax credit equivalent to one hundred per cent (100%) of the value of the compensating tax and customs duties that would have been paid on the machinery, equipment and spare parts had these items been imported shall be given to the registered enterprise who purchases machinery, equipment and spare parts from a domestic manufacturer, and another tax credit equivalent to fifty per cent (50%) thereof shall be given to the said manufacturer: Provided, (1) That the said machinery, equipment and spare parts are directly and actually needed and will be used exclusively by the registered enterprise in the manufacture of its products; (2) that the prior approval of the Board was obtained by the local manufacturer concerned; and (3) that the sale is made within seven years from the date of registration of the registered enterprise. If the registered enterprise sells, transfers or disposes of these machinery, equipment and spare parts without the prior approval of the Board within five years from the date of acquisition, then it shall pay twice the amount of the tax credit given it. However, the Board shall allow and approve the sale, transfer, or disposition of the said items within the said period of five years if made (1) to another registered enterprise; (2) for reasons of proven technical obsolescence; or (3) for purposes of replacement to improve and/or expand the operations of the enterprise
(f) Tax Credit for Withholding Tax on Interest. — A tax credit for taxes withheld on interest payments on foreign loans shall be given a registered enterprise when (1) no such credit is enjoyed by the lender-remittee in his country and (2) the registered enterprise has assumed the liability for payment of the tax due from the lender-remittee.
(g) Employment of Foreign Nationals. — Subject to the provisions of Section twenty-nine of Commonwealth Act Numbered Six hundred thirteen, as amended, an enterprise may, within five years from registration, employ foreign nationals in supervisory, technical or advisory positions not in excess of five per centum of its total personnel in each such category: Provided, That in no case shall each employment exceed five years. The employment of foreign nationals after five years from registration, or within such five years but in excess of the proportion herein provided, shall be governed by Section twenty of Commonwealth Act Numbered Six hundred thirteen, as amended.
Foreign nationals under employment contract within the purview of this Act, their spouse and unmarried children under twenty-one years of age, who are not excluded by Section twenty-nine of Commonwealth Act Numbered Six hundred thirteen, shall be permitted to enter and reside in the Philippines during the period of employment of such foreign nationals.
A registered enterprise shall train Filipinos in administrative, supervisory, and technical skills and shall submit annual reports on such training to the Board of Investments.
(h) Deduction for Expansion Reinvestment. — When a registered enterprise reinvests its undistributed profit or surplus by actual transfer thereof to the capital stock of the corporation for procurement of machinery, equipment and spare parts previously approved by the Board under Subsections "d" and "e" hereof or for the expansion of machinery and equipment used in production or for the construction of the buildings, improvements or other facilities for the installation of the said machinery and equipment, the amount so reinvested shall be allowed as a deduction from its taxable income in the year in which such reinvestment was made: Provided, (1) That prior approval by the Board of such reinvestment was obtained by the registered enterprise planning such reinvestment, and (2) that the registered enterprise does not reduce its capital stock represented by the reinvestment within seven years from the date such reinvestment was made. In the event the registered enterprise does not order the machinery and equipment within two (2) years from the date the reinvestment was made or reduces its capital stock represented by the reinvestment within a period of seven years from the date of reinvestment, a recomputation of the income tax liability therefor shall be made for the period when the deduction was made, and the proper taxes shall be assessed and paid with interest.
(i) Anti-Dumping Protection. — Upon recommendation of the Board, made after notice and hearing, the President shall issue a directive banning for a limited period the importation of goods or commodities which, as provided in Section three hundred one (a) of the Tariff and Customs Code of the Philippines, unfairly or unnecessarily complete with those produced by registered enterprises: Provided, (1) That the Board certifies to the satisfactory quality of the goods or commodities produced or manufactured by the registered enterprises; and (2) that the enterprises agree not to increase the price of these goods or commodities during this period, unless for good cause, the Board allows such an increase.
(j) Protection from Government Competition. — No agency or instrumentality of the government shall import, or allow the importation tax and duty free of products or items that are being produced or manufactured by registered enterprises, except when the President determines that the national interest so requires or when international commitments require international competitive bidding.
SECTION
8. Incentives to a Pioneer
(a) Tax Exemptions. — Exemptions from all taxes under the National Internal Revenue Code, except income tax, to the following extent:
(1) One hundred per cent
up to
(2) Seventy-five per cent
up to
(3) Fifty per cent up to
(4) Twenty per cent up to
(5) Ten per cent up to
(b) Employment
of Foreign Nationals. — Subject to the provisions of Section twenty nine of
Commonwealth Act Numbered Six hundred thirteen, as amended, to employ and bring
into the
(1) That all such foreign nationals shall register with the Board;
(2) That the employment of all foreign nationals shall cease and they shall be repatriated five years after the registered enterprise has begun operating: Provided, That when the majority of the capital stock of the pioneer enterprise is owned by foreign investors, the positions of president, treasurer and general manager, or their equivalents, may be retained by foreign nationals. In exceptional cases, the Board may allow employment of foreign nationals in other positions that cannot be filled by the Philippine nationals, but in such cases the limitations of Section seven paragraph (g) of this Act shall apply.
Foreign nationals under employment contract within the purview of this Act, their spouse and unmarried children under twenty-one years of age, who are not excluded by Section twenty-nine of Commonwealth Act Numbered Six hundred thirteen, shall be permitted to enter and reside in the Philippines during the period of employment of such foreign nationals.
(c) Post-Operative Tariff Protection. — Upon recommendation of the Board, the President, with or without the recommendation of the Tariff Commission or the National Economic Council, shall issue a certification that a pioneer industry shall be entitled to post-operative tariff protection to an extent not exceeding fifty per cent of the dutiable value of imported items similar to those being manufactured or produced by a pioneer enterprise, unless a higher rate or amount is provided for in the Tariff Code or pertinent laws. Said tariff shall take effect automatically upon certification by the Board that the pioneer enterprise is operating on a commercial scale: Provided, That said tariff, once operative, may be modified in accordance with Section four hundred one of the Tariff and Customs Code.
SECTION 9. Special Export Incentives for Registered Enterprises. — Registered enterprises shall be entitled to the following special incentives for exports of their completely finished products and commodities:
(a) Double Deduction of Promotional Expenses. — To deduct from taxable income twice the amount of the ordinary and necessary expenses incurred for the purpose of promoting the sale of their products abroad;
(b) Double Deduction of Shipping Costs. — To deduct from taxable income twice the amount of shipping freight incurred in connection with the export of their products, if the shipments are made in vessels of Philippine registry to their regular ports of call; and to deduct one hundred fifty per cent (150%) of the freight when shipments are made in vessels of foreign registry to a port which is not a regular port of call of Philippine vessels;
(c) Special Tax Credit on Raw Materials. — A tax credit equivalent to seven per cent (7%) of the total cost of the raw materials and supplies purchased by registered enterprises or an amount equivalent to the taxes actually paid by registered enterprises on said raw materials, whichever is higher, to the extent used in manufacturing exported products and commodities.
Before registered enterprises may avail themselves of the foregoing exports incentives benefits, the shall apply first with the Board, which shall approve the application upon proof: (1) that the enterprise proposes to engage in good faith in creating a market for its products abroad; (2) that the product to be exported is one included in the government priorities plan as suitable for export, or if not so included that its export will not adversely affect the needs of the domestic market for the finished product to be exported or for the domestic raw materials used in its manufacture; (3) that the enterprise has or will set up an adequate accounting system to segregate revenues, purchases and expenses of its export market operations from those of its domestic market operations; and (4) that the exported products and commodities meet the standards of quality established by the Bureau of Standards or, in default thereof, by the Board.
SECTION 10. Preference in Grant of Government Loans. — Government financial institutions such as the Development Bank of the Philippines, Philippine National Bank, Government Service Insurance System, Social Security System, Land Bank, and such other government institutions as are now engaged or may hereafter engage in financing or investment operations shall, in accordance with and to the extent allowed by the enabling provisions of their respective charters or applicable laws, accord high priority to applications for financial assistance submitted by pioneer and other registered enterprises, whether such financial assistance be in the form of equity participation in preferred, common, or preferred convertible shares of stock, or in loans and guarantees, and shall facilitate the processing thereof and the release of the funds therefor. However, no financial assistance shall be extended under this section to any investor or enterprise that is not a Philippine National.
The above-mentioned financial institutions, to the extent allowed by their respective charters or applicable laws, shall contribute to the capital of a registered enterprise whenever the said contribution would enable the formation of pioneer or other registered enterprise with at least sixty per cent control by Philippine Nationals: Provided, That the capital contribution of the said financial institutions shall be limited to the amount that cannot be contributed by private Filipino investors, and shall in no case exceed thirty per cent of the total capitalization of the pioneer or other registered enterprises. The shares representing the contribution of the said financial institutions shall be offered for public sale to Philippine Nationals through all the members of a registered Philippine stock exchange.
To facilitate the implementation of the provisions of this Section, all the said financial institutions shall coordinate their financial assistance programs with each other, exchange relevant information about applicants and applications, and submit a monthly report to the Board showing the amount of funds available for financial assistance to pioneer or other registered enterprises. The Board shall recommend to the Board of Directors of each such financial institution what order of priority shall be given the applications of pioneer and other registered enterprises, or of applicants that propose to seek registration as such.
SECTION 11. Private Financial Assistance. — Any provision of existing laws to the contrary notwithstanding, the Insurance Commissioner is hereby authorized to allow insurance companies, under such rules and regulations as he may issue, to invest in new issues of stock of registered enterprises, notwithstanding that said enterprises may not have paid regular dividends, to the extent set out in section two hundred, paragraphs (c) and (f) of the Insurance Act, as amended: Provided, that said investments are diversified.
SECTION 12. Loans for Investment. — The Government Service Insurance System and the Social Security System shall extend to their respective members five-year loans at a rate of interest not to exceed six per cent per annum for the purchase of shares of stock in any registered enterprise: Provided, That (1) the shares so purchased shall be deposited in escrow with the lending institution for the full five-year term of the loan; partial releases of the shares shall, however, be allowed to the extent of the payment of amortization made therefor; (2) such loans shall be amortized in sixty equal monthly installments which shall be withheld by the employer from the monthly salary of the employee concerned and remitted to the lending institution by the employer; but any and all dividends earned by shares of stock while they are held in escrow shall be delivered to the employee; and (3) the maximum loan available to each employee in any one calendar year shall not exceed fifty per centum of the employee's annual gross income: Provided, further, That the total investment of the government financial institution concerned, consisting of its direct investment in the registered enterprise and the loans it has extended to its respective members which have been invested by the members in a registered enterprise, shall not be more than forty-nine per cent (49%) of the total capitalization of the registered enterprise in which the investments have been made.
[55] Section
9. Private property shall not be
taken for public use without just compensation.
[56] Section
18. The State may, in the interest
of national welfare or defense, establish and operate vital industries and,
upon payment of just compensation, transfer to public ownership utilities and
other private enterprises to be operated by the Government.
[57] PICOP’s Motion for Reconsideration, pp. 17-18. rollo pp. 1386a-1386b.
[58] Riss & Co. v. Wallace, 195 S.W. 2d 881, 885, 239 Mo.App. 979, cited in Words and Phrases, Permanent Edition, Vol. 29, p. 13.
[59] E.O. No. 192, otherwise known as the “Reorganization Act of the Department of Environment and Natural Resources,” Section 4.
[60] Exhibit 7-g-2, Folder of Exhibits, Vol. 3, pp. 480-482.
[61] Motion for Reconsideration, p. 30.
[62] E.O. No. 192, otherwise known as the “Reorganization Act of the Department of Environment and Natural Resources,” Section 4.
[63] Rollo (G.R. No. 162243), p. 252.
[64] Folder of Exhibits, Vol. 2, pp. 398-399.
[65] See Rules of Court, Rule 130, Section 3(a).
[66] Folder of Exhibits, Vol. 3, pp. 433-434.
[67] Exhibit 6, p. 440; Folder of Exhibits, Vol. 3.
[68]
[69]
[70] TSN,
[71] Exhibit NN, p. 349; Folder of Exhibits, Vol. 2.
[72] Records, Vol. 2, pp. 457-458.
[73] Folder of Exhibits, Volume 3, p. 423.
[74] Folder of Exhibits, Volume 3, pp. 423-425.
[75]
[76] Section 36, Rule 130 of the Rules of Court.
[77] People v. Parungao, 332 Phil. 917, 924 (1996).
[78] TSN, Volume 2,
[79] 123 Phil. 272, 277 (1966).
[80] Alvarez
v. PICOP Resources, Inc., G.R. No. 162243,
[81]
[82] Oposa
v. Factoran, Jr., G.R. No. 101083,
[83] 400 Phil. 904, 1012-1013 (2000), Separate Opinion of Justice Reynato Puno.
[84] PICOP’s Motion for Reconsideration, p. 41; rollo, pp. 1390a-1390b.
[85] PICOP’s Motion for Reconsideration, pp. 43-44; rollo, pp. 1390a-1390b.
[86] Black’s Law Dictionary (Eighth Edition), p. 265.
[87]
[88] Rollo (G.R. No. 162243), pp. 470-472.
[89] Folder of Exhibits, Vol. 2, Exhibit OO, p. 351.
[90] Folder of Exhibits, Vol. 2, Exhibit O-1, p. 176; Folder of Exhibits, Vol. 3, Exhibit 7-g, p. 475.
[91] Folder of Exhibits, Vol. 2, Exhibit OO, p. 351.
[92] Rollo (G.R. No. 162243), p. 230.
[93] PICOP’s Motion for Reconsideration, pp. 48-49, rollo, pp. 1391a-1391b.
[94] Supra note 26.