PRESIDENTIAL DECREE NO.
1151
[PHILIPPINE ENVIRONMENTAL POLICY]
WHEREAS, the individual and, at times, conflicting demands of population growth, urbanization,
industrial expansion, rapid natural resources utilization and increasing technological advances have
resulted in a piece meal approach concept of environmental protection;
WHEREAS, such tunnel-vision concept is not conducive to the attainment of an ideal environmental
situation where man and nature can thrive in harmony with one another; and
WHEREAS, there is now an urgent need to formulate an intensive, integrated program of
environmental protection that will bring about a concerted effort towards the protection of the
entire spectrum of the environment through a requirement of environmental impact assessments
and statements;
NOW, THEREFORE, I, Ferdinand E. Marcos, President of the Philippines, by virtue of the powers
vested in me by the Constitution, do hereby order and decree:chanroblesvirtuallawlibrary
Section 1. Policy
It is hereby declared a continuing policy of the State:chanroblesvirtuallawlibrary
a. to create, develop, maintain, and improve conditions under which man and nature can thrive in
productive and enjoyable harmony with each other;
b. to fulfill the social, economic and other requirements of present and future generations of
Filipino; and
c. to insure the attainment of an environmental quality that is conducive to a life of dignity and
well-being.
Section 2. Goal
In pursuing this policy, it shall be the responsibility of the Government, in cooperation with
concerned private organizations and entities, to use all practicable means, consistent with other
essential considerations of national policy, in promoting the general welfare to the end that the
Nation may
a. recognize, discharge and fulfill the responsibilities of each generation as trustee and guardian of
the environment for succeeding generations;
b. to assure the people of a safe, decent, healthful, productive and aesthetic environment;
c. encourage the widest exploitation of the environment without degrading it, or endangering
human life, health and safety or creating conditions adverse to agriculture, commerce and industry;
d. preserve important historic and cultural aspects of the Philippine heritage;
e. attain a rational and orderly balance between population and resource use; and
f. improve the utilization of renewable and non-renewable resources.
Section 3. Right to a Healthy Environment
In furtherance of these goals and policies, the Government recognizes the right of the people to a
healthy environment. It shall be the duty and responsibility of each individual to contribute to the
preservation and enhancement of the Philippine environment.
Section 4. Environmental Impact Statement
Pursuant to the above enunciated policies and goals, all agencies and instrumentalities of the
national government, including government-owned or controlled corporations, as well as private
corporations, firms and entities shall prepare, file and include in every action, project or
undertaking which significantly affects the quality of the environment a detailed statement
on:chanroblesvirtuallawlibrary
a. the environmental impact of the proposed action, project or undertaking;
b. any adverse environmental effect which cannot be avoided should the proposal be
implemented;
c. alternative to the proposed action;
d. a determination that the short-term uses of the resources of the environment are consistent
with the maintenance and enhancement of the long-term productivity of the same; and
e. whenever a proposal involves the use of depletable or nonrenewable resources, a finding must
be made that such use and commitment are warranted.
Before an environmental impact statement is issued by a lead agency, all agencies having
jurisdiction over, or special expertise on, the subject matter involved shall comment on the draft
environmental impact statement made by the lead agency within thirty (30) days from the receipt
of the same.
Section 5. Agency Guidelines
The different agencies charged with environmental protection as enumerated in Letter of
Instruction No. 422 shall sixty (60) days from the effectivity of this Decree, submit to the National
Environmental Protection Council (NEPC), their respective, guidelines, rules and regulations to carry
out the provisions of Section 4 hereof on environmental impact assessments and statements.
Section 6. Repealing Clause
All Acts, Presidential Decrees, executive orders, rules and regulations or parts thereof which are
inconsistent with the provisions of this Decree are hereby repealed, amended or modified
accordingly.
Section 7. Effectivity
This Decree shall take effect immediately.
PRESIDENTIAL DECREE NO. 1152
[PHILIPPINE ENVIRONMENT CODE]
WHEREAS, the broad spectrum of environment has become a matter of vital concern to the
government;
WHEREAS, the national leadership has taken a step towards this direction by creating the National
Environment Protection Council under Presidential Decree No. 1121;
WHEREAS, it is necessary that the creation of the Council be complemented with the launching of a
comprehensive program of environmental protection and management;
WHEREAS, such a program can assume tangible and meaningful significance only by establishing
specific environment management policies and prescribing environment quality standards in a
Philippine Environment Code.
NOW, THEREFORE, I, Ferdinand E. Marcos, President of the Republic of the Philippines, by virtue of
the powers vested in me by the Constitution, do hereby order and decree:
Section 1. Short Title
This decree shall be known and cited as "The Philippine Environment Code."
TITLE I. AIR QUALITY MANAGEMENT
Section 2. Purposes
The purposes of this Title are:
a. to achieve and maintain such levels of air quality as to protect public health; and
b. to prevent to the greatest extent practicable, injury and/or damage to plant and animal life and
property, and promote the social economic development of the country.
Chapter I. Standards
Section 3. Ambient Air Quality Standards
There shall be established ambient air quality standards which shall prescribe the maximum
concentration of air pollutants permissible in the atmosphere consistent with public health, safety
and general welfare.chanrobles virtualawlibrary
In the establishment of ambient air quality standards, factors such as local atmospheric conditions,
location and land use, and available technology, shall be considered among others.
Section 4. National Emission Standards
There shall be established national emission standards for new and existing stationary and mobile
sources of pollution which shall consider among others such factors as type of industry, practicable
control technology available, location and land use, and the nature of pollutants emitted.
Section 5. Community Noise Standards
Appropriate standards for community noise levels shall be established considering, among others,
location, zoning and land use classification
Section 6. Standards for Noise-Producing Equipment
There shall be established a standard for noise-producing equipment such as construction
equipment, transportation equipment, stationary engines, and electrical or electronic equipment
and such similar equipment or contrivances. The standard shall set a limit on the acceptable level of
noise emitted from a given equipment for the protection of public health and welfare, considering
among others, the magnitude and condition of use, the degree of noise reduction achievable
through the application of best available technology and the cost of compliance.
The installation of any noise-producing equipment shall conform with the requirements of
Presidential Decree No. 1096 and other applicable laws as well as their implementing rules and
regulations.
Section 7. Aircraft Emission and Sonic Booms
Appropriate government agencies shall encourage research studies on the harmful effects of aircraft
emissions in the environment in order to establish permissible emission standards.chanrobles
virtualawlibrary
Research and studies shall also be undertaken to mitigate and/or minimize the effects of sonic
booms in the environment.
Chapter II. Regulation and Enforcement
Section 8. Air Quality and Noise Standards
National Pollution Control Commission in coordination with appropriate government agencies shall
be responsible for the enforcement of ambient air quality emission and noise standards, including
the monitoring and surveillance of air pollutants, licensing and permitting of air pollution control
facilities, and the promulgation of appropriate rules and regulations. Existing air quality emission
and noise standards may be revised and/or modified consistent with new development and
technology.
Section 9. Aircraft Noise
Community noise standards around airports shall be implemented by the Civil Aeronautics
Administration in coordination with the National Pollution Control Commission.
Section 10. Vehicular Emission
The Land Transportation Commission, in coordination with the National Pollution Control
Commission, shall implement emission standards for vehicles and may deputize other appropriate
law enforcement agencies for the purpose.
Section 11. Radioactive Emissions
The release and emission of radioactivity into the environment incident to the establishment or
possession of nuclear energy facilities and radioactive materials, handling, transport, production,
storage, use and disposal of radioactive materials shall be regulated by the Philippine Atomic
Energy Commission in coordination with other appropriated government agencies.
Chapter III. Monitoring
Section 12. Air Quality Monitoring
The National Pollution Control Commission in coordination with appropriate government agencies,
shall establish to the greatest extent practicable an air quality monitoring network. Such air quality
monitoring network shall put to maximum use the capabilities of these agencies.chanrobles
virtualawlibrary
The National Environmental Protection Council shall be furnished with the results of air quality
monitoring activities.
Section 13. Weather Modification
The Philippine Atmospheric, Geophysical and Astronomical Services Administration shall monitor
regularly meteorological factors affecting environmental conditions in order to effectively guide air
pollution monitoring activities.chanrobles virtualawlibrary
Activities relating to weather modification such as rainfall stimulation and storm seeding
experiments shall be undertaken in consultation or coordination with the Philippine Atmospheric,
Geophysical and Astronomical Services Administration.
TITLE II. WATER QUALITY MANAGEMENT
Section 14. Purpose
It is the purpose of this Title to prescribe management guidelines aimed to protect and improve the
quality of Philippine water resources through:
a. classification of Philippine waters;
b. establishment of water quality standards;
c. protection and improvement of the quality of Philippine water resources; and
d. responsibilities for surveillance and mitigation of pollution incidents.
Chapter I. Classification Standards
Section 15. Classification of Philippine Waters
The National Pollution Control Commission, in coordination with appropriate government agencies,
shall classify Philippine waters, according to their best usage. In classifying said waters, the National
Pollution Control Commission shall take into account, among others, the following:
a. the existing quality of the body of water at the time of classification;
b. the size, depth, surface area covered, volume, direction, rate of flow, gradient of stream; and
c. the most beneficial uses of said bodies of water and lands bordering them for residential,
agricultural, commercial, industrial, navigational, recreational, and aesthetic purposes.
Section 16. Reclassification of Waters Based on Intended Beneficial Use
Where the public interest so requires, the National Pollution Control Commission, in coordination
with appropriate government agencies, shall reclassify a body of water based on the intended
beneficial use and take such steps as may be necessary to upgrade the quality of said water. Other
government agencies may adopt higher standards for a particular body of water, subject to the
approval of the National Pollution Control Commission.
Section 17. Upgrading of Water Quality
Where the quality of water has deteriorated to a degree where its state will adversely affect its best
usage, the government agencies concerned shall take such measures as may be necessary to
upgrade the quality of such water to meet the prescribed water quality standards.
Section 18. Water Quality Standards
The National Pollution Control Commission shall prescribe quality and effluent standards consistent
with the guidelines set by the National Environmental Protection Council and the classification of
waters prescribed in the preceding sections, taking into consideration, among others, the
following:chanroblesvirtuallawlibrary
a. the standard of water quality or purity may vary according to beneficial uses; and
b. the technology relating to water pollution control.
Chapter II. Protection and Improvement of Water Quality
Section 19. Enforcement and Coordination
The production, utilization, storage and distribution of hazardous, toxic and other substances such
as radioactive materials, heavy metals, pesticides, fertilizers, and oils, and disposal, discharge and
dumping of untreated wastewater, mine-tailings and other substances that may pollute any body of
water of the Philippines resulting from normal operations of industries, water-borne sources, and
other human activities, as well as those resulting from accidental spills and discharges shall be
regulated by appropriate government agencies pursuant to their respective charters and enabling
legislations. In the performance of the above functions, the government agencies concerned shall
coordinate with the National Environmental Protection Council and furnish the latter with such
information as may be necessary to enable it to attain its objectives under Presidential Decree No.
1121.
Section 20. Clean-up Operations
It shall be the responsibility of the polluter to contain, remove and clean-up water pollution
incidents at his own expense. In case of his failure to do so, the government agencies concerned
shall undertake containment, removal and clean-up operations and expenses incurred in said
operations shall be charged against the persons and/or entities responsible for such pollution.
Section 21. Water Quality Monitoring and Surveillance
The various government agencies concerned with environmental protection shall establish to the
greatest extent practicable a water quality surveillance and monitoring network with sufficient
stations and sampling schedules to meet the needs of the country. Said water quality surveillance
network shall put to maximum use the capabilities of such government agencies. Each agency
involved in such network shall report to the National Environment Protection Council the results of
these monitoring activities as the need arises.
TITLE III. LAND USE MANAGEMENT
Section 22. Purposes
The purposes of this Title are:
a. to provide a rational, orderly and efficient acquisition, utilization and disposition of land its
resources in order to derive therefrom maximum benefits; and
b. to encourage the prudent use and conservation of land resources in order to prevent an
imbalance between the nation’s needs and such resources.
Section 23. National Land Use Scheme
The Human Settlements Commission, in coordination with the appropriate agencies of the
government, shall formulate and recommend to the National Environmental Protection Council a
land use scheme consistent with the purpose of this Title.
The Land Use Scheme shall include, among others, the following:
a. a science-based and technology-oriented land inventory and classification system;
b. a determination of present land uses, the extent to which they are utilized, under-utilized,
rendered idle or abandoned;
c. a comprehensive and accurate determination of the adaptability of the land for community
development, agriculture, industry, commerce, and other fields of endeavor;
d. a method of identification of areas where uncontrolled development could result in irreparable
damage to important historic, or aesthetic values, or nature systems or processes of national
significance;
e. a method for exercising control by the appropriate government agencies over the use of land in
area of critical environmental concern and areas impacted by public facilities including, but not
limited to, airports, highways, bridges, ports and wharves, buildings and other infrastructure
projects;
f. a method to ensure the consideration of regional development and land use in local regulations;
g. a policy for influencing the location of new communities and methods for assuring appropriate
controls over the use of land around new communities;
h. a system of controls and regulations pertaining to areas and development activities designed to
ensure that any source of pollution will not be located where it would result in a violation of any
applicable environmental pollution control regulations; and
i. a recommended method for the periodic revisions and updating of the national land use scheme
to meet changing conditions.
Section 24. Location of Industries
In the location of industries, factories, plants, depots and similar industrial establishments, the
regulating or enforcing agencies of the government shall take into consideration the social,
economic, geographic and significant environmental impact of said establishments.
TITLE IV. NATURAL RESOURCES MANAGEMENT AND CONSERVATION
Section 25. Purposes
The purpose of this Title are:
a. to provide the basics on the management and conservation of the country’s natural resources to
obtain the optimum benefits therefrom and to preserve the same for the future generations; and
b. to provide general measures through which the aforesaid policy may be carried out effectively.
Chapter I. Fisheries and Aquatic Resources
Section 26. Management Policy
The National government, through the Department of Natural Resources, shall establish a system of
rational exploitation of fisheries and aquatic resources within the Philippine territory and shall
encourage citizen participation therein to maintain and/or enhance the optimum and continuous
productivity of the same.
Section 27. Measures for Rational Exploitation
Measures for the rational exploitation of fisheries and other aquatic resources may include, but
shall not be limited to, the following:
a. undertaking manpower and expertise development;
b. acquiring the necessary facilities and equipment;
c. regulating the marketing of threatened species of fish or other aquatic resources;
d. reviewing all existing rules and regulations on the exploitation of fisheries and aquatic resources
with a view to formulating guidelines for the systematic and effective enforcement thereof; and
e. conserving the vanishing species of fish and aquatic resources such as turtles, sea snakes,
crocodiles, corals, as well as maintaining the mangrove areas, marshes and inland areas, coral reef
areas and islands serving as sanctuaries for fish and other aquatic life.
Chapter II. Wildlife
Section 28. Management Policy
The National Government, through the Department of Natural Resources, shall establish a system
of rational exploitation and conservation of wildlife resources and shall encourage citizen
participation in the maintenance and/or enhancement of their continuous productivity.
Section 29. Measures for Rational Exploitation
Measures for rational exploitation of wildlife resources may include, but shall not be limited to, the
following:
a. regulating the marketing of threatened wildlife resources;
b. reviewing all existing rules and regulations on the exploitation of wildlife resources with a view
of formulating guidelines for the systematic and effective enforcement thereof; and
c. conserving the threatened species of fauna, increasing their rate of production, maintaining their
original habitat, habitat manipulation, determining limits, population control in relation to the
carrying capacity of any given area, banning of indiscriminate and/or destructive means of catching
or hunting them.
Chapter III. Forestry and Soil Conservation
Section 30. Management Policy for Forestry
The National Government, through the Department of Natural Resources shall undertake a system
of rational exploitation forest resources and shall encourage citizen participation therein to keep
the country’s forest resources at maximum productivity at all times.
Section 31. Measures for Rational Exploitation of Forest Resources
Measures for the rational exploitation of forest resources may include, but shall not be limited to
the following:
a. regulating the marketing of threatened forest resources;
b. reviewing all existing rules and regulations on the exploitation of forest resources with a view of
formulating guidelines for the systematic and efficient enforcement thereof;
c. conserving threatened species of flora as well as increasing their rate of propagation; the
banning of destructive modes of exploitation, kaingin making or shifting cultivation, indiscriminate
harvesting of minor forest products, the recycling methods of waste materials; and
d. carrying out a continuing effort on reforestation; timber stand improvement; forest protection;
land classification; forest occupancy management; agri-silviculture; range management; agri-
silvicultural/kaingin management; multiple use forest; timber management; and forest research.
Section 32. Management Policy on Soil Conservation
The National Government, through the Department of Natural Resources and the Department
Agriculture, shall likewise undertake a soil conservation program including therein the identification
and protection of critical watershed areas, encouragement of scientific farming techniques, physical
and biological means of soil conservation, and short-term and long-term researches and technology
for effective soil conservation.
Section 33. Use of Fertilizers and Pesticides
The use of fertilizers and pesticides in agriculture shall be regulated, prescribing therefore a
tolerance level in their use. Their use shall be monitored by appropriate government agencies to
provide empirical data for effective regulation.
Chapter IV. Flood Control and Natural Calamities
Section 34. Measures in Flood Control Program
In addition to the pertinent provisions of existing laws, the following shall be included in a soil
erosion, sediment and flood control program:
a. the control of soil erosion on the banks of rivers, the shores or lakes and the sea-shores;
b. the control of flow and flooding in and from rivers and lakes;
c. the conservation of water which, for purposes of this Section shall mean forms of water, but shall
not include captive water;
d. the needs of fisheries and wildlife and all other recreational uses of natural water;
e. measures to control the damming, diversion, taking, and use of natural water, so far as any such
act may affect the quality and availability of natural water for other purposes; and
f. measures to stimulate research in matters relating to natural water and soil conservation and the
application of knowledge thereby acquired.
Section 35. Measures to Mitigate Destructive Effects of Calamities
The national government, through the Philippine Atmospheric, Geophysical and Astronomical
Services Administration, shall promote intensified and concerted research efforts on weather
modification, typhoon, earthquake, tsunami, storm surge, and other tropical natural phenomena in
order to bring about any significant effect to mitigate or prevent their destructive effects.
Chapter V. Energy Development
Section 36. Policy
Consistent with the environmental protection policies, the national government, through the
Energy Development Board, shall undertake an energy development program encouraging therein
the utilization of invariant sources such as solar, wind and tidal energy.
Section 37. Measures for Energy Development
Measures for energy development program may include, but shall not be limited to, the following:
a. setting up pilot plants utilizing invariant sources of energy;
b. training of technical personnel for purposes of energy development; and
c. conducting researches aimed at developing technology for energy development.
Section 38. Safety Measures on Energy Development
Rules and regulations shall be promulgated to prevent or mitigate the adverse effects of energy
development on the environment. For this purpose, all nuclear powered plants and plants exploring
and utilizing geothermal energy, whether owned or controlled by private or government entities
shall:
a. observe internationally accepted standards of safely; and
b. provide safety devises to ensure the health and welfare of their personnel as well as the
surrounding community.
Chapter VI. Conservation and Utilization of Surface Ground Waters
Section 39. Management Policy
In addition to existing laws, the national government through the National Water Resources Council
in coordination with other appropriate government agencies, shall prescribe measures for the
conservation and improvement of the quality of Philippine water resources and provide for the
prevention, control and abatement of water pollution.
Chapter VII. Mineral Resources
Section 40. Management Policy
The National Government, through the Department of Natural Resources, shall undertake a system
of gainful exploitation and rational and efficient utilization of mineral resources and shall encourage
citizen participation in this endeavor.
Section 41. Measures for Exploitation and Utilization of Mineral Resources
Measures for the gainful exploitation and rational and efficient utilization of such mineral resources
may include, but shall not be limited to, the following:
a. increasing research and development in mineral resources technology;
b. training of additional technical manpower needed in geology, geophysics, mining engineering,
and related fields;
c. regulating the exploitation of identified mineral reserves;
d. accelerating the exploitation of undiscovered mineral deposits; and
e. encouraging the establishment of processing plants for refined metal.
TITLE V. WASTE MANAGEMENT
Section 42. Purposes
The purposes of this Title are:
a. to set guidelines for waste management with a view to ensuring its effectiveness;
b. to encourage, promote and stimulate technological, educational, economic and social efforts to
prevent environmental damage and unnecessary loss of valuable resources of the nation through
recovery, recycling and re-use of wastes and waste products; and
c. to provide measures to guide and encourage appropriate government agencies in establishing
sound, efficient, comprehensive and effective waste management.
Chapter I. Enforcement and Guidelines
Section 43. Waste Management Programs
Preparation and implementation of waste management programs shall be required for all
provinces, cities and municipalities. The Department of Local Government and Community
Development shall promulgate guidelines for the formulation and establishment of waste
management program. Every waste management program shall include the following:
a. an orderly system of operation consistent with the needs of the area concerned;
b. a provision that the operation will not create pollution of any kind or will constitute public
nuisance;
c. a system for safe and sanitary disposal of waste;
d. a provision that existing plans affecting the development, use and protection of air, water or
natural resources shall be considered;
e. schedules and methods of implementing the development, construction and operation of the
plan together with the estimated costs; and
f. a provision for the periodic revision of the program to ensure its effective implementation.
Section 44. Responsibility of Local Government
Each province, city or municipality shall provide measures to facilitate collection, transportation,
processing and disposal of waste within its jurisdiction in coordination with other government
agencies concerned. For this purpose, the national government shall provide the necessary subsidy
to local governments upon request made through the National Environmental Protection Council
and subject to such terms and conditions as the latter may provide.

Chapter II. Methods of Solid Waste Disposal
Section 45. Solid Waste Disposal
Solid waste disposal shall be by sanitary landfill, incineration, composting, and other methods as
may be approved by competent government authority.
Section 46. Sanitary Landfills
Local governments, including private individuals, corporations or organizations may operate or
propose to operate one or more sanitary landfills. An entity proposing to operate a sanitary landfill
shall submit to the appropriate government agency an operational work plan showing, among
other things, a map of the proposed work location, disposal areas for rubbish, garbage, refuse and
other waste matter; and the equipment or machinery needed to accomplish its operations. In no
case shall land-fill or work locations under this Section be located along any shore or coast-line, or
along the banks of rivers and streams, lakes, throughout their entire length, in violation of any
existing rules and regulations.
Section 47. Incineration and Composting Plants
The installation and establishment of incineration or composting plants, or the
alteration/modification of any part thereof shall be regulated by the local governments concerned
in coordination with the National Pollution Control Commission.
Section 48. Disposal Sites
The location of solid waste disposal sites shall conform with existing zoning, land use standards, and
pollution control regulations.
Section 49. Dumping into the Sea and Other Navigable Waters
The dumping or disposal of solid wastes into the sea and any body of water in the Philippines,
including shore-lines and river banks, where the wastes are likely to be washed into the water is
prohibited. However, dumping of solid wastes or other materials into the sea or any navigable
waters shall be permitted in case of immediate or imminent danger to life and property, subject to
the rules and regulations of the Philippine Coast Guard and the National Pollution Control
Commission. Government agencies and private entities which are undertaking solid waste
management programs shall make consultations with the government agencies concerned with
respect to the effects of such dumping to the marine environment and navigation.
Chapter III. Methods of Liquid Waste Disposal
Section 50. Liquid Waste Disposal
Wastewater from manufacturing plants, industries, community, or domestic sources shall be
treated either physically, biologically or chemically prior to disposal in accordance with the rules
and regulations promulgated by proper government authority.
Section 51. Applicability of Section 49
The provisions of Section 49 hereof shall likewise apply to the dumping or disposal of liquid waste
into the sea and other bodies of water.
TITLE VI. MISCELLANEOUS PROVISIONS
Section 52. Population Environment Balance
In the assessment of development projects, the National Environmental Protection Council,
hereinafter referred to in this Title as the Council, shall take into consideration their effect on
population with a view to achieving a rational and orderly balance between man and his
environment.
Section 53. Environment Education
The Department of Education and Culture shall integrate subjects on environmental education in its
school curricula at all levels. It shall also endeavor to conduct special community education
emphasizing the relationship of man and nature as well as environmental sanitation and practices.
The Council and other government agencies implementing environmental protection laws in
coordination with public information agencies of the government shall undertake public
information activities for the purpose of stimulating awareness and encouraging involvement in
environmental protection.
Section 54. Environmental Research
The Council shall undertake and/or promote continuing studies and research programs on
environmental management and shall, from time to time, determine priority areas of
environmental research.
Section 55. Monitoring and Dissemination of Environmental Information of Foreign Origin
The Council shall keep itself informed of current environmental developments by obtaining
information and literature from foreign sources through the Department of Foreign Affairs,
government agencies and other entities, both domestic and foreign. Such information and literature
shall be given the widest dissemination possible.
Section 56. Incentive
To operate the installation and the utilization of pollution control facilities, the following incentives
are hereby granted:
a. exemption to the extent of fifty (50) percent of tariff duties and compensating tax for
importation of pollution control equipment, devices, spare parts and accessories for a period of five
(5) years from the effectivity of this Decree subject to the conditions that will be imposed by the
Council;
b. a tax credit equivalent of fifty (50) percent of the value of the compensating tax and tariff duties
that would have been paid on the pollution control equipment, devices, spare parts and accessories
had these items been imported shall, within a period of seven (7) years from the effectivity of this
Decree, be given to the person or firm who or which purchases them from a domestic
manufacturer, and another tax credit equivalent to twenty-five (25) percent thereof shall be given
to said manufacturer, subject to such conditions as may be imposed by the Council; and
c. deductions equivalent to fifty (50) percent of the expenses actually incurred on research projects
undertaken to develop technologies for the manufacture of pollution control equivalent which have
been proven effective and commercially reproducible, from the taxable income of the person or
firm actually undertaking such projects subject to the conditions that may be imposed by the
Council.
The pollution control equipment, devices, spare parts and accessories acquired under this Section
shall not be sold, transferred or disposed within five (5) years from the date of acquisition without
the prior approval of the Council otherwise the importer or purchaser shall pay twice the amount of
the tax exemption or tax credit granted.
Section 57. Financial Assistance/Grant
Financial assistance/grant for the study, design and construction of environmental protection
facilities especially for waste disposal in favor of cities, municipalities, small and medium scale
industries may be granted on a case-to-case basis subject to such conditions as may be imposed by
the Council.
Section 58. Participation of Local Government Units and Private Individuals
It shall be the responsibility of local government units as well as private individuals to actively
participate in the environmental management and protection programs of the government.
Section 59. Preservation of Historic and Cultural Resources and Heritage
It shall be the duty of every person to help preserve the historic and cultural resources of the
country such as sites, structures, artifacts, documents, objects, memorials, and priceless trees.
Section 60. Government Offices Performing Environmental Protection Functions
Government agencies vested by laws to exercise environmental management powers, shall
continue to function as such within their respective jurisdictions. The Council may, however, in the
exercise of its powers and functions under Presidential Decree No. 1121, inquire into any action or
issue of environmental significance.
Section 61. Public Hearings
The Council may, whenever it deems necessary, conduct public hearings on issue of environmental
significance.
Section 62. Definition of Terms As used in this Code.
a. Ambient Air Quality means the average atmospheric purity as distinguished from discharge
measurements taken at the source of pollution. It is the general amount of pollution present in a
broad area.
b. Emission means the act of passing into the atmosphere an air contaminant, pollutant, gas
stream and unwanted sound from a known source.
c. Water Quality means the characteristics of water which define its use in terms of physical,
chemical, and biological contents; hence, the quality of water for domestic use is different from
industrial use.
 If any provision of this Code, or the application of such provisions to any person or circumstances, is
d. Water Quality Surveillance means a close and continuous supervision of the water quality to declared unconstitutional, the remainder of the Code or the application of such provisions to other
detect development, movement, or charges in the characteristics of the water. persons or circumstances shall not be affected by such declaration.

e. Water Quality Standard means a plan that is established by governmental authority as a Section 64. Effectivity
program for water pollution prevention and abatement. Such standard may include water
classification and the criteria to support the uses of the water. This Code shall take effect upon its approval.

f. Effluent Standards means restrictions established to limit levels of concentration of physical, Done in the City of Manila, this 6th day of June, the year of our Lord, nineteen hundred and
chemical, and biological constituents which are discharged from point sources. seventy-seven.

g. Clean-up Operations refers to activities conducted in removing the pollutants discharged or

spilled in water to restore it to pre-spill condition.

h. Accidental Spills refers to spills of oil or other hazardous substances in water that result from
accidents such as collisions and groundings.

i. Areas of Critical Environmental Concern are areas where uncontrolled development could result
in irreparable damage to important historic, cultural, or aesthetic values or natural systems or
processes of national significance.

j. Hazardous Substances means elements or compounds which when discharged in any quantity
present imminent or substantial danger to public health and welfare.

k. Areas Impacted by Public Facilities refers to areas where the introduction of public facilities may
tend to induce development and urbanization of more than local significance or impact.

l. Environmental Impact is the alteration, to any degree, of environmental conditions or the

creation of a new set of environmental conditions, adverse or beneficial, to be induced or caused by EXECUTIVE ORDER NO. 192
a proposed project. [PROVIDING FOR THE REORGANIZATION OF
THE DEPARTMENT OF ENVIRONMENT, ENERGY
m. Government Agencies refers to national, local and regional agencies and instrumentalities AND NATURAL RESOURCES, RENAMING IT AS THE DEPARTMENT OF ENVIRONMENT AND NATURAL
including government-owned or controlled corporations. RESOURCES, AND FOR OTHER PURPOSES]

TITLE VII. FINAL PROVISIONS WHEREAS, Executive Order No. 131, dated January 30, 1987, was suspended;

Section 63. Separability of Provisions WHEREAS, a policy having been reached on energy, the reorganization of the Department of
Natural Resources can now be effected;
WHEREAS, the environment will be affected by the use, development, management, renewal and
conservation of the country's natural resources;
WHEREAS, there is a need to protect and enhance the quality of the country's environment;
WHEREAS, to attain this objective, environmental concerns and natural resources concerns should
be given equal attention by the Department;
WHEREAS, under Article XVIII, Section 6, of the 1987 Constitution, the President shall continue to
exercise legislative powers until the First Congress is convened;
NOW, THEREFORE, I, Corazon C. Aquino, President of the Philippines, by virtue of the powers vested
in me by the Constitution, do hereby order
Section 1. Title
This Executive Order shall otherwise be known as the "Reorganization Act of the Department of
Environment and Natural Resources."
Section 2. Reorganization
The Department of Environment, Energy, and Natural Resources is hereby reorganized structurally
and functionally and renamed as the Department of Environment and Natural Resources,
hereinafter referred to as Department, in accordance with the provisions of this Executive Order.
Section 3. Declaration of Policy
It is hereby declared the policy of the State to ensure the sustainable use, development,
management, renewal, and conservation of the country's forest, mineral, land, off-shore areas and
other natural resources, including the protection and enhancement of the quality of the
environment, and equitable access of the different segments of the population to the development
and use of the country's natural resources, not only for the present generation but for future
generations as well. It is also the policy of the state to recognize and apply a true value system
including social and environmental cost implications relative to their utilization, development and
conservation of our natural resources.
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.
To accomplish its mandate, the Department shall be guided by the following objectives that will
serve as basis for policy formulation:
 Assure the availability and sustainability of the country's natural resources through
judicious use and systematic restoration or replacement, whenever possible;
 Increase the productivity of natural resources in order to meet the demands for forest,
mineral, and land resources of a growing population;
 Enhance the contribution of natural resources for achieving national economic and social
development;
 Promote equitable access to natural resources by the different sectors of the population;
 Conserve specific terrestrial and marine areas representative of the Philippine natural and
cultural heritage for present and future generations.
Section 5. Powers and Functions
To accomplish its mandate, the Department shall have the following powers and functions:
a. Advise the President on the enactment of laws relative to the development, use, regulation, and
conservation of the country's natural resources and the control of pollution;
b. Formulate, implement, and supervise the government's policies, plans and programs pertaining
to the management, conservation, development, use and replenishment of the country's natural
resources;
c. Promulgate rules and regulations in accordance with law governing the exploration,
development, conservation, extraction, disposition, use and such other commercial activities
tending to cause the depletion and degradation of our natural resources;
d. Exercise supervision and control over forest lands, alienable and disposable lands, and mineral
resources and in the process of exercising such control, the Department shall impose appropriate
payments, fees, charges, rentals, and any such form of levy and collect such revenues for the
exploration, development, utilization or gathering of such resources;
e. Undertake exploration, assessment, classification and inventory of the country's natural
resources using ground surveys, remote sensing and complementary technologies;
f. Promote proper and mutual consultation with the private sector involving natural resources
development, use and conservation;
g. Undertake geological surveys of the whole country including its territorial waters;
h. Establish policies and implement programs for the:
1. Accelerated inventory, surveys and classification of lands, forest, and mineral resources using
appropriate technology, to be able to come up with a more accurate assessment of resource quality
and quantity;
2. Equitable distribution of natural resources through the judicious administration, regulation,
utilization, development and conservation of public lands, forest, and mineral resources (including
mineral reservation areas), that would benefit a greater number of Filipinos;
3. Promotion, development and expansion of natural resource-based industries;
4. Preservation of cultural and natural heritage through wildlife conservation and segregation of
national parks and other protected areas;
5. Maintenance of a wholesome natural environment by enforcing environmental protection laws;
and
6. Encouragement of greater people participation and private initiative in natural resources
management.
i. Promulgate rules and regulations necessary to:chanroblesvirtuallawlibrary
1. Accelerate cadastral and emancipation patent surveys, land use planning, and public land titling;
2. Harness forest resources in a sustainable manner, to assist rural development, support forest-
based industries, and provide raw materials to meet increasing demands, at the same time, keeping
adequate reserves for environmental stability; and
3. Expedite mineral resources surveys, promote the production of metallic and non-metallic
minerals, and encourage mineral marketing.
j. Regulate the development, disposition, extraction, exploration and use of the country's forest,
land and mineral resources;
k. Assume responsibility for the assessment, development, protection, conservation, licensing and
regulation as provided for by law, where applicable, of all natural resources; the regulation and
monitoring of service contractors, licensees, lessees, and permittees for the extraction, exploration,
development and utilization of natural resource products; the implementation of programs and
measures with the end in view of promoting close collaboration between the government and the
private sector; the effective and efficient classification and sub-classification of lands of the public
domain; and the enforcement of natural resources laws, rules and regulations;
l. Promulgate rules, regulations and guidelines on the issuance of co-production, joint venture or
production sharing agreements, licenses, permits, concessions, leases, and such other privileges
and arrangement concerning the development, exploration and utilization of the country's natural
resources and shall continue to oversee, supervise and police our natural resources; to cancel or
cause to cancel such privileges and arrangements upon failure, non-compliance, or violations of any
regulations, orders, and for all other causes which are in furtherance of the conservation of natural
resources and supportive of the national interests;
m. Exercise exclusive jurisdiction on the management and disposition of all lands of the public
domain and shall continue to be the sole agency responsible for classification, sub-classification,
surveying and titling of lands in consultation with appropriate agencies;
n. Implement measures for the regulation and supervision of the processing of forest products,
grading and inspection of lumber and other forest products and monitoring of the movement of
timber and other forest products;
o. Promulgate rules and regulations for the control of water, air and land pollution;
p. Promulgate ambient and effluent standards for water and air quality including the allowable
levels of other pollutants and radiations;
q. Promulgate policies, rules and regulations for the conservation of the country's genetic resources
and biological diversity, and endangered habitats;
r. Formulate an integrated, multi-sectoral , and multidisciplinary National Conservation Strategy,
which will be presented to the Cabinet for the President's approval; and
s. Exercise other powers and functions and perform such other acts as may be necessary, proper or
incidental to the attainment of its mandates and objectives.
Section 6. Structural Organization
The Department shall consist of the Department proper, the Staff offices, the Staff bureaus, and the
regional/provincial/community natural resources offices. The Department Proper shall consist of
the following:
a. Office of the Secretary
b. Offices of Undersecretaries
The authority and responsibility for the exercise of the mandate of the Department, the
accomplishment of its objectives, and the discharge of its powers and functions shall be vested in
the Secretary of Environment and Natural Resources, hereinafter referred to as Secretary, who shall
supervise the Department and shall be appointed by the President. For such purposes, the
Secretary shall have the following functions:
a. Advise the President on the promulgation of rules, regulations and other issuances relative to
the conservation, management, development and proper use of the country's natural resources;
b. Establish policies and standards for the efficient and effective operations of the Department in
accordance with the programs of the government;
c. Promulgate rules, regulations and other issuances necessary in carrying out the Department's
mandate, objectives, policies, plans, programs, and projects;

c. Offices of Assistant Secretaries d. Exercise supervision over all functions and activities of the Department;

d. Public Affairs Office e. Delegate authority for the performance of any administrative or substantive function to
subordinate officials of the Department; and
e. Special Concerns Office
f. Perform other functions as may be provided by law or assigned appropriately by the President.
f. Pollution Adjudication Board
Section 8. Office of the Secretary
The Staff Sectoral Bureaus on the other hand, shall be composed of:
a. Forest Management Bureau The Office of the Secretary shall consist of the Secretary and his immediate staff.

b. Lands Management Bureau Section 9. Undersecretary

c. Mines and Ge-osciences Bureau

The Secretary shall be assisted by five (5) Undersecretaries who shall be appointed by the President
d. Environmental Management Bureau upon the recommendation of the Secretary. The Secretary is hereby authorized to delineate, assign
and/or reassign the respective functional areas of responsibility of the Undersecretary, provided,
e. Ecosystems Research and Development Bureau that such responsibility shall be with respect to the mandate and objectives of the Department; and
provided, further, that no Undersecretary shall be assigned primarily administrative responsibilities.
f. Protected Areas and Wildlife Bureau Within his functional area of responsibility, an Undersecretary shall have the following functions:
a. Advise the Secretary in the promulgation of Department orders, administrative orders and other
The field offices shall consist of all the department regional offices, the provincial offices, and the
issuance with respect to his area of responsibility;
community offices.

Section 7. Secretary of Environment and Natural Resources

b. Exercise supervision over the offices, services, operating units and officers and employees under
his responsibility;
c. Promulgate rules and regulations, consistent with Department policies, that will efficiently and
effectively govern the activities of units under his responsibility;
d. Coordinate the functions and activities of the units under his responsibility with those of other
units under the responsibility of other Undersecretaries;
e. Exercise authority on substantive and administrative matters related to the functions and
activities of units under his responsibility as may be delegated by the Secretary; and
f. Perform other functions as may be provided by law or assigned by the Secretary.
Section 10. Assistant Secretary
The Secretary and the Undersecretaries shall be assisted by seven (7) Assistant Secretaries in the
formulation, management and implementation of natural resources laws, policies, plans, and
programs and projects. They shall oversee the day-to-day operations, administration and
supervision of the constituents of the Department. The seven (7) Assistant Secretaries shall be
responsible for the following:
a. Policy and Planning Studies
b. Foreign-Assisted and Special Projects
c. Field Operations in Luzon
d. Field Operations in Visayas
e. Field Operations in Mindanao
f. Legal Affairs
g. Management Services
Section 11. Public Affairs Office
There is hereby created a Public Affairs Office, under the Office of the Secretary, to be headed by a
Director and assisted by an Assistant Director, which shall serve as the public information arm of
the Department. It shall be responsible for disseminating information on natural resources
development, policies, plans, programs and projects; and respond to public queries related to the
development and conservation of natural resources.chanrobles virtualawlibrary
The Public Affairs Office of all bureaus are hereby abolished and their functions are transferred to
the Public Affairs Office in accordance with Section 24(b) thereof.
Section 12. Special Concerns Office
There is hereby created a Special Concerns Office under the Office of the Secretary, to be headed by
a Director and assisted by an Assistant Director, which shall be responsible for handling priority
areas/subjects identified by the Secretary which necessitates special and immediate attention.
Section 13. Forest Management Bureau
There is hereby created a Forest Management Bureau which shall integrate and absorb the powers
and functions of the Bureau of Forest Development (BFD) and the Wood Industry Development
Authority (WIDA), in accordance with Section 24 (e) hereof, except those line functions and powers
which are transferred to the regional field office. The Forest Management Bureau, to be headed by
a Director and assisted by an Assistant Director shall advise the Secretary on matters pertaining to
forest development and conservation, and shall have the following functions, but not limited to:
a. Recommend policies and/or programs for the effective protection, development, occupancy,
management and conservation of forest lands and watersheds, including grazing and mangrove
areas, reforestation and rehabilitation of critically denuded/degraded forest reservations,
improvement of water resource use and development, ancestral lands, wilderness areas and other
natural preserves, development of forest plantations including rattan, bamboo, and other valuable
non-timber forest resources, rationalization of the wood-based industries, regulation of the
utilization and exploitation of forest resources including wildlife, to ensure continued supply of
forest goods and services;
b. Advise the regional offices in the implementation of the above policies and/or programs;
c. Develop plans, programs, operating standards and administrative measures to promote the
Bureau's objectives and functions;
d. Assist in the monitoring and evaluation of forestry and watershed development projects to
ensure efficiency and effectiveness;
e. Undertake studies on the economics of forestry and forest-based industries, including supply and
demand trends on the local, national and international levels, identifying investment problems and
opportunities, in various areas; and
f. Perform other functions as may be assigned by the Secretary and/or provided by law.
Section 14. Lands Management Bureau
There is hereby created the Lands Management Bureau which shall absorb functions and powers of
the Bureau of Lands except those line functions and powers which are transferred to the regional
field office. The Lands Management Bureau to be headed by a Director and assisted by an Assistant
Director shall advise the Secretary on matters pertaining to rational land classification management
and disposition and shall have the following functions, but not limited to:
a. Recommend policies and programs for the efficient and effective administration, surveys,
management and disposition of alienable and disposable lands of the public domain and other
lands outside the responsibilities of other government agencies; such as reclaimed areas and other
areas not needed for or are not being utilized for the purposes for which they have been
established;
b. Advise the Regional Offices on the efficient and effective implementation of policies, programs
and projects for more effective public lands management;
c. Assist in the monitoring and evaluation of land surveys, management and disposition of lands to
ensure efficiency and effectiveness thereof;
d. Issue standards, guidelines, regulations and orders to enforce policies for the maximization of
land use and development;
e. Develop operating standards and procedure to entrance the Bureau's objectives and functions;
f. Assist the Secretary as Executive Officer charged with carrying out the provisions of the Public
Land Act [C.A. 141, as amended], who shall have direct executive control of the survey,
classification, lease, sale, or any other forms of concessions or disposition and management of the
lands of the public domain; and
g. Perform other functions as may be assigned by the Secretary and/or provided by law.
Section 15. Mines and Geo-Sciences Bureau
There is hereby created the Mines and Geo-Sciences Bureau which shall absorb the functions of the
Bureau of Mines and Geo-Sciences (BMGS), Mineral Reservations Development Board (MRDB), and
the Gold Mining Industry Development Board (GMIDB), all of which are hereby merged in
accordance with Section 24 hereof, except those line functions and powers which are transferred to
the regional field office. The Mines and Geo-Sciences Bureau, to be headed by a Director and
assisted by an Assistant Director, shall advise the Secretary on matters pertaining to geology and
mineral resources exploration, development and conservation and shall have the following
functions, but not limited to:
a. Recommend policies, regulations and programs pertaining to mineral resources development
and geology;
b. Recommend policies, regulations and oversee the development and exploitation of mineral
resources of the sea within the country's jurisdiction such as silica sand, gold placer, magnetite and
chromite sand, etc.;
c. Advise the Secretary on the granting of mining rights and contracts over areas containing
metallic and non-metallic resources;
d. Advise the Regional Offices on the effective implementation of mineral development and
conservation programs as well as geological surveys;
e. Assist in the monitoring and evaluation of the Bureau's programs and projects to ensure
efficiency and effectiveness thereof;
f. Develop and promulgate standards and operating procedures on mineral resources development
and geology;
g. Supervise and control the development and packaging of nationally applicable technologies in
geological survey, mineral resource assessment, mining and metallurgy; the provision of geological,
metallurgical, chemical and rock mechanics laboratory services; the conduct of marine geological
and geophysical survey and natural exploration drilling programs; and
h. Perform other functions as may be assigned by the Secretary and/or provided by law.
Section 16. Environmental Management Bureau
There is hereby created an Environmental Management Bureau. The National Environmental
Protection Council (NEPC), the National Pollution Control Commission (NPCC), and the
Environmental Center of the Philippines (ECP), are hereby abolished and their powers and functions
are hereby integrated into the Environmental Management Bureau in accordance with Section 24(c)
hereof, subject to Section 19 hereof. The Environmental Management Bureau shall be headed by a
Director and assisted by an Assistant Director who shall advise the Secretary on matters relating to
environmental management, conservation, and pollution control. The Environmental Management
Bureau shall have the following functions:
a. Recommend possible legislations, policies and programs for environmental management and
pollution control;
b. Advise the Regional Offices in the efficient and effective implementation of policies, programs,
and projects for the effective and efficient environmental management and pollution control;
c. Formulate environmental quality standards such as the quality standards for water, air, land,
noise, and radiations;
d. Recommend rules and regulations for environmental impact assessments and provide technical
assistance for their implementation and monitoring;
e. Formulate rules and regulations for the proper disposition of solid wastes, toxic, and hazardous
substances;
f. Advise the Secretary on the legal aspects of environmental management and pollution control
and assist in the conduct of public hearings in pollution cases;
g. Provide secretariat assistance to the Pollution Adjudication Board, created under Section 19
hereof;
h. Coordinate the inter-agency committees that may be created for the preparation of the State of
the Philippine Environment Report and the National Conservation Strategy;
i. Provide assistance to the Regional Offices in the formulation and dissemination of information on
environmental and pollution matters to the general public;
j. Assist the Secretary and the Regional Officers by providing technical assistance in the
implementation of environmental and pollution laws; and
k. Provide scientific assistance to the Regional Offices in the conduct of environmental research
programs.
Section 17. Ecosystems Research and Development Bureau
The Forest Research Institute and the National Mangrove Committee are hereby abolished and
integrated into the Ecosystems Research and Development Bureau in accordance with Section 24(e)
hereof. The Ecosystems Research and Development Bureau shall be headed by a Director and
assisted by an Assistant Director. The Bureau shall have the following functions:
a. Formulate and recommend an integrated research program relating to Philippine ecosystems
and natural resources such as minerals, lands, forests, as holistic and interdisciplinary fields of
inquiry;
b. Assist the Secretary in determining a system of priorities for the allocation of resources to
various technological research programs of the department;
c. Provide technical assistance in the implementation and monitoring of the aforementioned
research programs;
d. Generate technologies and provide scientific assistance in the research and development of
technologies relevant to the sustainable uses of Philippine ecosystems and natural resources; and
e. Assist the Secretary in the evaluation of the effectiveness of the implementation of the
integrated research program.
The Ecosystems Research and Development Bureau shall directly manage and administer the FORI
Research Offices, laboratories, and forest experiment stations located at UP Los Banos, and such
other field laboratories as the Secretary may assign to its direct supervision. The Bureau shall
coordinate all technological researches undertaken by the field offices, assess and translate all
recommendable findings and disseminate such findings for all possible users and clientele.
Section 18. Protected Areas and Wildlife Bureau
There is hereby created a Protected Areas and Wildlife Bureau which shall absorb the Division of
Parks and Wildlife and the Marine Parks Program of the Bureau of Forest Development, as well as:
Calauit Game Preserve and Wildlife Sanctuary, Presidential Committee on the Conservation of
Tamaraw, Ninoy Aquino Parks and Wildlife Center (formerly Parks and Wildlife Nature Center),
shares in Kabuhayan Program and Agro Forestry State Projects of the KKK Processing Authority, all
national parks, wildlife sanctuaries and game preserves previously managed and administered by
the Ministry of Human Settlements including National Parks Reservation situated in the provinces
of Bulacan, Rizal, Laguna and Quezon, formerly declared as Bagong Lipunan Sites of said Ministry,
Magat Forest Reservation and Mr. Arayat National Park, formerly with the Ministry of Tourism, in
accordance with Section 24(c) hereof. The Protected Areas and Wildlife Bureau shall be headed by a
Director and assisted by an Assistant Director. The Bureau shall have the following functions:
a. Formulate and recommend policies, guidelines, rules and regulations for the establishment and
management of an Integrated Protected Areas Systems such as national parks, wildlife sanctuaries
and refuge, marine parks, and biospheric reserves;
b. Formulate an up-to-date listing of endangered Philippine flora and fauna and recommend a
program of conservation and propagation of the same;
c. Formulate and recommend policies, guidelines, rules and regulations for the preservation of
biological diversity, genetic resources, the endangered Philippine flora and fauna;
d. Assist the Secretary in the monitoring and assessment of the management of the Integrated
Protected Areas System and provide technical assistance to the regional offices in the
implementation of programs for these areas;
e. Perform other functions as may be assigned by the Secretary and/or provided by law.
Section 19. Pollution Adjudication Board
There is hereby created a Pollution Adjudication Board under the Office of the Secretary. The Board
shall be composed of the Secretary as Chairman, two (2) Undersecretaries as may be designated by
the Secretary, the Director of Environmental Management Bureau, and three (3) others to be
designated by the Secretary as members. The Board shall assume the powers and functions of the
Commission/Commissioners of the National Pollution Control Commission with respect to the
adjudication of pollution cases under Republic Act 3931 and Presidential Decree 984, particularly
with respect to Section 6, letters e, f, g, j, k, and p, of P.D. 984. The Environmental Management
Bureau shall serve as the Secretariat of the Board. These powers and functions may be delegated to
the regional officers of the Department in accordance with rules and regulations to be promulgated
by the Board.
Section 20. Field Offices of the Department
The field offices of the Department are the Environment and Natural Resources Regional Offices in
the thirteen (13) administrative regions of the country, the Environment and Natural Resources
Provincial Office in every province and the Community Office in municipalities wherever deemed
necessary. The regional offices of the Bureau of Forest Development, Bureau of Mines and Geo-
Sciences, and Bureau of Lands in each of the thirteen (13) administrative regions and the research
centers of the Forest Research Institute are hereby integrated into the Department-wide Regional
Environment and Natural Resources Office of the Department, in accordance with Section 24(e)
hereof. A Regional Office shall be headed by a Regional Executive Director (with the rank of
Regional Director) and shall be assisted by five (5) Regional Technical Directors (with the rank of
Assistant Regional Director) each for Forestry, Lands Management, Mines and Geo-Sciences,
Environmental Management, and Ecosystems Research. The Regional Executive Directors and
Regional Technical Directors shall be Career Executive Service Officers.
Section 21. Functions of Environment and Natural Resources Regional Office
Environment and Natural Resources Regional Offices shall be located in the identified regional
capitals and shall have the following functions, but not limited to:
a. Implement laws, policies, plans, programs, projects, rules and regulations of the Department to
promote the sustainability and productivity of natural resources, social equity in natural resource
utilization and environmental protection;
b. Provide efficient and effective delivery of services to the people;
c. Coordinate with regional offices of other departments, offices, agencies in the region and local
government units in the enforcement of natural resource conservation laws and regulations, and in
the formulation/implementation of natural resources programs and projects;
d. Recommend and, upon approval, implement programs and projects on forestry, minerals, and
land management and disposition;
e. Conduct comprehensive inventory of natural resources in the region and formulate regional
short and long-term development plans for the conservation, utilization, and replacement of
natural resources;
f. Evolve respective regional budget in conformity with the priorities established by the Regional
Development Councils;
g. Supervise the processing of natural resources products, grade and inspect minerals, lumber and
other wood processed products, and monitor the movement of these products;
h. Conduct field researches for appropriate technologies recommended for various projects; and
i. Perform other functions as may be assigned by the Secretary and/or provided by law.
The natural resources provincial and community offices shall absorb, respectively, the functions of
the district offices of the bureaus, which are hereby abolished in accordance with Section 24(b)
hereof. The provincial and community natural resource office shall be headed by a provincial
natural resource officer and community natural resource officer, respectively.
Section 22. Attached Agencies and Corporations
The following agencies and corporations are attached to the
Department:chanroblesvirtuallawlibrary
a. National Mapping and Resource Information Authority
There is hereby created the National Mapping and Resource Information Authority (NAMRIA) which
shall integrate the functions and powers of the Natural Resources Management Center (NRMC),
National Cartography Authority (NCA), the Bureau of Coast and Geodetic Survey (BCGS), and the
Land Classification Teams based at the then Bureau of Forest Development, in accordance with
Section 24(e) hereof, which shall provide the Department and the government with map-making
services. The Authority shall act as the central mapping agency which will serve the needs of the
line services of the Department and other government offices with regard to information and
researches, and shall expand its capability in the production and maintenance of maps, charts and
similar photogrammetry and cartography materials.
The Authority shall be responsible for conducting research on remote sensing technologies such as
satellite imagery analysis, airborne multi-spectral scanning systems, and side-looking airborne
radar; provide remote sensing services and vital data on the environment, water resources,
agriculture and other information needed by other government agencies and the private sector;
integrate all techniques of producing maps from the ground surveys to various combinations of
remote sensing techniques in a cost-effective and acceptable manner; and the integration of
geographic and related information to facilitate access to and analysis of data and its
transformation into useful information for resource policy formulation, planning and management.
It shall be the central depository and distribution facility for natural resources data in the form of
maps, statistics, text, charts, etc. store on paper, film or computer compatible media and shall
operate information services and networks to facilitate transfer, sharing, access and dissemination
of natural resource information in all regions and provinces of the country; establishment of a
nationwide geodetic network of control points that serves as a common reference system for all
surveys in the country, and conduct hydrographic and coastal surveys to produce the hydrographic
and nautical charts vital to sea and water travel as well as the exploitation of our marine resources;
formulate and implement nationwide development program on aerial photography, cartography
and remote sensing mapping activities; establish and implement technical standards and quality
specification on map production and its reproduction; and provide photogrammetry, cartographic
and remote sensing mapping services in order to accelerate the development of a comprehensive
data bank and information systems on base maps and charts.
The NAMRIA shall be provided with policy directions by a five (5) member Board of Governors
consisting of key officers with no less than the rank of undersecretaries as follows:
Department of Environment
and Natural Resources - Chairman
Department of Agriculture
and Food - Member
Department of Public Works
and Highways - Member
Department of National Defense- Member
Department of Transportation
and Communications - Member
The operations and management of NAMRIA shall be vested in an Administrator who shall be
assisted by three (3) Deputy Administrators. The Administrator shall sit in the Board as its Secretary.
b. Natural Resources Development Corporation
The existing Natural Resources Development Corporation (NRDC), shall be reorganized under the
direct supervision of the Secretary. It shall be responsible primarily for promoting natural resource
development and conservation through:
1. Direct involvement in pioneering but potentially viable production, use, and marketing ventures
or projects using new/innovative technologies, systems, and strategies such as but not limited to
stumpage sales system, industrial forest plantations or logging operations, rattan tissue culture;
provided, however, that activities which compete with the private sector shall be avoided except in
specific cases where the revenues of NRDC are earmarked for a specific local developmental or
social service.
2. Financing natural resource development projects undertaken by the private sector such as
establishing industrial tree plantations, agro-forestry, small-scale mining and retooling of the
natural resource-based processing industries to improve their efficiency and competitiveness; to
discharge these functions effectively, it is hereby authorized to generate funds through debt
instruments from various sources, and innovative income-generating strategies.
The NRDC shall promote the enhancement of forest renewal rate through intensified Industrial Tree
Plantation promotion including the provision of incidental services such as extension of assistance
on equity/capital, credit line/facilities, marketing and management.
c. The National Electrification Administration
The National Electrification Administration (NEA) which is also attached to the Department shall be
reorganized in order that it can effectively and efficiently act and operate as the principal
implementing arm of the Department in matters of energy farming and aspects and components of
energy policies, programs, and plan which cannot be carried out by the private sector. The plans
and programs of NEA shall be carried out in conformity with policies defined by appropriate energy
authorities.
Section 23. Detachment and Transfers
The following offices and corporation attached to the Department of Environment, Energy and
Natural Resources by E. O. 131, are hereby detached and/or transferred as follows:
a. Manila Seedling Bank Foundation, Inc. is administratively detached from the Department;
b. Bureau of Energy Utilization; and
c. Bureau of Energy Development are transferred to the appropriate energy governing body
pursuant to the Executive Order pertaining to it.
Section 24. Transitory Provisions
In accomplishing the acts of reorganization herein prescribed, the following transitory provisions
shall be complied with, unless otherwise provided elsewhere in this Executive Order:
a. The transfer of a government unit shall include the functions, appropriations, funds, records,
equipment, facilities, chosen in action, rights, other assets, and liabilities, if any, of the transferred
unit as well as the personnel thereof, as may be necessary, who shall, in a hold-over capacity,
continue to perform their respective duties and responsibilities, and receive the corresponding
salaries and benefits. Those personnel from the transferred unit whose positions are not included
in the Department's new positions structure and staffing pattern approved and prescribed by the
Secretary or who are not reappointed shall be deemed separated from the service and shall be
entitled to the benefits provided in the second paragraph of Section 25 hereof.
b. The transfer of functions which results in the abolition of the government unit that exercised
them shall include the appropriations, funds, records, equipment, facilities, chosen in action, rights,
other assets and personnel as may be necessary to the proper discharge of the transferred
functions. The abolished unit's remaining appropriations and funds, if any, shall revert to the
General Fund and its remaining assets, if any, shall be allocated to such appropriate units as the
Secretary shall determine or shall otherwise be disposed in accordance with the Government
Auditing Code and other pertinent laws, rules and regulations. Its liabilities, ia any, shall likewise be
treated in accordance with the Government Auditing Code and other pertinent laws, rules, and
regulations. Its personnel shall, in a hold-over capacity, continue to perform their duties and
responsibilities and receive the corresponding salaries and benefits. Its personnel whose positions
are not included in the Department's structure and staffing pattern approved and prescribed by the
Secretary under Section 25 hereof or who is not reappointed, shall be deemed separated from the
service and shall be entitled to the benefits provided in the second paragraph of the same Section
25.
c. Any transfer of functions which does not result in the abolition of the government unit that has
exercised them shall include the appropriations, funds, records, equipment, facilities, chosen in
action, rights and assets and personnel as may be necessary to the proper discharge of the
transferred functions. The liabilities, if any, that may have been incurred in connection with the
discharge of the transferred functions, shall be treated in accordance with the Government Auditing
Code, and other pertinent laws, rules and regulations. Such personnel shall, in a hold-over capacity,
continue to perform their duties and responsibilities and receive the corresponding salaries and
benefits unless in the meantime they are separated from the service. Any personnel whose
positions are not included in the Department's new position structure and staffing pattern
approved and prescribed by the Secretary under Section 25 hereof or who is not reappointed, shall
be deemed separated from the service and shall be entitled to the benefits provided in the second
paragraph of the same Section 25.
d. In case of the abolition of the government unit which does not result in the transfer of its
functions to another unit, the appropriations and funds of the abolished entity shall revert to the
General Fund, while the records, equipment, facilities, chosen in action, rights, and other assets
thereof shall be allocated to such appropriate entities as the Secretary shall determine or shall
otherwise be disposed in accordance with the Government Auditing Code and other pertinent laws,
rules and regulations. The liabilities of the abolished units shall be treated in accordance with the
Government Auditing Code and other pertinent laws, rules and regulations, while the personnel
thereof, whose position is not included in the Department's new position structure and staffing
pattern approved and prescribed by the Secretary under Section 25 hereof or who has not been
reappointed, shall be deemed separated from the service and shall be entitled to the benefits
provided in the second paragraph of the same Section 25.
e. In case of merger or consolidation of government units, the new or surviving unit shall exercise
the functions (subject to the reorganization herein prescribed and the laws, rules and regulations
pertinent to the exercise of such functions) and shall acquire the appropriations, funds, records,
equipment, facilities, chosen in action, rights, other assets, liabilities, if any, and personnel, as may
be necessary, of the units that compose the merged unit shall, in a hold-over capacity, continue to
perform their respective duties and responsibilities and receive the corresponding salaries and
benefits unless in the meantime they are separated from the service. Any such personnel, whose
positions are not included in the Department's new position structure and staffing pattern
approved and prescribed by the Secretary under Section 25 hereof or who are not reappointed,
shall be deemed separated from the service and shall be entitled to the benefits provided in the
second paragraph of the same Section 25.
f. In case of termination of a function which does not result in the abolition of the government unit
which performed such function, the appropriations and funds intended to finance the discharge of
such function shall revert to the General Fund while the records, equipment, facilities, chosen in
action, rights and other assets used in connection with the discharged of such function shall be
allocated to the appropriate units as the Department shall determine or shall otherwise be
disposed in accordance with the Government Auditing Code and other pertinent laws, rules, and
regulations. The liabilities, if any, that may have been incurred in connection with the discharge of
such function shall likewise be treated in accordance with the Government Auditing Code and other
pertinent laws, rules and regulations. The personnel who have performed such function, whose
positions are not included in the Department's new position structure and staffing pattern
approved and prescribed by the Secretary under Section 25 hereof, or who have not been
reappointed, shall be deemed separated from the service and shall be entitled to the benefits
provided in the second paragraph of the same Section 25 hereof.
Section 25. New Structure and Pattern
Upon approval of this Executive Order, the officers and employees of the Department shall, in a
holdover capacity, continue to perform their respective duties and responsibilities and receive the
corresponding salaries and benefits unless in the meantime they are separated from government
service. The new position structure and staffing pattern of the Department shall be approved and
prescribed by the Secretary within sixty (60) days from the effectivity of this Executive Order and
the authorized positions created thereunder shall be filled with regular appointments by him or by
the President as the case may be. Those incumbents whose positions are not included therein or
who are not reappointed shall be deemed separated from the service. Those separated from the
service shall receive the retirement benefits to which they may be entitled under existing laws,
rules and regulations. Otherwise, they shall be paid the equivalent of one (1) month basic salary for
every year of service in the government, or a fraction thereof, computed on the basis of the highest
salary received, but in no case shall such payment exceed the equivalent of twelve (12) months
salary.
Section 26. Periodic Performance Evaluation
The Department of Environment and Natural Resources is hereby required to formulate and enforce
a system of measuring and evaluating periodically and objectively the performance of the
Department and submit the same annually to the President.
Section 27. Notice of Consent Requirement
If any reorganizational change herein authorized is of such substance or materiality as to prejudice
third persons with rights recognized by law or contract such that notice to or consent of creditors is
required to be made or obtained pursuant to any agreement entered into with any of such
creditors, such notice or consent requirement shall be complied with prior to the implementation of
such reorganizational change.
Section 28. Prohibition Against Structural Changes
No change in reorganization herein prescribed shall be valid except upon prior approval of the
President for the purpose of promoting efficiency and effectiveness in the delivery of public
services.
Section 29. Funding
Funds needed to carry out the provisions of this Executive Order shall be taken from funds available
in the Department.
Section 30. Implementing Authority of the Secretary
The Secretary shall issue such orders, rules, and regulations and other issuances as may necessary
to ensure the effective implementation of the provisions of this Executive Order.
Section 31. Separability
Any portion or provision of this Executive Order that may be declared unconstitutional shall not
have the effect of nullifying other portions or provisions hereof as long as such remaining portions
or provisions can still subsist and be given effect in their entirety.
Section 32. Repealing Clause
All laws, ordinances, rules, regulations and other issuances or parts thereof, which are inconsistent
with this Executive Order, are hereby repealed or modified accordingly.
Section 33. Effectivity

This Executive Order shall take effect immediately.

G.R. No. 172331 August 24, 2011
RAMON ARANDA, Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, Respondent.
DECISION
VILLARAMA, JR., J.:
On appeal is the Decision1 dated July 26, 2005 and Resolution2 dated April 11, 2006 of the Court of
Appeals (CA) in CA-G.R. CV No. 73067 which reversed and set aside the Decision 3 dated January 31,
2001 of the Regional Trial Court (RTC) of Tanauan, Batangas, Branch 6 in Land Reg. Case No. T-335
(LRA Record No. N-69447).
Subject of a petition for original registration before the RTC is a parcel of land situated in San Andres,
Malvar, Batangas with an area of 9,103 square meters and designated as Lot 3730, Psc 47, Malvar
Cadastre. The petition4was originally filed by ICTSI Warehousing, Inc. (ICTSI-WI) represented by its
Chairman, Enrique K. Razon, Jr. The Republic through the Office of the Solicitor General (OSG) filed its
opposition5 on grounds that the land applied for is part of the public domain and the applicant has
not acquired a registrable title thereto under the provisions of Commonwealth Act No. 141 as
amended by Republic Act No. 6940.
ICTSI-WI sought leave of court to amend the application citing the following reasons: (1) the petition
was not accompanied by a certification of non-forum shopping; (2) the statement of technical
description was based merely on the boundaries set forth in the tax declaration; and (3) due to a
technicality, the sale between the vendor and applicant corporation cannot push through and
consequently the tax declaration is still in the name of vendor Ramon Aranda and the land cannot be
transferred and declared in the name of ICTSI-WI.6
The trial court admitted the Amended Application for Registration of Title, 7 this time filed in the name
of Ramon Aranda, herein petitioner. Petitioner prayed that should the Land Registration Act be not
applicable to this case, he invokes the liberal provisions of Section 48 of Commonwealth Act No. 141,
as amended, having been in continuous possession of the subject land in the concept of owner,
publicly, openly and adversely for more than thirty (30) years prior to the filing of the application. 8
In support of the application, petitioner’s sister Merlita A. Enriquez testified that in 1965 her father
Anatalio Aranda donated the subject land to his brother (petitioner), as evidenced by documents
"Pagpapatunay ng Pagkakaloob ng Lupa" which she and her siblings executed on June 7, 2000. 9 She
came to know the land for the first time in 1965 when she was eight years old and his brother Ramon
has been tilling the land since then, planting it with rice and corn. His brother did not introduce any
permanent improvement and also did not hire a tenant to work on the land. As to the donation made
by his father to his brother Ramon, she recalled there was such a document but it was eaten by rats. 10
Another witness, Luis Olan, testified that his father Lucio Olan originally owned the land and that he
had known about this property since he was six (6) years old as he used to accompany his father in
going to the land. His father farmed the land and planted it first, with rice, and later corn. They had
open, peaceful, continuous and adverse possession of the land in the concept of owner until his
father sold the land in 1946 to Anatalio Aranda. The children of Anatalio then took over in tilling the
land, planting it with rice and corn and adding a few coconut trees. He does not have any copy of the
document of sale because his mother gave it to Anatalio. 11
On January 31, 2001, the trial court rendered its Decision 12 granting the application and ordering the
issuance of a decree of registration in favor of petitioner.
The Republic appealed to the CA which reversed the trial court. The CA held that petitioner’s evidence
does not satisfactorily establish the character and duration of possession required by law, as
petitioner failed to prove specific acts showing the nature of the possession by his predecessors-in-
interest. The CA also did not give evidentiary weight to the documents "Pagpapatunay ng Pagkakaloob
ng Lupa" and "Pagpapatunay ng Bilihang Lampasan ng Lupa", 13 both prepared only in the year 2000
when the application for registration was filed, as factual proof of ownership by the parties to the
compromise agreement.
Petitioner’s motion for reconsideration was likewise denied by the CA.
Hence, this appeal by way of a petition for review on certiorari under Rule 45 alleging that the
decision of the CA is based on a misapprehension of facts with regard to compliance with the required
30 years of open, exclusive, public and adverse possession in the concept of owner. Petitioner argues
that the deeds of confirmation of the 1946 sale in favor of Anatalio Aranda and the 1965 donation to
petitioner are competent proof of transfer of ownership notwithstanding that these were executed
only in the year 2000. He asserts that the testimonies of witnesses Merlita Aranda-Enriquez and Luis
Olan on the fact of loss and destruction of copies of the aforesaid deeds constitute secondary
evidence of the contents thereof based on recollection of persons who are adversely affected. Such
testimonial evidence coupled with the deeds of confirmation warrants the application of the
exception from the best evidence rule. Petitioner thus contends that the CA had no legal basis to
doubt the veracity of the donation and sale of the subject property, and to conclude that the
confirmation deeds can be treated as compromise agreement considering that the transactions had
been previously completed and perfected by the parties.
We deny the petition.
The Property Registration Decree (P.D. No. 1529) provides for original registration of land in an
ordinary registration proceeding. Under Section 14(1) 14 thereof, a petition may be granted upon
compliance with the following requisites: (a) that the property in question is alienable and disposable
land of the public domain; (b) that the applicants by themselves or through their predecessors-in-
interest have been in open, continuous, exclusive and notorious possession and occupation; and (c)
that such possession is under a bona fide claim of ownership since June 12, 1945 or earlier.
Under the Regalian doctrine which is embodied in Section 2, Article XII of the 1987 Constitution, all
lands of the public domain belong to the State, which is the source of any asserted right to ownership
of land. All lands not appearing to be clearly within private ownership are presumed to belong to the
State. Unless public land is shown to have been reclassified or alienated to a private person by the
State, it remains part of the inalienable public domain. To overcome this presumption,
incontrovertible evidence must be established that the land subject of the application is alienable or
disposable.15
To prove that the land subject of an application for registration is alienable, an applicant must
establish the existence of a positive act of the government such as a presidential proclamation or an
executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a
legislative act or a statute.16 The applicant may also secure a certification from the Government that
the lands applied for are alienable and disposable. 17
In this case, the Assistant Regional Executive Director For Operations-Mainland Provinces of the
Department of Environment and Natural Resources (DENR), in compliance with the directive of the
trial court, issued a certification stating that the subject property "falls within the Alienable and
Disposable Land, Project No. 22-A of Lipa, Batangas per LC Map 718 certified on March 26,
1928."18 However, in the Certification19 dated January 14, 2000 issued by the DENR CENR Officer of
Batangas City, Pancrasio M. Alcantara, which was submitted in evidence by the petitioner, it states
that:
This is to certify that based on projection from the technical reference map of this Office, Lot No.
3730, Ap-04-009883, situated at Barangay San Andres, Malvar, Batangas containing an area of NINE
THOUSAND ONE HUNDRED THREE AND FORTY SEVEN (9,103.47) SQUARE METERS and shown at the
reverse side hereof has been verified to be within the ALIENABLE AND DISPOSABLE ZONE under
Project No. 39, Land Classification Map No. 3601 certified on 22 December 1997 except for twenty
meters strip of land along the creek bounding on the northeastern portion which is to be maintained
as streambank protection.
x x x x (Emphasis supplied.)
Petitioner has not explained the discrepancies in the dates of classification 20 mentioned in the
foregoing government certifications. Consequently, the status of the land applied for as alienable and
disposable was not clearly established.
We also agree with the CA that petitioner’s evidence failed to show that he possessed the property in
the manner and for the duration required by law.
Petitioner presented tax declarations and the deeds of confirmation of the 1946 sale from the original
owner (Lucio Olan) to Anatalio Aranda and the 1965 donation made by the latter in favor of
petitioner. But as found by the CA, the history of the land shows that it was declared for taxation
purposes for the first time only in 1981. On the other hand, the Certification issued by the Municipal
Treasurer of Malvar stated that petitioner, who supposedly received the property from his father in
1965, had been paying the corresponding taxes for said land "for more than five consecutive years
including the current year [1999]," or beginning 1994 only or just three years before the filing of the
application for original registration. While, as a rule, tax declarations or realty tax payments of
property are not conclusive evidence of ownership, nevertheless they are good indicia of possession
in the concept of owner, for no one in his right mind would be paying taxes for a property that is not
in his actual or constructive possession – they constitute at least proof that the holder has a claim of
title over the property.21
Petitioner likewise failed to prove the alleged possession of his predecessors-in-interest. His witness
Luis Olan testified that he had been visiting the land along with his father Lucio since he was 6 years
old (he was 70 years old at the time he testified), or as early as 1936. Yet, there was no evidence that
Lucio Olan declared the property for tax purposes at anytime before he sold it to Anatalio Aranda.
There is also no showing that Anatalio Aranda declared the property in his name from the time he
bought it from Lucio Olan. And even assuming that Lucio actually planted rice and corn on the land,
such statement is not sufficient to establish possession in the concept of owner as contemplated by
law. Mere casual cultivation of the land does not amount to exclusive and notorious possession that
would give rise to ownership.22 Specific acts of dominion must be clearly shown by the applicant.
We have held that a person who seeks the registration of title to a piece of land on the basis of
possession by himself and his predecessors-in-interest must prove his claim by clear and convincing
evidence, i.e., he must prove his title and should not rely on the absence or weakness of the evidence
of the oppositors.23 Furthermore, the court has the bounden duty, even in the absence of any
opposition, to require the petitioner to show, by a preponderance of evidence and by positive and
absolute proof, so far as possible, that he is the owner in fee simple of the lands which he is
attempting to register.24 Since petitioner failed to meet the quantum of proof required by law, the CA
was correct in reversing the trial court and dismissing his application for judicial confirmation of title.
WHEREFORE, the present petition for review on certiorari is DENIED. The Decision dated July 26, 2005
and Resolution dated April 11, 2006 of the Court of Appeals in CA-G.R. CV No. 73067 are AFFIRMED
and UPHELD.
With costs against the petitioner.
SO ORDERED.
G.R. No. 101083 July 30, 1993
JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all surnamed OPOSA, minors, and represented
by their parents ANTONIO and RIZALINA OPOSA, ROBERTA NICOLE SADIUA, minor, represented by
her parents CALVIN and ROBERTA SADIUA, CARLO, AMANDA SALUD and PATRISHA, all surnamed
FLORES, minors and represented by their parents ENRICO and NIDA FLORES, GIANINA DITA R.
FORTUN, minor, represented by her parents SIGRID and DOLORES FORTUN, GEORGE II and MA.
CONCEPCION, all surnamed MISA, minors and represented by their parents GEORGE and MYRA
MISA, BENJAMIN ALAN V. PESIGAN, minor, represented by his parents ANTONIO and ALICE
PESIGAN, JOVIE MARIE ALFARO, minor, represented by her parents JOSE and MARIA VIOLETA
ALFARO, MARIA CONCEPCION T. CASTRO, minor, represented by her parents FREDENIL and JANE
CASTRO, JOHANNA DESAMPARADO,
minor, represented by her parents JOSE and ANGELA DESAMPRADO, CARLO JOAQUIN T. NARVASA,
minor, represented by his parents GREGORIO II and CRISTINE CHARITY NARVASA, MA. MARGARITA,
JESUS IGNACIO, MA. ANGELA and MARIE GABRIELLE, all surnamed SAENZ, minors, represented by
their parents ROBERTO and AURORA SAENZ, KRISTINE, MARY ELLEN, MAY, GOLDA MARTHE and
DAVID IAN, all surnamed KING, minors, represented by their parents MARIO and HAYDEE KING,
DAVID, FRANCISCO and THERESE VICTORIA, all surnamed ENDRIGA, minors, represented by their
parents BALTAZAR and TERESITA ENDRIGA, JOSE MA. and REGINA MA., all surnamed ABAYA,
minors, represented by their parents ANTONIO and MARICA ABAYA, MARILIN, MARIO, JR. and
MARIETTE, all surnamed CARDAMA, minors, represented by their parents MARIO and LINA
CARDAMA, CLARISSA, ANN MARIE, NAGEL, and IMEE LYN, all surnamed OPOSA, minors and
represented by their parents RICARDO and MARISSA OPOSA, PHILIP JOSEPH, STEPHEN JOHN and
ISAIAH JAMES, all surnamed QUIPIT, minors, represented by their parents JOSE MAX and VILMI
QUIPIT, BUGHAW CIELO, CRISANTO, ANNA, DANIEL and FRANCISCO, all surnamed BIBAL, minors,
represented by their parents FRANCISCO, JR. and MILAGROS BIBAL, and THE PHILIPPINE
ECOLOGICAL NETWORK, INC., petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his capacity as the Secretary of the Department
of Environment and Natural Resources, and THE HONORABLE ERIBERTO U. ROSARIO, Presiding
Judge of the RTC, Makati, Branch 66, respondents.
Oposa Law Office for petitioners.
The Solicitor General for respondents.
DAVIDE, JR., J.:
In a broader sense, this petition bears upon the right of Filipinos to a balanced and healthful ecology
which the petitioners dramatically associate with the twin concepts of "inter-generational
responsibility" and "inter-generational justice." Specifically, it touches on the issue of whether the said
petitioners have a cause of action to "prevent the misappropriation or impairment" of Philippine
rainforests and "arrest the unabated hemorrhage of the country's vital life support systems and
continued rape of Mother Earth."
The controversy has its genesis in Civil Case No. 90-77 which was filed before Branch 66 (Makati,
Metro Manila) of the Regional Trial Court (RTC), National Capital Judicial Region. The principal
plaintiffs therein, now the principal petitioners, are all minors duly represented and joined by their
respective parents. Impleaded as an additional plaintiff is the Philippine Ecological Network, Inc.
(PENI), a domestic, non-stock and non-profit corporation organized for the purpose of, inter alia,
engaging in concerted action geared for the protection of our environment and natural resources. The
original defendant was the Honorable Fulgencio S. Factoran, Jr., then Secretary of the Department of
Environment and Natural Resources (DENR). His substitution in this petition by the new Secretary, the
Honorable Angel C. Alcala, was subsequently ordered upon proper motion by the petitioners. 1 The
complaint2 was instituted as a taxpayers' class suit3 and alleges that the plaintiffs "are all citizens of
the Republic of the Philippines, taxpayers, and entitled to the full benefit, use and enjoyment of the
natural resource treasure that is the country's virgin tropical forests." The same was filed for
themselves and others who are equally concerned about the preservation of said resource but are "so
numerous that it is impracticable to bring them all before the Court." The minors further asseverate
that they "represent their generation as well as generations yet unborn." 4 Consequently, it is prayed
for that judgment be rendered:
. . . ordering defendant, his agents, representatives and other persons acting in his
behalf to —
(1) Cancel all existing timber license agreements in the country;
(2) Cease and desist from receiving, accepting, processing, renewing or approving
new timber license agreements.
and granting the plaintiffs ". . . such other reliefs just and equitable under the premises." 5
The complaint starts off with the general averments that the Philippine archipelago of 7,100 islands
has a land area of thirty million (30,000,000) hectares and is endowed with rich, lush and verdant
rainforests in which varied, rare and unique species of flora and fauna may be found; these rainforests
contain a genetic, biological and chemical pool which is irreplaceable; they are also the habitat of
indigenous Philippine cultures which have existed, endured and flourished since time immemorial;
scientific evidence reveals that in order to maintain a balanced and healthful ecology, the country's
land area should be utilized on the basis of a ratio of fifty-four per cent (54%) for forest cover and
forty-six per cent (46%) for agricultural, residential, industrial, commercial and other uses; the
distortion and disturbance of this balance as a consequence of deforestation have resulted in a host of
environmental tragedies, such as (a) water shortages resulting from drying up of the water table,
otherwise known as the "aquifer," as well as of rivers, brooks and streams, (b) salinization of the water
table as a result of the intrusion therein of salt water, incontrovertible examples of which may be
found in the island of Cebu and the Municipality of Bacoor, Cavite, (c) massive erosion and the
consequential loss of soil fertility and agricultural productivity, with the volume of soil eroded
estimated at one billion (1,000,000,000) cubic meters per annum — approximately the size of the
entire island of Catanduanes, (d) the endangering and extinction of the country's unique, rare and
varied flora and fauna, (e) the disturbance and dislocation of cultural communities, including the
disappearance of the Filipino's indigenous cultures, (f) the siltation of rivers and seabeds and
consequential destruction of corals and other aquatic life leading to a critical reduction in marine
resource productivity, (g) recurrent spells of drought as is presently experienced by the entire country,
(h) increasing velocity of typhoon winds which result from the absence of windbreakers, (i) the
floodings of lowlands and agricultural plains arising from the absence of the absorbent mechanism of
forests, (j) the siltation and shortening of the lifespan of multi-billion peso dams constructed and
operated for the purpose of supplying water for domestic uses, irrigation and the generation of
electric power, and (k) the reduction of the earth's capacity to process carbon dioxide gases which has
led to perplexing and catastrophic climatic changes such as the phenomenon of global warming,
otherwise known as the "greenhouse effect."
Plaintiffs further assert that the adverse and detrimental consequences of continued and
deforestation are so capable of unquestionable demonstration that the same may be submitted as a
matter of judicial notice. This notwithstanding, they expressed their intention to present expert
witnesses as well as documentary, photographic and film evidence in the course of the trial.
As their cause of action, they specifically allege that:
CAUSE OF ACTION
7. Plaintiffs replead by reference the foregoing allegations.
8. Twenty-five (25) years ago, the Philippines had some sixteen (16) million hectares
of rainforests constituting roughly 53% of the country's land mass.
9. Satellite images taken in 1987 reveal that there remained no more than 1.2
million hectares of said rainforests or four per cent (4.0%) of the country's land area.
10. More recent surveys reveal that a mere 850,000 hectares of virgin old-growth
rainforests are left, barely 2.8% of the entire land mass of the Philippine archipelago
and about 3.0 million hectares of immature and uneconomical secondary growth
forests.
11. Public records reveal that the defendant's, predecessors have granted timber
license agreements ('TLA's') to various corporations to cut the aggregate area of
3.89 million hectares for commercial logging purposes.
A copy of the TLA holders and the corresponding areas covered is hereto attached
as Annex "A".
12. At the present rate of deforestation, i.e. about 200,000 hectares per annum or
25 hectares per hour — nighttime, Saturdays, Sundays and holidays included — the
Philippines will be bereft of forest resources after the end of this ensuing decade, if
not earlier.
13. The adverse effects, disastrous consequences, serious injury and irreparable
damage of this continued trend of deforestation to the plaintiff minor's generation
and to generations yet unborn are evident and incontrovertible. As a matter of fact,
the environmental damages enumerated in paragraph 6 hereof are already being
felt, experienced and suffered by the generation of plaintiff adults.
14. The continued allowance by defendant of TLA holders to cut and deforest the
remaining forest stands will work great damage and irreparable injury to plaintiffs —
especially plaintiff minors and their successors — who may never see, use, benefit
from and enjoy this rare and unique natural resource treasure.
This act of defendant constitutes a misappropriation and/or impairment of the
natural resource property he holds in trust for the benefit of plaintiff minors and
succeeding generations.
15. Plaintiffs have a clear and constitutional right to a balanced and healthful
ecology and are entitled to protection by the State in its capacity as the parens
patriae.
16. Plaintiff have exhausted all administrative remedies with the defendant's office.
On March 2, 1990, plaintiffs served upon defendant a final demand to cancel all
logging permits in the country.
A copy of the plaintiffs' letter dated March 1, 1990 is hereto attached as Annex "B".
17. Defendant, however, fails and refuses to cancel the existing TLA's to the
continuing serious damage and extreme prejudice of plaintiffs.
18. The continued failure and refusal by defendant to cancel the TLA's is an act
violative of the rights of plaintiffs, especially plaintiff minors who may be left with a
country that is desertified (sic), bare, barren and devoid of the wonderful flora,
fauna and indigenous cultures which the Philippines had been abundantly blessed
with.
 19. Defendant's refusal to cancel the aforementioned TLA's is manifestly contrary to
the public policy enunciated in the Philippine Environmental Policy which, in
pertinent part, states that it is the policy of the State —
(a) to create, develop, maintain and improve conditions under which man and
nature can thrive in productive and enjoyable harmony with each other;
(b) to fulfill the social, economic and other requirements of present and future
generations of Filipinos and;
(c) to ensure the attainment of an environmental quality that is conductive to a life
of dignity and well-being. (P.D. 1151, 6 June 1977)
20. Furthermore, defendant's continued refusal to cancel the aforementioned TLA's
is contradictory to the Constitutional policy of the State to —
a. effect "a more equitable distribution of opportunities, income and wealth" and
"make full and efficient use of natural resources (sic)." (Section 1, Article XII of the
Constitution);
b. "protect the nation's marine wealth." (Section 2, ibid);
c. "conserve and promote the nation's cultural heritage and resources (sic)" (Section
14, Article XIV, id.);
d. "protect and advance the right of the people to a balanced and healthful ecology
in accord with the rhythm and harmony of nature." (Section 16, Article II, id.)
21. Finally, defendant's act is contrary to the highest law of humankind — the
natural law — and violative of plaintiffs' right to self-preservation and perpetuation.
22. There is no other plain, speedy and adequate remedy in law other than the
instant action to arrest the unabated hemorrhage of the country's vital life support
systems and continued rape of Mother Earth. 6
On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to Dismiss the
complaint based on two (2) grounds, namely: (1) the plaintiffs have no cause of action against him and
(2) the issue raised by the plaintiffs is a political question which properly pertains to the legislative or
executive branches of Government. In their 12 July 1990 Opposition to the Motion, the petitioners
maintain that (1) the complaint shows a clear and unmistakable cause of action, (2) the motion is
dilatory and (3) the action presents a justiciable question as it involves the defendant's abuse of
discretion.
On 18 July 1991, respondent Judge issued an order granting the aforementioned motion to
dismiss.7 In the said order, not only was the defendant's claim — that the complaint states no cause of
action against him and that it raises a political question — sustained, the respondent Judge further
ruled that the granting of the relief prayed for would result in the impairment of contracts which is
prohibited by the fundamental law of the land.
Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the Revised Rules of
Court and ask this Court to rescind and set aside the dismissal order on the ground that the
respondent Judge gravely abused his discretion in dismissing the action. Again, the parents of the
plaintiffs-minors not only represent their children, but have also joined the latter in this case. 8
On 14 May 1992, We resolved to give due course to the petition and required the parties to submit
their respective Memoranda after the Office of the Solicitor General (OSG) filed a Comment in behalf
of the respondents and the petitioners filed a reply thereto.
Petitioners contend that the complaint clearly and unmistakably states a cause of action as it contains
sufficient allegations concerning their right to a sound environment based on Articles 19, 20 and 21 of
the Civil Code (Human Relations), Section 4 of Executive Order (E.O.) No. 192 creating the DENR,
Section 3 of Presidential Decree (P.D.) No. 1151 (Philippine Environmental Policy), Section 16, Article II
of the 1987 Constitution recognizing the right of the people to a balanced and healthful ecology, the
concept of generational genocide in Criminal Law and the concept of man's inalienable right to self-
preservation and self-perpetuation embodied in natural law. Petitioners likewise rely on the
respondent's correlative obligation per Section 4 of E.O. No. 192, to safeguard the people's right to a
healthful environment.
It is further claimed that the issue of the respondent Secretary's alleged grave abuse of discretion in
granting Timber License Agreements (TLAs) to cover more areas for logging than what is available
involves a judicial question.
Anent the invocation by the respondent Judge of the Constitution's non-impairment clause,
petitioners maintain that the same does not apply in this case because TLAs are not contracts. They
likewise submit that even if TLAs may be considered protected by the said clause, it is well settled that
they may still be revoked by the State when the public interest so requires.
On the other hand, the respondents aver that the petitioners failed to allege in their complaint a
specific legal right violated by the respondent Secretary for which any relief is provided by law. They
see nothing in the complaint but vague and nebulous allegations concerning an "environmental right"
which supposedly entitles the petitioners to the "protection by the state in its capacity as parens
patriae." Such allegations, according to them, do not reveal a valid cause of action. They then
reiterate the theory that the question of whether logging should be permitted in the country is a
political question which should be properly addressed to the executive or legislative branches of
Government. They therefore assert that the petitioners' resources is not to file an action to court, but
to lobby before Congress for the passage of a bill that would ban logging totally.
As to the matter of the cancellation of the TLAs, respondents submit that the same cannot be done by
the State without due process of law. Once issued, a TLA remains effective for a certain period of time
— usually for twenty-five (25) years. During its effectivity, the same can neither be revised nor
cancelled unless the holder has been found, after due notice and hearing, to have violated the terms
of the agreement or other forestry laws and regulations. Petitioners' proposition to have all the TLAs
indiscriminately cancelled without the requisite hearing would be violative of the requirements of due
process.
Before going any further, We must first focus on some procedural matters. Petitioners instituted Civil
Case No. 90-777 as a class suit. The original defendant and the present respondents did not take issue
with this matter. Nevertheless, We hereby rule that the said civil case is indeed a class suit. The
subject matter of the complaint is of common and general interest not just to several, but to all
citizens of the Philippines. Consequently, since the parties are so numerous, it, becomes
impracticable, if not totally impossible, to bring all of them before the court. We likewise declare that
the plaintiffs therein are numerous and representative enough to ensure the full protection of all
concerned interests. Hence, all the requisites for the filing of a valid class suit under Section 12, Rule 3
of the Revised Rules of Court are present both in the said civil case and in the instant petition, the
latter being but an incident to the former.
This case, however, has a special and novel element. Petitioners minors assert that they represent
their generation as well as generations yet unborn. We find no difficulty in ruling that they can, for
themselves, for others of their generation and for the succeeding generations, file a class suit. Their
personality to sue in behalf of the succeeding generations can only be based on the concept of
intergenerational responsibility insofar as the right to a balanced and healthful ecology is concerned.
Such a right, as hereinafter expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its entirety. 9 Such rhythm
and harmony indispensably include, inter alia, the judicious disposition, utilization, management,
renewal and conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-shore
areas and other natural resources to the end that their exploration, development and utilization be
equitably accessible to the present as well as future generations. 10Needless to say, every generation
has a responsibility to the next to preserve that rhythm and harmony for the full enjoyment of a
balanced and healthful ecology. Put a little differently, the minors' assertion of their right to a sound
environment constitutes, at the same time, the performance of their obligation to ensure the
protection of that right for the generations to come.
The locus standi of the petitioners having thus been addressed, We shall now proceed to the merits of
the petition.
After a careful perusal of the complaint in question and a meticulous consideration and evaluation of
the issues raised and arguments adduced by the parties, We do not hesitate to find for the petitioners
and rule against the respondent Judge's challenged order for having been issued with grave abuse of
discretion amounting to lack of jurisdiction. The pertinent portions of the said order reads as follows:
xxx xxx xxx
After a careful and circumspect evaluation of the Complaint, the Court cannot help
but agree with the defendant. For although we believe that plaintiffs have but the
noblest of all intentions, it (sic) fell short of alleging, with sufficient definiteness, a
specific legal right they are seeking to enforce and protect, or a specific legal wrong
they are seeking to prevent and redress (Sec. 1, Rule 2, RRC). Furthermore, the
Court notes that the Complaint is replete with vague assumptions and vague
conclusions based on unverified data. In fine, plaintiffs fail to state a cause of action
in its Complaint against the herein defendant.
Furthermore, the Court firmly believes that the matter before it, being impressed
with political color and involving a matter of public policy, may not be taken
cognizance of by this Court without doing violence to the sacred principle of
"Separation of Powers" of the three (3) co-equal branches of the Government.
The Court is likewise of the impression that it cannot, no matter how we stretch our
jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing
timber license agreements in the country and to cease and desist from receiving,
accepting, processing, renewing or approving new timber license agreements. For
to do otherwise would amount to "impairment of contracts" abhored (sic) by the
fundamental law. 11
We do not agree with the trial court's conclusions that the plaintiffs failed to allege with sufficient
definiteness a specific legal right involved or a specific legal wrong committed, and that the complaint
is replete with vague assumptions and conclusions based on unverified data. A reading of the
complaint itself belies these conclusions.
The complaint focuses on one specific fundamental legal right — the right to a balanced and healthful
ecology which, for the first time in our nation's constitutional history, is solemnly incorporated in the
fundamental law. Section 16, Article II of the 1987 Constitution explicitly provides:
Sec. 16. The State shall protect and advance the right of the people to a balanced
and healthful ecology in accord with the rhythm and harmony of nature.
This right unites with the right to health which is provided for in the preceding
section of the same article:
Sec. 15. The State shall protect and promote the right to health of the people and
instill health consciousness among them.
While the right to a balanced and healthful ecology is to be found under the Declaration of Principles
and State Policies and not under the Bill of Rights, it does not follow that it is less important than any
of the civil and political rights enumerated in the latter. Such a right belongs to a different category of
rights altogether for it concerns nothing less than self-preservation and self-perpetuation — aptly and
fittingly stressed by the petitioners — the advancement of which may even be said to predate all
governments and constitutions. As a matter of fact, these basic rights need not even be written in the
Constitution for they are assumed to exist from the inception of humankind. If they are now explicitly
mentioned in the fundamental charter, it is because of the well-founded fear of its framers that unless
the rights to a balanced and healthful ecology and to health are mandated as state policies by the
Constitution itself, thereby highlighting their continuing importance and imposing upon the state a
solemn obligation to preserve the first and protect and advance the second, the day would not be too
far when all else would be lost not only for the present generation, but also for those to come —
generations which stand to inherit nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it the correlative duty to refrain from
impairing the environment. During the debates on this right in one of the plenary sessions of the 1986
Constitutional Commission, the following exchange transpired between Commissioner Wilfrido
Villacorta and Commissioner Adolfo Azcuna who sponsored the section in question:
MR. VILLACORTA:
Does this section mandate the State to provide sanctions against
all forms of pollution — air, water and noise pollution?
MR. AZCUNA:
Yes, Madam President. The right to healthful (sic) environment
necessarily carries with it the correlative duty of not impairing the
same and, therefore, sanctions may be provided for impairment of
environmental balance. 12
The said right implies, among many other things, the judicious management and conservation of the
country's forests.
Without such forests, the ecological or environmental balance would be irreversiby
disrupted.
Conformably with the enunciated right to a balanced and healthful ecology and the right to health, as
well as the other related provisions of the Constitution concerning the conservation, development
and utilization of the country's natural resources, 13 then President Corazon C. Aquino promulgated on
10 June 1987 E.O. No. 192, 14 Section 4 of which expressly mandates that the Department of
Environment and Natural Resources "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." Section 3 thereof makes
the following statement of policy:
Sec. 3. Declaration of Policy. — It is hereby declared the policy of the State to ensure
the sustainable use, development, management, renewal, and conservation of the
country's forest, mineral, land, off-shore areas and other natural resources,
including the protection and enhancement of the quality of the environment, and
equitable access of the different segments of the population to the development
and the use of the country's natural resources, not only for the present generation
but for future generations as well. It is also the policy of the state to recognize and
apply a true value system including social and environmental cost implications
relative to their utilization, development and conservation of our natural resources.
This policy declaration is substantially re-stated it Title XIV, Book IV of the Administrative Code of
1987,15 specifically in Section 1 thereof which reads:
Sec. 1. Declaration of Policy. — (1) The State shall ensure, for the benefit of the
Filipino people, the full exploration and development as well as the judicious
disposition, utilization, management, renewal and conservation of the country's
forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural
resources, consistent with the necessity of maintaining a sound ecological balance
and protecting and enhancing the quality of the environment and the objective of
making the exploration, development and utilization of such natural resources
equitably accessible to the different segments of the present as well as future
generations.
(2) The State shall likewise recognize and apply a true value system that takes into
account social and environmental cost implications relative to the utilization,
development and conservation of our natural resources.
The above provision stresses "the necessity of maintaining a sound ecological balance and protecting
and enhancing the quality of the environment." Section 2 of the same Title, on the other hand,
specifically speaks of the mandate of the DENR; however, it makes particular reference to the fact of
the agency's being subject to law and higher authority. Said section provides:
Sec. 2. Mandate. — (1) The Department of Environment and Natural Resources shall
be primarily responsible for the implementation of the foregoing policy.
 (2) It shall, subject to law and higher authority, be in charge of carrying out the
State's constitutional mandate to control and supervise the exploration,
development, utilization, and conservation of the country's natural resources.
Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives which will serve as the
bases for policy formulation, and have defined the powers and functions of the DENR.
It may, however, be recalled that even before the ratification of the 1987 Constitution, specific
statutes already paid special attention to the "environmental right" of the present and future
generations. On 6 June 1977, P.D. No. 1151 (Philippine Environmental Policy) and P.D. No. 1152
(Philippine Environment Code) were issued. The former "declared a continuing policy of the State (a)
to create, develop, maintain and improve conditions under which man and nature can thrive in
productive and enjoyable harmony with each other, (b) to fulfill the social, economic and other
requirements of present and future generations of Filipinos, and (c) to insure the attainment of an
environmental quality that is conducive to a life of dignity and well-being." 16 As its goal, it speaks of
the "responsibilities of each generation as trustee and guardian of the environment for succeeding
generations." 17 The latter statute, on the other hand, gave flesh to the said policy.
Thus, the right of the petitioners (and all those they represent) to a balanced and healthful ecology is
as clear as the DENR's duty — under its mandate and by virtue of its powers and functions under E.O.
No. 192 and the Administrative Code of 1987 — to protect and advance the said right.
A denial or violation of that right by the other who has the corelative duty or obligation to respect or
protect the same gives rise to a cause of action. Petitioners maintain that the granting of the TLAs,
which they claim was done with grave abuse of discretion, violated their right to a balanced and
healthful ecology; hence, the full protection thereof requires that no further TLAs should be renewed
or granted.
A cause of action is defined as:
. . . an act or omission of one party in violation of the legal right or rights of the
other; and its essential elements are legal right of the plaintiff, correlative obligation
of the defendant, and act or omission of the defendant in violation of said legal
right. 18
It is settled in this jurisdiction that in a motion to dismiss based on the ground that the complaint fails
to state a cause of action, 19 the question submitted to the court for resolution involves the sufficiency
of the facts alleged in the complaint itself. No other matter should be considered; furthermore, the
truth of falsity of the said allegations is beside the point for the truth thereof is deemed hypothetically
admitted. The only issue to be resolved in such a case is: admitting such alleged facts to be true, may
the court render a valid judgment in accordance with the prayer in the complaint? 20 In Militante vs.
Edrosolano, 21 this Court laid down the rule that the judiciary should "exercise the utmost care and
circumspection in passing upon a motion to dismiss on the ground of the absence thereof [cause of
action] lest, by its failure to manifest a correct appreciation of the facts alleged and deemed
hypothetically admitted, what the law grants or recognizes is effectively nullified. If that happens,
there is a blot on the legal order. The law itself stands in disrepute."
After careful examination of the petitioners' complaint, We find the statements under the
introductory affirmative allegations, as well as the specific averments under the sub-heading CAUSE
OF ACTION, to be adequate enough to show, prima facie, the claimed violation of their rights. On the
basis thereof, they may thus be granted, wholly or partly, the reliefs prayed for. It bears stressing,
however, that insofar as the cancellation of the TLAs is concerned, there is the need to implead, as
party defendants, the grantees thereof for they are indispensable parties.
The foregoing considered, Civil Case No. 90-777 be said to raise a political question. Policy formulation
or determination by the executive or legislative branches of Government is not squarely put in issue.
What is principally involved is the enforcement of a right vis-a-vis policies already formulated and
expressed in legislation. It must, nonetheless, be emphasized that the political question doctrine is no
longer, the insurmountable obstacle to the exercise of judicial power or the impenetrable shield that
protects executive and legislative actions from judicial inquiry or review. The second paragraph of
section 1, Article VIII of the Constitution states that:
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.
Commenting on this provision in his book, Philippine Political Law, 22 Mr. Justice Isagani A. Cruz, a
distinguished member of this Court, says:
The first part of the authority represents the traditional concept of judicial power,
involving the settlement of conflicting rights as conferred as law. The second part of
the authority represents a broadening of judicial power to enable the courts of
justice to review what was before forbidden territory, to wit, the discretion of the
political departments of the government.
As worded, the new provision vests in the judiciary, and particularly the Supreme
Court, the power to rule upon even the wisdom of the decisions of the executive
and the legislature and to declare their acts invalid for lack or excess of jurisdiction
because tainted with grave abuse of discretion. The catch, of course, is the meaning
of "grave abuse of discretion," which is a very elastic phrase that can expand or
contract according to the disposition of the judiciary.
In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for this Court, noted:
 In the case now before us, the jurisdictional objection becomes even less tenable
and decisive. The reason is that, even if we were to assume that the issue presented
before us was political in nature, we would still not be precluded from revolving it
under the expanded jurisdiction conferred upon us that now covers, in proper cases,
even the political question. Article VII, Section 1, of the Constitution clearly
provides: . . .
The last ground invoked by the trial court in dismissing the complaint is the non-impairment of
contracts clause found in the Constitution. The court a quo declared that:
The Court is likewise of the impression that it cannot, no matter how we stretch our
jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing
timber license agreements in the country and to cease and desist from receiving,
accepting, processing, renewing or approving new timber license agreements. For
to do otherwise would amount to "impairment of contracts" abhored (sic) by the
fundamental law. 24
We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a sweeping
pronouncement. In the first place, the respondent Secretary did not, for obvious reasons, even invoke
in his motion to dismiss the non-impairment clause. If he had done so, he would have acted with
utmost infidelity to the Government by providing undue and unwarranted benefits and advantages to
the timber license holders because he would have forever bound the Government to strictly respect
the said licenses according to their terms and conditions regardless of changes in policy and the
demands of public interest and welfare. He was aware that as correctly pointed out by the petitioners,
into every timber license must be read Section 20 of the Forestry Reform Code (P.D. No. 705) which
provides:
. . . Provided, That when the national interest so requires, the President may amend,
modify, replace or rescind any contract, concession, permit, licenses or any other
form of privilege granted herein . . .
Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not a
contract, property or a property right protested by the due process clause of the
Constitution. In Tan vs. Director of Forestry, 25 this Court held:
. . . 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 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 property or a property right, nor
does it create a vested right; nor is it taxation (37 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).
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary: 26
. . . Timber licenses, permits and license agreements are the principal instruments
by which the State regulates the utilization and disposition of forest resources to the
end that public welfare is promoted. And it can hardly be gainsaid that they merely
evidence a privilege granted by the State to qualified entities, and do not vest in the
latter a permanent or irrevocable right to the particular concession area and the
forest products therein. They may be validly amended, modified, replaced or
rescinded by the Chief Executive when national interests so require. Thus, they are
not deemed contracts within the purview of the due process of law clause
[See Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also, Tan v.
Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302].
Since timber licenses are not contracts, the non-impairment clause, which reads:
Sec. 10. No law impairing, the obligation of contracts shall be passed. 27
cannot be invoked.
In the second place, even if it is to be assumed that the same are contracts, the instant case does not
involve a law or even an executive issuance declaring the cancellation or modification of existing
timber licenses. Hence, the non-impairment clause cannot as yet be invoked. Nevertheless, granting
further that a law has actually been passed mandating cancellations or modifications, the same
cannot still be stigmatized as a violation of the non-impairment clause. This is because by its very
nature and purpose, such as law could have only been passed in the exercise of the police power of
the state for the purpose of advancing the right of the people to a balanced and healthful ecology,
promoting their health and enhancing the general welfare. In Abe vs. Foster Wheeler
Corp. 28 this Court stated:
The freedom of contract, under our system of government, is not meant to be
absolute. The same is understood to be subject to reasonable legislative regulation
aimed at the promotion of public health, moral, safety and welfare. In other words,
the constitutional guaranty of non-impairment of obligations of contract is limited
by the exercise of the police power of the State, in the interest of public health,
safety, moral and general welfare.
The reason for this is emphatically set forth in Nebia vs. New York, 29 quoted in Philippine American
Life Insurance Co. vs. Auditor General,30 to wit:
 Under our form of government the use of property and the making of contracts are
normally matters of private and not of public concern. The general rule is that both
shall be free of governmental interference. But neither property rights nor contract
rights are absolute; for government cannot exist if the citizen may at will use his
property to the detriment of his fellows, or exercise his freedom of contract to work
them harm. Equally fundamental with the private right is that of the public to
regulate it in the common interest.
In short, the non-impairment clause must yield to the police power of the state. 31
Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause could apply with
respect to the prayer to enjoin the respondent Secretary from receiving, accepting, processing,
renewing or approving new timber licenses for, save in cases of renewal, no contract would have as of
yet existed in the other instances. Moreover, with respect to renewal, the holder is not entitled to it as
a matter of right.
WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED, and the challenged
Order of respondent Judge of 18 July 1991 dismissing Civil Case No. 90-777 is hereby set aside. The
petitioners may therefore amend their complaint to implead as defendants the holders or grantees of
the questioned timber license agreements.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 2869 March 25, 1907
MATEO CARIÑO, petitioner-appellant,
vs.
THE INSULAR GOVERNMENT, respondent-appellee.
Coudert Brothers for appellant.
Office of the Solicitor-General Araneta for appellee.
ARELLANO, C.J.:
Mateo Cariño, the appellant herein, on the 23d of February, 1904, filed his petition in the Court of
Land Registration praying that there be granted to him title to a parcel of land consisting of 40
hectares, 1 are, and 13 centares, and situated in the town of Baguio, Province of Benguet, together
with a house erected thereon and constructed of wood and roofed with rimo, and bounded as
follows: On the north, in lines running 1,048 metes and 20 decimeters with the lands of Sepa Cariño,
H. Phelps Whitmarsh, and Calsi; on the east, in lines running 991 meters and 50 decimeters with the
land of Kuidno, Esteban Gonzales, and of the Civil Government; on the south, in lines of 115 meters
and 60 decimeters, with the lands of Talaca; and on the west, in lines running 982 meters and 20
decimeters, with the lands of Sisco Cariño and Mayengmeng.
By order of the court the hearing of this petition, No. 561, and that of Antonio Rebollo and Vicente
Valpiedad filed under No. 834, were heard together for the reason that the latter petition claimed a
small portion of land included in the parcel set out in the former petition.
The Insular Government opposed the granting of these petitions, alleging that the whole parcel of
land is public property of the Government and that the same was never acquired in any manner or
through any title of egresionfrom the State.
After trial, and the hearing of documentary and oral proof, the court of Land Registration rendered its
judgment in these terms:
Therefore the court finds that Cariño and his predecessors have not possessed exclusively
and adversely any part of the said property prior to the date on which Cariño constructed the
house now there — that is to say, for the years 1897 and 1898, and Cariño held possession
for some years afterwards of but a part of the property to which he claims title. Both
petitions are dismissed and the property in question is adjudged to be public land. (Bill of
exceptions, p. 15.)
The conclusions arrived at the set forth in definite terms in the decision of the court below are the
following:
From the testimony given by Cariño as well as from that of several of the witnesses for the
Government it is deduced, that in or about the year 1884 Cariño erected and utilized as a
domicile a house on the property situated to the north of that property now in question,
property which, according to the plan attached to expediente No. 561, appears to be
property belonging to Donaldson Sim; that during the year 1893 Cariño sold said house to
one Cristobal Ramos, who in turn sold the same to Donaldson Sim, moving to and living on
the adjoining property, which appears on the plan aforesaid to be the property of H. Phelps
Whitmarsh, a place where the father and the grandfather of his wife, that is to say, Ortega
and Minse, had lived . . ..
In or about the years 1898 Cariño abandoned the property of Whitmarsh and located on the
property described in the plan attached to expediente No. 561, having constructed a house
thereon in which he now lives, and which house is situated in the center of the property, as is
indicated on the plan; and since which time he has undoubtedly occupied some portion of
the property now claimed by him. (Bill of exceptions, pp. 11 and 12.)
1. Therefore it is evident that this court can not decree the registration of all of the superficial
extension of the land described in the petition and as appears on the plan filed herein, such extension
containing 40 hectares, 1 are, and 13 centares, inasmuch as the documentary evidence accompanying
the petition is conclusive proof against the petitioners; this documentary proof consists of a
possessory information under date of March 7, 1901, and registered on the 11th day of the same
month and year; and, according to such possessory information, the land therein described contains
an extension of only 28 hectares limited by "the country road to the barrio of Pias," a road appearing
on the plan now presented and cutting the land, as might be said, in half, or running through its
center from north to south, a considerable extension of land remaining on the other side of the said
road, the west side, and which could not have been included in the possessory information
mentioned.
2. As has been shown during the trial of this case, this land, of which mention is made in said
possessory information, and upon which is situated the house now actually occupied by the
petitioner, all of which is set forth as argument as to the possession in the judgment, is "used for
pasture and sowing," and belongs to the class called public lands.
3. Under the express provisions of law, a parcel of land, being of common origin, presumptively
belonged to the State during its sovereignty, and, in order to perfect the legitimate acquisition of such
land by private persons, it was necessary that the possession of the same pass from the State. And
there is no evidence or proof of title of egresionof this land from the domain of the Spanish
Government, nor is there any possessory information equivalent to title by composicion or under
agreement. 4, The possessory information filed herein is not the title to property authorized in
substitution for that of adjustment by the royal decree of February 13, 1894, this being the last law or
legal disposition of the former sovereignty applicable to the present subject-matter of common lands:
First, for the reason that the land referred to herein is not covered nor does it come within any one of
the three conditions required by article 19 of the said royal decree, to wit, that the land has been in
an uninterrupted state of cultivation during a period of six years last past; or that the same has been
possessed without interruption during a period of twelve years and has been in a state of cultivation
up to the date of the information and during the three years immediately preceding such information;
or that such land had been possessed openly without interruption during a period of thirty or more
years, notwithstanding the land had not been cultivated; nor is it necessary to refer to the testimony
given by the two witnesses to the possessory information for the following reason: Second, because
the possessory information authorized by said royal decree or last legal disposition of the Spanish
Government, as title or for the purpose of acquiring actual proprietary right, equivalent to that of
adjustment with the Spanish Government and required and necessary at all times until the
publication of said royal decree was limited in time to one year, in accordance with article 21, which is
as follows: " A period of one year, not to be extended, is allowed to verify the possessory informations
which are referred to in articles 19 and 20. After the expiration of this period of the right of the
cultivators and persons in possession to obtain gratuitous title thereto lapses and the land together
with full possession reverts to the state, or, as the case may be, to the community, and the said
possessors and cultivators or their assigns would simply have rights under universal or general title of
average in the event that the land is sold within a period of five years immediately following the
cancellation. The possessors not included under this chapter can only acquire by time the ownership
and title to unappropriated or royal lands in accordance with common law."
5. In accordance with the preceding provisions, the right that remained to Cariño, if it be certain that
he was the true possessor of the land in question, was the right of average in case the Government or
State could have sold the same within the period of five years immediately following for example, if
the denouncement of purchase had been carried out by Felipe Zafra or any other person, as appears
from the record of the trial of the case. Aside from this right, in such event, his possession as attested
in the possessory information herein could not, in accordance with common law, go to show any right
of ownership until after the expiration of twenty years from the expiration of twenty years from the
verification and registry of the same in conformity with the provisions of article 393 of the Mortgage
Law and other conditions prescribe by this law.
6. The right of possession in accordance with common law — that is to say, civil law — remains at all
times subordinate to the Spanish administrative law, inasmuch as it could only be of force when
pertaining to royal transferable or alienable lands, which condition and the determination thereof is
reversed to the government, which classified and designated the royal alienable lands for the purpose
of distinguishing them from those lands strictly public, and from forestry lands which could at no time
pass to private ownership nor be acquired through time even after the said royal decree of February
13, 1894.
7. The advent of the new sovereignty necessarily brought a new method of dealing with lands and
particularly as to the classification and manner of transfer and acquisition of royal or common lands
then appropriated, which were thenceforth merely called public lands, the alienation of which was
reserved to the Government, in accordance with section 12 and 13 of the act of Congress of July 1,
1902,1 and in conformity with other laws enacted under this act of Congress by the Philippine
Commission prescribing rules for the execution thereof, one of which is Act No. 648, 2herein
mentioned by the petitioner, in connection with Act No. 627, 3 which appears to be the law upon
which the petition herein is founded.
8. Section 6 of Act No. 627 admits prescription, in accordance with the provisions contained in Act No.
190, as a basis for obtaining the right of ownership. "The petitioners claims title under the period of
prescription of ten years established by that act, as well as by reason of his occupancy and use thereof
from time immemorial." (Allegation 1.) But said act admits such prescription for the purpose of
obtaining title and ownership to lands "not exceeding more that sixteen hectares in extent." (Sec. 6 of
said act.) The land claimed by Cariño is 40 hectares in extent, if we take into consideration his petition,
or an extension of 28 hectares, according to the possessory information, the only thing that can be
considered. Therefore, it follows that the judgment denying the petition herein and now appealed
from was strictly in accordance with the law invoked herein.
9. And of the 28 hectares of land as set out in the possessory information, one part of same,
according to the testimony of Cariño, belongs to Vicente Valpiedad, the extent of which is not
determined. From all of which it follows that the precise extent has not been determined in the trial
of this case on which judgment might be based in the event that the judgment and title be declared in
favor of the petitioner, Mateo Cariño. And we should not lose sight of the fact that, considering the
intention of Congress in granting ownership and title to 16 hectares, that Mateo Cariño and his
children have already exceeded such amount in various acquirements of lands, all of which is shown
in different cases decided by the said Court of Land Registration, donations or gifts of land that could
only have been made efficacious as to the conveyance thereof with the assistance of these new laws.
By reason of the findings set forth it is clearly seen that the court below did not err:
1. In finding that Mateo Cariño and those from whom he claims his right had not possessed
and claimed as owners the lands in question since time immemorial;
2. In finding that the land in question did not belong to the petitioner, but that, on the
contrary, it was the property of the Government. (Allegation 21.)
Wherefore, the judgment appealed from is affirmed with the costs of this instance against the
appellant. After the expiration of twenty days from the notification of this decision let judgment be
entered in accordance herewith, and ten days thereafter let the case be remanded to the court from
whence it came for proper action. So ordered.
G.R. No. 135385 December 6, 2000
ISAGANI CRUZ and CESAR EUROPA, petitioners,
vs.
SECRETARY OF ENVIRONMENT AND NATURAL RESOURCES, SECRETARY OF BUDGET AND
MANAGEMENT and CHAIRMAN and COMMISSIONERS OF THE NATIONAL COMMISSION ON
INDIGENOUS PEOPLES, respondents.
HON. JUAN M .FLAVIER, HON. PONCIANO BENNAGEN, BAYANI ASCARRAGA, EDTAMI
MANSAYANGAN, BASILIO WANDAG, EVELYN DUNUAN, YAOM TUGAS, ALFREMO CARPIANO,
LIBERATO A. GABIN, MATERNIDAD M. COLAS, NARCISA M. DALUPINES, BAI KIRAM-CONNIE
SATURNO, BAE MLOMO-BEATRIZ T. ABASALA, DATU BALITUNGTUNG-ANTONIO D. LUMANDONG,
DATU MANTUMUKAW TEOFISTO SABASALES, DATU EDUAARDO BANDA, DATU JOEL UNAD, DATU
RAMON BAYAAN, TIMUAY JOSE ANOY, TIMUAY MACARIO D. SALACAO, TIMUAY EDWIN B. ENDING,
DATU SAHAMPONG MALANAW VI, DATU BEN PENDAO CABIGON, BAI NANAPNAY-LIZA SAWAY, BAY
INAY DAYA-MELINDA S. REYMUNDO, BAI TINANGHAGA HELINITA T. PANGAN, DATU MAKAPUKAW
ADOLINO L. SAWAY, DATU MAUDAYAW-CRISPEN SAWAY, VICKY MAKAY, LOURDES D. AMOS, GILBERT
P. HOGGANG, TERESA GASPAR, MANUEL S. ONALAN, MIA GRACE L. GIRON, ROSEMARIE G. PE,
BENITO CARINO, JOSEPH JUDE CARANTES, LYNETTE CARANTES-VIVAL, LANGLEY SEGUNDO, SATUR S.
BUGNAY, CARLING DOMULOT, ANDRES MENDIOGRIN, LEOPOLDO ABUGAN, VIRGILIO CAYETANO,
CONCHITA G. DESCAGA, LEVY ESTEVES, ODETTE G. ESTEVEZ, RODOLFO C. AGUILAR, MAURO
VALONES, PEPE H. ATONG, OFELIA T. DAVI, PERFECTO B. GUINOSAO, WALTER N. TIMOL, MANUEL T.
SELEN, OSCAR DALUNHAY, RICO O. SULATAN, RAFFY MALINDA, ALFREDO ABILLANOS, JESSIE
ANDILAB, MIRLANDO H. MANGKULINTAS, SAMIE SATURNO, ROMEO A. LINDAHAY, ROEL S.
MANSANG-CAGAN, PAQUITO S. LIESES, FILIPE G. SAWAY, HERMINIA S. SAWAY, JULIUS S. SAWAY,
LEONARDA SAWAY, JIMMY UGYUB, SALVADOR TIONGSON, VENANCIO APANG, MADION MALID,
SUKIM MALID, NENENG MALID, MANGKATADONG AUGUSTO DIANO, JOSEPHINE M. ALBESO,
MORENO MALID, MARIO MANGCAL, FELAY DIAMILING, SALOME P. SARZA, FELIPE P. BAGON,
SAMMY SALNUNGAN, ANTONIO D. EMBA, NORMA MAPANSAGONOS, ROMEO SALIGA, SR., JERSON
P. GERADA, RENATO T. BAGON, JR., SARING MASALONG, SOLEDAD M. GERARDA, ELIZABETH L.
MENDI, MORANTE S. TIWAN, DANILO M. MALUDAO, MINORS MARICEL MALID, represented by her
father CORNELIO MALID, MARCELINO M. LADRA, represented by her father MONICO D. LADRA,
JENNYLYN MALID, represented by her father TONY MALID, ARIEL M. EVANGELISTA, represented by
her mother LINAY BALBUENA, EDWARD M. EMUY, SR., SUSAN BOLANIO, OND, PULA BATO B'LAAN
TRIBAL FARMER'S ASSOCIATION, INTER-PEOPLE'S EXCHANGE, INC. and GREEN FORUM-WESTERN
VISAYAS, intervenors.
COMMISSION ON HUMAN RIGHTS, intervenor.
IKALAHAN INDIGENOUS PEOPLE and HARIBON FOUNDATION FOR THE CONSERVATION OF NATURAL
RESOURCES, INC., intervenor.
RESOLUTION
PER CURIAM:
Petitioners Isagani Cruz and Cesar Europa brought this suit for prohibition and mandamus as citizens
and taxpayers, assailing the constitutionality of certain provisions of Republic Act No. 8371 (R.A.
8371), otherwise known as the Indigenous Peoples Rights Act of 1997 (IPRA), and its Implementing
Rules and Regulations (Implementing Rules).
In its resolution of September 29, 1998, the Court required respondents to comment. 1 In compliance,
respondents Chairperson and Commissioners of the National Commission on Indigenous Peoples
(NCIP), the government agency created under the IPRA to implement its provisions, filed on October
13, 1998 their Comment to the Petition, in which they defend the constitutionality of the IPRA and
pray that the petition be dismissed for lack of merit.
On October 19, 1998, respondents Secretary of the Department of Environment and Natural
Resources (DENR) and Secretary of the Department of Budget and Management (DBM) filed through
the Solicitor General a consolidated Comment. The Solicitor General is of the view that the IPRA is
partly unconstitutional on the ground that it grants ownership over natural resources to indigenous
peoples and prays that the petition be granted in part.
On November 10, 1998, a group of intervenors, composed of Sen. Juan Flavier, one of the authors of
the IPRA, Mr. Ponciano Bennagen, a member of the 1986 Constitutional Commission, and the leaders
and members of 112 groups of indigenous peoples (Flavier, et. al), filed their Motion for Leave to
Intervene. They join the NCIP in defending the constitutionality of IPRA and praying for the dismissal
of the petition.
On March 22, 1999, the Commission on Human Rights (CHR) likewise filed a Motion to Intervene
and/or to Appear as Amicus Curiae. The CHR asserts that IPRA is an expression of the principle of
parens patriae and that the State has the responsibility to protect and guarantee the rights of those
who are at a serious disadvantage like indigenous peoples. For this reason it prays that the petition be
dismissed.
On March 23, 1999, another group, composed of the Ikalahan Indigenous People and the Haribon
Foundation for the Conservation of Natural Resources, Inc. (Haribon, et al.), filed a motion to
Intervene with attached Comment-in-Intervention. They agree with the NCIP and Flavier, et al. that
IPRA is consistent with the Constitution and pray that the petition for prohibition and mandamus be
dismissed.
The motions for intervention of the aforesaid groups and organizations were granted.
Oral arguments were heard on April 13, 1999. Thereafter, the parties and intervenors filed their
respective memoranda in which they reiterate the arguments adduced in their earlier pleadings and
during the hearing.
Petitioners assail the constitutionality of the following provisions of the IPRA and its Implementing
Rules on the ground that they amount to an unlawful deprivation of the State’s ownership over lands
of the public domain as well as minerals and other natural resources therein, in violation of the
regalian doctrine embodied in Section 2, Article XII of the Constitution:
"(1) Section 3(a) which defines the extent and coverage of ancestral domains, and Section 3(b) which,
in turn, defines ancestral lands;
"(2) Section 5, in relation to section 3(a), which provides that ancestral domains including inalienable
public lands, bodies of water, mineral and other resources found within ancestral domains are private
but community property of the indigenous peoples;
"(3) Section 6 in relation to section 3(a) and 3(b) which defines the composition of ancestral domains
and ancestral lands;
"(4) Section 7 which recognizes and enumerates the rights of the indigenous peoples over the
ancestral domains;
(5) Section 8 which recognizes and enumerates the rights of the indigenous peoples over the ancestral
lands;
"(6) Section 57 which provides for priority rights of the indigenous peoples in the harvesting,
extraction, development or exploration of minerals and other natural resources within the areas
claimed to be their ancestral domains, and the right to enter into agreements with nonindigenous
peoples for the development and utilization of natural resources therein for a period not exceeding 25
years, renewable for not more than 25 years; and
"(7) Section 58 which gives the indigenous peoples the responsibility to maintain, develop, protect
and conserve the ancestral domains and portions thereof which are found to be necessary for critical
watersheds, mangroves, wildlife sanctuaries, wilderness, protected areas, forest cover or
reforestation."2
Petitioners also content that, by providing for an all-encompassing definition of "ancestral domains"
and "ancestral lands" which might even include private lands found within said areas, Sections 3(a)
and 3(b) violate the rights of private landowners.3
In addition, petitioners question the provisions of the IPRA defining the powers and jurisdiction of the
NCIP and making customary law applicable to the settlement of disputes involving ancestral domains
and ancestral lands on the ground that these provisions violate the due process clause of the
Constitution.4
These provisions are:
"(1) sections 51 to 53 and 59 which detail the process of delineation and recognition of
ancestral domains and which vest on the NCIP the sole authority to delineate ancestral
domains and ancestral lands;
"(2) Section 52[i] which provides that upon certification by the NCIP that a particular area is
an ancestral domain and upon notification to the following officials, namely, the Secretary of
Environment and Natural Resources, Secretary of Interior and Local Governments, Secretary
of Justice and Commissioner of the National Development Corporation, the jurisdiction of
said officials over said area terminates;
"(3) Section 63 which provides the customary law, traditions and practices of indigenous
peoples shall be applied first with respect to property rights, claims of ownership, hereditary
succession and settlement of land disputes, and that any doubt or ambiguity in the
interpretation thereof shall be resolved in favor of the indigenous peoples;
"(4) Section 65 which states that customary laws and practices shall be used to resolve
disputes involving indigenous peoples; and
"(5) Section 66 which vests on the NCIP the jurisdiction over all claims and disputes involving
rights of the indigenous peoples."5
Finally, petitioners assail the validity of Rule VII, Part II, Section 1 of the NCIP Administrative Order No.
1, series of 1998, which provides that "the administrative relationship of the NCIP to the Office of the
President is characterized as a lateral but autonomous relationship for purposes of policy and
program coordination." They contend that said Rule infringes upon the President’s power of control
over executive departments under Section 17, Article VII of the Constitution. 6
Petitioners pray for the following:
"(1) A declaration that Sections 3, 5, 6, 7, 8, 52[I], 57, 58, 59, 63, 65 and 66 and other related
provisions of R.A. 8371 are unconstitutional and invalid;
"(2) The issuance of a writ of prohibition directing the Chairperson and Commissioners of the
NCIP to cease and desist from implementing the assailed provisions of R.A. 8371 and its
Implementing Rules;
"(3) The issuance of a writ of prohibition directing the Secretary of the Department of
Environment and Natural Resources to cease and desist from implementing Department of
Environment and Natural Resources Circular No. 2, series of 1998;
"(4) The issuance of a writ of prohibition directing the Secretary of Budget and Management
to cease and desist from disbursing public funds for the implementation of the assailed
provisions of R.A. 8371; and
"(5) The issuance of a writ of mandamus commanding the Secretary of Environment and
Natural Resources to comply with his duty of carrying out the State’s constitutional mandate
to control and supervise the exploration, development, utilization and conservation of
Philippine natural resources."7
After due deliberation on the petition, the members of the Court voted as follows:
Seven (7) voted to dismiss the petition. Justice Kapunan filed an opinion, which the Chief Justice and
Justices Bellosillo, Quisumbing, and Santiago join, sustaining the validity of the challenged provisions
of R.A. 8371. Justice Puno also filed a separate opinion sustaining all challenged provisions of the law
with the exception of Section 1, Part II, Rule III of NCIP Administrative Order No. 1, series of 1998, the
Rules and Regulations Implementing the IPRA, and Section 57 of the IPRA which he contends should
be interpreted as dealing with the large-scale exploitation of natural resources and should be read in
conjunction with Section 2, Article XII of the 1987 Constitution. On the other hand, Justice Mendoza
voted to dismiss the petition solely on the ground that it does not raise a justiciable controversy and
petitioners do not have standing to question the constitutionality of R.A. 8371.
Seven (7) other members of the Court voted to grant the petition. Justice Panganiban filed a separate
opinion expressing the view that Sections 3 (a)(b), 5, 6, 7 (a)(b), 8, and related provisions of R.A. 8371
are unconstitutional. He reserves judgment on the constitutionality of Sections 58, 59, 65, and 66 of
the law, which he believes must await the filing of specific cases by those whose rights may have been
violated by the IPRA. Justice Vitug also filed a separate opinion expressing the view that Sections 3(a),
7, and 57 of R.A. 8371 are unconstitutional. Justices Melo, Pardo, Buena, Gonzaga-Reyes, and De Leon
join in the separate opinions of Justices Panganiban and Vitug.
As the votes were equally divided (7 to 7) and the necessary majority was not obtained, the case was
redeliberated upon. However, after redeliberation, the voting remained the same. Accordingly,
pursuant to Rule 56, Section 7 of the Rules of Civil Procedure, the petition is DISMISSED.
Attached hereto and made integral parts thereof are the separate opinions of Justices Puno, Vitug,
Kapunan, Mendoza, and Panganiban.
SO ORDERED.
G.R. Nos. 171947-48 December 18, 2008
METROPOLITAN MANILA DEVELOPMENT AUTHORITY, DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES, DEPARTMENT OF EDUCATION, CULTURE AND SPORTS, 1 DEPARTMENT OF
HEALTH, DEPARTMENT OF AGRICULTURE, DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS,
DEPARTMENT OF BUDGET AND MANAGEMENT, PHILIPPINE COAST GUARD, PHILIPPINE NATIONAL
POLICE MARITIME GROUP, and DEPARTMENT OF THE INTERIOR AND LOCAL
GOVERNMENT, petitioners,
vs.
CONCERNED RESIDENTS OF MANILA BAY, represented and joined by DIVINA V. ILAS, SABINIANO
ALBARRACIN, MANUEL SANTOS, JR., DINAH DELA PEÑA, PAUL DENNIS QUINTERO, MA. VICTORIA
LLENOS, DONNA CALOZA, FATIMA QUITAIN, VENICE SEGARRA, FRITZIE TANGKIA, SARAH JOELLE
LINTAG, HANNIBAL AUGUSTUS BOBIS, FELIMON SANTIAGUEL, and JAIME AGUSTIN R.
OPOSA, respondents.
DECISION
VELASCO, JR., J.:
The need to address environmental pollution, as a cause of climate change, has of late gained the
attention of the international community. Media have finally trained their sights on the ill effects of
pollution, the destruction of forests and other critical habitats, oil spills, and the unabated improper
disposal of garbage. And rightly so, for the magnitude of environmental destruction is now on a scale
few ever foresaw and the wound no longer simply heals by itself. 2 But amidst hard evidence and clear
signs of a climate crisis that need bold action, the voice of cynicism, naysayers, and procrastinators
can still be heard.
This case turns on government agencies and their officers who, by the nature of their respective
offices or by direct statutory command, are tasked to protect and preserve, at the first instance, our
internal waters, rivers, shores, and seas polluted by human activities. To most of these agencies and
their official complement, the pollution menace does not seem to carry the high national priority it
deserves, if their track records are to be the norm. Their cavalier attitude towards solving, if not
mitigating, the environmental pollution problem, is a sad commentary on bureaucratic efficiency and
commitment.
(8) Executive Order No. 192;
(9) The Toxic and Hazardous Wastes Law (Republic Act No. 6969);
(10) Civil Code provisions on nuisance and human relations;

At the core of the case is the Manila Bay, a place with a proud historic past, once brimming with (11) The Trust Doctrine and the Principle of Guardianship; and
marine life and, for so many decades in the past, a spot for different contact recreation activities, but
now a dirty and slowly dying expanse mainly because of the abject official indifference of people and
(12) International Law
institutions that could have otherwise made a difference.
Inter alia, respondents, as plaintiffs a quo, prayed that petitioners be ordered to clean the Manila Bay
This case started when, on January 29, 1999, respondents Concerned Residents of Manila Bay filed a
and submit to the RTC a concerted concrete plan of action for the purpose.
complaint before the Regional Trial Court (RTC) in Imus, Cavite against several government agencies,
among them the petitioners, for the cleanup, rehabilitation, and protection of the Manila Bay. Raffled
The trial of the case started off with a hearing at the Manila Yacht Club followed by an ocular
to Branch 20 and docketed as Civil Case No. 1851-99 of the RTC, the complaint alleged that the water
inspection of the Manila Bay. Renato T. Cruz, the Chief of the Water Quality Management Section,
quality of the Manila Bay had fallen way below the allowable standards set by law, specifically
Environmental Management Bureau, Department of Environment and Natural Resources (DENR),
Presidential Decree No. (PD) 1152 or the Philippine Environment Code. This environmental aberration,
testifying for petitioners, stated that water samples collected from different beaches around the
the complaint stated, stemmed from:
Manila Bay showed that the amount of fecal coliform content ranged from 50,000 to 80,000 most
probable number (MPN)/ml when what DENR Administrative Order No. 34-90 prescribed as a safe
x x x [The] reckless, wholesale, accumulated and ongoing acts of omission or commission [of
level for bathing and other forms of contact recreational activities, or the "SB" level, is one not
the defendants] resulting in the clear and present danger to public health and in the
exceeding 200 MPN/100 ml.4
depletion and contamination of the marine life of Manila Bay, [for which reason] ALL
defendants must be held jointly and/or solidarily liable and be collectively ordered to clean
Rebecca de Vera, for Metropolitan Waterworks and Sewerage System (MWSS) and in behalf of other
up Manila Bay and to restore its water quality to class B waters fit for swimming, skin-diving,
petitioners, testified about the MWSS’ efforts to reduce pollution along the Manila Bay through the
and other forms of contact recreation.3
Manila Second Sewerage Project. For its part, the Philippine Ports Authority (PPA) presented, as part
of its evidence, its memorandum circulars on the study being conducted on ship-generated waste
In their individual causes of action, respondents alleged that the continued neglect of petitioners in
treatment and disposal, and its Linis Dagat (Clean the Ocean) project for the cleaning of wastes
abating the pollution of the Manila Bay constitutes a violation of, among others:
accumulated or washed to shore.

(1) Respondents’ constitutional right to life, health, and a balanced ecology;

The RTC Ordered Petitioners to Clean Up and Rehabilitate Manila Bay

(2) The Environment Code (PD 1152);

On September 13, 2002, the RTC rendered a Decision 5 in favor of respondents. The dispositive portion
reads:
(3) The Pollution Control Law (PD 984);
WHEREFORE, finding merit in the complaint, judgment is hereby rendered ordering the
(4) The Water Code (PD 1067); abovenamed defendant-government agencies, jointly and solidarily, to clean up and
rehabilitate Manila Bay and restore its waters to SB classification to make it fit for swimming,
(5) The Sanitation Code (PD 856); skin-diving and other forms of contact recreation. To attain this, defendant-agencies, with
defendant DENR as the lead agency, are directed, within six (6) months from receipt hereof,
(6) The Illegal Disposal of Wastes Decree (PD 825); to act and perform their respective duties by devising a consolidated, coordinated and
concerted scheme of action for the rehabilitation and restoration of the bay.
(7) The Marine Pollution Law (PD 979);
In particular:
Defendant MWSS is directed to install, operate and maintain adequate [sewerage] treatment
facilities in strategic places under its jurisdiction and increase their capacities.
Defendant LWUA, to see to it that the water districts under its wings, provide, construct and
operate sewage facilities for the proper disposal of waste.
Defendant DENR, which is the lead agency in cleaning up Manila Bay, to install, operate and
maintain waste facilities to rid the bay of toxic and hazardous substances.
Defendant PPA, to prevent and also to treat the discharge not only of ship-generated wastes
but also of other solid and liquid wastes from docking vessels that contribute to the pollution
of the bay.
Defendant MMDA, to establish, operate and maintain an adequate and appropriate sanitary
landfill and/or adequate solid waste and liquid disposal as well as other alternative garbage
disposal system such as re-use or recycling of wastes.
Defendant DA, through the Bureau of Fisheries and Aquatic Resources, to revitalize the
marine life in Manila Bay and restock its waters with indigenous fish and other aquatic
animals.
Defendant DBM, to provide and set aside an adequate budget solely for the purpose of
cleaning up and rehabilitation of Manila Bay.
Defendant DPWH, to remove and demolish structures and other nuisances that obstruct the
free flow of waters to the bay. These nuisances discharge solid and liquid wastes which
eventually end up in Manila Bay. As the construction and engineering arm of the
government, DPWH is ordered to actively participate in removing debris, such as carcass of
sunken vessels, and other non-biodegradable garbage in the bay.
Defendant DOH, to closely supervise and monitor the operations of septic and sludge
companies and require them to have proper facilities for the treatment and disposal of fecal
sludge and sewage coming from septic tanks.
Defendant DECS, to inculcate in the minds and hearts of the people through education the
importance of preserving and protecting the environment.
Defendant Philippine Coast Guard and the PNP Maritime Group, to protect at all costs the
Manila Bay from all forms of illegal fishing.
No pronouncement as to damages and costs.
SO ORDERED.
The MWSS, Local Water Utilities Administration (LWUA), and PPA filed before the Court of Appeals
(CA) individual Notices of Appeal which were eventually consolidated and docketed as CA-G.R. CV No.
76528.
On the other hand, the DENR, Department of Public Works and Highways (DPWH), Metropolitan
Manila Development Authority (MMDA), Philippine Coast Guard (PCG), Philippine National Police
(PNP) Maritime Group, and five other executive departments and agencies filed directly with this
Court a petition for review under Rule 45. The Court, in a Resolution of December 9, 2002, sent the
said petition to the CA for consolidation with the consolidated appeals of MWSS, LWUA, and PPA,
docketed as CA-G.R. SP No. 74944.
Petitioners, before the CA, were one in arguing in the main that the pertinent provisions of the
Environment Code (PD 1152) relate only to the cleaning of specific pollution incidents and do not
cover cleaning in general. And apart from raising concerns about the lack of funds appropriated for
cleaning purposes, petitioners also asserted that the cleaning of the Manila Bay is not a ministerial act
which can be compelled by mandamus.
The CA Sustained the RTC
By a Decision6 of September 28, 2005, the CA denied petitioners’ appeal and affirmed the Decision of
the RTC in toto, stressing that the trial court’s decision did not require petitioners to do tasks outside
of their usual basic functions under existing laws.7
Petitioners are now before this Court praying for the allowance of their Rule 45 petition on the
following ground and supporting arguments:
THE [CA] DECIDED A QUESTION OF SUBSTANCE NOT HERETOFORE PASSED UPON BY THE
HONORABLE COURT, I.E., IT AFFIRMED THE TRIAL COURT’S DECISION DECLARING THAT
SECTION 20 OF [PD] 1152 REQUIRES CONCERNED GOVERNMENT AGENCIES TO REMOVE ALL
POLLUTANTS SPILLED AND DISCHARGED IN THE WATER SUCH AS FECAL COLIFORMS.
ARGUMENTS
I
[SECTIONS] 17 AND 20 OF [PD] 1152 RELATE ONLY TO THE CLEANING OF SPECIFIC POLLUTION
INCIDENTS AND [DO] NOT COVER CLEANING IN GENERAL
 II
THE CLEANING OR REHABILITATION OF THE MANILA BAY IS NOT A MINISTERIAL ACT OF
PETITIONERS THAT CAN BE COMPELLED BY MANDAMUS.
The issues before us are two-fold. First, do Sections 17 and 20 of PD 1152 under the
headings, Upgrading of Water Quality and Clean-up Operations, envisage a cleanup in general or are
they limited only to the cleanup of specific pollution incidents? And second, can petitioners be
compelled by mandamus to clean up and rehabilitate the Manila Bay?
On August 12, 2008, the Court conducted and heard the parties on oral arguments.
Our Ruling
We shall first dwell on the propriety of the issuance of mandamus under the premises.
The Cleaning or Rehabilitation of Manila Bay
Can be Compelled by Mandamus
Generally, the writ of mandamus lies to require the execution of a ministerial duty. 8 A ministerial duty
is one that "requires neither the exercise of official discretion nor judgment." 9 It connotes an act in
which nothing is left to the discretion of the person executing it. It is a "simple, definite duty arising
under conditions admitted or proved to exist and imposed by law." 10 Mandamus is available to compel
action, when refused, on matters involving discretion, but not to direct the exercise of judgment or
discretion one way or the other.
Petitioners maintain that the MMDA’s duty to take measures and maintain adequate solid waste and
liquid disposal systems necessarily involves policy evaluation and the exercise of judgment on the part
of the agency concerned. They argue that the MMDA, in carrying out its mandate, has to make
decisions, including choosing where a landfill should be located by undertaking feasibility studies and
cost estimates, all of which entail the exercise of discretion.
Respondents, on the other hand, counter that the statutory command is clear and that petitioners’
duty to comply with and act according to the clear mandate of the law does not require the exercise
of discretion. According to respondents, petitioners, the MMDA in particular, are without discretion,
for example, to choose which bodies of water they are to clean up, or which discharge or spill they are
to contain. By the same token, respondents maintain that petitioners are bereft of discretion on
whether or not to alleviate the problem of solid and liquid waste disposal; in other words, it is the
MMDA’s ministerial duty to attend to such services.
We agree with respondents.
First off, we wish to state that petitioners’ obligation to perform their duties as defined by law, on one
hand, and how they are to carry out such duties, on the other, are two different concepts. While the
implementation of the MMDA’s mandated tasks may entail a decision-making process, the
enforcement of the law or the very act of doing what the law exacts to be done is ministerial in nature
and may be compelled by mandamus. We said so in Social Justice Society v. Atienza11 in which the
Court directed the City of Manila to enforce, as a matter of ministerial duty, its Ordinance No. 8027
directing the three big local oil players to cease and desist from operating their business in the so-
called "Pandacan Terminals" within six months from the effectivity of the ordinance. But to illustrate
with respect to the instant case, the MMDA’s duty to put up an adequate and appropriate sanitary
landfill and solid waste and liquid disposal as well as other alternative garbage disposal systems is
ministerial, its duty being a statutory imposition. The MMDA’s duty in this regard is spelled out in Sec.
3(c) of Republic Act No. (RA) 7924 creating the MMDA. This section defines and delineates the scope
of the MMDA’s waste disposal services to include:
Solid waste disposal and management which include formulation and implementation of
policies, standards, programs and projects for proper and sanitary waste disposal. It shall
likewise include the establishment and operation of sanitary land fill and related
facilities and the implementation of other alternative programs intended to reduce, reuse
and recycle solid waste. (Emphasis added.)
The MMDA is duty-bound to comply with Sec. 41 of the Ecological Solid Waste Management Act (RA
9003) which prescribes the minimum criteria for the establishment of sanitary landfills and Sec. 42
which provides the minimum operating requirements that each site operator shall maintain in the
operation of a sanitary landfill. Complementing Sec. 41 are Secs. 36 and 37 of RA 9003, 12 enjoining the
MMDA and local government units, among others, after the effectivity of the law on February 15,
2001, from using and operating open dumps for solid waste and disallowing, five years after such
effectivity, the use of controlled dumps.
The MMDA’s duty in the area of solid waste disposal, as may be noted, is set forth not only in the
Environment Code (PD 1152) and RA 9003, but in its charter as well. This duty of putting up a proper
waste disposal system cannot be characterized as discretionary, for, as earlier stated, discretion
presupposes the power or right given by law to public functionaries to act officially according to their
judgment or conscience.13 A discretionary duty is one that "allows a person to exercise judgment and
choose to perform or not to perform."14 Any suggestion that the MMDA has the option whether or
not to perform its solid waste disposal-related duties ought to be dismissed for want of legal basis.
A perusal of other petitioners’ respective charters or like enabling statutes and pertinent laws would
yield this conclusion: these government agencies are enjoined, as a matter of statutory obligation, to
perform certain functions relating directly or indirectly to the cleanup, rehabilitation, protection, and
preservation of the Manila Bay. They are precluded from choosing not to perform these duties.
Consider:
(1) The DENR, under Executive Order No. (EO) 192,15 is the primary agency responsible for the
conservation, management, development, and proper use of the country’s environment and natural
resources. Sec. 19 of the Philippine Clean Water Act of 2004 (RA 9275), on the other hand, designates
the DENR as the primary government agency responsible for its enforcement and implementation,
more particularly over all aspects of water quality management. On water pollution, the DENR, under
the Act’s Sec. 19(k), exercises jurisdiction "over all aspects of water pollution, determine[s] its
location, magnitude, extent, severity, causes and effects and other pertinent information on pollution,
and [takes] measures, using available methods and technologies, to prevent and abate such
pollution."
The DENR, under RA 9275, is also tasked to prepare a National Water Quality Status Report, an
Integrated Water Quality Management Framework, and a 10-year Water Quality Management Area
Action Plan which is nationwide in scope covering the Manila Bay and adjoining areas. Sec. 19 of RA
9275 provides:
Sec. 19 Lead Agency.––The [DENR] shall be the primary government agency responsible for
the implementation and enforcement of this Act x x x unless otherwise provided herein. As
such, it shall have the following functions, powers and responsibilities:
a) Prepare a National Water Quality Status report within twenty-four (24) months from the
effectivity of this Act: Provided, That the Department shall thereafter review or revise and
publish annually, or as the need arises, said report;
b) Prepare an Integrated Water Quality Management Framework within twelve (12) months
following the completion of the status report;
c) Prepare a ten (10) year Water Quality Management Area Action Plan within 12 months
following the completion of the framework for each designated water management area.
Such action plan shall be reviewed by the water quality management area governing board
every five (5) years or as need arises.
The DENR has prepared the status report for the period 2001 to 2005 and is in the process of
completing the preparation of the Integrated Water Quality Management Framework. 16 Within twelve
(12) months thereafter, it has to submit a final Water Quality Management Area Action Plan. 17 Again,
like the MMDA, the DENR should be made to accomplish the tasks assigned to it under RA 9275.
Parenthetically, during the oral arguments, the DENR Secretary manifested that the DENR, with the
assistance of and in partnership with various government agencies and non-government
organizations, has completed, as of December 2005, the final draft of a comprehensive action plan
with estimated budget and time frame, denominated as Operation Plan for the Manila Bay Coastal
Strategy, for the rehabilitation, restoration, and rehabilitation of the Manila Bay.
The completion of the said action plan and even the implementation of some of its phases should
more than ever prod the concerned agencies to fast track what are assigned them under existing laws.
(2) The MWSS, under Sec. 3 of RA 6234,18 is vested with jurisdiction, supervision, and control over all
waterworks and sewerage systems in the territory comprising what is now the cities of Metro Manila
and several towns of the provinces of Rizal and Cavite, and charged with the duty:
(g) To construct, maintain, and operate such sanitary sewerages as may be necessary for the
proper sanitation and other uses of the cities and towns comprising the System; x x x
(3) The LWUA under PD 198 has the power of supervision and control over local water districts. It can
prescribe the minimum standards and regulations for the operations of these districts and shall
monitor and evaluate local water standards. The LWUA can direct these districts to construct, operate,
and furnish facilities and services for the collection, treatment, and disposal of sewerage, waste, and
storm water. Additionally, under RA 9275, the LWUA, as attached agency of the DPWH, is tasked with
providing sewerage and sanitation facilities, inclusive of the setting up of efficient and safe collection,
treatment, and sewage disposal system in the different parts of the country. 19 In relation to the instant
petition, the LWUA is mandated to provide sewerage and sanitation facilities in Laguna, Cavite,
Bulacan, Pampanga, and Bataan to prevent pollution in the Manila Bay.
(4) The Department of Agriculture (DA), pursuant to the Administrative Code of 1987 (EO 292), 20 is
designated as the agency tasked to promulgate and enforce all laws and issuances respecting the
conservation and proper utilization of agricultural and fishery resources. Furthermore, the DA, under
the Philippine Fisheries Code of 1998 (RA 8550), is, in coordination with local government units (LGUs)
and other concerned sectors, in charge of establishing a monitoring, control, and surveillance system
to ensure that fisheries and aquatic resources in Philippine waters are judiciously utilized and
managed on a sustainable basis.21 Likewise under RA 9275, the DA is charged with coordinating with
the PCG and DENR for the enforcement of water quality standards in marine waters. 22 More
specifically, its Bureau of Fisheries and Aquatic Resources (BFAR) under Sec. 22(c) of RA 9275 shall
primarily be responsible for the prevention and control of water pollution for the development,
management, and conservation of the fisheries and aquatic resources.
(5) The DPWH, as the engineering and construction arm of the national government, is tasked under
EO 29223 to provide integrated planning, design, and construction services for, among others, flood
control and water resource development systems in accordance with national development objectives
and approved government plans and specifications.
In Metro Manila, however, the MMDA is authorized by Sec. 3(d), RA 7924 to perform metro-wide
services relating to "flood control and sewerage management which include the formulation and
implementation of policies, standards, programs and projects for an integrated flood control, drainage
and sewerage system."
On July 9, 2002, a Memorandum of Agreement was entered into between the DPWH and MMDA,
whereby MMDA was made the agency primarily responsible for flood control in Metro Manila. For the
rest of the country, DPWH shall remain as the implementing agency for flood control services. The
mandate of the MMDA and DPWH on flood control and drainage services shall include the removal of
structures, constructions, and encroachments built along rivers, waterways, and esteros (drainages) in
violation of RA 7279, PD 1067, and other pertinent laws.
(6) The PCG, in accordance with Sec. 5(p) of PD 601, or the Revised Coast Guard Law of 1974, and Sec.
6 of PD 979,24 or the Marine Pollution Decree of 1976, shall have the primary responsibility of
enforcing laws, rules, and regulations governing marine pollution within the territorial waters of the
Philippines. It shall promulgate its own rules and regulations in accordance with the national rules and
policies set by the National Pollution Control Commission upon consultation with the latter for the
effective implementation and enforcement of PD 979. It shall, under Sec. 4 of the law, apprehend
violators who:
a. discharge, dump x x x harmful substances from or out of any ship, vessel, barge, or any
other floating craft, or other man-made structures at sea, by any method, means or manner,
into or upon the territorial and inland navigable waters of the Philippines;
b. throw, discharge or deposit, dump, or cause, suffer or procure to be thrown, discharged, or
deposited either from or out of any ship, barge, or other floating craft or vessel of any kind,
or from the shore, wharf, manufacturing establishment, or mill of any kind, any refuse matter
of any kind or description whatever other than that flowing from streets and sewers and
passing therefrom in a liquid state into tributary of any navigable water from which the same
shall float or be washed into such navigable water; and
c. deposit x x x material of any kind in any place on the bank of any navigable water or on the
bank of any tributary of any navigable water, where the same shall be liable to be washed
into such navigable water, either by ordinary or high tides, or by storms or floods, or
otherwise, whereby navigation shall or may be impeded or obstructed or increase the level
of pollution of such water.
(7) When RA 6975 or the Department of the Interior and Local Government (DILG) Act of 1990 was
signed into law on December 13, 1990, the PNP Maritime Group was tasked to "perform all police
functions over the Philippine territorial waters and rivers." Under Sec. 86, RA 6975, the police
functions of the PCG shall be taken over by the PNP when the latter acquires the capability to perform
such functions. Since the PNP Maritime Group has not yet attained the capability to assume and
perform the police functions of PCG over marine pollution, the PCG and PNP Maritime Group shall
coordinate with regard to the enforcement of laws, rules, and regulations governing marine pollution
within the territorial waters of the Philippines. This was made clear in Sec. 124, RA 8550 or the
Philippine Fisheries Code of 1998, in which both the PCG and PNP Maritime Group were authorized to
enforce said law and other fishery laws, rules, and regulations. 25
(8) In accordance with Sec. 2 of EO 513, the PPA is mandated "to establish, develop, regulate, manage
and operate a rationalized national port system in support of trade and national
development."26 Moreover, Sec. 6-c of EO 513 states that the PPA has police authority within the ports
administered by it as may be necessary to carry out its powers and functions and attain its purposes
and objectives, without prejudice to the exercise of the functions of the Bureau of Customs and other
law enforcement bodies within the area. Such police authority shall include the following:
xxxx
b) To regulate the entry to, exit from, and movement within the port, of persons and
vehicles, as well as movement within the port of watercraft.27
Lastly, as a member of the International Marine Organization and a signatory to the International
Convention for the Prevention of Pollution from Ships, as amended by MARPOL 73/78, 28 the
Philippines, through the PPA, must ensure the provision of adequate reception facilities at ports and
terminals for the reception of sewage from the ships docking in Philippine ports. Thus, the PPA is
tasked to adopt such measures as are necessary to prevent the discharge and dumping of solid and
liquid wastes and other ship-generated wastes into the Manila Bay waters from vessels docked at
ports and apprehend the violators. When the vessels are not docked at ports but within Philippine
territorial waters, it is the PCG and PNP Maritime Group that have jurisdiction over said vessels.
(9) The MMDA, as earlier indicated, is duty-bound to put up and maintain adequate sanitary landfill
and solid waste and liquid disposal system as well as other alternative garbage disposal systems. It is
primarily responsible for the implementation and enforcement of the provisions of RA 9003, which
would necessary include its penal provisions, within its area of jurisdiction. 29
Among the prohibited acts under Sec. 48, Chapter VI of RA 9003 that are frequently violated are
dumping of waste matters in public places, such as roads, canals or esteros, open burning of solid
waste, squatting in open dumps and landfills, open dumping, burying of biodegradable or non-
biodegradable materials in flood-prone areas, establishment or operation of open dumps as enjoined
in RA 9003, and operation of waste management facilities without an environmental compliance
certificate.
Under Sec. 28 of the Urban Development and Housing Act of 1992 (RA 7279), eviction or demolition
may be allowed "when persons or entities occupy danger areas such as esteros, railroad tracks,
garbage dumps, riverbanks, shorelines, waterways, and other public places such as sidewalks, roads,
parks and playgrounds." The MMDA, as lead agency, in coordination with the DPWH, LGUs, and
concerned agencies, can dismantle and remove all structures, constructions, and other
encroachments built in breach of RA 7279 and other pertinent laws along the rivers, waterways,
and esteros in Metro Manila. With respect to rivers, waterways, and esteros in Bulacan, Bataan,
Pampanga, Cavite, and Laguna that discharge wastewater directly or eventually into the Manila Bay,
the DILG shall direct the concerned LGUs to implement the demolition and removal of such
structures, constructions, and other encroachments built in violation of RA 7279 and other applicable Thus, the DBM shall then endeavor to provide an adequate budget to attain the noble objectives of
laws in coordination with the DPWH and concerned agencies. RA 9275 in line with the country’s development objectives.

(10) The Department of Health (DOH), under Article 76 of PD 1067 (the Water Code), is tasked to
promulgate rules and regulations for the establishment of waste disposal areas that affect the source
of a water supply or a reservoir for domestic or municipal use. And under Sec. 8 of RA 9275, the DOH,
in coordination with the DENR, DPWH, and other concerned agencies, shall formulate guidelines and
standards for the collection, treatment, and disposal of sewage and the establishment and operation
of a centralized sewage treatment system. In areas not considered as highly urbanized cities, septage
or a mix sewerage-septage management system shall be employed.
In accordance with Sec. 7230 of PD 856, the Code of Sanitation of the Philippines, and Sec. 5.1.1 31 of
Chapter XVII of its implementing rules, the DOH is also ordered to ensure the regulation and
monitoring of the proper disposal of wastes by private sludge companies through the strict
enforcement of the requirement to obtain an environmental sanitation clearance of sludge collection
treatment and disposal before these companies are issued their environmental sanitation permit.
(11) The Department of Education (DepEd), under the Philippine Environment Code (PD 1152), is
mandated to integrate subjects on environmental education in its school curricula at all
levels.32 Under Sec. 118 of RA 8550, the DepEd, in collaboration with the DA, Commission on Higher
Education, and Philippine Information Agency, shall launch and pursue a nationwide educational
campaign to promote the development, management, conservation, and proper use of the
environment. Under the Ecological Solid Waste Management Act (RA 9003), on the other hand, it is
directed to strengthen the integration of environmental concerns in school curricula at all levels, with
an emphasis on waste management principles.33
All told, the aforementioned enabling laws and issuances are in themselves clear, categorical, and
complete as to what are the obligations and mandate of each agency/petitioner under the law. We
need not belabor the issue that their tasks include the cleanup of the Manila Bay.
Now, as to the crux of the petition. Do Secs. 17 and 20 of the Environment Code encompass the
cleanup of water pollution in general, not just specific pollution incidents?
Secs. 17 and 20 of the Environment Code
Include Cleaning in General
The disputed sections are quoted as follows:
Section 17. Upgrading of Water Quality.––Where the quality of water has deteriorated to a
degree where its state will adversely affect its best usage, the government agencies
concerned shall take such measures as may be necessary to upgrade the quality of such
water to meet the prescribed water quality standards.
Section 20. Clean-up Operations.––It shall be the responsibility of the polluter to contain,
remove and clean-up water pollution incidents at his own expense. In case of his failure to do
so, the government agencies concerned shall undertake containment, removal and clean-up
operations and expenses incurred in said operations shall be charged against the persons
and/or entities responsible for such pollution.

(12) The Department of Budget and Management (DBM) is tasked under Sec. 2, Title XVII of the
When the Clean Water Act (RA 9275) took effect, its Sec. 16 on the subject, o, amended the
Administrative Code of 1987 to ensure the efficient and sound utilization of government funds and
counterpart provision (Sec. 20) of the Environment Code (PD 1152). Sec. 17 of PD 1152 continues,
revenues so as to effectively achieve the country’s development objectives. 34
however, to be operational.

One of the country’s development objectives is enshrined in RA 9275 or the Philippine Clean Water
The amendatory Sec. 16 of RA 9275 reads:
Act of 2004. This law stresses that the State shall pursue a policy of economic growth in a manner
consistent with the protection, preservation, and revival of the quality of our fresh, brackish, and
SEC. 16. Cleanup Operations.––Notwithstanding the provisions of Sections 15 and 26 hereof,
marine waters. It also provides that it is the policy of the government, among others, to streamline
any person who causes pollution in or pollutes water bodies in excess of the applicable and
processes and procedures in the prevention, control, and abatement of pollution mechanisms for the
prevailing standards shall be responsible to contain, remove and clean up any pollution
protection of water resources; to promote environmental strategies and use of appropriate economic
incident at his own expense to the extent that the same water bodies have been rendered
instruments and of control mechanisms for the protection of water resources; to formulate a holistic
unfit for utilization and beneficial use: Provided, That in the event emergency cleanup
national program of water quality management that recognizes that issues related to this
operations are necessary and the polluter fails to immediately undertake the same, the
management cannot be separated from concerns about water sources and ecological protection,
[DENR] in coordination with other government agencies concerned, shall undertake
water supply, public health, and quality of life; and to provide a comprehensive management program
containment, removal and cleanup operations. Expenses incurred in said operations shall be
for water pollution focusing on pollution prevention.
reimbursed by the persons found to have caused such pollution under proper administrative
 determination x x x. Reimbursements of the cost incurred shall be made to the Water Quality
Management Fund or to such other funds where said disbursements were sourced.
As may be noted, the amendment to Sec. 20 of the Environment Code is more apparent than real
since the amendment, insofar as it is relevant to this case, merely consists in the designation of the
DENR as lead agency in the cleanup operations.
Petitioners contend at every turn that Secs. 17 and 20 of the Environment Code concern themselves
only with the matter of cleaning up in specific pollution incidents, as opposed to cleanup in general.
They aver that the twin provisions would have to be read alongside the succeeding Sec. 62(g) and (h),
which defines the terms "cleanup operations" and "accidental spills," as follows:
g. Clean-up Operations [refer] to activities conducted in removing the pollutants discharged
or spilled in water to restore it to pre-spill condition.
h. Accidental Spills [refer] to spills of oil or other hazardous substances in water that result
from accidents such as collisions and groundings.
Petitioners proffer the argument that Secs. 17 and 20 of PD 1152 merely direct the government
agencies concerned to undertake containment, removal, and cleaning operations of a specific
polluted portion or portions of the body of water concerned. They maintain that the application of
said Sec. 20 is limited only to "water pollution incidents," which are situations that presuppose the
occurrence of specific, isolated pollution events requiring the corresponding containment, removal,
and cleaning operations. Pushing the point further, they argue that the aforequoted Sec. 62(g)
requires "cleanup operations" to restore the body of water to pre-spill condition, which means that
there must have been a specific incident of either intentional or accidental spillage of oil or other
hazardous substances, as mentioned in Sec. 62(h).
As a counterpoint, respondents argue that petitioners erroneously read Sec. 62(g) as delimiting the
application of Sec. 20 to the containment, removal, and cleanup operations for accidental spills only.
Contrary to petitioners’ posture, respondents assert that Sec. 62(g), in fact, even expanded the
coverage of Sec. 20. Respondents explain that without its Sec. 62(g), PD 1152 may have indeed
covered only pollution accumulating from the day-to-day operations of businesses around the Manila
Bay and other sources of pollution that slowly accumulated in the bay. Respondents, however,
emphasize that Sec. 62(g), far from being a delimiting provision, in fact even enlarged the operational
scope of Sec. 20, by including accidental spills as among the water pollution incidents contemplated in
Sec. 17 in relation to Sec. 20 of PD 1152.
To respondents, petitioners’ parochial view on environmental issues, coupled with their narrow
reading of their respective mandated roles, has contributed to the worsening water quality of the
Manila Bay. Assuming, respondents assert, that petitioners are correct in saying that the cleanup
coverage of Sec. 20 of PD 1152 is constricted by the definition of the phrase "cleanup operations"
embodied in Sec. 62(g), Sec. 17 is not hobbled by such limiting definition. As pointed out, the phrases
"cleanup operations" and "accidental spills" do not appear in said Sec. 17, not even in the chapter
where said section is found.
Respondents are correct. For one thing, said Sec. 17 does not in any way state that the government
agencies concerned ought to confine themselves to the containment, removal, and cleaning
operations when a specific pollution incident occurs. On the contrary, Sec. 17 requires them to act
even in the absence of a specific pollution incident, as long as water quality "has deteriorated to a
degree where its state will adversely affect its best usage." This section, to stress, commands
concerned government agencies, when appropriate, "to take such measures as may be necessary to
meet the prescribed water quality standards." In fine, the underlying duty to upgrade the quality of
water is not conditional on the occurrence of any pollution incident.
For another, a perusal of Sec. 20 of the Environment Code, as couched, indicates that it is properly
applicable to a specific situation in which the pollution is caused by polluters who fail to clean up the
mess they left behind. In such instance, the concerned government agencies shall undertake the
cleanup work for the polluters’ account. Petitioners’ assertion, that they have to perform cleanup
operations in the Manila Bay only when there is a water pollution incident and the erring polluters do
not undertake the containment, removal, and cleanup operations, is quite off mark. As earlier
discussed, the complementary Sec. 17 of the Environment Code comes into play and the specific
duties of the agencies to clean up come in even if there are no pollution incidents staring at them.
Petitioners, thus, cannot plausibly invoke and hide behind Sec. 20 of PD 1152 or Sec. 16 of RA 9275 on
the pretext that their cleanup mandate depends on the happening of a specific pollution incident. In
this regard, what the CA said with respect to the impasse over Secs. 17 and 20 of PD 1152 is at once
valid as it is practical. The appellate court wrote: "PD 1152 aims to introduce a comprehensive
program of environmental protection and management. This is better served by making Secs. 17 & 20
of general application rather than limiting them to specific pollution incidents." 35
Granting arguendo that petitioners’ position thus described vis-à-vis the implementation of Sec. 20 is
correct, they seem to have overlooked the fact that the pollution of the Manila Bay is of such
magnitude and scope that it is well-nigh impossible to draw the line between a specific and a general
pollution incident. And such impossibility extends to pinpointing with reasonable certainty who the
polluters are. We note that Sec. 20 of PD 1152 mentions "water pollution incidents" which may be
caused by polluters in the waters of the Manila Bay itself or by polluters in adjoining lands and in
water bodies or waterways that empty into the bay. Sec. 16 of RA 9275, on the other hand, specifically
adverts to "any person who causes pollution in or pollutes water bodies," which may refer to an
individual or an establishment that pollutes the land mass near the Manila Bay or the waterways,
such that the contaminants eventually end up in the bay. In this situation, the water pollution
incidents are so numerous and involve nameless and faceless polluters that they can validly be
categorized as beyond the specific pollution incident level.
Not to be ignored of course is the reality that the government agencies concerned are so
undermanned that it would be almost impossible to apprehend the numerous polluters of the Manila
Bay. It may perhaps not be amiss to say that the apprehension, if any, of the Manila Bay polluters has
been few and far between. Hence, practically nobody has been required to contain, remove, or clean
up a given water pollution incident. In this kind of setting, it behooves the Government to step in and
undertake cleanup operations. Thus, Sec. 16 of RA 9275, previously Sec. 20 of PD 1152, covers for all
intents and purposes a general cleanup situation.
The cleanup and/or restoration of the Manila Bay is only an aspect and the initial stage of the long-
term solution. The preservation of the water quality of the bay after the rehabilitation process is as
important as the cleaning phase. It is imperative then that the wastes and contaminants found in the
rivers, inland bays, and other bodies of water be stopped from reaching the Manila Bay. Otherwise,
any cleanup effort would just be a futile, cosmetic exercise, for, in no time at all, the Manila Bay water
quality would again deteriorate below the ideal minimum standards set by PD 1152, RA 9275, and
other relevant laws. It thus behooves the Court to put the heads of the petitioner-department-
agencies and the bureaus and offices under them on continuing notice about, and to enjoin them to
perform, their mandates and duties towards cleaning up the Manila Bay and preserving the quality of
its water to the ideal level. Under what other judicial discipline describes as "continuing
mandamus,"36 the Court may, under extraordinary circumstances, issue directives with the end in view
of ensuring that its decision would not be set to naught by administrative inaction or indifference. In
India, the doctrine of continuing mandamus was used to enforce directives of the court to clean up
the length of the Ganges River from industrial and municipal pollution. 37
The Court can take judicial notice of the presence of shanties and other unauthorized structures
which do not have septic tanks along the Pasig-Marikina-San Juan Rivers, the National Capital Region
(NCR) (Parañaque-Zapote, Las Piñas) Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the
Meycuayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the
Laguna De Bay, and other minor rivers and connecting waterways, river banks, and esteros which
discharge their waters, with all the accompanying filth, dirt, and garbage, into the major rivers and
eventually the Manila Bay. If there is one factor responsible for the pollution of the major river
systems and the Manila Bay, these unauthorized structures would be on top of the list. And if the
issue of illegal or unauthorized structures is not seriously addressed with sustained resolve, then
practically all efforts to cleanse these important bodies of water would be for naught. The DENR
Secretary said as much.38
Giving urgent dimension to the necessity of removing these illegal structures is Art. 51 of PD 1067 or
the Water Code,39 which prohibits the building of structures within a given length along banks of rivers
and other waterways. Art. 51 reads:
The banks of rivers and streams and the shores of the seas and lakes throughout their
entire length and within a zone of three (3) meters in urban areas, twenty (20) meters in
agricultural areas and forty (40) meters in forest areas, along their margins, are subject to
the easement of public use in the interest of recreation, navigation, floatage, fishing and
salvage. No person shall be allowed to stay in this zonelonger than what is necessary for
recreation, navigation, floatage, fishing or salvage or to build structures of any kind.
(Emphasis added.)
Judicial notice may likewise be taken of factories and other industrial establishments standing along
or near the banks of the Pasig River, other major rivers, and connecting waterways. But while they
may not be treated as unauthorized constructions, some of these establishments undoubtedly
contribute to the pollution of the Pasig River and waterways. The DILG and the concerned LGUs, have,
accordingly, the duty to see to it that non-complying industrial establishments set up, within a
reasonable period, the necessary waste water treatment facilities and infrastructure to prevent their
industrial discharge, including their sewage waters, from flowing into the Pasig River, other major
rivers, and connecting waterways. After such period, non-complying establishments shall be shut
down or asked to transfer their operations.
At this juncture, and if only to dramatize the urgency of the need for petitioners-agencies to comply
with their statutory tasks, we cite the Asian Development Bank-commissioned study on the garbage
problem in Metro Manila, the results of which are embodied in the The Garbage Book. As there
reported, the garbage crisis in the metropolitan area is as alarming as it is shocking. Some highlights
of the report:
1. As early as 2003, three land-filled dumpsites in Metro Manila - the Payatas, Catmon and
Rodriquez dumpsites - generate an alarming quantity of lead and leachate or liquid run-off.
Leachate are toxic liquids that flow along the surface and seep into the earth and poison the
surface and groundwater that are used for drinking, aquatic life, and the environment.
2. The high level of fecal coliform confirms the presence of a large amount of human waste in
the dump sites and surrounding areas, which is presumably generated by households that
lack alternatives to sanitation. To say that Manila Bay needs rehabilitation is an
understatement.
3. Most of the deadly leachate, lead and other dangerous contaminants and possibly strains
of pathogens seeps untreated into ground water and runs into the Marikina and Pasig River
systems and Manila Bay.40
Given the above perspective, sufficient sanitary landfills should now more than ever be established as
prescribed by the Ecological Solid Waste Management Act (RA 9003). Particular note should be taken
of the blatant violations by some LGUs and possibly the MMDA of Sec. 37, reproduced below:
Sec. 37. Prohibition against the Use of Open Dumps for Solid Waste.––No open dumps shall
be established and operated, nor any practice or disposal of solid waste by any person,
including LGUs which [constitute] the use of open dumps for solid waste, be allowed after
the effectivity of this Act: Provided, further that no controlled dumps shall be allowed (5)
years following the effectivity of this Act. (Emphasis added.)
RA 9003 took effect on February 15, 2001 and the adverted grace period of five (5) years which ended
on February 21, 2006 has come and gone, but no single sanitary landfill which strictly complies with
the prescribed standards under RA 9003 has yet been set up.
In addition, there are rampant and repeated violations of Sec. 48 of RA 9003, like littering, dumping of
waste matters in roads, canals, esteros, and other public places, operation of open dumps, open
burning of solid waste, and the like. Some sludge companies which do not have proper disposal
facilities simply discharge sludge into the Metro Manila sewerage system that ends up in the Manila
Bay. Equally unabated are violations of Sec. 27 of RA 9275, which enjoins the pollution of water
bodies, groundwater pollution, disposal of infectious wastes from vessels, and unauthorized transport
or dumping into sea waters of sewage or solid waste and of Secs. 4 and 102 of RA 8550 which
proscribes the introduction by human or machine of substances to the aquatic environment including
"dumping/disposal of waste and other marine litters, discharge of petroleum or residual products of
petroleum of carbonaceous materials/substances [and other] radioactive, noxious or harmful liquid,
gaseous or solid substances, from any water, land or air transport or other human-made structure."
In the light of the ongoing environmental degradation, the Court wishes to emphasize the extreme
necessity for all concerned executive departments and agencies to immediately act and discharge
their respective official duties and obligations. Indeed, time is of the essence; hence, there is a need
to set timetables for the performance and completion of the tasks, some of them as defined for them
by law and the nature of their respective offices and mandates.
The importance of the Manila Bay as a sea resource, playground, and as a historical landmark cannot
be over-emphasized. It is not yet too late in the day to restore the Manila Bay to its former splendor
and bring back the plants and sea life that once thrived in its blue waters. But the tasks ahead,
daunting as they may be, could only be accomplished if those mandated, with the help and
cooperation of all civic-minded individuals, would put their minds to these tasks and take
responsibility. This means that the State, through petitioners, has to take the lead in the preservation
and protection of the Manila Bay.
The era of delays, procrastination, and ad hoc measures is over. Petitioners must transcend their
limitations, real or imaginary, and buckle down to work before the problem at hand becomes
unmanageable. Thus, we must reiterate that different government agencies and instrumentalities
cannot shirk from their mandates; they must perform their basic functions in cleaning up and
rehabilitating the Manila Bay. We are disturbed by petitioners’ hiding behind two untenable claims:
(1) that there ought to be a specific pollution incident before they are required to act; and (2) that the
cleanup of the bay is a discretionary duty.
RA 9003 is a sweeping piece of legislation enacted to radically transform and improve waste
management. It implements Sec. 16, Art. II of the 1987 Constitution, which explicitly provides that the
State shall protect and advance the right of the people to a balanced and healthful ecology in accord
with the rhythm and harmony of nature.
So it was that in Oposa v. Factoran, Jr. the Court stated that the right to a balanced and healthful
ecology need not even be written in the Constitution for it is assumed, like other civil and political
rights guaranteed in the Bill of Rights, to exist from the inception of mankind and it is an issue of
transcendental importance with intergenerational implications. 41 Even assuming the absence of a
categorical legal provision specifically prodding petitioners to clean up the bay, they and the men and
women representing them cannot escape their obligation to future generations of Filipinos to keep
the waters of the Manila Bay clean and clear as humanly as possible. Anything less would be a
betrayal of the trust reposed in them.
WHEREFORE, the petition is DENIED. The September 28, 2005 Decision of the CA in CA-G.R. CV No.
76528 and SP No. 74944 and the September 13, 2002 Decision of the RTC in Civil Case No. 1851-99
are AFFIRMED but with MODIFICATIONS in view of subsequent developments or supervening events
in the case. The fallo of the RTC Decision shall now read:
WHEREFORE, judgment is hereby rendered ordering the abovenamed defendant-
government agencies to clean up, rehabilitate, and preserve Manila Bay, and restore and
maintain its waters to SB level (Class B sea waters per Water Classification Tables under DENR
Administrative Order No. 34 [1990]) to make them fit for swimming, skin-diving, and other
forms of contact recreation.
In particular:
(1) Pursuant to Sec. 4 of EO 192, assigning the DENR as the primary agency responsible for the
conservation, management, development, and proper use of the country’s environment and natural
resources, and Sec. 19 of RA 9275, designating the DENR as the primary government agency
responsible for its enforcement and implementation, the DENR is directed to fully implement
its Operational Plan for the Manila Bay Coastal Strategy for the rehabilitation, restoration, and
conservation of the Manila Bay at the earliest possible time. It is ordered to call regular coordination
meetings with concerned government departments and agencies to ensure the successful
implementation of the aforesaid plan of action in accordance with its indicated completion schedules.
(2) Pursuant to Title XII (Local Government) of the Administrative Code of 1987 and Sec. 25 of the
Local Government Code of 1991,42 the DILG, in exercising the President’s power of general supervision
and its duty to promulgate guidelines in establishing waste management programs under Sec. 43 of
the Philippine Environment Code (PD 1152), shall direct all LGUs in Metro Manila, Rizal, Laguna,
Cavite, Bulacan, Pampanga, and Bataan to inspect all factories, commercial establishments, and
private homes along the banks of the major river systems in their respective areas of jurisdiction, such
as but not limited to the Pasig-Marikina-San Juan Rivers, the NCR (Parañaque-Zapote, Las Piñas)
Rivers, the Navotas-Malabon-Tullahan-Tenejeros Rivers, the Meycauayan-Marilao-Obando (Bulacan)
Rivers, the Talisay (Bataan) River, the Imus (Cavite) River, the Laguna De Bay, and other minor rivers
and waterways that eventually discharge water into the Manila Bay; and the lands abutting the bay, to
determine whether they have wastewater treatment facilities or hygienic septic tanks as prescribed by
existing laws, ordinances, and rules and regulations. If none be found, these LGUs shall be ordered to
require non-complying establishments and homes to set up said facilities or septic tanks within a
reasonable time to prevent industrial wastes, sewage water, and human wastes from flowing into
these rivers, waterways, esteros, and the Manila Bay, under pain of closure or imposition of fines and
other sanctions.
(3) As mandated by Sec. 8 of RA 9275,43 the MWSS is directed to provide, install, operate, and
maintain the necessary adequate waste water treatment facilities in Metro Manila, Rizal, and Cavite
where needed at the earliest possible time.
(4) Pursuant to RA 9275,44 the LWUA, through the local water districts and in coordination with the
DENR, is ordered to provide, install, operate, and maintain sewerage and sanitation facilities and the
efficient and safe collection, treatment, and disposal of sewage in the provinces of Laguna, Cavite,
Bulacan, Pampanga, and Bataan where needed at the earliest possible time.
(5) Pursuant to Sec. 65 of RA 8550,45 the DA, through the BFAR, is ordered to improve and restore the
marine life of the Manila Bay. It is also directed to assist the LGUs in Metro Manila, Rizal, Cavite,
Laguna, Bulacan, Pampanga, and Bataan in developing, using recognized methods, the fisheries and
aquatic resources in the Manila Bay.
(6) The PCG, pursuant to Secs. 4 and 6 of PD 979, and the PNP Maritime Group, in accordance with
Sec. 124 of RA 8550, in coordination with each other, shall apprehend violators of PD 979, RA 8550,
and other existing laws and regulations designed to prevent marine pollution in the Manila Bay.
(7) Pursuant to Secs. 2 and 6-c of EO 51346 and the International Convention for the Prevention of
Pollution from Ships, the PPA is ordered to immediately adopt such measures to prevent the discharge
and dumping of solid and liquid wastes and other ship-generated wastes into the Manila Bay waters
from vessels docked at ports and apprehend the violators.
(8) The MMDA, as the lead agency and implementor of programs and projects for flood control
projects and drainage services in Metro Manila, in coordination with the DPWH, DILG, affected LGUs,
PNP Maritime Group, Housing and Urban Development Coordinating Council (HUDCC), and other
agencies, shall dismantle and remove all structures, constructions, and other encroachments
established or built in violation of RA 7279, and other applicable laws along the Pasig-Marikina-San
Juan Rivers, the NCR (Parañaque-Zapote, Las Piñas) Rivers, the Navotas-Malabon-Tullahan-Tenejeros
Rivers, and connecting waterways and esteros in Metro Manila. The DPWH, as the principal
implementor of programs and projects for flood control services in the rest of the country more
particularly in Bulacan, Bataan, Pampanga, Cavite, and Laguna, in coordination with the DILG, affected
LGUs, PNP Maritime Group, HUDCC, and other concerned government agencies, shall remove and
demolish all structures, constructions, and other encroachments built in breach of RA 7279 and other
applicable laws along the Meycauayan-Marilao-Obando (Bulacan) Rivers, the Talisay (Bataan) River,
the Imus (Cavite) River, the Laguna De Bay, and other rivers, connecting waterways, and esteros that
discharge wastewater into the Manila Bay.
In addition, the MMDA is ordered to establish, operate, and maintain a sanitary landfill, as prescribed
by RA 9003, within a period of one (1) year from finality of this Decision. On matters within its
territorial jurisdiction and in connection with the discharge of its duties on the maintenance of
sanitary landfills and like undertakings, it is also ordered to cause the apprehension and filing of the
appropriate criminal cases against violators of the respective penal provisions of RA 9003, 47 Sec. 27 of
RA 9275 (the Clean Water Act), and other existing laws on pollution.
(9) The DOH shall, as directed by Art. 76 of PD 1067 and Sec. 8 of RA 9275, within one (1) year from
finality of this Decision, determine if all licensed septic and sludge companies have the proper
facilities for the treatment and disposal of fecal sludge and sewage coming from septic tanks. The
DOH shall give the companies, if found to be non-complying, a reasonable time within which to set up
the necessary facilities under pain of cancellation of its environmental sanitation clearance.
(10) Pursuant to Sec. 53 of PD 1152,48 Sec. 118 of RA 8550, and Sec. 56 of RA 9003,49 the DepEd shall
integrate lessons on pollution prevention, waste management, environmental protection, and like
subjects in the school curricula of all levels to inculcate in the minds and hearts of students and,
through them, their parents and friends, the importance of their duty toward achieving and
maintaining a balanced and healthful ecosystem in the Manila Bay and the entire Philippine
archipelago.
(11) The DBM shall consider incorporating an adequate budget in the General Appropriations Act of
2010 and succeeding years to cover the expenses relating to the cleanup, restoration, and
preservation of the water quality of the Manila Bay, in line with the country’s development objective
to attain economic growth in a manner consistent with the protection, preservation, and revival of our
marine waters.
(12) The heads of petitioners-agencies MMDA, DENR, DepEd, DOH, DA, DPWH, DBM, PCG, PNP
Maritime Group, DILG, and also of MWSS, LWUA, and PPA, in line with the principle of "continuing
mandamus," shall, from finality of this Decision, each submit to the Court a quarterly progressive
report of the activities undertaken in accordance with this Decision.
No costs.
SO ORDERED.
G.R. No. 180771 April 21, 2015
RESIDENT MARINE MAMMALS OF THE PROTECTED SEASCAPE TAÑON STRAIT,
e.g., TOOTHED WHALES, DOLPHINS, PORPOISES, AND OTHER CETACEAN
SPECIES, Joined in and Represented herein by Human Beings Gloria Estenzo
Ramos and Rose-Liza Eisma-Osorio, In Their Capacity as Legal Guardians of the
Lesser Life-Forms and as Responsible Stewards of God's Creations, Petitioners,
vs.
SECRETARY ANGELO REYES, in his capacity as Secretary of the Department of
Energy (DOE), SECRETARY JOSE L. ATIENZA, in his capacity as Secretary of the
Department of Environment and Natural Resources (DENR), LEONARDO R.
SIBBALUCA, DENR Regional Director-Region VII and in his capacity as
Chairperson of the Tañon Strait Protected Seascape Management Board, Bureau
of Fisheries and Aquatic Resources (BFAR), DIRECTOR MALCOLM J.
SARMIENTO, JR., BFAR Regional Director for Region VII ANDRES M. BOJOS,
JAPAN PETROLEUM EXPLORATION CO., LTD. (JAPEX), as represented by its
Philippine Agent, SUPPLY OILFIELD SERVICES, INC. Respondents.
x-----------------------x
G.R. No. 181527
CENTRAL VISAYAS FISHERFOLK DEVELOPMENT CENTER (FIDEC), CERILO D.
ENGARCIAL, RAMON YANONG, FRANCISCO LABID, in their personal capacity and
as representatives of the SUBSISTENCE FISHERFOLKS OF THE MUNICIPALITIES
OF ALOGUINSAN AND PINAMUNGAJAN, CEBU, AND THEIR FAMILIES, AND THE
PRESENT AND FUTURE GENERATIONS OF FILIPINOS WHOSE RIGHTS ARE
SIMILARLY AFFECTED, Petitioners,
vs.
SECRETARY ANGELO REYES, in his capacity as Secretary of the Department of
Energy (DOE), JOSE L. ATIENZA, in his capacity as Secretary of the Department of
Environment and Natural Resources (DENR), LEONARDO R. SIBBALUCA, in his
capacity as DENR Regional Director-Region VII and as Chairperson of the Tañon
Strait Protected Seascape Management Board, ALAN ARRANGUEZ, in his capacity
as Director - Environmental Management Bureau-Region VII, DOE Regional
Director for Region VIII ANTONIO LABIOS, JAPAN PETROLEUM EXPLORATION
1
CO., LTD. (JAPEX), as represented by its Philippine Agent, SUPPLY OILFIELD
SERVICES, INC., Respondents.
LEONARDO-DE CASTRO, J.:
Before Us are two consolidated Petitions filed under Rule 65 of the 1997 Rules of Court, concerning
Service Contract No. 46 (SC-46), which allowed the exploration, development, and exploitation of
petroleum resources within Tañon Strait, a narrow passage of water situated between the islands of
Negros and Cebu.[2]
The Petition docketed as G.R. No. 180771 is an original Petition for Certiorari, Mandamus, and
Injunction, which seeks to enjoin respondents from implementing SC-46 and to have it nullified for
willful and gross violation of the 1987 Constitution and certain international and municipal laws.[3]
Likewise, the Petition docketed as G.R. No. 181527 is an original Petition for Certiorari, Prohibition,
and Mandamus, which seeks to nullify the Environmental Compliance Certificate (ECC) issued by the
Environmental Management Bureau (EMB) of the Department of Environment and Natural Resources
(DENR), Region VII in connection with SC-46; to prohibit respondents from implementing SC-46; and
to compel public respondents to provide petitioners access to the pertinent documents involving the
Tañon Strait Oil Exploration Project.[4]
ANTECEDENT FACTS AND PROCEEDINGS
Petitioners in G.R. No. 180771, collectively referred to as the "Resident Marine Mammals" in the
petition, are the toothed whales, dolphins, porpoises, and other cetacean species, which inhabit the
waters in and around the Tañon Strait. They are joined by Gloria Estenzo Ramos (Ramos) and Rose-
Liza Eisma-Osorio (Eisma-Osorio) as their legal guardians and as friends (to be collectively known as
"the Stewards") who allegedly empathize with, and seek the protection of, the aforementioned
marine species. Also impleaded as an unwilling co-petitioner is former President Gloria Macapagal-
Arroyo, for her express declaration and undertaking in the ASEAN Charter to protect the Tañon Strait,
among others.[5]
Petitioners in G.R. No. 181527 are the Central Visayas Fisherfolk Development Center (FIDEC), a non-
stock, non-profit, non-governmental organization, established for the welfare of the marginal
fisherfolk in Region VII; and Cerilo D. Engarcial (Engarcial), Ramon Yanong (Yanong) and Francisco
Labid (Labid), in their personal capacities and as representatives of the subsistence fisherfolk of the
municipalities of Aloguinsan and Pinamungajan, Cebu.
Named as respondents in both petitions are the late Angelo T. Reyes, as then Secretary of the
Department of Energy (DOE); Jose L. Atienza, as then Secretary of the DENR; Leonardo R. Sibbaluca, as
then DENR-Regional Director for Region VII and Chairman of the Tañon Strait Protected Seascape
Management Board; Japan Petroleum Exploration Co., Ltd. (JAPEX), a company organized and existing
under the laws of Japan with a Philippine branch office; and Supply Oilfield Services, Inc. (SOS), as the
alleged Philippine agent of JAPEX.
In G.R. No. 181527, the following were impleaded as additional public respondents: Alan C. Arranguez
(Arranguez) and Antonio Labios (Labios), in their capacities as then Director of the EMB, Region VII
and then Regional Director of the DOE, Region VII, respectively.[6]
On June 13, 2002, the Government of the Philippines, acting through the DOE, entered into a
Geophysical Survey and Exploration Contract-102 (GSEC-102) with JAPEX. This contract involved
geological and geophysical studies of the Tañon Strait. The studies included surface geology, sample
analysis, and reprocessing of seismic and magnetic data. JAPEX, assisted by DOE, also conducted
geophysical and satellite surveys, as well as oil and gas sampling in Tañon Strait.[7]
On December 21, 2004, DOE and JAPEX formally converted GSEC-102 into SC-46 for the exploration,
development, and production of petroleum resources in a block covering approximately 2,850 square
kilometers offshore the Tañon Strait.[8]
From May 9 to 18, 2005, JAPEX conducted seismic surveys in and around the Tañon Strait. A multi-
channel sub-bottom profiling covering approximately 751 kilometers was also done to determine the
area's underwater composition.[9]
JAPEX committed to drill one exploration well during the second sub-phase of the project. Since the
well was to be drilled in the marine waters of Aloguinsan and Pinamungajan, where the Tañon Strait
was declared a protected seascape in 1988,[10] JAPEX agreed to comply with the Environmental
Impact Assessment requirements pursuant to Presidential Decree No. 1586, entitled "Establishing An
Environmental Impact Statement System, Including Other Environmental Management Related
Measures And For Other Purposes."[11]
On January 31, 2007, the Protected Area Management Board[12] of the Tañon Strait (PAMB-Tañon
Strait) issued Resolution No. 2007-001,[13] wherein it adopted the Initial Environmental Examination
(IEE) commissioned by JAPEX, and favorably recommended the approval of JAPEX's application for an
ECC.
On March 6, 2007, the EMB of DENR Region VII granted an ECC to the DOE and JAPEX for the offshore
oil and gas exploration project in Tañon Strait.[14] Months later, on November 16, 2007, JAPEX began
to drill an exploratory well, with a depth of 3,150 meters, near Pinamungajan town in the western
Cebu Province.[15] This drilling lasted until February 8, 2008.[16]
It was in view of the foregoing state of affairs that petitioners applied to this Court for redress, via two
separate original petitions both dated December 17, 2007, wherein they commonly seek that
respondents be enjoined from implementing SC-46 for, among others, violation of the 1987
Constitution.
On March 31, 2008, SOS filed a Motion to Strike[17] its name as a respondent on the ground that it is
not the Philippine agent of JAPEX. In support of its motion, it submitted the branch office application
of JAPEX,[18] wherein the latter's resident agent was clearly identified. SOS claimed that it had acted
as a mere logistics contractor for JAPEX in its oil and gas exploration activities in the Philippines.
Petitioners Resident Marine Mammals and Stewards opposed SOS's motion on the ground that it was
premature, it was pro-forma, and it was patently dilatory. They claimed that SOS admitted that "it is in
law a (sic) privy to JAPEX" since it did the drilling and other exploration activities in Tañon Strait under
the instructions of its principal, JAPEX. They argued that it would be premature to drop SOS as a party
as JAPEX had not yet been joined in the case; and that it was "convenient" for SOS to ask the Court to
simply drop its name from the parties when what it should have done was to either notify or ask
JAPEX to join it in its motion to enable proper substitution. At this juncture, petitioners Resident
Marine Mammals and Stewards also asked the Court to implead JAPEX Philippines as a corespondent
or as a substitute for its parent company, JAPEX.[19]
On April 8, 2008, the Court resolved to consolidate G.R. No. 180771 and G.R. No. 181527.
On May 26, 2008, the FIDEC manifested[20] that they were adopting in toto the Opposition to Strike
with Motion to Implead filed by petitioners Resident Marine Mammals and Stewards in G.R. No.
180771.
On June 19, 2008, public respondents filed their Manifestation[21] that they were not objecting to
SOS's Motion to Strike as it was not JAPEX's resident agent. JAPEX during all this time, did not file any
comment at all. Atty. Maria Farah Z.G. Suite 2404 Discovery Centre

Nicolas-Suchianco 25 ADB Avenue

Thus, on February 7, 2012, this Court, in an effort to ensure that all the parties were given ample Resident Agent of JAPEX Ortigas Center, Pasig City
chance and opportunity to answer the issues herein, issued a Resolution directing the Court's process
servicing unit to again serve the parties with a copy of the September 23, 2008 Resolution of the
Philippines Ltd. This Resolution was personally served to the above parties, at the above addresses
Court, which gave due course to the petitions in G.R. Nos. 180771 and 181527, and which required
on February 23, 2012. On March 20, 2012, JAPEX Philippines, Ltd. (JAPEX PH), by way of special
the parties to submit their respective memoranda. The February 7, 2012 Resolution[22] reads as
appearance, filed a Motion to Admit[23] its Motion for Clarification,[24] wherein JAPEX PH requested
follows:
to be clarified as to whether or not it should deem the February 7, 2012 Resolution as this Court's
Order of its inclusion in the case, as it has not been impleaded. It also alleged that JAPEX PH had
G.R. No. 180771 (Resident Marine Mammals of the Protected Seascape Tañon Strait, e.g., Toothed already stopped exploration activities in the Tañon Strait way back in 2008, rendering this case moot.
Whales, Dolphins, Porpoises and Other Cetacean Species, et al. vs. Hon. Angelo Reyes, in his capacity
as Secretary of the Department of Energy, et al.) and G.R. No. 181527 (Central Visayas Fisherfolk
Development Center, et al. vs. Hon. Angelo Reyes, et al.). - The Court Resolved to direct the Process
Servicing Unit to RE-SEND the resolution dated September 23, 2008 to the following parties and
On March 22, 2012, JAPEX PH, also by special appearance, filed a Motion for Extension of Time[25] to
counsel, together with this resolution:
file its Memorandum. It stated that since it received the February 7, 2012 Resolution on February 23,
2012, it had until March 22, 2012 to file its Memorandum. JAPEX PH then asked for an additional
Atty. Aristeo O. Cariño 20th Floor Pearlbank Centre
thirty days, supposedly to give this Court some time to consider its Motion for Clarification.

Counsel for Respondent Supply 146 Valero Street

Oilfield Services, Inc. Salcedo Village, Makati City

On April 24, 2012, this Court issued a Resolution[26] granting JAPEX PH's Motion to Admit its Motion
for Clarification. This Court, addressing JAPEX PH's Motion for Clarification, held:

With regard to its Motion for Clarification (By Special Appearance) dated March 19, 2012, this Court
JAPEX Philippines Ltd. 20th Floor Pearlbank Centre considers JAPEX Philippines. Ltd. as a real party-in-interest in these cases. Under Section 2, Rule 3 of
the 1997 Rules of Court, a real party-in-interest is the party who stands to be benefited or injured by
146 Valero Street the judgment in the suit, or the party entitled to the avails of the suit. Contrary to JAPEX Philippines,
Ltd.'s allegation that it is a completely distinct corporation, which should not be confused with JAPEX
Salcedo Village, Makati City Company, Ltd., JAPEX Philippines, Ltd. is a mere branch office, established by JAPEX Company, Ltd. for
the purpose of carrying out the latter's business transactions here in the Philippines. Thus, JAPEX
Philippines, Ltd., has no separate personality from its mother foreign corporation, the party
impleaded in this case.
JAPEX Philippines Ltd. 19th Floor Pearlbank Centre

c/o Atty. Maria Farah Z.G. 146 Valero Street

Moreover, Section 128 of the Corporation Code provides for the responsibilities and duties of a
resident agent of a foreign corporation:
Nicolas-Suchianco Salcedo Village, Makati City
SECTION 128. Resident agent; service of process. — The Securities and Exchange Commission shall
require as a condition precedent to the issuance of the license to transact business in the Philippines
by any foreign corporation that such corporation file with the Securities and Exchange Commission a
written power of attorney designating some person who must be a resident of the Philippines, on
whom any summons and other legal processes may be served in all actions or other legal proceedings
against such corporation, and consenting that service upon such resident agent shall be admitted and
held as valid as if served upon the duly authorized officers of the foreign corporation at its home
office. Any such foreign corporation shall likewise execute and file with the Securities and Exchange
Commission an agreement or stipulation, executed by the proper authorities of said corporation, in
form and substance as follows:
And in the interest of justice, this Court resolved to grant JAPEX PH's motion for extension of time to
file its memorandum, and was given until April 21, 2012, as prayed for, within which to comply with
the submission.[27]
Without filing its Memorandum, JAPEX PH, on May 14, 2012, filed a motion, asking this Court for an
additional thirty days to file its Memorandum, to be counted from May 8, 2012. It justified its request
by claiming that this Court's April 24, 2012 Resolution was issued past its requested deadline for filing,
which was on April 21, 2012.[28]

"The (name of foreign corporation) does hereby stipulate and agree, in consideration of its being On June 19, 2012, this Court denied JAPEX PH's second request for additional time to file its
granted by the Securities and Exchange Commission a license to transact business in the Philippines, Memorandum and dispensed with such filing.
that if at any time said corporation shall cease to transact business in the Philippines, or shall be
without any resident agent in the Philippines on whom any summons or other legal processes may be
served, then in any action or proceeding arising out of any business or transaction which occurred in
the Philippines, service of any summons or other legal process may be made upon the Securities and
Since petitioners had already filed their respective memoranda,[29] and public respondents had
Exchange Commission and that such service shall have the same force and effect as if made upon the
earlier filed a Manifestation[30] that they were adopting their Comment dated March 31, 2008 as
duly-authorized officers of the corporation at its home office."
their memorandum, this Court submitted the case for decision.

Whenever such service of summons or other process shall be made upon the Securities and Exchange
Petitioners' Allegations
Commission, the Commission shall, within ten (10) days thereafter, transmit by mail a copy of such
summons or other legal process to the corporation at its home or principal office. The sending of such
copy by the Commission shall be a necessary part of and shall complete such service. All expenses
incurred by the Commission for such service shall be paid in advance by the party at whose instance
the service is made. Protesting the adverse ecological impact of JAPEX's oil exploration activities in the Tañon Strait,
petitioners Resident Marine Mammals and Stewards aver that a study made after the seismic survey
showed that the fish catch was reduced drastically by 50 to 70 percent. They claim that before the
seismic survey, the average harvest per day would be from 15 to 20 kilos; but after the activity, the
fisherfolk could only catch an average of 1 to 2 kilos a day. They attribute this "reduced fish catch" to
In case of a change of address of the resident agent, it shall be his or its duty to immediately notify in
the destruction of the "payao" also known as the "fish aggregating device" or "artificial reef."[31]
writing the Securities and Exchange Commission of the new address.
Petitioners Resident Marine Mammals and Stewards also impute the incidences of "fish kill"[32]
observed by some of the local fisherfolk to the seismic survey. And they further allege that the ECC
It is clear from the foregoing provision that the function of a resident agent is to receive summons or
obtained by private respondent JAPEX is invalid because public consultations and discussions with the
legal processes that may be served in all actions or other legal proceedings against the foreign
affected stakeholders, a pre-requisite to the issuance of the ECC, were not held prior to the ECC's
corporation. These cases have been prosecuted in the name of JAPEX Company, Ltd., and JAPEX
issuance.
Philippines Ltd., as its branch office and resident agent, had been receiving the various resolutions
from this Court, as evidenced by Registry Return Cards signed by its representatives.
In its separate petition, petitioner FIDEC confirms petitioners Resident Marine Mammals and
Stewards' allegations of reduced fish catch and lack of public consultations or discussions with the
fisherfolk and other stakeholders prior to the issuance of the ECC. Moreover, it alleges that during the
seismic surveys and drilling, it was barred from entering and fishing within a 7-kilometer radius from
the point where the oilrig was located, an area greater than the 1.5-kilometer radius "exclusion zone"
stated in the IEE.[33] It also agrees in the allegation that public respondents DENR and EMB abused
their discretion when they issued an ECC to public respondent DOE and private respondent JAPEX
without ensuring the strict compliance with the procedural and substantive requirements under the
Environmental Impact Assessment system, the Fisheries Code, and their implementing rules and
regulations.[34] It further claims that despite several requests for copies of all the documents
pertaining to the project in Taflon Strait, only copies of the PAMB-Tañon Strait Resolution and the ECC
were given to the fisherfolk.[35]
Public Respondents' Counter-Allegations
Public respondents, through the Solicitor General, contend that petitioners Resident Marine
Mammals and Stewards have no legal standing to file the present petition; that SC-46 does not violate
the 1987 Constitution and the various laws cited in the petitions; that the ECC was issued in
accordance with existing laws and regulations; that public respondents may not be compelled by
mandamus to furnish petitioners copies of all documents relating to SC-46; and that all the petitioners
failed to show that they are entitled to injunctive relief. They further contend that the issues raised in
these petitions have been rendered moot and academic by the fact that SC-46 had been mutually
terminated by the parties thereto effective June 21, 2008.[36]
ISSUES
The following are the issues posited by petitioners Resident Marine Mammals and Stewards in G.R.
No. 180771:
WHETHER OR NOT PETITIONERS HAVE LOCUS STANDI TO FILE THE INSTANT PETITION;
WHETHER OR NOT SERVICE CONTRACT NO. 46 IS VIOLAT[IVE] OF THE 1987 PHILIPPINE CONSTITUTION
AND STATUTES;
WHETHER OR NOT THE ON-GOING EXPLORATION AND PROPOSED EXPLOITATION FOR OIL AND
NATURAL GAS AT, AROUND, AND UNDERNEATH THE MARINE WATERS OF THE TANON STRAIT
PROTECTED SEASCAPE IS INCONSISTENT WITH THE PHILIPPINE COMMITMENTS TO INTERNATIONAL
ENVIRONMENTAL LAWS AND INSTRUMENTS; AND
WHETHER OR NOT THE ISSUANCE OF THE ENVIRONMENTAL COMPLIANCE CERTIFICATE (ECC) IN
ENVIRONMENTALLY CRITICAL AREAS AND HABITATS OF MARINE WILDLIFE AND ENDANGERED SPECIES
IS LEGAL AND PROPER.[37]
Meanwhile, in G.R. No. 181527, petitioner FIDEC presented the following issues for our consideration:
WHETHER OR NOT SERVICE CONTRACT NO. 46 EXECUTED BETWEEN RESPONDENTS DOE AND JAPEX
SHOULD BE NULLIFIED AND SET ASIDE FOR BEING IN DIRECT VIOLATION OF SPECIFIC PROVISIONS OF
THE 1987 PHILIPPINE CONSTITUTION AND APPLICABLE LAWS;
WHETHER OR NOT THE OFF-SHORE OIL EXPLORATION CONTEMPLATED UNDER SERVICE CONTRACT
NO. 46 IS LEGALLY PERMISSIBLE WITHOUT A LAW BEING DULY PASSED EXPRESSLY FOR THE PURPOSE;
WHETHER OR NOT THE OIL EXPLORATION BEING CONDUCTED WITHIN THE TANON STRAIT
PROTECTED SEASCAPE VIOLATES THE RIGHTS AND LEGAL PROTECTION GRANTED TO PETITIONERS
UNDER THE CONSTITUTION AND APPLICABLE LAWS.
WHETHER OR NOT THE ISSUANCE OF THE ENVIRONMENTAL COMPLIANCE CERTIFICATE (ECC) FOR
SUCH AN ENVIRONMENTALLY CRITICAL PROJECT INSIDE AN ENVIRONMENTALLY CRITICAL AREA SUCH
AS THE TANON STRAIT PROTECTED SEASCAPE CONFORMED TO LAW AND EXISTING RULES AND
REGULATIONS ON THE MATTER.
WHETHER OR NOT THE RESPONDENTS MAY BE COMPELLED BY MANDAMUS TO FURNISH
PETITIONERS WITH COPIES OF THE DOCUMENTS PERTAINING TO THE TANON STRAIT OIL
EXPLORATION PROJECT.
In these consolidated petitions, this Court has determined that the various issues raised by the
petitioners may be condensed into two primary issues:
Procedural Issue: Locus Standi of the Resident Marine Mammals and Stewards, petitioners in G.R. No.
180771; and
Main Issue: Legality of Sendee Contract No. 46.
DISCUSSION
At the outset, this Court makes clear that the '"moot and academic principle' is not a magical formula
that can automatically dissuade the courts in resolving a case." Courts have decided cases otherwise
moot and academic under the following exceptions:
1) There is a grave violation of the Constitution;
2) The exceptional character of the situation and the paramount public interest is involved;
3) The constitutional issue raised requires formulation of controlling principles to guide the bench, the
bar, and the public; and
4) The case is capable of repetition yet evading review.
In this case, despite the termination of SC-46, this Court deems it necessary to resolve these
consolidated petitions as almost all of the foregoing exceptions are present in this case. Both
petitioners allege that SC-46 is violative of the Constitution, the environmental and livelihood issues
raised undoubtedly affect the public's interest, and the respondents' contested actions are capable of
repetition.
Procedural Issues
Locus Standi of Petitioners Resident Marine Mammals and Stewards
The Resident Marine Mammals, through the Stewards, "claim" that they have the legal standing to file
this action since they stand to be benefited or injured by the judgment in this suit.[40] Citing Oposa v.
Factoran, Jr.,[41] they also assert their right to sue for the faithful performance of international and
municipal environmental laws created in their favor and for their benefit. In this regard, they
propound that they have the right to demand that they be accorded the benefits granted to them in
multilateral international instruments that the Philippine Government had signed, under the concept
of stipulation pour autrui.[42]
For their part, the Stewards contend that there should be no question of their right to represent the
Resident Marine Mammals as they have stakes in the case as forerunners of a campaign to build
awareness among the affected residents of Tañon Strait and as stewards of the environment since the
primary steward, the Government, had failed in its duty to protect the environment pursuant to the
public trust doctrine.[43]
Petitioners Resident Marine Mammals and Stewards also aver that this Court may lower the
benchmark in locus standi as an exercise of epistolary jurisdiction.[44]
In opposition, public respondents argue that the Resident Marine Mammals have no standing because
Section 1, Rule 3 of the Rules of Court requires parties to an action to be either natural or juridical
persons, viz.:
Section 1. Who may be parties; plaintiff and defendant. - Only natural or juridical persons, or entities
authorized by law may be parties in a civil action. The term "plaintiff may refer to the claiming party,
the counter-claimant, the cross-claimant, or the third (fourth, etc.)-party plaintiff. The term
"defendant" may refer to the original defending party, the defendant in a counterclaim, the cross-
defendant, or the third (fourth, etc.)-party defendant.
The public respondents also contest the applicability of Oposa, pointing out that the petitioners
therein were all natural persons, albeit some of them were still unborn.
As regards the Stewards, the public respondents likewise challenge their claim of legal standing on the
ground that they are representing animals, which cannot be parties to an action. Moreover, the public
respondents argue that the Stewards are not the real parties-in-interest for their failure to show how
they stand to be benefited or injured by the decision in this case.
Invoking the alter ego principle in political law, the public respondents claim that absent any proof
that former President Arroyo had disapproved of their acts in entering into and implementing SC-46,
such acts remain to be her own.
The public respondents contend that since petitioners Resident Marine Mammals and Stewards'
petition was not brought in the name of a real party-in-interest, it should be dismissed for failure to
state a cause of action.
The issue of whether or not animals or even inanimate objects should be given legal standing in
actions before courts of law is not new in the field of animal rights and environmental law. Petitioners
Resident Marine Mammals and Stewards cited the 1972 United States case Sierra Club v. Rogers C.B.
Morton,[49] wherein Justice William O. Douglas, dissenting to the conventional thought on legal
standing, opined:
The critical question of "standing" would be simplified and also put neatly in focus if we fashioned a
federal rule that allowed environmental issues to be litigated before federal agencies or federal courts
in the name of the inanimate object about to be despoiled, defaced, or invaded by roads and
bulldozers and where injury is the subject of public outrage, x x x.
Inanimate objects are sometimes parties in litigation. A ship has a legal personality, a fiction found
useful for maritime purposes. The corporation sole - a creature of ecclesiastical law - is an acceptable
adversary and large fortunes ride on its cases. The ordinary corporation is a "person" for purposes of
the adjudicatory processes, whether it represents proprietary, spiritual, aesthetic, or charitable
causes.
So it should be as respects valleys, alpine meadows, rivers, lakes, estuaries, beaches, ridges, groves of
trees, swampland, or even air that feels the destructive pressures of modern technology and modem
life. The river, for example, is the living symbol of all the life it sustains or nourishes—fish, aquatic
insects, water ouzels, otter, fisher, deer, elk, bear, and all other animals, including man, who are
dependent on it or who enjoy it for its sight, its sound, or its life. The river as plaintiff speaks for the
ecological unit of life that is part of it. Those people who have a meaningful relation to that body of
water—whether it be a fisherman, a canoeist, a zoologist, or a logger—must be able to speak for the
values which the river represents and which are threatened with destruction.[50] (Citations omitted.)
The primary reason animal rights advocates and environmentalists seek to give animals and inanimate
objects standing is due to the need to comply with the strict requirements in bringing a suit to court.
Our own 1997 Rules of Court demand that parties to a suit be either natural or juridical persons, or
entities authorized by law. It further necessitates the action to be brought in the name of the real
party-in-interest, even if filed by a representative, viz.:
Rule 3
Parties to Civil Actions
Section 1. Who may be parties; plaintiff and defendant. - Only natural or juridical persons, or entities
authorized by law may be parties in a civil action. The term "plaintiff " may refer to the claiming party,
the counter-claimant, the cross-claimant, or the third (fourth, etc.)-party plaintiff. The term
"defendant" may refer to the original defending party, the defendant in a counterclaim, the cross-
defendant, or the third (fourth, etc.)-party defendant.
Sec. 2. Parties in interest. - A real party in interest is the party who stands to be benefited or injured
by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized
by law or these Rules, every action must be prosecuted or defended in the name of the real party in
interest.
Sec. 3. Representatives as parties. - Where the action is allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title
of the case and shall be deemed to be the real party in interest. A representative may be a trustee of
an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules.
An agent acting in his own name and for the benefit of an undisclosed principal may sue or be sued
without joining the principal except when the contract involves things belonging to the principal.
It had been suggested by animal rights advocates and environmentalists that not only natural and
juridical persons should be given legal standing because of the difficulty for persons, who cannot
show that they by themselves are real parties-in-interests, to bring actions in representation of these
animals or inanimate objects. For this reason, many environmental cases have been dismissed for
failure of the petitioner to show that he/she would be directly injured or affected by the outcome of
the case. However, in our jurisdiction, locus standi in environmental cases has been given a more
liberalized approach. While developments in Philippine legal theory and jurisprudence have not
progressed as far as Justice Douglas's paradigm of legal standing for inanimate objects, the current
trend moves towards simplification of procedures and facilitating court access in environmental cases.
Recently, the Court passed the landmark Rules of Procedure for Environmental Cases,[51] which allow
for a "citizen suit," and permit any Filipino citizen to file an action before our courts for violations of
our environmental laws:
SEC. 5. Citizen suit. - Any Filipino citizen in representation of others, including minors or generations
yet unborn, may file an action to enforce rights or obligations under environmental laws. Upon the
filing of a citizen suit, the court shall issue an order which shall contain a brief description of the cause
of action and the reliefs prayed for, requiring all interested parties to manifest their interest to
intervene in the case within fifteen (15) days from notice thereof. The plaintiff may publish the order
once in a newspaper of a general circulation in the Philippines or furnish all affected barangays copies
of said order.
Citizen suits filed under R.A. No. 8749 and R.A. No. 9003 shall be governed by their respective
provisions.[52] (Emphasis ours.)
Explaining the rationale for this rule, the Court, in the Annotations to the Rules of Procedure for
Environmental Cases, commented:
Citizen suit. To further encourage the protection of the environment, the Rules enable litigants
enforcing environmental rights to file their cases as citizen suits. This provision liberalizes standing for
all cases filed enforcing environmental laws and collapses the traditional rule on personal and direct
interest, on the principle that humans are stewards of nature. The terminology of the text reflects the
doctrine first enunciated in Oposa v. Factoran, insofar as it refers to minors and generations yet
unborn.[53] (Emphasis supplied, citation omitted.)
Although this petition was filed in 2007, years before the effectivity of the Rules of Procedure for
Environmental Cases, it has been consistently held that rules of procedure "may be retroactively
applied to actions pending and undetermined at the time of their passage and will not violate any
right of a person who may feel that he is adversely affected, inasmuch as there is no vested rights in
rules of procedure."[54]
Elucidating on this doctrine, the Court, in Systems Factors Corporation v. National Labor Relations
Commission[55] held that:
Remedial statutes or statutes relating to remedies or modes of procedure, which do not create new or
take away vested rights, but only operate in furtherance of the remedy or confirmation of rights
already existing, do not come within the legal conception of a retroactive law, or the general rule
against retroactive operation of statutes. Statutes regulating the procedure of the courts will be
construed as applicable to actions pending and undetermined at the time of their passage. Procedural
laws are retroactive in that sense and to that extent, x x x.
Moreover, even before the Rules of Procedure for Environmental Cases became effective, this Court
had already taken a permissive position on the issue of locus standi in environmental cases. In Oposa,
we allowed the suit to be brought in the name of generations yet unborn "based on the concept of
intergenerational responsibility insofar as the right to a balanced and healthful ecology is
concerned."[56] Furthermore, we said that the right to a balanced and healthful ecology, a right that
does not even need to be stated in our Constitution as it is assumed to exist from the inception of
humankind, carries with it the correlative duty to refrain from impairing the environment.[57]
In light of the foregoing, the need to give the Resident Marine Mammals legal standing has been
eliminated by our Rules, which allow any Filipino citizen, as a steward of nature, to bring a suit to
enforce our environmental laws. It is worth noting here that the Stewards are joined as real parties in
the Petition and not just in representation of the named cetacean species. The Stewards, Ramos and
Eisma-Osorio, having shown in their petition that there may be possible violations of laws concerning
the habitat of the Resident Marine Mammals, are therefore declared to possess the legal standing to
file this petition.
Impleading Former President Gloria Macapagal-Arroyo as an Unwilling Co-Petitioner
Petitioners Stewards in G.R. No. 180771 impleaded as an unwilling co-petitioner former President
Gloria Macapagal-Arroyo for the following reasons, which we quote:
Her Excellency Gloria Macapagal-Arroyo, also of legal age, Filipino and resident of Malacañang Palace,
Manila Philippines. Steward Gloria Macapagal-Arroyo happens to be the incumbent President of the
Philippine Islands. She is personally impleaded in this suit as an unwilling co-petitioner by reason of
her express declaration and undertaking under the recently signed ASEAN Charter to protect Your
Petitioners' habitat, among others. She is meantime dominated as an unwilling co-petitioner due to
lack of material time in seeking her signature and imprimatur hereof and due to possible legal
complications that may hereafter arise by reason of her official relations with public respondents
under the alter ego principle in political law.[58]
This is incorrect.
Section 10, Rule 3 of the Rules of Court provides:
Sec. 10. Unwilling co-plaintiff. - If the consent of any party who should be joined as plaintiff can not be
obtained, he may be made a defendant and the reason therefor shall be stated in the complaint.
Under the foregoing rule, when the consent of a party who should be joined as a plaintiff cannot be
obtained, he or she may be made a party defendant to the case. This will put the unwilling party
under the jurisdiction of the Court, which can properly implead him or her through its processes. The
unwilling party's name cannot be simply included in a petition, without his or her knowledge and
consent, as such would be a denial of due process.
Moreover, the reason cited by the petitioners Stewards for including former President Macapagal-
Arroyo in their petition, is not sufficient to implead her as an unwilling co-petitioner. Impleading the
former President as an unwilling co-petitioner, for an act she made in the performance of the
functions of her office, is contrary to the public policy against embroiling the President in suits, "to
assure the exercise of Presidential duties and functions free from any hindrance or distraction,
considering that being the Chief Executive of the Government is a job that, aside from requiring all of
the office holder's time, also demands undivided attention."[59]
Therefore, former President Macapagal-Arroyo cannot be impleaded as one of the petitioners in this
suit. Thus, her name is stricken off the title of this case.
Main Issue:
Legality of Service Contract No. 46
Service Contract No. 46 vis-a-vis
Section 2, Article XII of the
1987 Constitution

Petitioners maintain that SC-46 transgresses the Jura Regalia Provision or paragraph 1, Section 2,
Article XII of the 1987 Constitution because JAPEX is 100% Japanese-owned.[60] Furthermore, the
FIDEC asserts that SC-46 cannot be considered as a technical and financial assistance agreement
validly executed under paragraph 4 of the same provision.[61] The petitioners claim that La Bugal-
B'laan Tribal Association, Inc. v. Ramos[62] laid down the guidelines for a valid service contract, one of
which is that there must exist a general law for oil exploration before a service contract may be
entered into by the Government. The petitioners posit that the service contract in La Bugal is
presumed to have complied with the requisites of (a) legislative enactment of a general law after the
effectivity of the 1987 Constitution (such as Republic Act No. 7942, or the Philippine Mining Law of
1995, governing mining contracts) and (b) presidential notification. The petitioners thus allege that
the ruling in La Bugal, which involved mining contracts under Republic Act No. 7942, does not apply in
this case.[63] The petitioners also argue that Presidential Decree No. 87 or the Oil Exploration and
Development Act of 1972 cannot legally justify SC-46 as it is deemed to have been repealed by the
1987 Constitution and subsequent laws, which enunciate new policies concerning the environment.
[64] In addition, petitioners in G.R. No. 180771 claim that paragraphs 2 and 3 of Section 2, Article XII
of the 1987 Constitution mandate the exclusive use and enjoyment by the Filipinos of our natural
resources,[65] and paragraph 4 does not speak of service contracts but of FTAAs or Financial Technical
Assistance Agreements.
The public respondents again controvert the petitioners' claims and asseverate that SC-46 does not
violate Section 2, Article XII of the 1987 Constitution. They hold that SC-46 does not fall under the
coverage of paragraph 1 but instead, under paragraph 4 of Section 2, Article XII of the 1987
Constitution on FTAAs. They also insist that paragraphs 2 and 3, which refer to the grant of exclusive
fishing right to Filipinos, are not applicable to SC-46 as the contract does not grant exclusive fishing
rights to JAPEX nor does it otherwise impinge on the FIDEC's right to preferential use of communal
marine and fishing resources.
Ruling of the Court
On the legality of Service Contract No. 46
vis-a-vis Section 2, Article XII of the 1987 Constitution
The petitioners insist that SC-46 is null and void for having violated Section 2, Article XII of the 1987
Constitution, which reads as follows:
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.
The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea, and
exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens, as well
as cooperative fish farming, with priority to subsistence fishermen and fishworkers in rivers, lakes,
bays, and lagoons.
The President may enter into agreements with foreign-owned corporations involving either technical
or financial assistance for large-scale exploration, development, and utilization of minerals,
petroleum, and other mineral oils according to the general terms and conditions provided by law,
based on real contributions to the economic growth and general welfare of the country. In such
agreements, the State shall promote the development and use of local scientific and technical
resources.
The President shall notify the Congress of every contract entered into in accordance with this
provision, within thirty days from its execution. (Emphases ours.)
This Court has previously settled the issue of whether service contracts are still allowed under the
1987 Constitution. In La Bugal, we held that the deletion of the words "service contracts" in the 1987
Constitution did not amount to a ban on them per se. In fact, in that decision, we quoted in length,
portions of the deliberations of the members of the Constitutional Commission (ConCom) to show
that in deliberating on paragraph 4, Section 2, Article XII, they were actually referring to service
contracts as understood in the 1973 Constitution, albeit with safety measures to eliminate or
minimize the abuses prevalent during the martial law regime, to wit:
Summation of the ConCom Deliberations
At this point, we sum up the matters established, based on a careful reading of the ConCom
deliberations, as follows:
In their deliberations on what was to become paragraph 4, the framers used the term service
contracts in referring to agreements x x x involving either technical or financial assistance.
They spoke of service contracts as the concept was understood in the 1973 Constitution.
It was obvious from their discussions that they were not about to ban or eradicate service contracts.
Instead, they were plainly crafting provisions to put in place safeguards that would eliminate or
minimize the abuses prevalent during the marital law regime. In brief, they were going to permit
service contracts with foreign corporations as contractors, but with safety measures to prevent
abuses, as an exception to the general norm established in the first paragraph of Section 2 of Article
XII. This provision reserves or limits to Filipino citizens and corporations at least 60 percent of which is
owned by such citizens — the exploration, development and utilization of natural resources.
This provision was prompted by the perceived insufficiency of Filipino capital and the felt need for
foreign investments in the EDU of minerals and petroleum resources.
The framers for the most part debated about the sort of safeguards that would be considered
adequate and reasonable. But some of them, having more "radical" leanings, wanted to ban service
contracts altogether; for them, the provision would permit aliens to exploit and benefit from the
nation's natural resources, which they felt should be reserved only for Filipinos.
In the explanation of their votes, the individual commissioners were heard by the entire body. They
sounded off their individual opinions, openly enunciated their philosophies, and supported or
attacked the provisions with fervor. Everyone's viewpoint was heard.
In the final voting, the Article on the National Economy and Patrimony — including paragraph 4
allowing service contracts with foreign corporations as an exception to the general norm in paragraph
1 of Section 2 of the same article — was resoundingly approved by a vote of 32 to 7, with 2
abstentions.
Agreements Involving Technical Or Financial Assistance Are Service Contracts with Safeguards
From the foregoing, we are impelled to conclude that the phrase agreements involving either
technical or financial assistance, referred to in paragraph 4, are in fact service contracts. But unlike
those of the 1973 variety, the new ones are between foreign corporations acting as contractors on the
one hand; and on the other, the government as principal or "owner" of the works. In the new service
contracts, the foreign contractors provide capital, technology and technical know-how, and
managerial expertise in the creation and operation of large-scale mining/extractive enterprises; and
the government, through its agencies (DENR, MGB), actively exercises control and supervision over
the entire operation.[68]
In summarizing the matters discussed in the ConCom, we established that paragraph 4, with the
safeguards in place, is the exception to paragraph 1, Section 2 of Article XII. The following are the
safeguards this Court enumerated in La Bugal:
Such service contracts may be entered into only with respect to minerals, petroleum and other
mineral oils. The grant thereof is subject to several safeguards, among which are these requirements:
(1) The service contract shall be crafted in accordance with a general law that will set standard or
uniform terms, conditions and requirements, presumably to attain a certain uniformity in provisions
and avoid the possible insertion of terms disadvantageous to the country.
(2) The President shall be the signatory for the government because, supposedly before an agreement
is presented to the President for signature, it will have been vetted several times over at different
levels to ensure that it conforms to law and can withstand public scrutiny.
(3) Within thirty days of the executed agreement, the President shall report it to Congress to give that
branch of government an opportunity to look over the agreement and interpose timely objections, if
any.
Adhering to the aforementioned guidelines, this Court finds that SC-46 is indeed null and void for
noncompliance with the requirements of the 1987 Constitution.
1. The General Law on Oil Exploration
The disposition, exploration, development, exploitation, and utilization of indigenous petroleum in
the Philippines are governed by Presidential Decree No. 87 or the Oil Exploration and Development
Act of 1972. This was enacted by then President Ferdinand Marcos to promote the discovery and
production of indigenous petroleum through the utilization of government and/or local or foreign
private resources to yield the maximum benefit to the Filipino people and the revenues to the
Philippine Government.
Contrary to the petitioners' argument, Presidential Decree No. 87, although enacted in 1972, before
the adoption of the 1987 Constitution, remains to be a valid law unless otherwise repealed, to wit:
ARTICLE XVIII - TRANSITORY PROVISIONS
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.
If there were any intention to repeal Presidential Decree No. 87, it would have been done expressly by
Congress. For instance, Republic Act No. 7160, more popularly known as the Local Government Code
of 1991, expressly repealed a number of laws, including a specific provision in Presidential Decree No.
87, viz.:
SECTION 534. Repealing Clause. — (a) Batas Pambansa Blg. 337, otherwise known as the "Local
Government Code," Executive Order No. 112 (1987), and Executive Order No. 319 (1988) are hereby
repealed.
(b) Presidential Decree Nos. 684, 1191, 1508 and such other decrees, orders, instructions,
memoranda and issuances related to or concerning the barangay are hereby repealed.
(c) The provisions of Sections 2, 3, and 4 of Republic Act No. 1939 regarding hospital fund; Section 3, a
(3) and b (2) of Republic Act No. 5447 regarding the Special Education Fund; Presidential Decree No.
144 as amended by Presidential Decree Nos. 559 and 1741; Presidential Decree No. 231 as amended;
Presidential Decree No. 436 as amended by Presidential Decree No. 558; and Presidential Decree Nos.
381, 436, 464, 477, 526, 632, 752, and 1136 are hereby repealed and rendered of no force and effect.
(d) Presidential Decree No. 1594 is hereby repealed insofar as it governs locally-funded projects.
(e) The following provisions are hereby repealed or amended insofar as they are inconsistent with the
provisions of this Code: Sections 2, 16 and 29 of Presidential Decree No. 704; Section 12 of
Presidential Decree No. 87, as amended; Sections 52, 53, 66, 67, 68, 69, 70, 71, 72, 73, and 74 of
Presidential Decree No. 463, as amended; and Section 16 of Presidential Decree No. 972, as amended,
and
(f) All general and special laws, acts, city charters, decrees, executive orders, proclamations and
administrative regulations, or part or parts thereof which are inconsistent with any of the provisions
of this Code are hereby repealed or modified accordingly. (Emphasis supplied.)
This Court could not simply assume that while Presidential Decree No. 87 had not yet been expressly
repealed, it had been impliedly repealed. As we held in Villareña v. The Commission on Audit,[71]
"[i]mplied repeals are not lightly presumed." It is a settled rule that when laws are in conflict with one
another, every effort must be exerted to reconcile them. In Republic of the Philippines v. Marcopper
Mining Corporation,[72] we said:
The two laws must be absolutely incompatible, and a clear finding thereof must surface, before the
inference of implied repeal may be drawn. The rule is expressed in the maxim, interpretare et
concordare leqibus est optimus interpretendi, i.e., every statute must be so interpreted and brought
into accord with other laws as to form a uniform system of jurisprudence. The fundament is that the
legislature should be presumed to have known the existing laws on the subject and not have enacted
conflicting statutes. Hence, all doubts must be resolved against any implied repeal, and all efforts
should be exerted in order to harmonize and give effect to all laws on the subject. (Citation omitted.)
Moreover, in cases where the statute seems to be in conflict with the Constitution, but a construction
that it is in harmony with the Constitution is also possible, that construction should be preferred.[73]
This Court, in Pangandaman v. Commission on Elections[74] expounding on this point, pronounced:
It is a basic precept in statutory construction that a statute should be interpreted in harmony with the
Constitution and that the spirit, rather than the letter of the law determines its construction; for that
reason, a statute must be read according to its spirit and intent, x x x. (Citation omitted.)
Consequently, we find no merit in petitioners' contention that SC-46 is prohibited on the ground that
there is no general law prescribing the standard or uniform terms, conditions, and requirements for
service contracts involving oil exploration and extraction.
But note must be made at this point that while Presidential Decree No. 87 may serve as the general
law upon which a service contract for petroleum exploration and extraction may be authorized, as will
be discussed below, the exploitation and utilization of this energy resource in the present case may be
allowed only through a law passed by Congress, since the Tañon Strait is a NIPAS[75] area.
2. President was not the signatory to SC-46 and the same was not submitted to Congress
While the Court finds that Presidential Decree No. 87 is sufficient to satisfy the requirement of a
general law, the absence of the two other conditions, that the President be a signatory to SC-46, and
that Congress be notified of such contract, renders it null and void.
As SC-46 was executed in 2004, its terms should have conformed not only to the provisions of
Presidential Decree No. 87, but also to those of the 1987 Constitution. The Civil Code provides:
ARTICLE 1306. The contracting parties may establish such stipulations, clauses, terms and conditions
as they may deem convenient, provided they are not contrary to law, morals, good customs, public
order, or public policy. (Italics ours.)
In Heirs of San Miguel v. Court of Appeals,[76] this Court held that:
It is basic that the law is deemed written into every contract. Although a contract is the law between
the parties, the provisions of positive law which regulate contracts are deemed written therein and
shall limit and govern the relations between the parties, x x x. (Citations omitted.)
Paragraph 4, Section 2, Article XII of the 1987 Constitution requires that the President himself enter
into any service contract for the exploration of petroleum. SC-46 appeared to have been entered into
and signed only by the DOE through its then Secretary, Vicente S. Perez, Jr., contrary to the said
constitutional requirement. Moreover, public respondents have neither shown nor alleged that
Congress was subsequently notified of the execution of such contract.
Public respondents' implied argument that based on the "alter ego principle," their acts are also that
of then President Macapagal-Arroyo's, cannot apply in this case. In Joson v. Torres,[77] we explained
the concept of the alter ego principle or the doctrine of qualified political agency and its limit in this
wise:
Under this doctrine, which recognizes the establishment of a single executive, all executive and
administrative organizations are adjuncts of the Executive Department, the heads of the various
executive departments are assistants and agents of the Chief Executive, and, except in cases where
the Chief Executive is required by the Constitution or law to act in person or the exigencies of the
situation demand that he act personally, the multifarious executive and administrative functions of
the Chief Executive are performed by and through the executive departments, and the acts of the
Secretaries of such departments, performed and promulgated in the regular course of business, are,
unless disapproved or reprobated by the Chief Executive presumptively the acts of the Chief
Executive. (Emphasis ours, citation omitted.)
While the requirements in executing service contracts in paragraph 4, Section 2 of Article XII of the
1987 Constitution seem like mere formalities, they, in reality, take on a much bigger role. As we have
explained in La Bugal, they are the safeguards put in place by the framers of the Constitution to
"eliminate or minimize the abuses prevalent during the martial law regime."[78] Thus, they are not
just mere formalities, which will only render a contract unenforceable but not void, if not complied
with. They are requirements placed, not just in an ordinary statute, but in the fundamental law, the
non-observance of which will nullify the contract. Elucidating on the concept of a "constitution," this
Court, in Manila Prince Hotel v. Government Service Insurance System,[79] held:
A constitution is a system of fundamental laws for the governance and administration of a nation. It is
supreme, imperious, absolute and unalterable except by the authority from which it emanates. It has
been defined as the fundamental and paramount law of the nation. It prescribes the permanent
framework of a system of government, assigns to the different departments their respective powers
and duties, and establishes certain fixed principles on which government is founded. The fundamental
conception in other words is that it is a supreme law to which all other laws must conform and in
accordance with which all private rights must be determined and all public authority administered.
Under the doctrine of constitutional supremacy, if a law or contract violates any norm of the
constitution that law or contract whether promulgated by the legislative or by the executive branch or
entered into by private persons for private purposes is null and void and without any force and effect.
Thus, since the Constitution is the fundamental, paramount and supreme law of the nation, it is
deemed written in every statute and contract. (Emphasis ours.)
As this Court has held in La Bugal, our Constitution requires that the President himself be the
signatory of service agreements with foreign-owned corporations involving the exploration,
development, and utilization of our minerals, petroleum, and other mineral oils. This power cannot be
taken lightly.
In this case, the public respondents have failed to show that the President had any participation in SC-
46. Their argument that their acts are actually the acts of then President Macapagal-Arroyo, absent
proof of her disapproval, must fail as the requirement that the President herself enter into these kinds
of contracts is embodied not just in any ordinary statute, but in the Constitution itself. These service
contracts involving the exploitation, development, and utilization of our natural resources are of
paramount interest to the present and future generations. Hence, safeguards were put in place to
insure that the guidelines set by law are meticulously observed and likewise to eradicate the
corruption that may easily penetrate departments and agencies by ensuring that the President has
authorized or approved of these service contracts herself.
Even under the provisions of Presidential Decree No. 87, it is required that the Petroleum Board, now
the DOE, obtain the President's approval for the execution of any contract under said statute, as
shown in the following provision:
SECTION 5. Execution of contract authorized in this Act. - Every contract herein authorized shall,
subject to the approval of the President, be executed by the Petroleum Board created in this Act, after
due public notice pre-qualification and public bidding or concluded through negotiations. In case bids
are requested or if requested no bid is submitted or the bids submitted are rejected by the Petroleum
Board for being disadvantageous to the Government, the contract may be concluded through
negotiation.
In opening contract areas and in selecting the best offer for petroleum operations, any of the
following alternative procedures may be resorted to by the Petroleum Board, subject to prior approval
of the President[.]
Even if we were inclined to relax the requirement in La Bugal to harmonize the 1987 Constitution with
the aforementioned provision of Presidential Decree No. 87, it must be shown that the government
agency or subordinate official has been authorized by the President to enter into such service contract
for the government. Otherwise, it should be at least shown that the President subsequently approved
of such contract explicitly. None of these circumstances is evident in the case at bar.
Service Contract No. 46 vis-a-vis Other Laws
Petitioners in G.R. No. 180771 claim that SC-46 violates Section 27 of Republic Act. No. 9147 or the
Wildlife Resources Conservation and Protection Act, which bans all marine exploration and
exploitation of oil and gas deposits. They also aver that Section 14 of Republic Act No. 7586 or the
National Integrated Protected Areas System Act of 1992 (NIPAS Act), which allows the exploration of
protected areas for the purpose of information-gathering, has been repealed by Section 27 of
Republic Act No. 9147. The said petitioners further claim that SC-46 is anathema to Republic Act No.
8550 or the Philippine Fisheries Code of 1998, which protects the rights of the fisherfolk in the
preferential use of municipal waters, with the exception being limited only to research and survey
activities.
The FIDEC, for its part, argues that to avail of the exceptions under Section 14 of the NIPAS Act, the
gathering of information must be in accordance with a DENR-approved program, and the exploitation
and utilization of energy resources must be pursuant to a general law passed by Congress expressly
for that purpose. Since there is neither a DENR-approved program nor a general law passed by
Congress, the seismic surveys and oil drilling operations were all done illegally.[81] The FIDEC likewise
contends that SC-46 infringes on its right to the preferential use of the communal fishing waters as it
is denied free access within the prohibited zone, in violation not only of the Fisheries Code but also of
the 1987 Constitutional provisions on subsistence fisherfolk and social justice.[82] Furthermore, the
FIDEC believes that the provisions in Presidential Decree No. 87, which allow offshore drilling even in
municipal waters, should be deemed to have been rendered inoperative by the provisions of Republic
Act No. 8550 and Republic Act No. 7160, which reiterate the social justice provisions of the
Constitution.
The public respondents invoke the rules on statutory construction and argue that Section 14 of the
NIPAS Act is a more particular provision and cannot be deemed to have been repealed by the more
general prohibition in Section 27 of Republic Act No. 9147. They aver that Section 14, under which SC-
46 falls, should instead be regarded as an exemption to Section 27.
Addressing the claim of petitioners in G.R. No. 180771 that there was a violation of Section 27 of
Republic Act No. 9147, the public respondents assert that what the section prohibits is the
exploration of minerals, which as defined in the Philippine Mining Act of 1995, exclude energy
materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy. Thus,
since SC-46 involves oil and gas exploration, Section 27 does not apply.
The public respondents defend the validity of SC-46 and insist that it does not grant exclusive fishing
rights to JAPEX; hence, it does not violate the rule on preferential use of municipal waters. Moreover,
they allege that JAPEX has not banned fishing in the project area, contrary to the FIDEC's claim. The
public respondents also contest the attribution of the declining fish catch to the seismic surveys and
aver that the allegation is unfounded. They claim that according to the Bureau of Fisheries and
Aquatic Resources' fish catch data, the reduced fish catch started in the 1970s due to destructive
fishing practices.[86]
Ruling of the Court
On the legality of Service Contract No. 46 vis-a-vis Other Laws
Although we have already established above that SC-46 is null and void for being violative of the 1987
Constitution, it is our duty to still rule on the legality of SC-46 vis-a-vis other pertinent laws, to serve
as a guide for the Government when executing service contracts involving not only the Tañon Strait,
but also other similar areas. While the petitioners allege that SC-46 is in violation of several laws,
including international ones, their arguments focus primarily on the protected status of the Tañon
Strait, thus this Court will concentrate on those laws that pertain particularly to the Tañon Strait as a
protected seascape.
The Tañon Strait is a narrow passage of water bounded by the islands of Cebu in the East and Negros
in the West. It harbors a rich biodiversity of marine life, including endangered species of dolphins and
whales. For this reason, former President Fidel V. Ramos declared the Tañon Strait as a protected
seascape in 1998 by virtue of Proclamation No. 1234 - Declaring the Tañon Strait situated in the
Provinces of Cebu, Negros Occidental and Negros Oriental as a Protected Area pursuant to the NIP AS
Act and shall be known as Tañon Strait Protected Seascape. During former President Joseph E.
Estrada's time, he also constituted the Tañon Strait Commission via Executive Order No. 76 to ensure
the optimum and sustained use of the resources in that area without threatening its marine life. He
followed this with Executive Order No. 177,[87] wherein he included the mayor of Negros Occidental
Municipality/City as a member of the Tañon Strait Commission, to represent the LGUs concerned. This
Commission, however, was subsequently abolished in 2002 by then President Gloria Macapagal-
Arroyo, via Executive Order No. 72.[88]
True to the constitutional policy that the "State shall protect and advance the right of the people to a
balanced and healthful ecology in accord with the rhythm and harmony of nature,"[89] Congress
enacted the NIPAS Act to secure the perpetual existence of all native plants and animals through the
establishment of a comprehensive system of integrated protected areas. These areas possess
common ecological values that were incorporated into a holistic plan representative of our natural
heritage. The system encompasses outstandingly remarkable areas and biologically important public
lands that are habitats of rare and endangered species of plants and animals, biogeographic zones
and related ecosystems, whether terrestrial, wetland, or marine.[90] It classifies and administers all
the designated protected areas to maintain essential ecological processes and life-support systems, to
preserve genetic diversity, to ensure sustainable use of resources found therein, and to maintain their
natural conditions to the greatest extent possible.[91]
The following categories of protected areas were established under the NIPAS Act:
Strict nature reserve;
Natural park;
Natural monument;
Wildlife sanctuary;
Protected landscapes and seascapes;
Resource reserve;

Natural biotic areas; and
Other categories established by law, conventions or international agreements which the Philippine
Government is a signatory.
Under Section 4 of the NIPAS Act, a protected area refers to portions of land and water, set aside due
to their unique physical and biological significance, managed to enhance biological diversity and
protected against human exploitation.
Under Proclamation No. 2146, the Tañon Strait is an environmentally critical area, having been
declared as a protected area in 1998; therefore, any activity outside the scope of its management
plan may only be implemented pursuant to an ECC secured after undergoing an EIA to determine the
effects of such activity on its ecological system.
The public respondents argue that they had complied with the procedures in obtaining an ECC[103]
and that SC-46 falls under the exceptions in Section 14 of the NIPAS Act, due to the following reasons:

The Tañon Strait, pursuant to Proclamation No. 1234, was set aside and declared a protected area 1) The Tañon Strait is not a strict nature reserve or natural park;
under the category of Protected Seascape. The NIPAS Act defines a Protected Seascape to be an area
of national significance characterized by the harmonious interaction of man and land while providing 2) Exploration is only for the purpose of gathering information on possible energy resources; and
opportunities for public enjoyment through recreation and tourism within the normal lifestyle and
economic activity of this areas;[93] thus a management plan for each area must be designed to 3) Measures are undertaken to ensure that the exploration is being done with the least damage to
protect and enhance the permanent preservation of its natural conditions.[94] Consistent with this surrounding areas.
endeavor is the requirement that an Environmental Impact Assessment (EIA) be made prior to
undertaking any activity outside the scope of the management plan. Unless an ECC under the EIA We do not agree with the arguments raised by the public respondents.
system is obtained, no activity inconsistent with the goals of the NIPAS Act shall be implemented.[95]
Sections 12 and 14 of the NIPAS Act read:
The Environmental Impact Statement System (EISS) was established in 1978 under Presidential Decree
No. 1586. It prohibits any person, partnership or corporation from undertaking or operating any
SECTION 12. Environmental Impact Assessment. - Proposals for activities which are outside the scope
declared environmentally critical project or areas without first securing an ECC issued by the President
of the management plan for protected areas shall be subject to an environmental impact assessment
or his duly authorized representative.[96] Pursuant to the EISS, which called for the proper
as required by law before they are adopted, and the results thereof shall be taken into consideration
management of environmentally critical areas,[97] Proclamation No. 2146[98] was enacted,
in the decision-making process.
identifying the areas and types of projects to be considered as environmentally critical and within the
scope of the EISS, while DENR Administrative Order No. 2003-30 provided for its Implementing Rules
No actual implementation of such activities shall be allowed without the required Environmental
and Regulations (IRR).
Compliance Certificate (ECC) under the Philippine Environmental Impact Assessment (EIA) system. In
instances where such activities are allowed to be undertaken, the proponent shall plan and carry
DENR Administrative Order No. 2003-30 defines an environmentally critical area as "an area
them out in such manner as will minimize any adverse effects and take preventive and remedial action
delineated as environmentally sensitive such that significant environmental impacts are expected if
when appropriate. The proponent shall be liable for any damage due to lack of caution or indiscretion.
certain types of proposed projects or programs are located, developed, or implemented in it";[99]
thus, before a project, which is "any activity, regardless of scale or magnitude, which may have
SECTION 14. Survey for Energy Resources. - Consistent with the policies declared in Section 2 hereof,
significant impact on the environment,"[100] is undertaken in it, such project must undergo an EIA to
protected areas, except strict nature reserves and natural parks, may be subjected to exploration only
evaluate and predict the likely impacts of all its stages on the environment.[101] An EIA is described in
for the purpose of gathering information on energy resources and only if such activity is carried out
detail as follows:
with the least damage to surrounding areas. Surveys shall be conducted only in accordance with a
program approved by the DENR, and the result of such surveys shall be made available to the public
h. Environmental Impact Assessment (EIA) - process that involves evaluating and predicting the likely
and submitted to the President for recommendation to Congress. Any exploitation and utilization of
impacts of a project (including cumulative impacts) on the environment during construction,
energy resources found within NIPAS areas shall be allowed only through a law passed by Congress.
commissioning, operation and abandonment. It also includes designing appropriate preventive,
mitigating and enhancement measures addressing these consequences to protect the environment
It is true that the restrictions found under the NIPAS Act are not without exceptions. However, while
and the community's welfare. The process is undertaken by, among others, the project proponent
an exploration done for the purpose of surveying for energy resources is allowed under Section 14 of
and/or EIA Consultant, EMB, a Review Committee, affected communities and other stakeholders.[102]
the NIPAS Act, this does not mean that it is exempt from the requirement to undergo an EIA under
Section 12. In Sotto v. Sotto,[105] this Court explained why a statute should be construed as a whole:
A statute is passed as a whole and not in parts or sections and is animated by one general purpose
and intent. Consequently each part or section should be construed in connection with every other
part or section and so as to produce a harmonious whole. It is not proper to confine the attention to
the one section to be construed. It is always an unsafe way of construing a statute or contract to
divide it by a process of etymological dissection, into separate words, and then apply to each, thus
separated from its context, some particular definition given by lexicographers, and then reconstruct
the instrument upon the basis of these definitions. An instrument must always be construed as a
whole, and the particular meaning to be attached to any word or phrase is usually to be ascertained
from the context, the nature of the subject treated of and the purpose or intention of the parties who
executed the contract, or of the body which enacted or framed the statute or constitution, x x x.
Surveying for energy resources under Section 14 is not an exemption from complying with the EIA
requirement in Section 12; instead, Section 14 provides for additional requisites before any
exploration for energy resources may be done in protected areas.
The rationale for such additional requirements are incorporated in Section 2 of the NIPAS Act, to wit:
SECTION 2. Declaration of Policy - Cognizant of the profound impact of man's activities on all
components of the natural environment particularly the effect of increasing population, resource
exploitation and industrial advancement amd recognizing the critical importance of protecting and
maintaining the natural biological and physical diversities of the environment notably on areas with
biologically unique features to sustain human life and development, as well as plant and animal life, it
is hereby declared the policy of the State to secure for the Filipino people of present and future
generations the perpetual existence of all native plants and animals through the establishment of a
comprehensive system of integrated protected areas within the classification of national park as
provided for in the Constitution.
It is hereby recognized that these areas, although distinct in features, possess common ecological
values that may be incorporated into a holistic plan representative of our natural heritage; that
effective administration of this area is possible only through cooperation among national government,
local government and concerned private organizations; that the use and enjoyment of these
protected areas must be consistent with the principles of biological diversity and sustainable
development.
To this end, there is hereby established a National Integrated Protected Areas System (NIPAS), which
shall encompass outstandingly remarkable areas and biologically important public lands that are
habitats of rare and endangered species of plants and animals, biogeographic zones and related
ecosystems, whether terrestrial, wetland or marine, all of which shall be designated as "protected
areas."
The public respondents themselves admitted that JAPEX only started to secure an ECC prior to the
second sub-phase of SC-46, which required the drilling of an oil exploration well. This means that
when the seismic surveys were done in the Tañon Strait, no such environmental impact evaluation
was done. Unless seismic surveys are part of the management plan of the Tañon Strait, such surveys
were dona in violation of Section 12 of the NIPAS Act and Section 4 of Presidential Decree No. 1586,
which provides:
Section 4. Presidential Proclamation of Environmentally Critical Areas and Projects. - The President of
the Philippines may, on his own initiative or upon recommendation of the National Environmental
Protection Council, by proclamation declare certain projects, undertakings or areas in the country as
environmentally critical. No person, partnership or corporation shall undertake or operate any such
declared environmentally critical project or area without first securing an Environmental Compliance
Certificate issued by the President or his duly authorized representative. For the proper management
of said critical project or area, the President may by his proclamation reorganize such government
offices, agencies, institutions, corporations or instrumentalities including the re-alignment of
government personnel, and their specific functions and responsibilities.
For the same purpose as above, the Ministry of Human Settlements shall: (a) prepare the proper land
or water use pattern for said critical project(s) or area(s); (b) establish ambient environmental quality
standards; (c) develop a program of environmental enhancement or protective measures against
calamitous factors such as earthquakes, floods, water erosion and others, and (d) perform such other
functions as may be directed by the President from time to time.
The respondents' subsequent compliance with the EISS for the second sub-phase of SC-46 cannot and
will not cure this violation. The following penalties are provided for under Presidential Decree No.
1586 and the NIPAS Act.
Section 9 of Presidential Decree No. 1586 provides for the penalty involving violations of the ECC
requirement:
Section 9. Penalty for Violation. - Any person, corporation or partnership found violating Section 4 of
this Decree, or the terms and conditions in the issuance of the Environmental Compliance Certificate,
or of the standards, rules and regulations issued by the National Environmental Protection Council
pursuant to this Decree shall be punished by the suspension or cancellation of his/its certificates
and/or a fine in an amount not to exceed Fifty Thousand Pesos (P50,000.00) for every violation
thereof, at the discretion of the National Environmental Protection Council. (Emphasis supplied.)
Violations of the NIPAS Act entails the following fines and/or imprisonment under Section 21:
SECTION 21. Penalties. - Whoever violates this Act or any rules and regulations issued by the
Department pursuant to this Act or whoever is found guilty by a competent court of justice of any of
the offenses in the preceding section shall be fined in the amount of not less than Five thousand
pesos (P5,000) nor more than Five hundred thousand pesos (P500,000), exclusive of the value of the
thing damaged or imprisonment for not less than one (1) year but not more than six (6) years, or
both, as determined by the court: Provided, that, if the area requires rehabilitation or restoration as
determined by the court, the offender shall be required to restore or compensate for the restoration
to the damages: Provided, further, that court shall order the eviction of the offender from the land
and the forfeiture in favor of the Government of all minerals, timber or any species collected or
removed including all equipment, devices and firearms used in connection therewith, and any
construction or improvement made thereon by the offender. If the offender is an association or
corporation, the president or manager shall be directly responsible for the act of his employees and
laborers: Provided, finally, that the DENR may impose administrative fines and penalties consistent
with this Act. (Emphases supplied.)
Moreover, SC-46 was not executed for the mere purpose of gathering information on the possible
energy resources in the Tañon Strait as it also provides for the parties' rights and obligations relating
to extraction and petroleum production should oil in commercial quantities be found to exist in the
area. While Presidential Decree No. 87 may serve as the general law upon which a service contract for
petroleum exploration and extraction may be authorized, the exploitation and utilization of this
energy resource in the present case may be allowed only through a law passed by Congress, since the
Tañon Strait is a NIPAS area.[106] Since there is no such law specifically allowing oil exploration and/or
extraction in the Tañon Strait, no energy resource exploitation and utilization may be done in said
protected seascape.
In view of the foregoing premises and conclusions, it is no longer necessary to discuss the other issues
raised in these consolidated petitions.
WHEREFORE, the Petitions in G.R. Nos. 180771 and 181527 are GRANTED, Service Contract No. 46 is
hereby declared NULL AND VOID for violating the 1987 Constitution, Republic Act No. 7586, and
Presidential Decree No. 1586.
SO ORDERED.
PROCLAMATION NO. 2146
[DECEMBER 14, 1981]
PROCLAIMING CERTAIN AREAS AND TYPES OF PROJECTS AS ENVIRONMENTALLY CRITICAL AND
WITHIN THE SCOPE OF THE ENVIRONMENTAL IMPACT STATEMENT SYSTEM ESTABLISHED UNDER
PRESIDENTIAL DECREE NO. 1586.
WHEREAS, it is the national policy to attain and maintain a rational and orderly balance between
socio-economic growth and environmental conservation and protection;
WHEREAS, there is an urgent need to bring about an intensive, integrated program of environmental
protection through a requirement of environmental impact assessments and statements;
WHEREAS, the environmental impact statement system established under Presidential Decree No.
1586 calls for the proper management of environmentally critical area,
WHEREAS, the pursuit of a comprehensive and integrated environmental protection program
necessitates the establishment and institutionalization of a system whereby the exigencies of socio-
economic undertakings can be reconciled with the requirements of environmental protection and
conservation;
WHEREAS, the national leadership mandates the establishment of such a system to regulate and
minimize the environmental impacts of projects and undertakings which may significantly affect the
quality of the environment in Presidential Decree No. 1586, and
WHEREAS, in the effective implementation of such a system, there arises the need to identify and
declare certain projects determined to be environmentally critical.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers
vested in me by law, hereby proclaim the following areas and types of projects as environmentally
critical and within the scope of the Environmental Impact Statement System.
A. Environmentally Critical Projects
I. Heavy Industries
a.Non-ferrous metal industries
b. Iron and steel mills
c.Petroleum and petro-chemical industries including oil and gas
d. Smelting plants
II. Resource Extractive Industries
a.Major mining and quarrying projects 9. Recharged areas of aquifers;
b. Forestry projects
10. Water bodies characterized by one or any combination of the following conditions;;
1. Logging
2. Major wood processing projects a. tapped for domestic purposes;;
b. within the controlled and/or protected areas declared by appropriate authorities;
3. Introduction of fauna (exotic-animals) in public/private forests
c. which support wildlife and fishery activities.
4. Forest occupancy
11. Mangrove areas characterized by one or any combination or the following conditions:
5.Extraction of mangrove products a. with primary pristine and dense young growth;
b. adjoining mouth of major river systems;
6. Grazing
c. near or adjacent to traditional productive fry or fishing grounds;
c. Fishery Projects
1. Dikes for fishpond development projects d. which act as natural buffers against shore erosion, strong winds and storm floods;

III. Infrastructure Projects e. on which people are dependent for their livelihood.
a. Major dams
b. Major power plants (fossil-fueled, nuclear fueled, hydroelectric or geothermal) 12. Coral reef characterized by one or any combination of the following conditions:

c. Major reclamation projects a. with 50% and above live coralline cover;

d. Major roads and bridges. b. Spawning and nursery grounds for fish;

B. Environmentally Critical Areas c. Which act as natural breakwater of coastlines.

1. All areas declared by law as national parks, watershed reserves, wildlife preserves and sanctuaries;

2. Areas set aside as aesthetic potential tourist spots;

This Proclamation shall take effect immediately.
3. Areas which constitute the habitat for any endangered or threatened species of indigenous
Philippine Wildlife (flora and fauna);

4. Areas of unique historic, archaeological , or scientific interests; IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of the Republic of the
Philippines to be affixed.
5. Areas which are traditionally occupied by cultural communities or tribes;

6. Areas frequently visited and/or hard-hit by natural calamities geologic hazards, floods, typhoons,
volcanic activity, etc.
Done in the City of Manila, this 14th day of December, in the year of Our Lord, nineteen hundred and
7. Areas with critical slopes; eighty one.chanrobles virtualawlibrary

8. Areas classified as prime agricultural lands; (SGD.) FERDINAND E. MARCOS

President of the Philippines
PRESIDENTIAL DECREE NO. 1586
[ESTABLISHING AN ENVIRONMENTAL IMPACT STATEMENT SYSTEM, INCLUDING OTHER
ENVIRONMENTAL MANAGEMENT RELATED MEASURES
AND FOR OTHER PURPOSES]
WHEREAS, the pursuit of a comprehensive and integrated environmental protection program
necessitates the establishment and institutionalization of a system whereby the exigencies of socio-
economic undertakings can be reconciled with the requirements of environmental quality;
WHEREAS, the regulatory requirements of Environmental Impact Statements and Assessments
instituted in pursuit of this national environmental protection program have to be worked into their
full regulatory and procedural details in a manner consistent with the goals of the program.
NOW, THEREFORE, I, Ferdinand E. Marcos, President of the Philippines, by virtue of the powers vested
in me by the Constitution do hereby order and declare:
Section 1. Policy
It is hereby declared the policy of the State to attain and maintain a rational and orderly balance
between socio-economic growth and environmental protection.
Section 2. Environmental Impact Statement System
There is hereby established an Environmental Impact Statement System founded and based on the
environmental impact statement required, under Section 4 of Presidential Decree No. 1151, of all
agencies and instrumentalities of the national government, including government-owned or
controlled corporations, as well as private corporations, firms and entities, for every proposed project
and undertaking which significantly affect the quality of the environment.
Section 3. Determination of Lead Agency
The Minister of Human Settlements or his designated representative is hereby authorized to name the
lead agencies referred to in Section 4 of Presidential Decree No. 1151 which shall have jurisdiction to
undertake the preparation of the necessary environmental impact statements on declared
environmentally critical projects and areas. All Environmental Impact Statements shall be submitted
to the National Environmental Protection Council for review and evaluation.
Section 4. Presidential Proclamation of Environmentally Critical Areas and Projects
The President of the Philippines may, on his own initiative or upon recommendation of the National
Environmental Protection Council, by proclamation declare certain projects, undertakings or areas in
the country as environmentally critical. No person, partnership or corporation shall undertake or
operate any such declared environmentally critical project or area without first securing an
Environmental Compliance Certificate issued by the President or his duly authorized representatives.
For the proper management of said critical project or area, the President may by his proclamation
reorganize such government offices, agencies, institutions, corporations or instrumentalities including
the re-alignment of government personnel, and their specific functions and responsibilities.
For the same purpose as above, the Ministry of Human Settlements shall:
a. prepare the proper land or water use pattern for said critical project(s) or area(s);
b. establish ambient environmental quality standards;
c. develop a program of environmental enhancement or protective measures against calamitous
factors such as earthquake, floods, water erosion and others, and
d. perform such other functions as may be directed by the President from time to time.
Section 5. Environmentally Non-Critical Projects
All other projects, undertakings and areas not declared by the President as environmentally critical
shall be considered as non-critical and shall not be required to submit an environmental impact
statement. The National Environmental Protection Council, thru the Ministry of Human Settlements
may however require non-critical projects and undertakings to provide additional environmental
safeguards as it may deem necessary.
Section 6. Secretariat
The National Environmental Protection Council is hereby authorized to constitute the necessary
secretariat which will administer the Environmental Impact Statement System and undertake the
processing and evaluation of environmental impact statements.
Section 7. Management and Financial Assistance
Ministry of Human Settlements is hereby authorized to provide management and financial support to
government offices and instrumentalities placed under its supervision pursuant to this Decree
financed from its existing appropriation or from budgetary augmentation as the Minister of Human This Decree shall take effect immediately.
Settlements may deem necessary.

Section 8. Rules and Regulations

The National Environmental Protection Council shall issue the necessary rules and regulations to
implement this Decree. For this purpose, the National Pollution Control Commission may be availed of
as one of its implementing arms, consistent with the powers and responsibilities of the National
Pollution Control Commission as provided in P.D. No. 984.

Section 9. Penalty for Violation

Any person, corporation or partnership found violating Section 4 of this Decree, or the terms and
conditions in the issuance of the Environmental Compliance Certificate, or of the standards, rules and
regulations issued by the National Environmental Protection Council pursuant to this Decree shall be
punished by the suspension or cancellation of his/its certificate and/or a fine in an amount not to
exceed Fifty Thousand Pesos (P50,000.000) for every violation thereof, at the discretion of the
National Environmental Protection Council.

Section 10. Environmental Revolving Fund

Proceeds from the penalties prescribed in the preceding Section 9 and other penalties imposed by the
National Pollution Control Commission as authorized in P.D. 984, shall be automatically appropriated
into an Environment Revolving Fund hereby created as an exemption to P.D. 711 and P.D. 1234. The
fund shall be used exclusively for the operation of the National Environmental Protection Council and
the National Pollution Control Commission in the implementation of this Decree. The rules and
regulations for the utilization of this fund shall be formulated by the Ministry of Human Settlements
and submitted to the President for approval.

Section 11. Repealing Clause

The Inter-Agency Advisory Council of the National Pollution Control Commission created under
Section 4 of P.D. 984 is hereby abolished and its powers and responsibilities are forthwith delegated
and transferred to the Control of the National Environmental Protection Council.

All other laws, decrees, executive orders, rules and regulations inconsistent herewith are hereby
repealed, amended or modified accordingly.

Section 12. Effectivity Clause

 [G.R. No. 148622. September 12, 2002.]
REPUBLIC OF THE PHILIPPINES, represented by HON. HEHERSON T. ALVAREZ, in his capacity as
Secretary of the DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES (DENR), CLARENCE L.
BAGUILAT, in his capacity as the Regional Executive Director of DENR-Region XI and ENGR.
BIENVENIDO L. LIPAYON, in his capacity as the Regional Director of the DENR-ENVIRONMENTAL
MANAGEMENT BUREAU (DENR-EMB), Region XI, Petitioners, v. THE CITY OF DAVAO, represented by
BENJAMIN C. DE GUZMAN, City Mayor, Respondent.
DECISION
YNARES-SANTIAGO, J.:
Before us is a petition for review 1 on certiorari assailing the decision 2 dated May 28, 2001 of the
Regional Trial Court of Davao City, Branch 33, which granted the writ of mandamus and injunction in
favor of respondent, the City of Davao, and against petitioner, the Republic, represented by the
Department of Environment and Natural Resources (DENR). The trial court also directed petitioner to
issue a Certificate of Non-Coverage in favor of Respondent.chanrob1es virtua1 1aw 1ibrary
The antecedent facts of the case are as follows:chanrob1es virtual 1aw library
On August 11, 2000, respondent filed an application for a Certificate of Non-Coverage (CNC) for its
proposed project, the Davao City Artica Sports Dome, with the Environmental Management Bureau
(EMB), Region XI. Attached to the application were the required documents for its issuance, namely,
a) detailed location map of the project site; b) brief project description; and c) a certification from the
City Planning and Development Office that the project is not located in an environmentally critical
area (ECA). The EMB Region XI denied the application after finding that the proposed project was
within an environmentally critical area and ruled that, pursuant to Section 2, Presidential Decree No.
1586, otherwise known as the Environmental Impact Statement System, in relation to Section 4 of
Presidential Decree No. 1151, also known as the Philippine Environment Policy, the City of Davao must
undergo the environmental impact assessment (EIA) process to secure an Environmental Compliance
Certificate (ECC), before it can proceed with the construction of its project.
Believing that it was entitled to a Certificate of Non-Coverage, respondent filed a petition for
mandamus and injunction with the Regional Trial Court of Davao, docketed as Civil Case No. 28, 133-
2000. It alleged that its proposed project was neither an environmentally critical project nor within an
environmentally critical area; thus it was outside the scope of the EIS system. Hence, it was the
ministerial duty of the DENR, through the EMB-Region XI, to issue a CNC in favor of respondent upon
submission of the required documents.
The Regional Trial Court rendered judgment in favor of respondent, the dispositive portion of which
reads as follows:chanrob1es virtual 1aw library
WHEREFORE, finding the petition to be meritorious, judgment granting the writ of mandamus and
injunction is hereby rendered in favor of the petitioner City of Davao and against respondents
Department of Environment and Natural Resources and the other respondents by:chanrob1es virtual
1aw library
1) directing the respondents to issue in favor of the petitioner City of Davao a Certificate of Non-
Coverage, pursuant to Presidential Decree No. 1586 and related laws, in connection with the
construction by the City of Davao of the Artica Sports Dome;
2) making the preliminary injunction issued on December 12, 2000 permanent.
Costs de oficio.
SO ORDERED. 3
The trial court ratiocinated that there is nothing in PD 1586, in relation to PD 1151 and Letter of
Instruction No. 1179 (prescribing guidelines for compliance with the EIA system), which requires local
government units (LGUs) to comply with the EIS law. Only agencies and instrumentalities of the
national government, including government owned or controlled corporations, as well as private
corporations, firms and entities are mandated to go through the EIA process for their proposed
projects which have significant effect on the quality of the environment. A local government unit, not
being an agency or instrumentality of the National Government, is deemed excluded under the
principle of expressio unius est exclusio alterius.
The trial court also declared, based on the certifications of the DENR-Community Environment and
Natural Resources Office (CENRO)-West, and the data gathered from the Philippine Institute of
Volcanology and Seismology (PHIVOLCS), that the site for the Artica Sports Dome was not within an
environmentally critical area. Neither was the project an environmentally critical one. It therefore
becomes mandatory for the DENR, through the EMB Region XI, to approve respondent’s application
for CNC after it has satisfied all the requirements for its issuance. Accordingly, petitioner can be
compelled by a writ of mandamus to issue the CNC, if it refuses to do so.
Petitioner filed a motion for reconsideration, however, the same was denied. Hence, the instant
petition for review.
With the supervening change of administration, respondent, in lieu of a comment, filed a
manifestation expressing its agreement with petitioner that, indeed, it needs to secure an ECC for its
proposed project. It thus rendered the instant petition moot and academic. However, for the guidance
of the implementors of the EIS law and pursuant to our symbolic function to educate the bench and
bar, 4 we are inclined to address the issue raised in this petition.
Section 15 of Republic Act 7160, 5 otherwise known as the Local Government Code, defines a local
government unit as a body politic and corporate endowed with powers to be exercised by it in
conformity with law. As such, it performs dual functions, governmental and proprietary.
Governmental functions are those that concern the health, safety and the advancement of the public
good or welfare as affecting the public generally. 6 Proprietary functions are those that seek to obtain
special corporate benefits or earn pecuniary profit and intended for private advantage and benefit. 7
When exercising governmental powers and performing governmental duties, an LGU is an agency of
the national government. 8 When engaged in corporate activities, it acts as an agent of the
community in the administration of local affairs. 9
Found in Section 16 of the Local Government Code is the duty of the LGUs to promote the people’s
right to a balanced ecology. 10 Pursuant to this, an LGU, like the City of Davao, can not claim
exemption from the coverage of PD 1586. As a body politic endowed with governmental functions, an
LGU has the duty to ensure the quality of the environment, which is the very same objective of PD
1586.chanrob1es virtua1 1aw 1ibrary
Further, it is a rule of statutory construction that every part of a statute must be interpreted with
reference to the context, i.e., that every part must be considered with other parts, and kept
subservient to the general intent of the enactment. 11 The trial court, in declaring local government
units as exempt from the coverage of the EIS law, failed to relate Section 2 of PD 1586 12 to the
following provisions of the same law:chanrob1es virtual 1aw library
WHEREAS, the pursuit of a comprehensive and integrated environmental protection program
necessitates the establishment and institutionalization of a system whereby the exigencies of socio-
economic undertakings can be reconciled with the requirements of environmental quality; . . .
Section 1. Policy. — It is hereby declared the policy of the State to attain and maintain a rational and
orderly balance between socio-economic growth and environmental protection.
x x x Mindanao Fault; and is outside the required minimum buffer zone of five (5) meters from a fault zone.
Section 4. Presidential Proclamation of Environmentally Critical Areas and Projects. — The President
of the Philippines may, on his own initiative or upon recommendation of the National Environmental
Protection Council, by proclamation declare certain projects, undertakings or areas in the country as
environmentally critical. No person, partnership or corporation shall undertake or operate any such
declared environmentally critical project or area without first securing an Environmental Compliance
Certificate issued by the President or his duly authorized representative. For the proper management
of said critical project or area, the President may by his proclamation reorganize such government
offices, agencies, institutions, corporations or instrumentalities including the realignment of
government personnel, and their specific functions and responsibilities.
Section 4 of PD 1586 clearly states that "no person, partnership or corporation shall undertake or
operate any such declared environmentally critical project or area without first securing an
Environmental Compliance Certificate issued by the President or his duly authorized representative."
13 The Civil Code defines a person as either natural or juridical. The state and its political subdivisions,
i.e., the local government units 14 are juridical persons. 15 Undoubtedly therefore, local government
units are not excluded from the coverage of PD 1586.
Lastly, very clear in Section 1 of PD 1586 that said law intends to implement the policy of the state to
achieve a balance between socio-economic development and environmental protection, which are
the twin goals of sustainable development. The above-quoted first paragraph of the Whereas clause
stresses that this can only be possible if we adopt a comprehensive and integrated environmental
protection program where all the sectors of the community are involved, i.e., the government and the
private sectors. The local government units, as part of the machinery of the government, cannot
therefore be deemed as outside the scope of the EIS system. 16
The foregoing arguments, however, presuppose that a project, for which an Environmental
Compliance Certificate is necessary, is environmentally critical or within an environmentally critical
area. In the case at bar, respondent has sufficiently shown that the Artica Sports Dome will not have a
significant negative environmental impact because it is not an environmentally critical project and it is
not located in an environmentally critical area. In support of this contention, respondent submitted
the following:chanrob1es virtual 1aw library
1. Certification from the City Planning and Development Office that the project is not located in an
environmentally critical area;
2. Certification from the Community Environment and Natural Resources Office (CENRO-West) that
the project area is within the 18-30% slope, is outside the scope of the NIPAS (R.A. 7586), and not
within a declared watershed area; and
3. Certification from PHILVOCS that the project site is thirty-seven (37) kilometers southeast of the
southernmost extension of the Davao River Fault and forty-five (45) kilometers west of the Eastern
The trial court, after a consideration of the evidence, found that the Artica Sports Dome is not within
an environmentally critical area. Neither is it an environmentally critical project. It is axiomatic that
factual findings of the trial court, when fully supported by the evidence on record, are binding upon
this Court and will not be disturbed on appeal. 17 This Court is not a trier of facts. 18
There are exceptional instances when this Court may disregard factual findings of the trial court,
namely: a) when the conclusion is a finding grounded entirely on speculations, surmises, or
conjectures; b) when the inference made is manifestly mistaken, absurd, or impossible; c) where
there is a grave abuse of discretion; d) when the judgment is based on a misapprehension of facts; e)
when the findings of fact are conflicting; f) when the Court of Appeals, in making its findings, went
beyond the issues of the case and the same are contrary to the admissions of both appellant and
appellee; g) when the findings of the Court of Appeals are contrary to those of the trial court; h) when
the findings of fact are conclusions without citation of specific evidence on which they are based; i)
when the finding of fact of the Court of Appeals is premised on the supposed absence of evidence but
is contradicted by the evidence on record; and j) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties and which, if properly considered, would justify a Environmental Impact Statement System established under PD 1586:chanrob1es virtual 1aw library
different conclusion. 19 None of these exceptions, however, obtain in this case.
A. Environmentally Critical Projects
The Environmental Impact Statement System, which ensures environmental protection and regulates
certain government activities affecting the environment, was established by Presidential Decree No. I. Heavy Industries
1586. Section 2 thereof states:chanrob1es virtual 1aw library
a. Non-ferrous metal industries
There is hereby established an Environmental Impact Statement System founded and based on the
environmental impact statement required under Section 4 of Presidential Decree No. 1151, of all b. Iron and steel mills
agencies and instrumentalities of the national government, including government-owned or
controlled corporations, as well as private corporations, firms and entities, for every proposed project c. Petroleum and petro-chemical industries including oil and gas
and undertaking which significantly affect the quality of the environment.
d. Smelting plants
Section 4 of PD 1151, on the other hand, provides:chanrob1es virtual 1aw library
II. Resource Extractive Industries
Environmental Impact Statements. — Pursuant to the above enunciated policies and goals, all
agencies and instrumentalities of the national government, including government-owned or a. Major mining and quarrying projects
controlled corporations, as well as private corporations, firms and entities shall prepare, file and
include in every action, project or undertaking which significantly affects the quality of the b. Forestry projects
environment a detailed statement on —
1. Logging
(a) the environmental impact of the proposed action, project or undertaking
2. Major wood processing projects
(b) any adverse environmental effect which cannot be avoided should the proposal be implemented
3. Introduction of fauna (exotic-animals) in public/private forests
(c) alternative to the proposed action
4. Forest occupancy
(d) a determination that the short-term uses of the resources of the environment are consistent with
the maintenance and enhancement of the long-term productivity of the same; and 5. Extraction of mangrove products

(e) whenever a proposal involves the use of depletable or nonrenewable resources, a finding must be 6. Grazing
made that such use and commitment are warranted.
c. Fishery Projects
Before an environmental impact statement is issued by a lead agency, all agencies having jurisdiction
over, or special expertise on, the subject matter involved shall comment on the draft environmental 1. Dikes for/and fishpond development projects
impact statement made by the lead agency within thirty (30) days from receipt of the same.
III. Infrastructure Projects
Under Article II, Section 1, of the Rules and Regulations Implementing PD 1586, the declaration of
certain projects or areas as environmentally critical, and which shall fall within the scope of the a. Major dams
Environmental Impact Statement System, shall be by Presidential Proclamation, in accordance with
Section 4 of PD 1586 quoted above. b. Major power plants (fossil-fueled, nuclear fueled, hydroelectric or geothermal)

Pursuant thereto, Proclamation No. 2146 was issued on December 14, 1981, proclaiming the c. Major reclamation projects
following areas and types of projects as environmentally critical and within the scope of the
d. Major roads and bridges
12. Coral reefs, characterized by one or any combinations of the following conditions: virtual 1aw
B. Environmentally Critical Areas library
a. with 50% and above live coralline cover;
1. All areas declared by law as national parks, watershed reserves, wildlife preserves and sanctuaries;
b. spawning and nursery grounds for fish;
2. Areas set aside as aesthetic potential tourist spots;
c. which act as natural breakwater of coastlines.
3. Areas which constitute the habitat for any endangered or threatened species of indigenous
Philippine Wildlife (flora and fauna); In this connection, Section 5 of PD 1586 expressly states: 1aw library

4. Areas of unique historic, archaeological, or scientific interests; Environmentally Non-Critical Projects. — All other projects, undertakings and areas not declared by
the President as environmentally critical shall be considered as non-critical and shall not be required
5. Areas which are traditionally occupied by cultural communities or tribes; to submit an environmental impact statement. The National Environmental Protection Council, thru
the Ministry of Human Settlements may however require non-critical projects and undertakings to
6. Areas frequently visited and/or hard-hit by natural calamities (geologic hazards, floods, typhoons, provide additional environmental safeguards as it may deem necessary.
volcanic activity, etc.);
The Artica Sports Dome in Langub does not come close to any of the projects or areas enumerated
7. Areas with critical slopes; above. Neither is it analogous to any of them. It is clear, therefore, that the said project is not
classified as environmentally critical, or within an environmentally critical area. Consequently, the
8. Areas classified as prime agricultural lands; DENR has no choice but to issue the Certificate of Non-Coverage. It becomes its ministerial duty, the
performance of which can be compelled by writ of mandamus, such as that issued by the trial court in
9. Recharged areas of aquifers; the case at bar.chanrob1es virtua1 1aw 1ibrary

10. Water bodies characterized by one or any combination of the following conditions;
a. tapped for domestic purposes
b. within the controlled and/or protected areas declared by appropriate authorities
WHEREFORE, in view of the foregoing, the instant petition is DENIED. The decision of the Regional
Trial Court of Davao City, Branch 33, in Civil Case No. 28,133-2000, granting the writ of mandamus and
directing the Department of Environment and Natural Resources to issue in favor of the City of Davao
a Certificate of Non-Coverage, pursuant to Presidential Decree No. 1586 and related laws, in
connection with the construction of the Artica Sports Dome, is AFFIRMED.

c. which support wildlife and fishery activities SO ORDERED.

11. Mangrove areas characterized by one or any combination of the following conditions:chanrob1es Davide, Jr., C.J., Vitug and Carpio, JJ., concur.
virtual 1aw library

a. with primary pristine and dense young growth;

b. adjoining mouth of major river systems; G.R. No. 196870 June 26, 2012

c. near or adjacent to traditional productive fry or fishing grounds; BORACAY FOUNDATION, INC., Petitioner,
vs.
d. which act as natural buffers against shore erosion, strong winds and storm floods; THE PROVINCE OF AKLAN, REPRESENTED BY GOVERNOR CARLITO S. MARQUEZ, THE PHILIPPINE
RECLAMATION AUTHORITY, AND THE DENR-EMB (REGION VI), Respondents.
e. on which people are dependent for their livelihood.
 DECISION
LEONARDO-DE CASTRO, J.:
In resolving this controversy, the Court took into consideration that all the parties involved share
common goals in pursuit of certain primordial State policies and principles that are enshrined in the
Constitution and pertinent laws, such as the protection of the environment, the empowerment of the
local government units, the promotion of tourism, and the encouragement of the participation of the
private sector. The Court seeks to reconcile the respective roles, duties and responsibilities of the
petitioner and respondents in achieving these shared goals within the context of our Constitution,
laws and regulations.
Nature of the Case
This is an original petition for the issuance of an Environmental Protection Order in the nature of a
continuing mandamus under A.M. No. 09-6-8-SC, otherwise known as the Rules of Procedure for
Environmental Cases, promulgated on April 29, 2010.
The Parties
Petitioner Boracay Foundation, Inc. (petitioner) is a duly registered, non-stock domestic corporation.
Its primary purpose is "to foster a united, concerted and environment-conscious development of
Boracay Island, thereby preserving and maintaining its culture, natural beauty and ecological balance,
marking the island as the crown jewel of Philippine tourism, a prime tourist destination in Asia and
the whole world."1 It counts among its members at least sixty (60) owners and representatives of
resorts, hotels, restaurants, and similar institutions; at least five community organizations; and several
environmentally-conscious residents and advocates. 2
Respondent Province of Aklan (respondent Province) is a political subdivision of the government
created pursuant to Republic Act No. 1414, represented by Honorable Carlito S. Marquez, the
Provincial Governor (Governor Marquez).
Respondent Philippine Reclamation Authority (respondent PRA), formerly called the Public Estates
Authority (PEA), is a government entity created by Presidential Decree No. 1084, 3 which states that
one of the purposes for which respondent PRA was created was to reclaim land, including foreshore
and submerged areas. PEA eventually became the lead agency primarily responsible for all
reclamation projects in the country under Executive Order No. 525, series of 1979. In June 2006, the
President of the Philippines issued Executive Order No. 543, delegating the power "to approve
reclamation projects to PRA through its governing Board, subject to compliance with existing laws and
rules and further subject to the condition that reclamation contracts to be executed with any person
or entity (must) go through public bidding." 4
Respondent Department of Environment and Natural Resources – Environmental Management
Bureau (DENR-EMB), Regional Office VI (respondent DENR-EMB RVI), is the government agency in the
Western Visayas Region authorized to issue environmental compliance certificates regarding projects
that require the environment’s protection and management in the region. 5
Summary of Antecedent Facts
Boracay Island (Boracay), a tropical paradise located in the Western Visayas region of the Philippines
and one of the country’s most popular tourist destinations, was declared a tourist zone and marine
reserve in 1973 under Presidential Proclamation No. 1801. 6 The island comprises the barangays of
Manoc-manoc, Balabag, and Yapak, all within the municipality of Malay, in the province of Aklan. 7
Petitioner describes Boracay as follows:
Boracay is well-known for its distinctive powdery white-sand beaches which are the product of the
unique ecosystem dynamics of the area. The island itself is known to come from the uplifted
remnants of an ancient reef platform. Its beaches, the sandy land strip between the water and the
area currently occupied by numerous establishments, is the primary draw for domestic and
international tourists for its color, texture and other unique characteristics. Needless to state, it is the
premier domestic and international tourist destination in the Philippines. 8
More than a decade ago, respondent Province built the Caticlan Jetty Port and Passenger Terminal at
Barangay Caticlan to be the main gateway to Boracay. It also built the corresponding Cagban Jetty Port
and Passenger Terminal to be the receiving end for tourists in Boracay. Respondent Province operates
both ports "to provide structural facilities suited for locals, tourists and guests and to provide safety
and security measures."9
In 2005, Boracay 2010 Summit was held and participated in by representatives from national
government agencies, local government units (LGUs), and the private sector. Petitioner was one of the
organizers and participants thereto. The Summit aimed "to re-establish a common vision of all
stakeholders to ensure the conservation, restoration, and preservation of Boracay Island" and "to
develop an action plan that [would allow] all sectors to work in concert among and with each other
for the long term benefit and sustainability of the island and the community." 10 The Summit yielded a
Terminal Report11 stating that the participants had shared their dream of having world-class land,
water and air infrastructure, as well as given their observations that government support was lacking,
infrastructure was poor, and, more importantly, the influx of tourists to Boracay was increasing. The
Report showed that there was a need to expand the port facilities at Caticlan due to congestion in the
holding area of the existing port, caused by inadequate facilities, thus tourists suffered long queues
while waiting for the boat ride going to the island. 12
Respondent Province claimed that tourist arrivals to Boracay reached approximately 649,559 in 2009
and 779,666 in 2010, and this was expected to reach a record of 1 million tourist arrivals in the years
to come. Thus, respondent Province conceptualized the expansion of the port facilities at Barangay
Caticlan.13
The Sangguniang Barangay of Caticlan, Malay Municipality, issued Resolution No. 13, s. 2008 14 on April
25, 2008 stating that it had learned that respondent Province had filed an application with the DENR
for a foreshore lease of areas along the shorelines of Barangay Caticlan, and manifesting its strong
opposition to said application, as the proposed foreshore lease practically covered almost all the
coastlines of said barangay, thereby technically diminishing its territorial jurisdiction, once granted,
and depriving its constituents of their statutory right of preference in the development and utilization
of the natural resources within its jurisdiction. The resolution further stated that respondent Province
did not conduct any consultations with the Sangguniang Barangay of Caticlan regarding the proposed
foreshore lease, which failure the Sanggunian considered as an act of bad faith on the part of
respondent Province.15
On November 20, 2008, the Sangguniang Panlalawigan of respondent Province approved Resolution
No. 2008-369,16 formally authorizing Governor Marquez to enter into negotiations towards the
possibility of effecting self-liquidating and income-producing development and livelihood projects to
be financed through bonds, debentures, securities, collaterals, notes or other obligations as provided
under Section 299 of the Local Government Code, with the following priority projects: (a)
renovation/rehabilitation of the Caticlan/Cagban Passenger Terminal Buildings and Jetty Ports; and (b)
reclamation of a portion of Caticlan foreshore for commercial purposes. 17 This step was taken as
respondent Province’s existing jetty port and passenger terminal was funded through bond flotation,
which was successfully redeemed and paid ahead of the target date. This was allegedly cited as one of
the LGU’s Best Practices wherein respondent Province was given the appropriate commendation. 18
Respondent Province included the proposed expansion of the port facilities at Barangay Caticlan in its
2009 Annual Investment Plan,19 envisioned as its project site the area adjacent to the existing jetty
port, and identified additional areas along the coastline of Barangay Caticlan as the site for future
project expansion.20
Governor Marquez sent a letter to respondent PRA on March 12, 2009 21 expressing the interest of
respondent Province to reclaim about 2.64 hectares of land along the foreshores of Barangay Caticlan,
Municipality of Malay, Province of Aklan.
Sometime in April 2009, respondent Province entered into an agreement with the Financial
Advisor/Consultant that won in the bidding process held a month before, to conduct the necessary
feasibility study of the proposed project for the Renovation/Rehabilitation of the Caticlan Passenger
Terminal Building and Jetty Port, Enhancement and Recovery of Old Caticlan Coastline, and
Reclamation of a Portion of Foreshore for Commercial Purposes (the Marina Project), in Malay,
Aklan.22
Subsequently, on May 7, 2009, the Sangguniang Panlalawigan of respondent Province issued
Resolution No. 2009–110,23 which authorized Governor Marquez to file an application to reclaim the
2.64 hectares of foreshore area in Caticlan, Malay, Aklan with respondent PRA.
Sometime in July 2009, the Financial Advisor/Consultant came up with a feasibility study which
focused on the land reclamation of 2.64 hectares by way of beach enhancement and recovery of the
old Caticlan coastline for the rehabilitation and expansion of the existing jetty port, and for its future
plans – the construction of commercial building and wellness center. The financial component of the
said study was Two Hundred Sixty Million Pesos (₱260,000,000.00). Its suggested financing scheme
was bond flotation.24
Meanwhile, the Sangguniang Bayan of the Municipality of Malay expressed its strong opposition to
the intended foreshore lease application, through Resolution No. 044, 25 approved on July 22, 2009,
manifesting therein that respondent Province’s foreshore lease application was for business
enterprise purposes for its benefit, at the expense of the local government of Malay, which by
statutory provisions was the rightful entity "to develop, utilize and reap benefits from the natural
resources found within its jurisdiction." 26
In August 2009, a Preliminary Geohazard Assessment 27 for the enhancement/expansion of the existing
Caticlan Jetty Port and Passenger Terminal through beach zone restoration and Protective Marina
Developments in Caticlan, Malay, Aklan was completed.
Thereafter, Governor Marquez submitted an Environmental Performance Report and Monitoring
Program (EPRMP)28 to DENR-EMB RVI, which he had attached to his letter 29 dated September 19, 2009,
as an initial step for securing an Environmental Compliance Certificate (ECC). The letter reads in part:
With the project expected to start its construction implementation next month, the province hereby
assures your good office that it will give preferential attention to and shall comply with whatever
comments that you may have on this EPRMP.30 (Emphasis added.)
Respondent Province was then authorized to issue "Caticlan Super Marina Bonds" for the purpose of
funding the renovation of the Caticlan Jetty Port and Passenger Terminal Building, and the
reclamation of a portion of the foreshore lease area for commercial purposes in Malay, Aklan through
Provincial Ordinance No. 2009-013, approved on September 10, 2009. The said ordinance authorized
Governor Marquez to negotiate, sign and execute agreements in relation to the issuance of the
Caticlan Super Marina Bonds in the amount not exceeding ₱260,000,000.00. 31
Subsequently, the Sangguniang Panlalawigan of the Province of Aklan issued Provincial Ordinance No.
2009-01532on October 1, 2009, amending Provincial Ordinance No. 2009-013, authorizing the bond
flotation of the Province of Aklan through Governor Marquez to fund the Marina Project and
appropriate the entire proceeds of said bonds for the project, and further authorizing Governor
Marquez to negotiate, sign and execute contracts or agreements pertinent to the transaction. 33
Within the same month of October 2009, respondent Province deliberated on the possible expansion
from its original proposed reclamation area of 2.64 hectares to forty (40) hectares in order to
maximize the utilization of its resources and as a response to the findings of the Preliminary
Geohazard Assessment study which showed that the recession and retreat of the shoreline caused by
coastal erosion and scouring should be the first major concern in the project site and nearby coastal
area. The study likewise indicated the vulnerability of the coastal zone within the proposed project
site and the nearby coastal area due to the effects of sea level rise and climate change which will
greatly affect the social, economic, and environmental situation of Caticlan and nearby Malay coastal
communities.34
In his letter dated October 22, 2009 addressed to respondent PRA, Governor Marquez wrote:
With our substantial compliance with the requirements under Administrative Order No. 2007-2
relative to our request to PRA for approval of the reclamation of the [proposed Beach Zone
Restoration and Protection Marine Development in Barangays Caticlan and Manoc-Manoc] and as a
result of our discussion during the [meeting with the respondent PRA on October 12, 2009], may we
respectfully submit a revised Reclamation Project Description embodying certain revisions/changes in
the size and location of the areas to be reclaimed. x x x.
On another note, we are pleased to inform your Office that the bond flotation we have secured with
the Local Government Unit Guarantee Corporation (LGUGC) has been finally approved last October
14, 2009. This will pave the way for the implementation of said project. Briefly, the Province has been
recognized by the Bureau of Local Government Finance (BLGF) for its capability to meet its loan
obligations. x x x.
With the continued increase of tourists coming to Boracay through Caticlan, the Province is venturing
into such development project with the end in view of protection and/or restoring certain segments
of the shoreline in Barangays Caticlan (Caticlan side) and Manoc-manoc (Boracay side) which, as
reported by experts, has been experiencing tremendous coastal erosion.
For the project to be self-liquidating, however, we will be developing the reclaimed land for
commercial and tourism-related facilities and for other complementary uses. 35 (Emphasis ours.)
Then, on November 19, 2009, the Sangguniang Panlalawigan enacted Resolution No. 2009-
29936 authorizing Governor Marquez to enter into a Memorandum of Agreement (MOA) with
respondent PRA in the implementation of the Beach Zone Restoration and Protection Marina
Development Project, which shall reclaim a total of 40 hectares in the areas adjacent to the jetty ports
at Barangay Caticlan and Barangay Manoc-manoc. The Sangguniang Panlalawigan approved the terms
and conditions of the necessary agreements for the implementation of the bond flotation of
respondent Province to fund the renovation/rehabilitation of the existing jetty port by way of
enhancement and recovery of the Old Caticlan shoreline through reclamation of an area of 2.64
hectares in the amount of ₱260,000,000.00 on December 1, 2009. 37
Respondent Province gave an initial presentation of the project with consultation to the Sangguniang
Bayan of Malay38 on December 9, 2009.
Respondent PRA approved the reclamation project on April 20, 2010 in its Resolution No. 4094 and
authorized its General Manager/Chief Executive Officer (CEO) to enter into a MOA with respondent
Province for the implementation of the reclamation project. 39
On April 27, 2010, DENR-EMB RVI issued to respondent Province ECC-R6-1003-096-7100 (the
questioned ECC) for Phase 1 of the Reclamation Project to the extent of 2.64 hectares to be done
along the Caticlan side beside the existing jetty port.40
On May 17, 2010, respondent Province entered into a MOA 41 with respondent PRA. Under Article III,
the Project was described therein as follows:
The proposed Aklan Beach Zone Restoration and Protection Marina Development Project involves the
reclamation and development of approximately forty (40) hectares of foreshore and offshore areas of
the Municipality of Malay x x x.
The land use development of the reclamation project shall be for commercial, recreational and
institutional and other applicable uses. 42 (Emphases supplied.)
It was at this point that respondent Province deemed it necessary to conduct a series of what it calls
"information-education campaigns," which provided the venue for interaction and dialogue with the
public, particularly the Barangay and Municipal officials of the Municipality of Malay, the residents of
Barangay Caticlan and Boracay, the stakeholders, and the non-governmental organizations (NGOs).
The details of the campaign are summarized as follows 43 :
a. June 17, 2010 at Casa Pilar Beach Resort, Boracay Island, Malay, Aklan; 44
b. July 28, 2010 at Caticlan Jetty Port and Passenger Terminal; 45
c. July 31, 2010 at Barangay Caticlan Plaza;46
d. September 15, 2010 at the Office of the Provincial Governor with Municipal Mayor of
Malay – Mayor John P. Yap;47
e. October 12, 2010 at the Office of the Provincial Governor with the Provincial Development
Council Executive Committee;48 and
f. October 29, 2010 at the Office of the Provincial Governor with Officials of LGU-Malay and
Petitioner.49
Petitioner claims that during the "public consultation meeting" belatedly called by respondent
Province on June 17, 2010, respondent Province presented the Reclamation Project and only then
detailed the actions that it had already undertaken, particularly: the issuance of the Caticlan Super
Marina Bonds; the execution of the MOA with respondent PRA; the alleged conduct of an
Environmental Impact Assessment (EIA) study for the reclamation project; and the expansion of the
project to forty (40) hectares from 2.64 hectares. 50
In Resolution No. 046, Series of 2010, adopted on June 23, 2010, the Malay Municipality reiterated its
strong opposition to respondent Province’s project and denied its request for a favorable
endorsement of the Marina Project.51
The Malay Municipality subsequently issued Resolution No. 016, Series of 2010, adopted on August 3,
2010, to request respondent PRA "not to grant reclamation permit and notice to proceed to the
Marina Project of the [respondent] Provincial Government of Aklan located at Caticlan, Malay,
Aklan."52
In a letter53 dated October 12, 2010, petitioner informed respondent PRA of its opposition to the
reclamation project, primarily for the reason that, based on the opinion of Dr. Porfirio M. Aliño, an
expert from the University of the Philippines Marine Science Institute (UPMSI), which he rendered
based on the documents submitted by respondent Province to obtain the ECC, a full EIA study is
required to assess the reclamation project’s likelihood of rendering critical and lasting effect on
Boracay considering the proximity in distance, geographical location, current and wind direction, and
many other environmental considerations in the area. Petitioner noted that said documents had failed
to deal with coastal erosion concerns in Boracay. It also noted that respondent Province failed to
comply with certain mandatory provisions of the Local Government Code, particularly, those requiring
the project proponent to conduct consultations with stakeholders.
Petitioner likewise transmitted its Resolution No. 001, Series of 2010, registering its opposition to the
reclamation project to respondent Province, respondent PRA, respondent DENR-EMB, the National
Economic Development Authority Region VI, the Malay Municipality, and other concerned entities. 54
Petitioner alleges that despite the Malay Municipality’s denial of respondent Province’s request for a
favorable endorsement, as well as the strong opposition manifested both by Barangay Caticlan and
petitioner as an NGO, respondent Province still continued with the implementation of the
Reclamation Project.55
On July 26, 2010, the Sangguniang Panlalawigan of respondent Province set aside Resolution No. 046,
s. 2010, of the Municipality of Malay and manifested its support for the implementation of the
aforesaid project through its Resolution No. 2010-022. 56
On July 27, 2010, the MOA was confirmed by respondent PRA Board of Directors under its Resolution
No. 4130. Respondent PRA wrote to respondent Province on October 19, 2010, informing the latter to
proceed with the reclamation and development of phase 1 of site 1 of its proposed project.
Respondent PRA attached to said letter its Evaluation Report dated October 18, 2010. 57
Petitioner likewise received a copy of respondent PRA’s letter dated October 19, 2010, which
authorized respondent Province to proceed with phase 1 of the reclamation project, subject to
compliance with the requirements of its Evaluation Report. The reclamation project was described as:
"[A] seafront development involving reclamation of an aggregate area of more or less, forty (40)
hectares in two (2) separate sites both in Malay Municipality, Aklan Province. Site 1 is in Brgy. Caticlan
with a total area of 36.82 hectares and Site 2 in Brgy. Manoc-Manoc, Boracay Island with a total area
of 3.18 hectares. Sites 1 and 2 are on the opposite sides of Tabon Strait, about 1,200 meters apart. x x
x." 58 (Emphases added.)
The Sangguniang Panlalawigan of Aklan, through Resolution No. 2010-034, 59 addressed the
apprehensions of petitioner embodied in its Resolution No. 001, s. 2010, and supported the
implementation of the project. Said resolution stated that the apprehensions of petitioner with regard
to the economic, social and political negative impacts of the projects were mere perceptions and
generalities and were not anchored on definite scientific, social and political studies.
In the meantime, a study was commissioned by the Philippine Chamber of Commerce and Industry-
Boracay (PCCI-Boracay), funded by the Department of Tourism (DOT) with the assistance of, among
others, petitioner. The study was conducted in November 2010 by several marine biologists/experts
from the Marine Environmental Resources Foundation (MERF) of the UPMSI. The study was intended
to determine the potential impact of a reclamation project in the hydrodynamics of the strait and on
the coastal erosion patterns in the southern coast of Boracay Island and along the coast of Caticlan. 60
After noting the objections of the respective LGUs of Caticlan and Malay, as well as the apprehensions
of petitioner, respondent Province issued a notice to the contractor on December 1, 2010 to
commence with the construction of the project.61
On April 4, 2011, the Sangguniang Panlalawigan of Aklan, through its Committee on Cooperatives,
Food, Agriculture, and Environmental Protection and the Committee on Tourism, Trade, Industry and
Commerce, conducted a joint committee hearing wherein the study undertaken by the MERF-UPMSI
was discussed.62 In attendance were Mr. Ariel Abriam, President of PCCI-Boracay, representatives from
the Provincial Government, and Dr. Cesar Villanoy, a professor from the UPMSI. Dr. Villanoy said that
the subject project, consisting of 2.64 hectares, would only have insignificant effect on the
hydrodynamics of the strait traversing the coastline of Barangay Caticlan and Boracay, hence, there
was a distant possibility that it would affect the Boracay coastline, which includes the famous white-
sand beach of the island.63
Thus, on April 6, 2011, the Sangguniang Panlalawigan of Aklan enacted Resolution No. 2011-
06564 noting the report on the survey of the channel between Caticlan and Boracay conducted by the
UPMSI in relation to the effects of the ongoing reclamation to Boracay beaches, and stating that Dr.
Villanoy had admitted that nowhere in their study was it pointed out that there would be an adverse
effect on the white-sand beach of Boracay.
During the First Quarter Regular Meeting of the Regional Development Council, Region VI (RDC-VI) on
April 16, 2011, it approved and supported the subject project (covering 2.64 hectares) through RDC-VI
Resolution No. VI-26, series of 2011.65
Subsequently, Mr. Abriam sent a letter to Governor Marquez dated April 25, 2011 stating that the
study conducted by the UPMSI confirms that the water flow across the Caticlan-Boracay channel is
primarily tide-driven, therefore, the marine scientists believe that the 2.64-hectare project of
respondent Province would not significantly affect the flow in the channel and would unlikely impact
the Boracay beaches. Based on this, PCCI-Boracay stated that it was not opposing the 2.64-hectare
Caticlan reclamation project on environmental grounds.66
On June 1, 2011, petitioner filed the instant Petition for Environmental Protection Order/Issuance of
the Writ of Continuing Mandamus. On June 7, 2011, this Court issued a Temporary Environmental
Protection Order (TEPO) and ordered the respondents to file their respective comments to the
petition.67
After receiving a copy of the TEPO on June 9, 2011, respondent Province immediately issued an order
to the Provincial Engineering Office and the concerned contractor to cease and desist from conducting
any construction activities until further orders from this Court.
The petition is premised on the following grounds:
I.
The respondent Province, proponent of the reclamation project, failed to comply with relevant rules
and regulations in the acquisition of an ECC.
A. The reclamation project is co-located within environmentally critical areas requiring the
performance of a full, or programmatic, environmental impact assessment.
B. Respondent Province failed to obtain the favorable endorsement of the LGU concerned.
C. Respondent Province failed to conduct the required consultation procedures as required
by the Local Government Code.
D. Respondent Province failed to perform a full environmental impact assessment as
required by law and relevant regulations.
II.
The reclamation of land bordering the strait between Caticlan and Boracay shall adversely affect the
frail ecological balance of the area.68
Petitioner objects to respondent Province’s classification of the reclamation project as single instead
of co-located, as "non-environmentally critical," and as a mere "rehabilitation" of the existing jetty
port. Petitioner points out that the reclamation project is on two sites (which are situated on the
opposite sides of Tabon Strait, about 1,200 meters apart):
 36.82 hectares – Site 1, in Bgy. Caticlan
 3.18 hectares – Site 2, in Manoc-manoc, Boracay Island 69
Phase 1, which was started in December 2010 without the necessary permits, 70 is located on the
Caticlan side of a narrow strait separating mainland Aklan from Boracay. In the implementation of the
project, respondent Province obtained only an ECC to conduct Phase 1, instead of an ECC on the
entire 40 hectares. Thus, petitioner argues that respondent Province abused and exploited the
Revised Procedural Manual for DENR Administrative Order No. 30, Series of 2003 (DENR DAO 2003-
30)71 relating to the acquisition of an ECC by:
1. Declaring the reclamation project under "Group II Projects-Non-ECP (environmentally
critical project) in ECA (environmentally critical area) based on the type and size of the area,"
and
2. Failing to declare the reclamation project as a co-located project application which would
have required the Province to submit a Programmatic Environmental Impact Statement
(PEIS)72 or Programmatic Environmental [Performance] Report Management Plan
(PE[P]RMP).73 (Emphases ours.)
Petitioner further alleges that the Revised Procedural Manual (on which the classification above is
based, which merely requires an Environmental Impact Statement [EIS] for Group II projects) is
patently ultra vires, and respondent DENR-EMB RVI committed grave abuse of discretion because the
laws on EIS, namely, Presidential Decree Nos. 1151 and 1586, as well as Presidential Proclamation No.
2146, clearly indicate that projects in environmentally critical areas are to be immediately considered
environmentally critical. Petitioner complains that respondent Province applied for an ECC only for
Phase 1; hence, unlawfully
evading the requirement that co-located projects74 within Environmentally Critical Areas (ECAs) must
submit a PEIS and/or a PEPRMP.
Petitioner argues that respondent Province fraudulently classified and misrepresented the project as a
Non-ECP in an ECA, and as a single project instead of a co-located one. The impact assessment
allegedly performed gives a patently erroneous and wrongly-premised appraisal of the possible
environmental impact of the reclamation project. Petitioner contends that respondent Province’s
choice of classification was designed to avoid a comprehensive impact assessment of the reclamation
project.
Petitioner further contends that respondent DENR-EMB RVI willfully and deliberately disregarded its
duty to ensure that the environment is protected from harmful developmental projects because it
allegedly performed only a cursory and superficial review of the documents submitted by the
respondent Province for an ECC, failing to note that all the information and data used by respondent
Province in its application for the ECC were all dated and not current, as data was gathered in the late
1990s for the ECC issued in 1999 for the first jetty port. Thus, petitioner alleges that respondent
DENR-EMB RVI ignored the environmental impact to Boracay, which involves changes in the structure
of the coastline that could contribute to the changes in the characteristics of the sand in the beaches
of both Caticlan and Boracay.
Petitioner insists that reclamation of land at the Caticlan side will unavoidably adversely affect the
Boracay side and notes that the declared objective of the reclamation project is for the exploitation of
Boracay’s tourist trade, since the project is intended to enhance support services thereto. But,
petitioner argues, the primary reason for Boracay’s popularity is its white-sand beaches which will be
negatively affected by the project.
Petitioner alleges that respondent PRA had required respondent Province to obtain the favorable
endorsement of the LGUs of Barangay Caticlan and Malay Municipality pursuant to the consultation
procedures as required by the Local Government Code.75 Petitioner asserts that the reclamation
project is in violation not only of laws on EIS but also of the Local Government Code as respondent
Province failed to enter into proper consultations with the concerned LGUs. In fact, the Liga ng mga
Barangay-Malay Chapter also expressed strong opposition against the project. 76
Petitioner cites Sections 26 and 27 of the Local Government Code, which require consultations if the
project or program may cause pollution, climactic change, depletion of non-renewable resources, etc.
According to petitioner, respondent Province ignored the LGUs’ opposition expressed as early as 2008.
Not only that, respondent Province belatedly called for public "consultation meetings" on June 17 and
July 28, 2010, after an ECC had already been issued and the MOA between respondents PRA and
Province had already been executed. As the petitioner saw it, these were not consultations but mere
"project presentations."
Petitioner claims that respondent Province, aided and abetted by respondents PRA and DENR-EMB,
ignored the spirit and letter of the Revised Procedural Manual, intended to implement the various
regulations governing the Environmental Impact Assessments (EIAs) to ensure that developmental
projects are in line with sustainable development of natural resources. The project was
conceptualized without considering alternatives.
Further, as to its allegation that respondent Province failed to perform a full EIA, petitioner argues
that while it is true that as of now, only the Caticlan side has been issued an ECC, the entire project
involves the Boracay side, which should have been considered a co-located project. Petitioner claims
that any project involving Boracay requires a full EIA since it is an ECA. Phase 1 of the project will
affect Boracay and Caticlan as they are separated only by a narrow strait; thus, it should be considered
an ECP. Therefore, the ECC and permit issued must be invalidated and cancelled.
Petitioner contends that a study shows that the flow of the water through a narrower channel due to
the reclamation project will likely divert sand transport off the southwest part of Boracay, whereas the
characteristic coast of the Caticlan side of the strait indicate stronger sediment transport. 77 The white-
sand beaches of Boracay and its surrounding marine environment depend upon the natural flow of
the adjacent waters.
Regarding its claim that the reclamation of land bordering the strait between Caticlan and Boracay
shall adversely affect the frail ecological balance of the area, petitioner submits that while the study
conducted by the MERF-UPMSI only considers the impact of the reclamation project on the land, it is
undeniable that it will also adversely affect the already frail ecological balance of the area. The effect
of the project would have been properly assessed if the proper EIA had been performed prior to any
implementation of the project.
According to petitioner, respondent Province’s intended purposes do not prevail over its duty and
obligation to protect the environment. Petitioner believes that rehabilitation of the Jetty Port may be
done through other means.
In its Comment78 dated June 21, 2011, respondent Province claimed that application for reclamation
of 40 hectares is advantageous to the Provincial Government considering that its filing fee would only
cost Php20,000.00 plus Value Added Tax (VAT) which is also the minimum fee as prescribed under
Section 4.2 of Administrative Order No. 2007-2.79
Respondent Province considers the instant petition to be premature; thus, it must necessarily fail for
lack of cause of action due to the failure of petitioner to fully exhaust the available administrative
remedies even before seeking judicial relief. According to respondent Province, the petition primarily
assailed the decision of respondent DENR-EMB RVI in granting the ECC for the subject project
consisting of 2.64 hectares and sought the cancellation of the ECC for alleged failure of respondent
Province to submit proper documentation as required for its issuance. Hence, the grounds relied upon
by petitioner can be addressed within the confines of administrative processes provided by law.
Respondent Province believes that under Section 5.4.3 of DENR Administrative Order No. 2003-30
(DAO 2003-30),80 the issuance of an ECC81 is an official decision of DENR-EMB RVI on the application of
a project proponent.82It cites Section 6 of DENR DAO 2003-30, which provides for a remedy available
to the party aggrieved by the final decision on the proponent’s ECC applications.
Respondent Province argues that the instant petition is anchored on a wrong premise that results to
petitioner’s unfounded fears and baseless apprehensions. It is respondent Province’s contention that
its 2.64-hectare reclamation project is considered as a "stand alone project," separate and
independent from the approved area of 40 hectares. Thus, petitioner should have observed the
difference between the "future development plan" of respondent Province from its "actual project"
being undertaken.83
Respondent Province clearly does not dispute the fact that it revised its original application to
respondent PRA from 2.64 hectares to 40 hectares. However, it claims that such revision is part of its
future plan, and implementation thereof is "still subject to availability of funds, independent scientific
environmental study, separate application of ECC and notice to proceed to be issued by respondent
PRA."84
Respondent Province goes on to claim that "[p]etitioner’s version of the Caticlan jetty port expansion
project is a bigger project which is still at the conceptualization stage. Although this project was
described in the Notice to Proceed issued by respondent PRA to have two phases, 36.82 hectares in
Caticlan and 3.18 hectares in Boracay [Island,] it is totally different from the [ongoing] Caticlan jetty
port expansion project."85
Respondent Province says that the Accomplishment Report 86 of its Engineering Office would attest
that the actual project consists of 2.64 hectares only, as originally planned and conceptualized, which
was even reduced to 2.2 hectares due to some construction and design modifications.
Thus, respondent Province alleges that from its standpoint, its capability to reclaim is limited to 2.64
hectares only, based on respondent PRA’s Evaluation Report 87 dated October 18, 2010, which was in
turn the basis of the issuance of the Notice to Proceed dated October 19, 2010, because the project’s
financial component is ₱260,000,000.00 only. Said Evaluation Report indicates that the
implementation of the other phases of the project including site 2, which consists of the other
portions of the 40-hectare area that includes a portion in Boracay, is still within the 10-year period
and will depend largely on the availability of funds of respondent Province. 88
So, even if respondent PRA approved an area that would total up to 40 hectares, it was divided into
phases in order to determine the period of its implementation. Each phase was separate and
independent because the source of funds was also separate. The required documents and
requirements were also specific for each phase. The entire approved area of 40 hectares could be
implemented within a period of 10 years but this would depend solely on the availability of funds. 89
As far as respondent Province understands it, additional reclamations not covered by the ECC, which
only approved 2.64 hectares, should undergo another EIA. If respondent Province intends to
commence the construction on the other component of the 40 hectares, then it agrees that it is
mandated to secure a new ECC.90
Respondent Province admits that it dreamt of a 40-hectare project, even if it had originally planned
and was at present only financially equipped and legally compliant to undertake 2.64 hectares of the
project, and only as an expansion of its old jetty port.91
Respondent Province claims that it has complied with all the necessary requirements for securing an
ECC. On the issue that the reclamation project is within an ECA requiring the performance of a full or
programmatic EIA, respondent Province reiterates that the idea of expanding the area to 40 hectares
is only a future plan. It only secured an ECC for 2.64 hectares, based on the limits of its funding and
authority. From the beginning, its intention was to rehabilitate and expand the existing jetty port
terminal to accommodate an increasing projected traffic. The subject project is specifically classified
under DENR DAO 2003-30 on its Project Grouping Matrix for Determination of EIA Report Type
considered as Minor Reclamation Projects falling under Group II – Non ECP in an ECA. Whether 2.64
or 40 hectares in area, the subject project falls within this classification.
Consequently, respondent Province claims that petitioner erred in considering the ongoing
reclamation project at Caticlan, Malay, Aklan, as co-located within an ECA.
Respondent Province, likewise argues that the 2.64-hectare project is not a component of the
approved 40-hectare area as it is originally planned for the expansion site of the existing Caticlan jetty
port. At present, it has no definite conceptual construction plan of the said portion in Boracay and it
has no financial allocation to initiate any project on the said Boracay portion.
Furthermore, respondent Province contends that the present project is located in Caticlan while the
alleged component that falls within an ECA is in Boracay. Considering its geographical location, the
two sites cannot be considered as a contiguous area for the reason that it is separated by a body of
water – a strait that traverses between the mainland Panay wherein Caticlan is located and Boracay.
Hence, it is erroneous to consider the two sites as a co-located project within an ECA. Being a "stand
alone project" and an expansion of the existing jetty port, respondent DENR-EMB RVI had required
respondent Province to perform an EPRMP to secure an ECC as sanctioned by Item No. 8(b), page 7 of
DENR DAO 2003-30.
Respondent Province contends that even if, granting for the sake of argument, it had erroneously
categorized its project as Non-ECP in an ECA, this was not a final determination. Respondent DENR-
EMB RVI, which was the administrator of the EIS system, had the final decision on this matter. Under
DENR DAO 2003-30, an application for ECC, even for a Category B2 project where an EPRMP is
conducted, shall be subjected to a review process. Respondent DENR-EMB RVI had the authority to
deny said application. Its Regional Director could either issue an ECC for the project or deny the
application. He may also require a more comprehensive EIA study. The Regional Director issued the
ECC based on the EPRMP submitted by respondent Province and after the same went through the EIA
review process.
Thus, respondent Province concludes that petitioner’s allegation of this being a "co-located project" is
premature if not baseless as the bigger reclamation project is still on the conceptualization stage.
Both respondents PRA and Province are yet to complete studies and feasibility studies to embark on
another project.
Respondent Province claims that an ocular survey of the reclamation project revealed that it had
worked within the limits of the ECC.92
With regard to petitioner’s allegation that respondent Province failed to get the favorable
endorsement of the concerned LGUs in violation of the Local Government Code, respondent Province
contends that consultation vis-à-vis the favorable endorsement from the concerned LGUs as
contemplated under the Local Government Code are merely tools to seek advice and not a power
clothed upon the LGUs to unilaterally approve or disapprove any government projects. Furthermore,
such endorsement is not necessary for projects falling under Category B2 unless required by the
DENR-EMB RVI, under Section 5.3 of DENR DAO 2003-30.
Moreover, DENR Memorandum Circular No. 08-2007 no longer requires the issuance of permits and
certifications as a pre-requisite for the issuance of an ECC. Respondent Province claims to have
conducted consultative activities with LGUs in connection with Sections 26 and 27 of the Local
Government Code. The vehement and staunch objections of both the Sangguniang Barangay of
Caticlan and the Sangguniang Bayan of Malay, according to respondent Province, were not rooted on
its perceived impact upon the people and the community in terms of environmental or ecological
balance, but due to an alleged conflict with their "principal position to develop, utilize and reap
benefits from the natural resources found within its jurisdiction." 93 Respondent Province argues that
these concerns are not within the purview of the Local Government Code. Furthermore, the
Preliminary Geohazard Assessment Report and EPRMP as well as Sangguniang Panlalawigan
Resolution Nos. 2010-022 and 2010-034 should address any environmental issue they may raise.
Respondent Province posits that the spirit and intent of Sections 26 and 27 of the Local Government
Code is to create an avenue for parties, the proponent and the LGU concerned, to come up with a tool
in harmonizing its views and concerns about the project. The duty to consult does not automatically
require adherence to the opinions during the consultation process. It is allegedly not within the
provisions to give the full authority to the LGU concerned to unilaterally approve or disapprove the
project in the guise of requiring the proponent of securing its favorable endorsement. In this case,
petitioner is calling a halt to the project without providing an alternative resolution to harmonize its
position and that of respondent Province.
Respondent Province claims that the EPRMP94 would reveal that:
[T]he area fronting the project site is practically composed of sand. Dead coral communities may be
found along the vicinity. Thus, fish life at the project site is quite scarce due to the absence of marine
support systems like the sea grass beds and coral reefs.
x x x [T]here is no coral cover at the existing Caticlan jetty port. [From] the deepest point of jetty to
the shallowest point, there was no more coral patch and the substrate is sandy. It is of public
knowledge that the said foreshore area is being utilized by the residents ever since as berthing or
anchorage site of their motorized banca. There will be no possibility of any coral development therein
because of its continuous utilization. Likewise, the activity of the strait that traverses between the
main land Caticlan and Boracay Island would also be a factor of the coral development. Corals [may]
only be formed within the area if there is scientific human intervention, which is absent up to the
present.
In light of the foregoing premise, it casts serious doubt on petitioner’s allegations pertaining to the
environmental effects of Respondent-LGU’s 2.64 hectares reclamation project. The alleged
environmental impact of the subject project to the beaches of Boracay Island remains unconfirmed.
Petitioner had unsuccessfully proven that the project would cause imminent, grave and irreparable
injury to the community.95
Respondent Province prayed for the dissolution of the TEPO, claiming that the rules provide that the
TEPO may be dissolved if it appears after hearing that its issuance or continuance would cause
irreparable damage to the party or person enjoined, while the applicant may be fully compensated for
such damages as he may suffer and subject to the posting of a sufficient bond by the party or person
enjoined. Respondent Province contends that the TEPO would cause irreparable damage in two
aspects:
a. Financial dislocation and probable bankruptcy; and
b. Grave and imminent danger to safety and health of inhabitants of immediate area,
including tourists and passengers serviced by the jetty port, brought about by the abrupt
cessation of development works.
As regards financial dislocation, the arguments of respondent Province are summarized below:
1. This project is financed by bonds which the respondent Province had issued to its creditors
as the financing scheme in funding the present project is by way of credit financing through
bond flotation.
2. The funds are financed by a Guarantee Bank – getting payment from bonds, being sold to
investors, which in turn would be paid by the income that the project would realize or incur
upon its completion.
3. While the project is under construction, respondent Province is appropriating a portion of
its Internal Revenue Allotment (IRA) budget from the 20% development fund to defray the
interest and principal amortization due to the Guarantee Bank.
4. The respondent Province’s IRA, regular income, and/or such other revenues or funds, as
may be permitted by law, are being used as security for the payment of the said loan used for
the project’s construction.
 5. The inability of the subject project to earn revenues as projected upon completion will
compel the Province to shoulder the full amount of the obligation, starting from year 2012.
6. Respondent province is mandated to assign its IRA, regular income and/or such other
revenues or funds as permitted by law; if project is stopped, detriment of the public welfare
and its constituents.96
As to the second ground for the dissolution of the TEPO, respondent Province argues:
1. Non-compliance with the guidelines of the ECC may result to environmental hazards most
especially that reclaimed land if not properly secured may be eroded into the sea.
2. The construction has accomplished 65.26 percent of the project. The embankment that
was deposited on the project has no proper concrete wave protection that might be washed
out in the event that a strong typhoon or big waves may occur affecting the strait and the
properties along the project site. It is already the rainy season and there is a big possibility of
typhoon occurrence.
3. If said incident occurs, the aggregates of the embankment that had been washed out
might be transferred to the adjoining properties which could affect its natural environmental
state.
4. It might result to the total alteration of the physical landscape of the area attributing to
environmental disturbance.
5. The lack of proper concrete wave protection or revetment would cause the total erosion of
the embankment that has been dumped on the accomplished area. 97
Respondent Province claims that petitioner will not stand to suffer immediate, grave and irreparable
injury or damage from the ongoing project. The petitioner’s perceived fear of environmental
destruction brought about by its erroneous appreciation of available data is unfounded and does not
translate into a matter of extreme urgency. Thus, under the Rules of Procedure on Environmental
Cases, the TEPO may be dissolved.
Respondent PRA filed its Comment98 on June 22, 2011. It alleges that on June 24, 2006, Executive
Order No. 543 delegated the power "to approve reclamation projects to respondent PRA through its
governing Board, subject to compliance with existing laws and rules and further subject to the
condition that reclamation contracts to be executed with any person or entity (must) go through
public bidding."
Section 4 of respondent PRA’s Administrative Order No. 2007-2 provides for the approval process and
procedures for various reclamation projects to be undertaken. Respondent PRA prepared an
Evaluation Report on November 5, 200999 regarding Aklan’s proposal to increase its project to 40
hectares.
Respondent PRA contends that it was only after respondent Province had complied with the
requirements under the law that respondent PRA, through its Board of Directors, approved the
proposed project under its Board Resolution No. 4094.100 In the same Resolution, respondent PRA
Board authorized the General Manager/CEO to execute a MOA with the Aklan provincial government
to implement the reclamation project under certain conditions.
The issue for respondent PRA was whether or not it approved the respondent Province’s 2.64-hectare
reclamation project proposal in willful disregard of alleged "numerous irregularities" as claimed by
petitioner.101
Respondent PRA claims that its approval of the Aklan Reclamation Project was in accordance with law
and its rules. Indeed, it issued the notice to proceed only after Aklan had complied with all the
requirements imposed by existing laws and regulations. It further contends that the 40 hectares
involved in this project remains a plan insofar as respondent PRA is concerned. What has been
approved for reclamation by respondent PRA thus far is only the 2.64-hectare reclamation project.
Respondent PRA reiterates that it approved this reclamation project after extensively reviewing the
legal, technical, financial, environmental, and operational aspects of the proposed reclamation. 102
One of the conditions that respondent PRA Board imposed before approving the Aklan project was
that no reclamation work could be started until respondent PRA has approved the detailed
engineering plans/methodology, design and specifications of the reclamation. Part of the required
submissions to respondent PRA includes the drainage design as approved by the Public Works
Department and the ECC as issued by the DENR, all of which the Aklan government must submit to
respondent PRA before starting any reclamation works. 103 Under Article IV(B)(3) of the MOA between
respondent PRA and Aklan, the latter is required to submit, apart from the ECC, the following
requirements for respondent PRA’s review and approval, as basis for the issuance of a Notice to
Proceed (NTP) for Reclamation Works:
(a) Land-form plan with technical description of the metes and bounds of the same land-
form;
(b) Final master development and land use plan for the project;
(c) Detailed engineering studies, detailed engineering design, plans and specification for
reclamation works, reclamation plans and methodology, plans for the sources of fill
materials;
(d) Drainage plan vis-a-vis the land-form approved by DPWH Regional Office to include a cost
effective and efficient drainage system as may be required based on the results of the
studies;
 (e) Detailed project cost estimates and quantity take-off per items of work of the rawland
reclamation components, e.g. reclamation containment structures and soil consolidation;
(f) Organizational chart of the construction arm, manning table, equipment schedule for the
project; and,
(g) Project timetable (PERT/CPM) for the entire project construction period. 104
In fact, respondent PRA further required respondent Province under Article IV (B)(24) of the MOA to
strictly comply with all conditions of the DENR-EMB-issued ECC "and/or comply with pertinent local
and international commitments of the Republic of the Philippines to ensure environmental
protection."105
In its August 11, 2010 letter,106 respondent PRA referred for respondent Province’s appropriate action
petitioner’s Resolution 001, series of 2010 and Resolution 46, series of 2010, of the Sangguniang
Bayan of Malay. Governor Marquez wrote respondent PRA107 on September 16, 2010 informing it that
respondent Province had already met with the different officials of Malay, furnishing respondent PRA
with the copies of the minutes of such meetings/presentations. Governor Marquez also assured
respondent PRA that it had complied with the consultation requirements as far as Malay was
concerned.
Respondent PRA claims that in evaluating respondent Province’s project and in issuing the necessary
NTP for Phase 1 of Site 1 (2.64 hectares) of the Caticlan Jetty Port expansion and modernization,
respondent PRA gave considerable weight to all pertinent issuances, especially the ECC issued by
DENR-EMB RVI.108 Respondent PRA stresses that its earlier approval of the 40-hectare reclamation
project under its Resolution No. 4094, series of 2010, still requires a second level of compliance
requirements from the proponent. Respondent Province could not possibly begin its reclamation
works since respondent PRA had yet to issue an NTP in its favor.
Respondent PRA alleges that prior to the issuance of the NTP to respondent Province for Phase 1 of
Site 1, it required the submission of the following pre-construction documents:
(a) Land-Form Plan (with technical description);
(b) Site Development Plan/Land Use Plan including,
(i) sewer and drainage systems and
(ii) waste water treatment;
(c) Engineering Studies and Engineering Design;
(d) Reclamation Methodology;
(e) Sources of Fill Materials, and,
(f) The ECC.109
Respondent PRA claims that it was only after the evaluation of the above submissions that it issued to
respondent Province the NTP, limited to the 2.64-hectare reclamation project. Respondent PRA even
emphasized in its evaluation report that should respondent Province pursue the other phases of its
project, it would still require the submission of an ECC for each succeeding phases before the start of
any reclamation works.110
Respondent PRA, being the national government’s arm in regulating and coordinating all reclamation
projects in the Philippines – a mandate conferred by law – manifests that it is incumbent upon it, in
the exercise of its regulatory functions, to diligently evaluate, based on its technical competencies, all
reclamation projects submitted to it for approval. Once the reclamation project’s requirements set
forth by law and related rules have been complied with, respondent PRA is mandated to approve the
same. Respondent PRA claims, "[w]ith all the foregoing rigorous and detailed requirements submitted
and complied with by Aklan, and the attendant careful and meticulous technical and legal evaluation
by respondent PRA, it cannot be argued that the reclamation permit it issued to Aklan is ‘founded
upon numerous irregularities;’ as recklessly and baselessly imputed by BFI." 111
In its Comment112 dated July 1, 2011, respondent DENR-EMB RVI asserts that its act of issuing the ECC
certifies that the project had undergone the proper EIA process by assessing, among others, the direct
and indirect impact of the project on the biophysical and human environment and ensuring that these
impacts are addressed by appropriate environmental protection and enhancement measures,
pursuant to Presidential Decree No. 1586, the Revised Procedural Manual for DENR DAO 2003-30, and
the existing rules and regulations.113
Respondent DENR-EMB RVI stresses that the declaration in 1978 of several islands, which includes
Boracay as tourist zone and marine reserve under Proclamation No. 1801, has no relevance to the
expansion project of Caticlan Jetty Port and Passenger Terminal for the very reason that the project is
not located in the Island of Boracay, being located in Barangay Caticlan, Malay, which is not a part of
mainland Panay. It admits that the site of the subject jetty port falls within the ECA under
Proclamation No. 2146 (1981), being within the category of a water body. This was why respondent
Province had faithfully secured an ECC pursuant to the Revised Procedural Manual for DENR DAO
2003-30 by submitting the necessary documents as contained in the EPRMP on March 19, 2010,
which were the bases in granting ECC No. R6-1003-096-7100 (amended) on April 27, 2010 for the
expansion of Caticlan Jetty Port and Passenger Terminal, covering 2.64 hectares. 114
Respondent DENR-EMB RVI claims that the issues raised by the LGUs of Caticlan and Malay had been
considered by the DENR-Provincial Environment and Natural Resources Office (PENRO), Aklan in the
issuance of the Order115dated January 26, 2010, disregarding the claim of the Municipality of Malay,
Aklan of a portion of the foreshore land in Caticlan covered by the application of the Province of
Aklan; and another Order of Rejection dated February 5, 2010 of the two foreshore applications,
namely FLA No. 060412-43A and FLA No. 060412-43B, of the Province of Aklan. 116
Respondent DENR-EMB RVI contends that the supporting documents attached to the EPRMP for the
issuance of an ECC were merely for the expansion and modernization of the old jetty port in Barangay
Caticlan covering 2.64 hectares, and not the 40-hectare reclamation project in Barangay Caticlan and
Boracay. The previous letter of respondent Province dated October 14, 2009 addressed to DENR-EMB
RVI Regional Executive Director, would show that the reclamation project will cover approximately 2.6
hectares.117 This application for ECC was not officially accepted due to lack of requirements or
documents.
Although petitioner insists that the project involves 40 hectares in two sites, respondent DENR-EMB
RVI looked at the documents submitted by respondent Province and saw that the subject area
covered by the ECC application and subsequently granted with ECC-R6-1003-096-7100 consists only of
2.64 hectares; hence, respondent DENR-EMB RVI could not comment on the excess area. 118
Respondent DENR-EMB RVI admits that as regards the classification of the 2.64-hectare reclamation
project under "Non ECP in ECA," this does not fall within the definition of a co-located project because
the subject project is merely an expansion of the old Caticlan Jetty Port, which had a previously issued
ECC (ECC No. 0699-1012-171 on October 12, 1999). Thus, only an EPRMP, not a PEIS or PEPRMP, is
required.119
Respondent Province submitted to respondent DENR-EMB RVI the following documents contained in
the EPRMP:
a. The Observations on the Floor Bottom and its Marine Resources at the Proposed Jetty
Ports at Caticlan and Manok-manok, Boracay, Aklan, conducted in 1999 by the Bureau of
Fisheries Aquatic Resources (BFAR) Central Office, particularly in Caticlan site, and
b. The Study conducted by Dr. Ricarte S. Javelosa, Ph. D, Mines and Geosciences Bureau
(MGB), Central Office and Engr. Roger Esto, Provincial Planning and Development Office
(PPDO), Aklan in 2009 entitled "Preliminary Geo-hazard Assessment for the Enhancement of
the Existing Caticlan Jetty Port Terminal through Beach Zone Restoration and Protective
Marina Development in Malay, Aklan."
Respondent DENR-EMB RVI claims that the above two scientific studies were enough for it to arrive at
a best professional judgment to issue an amended ECC for the Aklan Marina Project covering 2.64
hectares.120Furthermore, to confirm that the 2.64-hectare reclamation has no significant negative
impact with the surrounding environment particularly in Boracay, a more recent study was conducted,
and respondent DENR-EMB RVI alleges that "[i]t is very important to highlight that the input data in
the [MERF- UPMSI] study utilized the [40-hectare] reclamation and [200-meter] width seaward using
the tidal and wave modelling."121 The study showed that the reclamation of 2.64 hectares had no
effect to the hydrodynamics of the strait between Barangay Caticlan and Boracay.
Respondent DENR-EMB RVI affirms that no permits and/or clearances from National Government
Agencies (NGAs) and LGUs are required pursuant to the DENR Memorandum Circular No. 2007-08,
entitled "Simplifying the Requirements of ECC or CNC Applications;" that the EPRMP was evaluated
and processed based on the Revised Procedural Manual for DENR DAO 2003-30 which resulted to the
issuance of ECC-R6-1003-096-7100; and that the ECC is not a permit per se but a planning tool for
LGUs to consider in its decision whether or not to issue a local permit. 122
Respondent DENR-EMB RVI concludes that in filing this case, petitioner had bypassed and deprived
the DENR Secretary of the opportunity to review and/or reverse the decision of his subordinate office,
EMB RVI pursuant to the Revised Procedural Manual for DENR DAO 2003-30. There is no "extreme
urgency that necessitates the granting of Mandamus or issuance of TEPO that put to balance between
the life and death of the petitioner or present grave or irreparable damage to environment." 123
After receiving the above Comments from all the respondents, the Court set the case for oral
arguments on September 13, 2011.
Meanwhile, on September 8, 2011, respondent Province filed a Manifestation and Motion 124 praying
for the dismissal of the petition, as the province was no longer pursuing the implementation of the
succeeding phases of the project due to its inability to comply with Article IV B.2(3) of the MOA;
hence, the issues and fears expressed by petitioner had become moot. Respondent Province alleges
that the petition is "premised on a serious misappreciation of the real extent of the contested
reclamation project" as certainly the ECC covered only a total of 2,691 square meters located in
Barangay Caticlan, Malay, Aklan; and although the MOA spoke of 40 hectares, respondent Province’s
submission of documents to respondent PRA pertaining to said area was but the first of a two-step
process of approval. Respondent Province claims that its failure to comply with the documentary
requirements of respondent PRA within the period provided, or 120 working days from the effectivity
of the MOA, indicated its waiver to pursue the remainder of the project. 125 Respondent Province
further manifested:
Confirming this in a letter dated 12 August 2011,126 Governor Marquez informed respondent PRA that
the Province of Aklan is no longer "pursuing the implementation of the succeeding phases of the
project with a total area of 37.4 hectares for our inability to comply with Article IV B.2 (3) of the MOA;
hence, the existing MOA will cover only the project area of 2.64 hectares."
In his reply-letter dated August 22, 2011,127 [respondent] PRA General Manager informed Governor
Marquez that the [respondent] PRA Board of Directors has given [respondent] PRA the authority to
confirm the position of the Province of Aklan that the "Aklan Beach Zone Restoration and Protection
Marine Development Project will now be confined to the reclamation and development of the 2.64
hectares, more or less.
It is undisputed from the start that the coverage of the Project is in fact limited to 2.64 hectares, as
evidenced by the NTP issued by respondent PRA. The recent exchange of correspondence between
respondents Province of Aklan and [respondent] PRA further confirms the intent of the parties all
along. Hence, the Project subject of the petition, without doubt, covers only 2.64 and not 40 hectares
as feared. This completely changes the extent of the Project and, consequently, moots the issues and
fears expressed by the petitioner.128 (Emphasis supplied.)
Based on the above contentions, respondent Province prays that the petition be dismissed as no
further justiciable controversy exists since the feared adverse effect to Boracay Island’s ecology had
become academic all together.129
WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court that after
due proceedings, the following be rendered:
1. The Temporary Environmental Protection Order (TEPO) it issued on June 7, 2011 be
lifted/dissolved.
2. The instant petition be dismissed for being moot and academic.
3. Respondent Province of Aklan prays for such other reliefs that are just and equitable under
the premises. (Emphases in the original.)

The Court heard the parties’ oral arguments on September 13, 2011 and gave the latter twenty (20) ISSUES
days thereafter to file their respective memoranda.
The Court will now resolve the following issues:
Respondent Province filed another Manifestation and Motion, 130 which the Court received on April 2,
2012 stating that:
I. Whether or not the petition should be dismissed for having been rendered moot and
academic
1. it had submitted the required documents and studies to respondent DENR-EMB RVI before
an ECC was issued in its favor;
II. Whether or not the petition is premature because petitioner failed to exhaust
administrative remedies before filing this case
2. it had substantially complied with the requirements provided under PRA Administrative
Order 2007-2, which compliance caused respondent PRA’s Board to approve the reclamation
III. Whether or not respondent Province failed to perform a full EIA as required by laws and
project; and
regulations based on the scope and classification of the project

3. it had conducted a series of "consultative [presentations]" relative to the reclamation

IV. Whether or not respondent Province complied with all the requirements under the
project before the LGU of Malay Municipality, the Barangay Officials of Caticlan, and
pertinent laws and regulations
stakeholders of Boracay Island.
V. Whether or not there was proper, timely, and sufficient public consultation for the project
Respondent Province further manifested that the Barangay Council of Caticlan, Malay, Aklan enacted
on February 13, 2012 Resolution No. 003, series of 2012, entitled "Resolution Favorably Endorsing the
DISCUSSION
2.6 Hectares Reclamation/MARINA Project of the Aklan Provincial Government at Caticlan
Coastline"131 and that the Sangguniang Bayan of the Municipality of Malay, Aklan enacted Resolution
No. 020, series of 2012, entitled "Resolution Endorsing the 2.6 Hectares Reclamation Project of the On the issue of whether or not the Petition should be dismissed for having been rendered moot and
Provincial Government of Aklan Located at Barangay Caticlan, Malay, Aklan." 132 academic

Respondent Province claims that its compliance with the requirements of respondents DENR-EMB RVI
and PRA that led to the approval of the reclamation project by the said government agencies, as well
as the recent enactments of the Barangay Council of Caticlan and the Sangguniang Bayan of the
Municipality of Malay favorably endorsing the said project, had "categorically addressed all the issues
raised by the Petitioner in its Petition dated June 1, 2011." Respondent Province prays as follows:
Respondent Province claims in its Manifestation and Motion filed on April 2, 2012 that with the
alleged favorable endorsement of the reclamation project by the Sangguniang Barangay of Caticlan
and the Sangguniang Bayan of the Municipality of Malay, all the issues raised by petitioner had
already been addressed, and this petition should be dismissed for being moot and academic.
On the contrary, a close reading of the two LGUs’ respective resolutions would reveal that they are
not sufficient to render the petition moot and academic, as there are explicit conditions imposed that
must be complied with by respondent Province. In Resolution No. 003, series of 2012, of the
Sangguniang Barangay of Caticlan it is stated that "any vertical structures to be constructed shall be
subject for barangay endorsement."133 Clearly, what the barangay endorsed was the reclamation only,
and not the entire project that includes the construction of a commercial building and wellness
center, and other tourism-related facilities. Petitioner’s objections, as may be recalled, pertain not
only to the reclamation per se, but also to the building to be constructed and the entire project’s
perceived ill effects to the surrounding environment.
Resolution No. 020, series of 2012, of the Sangguniang Bayan of Malay 134 is even more specific. It
reads in part:
WHEREAS, noble it seems the reclamation project to the effect that it will generate scores of benefits
for the Local Government of Malay in terms of income and employment for its constituents, but the
fact cannot be denied that the project will take its toll on the environment especially on the nearby
fragile island of Boracay and the fact also remains that the project will eventually displace the local
transportation operators/cooperatives;
WHEREAS, considering the sensitivity of the project, this Honorable Body through the Committee
where this matter was referred conducted several consultations/committee hearings with concerned
departments and the private sector specifically Boracay Foundation, Inc. and they are one in its belief
that this Local Government Unit has never been against development so long as compliance with the
law and proper procedures have been observed and that paramount consideration have been given to
the environment lest we disturb the balance of nature to the end that progress will be brought to
naught;
WHEREAS, time and again, to ensure a healthy intergovernmental relations, this August Body requires
no less than transparency and faithful commitment from the Provincial Government of Aklan in the
process of going through these improvements in the Municipality because it once fell prey to
infidelities in matters of governance;
WHEREAS, as a condition for the grant of this endorsement and to address all issues and concerns,
this Honorable Council necessitates a sincere commitment from the Provincial Government of Aklan
to the end that:
1. To allocate an office space to LGU-Malay within the building in the reclaimed area;
2. To convene the Cagban and Caticlan Jetty Port Management Board before the resumption
of the reclamation project;
3. That the reclamation project shall be limited only to 2.6 hectares in Barangay Caticlan and
not beyond;
4. That the local transportation operators/cooperatives will not be displaced; and
5. The Provincial Government of Aklan conduct a simultaneous comprehensive study on the
environmental impact of the reclamation project especially during Habagat and Amihan
seasons and put in place as early as possible mitigating measures on the effect of the project
to the environment.
WHEREAS, having presented these stipulations, failure to comply herewith will leave this August Body
no choice but to revoke this endorsement, hence faithful compliance of the commitment of the
Provincial Government is highly appealed for[.] 135 (Emphases added.)
The Sangguniang Bayan of Malay obviously imposed explicit conditions for respondent Province to
comply with on pain of revocation of its endorsement of the project, including the need to conduct a
comprehensive study on the environmental impact of the reclamation project, which is the heart of
the petition before us. Therefore, the contents of the two resolutions submitted by respondent
Province do not support its conclusion that the subsequent favorable endorsement of the LGUs had
already addressed all the issues raised and rendered the instant petition moot and academic.
On the issue of failure to exhaust administrative remedies
Respondents, in essence, argue that the present petition should be dismissed for petitioner’s failure
to exhaust administrative remedies and even to observe the hierarchy of courts. Furthermore, as the
petition questions the issuance of the ECC and the NTP, this involves factual and technical verification,
which are more properly within the expertise of the concerned government agencies.
Respondents anchor their argument on Section 6, Article II of DENR DAO 2003-30, which provides:
Section 6. Appeal
Any party aggrieved by the final decision on the ECC / CNC applications may, within 15 days from
receipt of such decision, file an appeal on the following grounds:
a. Grave abuse of discretion on the part of the deciding authority, or
b. Serious errors in the review findings.
The DENR may adopt alternative conflict/dispute resolution procedures as a means to settle
grievances between proponents and aggrieved parties to avert unnecessary legal action. Frivolous
appeals shall not be countenanced.
The proponent or any stakeholder may file an appeal to the following:
Deciding Authority Where to file the appeal
 EMB Regional Office Director Office of the EMB Director
EMB Central Office Director Office of the DENR Secretary
DENR Secretary Office of the President
(Emphases supplied.)
Respondents argue that since there is an administrative appeal provided for, then petitioner is duty
bound to observe the same and may not be granted recourse to the regular courts for its failure to do
so.
We do not agree with respondents’ appreciation of the applicability of the rule on exhaustion of
administrative remedies in this case. We are reminded of our ruling in Pagara v. Court of
Appeals,136 which summarized our earlier decisions on the procedural requirement of exhaustion of
administrative remedies, to wit:
The rule regarding exhaustion of administrative remedies is not a hard and fast rule. It is not
applicable (1) where the question in dispute is purely a legal one, or (2) where the controverted act is
patently illegal or was performed without jurisdiction or in excess of jurisdiction; or (3) where the
respondent is a department secretary, whose acts as an alter ego of the President bear the implied or
assumed approval of the latter, unless actually disapproved by him, or (4) where there are
circumstances indicating the urgency of judicial intervention, - Gonzales vs. Hechanova, L-21897,
October 22, 1963, 9 SCRA 230; Abaya vs. Villegas, L-25641, December 17, 1966, 18 SCRA; Mitra vs.
Subido, L-21691, September 15, 1967, 21 SCRA 127.
Said principle may also be disregarded when it does not provide a plain, speedy and adequate
remedy, (Cipriano vs. Marcelino, 43 SCRA 291), when there is no due process observed (Villanos vs.
Subido, 45 SCRA 299), or where the protestant has no other recourse (Sta. Maria vs. Lopez, 31 SCRA
637).137 (Emphases supplied.)
As petitioner correctly pointed out, the appeal provided for under Section 6 of DENR DAO 2003-30 is
only applicable, based on the first sentence thereof, if the person or entity charged with the duty to
exhaust the administrative remedy of appeal to the appropriate government agency has been a party
or has been made a party in the proceedings wherein the decision to be appealed was rendered. It
has been established by the facts that petitioner was never made a party to the proceedings before
respondent DENR-EMB RVI. Petitioner was only informed that the project had already been approved
after the ECC was already granted.138 Not being a party to the said proceedings, it does not appear
that petitioner was officially furnished a copy of the decision, from which the 15-day period to appeal
should be reckoned, and which would warrant the application of Section 6, Article II of DENR DAO
2003-30.
Although petitioner was not a party to the proceedings where the decision to issue an ECC was
rendered, it stands to be aggrieved by the decision, 139 because it claims that the reclamation of land
on the Caticlan side would unavoidably adversely affect the Boracay side, where petitioner’s members
own establishments engaged in the tourism trade. As noted earlier, petitioner contends that the
declared objective of the reclamation project is to exploit Boracay’s tourism trade because the project
is intended to enhance support services thereto; however, this objective would not be achieved since
the white-sand beaches for which Boracay is famous might be negatively affected by the project.
Petitioner’s conclusion is that respondent Province, aided and abetted by respondents PRA and DENR-
EMB RVI, ignored the spirit and letter of our environmental laws, and should thus be compelled to
perform their duties under said laws.
The new Rules of Procedure for Environmental Cases, A.M. No. 09-6-8-SC, provides a relief for
petitioner under the writ of continuing mandamus, which is a special civil action that may be availed
of "to compel the performance of an act specifically enjoined by law" 140 and which provides for the
issuance of a TEPO "as an auxiliary remedy prior to the issuance of the writ itself." 141 The Rationale of
the said Rules explains the writ in this wise:
Environmental law highlights the shift in the focal-point from the initiation of regulation by Congress
to the implementation of regulatory programs by the appropriate government agencies.
Thus, a government agency’s inaction, if any, has serious implications on the future of environmental
law enforcement. Private individuals, to the extent that they seek to change the scope of the
regulatory process, will have to rely on such agencies to take the initial incentives, which may require
a judicial component. Accordingly, questions regarding the propriety of an agency’s action or inaction
will need to be analyzed.
This point is emphasized in the availability of the remedy of the writ of mandamus, which allows for
the enforcement of the conduct of the tasks to which the writ pertains: the performance of a legal
duty.142 (Emphases added.)
The writ of continuing mandamus "permits the court to retain jurisdiction after judgment in order to
ensure the successful implementation of the reliefs mandated under the court’s decision" and, in
order to do this, "the court may compel the submission of compliance reports from the respondent
government agencies as well as avail of other means to monitor compliance with its decision." 143
According to petitioner, respondent Province acted pursuant to a MOA with respondent PRA that was
conditioned upon, among others, a properly-secured ECC from respondent DENR-EMB RVI. For this
reason, petitioner seeks to compel respondent Province to comply with certain environmental laws,
rules, and procedures that it claims were either circumvented or ignored. Hence, we find that the
petition was appropriately filed with this Court under Rule 8, Section 1, A.M. No. 09-6-8-SC, which
reads:
SECTION 1. Petition for continuing mandamus.—When any agency or instrumentality of the
government or officer thereof unlawfully neglects the performance of an act which the law
specifically enjoins as a duty resulting from an office, trust or station in connection with the
enforcement or violation of an environmental law rule or regulation or a right therein, or unlawfully
excludes another from the use or enjoyment of such right 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, attaching thereto supporting evidence,
specifying that the petition concerns an environmental law, rule or regulation, and praying that
judgment be rendered commanding the respondent to do an act or series of acts until the judgment is
fully satisfied, and to pay damages sustained by the petitioner by reason of the malicious neglect to
perform the duties of the respondent, under the law, rules or regulations. The petition shall also
contain a sworn certification of non-forum shopping.
SECTION 2. Where to file the petition.—The petition shall be filed with the Regional Trial Court
exercising jurisdiction over the territory where the actionable neglect or omission occurred or with
the Court of Appeals or the Supreme Court.
Petitioner had three options where to file this case under the rule: the Regional Trial Court exercising
jurisdiction over the territory where the actionable neglect or omission occurred, the Court of
Appeals, or this Court.
Petitioner had no other plain, speedy, or adequate remedy in the ordinary course of law to determine
the questions of unique national and local importance raised here that pertain to laws and rules for
environmental protection, thus it was justified in coming to this Court.
Having resolved the procedural issue, we now move to the substantive issues.
On the issues of whether, based on the scope and classification of the project, a full EIA is required by
laws and regulations, and whether respondent Province complied with all the requirements under the
pertinent laws and regulations
Petitioner’s arguments on this issue hinges upon its claim that the reclamation project is misclassified
as a single project when in fact it is co-located. Petitioner also questions the classification made by
respondent Province that the reclamation project is merely an expansion of the existing jetty port,
when the project descriptions embodied in the different documents filed by respondent Province
describe commercial establishments to be built, among others, to raise revenues for the LGU; thus, it
should have been classified as a new project. Petitioner likewise cries foul to the manner by which
respondent Province allegedly circumvented the documentary requirements of the DENR-EMB RVI by
the act of connecting the reclamation project with its previous project in 1999 and claiming that the
new project is a mere expansion of the previous one.
As previously discussed, respondent Province filed a Manifestation and Motion stating that the ECC
issued by respondent DENR-EMB RVI covered an area of 2,691 square meters in Caticlan, and its
application for reclamation of 40 hectares with respondent PRA was conditioned on its submission of
specific documents within 120 days. Respondent Province claims that its failure to comply with said
condition indicated its waiver to pursue the succeeding phases of the reclamation project and that the
subject matter of this case had thus been limited to 2.64 hectares. Respondent PRA, for its part,
declared through its General Manager that the "Aklan Beach Zone Restoration and Protection Marine
Development Project will now be confined to the reclamation and development of the 2.64 hectares,
more or less."144
The Court notes such manifestation of respondent Province. Assuming, however, that the area
involved in the subject reclamation project has been limited to 2.64 hectares, this case has not
become moot and academic, as alleged by respondents, because the Court still has to check whether
respondents had complied with all applicable environmental laws, rules, and regulations pertaining to
the actual reclamation project.
We recognize at this point that the DENR is the government agency vested with delegated powers to
review and evaluate all EIA reports, and to grant or deny ECCs to project proponents. 145 It is the DENR
that has the duty to implement the EIS system. It appears, however, that respondent DENR-EMB RVI’s
evaluation of this reclamation project was problematic, based on the valid questions raised by
petitioner.
Being the administrator of the EIS System, respondent DENR-EMB RVI’s submissions bear great weight
in this case. However, the following are the issues that put in question the wisdom of respondent
DENR-EMB RVI in issuing the ECC:
1. Its approval of respondent Province’s classification of the project as a mere expansion of
the existing jetty port in Caticlan, instead of classifying it as a new project;
2. Its classification of the reclamation project as a single instead of a co-located project;
3. The lack of prior public consultations and approval of local government agencies; and
4. The lack of comprehensive studies regarding the impact of the reclamation project to the
environment.
The above issues as raised put in question the sufficiency of the evaluation of the project by
respondent DENR-EMB RVI.
Nature of the project
The first question must be answered by respondent DENR-EMB RVI as the agency with the expertise
and authority to state whether this is a new project, subject to the more rigorous environmental
impact study requested by petitioner, or it is a mere expansion of the existing jetty port facility.
The second issue refers to the classification of the project by respondent Province, approved by
respondent DENR-EMB RVI, as single instead of co-located. Under the Revised Procedural Manual, the
"Summary List of Additional Non-Environmentally-Critical Project (NECP) Types in ECAs Classified
under Group II" (Table I-2) lists "buildings, storage facilities and other structures" as a separate item
from "transport terminal facilities." This creates the question of whether this project should be
considered as consisting of more than one type of activity, and should more properly be classified as
"co-located," under the following definition from the same Manual, which reads:
f) Group IV (Co-located Projects in either ECA or NECA): A co-located project is a group of single
projects, under one or more proponents/locators, which are located in a contiguous area and
managed by one administrator, who is also the ECC applicant. The co-located project may be an
economic zone or industrial park, or a mix of projects within a catchment, watershed or river basin, or
any other geographical, political or economic unit of area. Since the location or threshold of specific
projects within the contiguous area will yet be derived from the EIA process based on the carrying
capacity of the project environment, the nature of the project is called "programmatic." (Emphasis
added.)
Respondent DENR-EMB RVI should conduct a thorough and detailed evaluation of the project to
address the question of whether this could be deemed as a group of single projects (transport
terminal facility, building, etc.) in a contiguous area managed by respondent Province, or as a single
project.
The third item in the above enumeration will be discussed as a separate issue.
The answer to the fourth question depends on the final classification of the project under items 1 and
3 above because the type of EIA study required under the Revised Procedural Manual depends on
such classification.
The very definition of an EIA points to what was most likely neglected by respondent Province as
project proponent, and what was in turn overlooked by respondent DENR-EMB RVI, for it is defined as
follows:
An [EIA] is a ‘process that involves predicting and evaluating the likely impacts of a project (including
cumulative impacts) on the environment during construction, commissioning, operation and
abandonment. It also includes designing appropriate preventive, mitigating and enhancement
measures addressing these consequences to protect the environment and the community’s
welfare.146 (Emphases supplied.)
Thus, the EIA process must have been able to predict the likely impact of the reclamation project to
the environment and to prevent any harm that may otherwise be caused.
The project now before us involves reclamation of land that is more than five times the size of the
original reclaimed land. Furthermore, the area prior to construction merely contained a jetty port,
whereas the proposed expansion, as described in the EPRMP submitted by respondent Province to
respondent DENR-EMB RVI involves so much more, and we quote:
The expansion project will be constructed at the north side of the existing jetty port and terminal that
will have a total area of 2.64 hectares, more or less, after reclamation. The Phase 1 of the project
construction costing around ₱260 million includes the following:
1. Reclamation - 3,000 sq m (expansion of jetty port)
2. Reclamation - 13,500 sq m (buildable area)
3. Terminal annex building - 250 sq m
4. 2-storey commercial building – 2,500 sq m (1,750 sq m of leasable space)
5. Health and wellness center
6. Access road - 12 m (wide)
7. Parking, perimeter fences, lighting and water treatment sewerage system
8. Rehabilitation of existing jetty port and terminal
xxxx
The succeeding phases of the project will consist of [further] reclamation, completion of the
commercial center building, bay walk commercial strip, staff building, ferry terminal, a cable car
system and wharf marina. This will entail an additional estimated cost of ₱785 million bringing the
total investment requirement to about ₱1.0 billion.147(Emphases added.)
As may be gleaned from the breakdown of the 2.64 hectares as described by respondent Province
above, a significant portion of the reclaimed area would be devoted to the construction of a
commercial building, and the area to be utilized for the expansion of the jetty port consists of a mere
3,000 square meters (sq. m). To be true to its definition, the EIA report submitted by respondent
Province should at the very least predict the impact that the construction of the new buildings on the
reclaimed land would have on the surrounding environment. These new constructions and their
environmental effects were not covered by the old studies that respondent Province previously
submitted for the construction of the original jetty port in 1999, and which it re-submitted in its
application for ECC in this alleged expansion, instead of conducting updated and more comprehensive
studies.
Any impact on the Boracay side cannot be totally ignored, as Caticlan and Boracay are separated only
by a narrow strait. This becomes more imperative because of the significant contributions of Boracay’s
white-sand beach to the country’s tourism trade, which requires respondent Province to proceed with
utmost caution in implementing projects within its vicinity.
We had occasion to emphasize the duty of local government units to ensure the quality of the
environment under Presidential Decree No. 1586 in Republic of the Philippines v. The City of
Davao,148 wherein we held:
Section 15 of Republic Act 7160, otherwise known as the Local Government Code, defines a local
government unit as a body politic and corporate endowed with powers to be exercised by it in
conformity with law. As such, it performs dual functions, governmental and proprietary.
Governmental functions are those that concern the health, safety and the advancement of the public
good or welfare as affecting the public generally. Proprietary functions are those that seek to obtain
special corporate benefits or earn pecuniary profit and intended for private advantage and benefit.
When exercising governmental powers and performing governmental duties, an LGU is an agency of
the national government. When engaged in corporate activities, it acts as an agent of the community
in the administration of local affairs.
Found in Section 16 of the Local Government Code is the duty of the LGUs to promote the people’s
right to a balanced ecology. Pursuant to this, an LGU, like the City of Davao, can not claim exemption
from the coverage of PD 1586. As a body politic endowed with governmental functions, an LGU has
the duty to ensure the quality of the environment, which is the very same objective of PD 1586.
xxxx
Section 4 of PD 1586 clearly states that "no person, partnership or corporation shall undertake or
operate any such declared environmentally critical project or area without first securing an
Environmental Compliance Certificate issued by the President or his duly authorized representative."
The Civil Code defines a person as either natural or juridical. The state and its political subdivisions,
i.e., the local government units are juridical persons. Undoubtedly therefore, local government units
are not excluded from the coverage of PD 1586.
Lastly, very clear in Section 1 of PD 1586 that said law intends to implement the policy of the state to
achieve a balance between socio-economic development and environmental protection, which are
the twin goals of sustainable development. The above-quoted first paragraph of the Whereas clause
stresses that this can only be possible if we adopt a comprehensive and integrated environmental
protection program where all the sectors of the community are involved, i.e., the government and the
private sectors. The local government units, as part of the machinery of the government, cannot
therefore be deemed as outside the scope of the EIS system. 149 (Emphases supplied.)
The Court chooses to remand these matters to respondent DENR-EMB RVI for it to make a proper
study, and if it should find necessary, to require respondent Province to address these environmental
issues raised by petitioner and submit the correct EIA report as required by the project’s
specifications. The Court requires respondent DENR-EMB RVI to complete its study and submit a
report within a non-extendible period of three months. Respondent DENR-EMB RVI should establish
to the Court in said report why the ECC it issued for the subject project should not be canceled.
Lack of prior public consultation
The Local Government Code establishes the duties of national government agencies in the
maintenance of ecological balance, and requires them to secure prior public consultation and
approval of local government units for the projects described therein.
In the case before us, the national agency involved is respondent PRA. Even if the project proponent is
the local government of Aklan, it is respondent PRA which authorized the reclamation, being the
exclusive agency of the government to undertake reclamation nationwide. Hence, it was necessary for
respondent Province to go through respondent PRA and to execute a MOA, wherein respondent PRA’s
authority to reclaim was delegated to respondent Province. Respondent DENR-EMB RVI, regional
office of the DENR, is also a national government institution which is tasked with the issuance of the
ECC that is a prerequisite to projects covered by environmental laws such as the one at bar.
This project can be classified as a national project that affects the environmental and ecological
balance of local communities, and is covered by the requirements found in the Local Government
Code provisions that are quoted below:
Section 26. Duty of National Government Agencies in the Maintenance of Ecological Balance. - It shall
be the duty of every national agency or government-owned or controlled corporation authorizing or
involved in the planning and implementation of any project or program that may cause pollution,
climatic change, depletion of non-renewable resources, loss of crop land, 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.
Section 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.
In Lina, Jr. v. Paño,150 we held that Section 27 of the Local Government Code applies only to "national
programs and/or projects which are to be implemented in a particular local community" 151 and that it
should be read in conjunction with Section 26. We held further in this manner:
Thus, the projects and programs mentioned in Section 27 should be interpreted to mean projects and
programs whose effects are among those enumerated in Section 26 and 27, to wit, those that:
(1) may cause pollution; (2) may bring about climatic change; (3) may cause the depletion of non-
renewable resources; (4) may result in loss of crop land, range-land, or forest cover; (5) may eradicate
certain animal or plant species from the face of the planet; and (6) other projects or programs that
may call for the eviction of a particular group of people residing in the locality where these will be
implemented. Obviously, none of these effects will be produced by the introduction of lotto in the
province of Laguna.152 (Emphasis added.)
During the oral arguments held on September 13, 2011, it was established that this project as
described above falls under Section 26 because the commercial establishments to be built on phase 1,
as described in the EPRMP quoted above, could cause pollution as it could generate garbage, sewage,
and possible toxic fuel discharge.153
Our ruling in Province of Rizal v. Executive Secretary 154 is instructive:
We reiterated this doctrine in the recent case of Bangus Fry Fisherfolk v. Lanzanas, where we held
that there was no statutory requirement for the sangguniang bayan of Puerto Galera to approve the
construction of a mooring facility, as Sections 26 and 27 are inapplicable to projects which are not
environmentally critical.
Moreover, Section 447, which enumerates the powers, duties and functions of the municipality,
grants the sangguniang bayan the power to, among other things, "enact ordinances, approve
resolutions and appropriate funds for the general welfare of the municipality and its inhabitants
pursuant to Section 16 of th(e) Code." These include:
(1) Approving ordinances and passing resolutions to protect the environment and impose
appropriate penalties for acts which endanger the environment, such as dynamite fishing
and other forms of destructive fishing, illegal logging and smuggling of logs, smuggling of
natural resources products and of endangered species of flora and fauna, slash and burn
farming, and such other activities which result in pollution, acceleration of eutrophication of
rivers and lakes, or of ecological imbalance; [Section 447 (1)(vi)]
(2) Prescribing reasonable limits and restraints on the use of property within the jurisdiction
of the municipality, adopting a comprehensive land use plan for the municipality,
reclassifying land within the jurisdiction of the city, subject to the pertinent provisions of this
Code, enacting integrated zoning ordinances in consonance with the approved
comprehensive land use plan, subject to existing laws, rules and regulations; establishing fire
limits or zones, particularly in populous centers; and regulating the construction, repair or
modification of buildings within said fire limits or zones in accordance with the provisions of
this Code; [Section 447 (2)(vi-ix)]
(3) Approving ordinances which shall ensure the efficient and effective delivery of the basic
services and facilities as provided for under Section 17 of this Code, and in addition to said
services and facilities, …providing for the establishment, maintenance, protection, and
conservation of communal forests and watersheds, tree parks, greenbelts, mangroves, and
other similar forest development projects …and, subject to existing laws, establishing and
providing for the maintenance, repair and operation of an efficient waterworks system to
supply water for the inhabitants and purifying the source of the water supply; regulating the
construction, maintenance, repair and use of hydrants, pumps, cisterns and reservoirs;
protecting the purity and quantity of the water supply of the municipality and, for this
purpose, extending the coverage of appropriate ordinances over all territory within the
drainage area of said water supply and within one hundred (100) meters of the reservoir,
conduit, canal, aqueduct, pumping station, or watershed used in connection with the water
service; and regulating the consumption, use or wastage of water." [Section 447 (5)(i) & (vii)]
Under the Local Government Code, therefore, two requisites must be met before a national project
that affects the environmental and ecological balance of local communities can be implemented:
prior consultation with the affected local communities, and prior approval of the project by the
appropriate sanggunian. Absent either of these mandatory requirements, the project’s
implementation is illegal.155 (Emphasis added.)
Based on the above, therefore, prior consultations and prior approval are required by law to have
been conducted and secured by the respondent Province. Accordingly, the information dissemination
conducted months after the ECC had already been issued was insufficient to comply with this
requirement under the Local Government Code. Had they been conducted properly, the prior public
consultation should have considered the ecological or environmental concerns of the stakeholders
and studied measures alternative to the project, to avoid or minimize adverse environmental impact
or damage. In fact, respondent Province once tried to obtain the favorable endorsement of the
Sangguniang Bayan of Malay, but this was denied by the latter.
Moreover, DENR DAO 2003-30 provides:
5.3 Public Hearing / Consultation Requirements
For projects under Category A-1, the conduct of public hearing as part of the EIS review is mandatory
unless otherwise determined by EMB. For all other undertakings, a public hearing is not mandatory
unless specifically required by EMB.
Proponents should initiate public consultations early in order to ensure that environmentally relevant
concerns of stakeholders are taken into consideration in the EIA study and the formulation of the
management plan. All public consultations and public hearings conducted during the EIA process are
to be documented. The public hearing/consultation Process report shall be validated by the
EMB/EMB RD and shall constitute part of the records of the EIA process. (Emphasis supplied.)
In essence, the above-quoted rule shows that in cases requiring public consultations, the same should
be initiated early so that concerns of stakeholders could be taken into consideration in the EIA study.
In this case, respondent Province had already filed its ECC application before it met with the local
government units of Malay and Caticlan.
The claim of respondent DENR-EMB RVI is that no permits and/or clearances from National
Government Agencies (NGAs) and LGUs are required pursuant to the DENR Memorandum Circular No.
2007-08. However, we still find that the LGC requirements of consultation and approval apply in this
case. This is because a Memorandum Circular cannot prevail over the Local Government Code, which
is a statute and which enjoys greater weight under our hierarchy of laws.
Subsequent to the information campaign of respondent Province, the Municipality of Malay and the
Liga ng mga Barangay-Malay Chapter still opposed the project. Thus, when respondent Province
commenced the implementation project, it violated Section 27 of the LGC, which clearly enunciates
that "[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."
The lack of prior public consultation and approval is not corrected by the subsequent endorsement of
the reclamation project by the Sangguniang Barangay of Caticlan on February 13, 2012, and the
Sangguniang Bayan of the Municipality of Malay on February 28, 2012, which were both undoubtedly
achieved at the urging and insistence of respondent Province. As we have established above, the
respective resolutions issued by the LGUs concerned did not render this petition moot and academic.
It is clear that both petitioner and respondent Province are interested in the promotion of tourism in
Boracay and the protection of the environment, lest they kill the proverbial hen that lays the golden
egg. At the beginning of this decision, we mentioned that there are common goals of national
significance that are very apparent from both the petitioner’s and the respondents’ respective
pleadings and memoranda.
The parties are evidently in accord in seeking to uphold the mandate found in Article II, Declaration of
Principles and State Policies, of the 1987 Constitution, which we quote below:
SECTION 16. The State shall protect and advance the right of the people to a balanced and healthful
ecology in accord with the rhythm and harmony of nature.
xxxx
SECTION 20. The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.
The protection of the environment in accordance with the aforesaid constitutional mandate is the
aim, among others, of Presidential Decree No. 1586, "Establishing an Environmental Impact
Statement System, Including Other Environmental Management Related Measures and For Other
Purposes," which declared in its first Section that it is "the policy of the State to attain and maintain a
rational and orderly balance between socio-economic growth and environmental protection."
The parties undoubtedly too agree as to the importance of promoting tourism, pursuant to Section 2
of Republic Act No. 9593, or "The Tourism Act of 2009," which reads:
SECTION 2. Declaration of Policy. – The State declares tourism as an indispensable element of the
national economy and an industry of national interest and importance, which must be harnessed as
an engine of socioeconomic growth and cultural affirmation to generate investment, foreign exchange
and employment, and to continue to mold an enhanced sense of national pride for all Filipinos.
(Emphasis ours.)
The primordial role of local government units under the Constitution and the Local Government Code
of 1991 in the subject matter of this case is also unquestionable. The Local Government Code of 1991
(Republic Act No. 7160) pertinently provides:
Section 2. Declaration of Policy. - (a) It is hereby declared the policy of the State that the territorial
and political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable
them to attain their fullest development as self-reliant communities and make them more effective
partners in the attainment of national goals. Toward this end, the State shall provide for a more
responsive and accountable local government structure instituted through a system of
decentralization whereby local government units shall be given more powers, authority,
responsibilities, and resources. The process of decentralization shall proceed from the national
government to the local government units.156 (Emphases ours.)
As shown by the above provisions of our laws and rules, the speedy and smooth resolution of these
issues would benefit all the parties. Thus, respondent Province’s cooperation with respondent DENR-
EMB RVI in the Court-mandated review of the proper classification and environmental impact of the
reclamation project is of utmost importance.
WHEREFORE, premises considered, the petition is hereby PARTIALLY GRANTED.1âwphi1 The TEPO
issued by this Court is hereby converted into a writ of continuing mandamus specifically as follows:
1. Respondent Department of Environment and Natural Resources-Environmental
Management Bureau Regional Office VI shall revisit and review the following matters:
a. its classification of the reclamation project as a single instead of a co-located
project;
 b. its approval of respondent Province’s classification of the project as a mere
expansion of the existing jetty port in Caticlan, instead of classifying it as a new
project; and
c. the impact of the reclamation project to the environment based on new, updated,
and comprehensive studies, which should forthwith be ordered by respondent
DENR-EMB RVI.
2. Respondent Province of Aklan shall perform the following:
a. fully cooperate with respondent DENR-EMB RVI in its review of the reclamation
project proposal and submit to the latter the appropriate report and study; and
b. secure approvals from local government units and hold proper consultations with
non-governmental organizations and other stakeholders and sectors concerned as
required by Section 27 in relation to Section 26 of the Local Government Code.
3. Respondent Philippine Reclamation Authority shall closely monitor the submission by
respondent Province of the requirements to be issued by respondent DENR-EMB RVI in
connection to the environmental concerns raised by petitioner, and shall coordinate with
respondent Province in modifying the MOA, if necessary, based on the findings of
respondent DENR-EMB RVI.
4. The petitioner Boracay Foundation, Inc. and the respondents The Province of Aklan,
represented by Governor Carlito S. Marquez, The Philippine Reclamation Authority, and The
DENR-EMB (Region VI) are mandated to submit their respective reports to this Court
regarding their compliance with the requirements set forth in this Decision no later than
three (3) months from the date of promulgation of this Decision.
5. In the meantime, the respondents, their concerned contractor/s, and/or their agents,
representatives or persons acting in their place or stead, shall immediately cease and desist
from continuing the implementation of the project covered by ECC-R6-1003-096-7100 until
further orders from this Court. For this purpose, the respondents shall report within five (5)
days to this Court the status of the project as of their receipt of this Decision, copy furnished
the petitioner.
This Decision is immediately executory.
SO ORDERED.
PRESIDENTIAL DECREE No. 705 May 19, 1975
REVISING PRESIDENTIAL DECREE NO. 389, OTHERWISE KNOWN AS THE FORESTRY REFORM CODE
OF THE PHILIPPINES
WHEREAS, proper classification, management and utilization of the lands of the public domain to
maximize their productivity to meet the demands of our increasing population is urgently needed;
WHEREAS, to achieve the above purpose, it is necessary to reassess the multiple uses of forest lands
and resources before allowing any utilization thereof to optimize the benefits that can be derived
therefrom;
WHEREAS, it is also imperative to place emphasis not only on the utilization thereof but more so on
the protection, rehabilitation and development of forest lands, in order to ensure the continuity of
their productive condition;
WHEREAS, the present laws and regulations governing forest lands are not responsive enough to
support re-oriented government programs, projects and efforts on the proper classification and
delimitation of the lands of the public domain, and the management, utilization, protection,
rehabilitation, and development of forest lands;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in
me vested by the Constitution, do hereby revise Presidential Decree No. 389 to read as follows:
Section 1. Title of this Code. This decree shall be known as the "Revised Forestry Code of the
Philippines."
Section 2. Policies. The State hereby adopts the following policies:
(a) The multiple uses of forest lands shall be oriented to the development and progress
requirements of the country, the advancement of science and technology, and the public
welfare;
(b) Land classification and survey shall be systematized and hastened;
(c) The establishment of wood-processing plants shall be encouraged and rationalized; and
(d) The protection, development and rehabilitation of forest lands shall be emphasized so as
to ensure their continuity in productive condition.
Section 3. Definitions.
(a) Public forest is the mass of lands of the public domain which has not been the subject of
the present system of classification for the determination of which lands are needed for
forest purposes and which are not.
(b) Permanent forest or forest reserves refer to those lands of the public domain which have
been the subject of the present system of classification and determined to be needed for
forest purposes.
(c) Alienable and disposable lands refer to those lands of the public domain which have been
the subject of the present system of classification and declared as not needed for forest
purposes.
(d) Forest lands include the public forest, the permanent forest or forest reserves, and forest
reservations.
(e) Grazing land refers to that portion of the public domain which has been set aside, in view
of the suitability of its topography and vegetation, for the raising of livestock.
(f) Mineral lands refer to those lands of the public domain which have been classified as such
by the Secretary of Natural Resources in accordance with prescribed and approved criteria,
guidelines and procedure.
(g) Forest reservations refer to forest lands which have been reserved by the President of the
Philippines for any specific purpose or purposes.
(h) National park refers to a forest land reservation essentially of primitive or wilderness
character which has been withdrawn from settlement or occupancy and set aside as such
exclusively to preserve the scenery, the natural and historic objects and the wild animals or
plants therein, and to provide enjoyment of these features in such a manner as will leave
them unimpaired for future generations.
(i) Game refuge or bird sanctuary refers to a forest land designated for the protection of
game animals, birds and fish and closed to hunting and fishing in order that the excess
population may flow and restock surrounding areas.
(j) Marine parks refers to any off-shore area inhabited by rare and unique species of marine
flora and fauna.
(k) Seashore park refers to any public shore area delimited for outdoor recreation, sports
fishing, water skiing and related healthful activities.
(l) Watershed reservation is a forest land reservation established to protect or improve the
conditions of the water yield thereof or reduce sedimentation.
(m) Watershed is a land area drained by a stream or fixed body of water and its tributaries
having a common outlet for surface run-off.
(n) Critical watershed is a drainage area of a river system supporting existing and proposed
hydro-electric power and irrigation works needing immediate rehabilitation as it is being
subjected to a fast denudation causing accelerated erosion and destructive floods. It is closed
from logging until it is fully rehabilitated.
(o) Mangrove is a term applied to the type of forest occurring on tidal flat along the sea
coast, extending along streams where the water is brackish.
(p) Kaingin is a portion of the forest land, whether occupied or not, which is subjected to
shifting and/or permanent slash-and-burn cultivation having little or no provision to prevent
soil erosion.
(q) Forest product means timber, pulpwood, firewood, bark, tree top, resin, gum, wood, oil,
honey, beeswax, nipa, rattan, or other forest growth such as grass, shrub, and flowering
plant, the associated water, fish, game, scenic, historical, recreational and geologic resources
in forest lands.
(r) Dipterocarp forest is a forest dominated by trees of the dipterocarp species, such as red
lauan, tengile, tiaong, white lauan, almon, bagtikan and mayapis of the Philippine mahogany
group, apitong and the yakals.
(s) Pine forest is a forest composed of the Benguet Pine in the Mountain Provinces or the
Mindoro pine in Mindoro and Zambales provinces.
(t) Industrial tree plantation is any tract of forest land purposely and extensively planted to
timber crops primarily to supply the raw material requirements of existing or proposed
processing plants and related industries.
(u) Tree farm refers to any tract of forest land purposely and extensively planted to trees of
economic value for their fruits, flowers, leaves, barks, or extractives, but not for the wood
thereof.
(v) Multiple-use is the harmonized utilization of the numerous beneficial uses of the land,
soil, water, wildlife, recreation value, grass and timber of forest lands.
(w) Selective logging means the systematic removal of the mature, over-mature and
defective trees in such manner as to leave adequate number and volume of healthy residual
trees of the desired species necessary to assure a future crop of timber, and forest cover for
the protection and conservation of soil and water.
(x) Seed tree system is partial clearcutting with seed trees left to regenerate the area.
(y) Healthy residual is a sound or slightly injured tree of the commercial species left after
logging.
(z) Sustained-yield management implies continuous or periodic production of forest products
in a working unit with the aid of achieving at the earliest practicable time an approximate
balance between growth and harvest or use. This is generally applied to the commercial
timber resources and is also applicable to the water, grass, wildlife, and other renewable
resources of the forest.
(aa) Processing plant is any mechanical set-up, machine or combination of machine used for
the processing of logs and other forest raw materials into lumber, veneer, plywood,
wallboard, block-board, paper board, pulp, paper or other finished wood products.
(bb) Lease is a privilege granted by the State to a person to occupy and possess, in
consideration of a specified rental, any forest land of the public domain in order to undertake
any authorized activity therein.
(cc) License is a privilege granted by the State to a person to utilize forest resources as in any
forest land, without any right of occupation and possession over the same, to the exclusion
of others, or establish and operate a wood-processing plant, or conduct any activity involving
the utilization of any forest resources.
(dd) License agreement is a privilege granted by the State to a person to utilize forest
resources within any forest land with the right of possession and occupation thereof to the
exclusion of others, except the government, but with the corresponding obligation to
develop, protect and rehabilitate the same in accordance with the terms and conditions set
forth in said agreement.
(ee) Permit is a short-term privilege or authority granted by the State to a person to utilize
any limited forest resources or undertake a limited activity with any forest land without any
right of occupation and possession therein.
(ff) Annual allowable cut is the volume of materials, whether of wood or other forest
products, that is authorized to be cut regularly from the forest.
(gg) Cutting cycle is the number of years between major harvests in the same working unit
and/or region, within a rotation.
(hh) Ecosystem means the ecological community considered together with non-living factors
and its environment as a unit.
(ii) Silviculture is the establishment, development reproduction and care of forest trees.
(jj) Rationalization is the organization of a business or industry using scientific business
management principles and simplified procedures to obtain greater efficiency of operation.
(kk) Forest officer means any official or employee of the Bureau who, by the nature of his
appointment or the function of the position to which he is appointed, is delegated by law or
by competent authority to execute, implement or enforce the provisions of this Code, other
related laws, as well as their implementing regulations.
(ll) Primitive tribe is a group of endemic tribe living primitively as a distinct portion of a
people from a common ancestor.
(mm) Private right means or refers to titled rights of ownership under existing laws, and in
the case of primitive tribes, to rights of possession existing at the time a license is granted
under this Code, which possession may include places of abode and worship, burial grounds,
and old clearings, but excludes production forest inclusive of logged-over areas, commercial
forests and established plantations of forest trees and trees of economic value.
(nn) Person includes natural as well as juridical person.
CHAPTER I
ORGANIZATION AND JURISDICTION OF THE BUREAU
Section 4. Creation of, and merger of all forestry agencies into, the Bureau of Forest Development. For
the purpose of implementing the provisions of this Code, the Bureau of Forestry, the Reforestation
Administration, the Southern Cebu Reforestation Development Project, and the Parks and Wildlife
Office, including applicable appropriations, records, equipment, property and such personnel as may
be necessary, are hereby merged into a single agency to be known as the Bureau of Forest
Development, hereinafter referred to as the Bureau.
Section 5. Jurisdiction of Bureau. The Bureau shall have jurisdiction and authority over all forest land,
grazing lands, and all forest reservations including watershed reservations presently administered by
other government agencies or instrumentalities.
It shall be responsible for the protection, development, management, regeneration, and reforestation
of forest lands; the regulation and supervision of the operation of licensees, lessees and permittees
for the taking or use of forest products therefrom or the occupancy or use thereof; the
implementation of multiple use and sustained yield management in forest lands; the protection,
development and preservation of national parks, marine parks, game refuges and wildlife; the
implementation of measures and programs to prevent kaingin and managed occupancy of forest and
grazing lands; in collaboration with other bureaus, the effective, efficient and economic classification
of lands of the public domain; and the enforcement of forestry, reforestation, parks, game and wildlife
laws, rules, and regulations.
The Bureau shall regulate the establishment and operation of sawmills, veneer and plywood mills and
other wood processing plants and conduct studies of domestic and world markets of forest products.
Section 6. Director and Assistant Director and their qualifications. The Bureau shall be headed by a
Administrative Division Personnel;
Director, who shall be assisted by one or more Assistant Directors. The Director and Assistant
Budget;
Directors shall be appointed by the President.
Accounting;
Information;
No person shall be appointed Director or Assistant Director of the Bureau unless he is a natural born General Services.
citizen of the Philippines, at least 30 years of age, a holder of at least a Bachelor's Degree in Forestry
or its equivalent, and a registered forester. Legal Division

Section 7. Supervision and Control. The Bureau shall be directly under the control and supervision of Reforestation and Afforestation Division Cooperative Planting;
the Secretary of the Department of Natural Resources, hereinafter referred to as the Department Planting Stock Production;
Head. Plantation Management.

Timber Management Division Forest Surveys, Data & Mapping;

Section 8. Review. All actions and decisions of the Director are subject to review, motu propio or upon Sulviculture;
appeal of any person aggrieved thereby, by the Department Head whose decision shall be final and Timber Inventory & Photo-Interpretation;
executory after the lapse of thirty (30) days from receipt by the aggrieved party of said decision, Timber Management Plans;
unless appealed to the President in accordance with the Executive Order No. 19, series of 1966. The Land Classification.
Decision of the Department Head may not be reviewed by the courts except through a special civil
action for certiorari or prohibition. Utilization Division Timber Operations;
Land Uses;
Section 9. Rules and Regulations. The Department Head, upon the recommendation of the Director of Utilization.
Forest Development, shall promulgate the rules and regulations necessary to implement effectively
Forest Protection and Infrastructure Forest Protection;
the provisions of this Code.
Forest Occupancy
Management;
Section 10. Creation of Functional Divisions, and Regional and District Offices. All positions in the Watershed Management; Infrastructure.
merged agencies are considered vacant. Present occupants may be appointed in accordance with a
staffing pattern or plan of organization to be prepared by the Director and approved by the Parks, Wildlife Division Parks Management;
Department Head. Any appointee who fails to report for duty in accordance with the approved plan Recreation Management;
within thirty (30) days upon receipt of notification shall be deemed to have declined the appointment, Wildlife Management;
in which case the position may be filed by any other qualified applicant. Range Management.

For the efficient and effective implementation of the program of the Bureau, the following divisions Security and Intelligence Division
and sections are hereby created, to wit:
Forest Development Training Center Technical Training;
Non-Technical Training.

Divisions Sections

Planning and Evaluation Program Planning;

Performance Evaluation; The Department Head may, upon recommendation of the Director, reorganize or create such other
Forest Economics; divisions, sections of units as may be deemed necessary and to appoint the personnel there:
Management Analysis Provided, That an employee appointed or designated as officer-in-charge of a newly created division,
Data & Information. section or unit, or to an existing vacant position with a higher salary, shall receive, from the date of
such appointment or designation until he is replaced or reverted to his original position, the salary
corresponding to the position temporarily held by him.
There shall be created at least eleven regional offices. In each region, there shall be as many forest
districts as may be necessary, in accordance with the extent of forest area, established work loads,
need for forest protection, fire prevention and other factors, the provisions of any law to the contrary
notwithstanding: Provided, That the boundaries of such districts shall follow, whenever possible,
natural boundaries of watersheds under the river-basin concept of management.
Section 11. Manpower Development. The Bureau shall establish and operate an in-service training
center for the purpose of upgrading and training its personnel and new employees.
The Bureau shall also set aside adequate funds to enable personnel to obtain special education and
training in local or foreign colleges or institutions.
Section 12. Performance Evaluation. The Bureau shall devise a system, to be approved by the
Department Head, to evaluate the performance of its employees. The system shall measure
accomplishment in quantity and quality of performance as related to the funded program of work
assigned to each organizational unit. There shall be included a system of periodic inspection of district
offices by the regional offices and the regional and district offices by the Central Office in both
functional fields and in the overall assessment of how each administrative unit has implemented the
laws, regulations, policies, programs, and practices relevant to such unit. The evaluation system shall
provide the information necessary for annual progress reports and determination of employee
training civil service awards and transfer or disciplinary action.
CHAPTER II
CLASSIFICATION AND SURVEY
Section 13. System of Land Classification. The Department Head shall study, devise, determine and
prescribe the criteria, guidelines and methods for the proper and accurate classification and survey of
all lands of the public domain into agricultural, industrial or commercial, residential, resettlement,
mineral, timber or forest, and grazing lands, and into such other classes as now or may hereafter be
provided by law, rules and regulations.
In the meantime, the Department Head shall simplify through inter-bureau action the present system
of determining which of the unclassified lands of the public domain are needed for forest purposes
and declare them as permanent forest to form part of the forest reserves. He shall decree those
classified and determined not to be needed for forest purposes as alienable and disposable lands, the
administrative jurisdiction and management of which shall be transferred to the Bureau of Lands:
Provided, That mangrove and other swamps not needed for shore protection and suitable for
fishpond purposes shall be released to, and be placed under the administrative jurisdiction and
management of, the Bureau of Fisheries and Aquatic Resources. Those still to be classified under the
Present system shall continue to remain as part of the public forest.
Section 14. Existing Pasture Leases and Permits in Forest Lands. Forest lands which have been the
subject of pasture leases and permits shall remain classified as forest lands until classified as grazing
lands under the criteria, guidelines and methods of classification to be prescribed by the Department
Head: Provided, That the administration, management and disposition of grazing lands shall remain
under the Bureau.
Section 15. Topography. No land of the public domain eighteen per cent (18%) in slope or over shall
be classified as alienable and disposable, nor any forest land fifty per cent (50%) in slope or over, as
grazing land.
Lands eighteen per cent (18%) in slope or over which have already been declared as alienable and
disposable shall be reverted to the classification of forest lands by the Department Head, to form part
of the forest reserves, unless they are already covered by existing titles or approved public land
application, or actually occupied openly, continuously, adversely and publicly for a period of not less
than thirty (30) years as of the effectivity of this Code, where the occupant is qualified for a free
patent under the Public Land Act: Provided, That said lands, which are not yet part of a well-
established communities, shall be kept in a vegetative condition sufficient to prevent erosion and
adverse effects on the lowlands and streams: Provided, further, That when public interest so requires,
steps shall be taken to expropriate, cancel defective titles, reject public land application, or eject
occupants thereof.
Section 16. Areas needed for forest purposes. The following lands, even if they are below eighteen per
cent (18%) in slope, are needed for forest purposes, and may not, therefore, be classified as alienable
and disposable land, to wit:
1. Areas less than 250 hectares which are far from, or are not contiguous with, any certified
alienable and disposable land;
2. Isolated patches of forest of at least five (5) hectares with rocky terrain, or which protect a
spring for communal use;
3. Areas which have already been reforested;
4. Areas within forest concessions which are timbered or have good residual stocking to
support an existing, or approved to be established, wood processing plant;
5. Ridge tops and plateaus regardless of size found within, or surrounded wholly or partly by,
forest lands where headwaters emanate;
6. Appropriately located road-rights-or-way;
7. Twenty-meter strips of land along the edge of the normal high waterline of rivers and
streams with channels of at least five (5) meters wide;
 8. Strips of mangrove or swamplands at least twenty (20) meters wide, along shorelines
facing oceans, lakes, and other bodies of water, and strips of land at least twenty (20) meters
wide facing lakes;
9. Areas needed for other purposes, such as national parks, national historical sites, game
refuges and wildlife sanctuaries, forest station sites, and others of public interest; and
10. Areas previously proclaimed by the President as forest reserves, national parks, game
refuge, bird sanctuaries, national shrines, national historic sites:
Provided, That in case an area falling under any of the foregoing categories shall have been titled in
favor of any person, steps shall be taken, if public interest so requires, to have said title cancelled or
amended, or the titled area expropriated.
Section 17. Establishment of boundaries of forest lands. All boundaries between permanent forests
and alienable and disposable lands shall be clearly marked and maintained on the ground, with
infrastructure or roads, or concrete monuments at intervals of not more than five hundred (500)
meters in accordance with established procedures and standards, or any other visible and practicable
signs to insure protection of the forest.
Section 18. Reservations in forest lands and off-shore areas. The President of the Philippines may
establish within any lands of the public domain, forest reserve and forest reservation for the national
park system, for preservation as critical watersheds, or for any other purpose, and modify boundaries
of existing ones. The Department Head may reserve and establish any portion of the public forest or
forest reserve as site or experimental forest for use of the Forest Research Institute.
When public interest so requires, any off-shore area needed for the preservation and protection of its
educational, scientific, historical, ecological and recreational values including the marine life found
therein, shall be established as marine parks.
CHAPTER III
UTILIZATION AND MANAGEMENT
Section 19. Multiple use. The numerous beneficial uses of the timber, land, soil, water, wildlife,
recreation value and grass of forest lands shall be evaluated and weighted before allowing the
utilization, exploitation, occupation or possession thereof, or the conduct of any activity therein.
Only the utilization, exploitation, occupation or possession of any forest land, or any activity therein,
involving one or more or its resources, which will produce the optimum benefits to the development
and progress of the country and the public welfare, without impairment or with the least injury to its
other resources, shall be allowed.
All forest reservations may be open to uses not inconsistent with the principal objectives of the
reservation: Provided, That critical watersheds and national parks shall not be subject to logging
operations.
Section 20. License agreement, license, lease or permit. No person may utilize, exploit, occupy,
possess or conduct any activity within any forest land, or establish and operate any wood-processing
plant, unless he has been authorized to do so under a license agreement, lease, license, or permit.
Section 21. Sustained yield. All measures shall be taken to achieve an approximate balance between
growth and harvest or use of forest products in forest lands.
A. TIMBER
Section 22. Silvicultural and harvesting systems. In any logging operations in production forests within
forest lands, the proper silvicultural and harvesting systems that will promote optimum sustained
yield shall be practised.
(a) For dipterocarp forest, selective logging shall be practised.
(b) For pine forest, the seed tree system with planting when necessary shall be practised.
(c) For other types of forest, the silvicultural and harvesting system that will be found
suitable by research shall be applied. Meanwhile, a system based on observation and
practices abroad may be adopted initially.
Any practised system are subject to modification or changes based on research findings.
Section 23. Timber inventory. The Bureau shall conduct a program of progressive inventories of the
harvestable timber and young trees in all forest lands, whether covered by any license agreement,
license, lease or permit, or not, until a one hundred per cent (100%) timber inventory thereon has
been achieved.
Section 24. Required inventory prior to timber utilization in forest lands. No harvest of timber in any
forest land shall be allowed unless it has been the subject of at least a five per cent (5%) timber
inventory, or any statistically sound timber estimate, made not earlier than five (5) years prior to the
issuance of a license agreement or license allowing such utilization.
Section 25. Cutting cycle. The Bureau shall apply scientific cutting cycle and rotation in all forest lands,
giving particular consideration to the age, volume and kind of healthy residual trees which may be left
undisturbed and undamaged for future harvest and forest cover indipterocarp area, and seed trees
and reproduction in pine area.
Section 26. Annual allowable cut. The annual allowable cut of any particular forest land shall be
determined on the basis of the established rotation and cutting cycle thereof, and the volume and
kind of harvestable timber and healthy residuals, seed trees and reproduction found therein.
Section 27. Duration of license agreement or license to harvest timber in forest lands. The duration of
the privilege to harvest timber in any particular forest land under a license agreement or license shall
be fixed and determined in accordance with the annual allowable cut therein, the established cutting
cycle thereof, the yield capacity of harvestable timber, and the capacity of healthy residuals for a
second growth.
The privilege shall automatically terminate, even before the expiration of the license agreement of
license, the moment the harvestable timber have been utilized without leaving any logged-over area
capable of commercial utilization.
The maximum period of any privilege to harvest timber is twenty-five (25) years, renewable for a
period, not exceeding twenty-five (25) years, necessary to utilize all the remaining commercial
quantity or harvestable timber either from the unlogged or logged-over area.
It shall be a condition for the continued privilege to harvest timber under any license or license
agreement that the licensee shall reforest all the areas which shall be determined by the Bureau.
Section 28. Size of forest concessions. Forest lands shall not be held in perpetuity.
The size of the forest lands which may be the subject of timber utilization shall be limited to that
which a person may effectively utilize and develop for a period of fifty (50) years, considering the
cutting cycle, the past performance of the applicant and his capacity not only to utilize but, more
importantly, to protect and manage the whole area, and the requirements of processing plants
existing or to be installed in the region.
Forest concessions which had been the subject of consolidations shall be reviewed and re-evaluated
for the effective implementation of protection, reforestation and management thereof under the
multiple use and sustained yield concepts, and for the processing locally of the timber resources
therefrom.
B. WOOD-PROCESSING
Section 29. Incentives to the wood industry. The Department Head, in collaboration with other
government agencies and the wood industry associations and other private entities in the country,
shall evolve incentives for the establishment of an integrated wood industry in designated wood
industry centers and/or economic area.
The President of the Philippines, upon the recommendations of the National Economic Development
Authority and the Department Head, may establish wood industry import-export centers in selected
locations: Provided, That logs imported for such centers shall be subject to such precaution as may be
imposed by the Bureau, in collaboration with proper government agencies, to prevent the
introduction of pests, insects and/or diseases detrimental to the forests.
Section 30. Rationalization of the wood industry. While establishment of wood-processing plants shall
be encouraged, their locations and operations shall be regulated in order to rationalize the industry.
No new processing plant shall be established unless adequate raw material is available on a sustained-
yield basis in the area where the raw materials will come from.
The Department Head may cancel, suspend, or phase-out all uneconomical wood-processing plants
which are not responsive to the rationalization program of the government.
Section 31. Wood wastes, weed trees and residues. Timber licensees shall be encouraged and assisted
to gather and save the wood wastes and weed trees in their concessions, and those with processing
plants, the wood residues thereof, for utilization and conversion into wood by-products and
derivatives.
Section 32. Log production and processing. Unless otherwise decreed by the President, upon
recommendation of the National Economic Development Authority, the entire production of logs by
all licensees shall, beginning January 1, 1976, be processed locally.
A licensee who has no processing plant may, subject to the approval of the Director, enter into a
contract with a wood processor for the processing of his logs. Wood processors shall accept for
processing only logs cut by, or purchased from, licensees of good standing at the time of the cutting of
logs.
C. REFORESTATION
Section 33. Forest lands to be reforested. The following shall be reforested and covered with suitable
and sufficient trees, to wit:
(a) Bare or grass-covered tracts of forest lands with at least fifty per cent (50%) slope;
(b) Bare or grass-covered tracts of forest lands with less than fifty per cent (50%) slope, but
with soil so highly erodible as to make grass cover inadequate for soil erosion control;
(c) Brushlands or tracts of forest lands generally covered with brush, which need to be
developed to increase their productivity;
 (d) Open tracts of forest lands with slopes or gradients generally exceeding fifty per cent
(50%), interspersed with patches of forest each of which is less than two hundred fifty (250)
hectares in area;
(e) Denuded or inadequately-timbered areas proclaimed by the President as forest reserves
and reservations as critical watersheds, national parks, game refuge, bird sanctuaries,
national shrines, national historic sites;
(f) Inadequately-stocked forest lands within forest concessions;
(g) Portions of areas covered by pasture leases or permits having a slope of at least fifty per
cent (50%); and
(h) River banks, easements, road rights-of-ways, deltas, swamps, former river beds, and
beaches.
Section 34. Industrial Tree Plantations and Tree Farms. A lease for a period of twenty-five (25) years,
renewable for another period not exceeding twenty-five (25) years, for the establishment of an
industrial tree plantation or a tree farm may be granted by the Department Head upon
recommendation of the Director to any person qualified to develop and exploit natural resources,
over timber or forest lands of the public domain categorized in Section 33 hereof, with a minimum
area of One Thousand (1,000) hectares for industrial tree plantation and One Hundred (100) hectares
for tree farm; Provided, That the size of the area that may be granted under each category shall in
each case depend upon the capacity of the lessee to develop or convert the area into productive
condition within the term of the lease; Provided, further, That no lease shall be granted within critical
watersheds.
Scattered areas of less than One Hundred (100) hectares each may be leased for the establishment of
tree farms to different qualified persons upon a showing that if developed as an integrated unit these
areas can be economically exploited: Provided, That it shall be a condition of the lease that such
persons organize themselves into a cooperative to ensure the orderly management thereof.
The lease may be granted under such terms and conditions as the Department Head may prescribe,
taking into account, among others, the raw material needs of forest-based industries and the
maintenance of a wholesome ecological balance.
Reforestation projects of the Government, or portions thereof which, upon field evaluation, are found
to be more suitable for, or can be better developed as, industrial tree plantations or tree farms in
terms of benefits to the Government and the general surrounding area, may be the subject of the
lease under this section.
Section 35. Priority. Over any suitable area covered by a timber license agreement, or a pasture lease
agreement or permit, the priority to establish industrial forest plantation or tree farm shall be given to
the holder thereof.
The priority herein granted must, however, be availed of within a reasonable period to be determined
by the Department Head, otherwise, the area shall be declared open to any qualified person and
consequently segregated from the holder's area.
Section 36. Incentives. To encourage qualified persons to engage in industrial tree plantation and/or
tree farming, the following incentives are granted:
(a) Payment of a nominal filing fee of fifty centavos (P0.50) per hectare;
(b) No rental shall be collected during the first five (5) years from the date of the lease; from
the sixth year to the tenth year, the annual rental shall be fifty centavos (P0.50) per hectare;
and thereafter, the annual rental shall be one peso (P1.00) per hectare: Provided, That
lessees of areas long denuded as certified by the Director and approved by the Department
Head, shall be exempted from the payment of rental for the full term of the lease which shall
not exceed twenty-five (25) years; for the first five (5) years following the renewal of the
lease, the annual rental shall be fifty centavos (P0.50) per hectare; and thereafter, the annual
rental shall be one peso (P1.00) per hectare.
(c) The lessee shall pay forest charges on the timber and other forest products grown and cut
or gathered in an industrial tree plantation or tree farm equivalent to six percent (6%)
current market value thereof;
(d) Sale at cost of seedlings and free technical advice and assistance to persons who will
develop their privately-owned lands into industrial tree plantation or tree farm;
(e) Exemption from the payment of the percentage tax levied in Title V of the National
Internal Revenue Code when the timber and forest products are sold, bartered or exchanged
by the lessee whether in their original state or not;
(f) The Board of Investments shall, notwithstanding its nationality requirement on projects
involving natural resources, classify industrial tree plantations and tree farms as pioneer
areas of investment under its annual priority plan, to be governed by the rules and
regulations of said Board. A lessee of an industrial tree plantation or tree farm may either
apply to the Board of Investments for the tax and other benefits thereunder, or avail of the
following benefits:
1. Amounts expended by a lessee in the development and operation of an industrial
tree plantation or tree farm prior to the time when the production state is reached,
 may, at the option of said lessee, be regarded as ordinary and necessary business
expenses or as capital expenditures; and
2. Deduction from an investor's taxable income for the year, of an annual
investment allowance equivalent to thirty-three and one-third per cent (33-1/3%) of
his actual investment during the year in an enterprise engaged in industrial tree
plantation or tree farm: Provided, That such investment shall not be withdrawn for a
period of at least ten (10) years from the date of investment: Provided, further, That
should the investment be withdrawn within such period, a tax equivalent to double
the amount of the total income tax rebate resulting from the investment allowance
shall be payable as a lump sum in addition to the income tax due from the taxpayer
for the year the investment was withdrawn.
(g) Except when public interest demands the alteration or modification, the boundaries of an
area covered by an industrial tree plantation or tree farm lease, once established on the
ground, shall not be altered or modified; and
(h) A lessee shall not be subject to any obligation prescribed in, or arising out of, the
provisions of the National Internal Revenue Code on withholding of tax at source upon
interests paid on borrowings incurred for development and operation of the industrial tree
plantation or tree farm.
The Department Head may provide other incentives in addition to those hereinabove granted to
promote industrial tree plantation and tree farms in special areas such as, but not limited to, those
where there are no roads or where roads are inadequate, or areas with rough topography and remote
areas far from processing plants.
All amounts collected under this section shall accrue to a special deposit of the Bureau to be used for
reforestation of critical watersheds or degraded areas and other development activities, over and
above the general appropriation of the said Bureau.
D. FOREST PROTECTION
Section 37. Protection of all resources. All measures shall be taken to protect the forest resources
from destruction, impairment and depletion.
Section 38. Control of concession area. In order to achieve the effective protection of the forest lands
and the resources thereof from illegal entry, unlawful occupation, kaingin, fire, insect infestation,
theft, and other forms of forest destruction, the utilization of timber therein shall not be allowed
except through license agreements under which the holders thereof shall have the exclusive privilege
to cut all the allowable harvestable timber in their respective concessions, and the additional right of
occupation, possession, and control over the same, to the exclusive of all others, except the
government, but with the corresponding obligation to adopt all the protection and conservation
measures to ensure the continuity of the productive condition of said areas, conformably with
multiple use and sustained yield management.
If the holder of a license agreement over a forest area expressly or impliedly waives the privilege to
utilize any softwood, hardwood or mangrove species therein, a license may be issued to another
person for the harvest thereof without any right of possession or occupation over the areas where
they are found, but he shall, likewise, adopt protection and conservation measures consistent with
those adopted by the license agreement holder in the said areas.
Section 39. Regulation of timber utilization in all other classes of lands and of wood-processing
plants. The utilization of timber in alienable and disposable lands, private lands, civil reservations, and
all lands containing standing or felled timber, including those under the jurisdiction of other
government agencies, and the establishment and operation of saw-mills and other wood-processing
plants, shall be regulated in order to prevent them from being used as shelters for excessive and
unauthorized harvests in forest lands, and shall not therefore be allowed except through a license
agreement, license, lease or permit.
Section 40. Timber inventory in other lands containing standing or felled timber. The Bureau shall
conduct a one hundred per cent (100%) timber inventory in alienable and disposable lands and civil
reservations immediately upon classification or reservation thereof.
No harvest of standing or felled timber in alienable and disposable lands, private lands, civil
reservation, and all other lands, including those under the jurisdiction of other government agencies,
shall be allowed unless a one hundred per cent (100%) timber inventory has been conducted thereon.
Section 41. Sworn timber inventory reports. All reports on timber inventories of forest lands, alienable
and disposable lands, private lands, civil reservations, and all lands containing standing or felled
timber must be subscribed and sworn to by all the forest officers who conducted the same.
Section 42. Participation in the development of alienable and disposable lands and civil
reservations. The privilege to harvest timber in alienable and disposable lands and civil reservations
shall be given to those who can best help in the delineation and development of such areas in
accordance with the management plan of the appropriate government exercising jurisdiction over the
same.
The extent of participation shall be based on the amount of timber which may be harvested
therefrom.
Section 43. Swamplands and mangrove forests. Strips of mangrove forest bordering numerous islands
which protect the shoreline, the shoreline roads, and even coastal communities from the destructive
force of the sea during high winds and typhoons, shall be maintained and shall not be alienated. Such
strips must be kept from artificial obstruction so that flood water will flow unimpeded to the sea to
avoid flooding or inundation of cultivated areas in the upstream.
All mangrove swamps set aside for coast-protection purposes shall not be subject to clear-cutting
operation.
Mangrove and other swamps released to the Bureau of Fisheries and Aquatic Resources for fishpond
purposes which are not utilized, or which have been abandoned for five (5) years from the date of
such release shall revert to the category of forest land.
Section 44. Visitorial power. The Department Head may, by himself or thru the Director or any
qualified person duly designated by the Department Head, investigate, inspect and examine records,
books and other documents relating to the operation of any holder of a license agreement, license,
lease, or permit, and its subsidiary or affiliated companies, to determine compliance with the terms
and conditions thereof, this Code and pertinent laws, policies, rules and regulations.
Section 45. Authority of forest officers. When in the performance of their official duties, forest
officers, or other government officials or employees duly authorized by the Department Head or
Director, shall have free entry into areas covered by a license agreement, license, lease or permit.
Forest officers are authorized to administer oath and take acknowledgment in official matters
connected with the functions of their office, and to take testimony in official investigations conducted
under the authority of this Code and the implementing rules and regulations.
Section 46. Scaling stations. In collaboration with appropriate government agencies, the Bureau shall
establish control or scaling stations at suitably located outlets of timber and other forest products to
insure that they were legally cut or harvested.
Section 47. Mining operations. Mining operations in forest lands shall be regulated and conducted
with due regard to protection, development and utilization of other surface resources.
Location, prospecting, exploration, utilization or exploitation of mineral resources in forest
reservations shall be governed by Mining laws, rules and regulations. No location, prospecting,
exploration, utilization, or exploitation of mineral resources inside forest concessions shall be allowed
unless proper notice has been served upon the licensees thereof and the prior approval of the
Director, secured.
Mine tailings and other pollutants affecting the health and safety of the people, water, fish,
vegetation, animal life and other surface resources, shall be filtered in silt traps or other filtration
devices and only clean exhausts and liquids shall be released therefrom.
Surface-mined areas shall be restored to as near its former natural configuration or as approved by
the Director prior to its abandonment by the mining concern.
Section 48. Mineral Reservations. Mineral reservations which are not the subject of mining operations
or where operations have been suspended for more than five (5) years shall be placed under forest
management by the Bureau.
Mineral reservations where mining operations have been terminated due to the exhaustion of its
minerals shall revert to the category of forest land, unless otherwise reserved for other purposes.
Section 49. Roads and other infrastructure. Roads and other infrastructure in forest lands shall be
constructed with the least impairment to the resource values thereof.
Government agencies undertaking the construction of roads, bridges, communications, and other
infrastructure and installations inside forest lands, shall coordinate with the Bureau, especially if it will
involve the utilization or destruction of timber and/or other forest resources, or watershed
disturbance therein, in order to adopt measures to avoid or reduce damage or injury to the forest
resource values.
They shall likewise extend assistance in the planning and establishment of roads, wharves, piers, port
facilities, and other infrastructure in locations designated as wood-processing centers or for the
convenience of wood-based industries.
In order to coincide and conform to government plans, programs, standards, and specifications,
holders of license agreements, licenses, leases and permits shall not undertake road or infrastructure
construction or installation in forest lands without the prior approval of the Director, or in alienable
and disposable lands, civil reservations and other government lands, without the approval of the
government agencies having administrative jurisdiction over the same.
All roads and infrastructure constructed by holders of license agreements, licenses, leases and
permits belong to the State and the use and administration thereof shall be transferred to the
government immediately upon the expiration or termination thereof. Prior thereto the Bureau may
authorize the public use thereof, if it will not be detrimental to forest conservation measures.
Where roads are utilized by more than one commercial forest user, the Bureau shall prescribe the
terms and conditions of joint use including the equitable sharing of construction and/or maintenance
costs, and of the use of these roads by other parties and the collection of such fees as may be
deemed necessary.
Section 50. Logging roads. There shall be indiscriminate construction of logging roads.
Such roads shall be strategically located and their widths regulated so as to minimize clear-cutting,
unnecessary damage or injury to healthy residuals, and erosion. Their construction must not only
serve the transportation need of the logger but, most importantly, the requirement to save as many
healthy residuals as possible during cutting and hauling operations.
Section 51. Management of occupancy in forest lands. Forest occupancy shall henceforth be
managed. The Bureau shall study, determine and define which lands may be the subject of occupancy
and prescribed therein, an agro-forestry development program.
Occupants shall undertake measures to prevent and protect forest resources.
Any occupancy in forest land which will result in sedimentation, erosion, reduction in water yield and
impairment of other resources to the detriment of community and public interest shall not be
allowed.
In areas above 50% in slope, occupation shall be conditioned upon the planting of desirable trees
thereon and/or adoption of other conservation measures.
Section 52. Census of kaingineros, squatters, cultural minorities and other occupants and residents in
forest lands.Henceforth, no person shall enter into forest lands and cultivate the same without lease
or permit.
A complete census of kaingineros, squatters, cultural minorities and other occupants and residents in
forest lands with or without authority or permits from the government, showing the extent of their
respective occupation and resulting damage, or impairment of forest resources, shall be conducted.
The Bureau may call upon other agencies of the government and holders of license agreement,
license, lease and permits over forest lands to participate in the census.
Section 53. Criminal Prosecution. Kaingineros, squatters, cultural minorities and other occupants who
entered into forest lands before the effectivity of this Code, without permits or authority, shall not be
prosecuted: Provided, That they do not increase their clearings: Provided, further, That they
undertake, within two (2) months from the notice thereof, the activities which will be imposed upon
them by the Bureau in accordance with a management plan calculated to conserve and protect forest
resources.
E. SPECIAL USES
Section 54. Pasture in forest lands. No forest land 50% in slope or over may be utilized for pasture
purposes.
Forest lands which are being utilized for pasture shall be maintained with sufficient grass cover to
protect soil, water and other forest resources.
If grass cover is insufficient, the same shall be supplemented with trees or such vegetative cover as
may be deemed necessary.
The size of forest lands that may be allowed for pasture and other special uses shall be determined by
rules and regulations, any provision of law to the contrary notwithstanding.
Section 55. Wildlife. Wildlife may be destroyed, killed, consumed, eaten or otherwise disposed of,
without the necessity of permit, for the protection of life, health, safety and property, and the
convenience of the people.
However, the Director may regulate the killing and destruction of wildlife in forest lands in order to
maintain an ecological balance of flora and fauna.
Section 56. Recreation. The Bureau shall, in the preparation of multiple-use management plans,
identify and provide for the protection of scenic areas in all forest lands which are potentially valuable
for recreation and tourism, and plan for the development and protection of such areas to attract
visitors thereto and meet increasing demands therefor.
The construction and operation of necessary facilities to accommodate outdoor recreation shall be
done by the Bureau with the use of funds derived from rentals and fees for the operation and use of
recreational facilities by private persons or operators, in addition to whatever funds may be
appropriated for such purposes.
Section 57. Other special uses of forest lands. Forest lands may be leased for a period not exceeding
twenty-five (25) years, renewable upon the expiration thereof for a similar period, or held under
permit, for the establishment of sawmills, lumber yards, timber depots, logging camps, rights-of-way,
or for the construction of sanatoria, bathing establishments, camps, salt works, or other beneficial
purposes which do not in any way impair the forest resources therein.
F. QUALIFICATIONS
Section 58. Diffusion of benefits. The privilege to utilize, exploit, occupy, or possess forest lands, or to
conduct any activity therein, or to establish and operate wood-processing plants, shall be diffused to
as many qualified and deserving applicants as possible.
Section 59. Citizenship. In the evaluation of applications of corporations, increased Filipino equity and
participation beyond the 60% constitutional limitation shall be encouraged. All other factors being
equal, the applicant with more Filipino equity and participation shall be preferred.
Section 60. Financial and technical capability. No license agreement, license, lease or permit over
forest lands shall be issued to an applicant unless he proves satisfactorily that he has the financial
resources and technical capability not only to minimize utilization, but also to practice forest
protection, conservation and development measures to insure the perpetuation of said forest in
productive condition.
Section 61. Transfers. Unless authorized by the Department Head, no licensee, lessee, or permittee
may transfer, exchange, sell or convey his license agreement, license, lease or permit, or any of his
rights or interests therein, or any of his assets used in connection therewith.
The licensee, lessee, or permittee shall be allowed to transfer or convey his license agreement,
license, lease or permit only if he has not violated any forestry law, rule or regulation; has been
faithfully complying with the terms and conditions of the license agreement, license, lease or permit;
the transferee has all the qualifications and none of the disqualifications to hold a license agreement,
license, lease or permit; there is no evidence that such transfer or conveyance is being made for
purposes of speculation; and the transferee shall assume all the obligations of the transferor.
The transferor shall forever be barred from acquiring another license agreement, license, lease or
permit.
Section 62. Service contracts. The Department Head, may in the national interest, allow forest
products licensees, lessees, or permittees to enter into service contracts for financial, technical,
management, or other forms of assistance, in consideration of a fee, with any foreign person or entity
for the exploration, development, exploitation or utilization of the forest resources, covered by their
license agreements, licenses, leases or permits. Existing valid and binding service contracts for
financial, technical, management or other forms of assistance are hereby recognized as such.
Section 63. Equity sharing. Every corporation holding a license agreement, license, lease or permit to
utilize, exploit, occupy or possess any forest land, or conduct any activity therein, or establish and
operate a wood-processing plant, shall within one (1) year after the effectivity of this Code, formulate
and submit to the Department Head for approval a plan for the sale of at least twenty percent (20%)
of its subscribed capital stock in favor of its employees and laborers.
The plan shall be so implemented that the sale of the shares of stock shall be effected by the
corporation not later than the sixth year of its operation, or the first year of the effectivity of this
Code, if the corporation has been in operation for more than 5 years prior to such effectivity.
No corporation shall be issued any license agreement, license, lease or permit after the effectivity of
this Code, unless it submits such a plan and the same is approved for implementation within the sixth
year of its operation.
The Department Head shall promulgate the necessary rules and regulations to carry out the
provisions of this section, particularly on the determination of the manner of payment, factors
affecting the selling price, establishment of priorities in the purchase of the shares of stock, and the
capability of the deserving employees and laborers. The industries concerned shall extend all
assistance in the promulgation of policies on the matter, such as the submission of all data and
information relative to their operation, personnel management, and asset evaluation.
G. REGULATORY FEES
Section 64. Charges, fees and bonds. The Department Head, upon recommendation of the Director,
shall fix the amount of charges, rental, bonds and fees for the different kinds of utilization,
exploitation, occupation, possession, or activity inside forest lands, the filing and processing of
applications therefor, the issuance and renewal of license agreements, licenses, leases and permits,
and for other services; Provided, That all fees and charges presently being collected under existing
laws and regulations shall continue to be imposed and collected until otherwise provided; Provided,
further, That timber taken and removed from private lands for commercial purposes shall be exempt
from the payment of forest charges.
Section 65. Authority of Department Head to impose other fees. In addition to the fees and charges
imposed under existing laws, rules and regulations, the Department Head is hereby authorized, upon
recommendation of the Director and in consultation with representatives of the industries affected, to
impose other fees for forest protection, management, reforestation, and development, the proceeds
of which shall accrue into a special deposit of the Bureau as its revolving fund for the aforementioned
purposes.
Section 66. Collection and Disbursement. The collection of the charges and fees above-mentioned
shall be the responsibility of the Director or his authorized representative. The Director shall remit his
monthly collection of fees and charges mentioned in Section 64 to the Treasurer of the Philippines
within the first ten (10) days of the succeeding month; Provided, That the proceeds of the collection
of the fees imposed under Section 65 and the special deposit heretofore required of licensees shall be
constituted into a revolving fund for such purposes and be deposited in the Philippine National Bank,
as a special deposit of the Bureau. The Budget Commissioner and the National Treasurer shall effect
the quarterly releases out of the collection accruing to the general fund upon request of the Director
on the basis of a consolidated annual budget of a work program approved by the Department Head
and the President.
In the case of the special deposit revolving fund, withdrawals therefrom shall be effected by the
Department Head on the basis of a consolidated annual budget prepared by the Director of a work
program for the specific purposes mentioned in Section 65.
Section 67. Basis of Assessment. Tree measurement shall be the basis for assessing government
charges and other fees on timber cut and removed from forest lands, alienable or disposable lands,
and the civil reservations; Provided, That until such time as the mechanics of tree measurement shall
have been developed and promulgated in rules and regulations, the present scaling method provided
for in the National Internal Revenue Code shall be used.
The Director may, with the approval of the Department Head, prescribe a new method of assessment
of forest products and collection of charges thereon based upon the result of production cost and
market studies undertaken by the Bureau; Provided, That such charges shall not be lower than those
now imposed.
 CHAPTER IV
CRIMINAL OFFENSES AND PENALTIES
Section 68. Cutting, gathering and/or collecting timber or other products without license. Any person
who shall cut, gather, collect, or remove timber or other forest products from any forest land, or
timber from alienable and disposable public lands, or from private lands, without any authority under
a license agreement, lease, license or permit, shall be guilty of qualified theft as defined and punished
under Articles 309 and 310 of the Revised Penal Code; Provided, That in the case of partnership,
association or corporation, the officers who ordered the cutting, gathering or collecting shall be liable,
and if such officers are aliens, they shall, in addition to the penalty, be deported without further
proceedings on the part of the Commission on Immigration and Deportation.
The Court shall further order the confiscation in favor of the government of the timber or forest
products to cut, gathered, collected or removed, and the machinery, equipment, implements and
tools used therein, and the forfeiture of his improvements in the area.
The same penalty plus cancellation of his license agreement, lease, license or permit and perpetual
disqualification from acquiring any such privilege shall be imposed upon any licensee, lessee, or
permittee who cuts timber from the licensed or leased area of another, without prejudice to whatever
civil action the latter may bring against the offender.
Section 69. Unlawful occupation or destruction of forest lands. Any person who enters and occupies
or possesses, or makes kaingin for his own private use or for others any forest land without authority
under a license agreement, lease, license or permit, or in any manner destroys such forest land or
part thereof, or causes any damage to the timber stand and other products and forest growths found
therein, or who assists, aids or abets any other person to do so, or sets a fire, or negligently permits a
fire to be set in any forest land shall, upon conviction, be fined in an amount of not less than five
hundred pesos (P500.00) nor more than twenty thousand pesos (P20,000.00) and imprisoned for not
less than six (6) months nor more than two (2) years for each such offense, and be liable to the
payment of ten (10) times the rental fees and other charges which would have been accrued had the
occupation and use of the land been authorized under a license agreement, lease, license or permit:
Provided, That in the case of an offender found guilty of making kaingin, the penalty shall be
imprisoned for not less than two (2) nor more than (4) years and a fine equal to eight (8) times the
regular forest charges due on the forest products destroyed, without prejudice to the payment of the
full cost of restoration of the occupied area as determined by the Bureau.
The Court shall further order the eviction of the offender from the land and the forfeiture to the
Government of all improvements made and all vehicles, domestic animals and equipment of any kind
used in the commission of the offense. If not suitable for use by the Bureau, said vehicles shall be sold
at public auction, the proceeds of which shall accrue to the Development Fund of the Bureau.
In case the offender is a government official or employee, he shall, in addition to the above penalties,
be deemed automatically dismissed from office and permanently disqualified from holding any
elective or appointive position.
Section 70. Pasturing Livestock. Imprisonment for not less than six (6) months nor more than two (2)
years and a fine equal to ten (10) times the regular rentals due, in addition to the confiscation of such
livestock and all improvement introduced in the area in favor of the government, shall be imposed
upon any person, who shall, without authority under a lease or permit, graze or cause to graze
livestock in forest lands, grazing lands and alienable and disposable lands which have not as yet been
disposed of in accordance with the Public Land Act; Provided, That in case the offender is a
corporation, partnership or association, the officers and directors thereof shall be liable.
Section 71. Illegal occupation of national parks system and recreation areas and vandalism
therein. Any person who shall, without permit, occupy for any length of time any portion of the
national parks system or shall, in any manner, cut, destroy, damage or remove timber or any species
of vegetation or forest cover and other natural resources found therein, or shall mutilate, deface or
destroy objects of natural beauty or of scenic value within areas in the national parks system, shall be
fined not less than two hundred (P200.00) pesos or more than five hundred (P500.00) pesos exclusive
of the value of the thing damaged; Provided, That if the area requires rehabilitation or restoration as
determined by the Director, the offender shall also be required to restore or compensate for the
restoration of the damage; Provided, Further, That any person who, without proper permit shall hunt,
capture or kill any kind of bird, fish or wild animal life within any area in the national parks system
shall be subject to the same penalty; Provided, Finally, That the Court shall order eviction of the
offender from the land and the forfeiture in favor of the Government of all timber or any species of
vegetation and other natural resources collected or removed, and any construction or improvement
made thereon by the offender. If the offender is an association or corporation, the president or
manager shall be directly responsible and liable for the act of his employees or laborers.
In the event that an official of a city or municipal government is primarily responsible for detecting
and convicting the violator of the provisions of this Section, fifty per centum (50%) of the fine
collected shall accrue to such municipality or city for the development of local parks.
Section 72. Destruction of wildlife resources. Any person violating the provisions of Section 55 of this
Code, or the regulations promulgated thereunder, shall be fined not less than one hundred (P100.00)
pesos for each such violation and in addition shall be denied a permit for a period of three (3) years
from the date of the violation.
Section 73. Survey by unauthorized person. Imprisonment for not less than two (2) nor more than
four (4) years, in addition to the confiscation of the implements used in the violation of this section
including the cancellation of the license, if any, shall be imposed upon any person who shall, without
permit to survey from the Director, enter any forest lands, whether covered by a license agreement,
lease, license, or permit, or not, and conduct or undertake a survey for whatever purpose.
Section 74. Misclassification and survey by government official or employee. Any public officer or
employee who knowingly surveys, classifies, or recommends the release of forest lands as alienable
and disposable lands contrary to the criteria and standards established in this Code, or the rules and
regulations promulgated hereunder, shall, after an appropriate administrative proceeding, be
dismissed from the service with prejudice to re-employment, and upon conviction by a court of
competent jurisdiction, suffer an imprisonment of not less than one (1) year and a fine of not less
than one thousand, (P1,000.00) pesos. The survey, classification or release of forest lands shall be null
and void.
Section 75. Tax declaration on real property. Imprisonment for a period of not less than two (2) nor
more than four (4) years and perpetual disqualification from holding an elective or appointive office,
shall be imposed upon any public officer or employee who shall issue a tax declaration on real
property without a certification from the Director of Forest Development and the Director of Lands or
their duly designated representatives that the area declared for taxation is alienable and disposable
lands, unless the property is titled or has been occupied and possessed by members of the national
cultural minorities prior to July 4, 1955.
Section 76. Coercion and influence. Any person who coerces, influences, abets or persuades the public
officer or employee referred to in the two preceding sections to commit any of the acts mentioned
therein shall suffer imprisonment of not less than one (1) year and pay a fine of five hundred
(P500.00) pesos for every hectare or a fraction thereof so improperly surveyed, classified or released.
Section 77. Unlawful possession of implements and devices used by forest officers. Imprisonment for a
period of not less than (2) nor more than four (4) years and a fine of not less than one thousand pesos
(P1,000.00), nor more than ten thousand (P10,000.00) pesos in addition to the confiscation of such
implements and devices, and the automatic cancellation of the license agreement, lease, license or
permit, if the offender is a holder thereof, shall be imposed upon any person who shall, without
authority from the Director or his authorized representative, make, manufacture, or has in his
possession any government marking, hatchet or other marking implement, or any marker, poster, or
other devices officially used by officers of the Bureau for the marking or identification of timber or
other products, or any duplicate, counterfeit, or imitation thereof, or make or apply a government
mark on timber or any other forest products by means of any authentic or counterfeit device, or alter,
deface, or remove government marks or signs, from trees, logs, stumps, firewoods or other forest
products, or destroy, deface, remove or disfigure any such mark, sign, poster or warning notices set by
the Bureau to designate the boundaries of cutting areas, municipal or city forest or pasture, classified
timber land, forest reserve, and areas under the national park system or to make any false mark or
imitation of any mark or sign herein indicated; Provided, That if the offender is a corporation,
partnership or association, the officers and directors thereof shall be liable.
Section 78. Payment, collection and remittance of forest charges. Any person who fails to pay the
amount due and payable under the provisions of this Code, the National Internal Revenue Code, or
the rules and regulations promulgated thereunder, shall be liable to the payment of a surcharge of
twenty-five per centum (25%) of the amount due and payable.
Any person who fails or refuses to remit to the proper authorities said forest charges collectible
pursuant to the provisions of this Code or the National Internal Revenue Code, or who delays,
obstructs or prevents the same, or who orders, causes or effects the transfer or diversion of the funds
for purposes other than those specified in this Code, for each such offense shall, upon conviction, be
punished by a fine of not exceeding one hundred thousand pesos (P100,000.00) and/or imprisonment
for a period of not exceeding six (6) years in the discretion of the Court. If the offender is a
government official or employee, he shall, in addition, be dismissed from the service with prejudice to
reinstatement and with disqualification from holding any elective or appointive office.
If the offender is a corporation, partnership or association, the officers and directors thereof shall be
liable.
Section 79. Sale of wood products. No person shall sell or offer for sale any log, lumber, plywood or
other manufactured wood products in the international or domestic market unless he complies with
grading rules and established or to be established by the Government.
Failure to adhere to the established grading rules and standards, or any act of falsification of the
volume of logs, lumber, or other forest products shall be a sufficient cause for the suspension of the
export, sawmill, or other license or permit authorizing the manufacture or sale of such products for a
period of not less than two (2) years.
A duly accredited representative of the Bureau shall certify to the compliance by the licensees with
grading rules.
Every dealer in lumber and other building material covered by this Code shall issue an invoice for each
sale of such material and such invoice shall state that the kind, standard and size of material sold to
each purchaser in exactly the same as described in the invoice. Any violation of this Section shall be
sufficient ground for the suspension of the dealer's license for a period of not less than two (2) years
and, in addition thereto, the dealer shall be punished for each such offense by a fine of not less than
two hundred pesos (P200.00) or the total value of the invoice, whichever is greater.
Section 80. Arrest; Institution of criminal actions. A forest officer or employee of the Bureau shall
arrest even without warrant any person who has committed or is committing in his presence any of
the offenses defined in this Chapter. He shall also seize and confiscate, in favor of the Government,
the tools and equipment used in committing the offense, and the forest products cut, gathered or
taken by the offender in the process of committing the offense. The arresting forest officer or
employee shall thereafter deliver within six (6) hours from the time of arrest and seizure, the offender
and the confiscated forest products, tools and equipment to, and file the proper complaint with, the
appropriate official designated by law to conduct preliminary investigations and file informations in
court.
If the arrest and seizure are made in the forests, far from the authorities designated by law to conduct
preliminary investigations, the delivery to, and filing of the complaint with, the latter shall be done
within a reasonable time sufficient for ordinary travel from the place of arrest to the place of delivery.
The seized products, materials and equipment shall be immediately disposed of in accordance with
forestry administrative orders promulgated by the Department Head.
The Department Head may deputize any member or unit of the Philippine Constabulary, police
agency, barangay or barrio official, or any qualified person to protect the forest and exercise the
power or authority provided for in the preceding paragraph.
Reports and complaints regarding the commission of any of the offenses defined in this Chapter, not
committed in the presence of any forest officer or employee, or any of the deputized officers or
officials, shall immediately be investigated by the forest officer assigned in the area where the offense
was allegedly committed, who shall thereupon receive the evidence supporting the report or
complaint.
If there is prima facie evidence to support the complaint or report, the investigating forest officer shall
file the necessary complaint with the appropriate official authorized by law to conduct a preliminary
investigation of criminal cases and file an information in Court.
SPECIAL CLAUSES
Section 81. Separability Clause. Should any provision herein be subsequently declared
unconstitutional, the same shall not affect the validity or the legality of the other provisions.
Section 82. Repealing Clause. Presidential Decree Nos. 330, and 389, C.A. No. 452, R.A. No. 4715 and
all laws, orders, rules and regulations or any part thereof which are inconsistent herewith are hereby
repealed or amended accordingly.
Section 83. Date of Effectivity. This Code shall take effect immediately upon promulgation.
EXECUTIVE ORDER NO. 277 July 25, 1987
AMENDING SECTION 68 OF PRESIDENTIAL DECREE (P.D.) NO. 705, AS AMENDED, OTHERWISE
KNOWN AS THE REVISED FORESTRY CODE OF THE PHILIPPINES, FOR THE PURPOSE OF PENALIZING
POSSESSION OF TIMBER OR OTHER FOREST PRODUCTS WITHOUT THE LEGAL DOCUMENTS
REQUIRED BY EXISTING FOREST LAWS, AUTHORIZING THE CONFISCATION OF ILLEGALLY CUT,
GATHERED. REMOVED AND POSSESSED FOREST PRODUCTS, AND GRANTING REWARDS TO
INFORMERS OF VIOLATIONS OF FORESTRY LAWS, RULES AND REGULATIONS
WHEREAS, there is an urgency to conserve the remaining forest resources of the country for the
benefit and welfare of the present and future generations of Filipinos;
WHEREAS, our forest resources may be effectively conserved and protected through the vigilant
enforcement and implementation of our forestry laws, rules and regulations;
WHEREAS, the implementation of our forest laws suffers from technical difficulties, due to certain
inadequacies in the penal provisions of the Revised Forestry Code of the Philippines; and
WHEREAS, to overcome these difficulties, there is a need to penalize certain acts to make our forestry
laws more responsive to present situations and realities;
NOW, THEREFORE, I, CORAZON C. AQUINO, President of the Philippines, by virtue of the powers
vested in me by the Constitution, do hereby order:
Sec. 1. Section 68 of Presidential Decree (P.D.) No. 705, as amended, is hereby amended to read as
follows:
"Sec. 68. Cutting, Gathering and/or collecting Timber, or Other Forest Products Without
License. Any person who shall cut, gather, collect, removed timber or other forest products
from any forest land, or timber from alienable or disposable public land, or from private land,
without any authority, or possess timber or other forest products without the legal
documents as required under existing forest laws and regulations, shall be punished with the
penalties imposed under Articles 309 and 310 of the Revised Penal Code: Provided, That in
the case of partnerships, associations, or corporations, the officers who ordered the cutting,
gathering, collection or possession shall be liable, and if such officers are aliens, they shall, in
addition to the penalty, be deported without further proceedings on the part of the
Commission on Immigration and Deportation.
"The court shall further order the confiscation in favor of the government of the timber or
any forest products cut, gathered, collected, removed, or possessed as well as the machinery,
equipment, implements and tools illegally used in the area where the timber or forest
products are found."
Sec. 2. Presidential Decree No. 705, as amended, is hereby further amended by adding Sections 68-A
and 68-B which shall read as follows:
"Sec. 68-A. Administrative Authority of the Department Head or His Duly Authorized
Representative to Order Confiscation. In all cases of violations of this Code or other forest
laws, rules and regulations, the Department Head or his duly authorized representative, may
order the confiscation of any forest products illegally cut, gathered, removed or possessed or
abandoned, and all conveyances used either by land, water or air in the commission of the
offense and to dispose of the same in accordance with pertinent laws, regulations or policies
on the matter.
"Sec. 68-B. Rewards to Informants. Any person who shall provide any information leading to
the apprehension and conviction of any offender for any violation of this Code or other forest
laws, rules and regulations, or confiscation of forest products shall be given a reward in the
amount of twenty per centum (20%) of the proceeds of the confiscated forest products."
Sec. 3. All laws, orders, issuances, rules and regulations or parts thereof inconsistent with this
Executive Order are hereby repealed or modified accordingly.
Sec. 4. This Executive Order shall take effect after fifteen days following its publication either in the
Official Gazette or in a newspaper of general circulation in the Philippines.
DONE in the City of Manila, this 25th day of July, in the year of Our Lord, nineteen hundred and
eighty-seven.
PRESIDENTIAL DECREE No. 1559
FURTHER AMENDING PRESIDENTIAL DECREE NO. 705, OTHERWISE KNOWN AS THE "REVISED
FORESTRY CODE OF THE PHILIPPINES"
WHEREAS, there is need to further strengthen the Code to make it more responsive to present
realities and to the new thrust of government policies and programs on forest development and
conservation and rationalization of the wood industry;
WHEREAS, forest development and wood industry programs should complement, as well as enhance,
the rural development program of the government; and
WHEREAS, there is a need to provide sufficient incentives to encourage and further expand the
participation of the private sector in forest management, protection and development as well as in
wood processing activities within the concept of joint or co-management of the forest resources.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers
vested in me by the Constitution, do hereby amend Presidential Decree No. 705 as follows:
Section 1. Sections 3, 11, 14, 17, 19, 20, 22, 26 and 30 of the said Decree are amended as follows.
"Sec. 3. Definitions
"a) Public forest is the mass of lands of the public domain which has not been subject to the
present system of classification for the determination of which lands are needed for forest
purposes and which are not.
"b) Permanent forest or forest reserves refers to those lands of the public domain which have
been the subject of the present system of classification and declared as not needed for forest
purposes.
"c) Alienable or disposable lands refer to those lands of the public domain which have been
the subject of the present of classification and declared as not needed for forest purposes.
"d) Forest lands includes the public forest, the permanent forest or forest reserves, and
forest reservations.
"e) Grazing land refers to that portion of the public domain which has been set aside, in view
of the suitability of its topography and vegetation, for the raising of livestock.
"f) Mineral lands refer to those lands of the public domain which have been classified as such
by the Secretary of Natural Resources in accordance with prescribed and approved criteria,
guidelines and procedure.
"g) Forest reservations refer to forest lands which have been reserved by the President of the
Philippines for any specific purpose or purposes.
"h) National park refers to a forest land reservation essentially of primitive or wilderness
character which has been withdrawn from settlement or occupancy and set aside as such
exclusively to preserve the scenery, the natural and historic objects and the wild animals or
plants therein, and to provide enjoyment of those features in such a manner as will leave
them unimpaired for future generations.
"i) Game refuge or bird sanctuary refers to a forest land designated for the protection of
game animals, birds and fish and closed to hunting and fishing in order that the excess
population may flow and restock surrounding areas.
"j) Marine park refers to any public offshore are delimited as habitat of rare and unique
species of marine flora and fauna.
"k) Seashore park refers to any public shore are delimited for outdoor recreation, sports
fishing, water skiing and related healthful activities.
"l) Watershed reservation is a forest land reservation established to protect or improve the
conditions of the water yield thereof or reduce sedimentation.
"m) Watershed is a land area drained by a stream or fixed body of water and its tributaries
having a common outlet for surface run-off.
"n) Critical watershed is a drainage area of a river system supporting existing and proposed
hydro-electric power, irrigation works or domestic water facilities needing immediate
protection or rehabilitation.
"o) Mangrove is a term implied to the type of forest occurring on tidal flat along the sea
coast, extending along stream where the water is brackish.
"p) Kaingin refers to a portion of the forest land which is subjected to shifting and/or
permanent slash-and-burn cultivation.
"q) Forest products means timber, pulpwood, firewood, bark, tree top, resin, gum, wood, oil,
honey, beeswax, nipa, rattan, or other forest growth such as grass, shrub, and flowering
plant, the associated water, fish, game scenic, historical, recreational and geologic resources
in forest lands.
"r) Dipterocarp forest is a forest dominated by trees of the dipterocarp species, such as red
lauan, tanguile, tiaong, white lauan, almon, bagtikan and mayapis of the Philippine
mahogany group, apitong and the yakals.
"s) Pine forest as a forest type predominantly of pine trees.
"t) Industrial tree plantation refers to any forest land extensively planted to three crops
primarily to supply raw material requirements of existing or proposed wood processing
plants and related industries.
"u) Tree farm refers to any small forest land or tract of land purposely planted to tree crops.
"v) Agro-forestry is a sustainable management for land which increases overall production,
combines agriculture crops, tree crops and forest plants and/or animals simultaneously or
sequentially, and applies management practices which are compatible with the cultural
patterns of the local population.
"w) Multiple-use is the harmonized utilization of the land, soil, water, wildlife, recreation
value, grass and timber of forest lands.
"x) Selective logging is the systematic removal of the mature, over-mature and defective
trees in such manner as to leave adequate number and volume of healthy residual trees of
the desired species necessary to assure a future crop of timber, and forest cover for the
protection and conservation of soil, water and wildlife.
"y) Seed tree system is a silvicultural system characterized by partial clearcutting leaving
seed- trees to regenerate the area.
"z) Healthy residual refers to a sound or slightly injured tree of the commercial species left
after logging.
"aa) Sustained-yield management implies continuous or periodic production of forest
products in a working unit for the purpose of achieving at the earliest practicable time an
approximate balance between growth and harvest or use. This is generally applied to the
commercial timber resources and is also applicable to the water, grass, wildlife, and other
renewable resources of the forest.
"bb) Processing plant is any mechanical setup, device, machine or combination of machines
used for the conversation of logs and other forest raw materials into lumber, veneer,
plywood, fiberboard, blackboard, paper board, pulp, paper or other finished wood products.
"cc) Lease is a privilege granted by the State to a person to occupy and possess, in
consideration of specified rental, any forest land of the public domain in order to undertake
any authorized activity therein.
"dd) License is a privilege granted by the State to a person to utilize forest resources within
any forest land, without any right of occupation and possession over the same, to the
exclusion of others, or establish and operate a wood-processing plant, or conduct any activity
involving the utilization of any forest resources.
"ee) License agreement is a privilege granted by the State to a person to utilize forest
resources within any forest land with the right of possession and occupation thereof to the
exclusion of others, except the government, but with the corresponding obligation to
develop, protect and rehabilitate the same in accordance with the terms and conditions set
forth in said agreement.
"ff) Permit is short-term privilege or authority granted by the State to a person to utilize any
limited forest resources or undertake a limited activity within any forest land without any
right of occupation and possession therein.
"gg) Annual allowable cut is the volume of materials, whether or wood or other forest
products, that is authorized to be cut yearly from a forest.
"hh) Cutting cycle is the number of years between two major harvests in the same working
unit and/or region.
"ii) Forest ecosystem refers to the living and non-living components of a forest and their
interaction.
"jj) Silviculture is the establishment, development, reproduction and care of forest trees.
"kk) Rationalization is the organization of a business or industry using management
principles, systems and procedures to attain stability, efficiency and profitability of operation.
 "ll) Forest officer means any official or employee of the Bureau who has been appointed or
delegated by law or by competent authority to execute, implement or enforce the provisions
of this Code, other related laws, as well as their implementing regulations.
"mm) Private right means to refers to titled rights of ownership under existing laws, and in
the case of national minority to rights of possession existing at the time a license is granted
under this Code, which possession may include places of abode and worship, burial grounds,
and old clearings, but exclude productive forest inclusive of logged-over areas, commercial
forests and established plantations of the forest trees and trees of economic values.
"nn) Person includes natural as well as juridical person."
"Sec. 11. Manpower and policy development. The Bureau shall establish and operate an in-service
training center for the purpose of upgrading and training its personnel and new employees.
"The Bureau shall also set aside adequate funds to enable personnel to obtain specialized education
and training in local or foreign colleges or institutions.
"There shall be established in the College of Forestry, University of the Philippines at Los Baños, in
coordination with the Department of Natural Resources and the wood industry, a Forestry
Development Center which shall conduct basic policy researches in forestry policy formulation and
implementation. To help defray the cost of operating said Center, it is authorized to receive assistance
from the wood industry and other sources."
"Sec. 14. Existing pasture leases in forest lands. Forest lands which are not reservations and which are
the subject of pasture leases shall be classified as grazing lands and areas covered by pasture permits
shall remain forest lands until otherwise classified under the criteria, guidelines and methods of
classification to be prescribed by the Department Head: Provided, That the administration,
management and disposition of grazing lands shall remain under the Bureau."
"Sec. 17. Establishment of boundaries of forest lands. All boundaries between permanent forests and
alienable or disposable lands shall be clearly marked and maintained on the ground, with
infrastructure or roads, or concrete monuments at intervals of not more than five hundred (500)
meters in accordance with established procedures and standards, or any other visible and practicable
signs to insure protection of the forest.
"In all cases of boundary conflicts, reference shall be made to the Philippine Coast and Geodetic
Survey Topo map."
"Sec. 19. Multiple use. The numerous beneficial uses of the timber, land, soil, water, wildlife, grass and
recreation or aesthetic value of forest lands and grazing lands shall be evaluated and weighted before
allowing their utilization, exploitation, occupation or possession thereof, or the conduct of any activity
therein.
"Only the utilization, exploitation, occupation or possession of any forest lands and grazing lands, or
any activity therein, involving one or more of its resources, which will produce the optimum benefits
to the development and progress of the country and the public welfare, without impairment of with
the least injury to its resources, shall be allowed.
"All forest reservations may be open to development or uses not inconsistent with the principal
objectives of the reservation. Provided, That critical watersheds, national parks and established
experimental forests shall not be subject to commercial logging or grazing operations, and game
refuges, bird sanctuaries, marine and seashore parks shall not be subject to hunting or fishing and
other activities of commercial nature."
"Sec. 20. License agreement, license, lease or permit. No person may utilize, exploit, occupy, possess
or conduct any activity within any forest and grazing land, or establish, install, add and operate any
wood or forest products processing plant, unless he had been authorized to do under a license
agreement license, lease or permit: Provided, That when the national interest so requires, the
President may amend, modify, replace, or rescind any contract, concession, permit, license, or any
other form of privilege granted herein; Provided, further, That upon the recommendation of the
appropriate government agency, the President may, pending the conduct of appropriate hearing,
order the summary suspension of any such contract, concession, license, permit, lease or privilege
granted under this decree for violation of any of the condition therein such as those pertaining but
not limited to reforestation, pollution, environmental protection, export limitation or such condition
as are prescribed by the Minister of Natural Resources in daily issued regulations.
"Sec. 22. Silvicultural and harvesting system. In any logging operation in production forests within
forest lands, the proper silvicultural and harvesting system that will promote optimum sustained yield
shall be practiced, to wit:
"a) For dipterocarp forest, selective logging with enrichment or supplemental planting when
necessary.
"b) For pine mangrove forest, the seed tree system with planting when necessary. Provided,
That subject to the approval of the Department Head, upon recommendation of the Director,
any silvicultural and harvesting system that may be found suitable as a result of research may
be adopted: Provided, further, That no authorized person shall cut, harvest or gather any
timber, pulpwood, or other products of logging unless he plants three times of the same
variety for every tree cut or destroyed by such logging or removal of logs. Any violation of
this provision shall be sufficient ground for the immediate cancellation of the license,
agreement, lease or permit.
"Sec. 26. Annual allowable cut. The annual allowable cut or harvest of any particular forest land under
a license agreement, license, lease or permit shall be determined on the basis of the size of the area,
the volume and kind of harvestable timber or , forest products and healthy residuals, seed trees and
reproduction found therein, and the established cutting cycle and rotation thereof.
"No person shall cut, harvest and gather any particular timber, pulpwood, firewood and other forest
products unless he has been authorized under Section 20 hereof to do so and the particular annual
allowable cut thereof has been granted.
"In the public interest and in accordance with Section 21 hereof, the Department Head shall review all
existing annual allowable cut and thereupon shall prescribe the level of annual allowable cut for the
common dipterocarp timber, softwood and hardwood timber cutting of which is not prohibited,
pulpwood, firewood and other forest products using as bases the factors as well as the updated aerial
photographs and field inventories of such forest land: Provided, That pending the completion of such
review and appropriate amendment of the annual allowable cut in existing license agreement,
license, lease or permit, existing annual allowable cut that not sufficiently supports wood or forest
products processing expansion program or new processing projects may be allowed to continue
without change: Provided, further, That no additional or adjustment in annual allowable cut shall be
made after such a review has been made."
"All processing plants existing, to be expanded, to be integrated or to be established shall obtain
operating permits, licenses and/or approval from the Bureau or the Department, as the case maybe,
and shall submit themselves to other regulations related to their operation.
"The Department Head may cancel, suspend, or phaseout all inefficient, wasteful, uneconomical or
perennially short in raw material wood or forest products processing plants which are not responsible
to the rationalization program of the government."
Section 2. Section 32, as amended by Presidential Decree No. 865, is further amended to read as
follows:
"Sec. 32. Log production and processing. Unless otherwise directed by the President, upon
recommendation of the Department Head, the entire production of logs by all timber licensees shall,
beginning January 1, 1976 be processed locally: Provided, That the following conditions must be
complied with by whose who apply be allowed to export a portion of their log production to be
determined by the Department Head such that the total log export of these timber licensees shall not
exceed twenty-five percent (25%) of the total national allowable cut:
"1) Timber licensees with existing viable processing plants or

"Sec. 30. Rationalization of the wood or forest products industry. While the expansion and integration "2) Timber licensees with processing projects duly approved by the Department Head or
of existing wood or forest products processing plants, as well as the establishment of new processing
plants shall be encourage, their locations and operations shall be regulated in order to rationalize the
"3) Timber licensees who have acquired viable processing machinery and equipment which
whole industry.
will be installed and will become operational in accordance with the schedule approved by
the Department Head; and
"No expansion or integration of existing processing plant nor establishment of new processing plant
shall be allowed unless environmental considerations are taken into account and adequate raw
"4) Timber licensees whose log expert support or are in line with, government-approved
material supply on a sustained-yield basis is assured.
trade agreement:

"A long-term assurance of raw material source from forest concessions and/or from industrial tree
Provided, further, That no person shall be given a permit to export if he has not complied with the
plantations, tree farms or agro-forest farms whose annual allowable cut and/or whose harvest is
requirements on replanting and reforestation. Provided, That the President may, upon
deemed sufficient to meet the requirement of such processing plant shall govern, among others, the
recommendation of the Department Head, whenever the export price of logs falls to unreasonably
grant of the privilege to establish, install additional capacity or operate a processing plant.
low level or whenever public interest so requires, cancel log exportation or reduce the maximum
allowable proportion for log exports.
"Henceforth within one year from the date of this law, as a condition to exercise of the privileges
granted them under a license agreement, license, lease or permit, wood or forest products processors
"All timber licensees who have no processing plant and who have no plan to establish the same shall,
without forest concessions or areas that may be developed into industrial tree plantations, tree farms
jointly with wood processors, adopt a scheme, or schemes for the processing of the log production in
or agro-forest farms and licensees, lessees or permitees without processing plants shall jointly adopt
accordance with Section 30 hereof."
any feasible scheme or schemes, other than log supply contract, for the approval of the Department
Head: Provided, That no license agreement, license, lease or permit, including processing plant
Section 3. Section 33, 34, 35, 36, 53, 55, 61, 62, 63, 68, 69, 71, and 76 of the same Decree are
permit, shall be granted or renewed unless said scheme or schemes are submitted to, and approved
amended to read as follows:
by, the Department Head.
"Sec. 33. Lands to be reforested and/or afforested. Lands to be reforested and/or afforested are as
follows:
"1. Public forest lands.
"a) Bare or grass-covered tracts of forest lands;
"b) Brushlands or tracts of forest lands generally covered with brush, which need to
be developed to increase their productivity;
"c) Open tracts of forest lands interspersed with patches of forest;
"d) Denuded or inadequately timbered areas proclaimed by the President as forest
reserves and reservations as critical watersheds, national parks, game refuge, bird
sanctuaries, national shrines, national historic sites;
"e) Inadequately-stock forest lands within forest concessions;
"f) Portions of areas covered by pasture leases or permits needing immediate
reforestation;
"g) River banks, easements, road right-of-ways, deltas, swamps, former river beds,
and beaches.
"2. Private Lands
"a) Portions of private lands required to be reforested or planted to trees pursuant
to Presidential Decree Nos. 953 and 1153 and other existing laws."
"Sec. 34. Industrial tree plantations, tree farms and Agro-forestry farms. A lease for a period of fifty
(50) years for the establishment of an industrial tree plantations, tree farm or agro-forestry farm, may
be granted by the Department Head, upon recommendation of the Director, to any person qualified
to develop and exploit natural resources, over timber or forest lands of the public domain categorized
in Section 33 (1) hereof except those under paragraphs (d) and (g) with a minimum area of one
hundred (100) hectares for industrial tree plantations and agro-forestry farms and ten (10) hectares
for tree farms: Provided, That the size of the area that may be granted under each category shall, in
each case, depend upon the capability of the lessee to develop or convert the area into productive
condition within the term of the lease.
"The lease may be granted under such terms and conditions as the Department Head may prescribe,
taking into account, among others, the raw material needs of forest based and other industries and
the maintenance of a wholesome ecological balance.
"Trees and other products raised within the industrial tree plantation, tree farm or agro-forestry farm
belong to the lessee who shall have the right to sell, contract, convey, or dispose of said planted trees
and other products in any manner he sees fit, in accordance with existing laws, rules and regulations.
"Reforestation projects of the Government, or portion thereof, which, upon field evaluation, are
found to be more suitable for, or can better be developed as industrial tree plantations, tree farms or
agro-forestry farms, in terms of benefits to the Government and the general surrounding area, may be
the subject of a lease under this section."
"Sec. 35. Priority. Over any suitable area covered by a timber license agreement or permit, the priority
to establish industrial tree plantation, tree farms or agro-forestry farm shall be given to the holder
thereof after the Bureau had determined the suitability of such and has set aside the same for the
purpose.
"The priority herein granted must, however, be availed of within a reasonable period otherwise the
area shall be declared open to any qualified person and consequently segregated from the licensee's
or permittee's are."
Priority shall also be given to the establishment of communal industries tree plantations by barangays,
municipalities or cities and provinces.
"Sec. 36. Incentives. To encourage qualified persons to engage in industrial tree plantation, tree farm
and/or agro-forest farm, the following incentives are granted:
"a) Payment of a nominal filing fee of fifty centavos (P0.50) per hectare.
"b) No rental shall be collected during the first five (5) years from the date of the lease; from
the sixth year to the tenth year, the annual rental shall be fifty centavos (P0.50) per hectare;
and thereafter, the annual rental shall be one peso (1.00) per hectare: Provided, That lessees
of areas long denuded, as certified by the Director and approved by the Department Head,
shall be exempted from the payment of rental for the full term of the lease which shall not
exceed twenty-five (25) years; for the first five (5) years following the renewal of the lease,
the annual rental shall be fifty centavos (P.0.50) per hectare; and thereafter, the annual rental
shall be one pesos (1.00) per hectare: Provided, further, That notwithstanding the foregoing,
no rental shall be collected from a lessee who, upon verification by the Bureau, substantially
meets the schedule of development of the industrial tree plantation, the tree farm, or agro-
forestry farm, as the case may be, as prescribed in the Ministry Head, upon recommendation
of the Director;
"c) The forest charges payable by a lessee on the timber and other forest products grown and
cut or gathered in an industrial tree plantation, tree farm, or agro-forestry farm shall only be
twenty-five percent (25%) of the regular forest charges prescribed in the National Internal
Revenue Code;
"d) Exemption from the payment of the percentage tax levied in Title V of the National
Internal Revenue Code when the timber and forest products are sold, bartered or exchanged
by the lessee, whether in their original state or not, as well as exemption from all forms of
sales tax, local and municipal taxes, and from the real property tax under the provisions of
Presidential Decree No. 853;
"e) A lessee shall not be subject to any obligation prescribed in, or arising out of, the
provisions of the National Internal Revenue Code on withholding of tax at source upon
interest paid on borrowing incurred for development and operation of the industrial tree
plantation, tree farms, or agro-forestry farm;
"f) Except when public interest demands, the boundaries of an area covered by an industrial
tree plantation, tree farm, or agro-forestry farm lease, once establish on the ground, shall
not be altered or modified;
"g) Amounts expended by a lessee in the development and operation of an industrial tree
plantation, tree farm, or agro-forestry farm prior to the time when the production state is
reached, may, at the option of the lessee, be regarded as ordinary and necessary business or
as capital expenditures;
"h) The Board of Investments shall, notwithstanding its nationality requirement on projects
involving natural resources, classify industrial tree plantations, tree farms and agro-forestry
farms as pioneer areas of investment under its annual priority plan, to be governed by the
rules and regulations of said Board:
"i) Approved industrial tree plantations, tree farms, and agro-forestry farms shall be given
priority in securing credit assistance from the government and government-supported
financing institutions which shall set aside adequate funds for lending to the lessee and/or
investor at reasonable interest rates;
"j) The lessee and its field employees and workers shall be exempted from the provisions of
Presidential Decree No. 1153;
"k) Government institutions administering or financing programs and projects requiring
wood materials shall specify the purchase of, or utilize, manufactured products derived from
trees grown and harvested from industrial tree plantations, tree farms or agro-forestry farms,
whenever possible;
"l) No wood, wood products or wood-derivated products including pulp, paper and
paperboard shall be imported if the same are available in required quantities and reasonable
prices, as may be certified by the Department Head, from artificial or man-made forests, or
local processing plants manufacturing the same;
"m) No proceeding plant of whatever nature or type, made of, or utilizing, wood as primary
materials shall be allowed to be established, expanded or integrated, and operated without a
long-term assurance or raw materials source from forest concessions and/or from industrial
tree plantations, tree farms or agro-forestry farms in accordance with Section 30 hereof.
"n) Timber grown and harvested from industrial tree plantations, tree and agro-forestry
farms may be exported without restriction in quantity of volume, and if the exported is the
same person or firm qualified and allowed to export logs under the provisions of this Decree,
such timber from plantations/farms may be exported exclusive of the quantity or volume
authorized under Section 32 hereof: Provided, That the rentals on the forest land and the
forest charges on the plantation timber shall have been paid: Provided, further, That, the
export of the plantation timber shall be covered by a certificate to export issued by the
Department Head on a yearly basis: Provided, finally, That the Department Head may at any
time review the exportation of timber harvested from the plantations/farms and either
reduced or totally suspend the export of such plantation timber whenever public interest so
requires; and
"o) Free technical advice from government foresters and farm technicians.
"The Department Head may provide other incentives in addition to those hereinabove granted to
promote industrial tree plantations, tree farms and agro-forestry farms in special areas such as, but
not limited to, those where there are no roads or where roads are inadequate, or areas with rough
topography and remote areas far from processing plants."
"Sec 53. Criminal prosecution. Kaingeros, squatters, cultural minorities and other occupants who
entered into forest lands and grazing lands before May 19, 1975, without permit or authority, shall
not be prosecuted: Provided, That they do not increase their clearings: Provided, further, That they
undertake, within two (2) months from notice thereof, the activities to be imposed upon them by the
Bureau in accordance with management plan calculated to conserve and protect forest resources in
the area: Provided, finally, That kaingeros, squatters, cultural minorities and other occupants shall
whenever the best land use of the area so demands as determined by the Director, be ejected and
relocated to the nearest accessible government resettlement are."
"Sec. 55. Wildlife. All measures shall be adopted to conserve wildlife. The Director shall regulate the
hunting of wildlife in forest lands in order to maintain an ecological balance of flora and fauna."
"Sec. 61. Transfer, Unless authorized by the Department Head, no licensee, lessee, or permittee may
transfer, exchange, sell or convey his license agreement, license, lease or permit, or any of his rights or
interests therein, or any of his assets used in connection therewith.
"The licensee, lessee or permittee shall be allowed to transfer or convey his license agreement,
license, lease or permit only if the license, lease or permit has been in existence for at least three (3)
years; the licensee, lessee or permittee has not violated any forestry law, rule or regulation and has
been faithfully complying with the terms and conditions of the license agreement, license, lease or
permit: the transferee has all the qualifications and none of the disqualifications to hold a license
agreement, license, lease or permit; there is no evidence that such transfer or conveyance is being
made for purposes of speculation; and the transferee shall assume all the obligations of the
transferor.
"As used in this section, the term "assets" shall not include cattle and other livestocks or animals
raised in grazing lands and forest lands, and planted trees and other products raised in industrial tree
plantations, tree farms and agro-forestry farms."
"Sec. 64. Equity sharing. Every corporation holding a license agreement, license, lease or permit to
utilize, exploit, occupy or possess any forest land, or conduct any activity therein, or establish and
operate a wood-processing plant, shall within one (1) year after the effectivity of this amendatory
Decree, formulate and submit to the Department Head for approval a plan for the sale of at least ten
percent (10%) of its subscribed capital stock in favor of employees, laborers and the general public.
"The plan shall be so implemented that the sale of the shares of stocks shall be effected by the
corporation not later than the sixth year of its operation, or the first year of effectivity of the
amendatory Decree, if the corporation has been in operation for more that five (5) years prior to such
effectivity.
"No corporation shall be issued any license agreement, license, lease or permit after the effectivity of
his amendatory Decree, unless it submits such a plan and the same is approved for implementation
within the sixth year of its operation.
"The Department Head shall promulgate the necessary rules and regulations to carry out the
provisions of this section, particularly on the determination of the manner of payment, factors
affecting the selling price, establishment of priorities in the purchase of the shares of stock, and the
preparation of a fund to ensure the financial capability of the deserving employees and laborers. The
industries concerned shall extend all assistance in the promulgation of policies on the matter, such as
the submission of all data and information relative to their operation, personnel management and
asset evaluation."
"Sec. 68. Cutting, gathering and/or collecting timber or other products without license. Any person
shall cut, gather, collect, or remove timber or other forest products from any forest land, or timber
from alienable or disposable public land or from private land whose title has no limitation on the
disposition of forest products found therein, without any authority under a license agreement, lease,
license or permit, shall be punished with the penalty imposed under Arts. 309 and 310 of the Revised
Penal Code: Provided, That in the case of partnership, association or corporation, the officers who
ordered the cutting, gathering, or collection shall be liable, and if such officers are aliens, they shall, in
addition to the penalty, be deported without further proceedings on the part of the Commission on
Immigration and Deportation.
"The Court shall further order the confiscation in the favor of the government of the timber of forest
products so cut, gathered, collected or removed, as well as the machinery, equipment, implements
and tools used therein and the forfeiture of his improvements in the area: Provided, That timber or
forest products cut, gathered, collected or removed from a license area shall be delivered to the
licensee, lessee or permittee in whose area the forest products were cut, gathered, collected or
removed, free from claims of the illegal cutter, but subject to the payment of the corresponding forest
charges. Should the licensee refuse to accept the products, the same may be confiscated in favor of
the government to be disposed in accordance with law, regulation or policy on the matter."
"Sec. 69. Unlawful occupation or destruction of forest lands and grazing lands. Any person who enters
and occupies or possesses, or makes kaingin for his own private use or for others, any forest land or
grazing land without authority under a license agreement, lease, license or permit, or in any manner
destroys such forest land or grazing land or part thereof, or causes any damage to the timber stand
and other products and forest growth found therein, or who assists, aids or abets any other person to
do so, or sets a fire, or negligently permits a fire to be set in any forest land or grazing land, or refuses
to vacate the area when ordered to do so, pursuant to the provisions of Section 53 hereof shall, upon
conviction, be fined in an amount of not less than five hundred pesos (P500.00), nor more than
twenty thousand pesos (P20,000.00) and imprisoned for not less than six (6) months nor more than
two (2) years for each such offense, and be liable to the payment to ten (10) times the rental fees and
other charges which would have accrued has the occupational and use of the land been authorized
under a license agreement, lease, license or permit: Provided, That in the case of an offender found
guilty of making kaingin, the penalty shall be imprisonment for not less than two (2) nor more than
four (4) years and a fine equal to eight (8) times the regular forest charges due on the forest products
destroyed, without prejudice to the payment of the full cost of production of the occupied area as
determined by the Bureau: Provided, further, That the maximum of the penalty prescribed herein
shall be imposed upon the offender who repeats the same offense and who commits the same
offense and double the maximum of the penalty upon the offender who commits the same offense
for the third time.
"In all cases the Court shall further order the eviction of the offender from the land and the forfeiture
to the government of all improvements made and all vehicles, domestic animals and equipment of
any kind used in the commission of the offense. If not suitable for use by the Bureau, said vehicles,
domestic animals, equipment and improvements shall be sold at public auction, the proceeds of
which shall accrue to the Development Fund of the Bureau.
"In case the offender is a government official or employee, he shall, in addition to the above penalties
be deemed automatically dismissed from office and permanently disqualified form holding any
elective or appointive position.
"Sec. 71. Illegal occupation of national parks system and recreation areas and vandalism therein. Any
person who, shall, without permit, occupy for any length of time any portion of the national parks
system or shall, in any manner cut, destroy, damage or remove timber or any species of vegetation or
forest cover and other natural resources found therein, or shall mutilate, deface or destroy objects of
natural beauty or of scenic value within areas in the national parks system, shall be fined not less than Section 6. Repealing Clause. The Pasture Land Act (C.A. No. 462) and its implementing rules and
five hundred (P500.00) pesos or more than twenty thousand (P20,000.00) pesos exclusive of the value regulations and other laws, rules and regulations in conflict with the provisions of this Decree are
of the thing damaged. Provided, That if the area requires rehabilitation or restoration as determined repealed.
by the Director, the offender shall also be required to restore or compensate or the restoration of the
damage: Provided, further, That any person who, without proper permit shall hurt, capture or kill any Section 7. This Decree shall take effect immediately.
kind of bird, fish or wild animal life within the area in the national parks system shall be subject to the
same penalty. Provided, finally, That the Court shall order eviction of the offender from the land and Done in the City of Manila, this 11th day of June, in the year of Our Lord, Nineteen Hundred and
the forfeiture in favor of the government of all timber or any species or vegetation and other natural seventy-eight.
resources collected or removed, and any construction or improvement made thereon by the offender.
If the offender is an association or corporation, the president or manager shall be directly responsible
and liable for the act of his employees or laborers.

"In the event that an official or employee of a city or municipal government is primarily responsible
for detecting and convicting the violator of the provisions of this section, fifty per centum (50%) of the
Republic Act No. 7161 October 10, 1991
fine collected shall accrue to such municipality or city for the development of local parks."

AN ACT INCORPORATING CERTAIN SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE OF 1977,
"Sec. 76. Coercion and influence. Any person who coerces, influences, abets or persuades the public
AS AMENDED, TO PRESIDENTIAL DECREE NO. 705, AS AMENDED, OTHERWISE KNOWN AS THE
officer or employee referred to in Sections 74 and 75 commit any of the acts mentioned therein shall
"REVISED FORESTRY CODE OF THE PHILIPPINES", AND PROVIDING AMENDMENTS THERETO BY
suffer imprisonment of not less than one (1) year and pay a fine of five hundred (P500.00) pesos for
INCREASING THE FOREST CHARGES ON TIMBER AND OTHER FOREST PRODUCTS.
every hectare or a fraction thereof so improperly surveyed, classified or released.

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
"In all other cases, any person who coerces, influences, abets or persuades the public officer or
employee by using power and influence in deciding any pending case or matter in his favor shall be
punished by a fine of not more than five thousand pesos (P5,000.00) and imprisonment of not less Section 1. Pursuant to Executive Order No. 273, Sections 230 to 297 of the National Internal Revenue
than one (1) year." Code of 1977, as amended, are hereby incorporated into Presidential Decree No. 705, as amended,
otherwise known as the "Revised Forestry Code of the Philippines" and numbered as follows:
Section 4. The same Decree is amended by inserting after Section 80 thereof, a new section which
shall read as follows: National Internal Revenue Code of 1977 Section 230, 231, 232, 233, 234, 235, 236, 237, 238,
297
"Sec. 80-A. The Armed Forces of the Philippines shall organize a special force in every region to help
enforce the provisions of this Act under such rules and regulations as may be agreed upon by the Revised Forestry Code
Secretaries of National Defense and Natural Resources. Section 68
Section 69
Section 70
"Sec. 80-B. Administrative Authority of the Director to impose fines. In all cases of violations of this
Section 71
Code and other forest laws, rules and regulations where fine is the principal penalty, the Director is
Section 72
hereby authorized to impose administratively the penalty consisting of the fine."
Section 73
Section 74
Section 5. Appropriation. The sun of the three million pesos is hereby authorized to be appropriated
Section 75
out of any fund in the National Treasury not otherwise appropriated, for the operation of the Forestry
Section 76
Development Center for the current fiscal year. Thereafter, the appropriation for said Center shall be
Section 77
included in the appropriations for the University of the Philippines.
All references to the Bureau of Internal Revenue, Commissioner of Internal Revenue, and Ministry of
Finance in Section 230 to 238 of the National Internal Revenue Code of 1977 shall hereafter refer to
the Forest Management Bureau, and Secretary of Environment and Natural Resources, respectively.
Section 2. The incorporated and numbered Sections 68 to 76 of Presidential Decree No. 705, as
amended, are hereby placed under a new subtitle of Chapter III (Utilization and Management) which
shall be Subtitle II.
Section 3. Section 70 of Presidential Decree No. 705, as amended, (formerly Section 232 of the
National Revenue Code) is hereby amended to read as follows:
"Section 70. Charges on Timber Cut in Forestland- There shall be collected charges on each
cubic cubic meter of timber cut in forestland, whether belonging to the first, second, third or
fourth group, twenty-five percent (25%) of the actual FOB market price based on species and
grading: Provided, however, That, in the case of pulpwood and matchwood cut in forestland,
forest charges on each cubic meter shall be ten percent (10%) of the actual FOB market
price."
Section 4. Section 71 of Presidential Decree No. 705, as amended, (formerly Section 233 of the
National Internal Revenue Code) is hereby amended to read as follows:
"Sec. 71. Charges on Firewood, Branches and Other Recoverable Wood Wastes of Timber. -
Except for all mangrove species whose cutting shall be banned, there shall be collected forest
charges on each cubic meter of firewood cut in forestland, branches and other recoverable
wood wastes of timber, such as timber ends, tops and stumps, when used as raw materials
for the manufacture of finished products, Ten pesos (P10.00).
"Only third or fourth group wood can be taken for firewood. However, if jointly authorized by
the Secretary of both the Departments of Environment and Natural Resources, and
Agriculture, first and second group woods may be removed for firewood purposes from land
which is more valuable for agricultural than for forest purposes."
Section 5. Section 73 of Presidential Decree No. 705, as amended, (formerly Section 235 of the
National Internal Revenue Code) is hereby repealed.
Section 72 of Presidential Decree No. 705, as amended, (formerly Section 234 of the National
Revenue Code) is hereby amended to read as follows:
"Section 72. Charges on Minor Forest Products- All other forest products of
forestland which are not covered by the preceding sections shall be exempt rattan,
gums and resins, beeswax, guta-percha, almaciga resin and bamboo which shall be
charged at ten percent (10%) of the actual FOB market price."
Section 6. There shall be added a new section after Section 72 of Presidential Decree No. 705, to be
known as Section 73, as to read as follows:
"Sec. 73. Effectivity and Application of Forest Charges and Determination of Market Price of
Forest Products.-The rates of forest charges provided for in Sections 70,71 and 72 hereof
shall be effective upon approval of this Act. The new rates shall be published in the Official
Gazette or in two (2) newspapers of national circulation and shall also be posted in
conspicuous places in the different Department of Environment and Natural Resources field
offices.
"The actual FOB market price of forest products shall be justly determined once a year by the
Secretary of Environment and Natural Resources: Provided, That he shall cause the creation
of a committee to be composed of representatives of the Department of Environment and
Natural Resources, the National Economic and Development Authority, the Department of
Trade and Industry, the Bureau of Internal Revenue and the wood and furniture industry and
consumers sectors which shall formulate the criteria and/or guidelines in the determination
of the actual FOB market price to be used as the basis for the assessment of the ad valorem
tax. taking into consideration production cost (developing cost, contingencies and
miscellaneous cost), species and grade of timber and forest products gathered within public
forestlands, alienable and disposable lands and private lands. Forest charges collected shall
be in lieu of the administrative charge on environment and other fees and charges imposed
thereon: Provided, That planted trees and other forest products harvested from industrial
tree plantations and private lands covered by existing tiller or by approved land application
are exempted from payment of forest charges."
Section 7. Section 77 of Presidential Decree No. 705, as amended, as numbered herein, is hereby
repealed.
Section 68 of Presidential Decree No. 705, as amended by Executive Order No. 277 dated July
25, 1987 and Section 68-A and 68-B of Presidential Decree No. 705, as added by Executive
Order No. 277, are hereby renumbered as Sections 89-A, 89-B to 92, respectively.
Section 8. This Act shall take effect fifteen (15) days after its publication in a newspaper of general
circulation.
Approved: 10 October 1991.

G.R. No. 167707 October 8, 2008
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE
REGIONAL EXECUTIVE DIRECTOR, DENR-REGION VI, REGIONAL TECHNICAL DIRECTOR FOR LANDS,
LANDS MANAGEMENT BUREAU, REGION VI PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES
OFFICER OF KALIBO, AKLAN, REGISTER OF DEEDS, DIRECTOR OF LAND REGISTRATION AUTHORITY,
DEPARTMENT OF TOURISM SECRETARY, DIRECTOR OF PHILIPPINE TOURISM
AUTHORITY, petitioners,
vs.
MAYOR JOSE S. YAP, LIBERTAD TALAPIAN, MILA Y. SUMNDAD, and ANICETO YAP, in their behalf and
in behalf of all those similarly situated, respondents.
x--------------------------------------------------x
G.R. No. G.R. No. 173775 October 8, 2008
DR. ORLANDO SACAY and WILFREDO GELITO, joined by THE LANDOWNERS OF BORACAY SIMILARLY
SITUATED NAMED IN A LIST, ANNEX "A" OF THIS PETITION, petitioners,
vs.
THE SECRETARY OF THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, THE
REGIONAL TECHNICAL DIRECTOR FOR LANDS, LANDS MANAGEMENT BUREAU, REGION VI,
PROVINCIAL ENVIRONMENT AND NATURAL RESOURCES OFFICER, KALIBO, AKLAN, respondents.
DECISION
REYES, R.T., J.:
AT stake in these consolidated cases is the right of the present occupants of Boracay Island to secure
titles over their occupied lands.
There are two consolidated petitions. The first is G.R. No. 167707, a petition for review on certiorari of
the Decision1of the Court of Appeals (CA) affirming that2 of the Regional Trial Court (RTC) in Kalibo,
Aklan, which granted the petition for declaratory relief filed by respondents-claimants Mayor Jose
Yap, et al. and ordered the survey of Boracay for titling purposes. The second is G.R. No. 173775, a
petition for prohibition, mandamus, and nullification of Proclamation No. 10645">[3] issued by
President Gloria Macapagal-Arroyo classifying Boracay into reserved forest and agricultural land.
The Antecedents
G.R. No. 167707
Boracay Island in the Municipality of Malay, Aklan, with its powdery white sand beaches and warm
crystalline waters, is reputedly a premier Philippine tourist destination. The island is also home to
12,003 inhabitants4 who live in the bone-shaped island’s three barangays.5
On April 14, 1976, the Department of Environment and Natural Resources (DENR) approved the
National Reservation Survey of Boracay
Island,6 which identified several lots as being occupied or claimed by named persons. 7
On November 10, 1978, then President Ferdinand Marcos issued Proclamation No. 18018 declaring
Boracay Island, among other islands, caves and peninsulas in the Philippines, as tourist zones and
marine reserves under the administration of the Philippine Tourism Authority (PTA). President Marcos
later approved the issuance of PTA Circular 3-829 dated September 3, 1982, to implement
Proclamation No. 1801.
Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an
application for judicial confirmation of imperfect title or survey of land for titling purposes,
respondents-claimants
Mayor Jose S. Yap, Jr., Libertad Talapian, Mila Y. Sumndad, and Aniceto Yap filed a petition for
declaratory relief with the RTC in Kalibo, Aklan.
In their petition, respondents-claimants alleged that Proclamation No. 1801 and PTA Circular No. 3-82
raised doubts on their right to secure titles over their occupied lands. They declared that they
themselves, or through their predecessors-in-interest, had been in open, continuous, exclusive, and
notorious possession and occupation in Boracay since June 12, 1945, or earlier since time
immemorial. They declared their lands for tax purposes and paid realty taxes on them. 10
Respondents-claimants posited that Proclamation No. 1801 and its implementing Circular did not
place Boracay beyond the commerce of man. Since the Island was classified as a tourist zone, it was
susceptible of private ownership. Under Section 48(b) of Commonwealth Act (CA) No. 141, otherwise
known as the Public Land Act, they had the right to have the lots registered in their names through
judicial confirmation of imperfect titles.
The Republic, through the Office of the Solicitor General (OSG), opposed the petition for declaratory
relief. The OSG countered that Boracay Island was an unclassified land of the public domain. It formed
part of the mass of lands classified as "public forest," which was not available for disposition pursuant
to Section 3(a) of Presidential Decree (PD) No. 705 or the Revised Forestry Code, 11 as amended.
The OSG maintained that respondents-claimants’ reliance on PD No. 1801 and PTA Circular No. 3-82
was misplaced. Their right to judicial confirmation of title was governed by CA No. 141 and PD No.
705. Since Boracay Island had not been classified as alienable and disposable, whatever possession
they had cannot ripen into ownership.
During pre-trial, respondents-claimants and the OSG stipulated on the following facts: (1)
respondents-claimants were presently in possession of parcels of land in Boracay Island; (2) these
parcels of land were planted with coconut trees and other natural growing trees; (3) the coconut trees
had heights of more or less twenty (20) meters and were planted more or less fifty (50) years ago; and
(4) respondents-claimants declared the land they were occupying for tax purposes. 12
The parties also agreed that the principal issue for resolution was purely legal: whether Proclamation
No. 1801 posed any legal hindrance or impediment to the titling of the lands in Boracay. They decided
to forego with the trial and to submit the case for resolution upon submission of their respective
memoranda.13
The RTC took judicial notice14 that certain parcels of land in Boracay Island, more particularly Lots 1
and 30, Plan PSU-5344, were covered by Original Certificate of Title No. 19502 (RO 2222) in the name
of the Heirs of Ciriaco S. Tirol. These lots were involved in Civil Case Nos. 5222 and 5262 filed before
the RTC of Kalibo, Aklan.15 The titles were issued on
August 7, 1933.16
RTC and CA Dispositions
On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, with a fallo reading:
WHEREFORE, in view of the foregoing, the Court declares that Proclamation No. 1801 and PTA Circular
No. 3-82 pose no legal obstacle to the petitioners and those similarly situated to acquire title to their
lands in Boracay, in accordance with the applicable laws and in the manner prescribed therein; and to
have their lands surveyed and approved by respondent Regional Technical Director of Lands as the
approved survey does not in itself constitute a title to the land.
SO ORDERED.17
The RTC upheld respondents-claimants’ right to have their occupied lands titled in their name. It ruled
that neither Proclamation No. 1801 nor PTA Circular No. 3-82 mentioned that lands in Boracay were
inalienable or could not be the subject of disposition. 18 The Circular itself recognized private
ownership of lands.19 The trial court cited Sections 8720 and 5321 of the Public Land Act as basis for
acknowledging private ownership of lands in Boracay and that only those forested areas in public
lands were declared as part of the forest reserve.22
The OSG moved for reconsideration but its motion was denied. 23 The Republic then appealed to the
CA.
On December 9, 2004, the appellate court affirmed in toto the RTC decision, disposing as follows:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DENYING the
appeal filed in this case and AFFIRMING the decision of the lower court. 24
The CA held that respondents-claimants could not be prejudiced by a declaration that the lands they
occupied since time immemorial were part of a forest reserve.
Again, the OSG sought reconsideration but it was similarly denied. 25 Hence, the present petition under
Rule 45.
G.R. No. 173775
On May 22, 2006, during the pendency of G.R. No. 167707, President Gloria Macapagal-Arroyo issued
Proclamation No. 106426 classifying Boracay Island into four hundred (400) hectares of reserved forest
land (protection purposes) and six hundred twenty-eight and 96/100 (628.96) hectares of agricultural
land (alienable and disposable). The Proclamation likewise provided for a fifteen-meter buffer zone on
each side of the centerline of roads and trails, reserved for right-of-way and which shall form part of
the area reserved for forest land protection purposes.
On August 10, 2006, petitioners-claimants Dr. Orlando Sacay, 27 Wilfredo Gelito,28 and other
landowners29 in Boracay filed with this Court an original petition for prohibition, mandamus, and
nullification of Proclamation No. 1064.30 They allege that the Proclamation infringed on their "prior
vested rights" over portions of Boracay. They have been in continued possession of their respective
lots in Boracay since time immemorial. They have also invested billions of pesos in developing their
lands and building internationally renowned first class resorts on their lots. 31
Petitioners-claimants contended that there is no need for a proclamation reclassifying Boracay into
agricultural land. Being classified as neither mineral nor timber land, the island is deemed agricultural
pursuant to the Philippine Bill of 1902 and Act No. 926, known as the first Public Land Act. 32 Thus,
their possession in the concept of owner for the required period entitled them to judicial
confirmation of imperfect title.
Opposing the petition, the OSG argued that petitioners-claimants do not have a vested right over their
occupied portions in the island. Boracay is an unclassified public forest land pursuant to Section 3(a)
of PD No. 705. Being public forest, the claimed portions of the island are inalienable and cannot be
the subject of judicial confirmation of imperfect title. It is only the executive department, not the
courts, which has authority to reclassify lands of the public domain into alienable and disposable
lands. There is a need for a positive government act in order to release the lots for disposition.
On November 21, 2006, this Court ordered the consolidation of the two petitions as they principally
involve the same issues on the land classification of Boracay Island. 33
Issues
G.R. No. 167707
The OSG raises the lone issue of whether Proclamation No. 1801 and PTA Circular No. 3-82 pose any
legal obstacle for respondents, and all those similarly situated, to acquire title to their occupied lands
in Boracay Island.34
G.R. No. 173775
Petitioners-claimants hoist five (5) issues, namely:
I.
AT THE TIME OF THE ESTABLISHED POSSESSION OF PETITIONERS IN CONCEPT OF OWNER OVER THEIR
RESPECTIVE AREAS IN BORACAY, SINCE TIME IMMEMORIAL OR AT THE LATEST SINCE 30 YRS. PRIOR TO
THE FILING OF THE PETITION FOR DECLARATORY RELIEF ON NOV. 19, 1997, WERE THE AREAS
OCCUPIED BY THEM PUBLIC AGRICULTURAL LANDS AS DEFINED BY LAWS THEN ON JUDICIAL
CONFIRMATION OF IMPERFECT TITLES OR PUBLIC FOREST AS DEFINED BY SEC. 3a, PD 705?
II.
HAVE PETITIONERS OCCUPANTS ACQUIRED PRIOR VESTED RIGHT OF PRIVATE OWNERSHIPOVER THEIR
OCCUPIED PORTIONS OF BORACAY LAND, DESPITE THE FACT THAT THEY HAVE NOT APPLIED YET FOR
JUDICIAL CONFIRMATION OF IMPERFECT TITLE?
III.
IS THE EXECUTIVE DECLARATION OF THEIR AREAS AS ALIENABLE AND DISPOSABLE UNDER SEC 6, CA
141 [AN] INDISPENSABLE PRE-REQUISITE FOR PETITIONERS TO OBTAIN TITLEUNDER THE TORRENS
SYSTEM?
IV.
IS THE ISSUANCE OF PROCLAMATION 1064 ON MAY 22, 2006, VIOLATIVE OF THE PRIOR VESTED
RIGHTS TO PRIVATE OWNERSHIP OF PETITIONERS OVER THEIR LANDS IN BORACAY, PROTECTED BY
THE DUE PROCESS CLAUSE OF THE CONSTITUTION OR IS PROCLAMATION 1064 CONTRARY TO SEC. 8,
CA 141, OR SEC. 4(a) OF RA 6657.
V.
CAN RESPONDENTS BE COMPELLED BY MANDAMUS TO ALLOW THE SURVEY AND TO APPROVE THE
SURVEY PLANS FOR PURPOSES OF THE APPLICATION FOR TITLING OF THE LANDS OF PETITIONERS IN
BORACAY?35 (Underscoring supplied)
In capsule, the main issue is whether private claimants (respondents-claimants in G.R. No. 167707
and petitioners-claimants in G.R. No. 173775) have a right to secure titles over their occupied portions
in Boracay. The twin petitions pertain to their right, if any, to judicial confirmation of imperfect title
under CA No. 141, as amended. They do not involve their right to secure title under other pertinent
laws.
Our Ruling
Regalian Doctrine and power of the executive
to reclassify lands of the public domain
Private claimants rely on three (3) laws and executive acts in their bid for judicial confirmation of
imperfect title, namely: (a) Philippine Bill of 1902 36 in relation to Act No. 926, later amended and/or
superseded by Act No. 2874 and CA No. 141;37 (b) Proclamation No. 180138 issued by then President
Marcos; and (c) Proclamation No. 106439issued by President Gloria Macapagal-Arroyo. We shall
proceed to determine their rights to apply for judicial confirmation of imperfect title under these laws
and executive acts.
But first, a peek at the Regalian principle and the power of the executive to reclassify lands of the
public domain.
The 1935 Constitution classified lands of the public domain into agricultural, forest or
timber.40 Meanwhile, the 1973 Constitution provided the following divisions: agricultural, industrial or
commercial, residential, resettlement, mineral, timber or forest and grazing lands, and such other
classes as may be provided by law,41 giving the government great leeway for classification.42 Then the
1987 Constitution reverted to the 1935 Constitution classification with one addition: national
parks.43 Of these, only agricultural lands may be alienated.44 Prior to Proclamation No. 1064 of May
22, 2006, Boracay Island had never been expressly and administratively classified under any of these
grand divisions. Boracay was an unclassified land of the public domain.
The Regalian Doctrine dictates that all lands of the public domain belong to the State, that the State is
the source of any asserted right to ownership of land and charged with the conservation of such
patrimony.45 The doctrine has been consistently adopted under the 1935, 1973, and 1987
Constitutions.46
All lands not otherwise appearing to be clearly within private ownership are presumed to belong to
the State.47Thus, all lands that have not been acquired from the government, either by purchase or by
grant, belong to the State as part of the inalienable public domain. 48 Necessarily, it is up to the State
to determine if lands of the public domain will be disposed of for private ownership. The government,
as the agent of the state, is possessed of the plenary power as the persona in law to determine who
shall be the favored recipients of public lands, as well as under what terms they may be granted such
privilege, not excluding the placing of obstacles in the way of their exercise of what otherwise would
be ordinary acts of ownership.49
Our present land law traces its roots to the Regalian Doctrine. Upon the Spanish conquest of the
Philippines, ownership of all lands, territories and possessions in the Philippines passed to the Spanish
Crown.50 The Regalian doctrine was first introduced in the Philippines through the Laws of the Indies
and the Royal Cedulas, which laid the foundation that "all lands that were not acquired from the
Government, either by purchase or by grant, belong to the public domain." 51
The Laws of the Indies was followed by the Ley Hipotecaria or the Mortgage Law of 1893. The Spanish
Mortgage Law provided for the systematic registration of titles and deeds as well as possessory
claims.52
The Royal Decree of 1894 or the Maura Law53 partly amended the Spanish Mortgage Law and
the Laws of the Indies. It established possessory information as the method of legalizing possession of
vacant Crown land, under certain conditions which were set forth in said decree. 54 Under Section 393
of the Maura Law, an informacion posesoria or possessory information title,55 when duly inscribed in
the Registry of Property, is converted into a title of ownership only after the lapse of twenty (20) years
of uninterrupted possession which must be actual, public, and adverse, 56 from the date of its
inscription.57 However, possessory information title had to be perfected one year after the
promulgation of the Maura Law, or until April 17, 1895. Otherwise, the lands would revert to the
State.58
In sum, private ownership of land under the Spanish regime could only be founded on royal
concessions which took various forms, namely: (1) titulo real or royal grant; (2) concesion especial or
special grant; (3) composicion con el estado or adjustment title; (4) titulo de compra or title by
purchase; and (5) informacion posesoria or possessory information title.59>
The first law governing the disposition of public lands in the Philippines under American rule was
embodied in the Philippine Bill of 1902.60 By this law, lands of the public domain in the Philippine
Islands were classified into three (3) grand divisions, to wit: agricultural, mineral, and timber or forest
lands.61 The act provided for, among others, the disposal of mineral lands by means of absolute grant
(freehold system) and by lease (leasehold system).62 It also provided the definition by exclusion of
"agricultural public lands."63 Interpreting the meaning of "agricultural lands" under the Philippine Bill
of 1902, the Court declared in Mapa v. Insular Government:64
x x x In other words, that the phrase "agricultural land" as used in Act No. 926 means those public
lands acquired from Spain which are not timber or mineral lands. x x x65 (Emphasis Ours)
On February 1, 1903, the Philippine Legislature passed Act No. 496, otherwise known as the Land
Registration Act. The act established a system of registration by which recorded title becomes
absolute, indefeasible, and imprescriptible. This is known as the Torrens system. 66
Concurrently, on October 7, 1903, the Philippine Commission passed Act No. 926, which was the first
Public Land Act. The Act introduced the homestead system and made provisions for judicial and
administrative confirmation of imperfect titles and for the sale or lease of public lands. It permitted
corporations regardless of the nationality of persons owning the controlling stock to lease or purchase
lands of the public domain.67 Under the Act, open, continuous, exclusive, and notorious possession
and occupation of agricultural lands for the next ten (10) years preceding July 26, 1904 was sufficient
for judicial confirmation of imperfect title.68
On November 29, 1919, Act No. 926 was superseded by Act No. 2874, otherwise known as the
second Public Land Act. This new, more comprehensive law limited the exploitation of agricultural
lands to Filipinos and Americans and citizens of other countries which gave Filipinos the same
privileges. For judicial confirmation of title, possession and occupation en concepto dueño since time
immemorial, or since July 26, 1894, was required. 69
After the passage of the 1935 Constitution, CA No. 141 amended Act No. 2874 on December 1,
1936. To this day, CA No. 141, as amended, remains as the existing general law governing the
classification and disposition of lands of the public domain other than timber and mineral lands, 70 and
privately owned lands which reverted to the State.71
Section 48(b) of CA No. 141 retained the requirement under Act No. 2874 of possession and
occupation of lands of the public domain since time immemorial or since July 26, 1894. However, this
provision was superseded by Republic Act (RA) No. 1942,72 which provided for a simple thirty-year
prescriptive period for judicial confirmation of imperfect title. The provision was last amended by PD
No. 1073,73 which now provides for possession and occupation of the land applied for since June 12,
1945, or earlier.74
The issuance of PD No. 89275 on February 16, 1976 discontinued the use of Spanish titles as evidence
in land registration proceedings.76 Under the decree, all holders of Spanish titles or grants should
apply for registration of their lands under Act No. 496 within six (6) months from the effectivity of the
decree on February 16, 1976. Thereafter, the recording of all unregistered lands77 shall be governed by
Section 194 of the Revised Administrative Code, as amended by Act No. 3344.
On June 11, 1978, Act No. 496 was amended and updated by PD No. 1529, known as the Property
Registration Decree. It was enacted to codify the various laws relative to registration of property. 78 It
governs registration of lands under the Torrens system as well as unregistered lands, including chattel
mortgages.79
A positive act declaring land as alienable and disposable is required. In keeping with the
presumption of State ownership, the Court has time and again emphasized that there must be a
positive act of the government, such as an official proclamation,80 declassifying inalienable public
land into disposable land for agricultural or other purposes. 81 In fact, Section 8 of CA No. 141 limits
alienable or disposable lands only to those lands which have been "officially delimited and
classified."82
The burden of proof in overcoming the presumption of State ownership of the lands of the public
domain is on the person applying for registration (or claiming ownership), who must prove that the
land subject of the application is alienable or disposable. 83 To overcome this presumption,
incontrovertible evidence must be established that the land subject of the application (or claim) is
alienable or disposable.84 There must still be a positive act declaring land of the public domain as
alienable and disposable. To prove that the land subject of an application for registration is alienable,
the applicant must establish the existence of a positive act of the government such as a presidential
proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands
investigators; and a legislative act or a statute. 85 The applicant may also secure a certification from the
government that the land claimed to have been possessed for the required number of years is
alienable and disposable.86
In the case at bar, no such proclamation, executive order, administrative action, report, statute, or
certification was presented to the Court. The records are bereft of evidence showing that, prior to
2006, the portions of Boracay occupied by private claimants were subject of a government
proclamation that the land is alienable and disposable. Absent such well-nigh incontrovertible
evidence, the Court cannot accept the submission that lands occupied by private claimants were
already open to disposition before 2006. Matters of land classification or reclassification cannot be
assumed. They call for proof.87
Ankron and De Aldecoa did not make the whole of Boracay Island, or portions of it, agricultural
lands.Private claimants posit that Boracay was already an agricultural land pursuant to the old
cases Ankron v. Government of the Philippine Islands (1919)88 and De Aldecoa v. The Insular
Government (1909).89 These cases were decided under the provisions of the Philippine Bill of 1902
and Act No. 926. There is a statement in these old cases that "in the absence of evidence to the
contrary, that in each case the lands are agricultural lands until the contrary is shown." 90
Private claimants’ reliance on Ankron and De Aldecoa is misplaced. These cases did not have the effect
of converting the whole of Boracay Island or portions of it into agricultural lands. It should be stressed
that the Philippine Bill of 1902 and Act No. 926 merely provided the manner through which land
registration courts would classify lands of the public domain. Whether the land would be classified as
timber, mineral, or agricultural depended on proof presented in each case.
Ankron and De Aldecoa were decided at a time when the President of the Philippines had no power to
classify lands of the public domain into mineral, timber, and agricultural. At that time, the courts were
free to make corresponding classifications in justiciable cases, or were vested with implicit power to
do so, depending upon the preponderance of the evidence.91 This was the Court’s ruling in Heirs of
the Late Spouses Pedro S. Palanca and Soterranea Rafols Vda. De Palanca v. Republic,92 in which it
stated, through Justice Adolfo Azcuna, viz.:
x x x Petitioners furthermore insist that a particular land need not be formally released by an act of
the Executive before it can be deemed open to private ownership, citing the cases of Ramos v.
Director of Lands and Ankron v. Government of the Philippine Islands.
xxxx
Petitioner’s reliance upon Ramos v. Director of Lands and Ankron v. Government is misplaced. These
cases were decided under the Philippine Bill of 1902 and the first Public Land Act No. 926 enacted by
the Philippine Commission on October 7, 1926, under which there was no legal provision vesting in
the Chief Executive or President of the Philippines the power to classify lands of the public domain
into mineral, timber and agricultural so that the courts then were free to make corresponding
classifications in justiciable cases, or were vested with implicit power to do so, depending upon the
preponderance of the evidence.93
To aid the courts in resolving land registration cases under Act No. 926, it was then necessary to
devise a presumption on land classification. Thus evolved the dictum in Ankron that "the courts have
a right to presume, in the absence of evidence to the contrary, that in each case the lands are
agricultural lands until the contrary is shown." 94
But We cannot unduly expand the presumption in Ankron and De Aldecoa to an argument that all
lands of the public domain had been automatically reclassified as disposable and alienable
agricultural lands. By no stretch of imagination did the presumption convert all lands of the public
domain into agricultural lands.
If We accept the position of private claimants, the Philippine Bill of 1902 and Act No. 926 would have
automatically made all lands in the Philippines, except those already classified as timber or mineral
land, alienable and disposable lands. That would take these lands out of State ownership and worse,
would be utterly inconsistent with and totally repugnant to the long-entrenched Regalian doctrine.
The presumption in Ankron and De Aldecoa attaches only to land registration cases brought under the
provisions of Act No. 926, or more specifically those cases dealing with judicial and administrative
confirmation of imperfect titles. The presumption applies to an applicant for judicial or administrative
conformation of imperfect title under Act No. 926. It certainly cannot apply to landowners, such as
private claimants or their predecessors-in-interest, who failed to avail themselves of the benefits of
Act No. 926. As to them, their land remained unclassified and, by virtue of the Regalian doctrine,
continued to be owned by the State.
In any case, the assumption in Ankron and De Aldecoa was not absolute. Land classification was, in
the end, dependent on proof. If there was proof that the land was better suited for non-agricultural
uses, the courts could adjudge it as a mineral or timber land despite the presumption. In Ankron, this
Court stated:
In the case of Jocson vs. Director of Forestry (supra), the Attorney-General admitted in effect that
whether the particular land in question belongs to one class or another is a question of fact. The mere
fact that a tract of land has trees upon it or has mineral within it is not of itself sufficient to declare
that one is forestry land and the other, mineral land. There must be some proof of the extent and
present or future value of the forestry and of the minerals. While, as we have just said, many
definitions have been given for "agriculture," "forestry," and "mineral" lands, and that in each case it
is a question of fact, we think it is safe to say that in order to be forestry or mineral land the proof
must show that it is more valuable for the forestry or the mineral which it contains than it is for
agricultural purposes. (Sec. 7, Act No. 1148.) It is not sufficient to show that there exists some trees
upon the land or that it bears some mineral. Land may be classified as forestry or mineral today, and,
by reason of the exhaustion of the timber or mineral, be classified as agricultural land tomorrow. And
vice-versa, by reason of the rapid growth of timber or the discovery of valuable minerals, lands
classified as agricultural today may be differently classified tomorrow. Each case must be decided
upon the proof in that particular case, having regard for its present or future value for one or the
other purposes. We believe, however, considering the fact that it is a matter of public knowledge that
a majority of the lands in the Philippine Islands are agricultural lands that the courts have a right to
presume, in the absence of evidence to the contrary, that in each case the lands are agricultural lands
until the contrary is shown. Whatever the land involved in a particular land registration case is
forestry or mineral land must, therefore, be a matter of proof. Its superior value for one purpose or
the other is a question of fact to be settled by the proof in each particular case. The fact that the
land is a manglar [mangrove swamp] is not sufficient for the courts to decide whether it is
agricultural, forestry, or mineral land. It may perchance belong to one or the other of said classes of
land. The Government, in the first instance, under the provisions of Act No. 1148, may, by reservation,
decide for itself what portions of public land shall be considered forestry land, unless private interests
have intervened before such reservation is made. In the latter case, whether the land is agricultural,
forestry, or mineral, is a question of proof. Until private interests have intervened, the Government, by
virtue of the terms of said Act (No. 1148), may decide for itself what portions of the "public domain"
shall be set aside and reserved as forestry or mineral land. (Ramos vs. Director of Lands, 39 Phil.
175; Jocson vs. Director of Forestry, supra)95(Emphasis ours)
Since 1919, courts were no longer free to determine the classification of lands from the facts of each
case, except those that have already became private lands. 96 Act No. 2874, promulgated in 1919 and
reproduced in Section 6 of CA No. 141, gave the Executive Department, through the President,
the exclusive prerogative to classify or reclassify public lands into alienable or disposable, mineral or
forest.96-a Since then, courts no longer had the authority, whether express or implied, to determine
the classification of lands of the public domain.97
Here, private claimants, unlike the Heirs of Ciriaco Tirol who were issued their title in 1933, 98 did not
present a justiciable case for determination by the land registration court of the property’s land
classification. Simply put, there was no opportunity for the courts then to resolve if the land the
Boracay occupants are now claiming were agricultural lands. When Act No. 926 was supplanted by Act
No. 2874 in 1919, without an application for judicial confirmation having been filed by private
claimants or their predecessors-in-interest, the courts were no longer authorized to determine the
property’s land classification. Hence, private claimants cannot bank on Act No. 926.
We note that the RTC decision99 in G.R. No. 167707 mentioned Krivenko v. Register of Deeds of
Manila,100 which was decided in 1947 when CA No. 141, vesting the Executive with the sole power to
classify lands of the public domain was already in effect. Krivenko cited the old cases Mapa v. Insular
Government,101 De Aldecoa v. The Insular Government,102 and Ankron v. Government of the Philippine
Islands.103
Krivenko, however, is not controlling here because it involved a totally different issue. The pertinent
issue in Krivenko was whether residential lots were included in the general classification of agricultural
lands; and if so, whether an alien could acquire a residential lot. This Court ruled that as an
alien, Krivenko was prohibited by the 1935 Constitution104 from acquiring agricultural land, which
included residential lots. Here, the issue is whether unclassified lands of the public domain are
automatically deemed agricultural.
Notably, the definition of "agricultural public lands" mentioned in Krivenko relied on the old cases
decided prior to the enactment of Act No. 2874, including Ankron and De Aldecoa.105 As We have
already stated, those cases cannot apply here, since they were decided when the Executive did not
have the authority to classify lands as agricultural, timber, or mineral.
Private claimants’ continued possession under Act No. 926 does not create a presumption that the
land is alienable. Private claimants also contend that their continued possession of portions of
Boracay Island for the requisite period of ten (10) years under Act No. 926 106 ipso facto converted the
island into private ownership. Hence, they may apply for a title in their name.
A similar argument was squarely rejected by the Court in Collado v. Court of Appeals.107 Collado, citing
the separate opinion of now Chief Justice Reynato S. Puno in Cruz v. Secretary of Environment and
Natural Resources,107-a ruled:
"Act No. 926, the first Public Land Act, was passed in pursuance of the provisions of the Philippine Bill
of 1902. The law governed the disposition of lands of the public domain. It prescribed rules and
regulations for the homesteading, selling and leasing of portions of the public domain of the
Philippine Islands, and prescribed the terms and conditions to enable persons to perfect their titles to
public lands in the Islands. It also provided for the "issuance of patents to certain native settlers upon
public lands," for the establishment of town sites and sale of lots therein, for the completion of
imperfect titles, and for the cancellation or confirmation of Spanish concessions and grants in the
Islands." In short, the Public Land Act operated on the assumption that title to public lands in the
Philippine Islands remained in the government; and that the government’s title to public land sprung
from the Treaty of Paris and other subsequent treaties between Spain and the United States. The term
"public land" referred to all lands of the public domain whose title still remained in the government
and are thrown open to private appropriation and settlement, and excluded the patrimonial property
of the government and the friar lands."
Thus, it is plain error for petitioners to argue that under the Philippine Bill of 1902 and Public Land
Act No. 926, mere possession by private individuals of lands creates the legal presumption that the
lands are alienable and disposable.108 (Emphasis Ours)
Except for lands already covered by existing titles, Boracay was an unclassified land of the public
domain prior to Proclamation No. 1064. Such unclassified lands are considered public forest under
PD No. 705. The DENR109 and the National Mapping and Resource Information Authority 110 certify that
Boracay Island is an unclassified land of the public domain.
PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain as
public forest. Section 3(a) of PD No. 705 defines a public forest as "a mass of lands of the public
domain which has not been the subject of the present system of classification for the determination of
which lands are needed for forest purpose and which are not." Applying PD No. 705, all unclassified
lands, including those in Boracay Island, are ipso factoconsidered public forests. PD No. 705, however,
respects titles already existing prior to its effectivity.
The Court notes that the classification of Boracay as a forest land under PD No. 705 may seem to be
out of touch with the present realities in the island. Boracay, no doubt, has been partly stripped of its
forest cover to pave the way for commercial developments. As a premier tourist destination for local
and foreign tourists, Boracay appears more of a commercial island resort, rather than a forest land.
Nevertheless, that the occupants of Boracay have built multi-million peso beach resorts on the
island;111 that the island has already been stripped of its forest cover; or that the implementation of
Proclamation No. 1064 will destroy the island’s tourism industry, do not negate its character as public
forest.
Forests, in the context of both the Public Land Act and the Constitution 112 classifying lands of the
public domain into "agricultural, forest or timber, mineral lands, and national parks," do not
necessarily refer to large tracts of wooded land or expanses covered by dense growths of trees and
underbrushes.113 The discussion in Heirs of Amunategui v. Director of Forestry114 is particularly
instructive:
A forested area classified as forest land of the public domain does not lose such classification simply
because loggers or settlers may have stripped it of its forest cover. Parcels of land classified as forest
land may actually be covered with grass or planted to crops by kaingin cultivators or other farmers.
"Forest lands" do not have to be on mountains or in out of the way places. Swampy areas covered by
mangrove trees, nipa palms, and other trees growing in brackish or sea water may also be classified as
forest land. The classification is descriptive of its legal nature or status and does not have to be
descriptive of what the land actually looks like. Unless and until the land classified as "forest" is
released in an official proclamation to that effect so that it may form part of the disposable
agricultural lands of the public domain, the rules on confirmation of imperfect title do not
apply.115 (Emphasis supplied)
There is a big difference between "forest" as defined in a dictionary and "forest or timber land" as a
classification of lands of the public domain as appearing in our statutes. One is descriptive of what
appears on the land while the other is a legal status, a classification for legal purposes. 116 At any rate,
the Court is tasked to determine the legalstatus of Boracay Island, and not look into its physical
layout. Hence, even if its forest cover has been replaced by beach resorts, restaurants and other
commercial establishments, it has not been automatically converted from public forest to alienable
agricultural land.
Private claimants cannot rely on Proclamation No. 1801 as basis for judicial confirmation of
imperfect title. The proclamation did not convert Boracay into an agricultural land. However, private
claimants argue that Proclamation No. 1801 issued by then President Marcos in 1978 entitles them to
judicial confirmation of imperfect title. The Proclamation classified Boracay, among other islands, as a
tourist zone. Private claimants assert that, as a tourist spot, the island is susceptible of private
ownership.
Proclamation No. 1801 or PTA Circular No. 3-82 did not convert the whole of Boracay into an
agricultural land. There is nothing in the law or the Circular which made Boracay Island an agricultural
land. The reference in Circular No. 3-82 to "private lands" 117 and "areas declared as alienable and
disposable"118 does not by itself classify the entire island as agricultural. Notably, Circular No. 3-82
makes reference not only to private lands and areas but also to public forested lands. Rule VIII,
Section 3 provides:
No trees in forested private lands may be cut without prior authority from the PTA. All forested areas
in public lands are declared forest reserves. (Emphasis supplied)
Clearly, the reference in the Circular to both private and public lands merely recognizes that the island
can be classified by the Executive department pursuant to its powers under CA No. 141. In fact,
Section 5 of the Circular recognizes the then Bureau of Forest Development’s authority to declare
areas in the island as alienable and disposable when it provides:
Subsistence farming, in areas declared as alienable and disposable by the Bureau of Forest
Development.
Therefore, Proclamation No. 1801 cannot be deemed the positive act needed to classify Boracay
Island as alienable and disposable land. If President Marcos intended to classify the island as alienable
and disposable or forest, or both, he would have identified the specific limits of each, as President
Arroyo did in Proclamation No. 1064. This was not done in Proclamation No. 1801.
The Whereas clauses of Proclamation No. 1801 also explain the rationale behind the declaration of
Boracay Island, together with other islands, caves and peninsulas in the Philippines, as a tourist zone
and marine reserve to be administered by the PTA – to ensure the concentrated efforts of the public
and private sectors in the development of the areas’ tourism potential with due regard for ecological
balance in the marine environment. Simply put, the proclamation is aimed at administering the
islands for tourism and ecological purposes. It does not address the areas’ alienability.119
More importantly, Proclamation No. 1801 covers not only Boracay Island, but sixty-four (64) other
islands, coves, and peninsulas in the Philippines, such as Fortune and Verde Islands in Batangas, Port
Galera in Oriental Mindoro, Panglao and Balicasag Islands in Bohol, Coron Island, Puerto Princesa and
surrounding areas in Palawan, Camiguin Island in Cagayan de Oro, and Misamis Oriental, to name a
few. If the designation of Boracay Island as tourist zone makes it alienable and disposable by virtue of
Proclamation No. 1801, all the other areas mentioned would likewise be declared wide open for
private disposition. That could not have been, and is clearly beyond, the intent of the proclamation.
It was Proclamation No. 1064 of 2006 which positively declared part of Boracay as alienable and
opened the same to private ownership. Sections 6 and 7 of CA No. 141120 provide that it is only the
President, upon the recommendation of the proper department head, who has the authority to
classify the lands of the public domain into alienable or disposable, timber and mineral lands. 121
In issuing Proclamation No. 1064, President Gloria Macapagal-Arroyo merely exercised the authority
granted to her to classify lands of the public domain, presumably subject to existing vested rights.
Classification of public lands is the exclusive prerogative of the Executive Department, through the
Office of the President. Courts have no authority to do so. 122 Absent such classification, the land
remains unclassified until released and rendered open to disposition. 123
Proclamation No. 1064 classifies Boracay into 400 hectares of reserved forest land and 628.96
hectares of agricultural land. The Proclamation likewise provides for a 15-meter buffer zone on each
side of the center line of roads and trails, which are reserved for right of way and which shall form
part of the area reserved for forest land protection purposes.
Contrary to private claimants’ argument, there was nothing invalid or irregular, much less
unconstitutional, about the classification of Boracay Island made by the President through
Proclamation No. 1064. It was within her authority to make such classification, subject to existing
vested rights.
Proclamation No. 1064 does not violate the Comprehensive Agrarian Reform Law. Private claimants
further assert that Proclamation No. 1064 violates the provision of the Comprehensive Agrarian
Reform Law (CARL) or RA No. 6657 barring conversion of public forests into agricultural lands. They
claim that since Boracay is a public forest under PD No. 705, President Arroyo can no longer convert it
into an agricultural land without running afoul of Section 4(a) of RA No. 6657, thus:
SEC. 4. Scope. – The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial
arrangement and commodity produced, all public and private agricultural lands as provided in
Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain
suitable for agriculture.
More specifically, the following lands are covered by the Comprehensive Agrarian Reform Program:
(a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture.
No reclassification of forest or mineral lands to agricultural lands shall be undertaken after the
approval of this Act until Congress, taking into account ecological, developmental and equity
considerations, shall have determined by law, the specific limits of the public domain.
That Boracay Island was classified as a public forest under PD No. 705 did not bar the Executive from
later converting it into agricultural land. Boracay Island still remained an unclassified land of the public
domain despite PD No. 705.
In Heirs of the Late Spouses Pedro S. Palanca and Soterranea Rafols v. Republic, 124 the Court stated
that unclassified lands are public forests.
While it is true that the land classification map does not categorically state that the islands are
public forests, the fact that they were unclassified lands leads to the same result. In the absence of
the classification as mineral or timber land, the land remains unclassified land until released and
rendered open to disposition.125 (Emphasis supplied)
Moreover, the prohibition under the CARL applies only to a "reclassification" of land. If the land had
never been previously classified, as in the case of Boracay, there can be no prohibited reclassification
under the agrarian law. We agree with the opinion of the Department of Justice 126 on this point:
Indeed, the key word to the correct application of the prohibition in Section 4(a) is the word
"reclassification." Where there has been no previous classification of public forest [referring, we
repeat, to the mass of the public domain which has not been the subject of the present system of
classification for purposes of determining which are needed for forest purposes and which are not]
into permanent forest or forest reserves or some other forest uses under the Revised Forestry Code,
there can be no "reclassification of forest lands" to speak of within the meaning of Section 4(a).
Thus, obviously, the prohibition in Section 4(a) of the CARL against the reclassification of forest lands
to agricultural lands without a prior law delimiting the limits of the public domain, does not, and
cannot, apply to those lands of the public domain, denominated as "public forest" under the Revised
Forestry Code, which have not been previously determined, or classified, as needed for forest
purposes in accordance with the provisions of the Revised Forestry Code. 127
Private claimants are not entitled to apply for judicial confirmation of imperfect title under CA No.
141. Neither do they have vested rights over the occupied lands under the said law. There are two
requisites for judicial confirmation of imperfect or incomplete title under CA No. 141, namely: (1)
open, continuous, exclusive, and notorious possession and occupation of the subject land by himself
or through his predecessors-in-interest under a bona fide claim of ownership since time immemorial
or from June 12, 1945; and (2) the classification of the land as alienable and disposable land of the
public domain.128
As discussed, the Philippine Bill of 1902, Act No. 926, and Proclamation No. 1801 did not convert
portions of Boracay Island into an agricultural land. The island remained an unclassified land of the
public domain and, applying the Regalian doctrine, is considered State property.
Private claimants’ bid for judicial confirmation of imperfect title, relying on the Philippine Bill of 1902,
Act No. 926, and Proclamation No. 1801, must fail because of the absence of the second element of
alienable and disposable land. Their entitlement to a government grant under our present Public Land
Act presupposes that the land possessed and applied for is already alienable and disposable. This is
clear from the wording of the law itself. 129Where the land is not alienable and disposable, possession
of the land, no matter how long, cannot confer ownership or possessory rights. 130
Neither may private claimants apply for judicial confirmation of imperfect title under Proclamation
No. 1064, with respect to those lands which were classified as agricultural lands. Private claimants
failed to prove the first element of open, continuous, exclusive, and notorious possession of their
lands in Boracay since June 12, 1945.
We cannot sustain the CA and RTC conclusion in the petition for declaratory relief that private
claimants complied with the requisite period of possession.
The tax declarations in the name of private claimants are insufficient to prove the first element of
possession. We note that the earliest of the tax declarations in the name of private claimants were
issued in 1993. Being of recent dates, the tax declarations are not sufficient to convince this Court that
the period of possession and occupation commenced on June 12, 1945.
Private claimants insist that they have a vested right in Boracay, having been in possession of the
island for a long time. They have invested millions of pesos in developing the island into a tourist spot.
They say their continued possession and investments give them a vested right which cannot be
unilaterally rescinded by Proclamation No. 1064.
The continued possession and considerable investment of private claimants do not automatically give
them a vested right in Boracay. Nor do these give them a right to apply for a title to the land they are
presently occupying. This Court is constitutionally bound to decide cases based on the evidence
presented and the laws applicable. As the law and jurisprudence stand, private claimants are ineligible
to apply for a judicial confirmation of title over their occupied portions in Boracay even with their
continued possession and considerable investment in the island.
One Last Note
The Court is aware that millions of pesos have been invested for the development of Boracay Island,
making it a by-word in the local and international tourism industry. The Court also notes that for a
number of years, thousands of people have called the island their home. While the Court
commiserates with private claimants’ plight, We are bound to apply the law strictly and judiciously.
This is the law and it should prevail. Ito ang batas at ito ang dapat umiral.
All is not lost, however, for private claimants. While they may not be eligible to apply for judicial
confirmation of imperfect title under Section 48(b) of CA No. 141, as amended, this does not denote
their automatic ouster from the residential, commercial, and other areas they possess now classified
as agricultural. Neither will this mean the loss of their substantial investments on their occupied
alienable lands. Lack of title does not necessarily mean lack of right to possess.
For one thing, those with lawful possession may claim good faith as builders of improvements. They
can take steps to preserve or protect their possession. For another, they may look into other modes of
applying for original registration of title, such as by homestead 131 or sales patent,132 subject to the
conditions imposed by law.
More realistically, Congress may enact a law to entitle private claimants to acquire title to their
occupied lots or to exempt them from certain requirements under the present land laws. There is one
such bill133 now pending in the House of Representatives. Whether that bill or a similar bill will
become a law is for Congress to decide.
In issuing Proclamation No. 1064, the government has taken the step necessary to open up the island
to private ownership. This gesture may not be sufficient to appease some sectors which view the
classification of the island partially into a forest reserve as absurd. That the island is no longer overrun
by trees, however, does not becloud the vision to protect its remaining forest cover and to strike a
healthy balance between progress and ecology. Ecological conservation is as important as economic
progress.
To be sure, forest lands are fundamental to our nation’s survival. Their promotion and protection are
not just fancy rhetoric for politicians and activists. These are needs that become more urgent as
destruction of our environment gets prevalent and difficult to control. As aptly observed by Justice
Conrado Sanchez in 1968 in Director of Forestry v. Munoz:134
The view this Court takes of the cases at bar is but in adherence to public policy that should be
followed with respect to forest lands. Many have written much, and many more have spoken, and
quite often, about the pressing need for forest preservation, conservation, protection, development
and reforestation. Not without justification. For, forests constitute a vital segment of any country's
natural resources. It is of common knowledge by now that absence of the necessary green cover on
our lands produces a number of adverse or ill effects of serious proportions. Without the trees,
watersheds dry up; rivers and lakes which they supply are emptied of their contents. The fish
disappear. Denuded areas become dust bowls. As waterfalls cease to function, so will hydroelectric
plants. With the rains, the fertile topsoil is washed away; geological erosion results. With erosion
come the dreaded floods that wreak havoc and destruction to property – crops, livestock, houses, and
highways – not to mention precious human lives. Indeed, the foregoing observations should be
written down in a lumberman’s decalogue. 135
WHEREFORE, judgment is rendered as follows:
1. The petition for certiorari in G.R. No. 167707 is GRANTED and the Court of Appeals Decision in CA-
G.R. CV No. 71118 REVERSED AND SET ASIDE.
2. The petition for certiorari in G.R. No. 173775 is DISMISSED for lack of merit.
SO ORDERED.
G.R. No. 136142 October 24, 2000
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ALFONSO DATOR and BENITO GENOL, accused (Acquitted)
PASTOR TELEN, accused-appellant.
DECISION
DE LEON, JR., J.:
Before us on appeal is the Decision1 of the Regional Trial Court of Maasin, Southern Leyte, Branch 25,
in Criminal Case No. 1733 convicting the appellant of the crime of violation of Presidential Decree No.
705.
Pastor Telen and his co-accused, Alfonso Dator and Benito Genol, were charged with the crime of
violation of Section 682 of Presidential Decree No. 705, otherwise known as the Revised Forestry
Code,3 in an Information that reads:
That on or about the 29th day of October, 1993 at around 8:00 o’clock in the evening, in barangay
Laboon, municipality of Maasin, province of Southern Leyte, Philippines, and within the jurisdiction of
this Honorable Court, the above-named accused conspiring, confederating and mutually helping each
other, with intent of gain, did then and there wilfully, unlawfully and feloniously possess 1,560.16
board feet of assorted lumber flitches valued at TWENTY-THREE THOUSAND FIVE HUNDRED PESOS
(23,500.00), Philippine Currency, without any legal document as required under existing forest laws
and regulations from proper government authorities, to the damage and prejudice of the
government.
CONTRARY TO LAW.
Upon being arraigned on May 27, 1994, Pastor Telen and his co-accused, Alfonso Dator and Benito
Genol, assisted by counsel, separately entered the plea of "Not guilty" to the charge in the
Information. Thereafter, trial on the merits ensued.
It appears that on October 29, 1993, Police Station Commander Alejandro Rojas of Maasin, Southern
Leyte, and SPO1 Necitas Bacala, were on board a police patrol vehicle heading towards Barangay San
Rafael, Maasin, Southern Leyte. Upon reaching Barangay Laboon of the same municipality, they
noticed a Isuzu cargo truck loaded with pieces of lumber bound toward the town proper of Maasin.
Suspicious that the cargo was illegally cut pieces of lumber, Police Station Commander Rojas
maneuvered their police vehicle and gave chase.4
Upon catching up with the Isuzu cargo truck in Barangay Soro-soro, Maasin, Southern Leyte, they
ordered the driver, accused Benito Genol, to pull over. Benito Genol was left alone in the truck after
his companions hurriedly left. When asked if he had the required documents for the proper transport
of the pieces of lumber, Genol answered in the negative. Genol informed the police authorities that
the pieces of lumber were owned by herein appellant, Pastor Telen, while the Isuzu cargo truck
bearing Plate No. HAF 628 was registered in the name of Southern Leyte Farmers Agro-Industrial
Cooperative, Inc. (SLEFAICO) which is a local cooperative. Consequently, Police Officers Rojas and
Bacala directed Benito Genol to proceed to the Maasin Police Station, Maasin, Southern Leyte for
further investigation.5
On November 5, 1993, Forest Ranger Romeo Galola was fetched from his office at the Community
Environment and Natural Resources Office (CENRO), Maasin, Southern Leyte by SPO1 Necitas Bacala
to inspect the pieces of lumber that were confiscated on October 29, 1993 in Soro-soro, Maasin,
Southern Leyte from Pastor Telen. Galola and his immediate supervisor, Sulpicio Saguing, found that
the cargo consisted of forty-one (41) pieces of Dita lumber and ten (10) pieces of Antipolo lumber of
different dimensions with a total volume of 1,560.16 board feet. 6
Subsequently, SPO1 Bacala issued a seizure receipt 7 covering the fifty-one (51) pieces of confiscated
Dita and Antipolo lumber and one (1) unit of Isuzu cargo truck with Plate No. HAF 628. The
confiscated pieces of lumber and the cargo truck were turned over to SPO3 Daniel Lasala, PNP
Property Custodian, Maasin, Southern Leyte who, in turn, officially transferred custody of the same to
the CENRO, Maasin, Southern Leyte.8
The defense denied any liability for the crime charged in the Information. Pastor Telen, a utility worker
at the Integrated Provincial Health Office, Southern Leyte for nineteen (19) years, testified that he
needed lumber to be used in renovating the house of his grandparents in Barangay Abgao, Maasin,
Southern Leyte where he maintained residence. Knowing that it was prohibited by law to cut trees
without appropriate permit from the Department of Environment and Natural Resources (DENR),
Telen sought the assistance of a certain Lando dela Pena who was an employee at the CENRO, Maasin,
Southern Leyte. Dela Pena accompanied Telen to the office of a certain Boy Leonor, who was the
Officer in Charge of CENRO in Maasin, Southern Leyte. Leonor did not approve of the plan of Telen to
cut teak or hard lumber from his (Telen) mother’s track of land in Tabunan, San Jose, Maasin,
Southern Leyte. However, Leonor allegedly allowed Telen to cut the aging Dita trees only. According to
Telen, Leonor assured him that a written permit was not anymore necessary before he could cut the
Dita trees, which are considered soft lumber, from the private land of his mother, provided the same
would be used exclusively for the renovation of his house and that he shall plant trees as replacement
thereof, which he did by planting Gemelina seedlings.9
On September 15, 1993, Telen requested his cousin, Vicente Sabalo, to hire for him a cargo truck in
order to haul the sawn lumber from the land of his mother in Tabunan, San Jose, Maasin, Southern
Leyte. His cousin obliged after Telen assured him that he had already secured verbal permission from
Boy Leonor, Officer in Charge of CENRO in Maasin, Southern Leyte, before cutting the said lumber. 10
After having been informed by Vicente Sabalo on October 29, 1993 at about 4:00 o’clock in the
afternoon that a cargo truck was available for hire, Telen instructed his cousin to personally supervise
the hauling of the sawn lumber for him inasmuch as he was busy with his work in the office. At
around 7:00 o’clock in the evening, Telen learned from his daughter that the sawn lumber were
confiscated by the police in Barangay Soro-soro, Maasin, Southern Leyte. 11
Upon arrival in Barangay Soro-Soro, Telen was accosted by Police Station Commander Alejandro Rojas
who demanded from him DENR permit for the sawn lumber. After confirming ownership of the sawn
lumber, Telen explained to Rojas that he had already secured verbal permission from Boy Leonor to
cut Dita trees, which are considered soft lumber, to be used in the renovation of his house and that he
had already replaced the sawn Dita trees with Gemelina seedlings, but to no avail. Rojas ordered that
the pieces of lumber and the Isuzu cargo truck be impounded at the municipal building of Maasin,
Southern Leyte for failure of Telen to produce the required permit from the DENR. 12
Pastor Telen appeared before Bert Pesidas, CENRO hearing officer, in Maasin, Southern Leyte for
investigation in connection with the confiscated pieces of lumber. Telen had tried to contact Officer-in-
Charge Boy Leonor of the CENRO Maasin, Southern Leyte after the confiscation of the sawn lumber
on October 29, 1993 and even during the investigation conducted by the CENRO hearing officer for
three (3) times but to no avail, for the reason that Boy Leonor was assigned at a reforestation site in
Danao, Cebu province.13
Alfonso Dator, was the accounting manager of SLEFAICO, Inc., a local cooperative engaged in buying
and selling abaca fibers. Dator testified that on October 29, 1993 at 3:00 o’clock in the afternoon, a
certain Vicente Sabalo, accompanied by their company driver, Benito Genol, proposed to hire the
Isuzu cargo truck owned by SLEFAICO, Inc. to haul pieces of coconut lumber from Barangay San Jose to
Barangay Soro-soro in Maasin, Southern Leyte. He readily acceded to the proposal inasmuch as the
owner of the alleged coconut lumber, according to Sabalo, was Pastor Telen, who is a long time friend
and former officemate at the provincial office of the Department of Health. Besides, the fee to be
earned from the hauling services meant additional income for the cooperative. 14
At about 6:00 o’clock in the evening of the same day, Dator met the Isuzu cargo truck of SLEFAICO, Inc.
at the Canturing bridge in Maasin, Southern Leyte, being escorted by a police patrol vehicle, heading
towards the municipal town proper. At the municipal hall building of Maasin, he learned that the
Isuzu truck was apprehended by the police for the reason that it contained a cargo of Dita and
Antipolo lumber without the required permit from the DENR. He explained to the police authorities
that the Isuzu cargo truck was hired merely to transport coconut lumber, however, it was impounded
at the municipal building just the same. 15 Due to the incident Dator lost his job as accounting manager
in SLEFAICO, Inc.16
For his defense, Benito Genol testified that he was employed by the SLEFAICO, Inc. as driver of its
Isuzu cargo truck. Aside from transporting abaca fibers, the Isuzu cargo truck was also available for
hire.17
While Genol was having the two tires of the Isuzu cargo truck vulcanized on October 29, 1993 in
Barangay Mantahan, Maasin, Southern Leyte, Vicente Sabalo approached him and offered to hire the
services of the cargo truck. Genol accompanied Sabalo to the residence of the accounting manager of
SLEFAICO, Inc., Alfonso Dator, which was nearby, and the latter agreed to the proposal of Sabalo to
hire the Isuzu cargo truck to haul pieces of coconut lumber from San Jose, Maasin, Southern Leyte, for
a fee.18
At 4:00 o’clock in the afternoon of the same day, Genol, Sabalo and a son of Alfonso Dator, proceeded
to San Jose after fetching about six (6) haulers along the way in Barangay Soro-soro. Upon arrival in
San Jose, Genol remained behind the steering wheel to take a rest. He was unmindful of the actual
nature of the lumber that were being loaded. After the loading, Genol was instructed to proceed to
Barangay Soro-soro in front of the lumberyard of a certain Jimmy Go. Before the lumber could be
unloaded at 8:00 o’clock in the evening Genol was approached by Police Station Commander
Alejandro Rojas who demanded DENR permit for the lumber. The pieces of lumber were confiscated
by Rojas after Genol failed to produce the required permit from the DENR office. 19
Vicente Sabalo corroborated the testimonies of the three (3) accused in this case. He testified in
substance that he was requested by his cousin, Pastor Telen, to engage the services of a cargo truck to
transport sawn pieces of lumber from San Jose to be used in the renovation of his house in Abgao,
Maasin, Southern Leyte; that he approached Benito Genol and offered to hire the services of the Isuzu
cargo truck that he was driving; that both of them asked the permission of Alfonso Dator who readily
acceded to the proposal for a fee of P500.00; 20 that he saw Genol remained behind the steering wheel
as the loading of the lumber was going on in San Jose; and that the lumber and the Isuzu cargo truck
were confiscated in Barangay Soro-soro for failure of his cousin, Pastor Telen, to show to Police Station
Commander Alejandro Rojas any written permit from the DENR for the subject lumber. 21
After analyzing the evidence, the trial court rendered a decision, the dispositive portion of which
reads:
WHEREFORE, judgment is rendered as follows:
 1. CONVICTING the accused PASTOR TELEN beyond reasonable doubt of the offense charged
and there being no modifying circumstances, and with the Indeterminate Sentence Law
being inapplicable, the herein accused is hereby sentenced to suffer the indivisible penalty of
RECLUSION PERPETUA, with the accessory penalties provided by law, which is two (2)
degrees higher than PRISION MAYOR maximum, the authorized penalty similar to Qualified
Theft, and to pay the costs. His bail for his provisional liberty is hereby cancelled and he shall
be committed to the New Bilibid Prisons, Muntinlupa, Metro Manila thru the Abuyog
Regional Prisons, Abuyog, Leyte via the Provincial Warden, Maasin, Southern Leyte;
2. ACQUITTING co-accused Alfonso Dator and Benito Genol on reasonable doubt for
insufficiency of evidence; and cancelling their bail;
3. CONFISCATING and SEIZING the 1,560.16 board feet of illegal lumber worth P23,500.00
and ORDERING the CENRO Maasin, Southern Leyte to sell the lumber at public auction under
proper permission from the Court, with the proceeds thereof turned over to the National
Government thru the National Treasury under proper receipt, and to REPORT the fact of sale
to this Court duly covered by documents of sale and other receipts by evidencing the sale
within five (5) days from the consummation of sale; and
4. DIRECTING the CENRO authorities to coordinate with its Regional Office for immediate
administrative proceedings and determination of any administrative liability of the truck
owner, SLEFAICO Inc. if any, otherwise, to release the truck to its owner.
SO ORDERED.
In his appeal Pastor Telen interpose the following assignments of error:
I
THE LOWER COURT ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY BEYOND
REASONABLE DOUBT FOR VIOLATION OF SEC. 68, P. D. 705, AS AMENDED, BEING CONTRARY
TO LAW AND THE EVIDENCE ON RECORD AND FOR BEING NOT IN CONFORMITY WITH DENR
ADMINISTRATIVE ORDER NO. 79, SERIES OF 1990.
II
THE LOWER COURT ERRED IN IMPOSING THE ACCUSED-APPELLANT THE PENALTY OF
RECLUSION PERPETUA FOR THE ALLEGED VIOLATION OF SEC. 68, P. D. 705, AS AMENDED, IT
BEING A PATENTLY ERRONEOUS PENALTY NOT WARRANTED BY ANY PROVISION OF THE
REVISED PENAL CODE OR JURISPRUDENCE.
III
THE LOWER COURT ERRED IN FINDING THAT THE VALUE OF THE CONFISCATED LUMBER IS
P23,500.00 FOR NO EVIDENCE OF SUCH VALUE WAS ESTABLISHED DURING THE TRIAL.
The appeal is not impressed with merit.
It is not disputed that appellant Pastor Telen is the owner of the fifty-one (51) pieces of assorted
Antipolo and Dita lumber with a total volume of 1,560.16 board feet. He alleged that the pieces of
lumber were cut from the track of land belonging to his mother in San Jose, Maasin, Southern Leyte
which he intended to use in the renovation of his house in Barangay Abgao of the same municipality.
After having been confiscated by the police, while in transit, in Barangay Soro-soro, appellant Telen
failed to produce before the authorities the required legal documents from the DENR pertaining to
the said pieces of lumber.
The fact of possession by the appellant of the subject fifty-one (51) pieces of assorted Antipolo and
Dita lumber, as well as his subsequent failure to produce the legal documents as required under
existing forest laws and regulations constitute criminal liability for violation of Presidential Decree No.
705, otherwise known as the Revised Forestry Code. 22 Section 68 of the code provides:
Section 68. Cutting, Gathering and/or Collecting Timber or Other Forest Products Without License.-Any
person who shall cut, gather, collect, remove timber or other forest products from any forest land, or
timber from alienable or disposable public land, or from private land, without any authority, or
possess timber or other forest products without the legal documents as required under existing forest
laws and regulations, shall be punished with the penalties imposed under Articles 309 and 310 of the
Revised Penal Code: Provided, that in the case of partnerships, associations, or corporations, the
officers who ordered the cutting, gathering, collection or possession shall be liable, and if such officers
are aliens, they shall, in addition to the penalty, be deported without further proceedings on the part
of the Commission on Immigration and Deportation.
The Court shall further order the confiscation in favor of the government of the timber or any forest
products cut, gathered, collected, removed, or possessed, as well as the machinery, equipment,
implements and tools illegally used in the area where the timber or forest products are found.
Appellant Telen contends that he secured verbal permission from Boy Leonor, Officer-in-Charge of the
DENR-CENRO in Maasin, Southern Leyte before cutting the lumber, and that the latter purportedly
assured him that written permit was not anymore necessary before cutting soft lumber, such as the
Antipolo and Dita trees in this case, from a private track of land, to be used in renovating appellant’s
house, provided that he would plant trees as replacements thereof, which he already did. It must be
underscored that the appellant stands charged with the crime of violation of Section 68 of
Presidential Decree No. 705, a special statutory law, and which crime is considered mala prohibita. In
the prosecution for crimes that are considered mala prohibita, the only inquiry is whether or not the
law has been violated.23 The motive or intention underlying the act of the appellant is immaterial for
the reason that his mere possession of the confiscated pieces of lumber without the legal documents
as required under existing forest laws and regulations gave rise to his criminal liability.
In any case, the mere allegation of the appellant regarding the verbal permission given by Boy Leonor,
Officer in Charge of DENR-CENRO, Maasin, Southern Leyte, is not sufficient to overturn the
established fact that he had no legal documents to support valid possession of the confiscated pieces
of lumber. It does not appear from the record of this case that appellant exerted any effort during the
trial to avail of the testimony of Boy Leonor to corroborate his allegation. Absent such corroborative
evidence, the trial court did not commit an error in disregarding the bare testimony of the appellant
on this point which is, at best, self-serving.24
The appellant cannot validly take refuge under the pertinent provision of DENR Administrative Order
No. 79, Series of 199025 which prescribes rules on the deregulation of the harvesting, transporting and
sale of firewood, pulpwood or timber planted in private lands. Appellant submits that under the said
DENR Administrative Order No. 79, no permit is required in the cutting of planted trees within titled
lands except Benguet pine and premium species listed under DENR Administrative Order No. 78,
Series of 1987, namely: narra, molave, dao, kamagong, ipil, acacia, akle, apanit, banuyo, batikuling,
betis, bolong-eta, kalantas, lanete, lumbayao, sangilo, supa, teak, tindalo and manggis.
Concededly, the varieties of lumber for which the appellant is being held liable for illegal possession
do not belong to the premium species enumerated under DENR Administrative Order No. 78, Series of
1987. However, under the same DENR administrative order, a certification from the CENRO concerned
to the effect that the forest products came from a titled land or tax declared alienable and disposable
land must still be secured to accompany the shipment. This the appellant failed to do, thus, he is
criminally liable under Section 68 of Presidential Decree No. 705 necessitating prior acquisition of
permit and "legal documents as required under existing forest laws and regulations." The pertinent
portion of DENR Administrative Order No. 79, Series of 1990, is quoted hereunder, to wit:
In line with the National Reforestation Program and in order to promote the planting of trees by
owners of private lands and give incentives to the tree farmers, Ministry Administrative Order No. 4
dated January 19, 1987 which lifted the restriction in the harvesting, transporting and sale of
firewood, pulpwood or timber produced from Ipil-Ipil (leucaenia spp) and Falcate (Albizzia falcataria)
is hereby amended to include all other tree species planted in private lands except BENGUET PINE and
premium hardwood species. Henceforth, no permit is required in the cutting of planted trees within
the titled lands or tax declared A and D lands with corresponding application for patent or acquired
through court proceedings, except BENGUET PINE and premium species listed under DENR
Administrative Order No 78, Series of 1987, provided, that a certification of the CENRO concerned to
the effect that the forest products came from a titled land or tax declared alienable and disposable
land is issued accompanying the shipment.
Appellant Telen next contends that proof of value of the confiscated pieces of lumber is indispensable,
it being the basis for the computation of the penalty prescribed in Article 309 in relation to Article 310
of the Revised Penal Code; and that in the absence of any evidence on record to prove the allegation
in the Information that the confiscated pieces of lumber have an equivalent value of P23,500.00 there
can be no basis for the penalty to be imposed and hence, he should be acquitted.
The appellant’s contention is untenable. It is a basic rule in criminal law that penalty is not an element
of the offense. Consequently, the failure of the prosecution to adduce evidence in support of its
allegation in the Information with respect to the value of the confiscated pieces of lumber is not
necessarily fatal to its case. This Court notes that the estimated value of the confiscated pieces of
lumber, as appearing in the official transmittal letter 26 of the DENR-CENRO, Maasin, Southern Leyte
addressed to the Office of the Provincial Prosecutor of the same province, is P23,500.00 which is
alleged in the Information. However, the said transmittal letter cannot serve as evidence or as a valid
basis for the estimated value of the confiscated pieces of lumber for purposes of computing the
proper penalty to be imposed on the appellant considering that it is hearsay and it was not formally
offered in evidence contrary to Section 34 of Rule 132 of the Revised Rules of Court.1âwphi1
In the case of People vs. Elizaga,27 the accused-appellant therein was convicted of the crimes of
homicide and theft, and the value of the bag and its contents that were taken by the accused-
appellant from the victim was estimated by the prosecution witness to be P500.00. In the absence of
a conclusive or definite proof relative to their value, this Court fixed the value of the bag and its
contents at P100.00 based on the attendant circumstances of the case. More pertinently, in the case
of People vs. Reyes,28 this Court held that if there is no available evidence to prove the value of the
stolen property or that the prosecution failed to prove it, the corresponding penalty to be imposed on
the accused-appellant should be the minimum penalty corresponding to theft involving the value of
P5.00.
In the case at bench, the confiscated fifty-one (51) pieces of assorted Dita and Antipolo lumber were
classified by the CENRO officials as soft, and therefore not premium quality lumber. It may also be
noted that the said pieces of lumber were cut by the appellant, a mere janitor in a public hospital,
from the land owned by his mother, not for commercial purposes but to be utilized in the renovation
of his house. It does not appear that appellant Telen had been convicted nor was he an accused in any
other pending criminal case involving violation of any of the provisions of the Revised Forestry Code
(P.D. No. 705, as amended). In view of the attendant circumstances of this case, and in the interest of
justice, the basis for the penalty to be imposed on the appellant should be the minimum amount
under Article 309 paragraph (6) of the Revised Penal Code which carries the penalty of arresto mayor
in its minimum and medium periods for simple theft.
Considering that the crime of violation of Section 68 of Presidential Decree No. 705, as amended, is
punished as qualified theft under Article 310 of the Revised Penal Code, pursuant to the said decree,
the imposable penalty on the appellant shall be increased by two degrees, that is, from arresto mayor
in its minimum and medium periods to prision mayor in its minimum and medium periods. 29 Applying
the Indeterminate Sentence Law,30 the penalty to be imposed on the appellant should be six (6)
months and one (1) day of prision correccional to six (6) years and one (1) day of prision mayor.
WHEREFORE, the decision of the Regional Trial Court of Maasin, Southern Leyte, Branch 25, in
Criminal Case No. 1733 is AFFIRMED with the MODIFICATION that appellant Pastor Telen is sentenced
to six (6) months and one (1) day of prision correccional, as minimum, to six (6) years and one (1) day
of prision mayor, as maximum.
SO ORDERED. Respondent Secretary Fulgencio S. Factoran, Jr., and respondent Atty. Vincent A. Robles were, during
all the time material to these cases, the Secretary of the Department of Environment and Natural
Resources (DENR) and the Chief of the Special Actions and Investigation Division (SAID) of the DENR,
respectively.
G.R. No. 104988 June 18, 1996
The material operative facts are as follows:
MUSTANG LUMBER, INC., petitioner,
vs. On 1 April 1990, acting on an information that a huge stockpile of narra flitches, shorts, and slabs
HON. COURT OF APPEALS, HON. FULGENCIO S. FACTORAN, JR., Secretary, Department of were seen inside the lumberyard of the petitioner in Valenzuela, Metro Manila, the SAID organized a
Environment and Natural Resources (DENR), and ATTY. VINCENT A. ROBLES, Chief, Special Actions team of foresters and policemen and sent it to conduct surveillance at the said lumberyard. In the
and Investigations Division, DENR, respondents. course thereof, the team members saw coming out from the lumberyard the petitioner's truck, with
Plate No. CCK-322, loaded with lauan and almaciga lumber of assorted sizes and dimensions. Since
the driver could not produce the required invoices and transport documents, the team seized the
G.R. No. 106424 June 18, 1996
truck together with its cargo and impounded them at the DENR compound at Visayas Avenue, Quezon
City.1 The team was not able to gain entry into the premises because of the refusal of the owner. 2
PEOPLE OF THE PHILIPPINES, petitioner,
vs.
On 3 April 1990, the team was able to secure a search warrant from Executive Judge Adriano R. Osorio
HON. TERESITA DIZON-CAPULONG, in her capacity as the Presiding Judge, Regional Trial Court,
of the Regional Trial Court (RTC) of Valenzuela, Metro Manila. By virtue thereof, the team seized on
National Capital Judicial Region, Branch 172, Valenzuela, Metro Manila, and RI CHUY
that date from the petitioner's lumberyard four truckloads of narra shorts, trimmings, and slabs; a
PO, respondents.
negligible number of narra lumber; and approximately 200,000 board feet of lumber and shorts of
various species including almaciga and supa.3
G.R. No. 123784 June 18, 1996
On 4 April 1990, the team returned to the premises of the petitioner's lumberyard in Valenzuela and
MUSTANG LUMBER, INC., petitioner, placed under administrative seizure the remaining stockpile of almaciga, supa, and lauan lumber with
vs. a total volume of 311,000 board feet because the petitioner failed to produce upon demand the
HON. COURT OF APPEALS, ATTY. VINCENT A. ROBLES, Chief, Special Actions and Investigation corresponding certificate of lumber origin, auxiliary invoices, tally sheets, and delivery receipts from
Division, Department of Environment and Natural Resources (DENR), ATTY. NESTOR V. GAPUSAN, the source of the invoices covering the lumber to prove the legitimacy of their source and origin. 4
TIRSO P. PARIAN, JR., and FELIPE H. CALLORINA, JR., respondents.
Parenthetically, it may be stated that under an administrative seizure the owner retains the physical
possession of the seized articles. Only an inventory of the articles is taken and signed by the owner or
his representative. The owner is prohibited from disposing them until further orders. 5
DAVIDE, JR., J.:p
On 10 April 1990, counsel for the petitioner sent a letter to Robles requesting an extension of fifteen
The first and third case, G.R. No. 104988 and G.R. No. 123784, were originally assigned to the Second days from 14 April 1990 to produce the required documents covering the seized articles because
and Third Divisions of the Court, respectively. They were subsequently consolidated with the second, some of them, particularly the certificate of lumber origin, were allegedly in the Province of Quirino
a case of the Court en banc. Robles denied the motion on the ground that the documents being required from the petitioner must
accompany the lumber or forest products placed under seizure. 6
Petitioner, a domestic corporation with principal office at Nos. 1350-1352 Juan Luna Street, Tondo,
Manila, and with a Lumberyard at Fortune Street, Fortune Village, Paseo de Blas, Valenzuela, Metro On 11 April 1990, Robles submitted his memorandum-report recommending to Secretary Factoran
Manila, was duly registered as a lumber dealer with the Bureau of Forest Development (BFD) under the following:
Certificate of Registration No. NRD-4-092590-0469. Its permit as such was to expire on 25 September
1990.
 1. Suspension and subsequent cancellation of the lumber Dealer's Permit of
Mustang Lumber, Inc. for operating an unregistered lumberyard and resaw mill and
possession of Almaciga Lumber (a banned specie) without the required documents;
2. Confiscation of the lumber seized at the Mustang Lumberyard including the truck
with Plate No. CCK-322 and the lumber loaded herein [sic] now at the DENR
compound in the event its owner fails to submit documents showing legitimacy of
the source of said lumber within ten days from date of seizure;
3. Filing of criminal charges against Mr. Ri Chuy Po, owner of Mustang Lumber Inc.
and Mr. Ruiz, or if the circumstances warrant for illegal possession of narra and
almaciga lumber and shorts if and when recommendation no. 2 pushes through;
4. Confiscation of Trucks with Plate No. CCS-639 and CDV. 458 as well as the lumber
loaded therein for transport lumber using "recycled" documents. 7
On 23 April 1990, Secretary Factoran issued an order suspending immediately the petitioner's lumber-
dealer's permit No. NRD-4-092590-0469 and directing the petitioner to explain in writing within
fifteen days why its lumber-dealer's permit should not be cancelled.
On the same date, counsel for the petitioner sent another letter to Robles informing the latter that
the petitioner had already secured the required documents and was ready to submit them. None,
however, was submitted.8
On 3 May 1990, Secretary Factoran issued another order wherein, after reciting the events which took
place on 1 April and 3 April 1990, he ordered "CONFISCATED in favor of the government to be
disposed of in accordance with law" the approximately 311,000 board feet of lauan, supa, and
almaciga lumber, shorts, and sticks found inside the petitioner's lumberyard. 9
On 11 July 1990, the petitioner filed with the RTC of Manila a petition for certiorari and prohibition
with a prayer for a restraining order or preliminary injunction against Secretary Fulgencio S. Factoran,
Jr., and Atty. Vincent A. Robles. The case (hereinafter, the FIRST CIVIL CASE) was docketed as Civil Case
No. 90-53648 and assigned to Branch 35 of the said court. The petitioner questioned therein (a) the
seizure on 1 April 1990, without any search and seizure order issued by a judge, of its truck with Plate
No. CCK-322 and its cargo of assorted lumber consisting of apitong, tanguile, and lauan of different
sizes and dimensions with a total value of P38,000.00; and (b) the orders of Secretary Factoran of 23
April 1990 for lack of prior notice and hearing and of 3 May 1990 for violation of Section 2, Article III
of the Constitution.
On 17 September 1990, in response to reports that violations of P.D. No. 705 (The Revised Forestry
Code of the Philippines), as amended, were committed and acting upon instruction of Robles and
under Special Order No. 897, series of 1990, a team of DENR agents went to the business premises of
the petitioner located at No. 1352 Juan Luna Street, Tondo, Manila. The team caught the petitioner
operating as a lumber dealer although its lumber-dealer's permit had already been suspended or 23
April 1990. Since the gate of the petitioner's lumberyard was open, the team went inside and saw an
owner-type jeep with a trailer loaded with lumber. Upon investigation, the team was informed that
the lumber loaded on the trailer was to be delivered to the petitioner's customer. It also came upon
the sales invoice covering the transaction. The members of the team then introduced themselves to
the caretaker, one Ms. Chua, who turned out to be the wife of the petitioner's president and general
manager, Mr. Ri Chuy Po, who was then out of town. The team's photographer was able to take
photographs of the stockpiles of lumber including newly cut ones, fresh dust around sawing or cutting
machineries and equipment, and the transport vehicles loaded with lumber. The team thereupon
effected a constructive seizure of approximately 20,000 board feet of lauan lumber in assorted sizes
stockpiled in the premises by issuing a receipt
therefor. 10
As a consequence of this 17 September 1990 incident, the petitioner filed with the RTC of Manila a
petition for certiorari and prohibition. The case (hereinafter, the SECOND CIVIL CASE) was docketed as
Civil Case No. 90-54610 and assigned to Branch 24 of the said court.
In the meantime, Robles filed with the Department of Justice (DOJ) a complaint against the
petitioner's president and general manager, Ri Chuy Po, for violation of Section 68 of P.D. No. 705, as
amended by E.O. No. 277. After appropriate preliminary investigation, the investigating prosecutor,
Claro Arellano, handed down a resolution 11whose dispositive portion reads:
WHEREFORE, premises considered, it is hereby recommended that an information
be filed against respondent Ri Chuy Po for illegal possession of approximately
200,000 bd. ft. of lumber consisting of almaciga and supa and for illegal shipment of
almaciga and lauan in violation of Sec. 68 of PD 705 as amended by E.O. 277, series
of 1987.
It is further recommended that the 30,000 bd. ft. of narra shorts, trimmings and
slabs covered by legal documents be released to the rightful owner, Malupa. 12
This resolution was approved by Undersecretary of Justice Silvestre H. Bello III, who served as
Chairman of the Task Force on Illegal Logging." 13
On the basis of that resolution, an information was filed on 5 June 1991 by the DOJ with Branch 172
of the RTC of Valenzuela, charging Ri Chuy Po with the violation of Section 58 of P.D. No. 705, as
amended, which was docketed as Criminal Case No. 324-V-91 (hereinafter, the CRIMINAL CASE). The
accusatory portion of the information reads as follows:
That on or about the 3rd day of April 1990, or prior to or subsequent thereto, within
the premises and vicinity of Mustang Lumber, Inc. in Fortune Village, Valenzuela,
Metro Manila, and within the jurisdiction of this Honorable Court, the above-named
accused, did then and there wilfully, feloniously and unlawfully have in his
 possession truckloads of almaciga and lauan and approximately 200,000 bd. ft. of
lumber and shorts of various species including almaciga and supa, without the legal
documents as required under existing forest laws and
regulations. 14
On 7 June 1991, Branch 35 of the RTC of Manila rendered its decision 15 in the FIRST CIVIL CASE, the
dispositive portion of which reads:
WHEREFORE, judgment in this case is rendered as follows:
1. The Order of Respondent Secretary of the DENR, the Honorable Fulgencio S.
Factoran, Jr., dated 3 May 1990 ordering the confiscation in favor of the
Government the approximately 311,000 board feet of Lauan, supa, end almaciga
Lumber, shorts and sticks, found inside and seized from the Lumberyard of the
petitioner at Fortune Drive, Fortune Village, Paseo de Blas, Valenzuela, Metro
Manila, on April 4, 1990 (Exhibit 10), is hereby set aside and vacated, and instead
the respondents are required to report and bring to the Hon. Adriano Osorio,
Executive Judge, Regional Trial Court, NCR, Valenzuela, Metro Manila, the said
311,000 board feet of Lauan, supa and almaciga Lumber, shorts and sticks, to be
dealt with as directed by Law;
2. The respondents are required to initiate and prosecute the appropriate action
before the proper court regarding the Lauan and almaciga lumber of assorted sizes
and dimensions Loaded in petitioner's truck bearing Plate No. CCK-322 which were
seized on April 1, 1990;
3. The Writ of Preliminary Injunction issued by the Court on August 2, 1990 shall be
rendered functus oficio upon compliance by the respondents with paragraphs 1 and
2 of this judgment;.
4. Action on the prayer of the petitioner that the Lauan, supa and almaciga lumber,
shorts and sticks mentioned above in paragraphs 1 and 2 of this judgment be
returned to said petitioner is withheld in this case until after the proper court has
taken cognizance and determined how those Lumber, shorts and sticks should be
disposed of; and
5. The petitioner is ordered to pay the costs.
SO ORDERED.
In resolving the said case, the trial court held that the warrantless search and seizure on 1 April 1990
of the petitioner's truck, which was moving out from the petitioner's lumberyard in Valenzuela, Metro
Manila, loaded with large volumes of lumber without covering document showing the legitimacy of
its source or origin did not offend the constitutional mandate that search and seizure must be
supported by a valid warrant. The situation fell under one of the settled and accepted exceptions
where warrantless search and seizure is justified, viz., a search of a moving vehicle. 16 As to the seizure
of a large volume of almaciga, supa, and lauan lumber and shorts effected on 4 April 1990, the trial
court ruled that the said seizure was a continuation of that made the previous day and was still
pursuant to or by virtue of the search warrant issued by Executive Judge Osorio whose validity the
petitioner did not even question. 17 And, although the search warrant did not specifically mention
almaciga, supa, and lauan lumber and shorts, their seizure was valid because it is settled that the
executing officer is not required to ignore contrabands observed during the conduct of the
search.18
The trial court, however, set aside Secretary Factoran's order of 3 May 1990 ordering the confiscation
of the seized articles in favor of the Government for the reason that since the articles were seized
pursuant to the search warrant issued by Executive Judge Osorio they should have been returned to
him in compliance with the directive in the warrant.
As to the propriety of the 23 April 1990 order of Secretary Factoran, the trial court ruled that the
same had been rendered moot and academic by the expiration of the petitioner's lumber dealer's
permit on 25 September 1990, a fact the petitioner admitted in its memorandum.
The petitioner forthwith appealed from the decision in the FIRST CIVIL CASE to the Court of Appeals,
which docketed the appeal as CA-G.R. SP No. 25510.
On 7 July 1991, accused Ri Chuy Po filed in the CRIMINAL CASE a Motion to Quash and/or to Suspend
Proceedings based on the following grounds: (a) the information does not charge an offense, for
possession of lumber, as opposed to timber, is not penalized in Section 68 of P.D. No. 705, as
amended, and even grantingarguendo that lumber falls within the purview of the said section, the
same may not be used in evidence against him for they were taken by virtue of an illegal seizure; and
(b) Civil Case No. 90-53648 of Branch 35 of the RTC of Manila, the FIRST CIVIL CASE, then pending
before the Court of Appeals, which involves the legality of the seizure, raises a prejudicial question. 19
The prosecution opposed the motion alleging that lumber is included in Section 68 of P.D. No. 705, as
amended, and possession thereof without the required legal documents is penalized therein. It
referred to Section 3.2 of DENR Administrative Order No. 19, series of 1989, for the definitions
of timber and lumber, and then argued that exclusion of lumber from Section 68 would defeat the
very purpose of the law, i.e., to minimize, if not halt, illegal logging that has resulted in the rapid
denudation of our forest resources. 20
In her order of 16 August 1991 in the CRIMINAL CASE, 21 respondent Judge Teresita Dizon-Capulong
granted the motion to quash and dismissed the case on the ground that "possession of lumber
without the legal documents required by forest laws and regulations is not a crime. 22
Its motion for reconsideration having been denied in the order of 18 October 1991, 23 the People filed
a petition for certiorari with this Court in G.R. No. 106424, wherein it contends that the respondent
Judge acted with grave abuse of discretion in granting the motion to quash and in dismissing the case.
On 29 November 1991, the Court of Appeals rendered a decision 24 in CA-G.R. SP No. 25510 dismissing
for lack of merit the petitioner's appeal from the decision in the FIRST CIVIL CASE and affirming the
trial court's rulings on the issues raised. As to the claim that the truck was not carrying contraband
articles since there is no law punishing the possession of lumber, and that lumber is not timber whose
possession without the required legal documents is unlawful under P.D. No. 705, as amended, the
Court of Appeals held:
This undue emphasis on lumber or the commercial nature of the forest product
involved has always been foisted by those who claim to be engaged in the legitimate
business of lumber dealership. But what is important to consider is that when
appellant was required to present the valid documents showing its acquisition and
lawful possession of the lumber in question, it failed to present any despite the
period of extension granted to it. 25
The petitioner's motion to reconsider the said decision was denied by the Court of Appeals in its
resolution of 3 March 1992. 26 Hence, the petitioner came to this Court by way of a petition for review
on certiorari in G.R. No. 104988, which was filed on 2 May 1992. 27
On 24 September 1992, Branch 24 of the RTC of Manila handed down a decision in the SECOND CIVIL
CASE dismissing the petition for certiorari and prohibition because (a) the petitioner did not exhaust
administrative remedies; (b) when the seizure was made on 17 September 1990 the petitioner could
not lawfully sell lumber, as its license was still under suspension; (c) the seizure was valid under
Section 68-A of P.D. No. 705, as amended; and (d) the seizure was justified as a warrantless search and
seizure under Section 80 of P.D. No. 705, as amended.
The petitioner appealed from the decision to the Court of Appeals, which docketed the appeal as CA-
G.R. SP No.33778.
In its decision 28 of 31 July 1995, the Court of Appeals dismissed the petitioner's appeal in CA-G.R. SP
No. 33778 for lack of merit and sustained the grounds relied upon by the trial court in dismissing the
SECOND CIVIL CASE. Relying on the definition of "lumber" by Webster, viz., "timber or logs, especially
after being prepared for the market," and by the Random House Dictionary of the English
Language, viz., "wood, esp. when suitable or adapted for various building purposes," the respondent
Court held that since wood is included in the definition of forest product in Section 3(q) of P.D. No.
705, as amended, lumber is necessarily included in Section 68 under the term forest product.
The Court of Appeals further emphasized that a forest officer or employee can seize the forest
product involved in a violation of Section 68 of P.D. No. 705 pursuant to Section 80 thereof, as
amended by P.D. No. 1775, which provides in part as follows:
Sec. 80. Arrest, Institution of Criminal Actions. -- A forest officer or employee of the
Bureau or any personnel of the Philippine Constabulary/Integrated National Police
shall arrest even without warrant any person who has committed or is committing in
his presence any of the offenses defined in this chapter. He shall also seize and
confiscate, in favor of the Government, the tools and equipment used in committing
the offense, or the forest products cut, gathered or taken by the offender in the
process of committing the offense.
Among the offenses punished in the chapter referred to in said Section 80 are the cutting, gathering,
collection, or removal of timber or other forest products or possession of timber or other forest
products without the required legal documents.
Its motion to reconsider the decision having been denied by the Court of Appeals in the resolution of
6 February 1996, the petitioner filed with this Court on 27 February 1996 a petition for review
on certiorari in G.R. No. 123784.
We shall now resolve these three cases starting with G.R. No. 106424 with which the other two were
consolidated.
G.R. No. 106424
The petitioner had moved to quash the information in Criminal Case No. 324-V-91 on the ground that
it does not charge an offense. Respondent Judge Dizon-Capulong granted the motion reasoning that
the subject matter of the information in the CRIMINAL CASE is LUMBER, which is neither "timber" nor
"other forest product" under Section 68 of P.D. No. 705, as amended, and hence, possession thereof
without the required legal documents is not prohibited and penalized under the said section.
Under paragraph (a), Section 3, Rule 117 of the Rules of Court, an information may be quashed on the
ground that the facts alleged therein do not constitute an offense. It has been said that "the test for
the correctness of this ground is the sufficiency of the averments in the information, that is, whether
the facts alleged, if hypothetically admitted, constitute the elements of the
offense, 29 and matters aliunde will not be considered." Anent the sufficiency of the information,
Section 6, Rule 110 of the Rules of Court requires, inter alia, that the information state the acts or
omissions complained of as constituting the offense.
Respondent Ri Chuy Po is charged with the violation of Section 68 of P.D. No. 705, as amended by E.O.
No. 277, which provides:
Sec. 68. Cutting, Gathering and/or collecting Timber, or Other Forest Products
Without License. -- Any person who shall cut, gather, collect, remove timber or other
forest products from any forest land, or timber from alienable or disposable public
land, or from private land, without any authority, or possess timber or other forest
products without the legal documents as required under existing forest laws and
 regulations, shall be punished with the penalties imposed under Articles 309 and
310 of the Revised Penal Code: Provided, That in the case of partnerships,
associations, or corporations, the officers who ordered the cutting, gathering,
collection or possession shall be liable, and if such officers are aliens, they shall, in
addition to the penalty, be deported without further proceedings on the part of the
Commission on Immigration and Deportation.
The Court shall further order the confiscation in favor of the government of the
timber or any forest products cut, gathered, collected, removed, or possessed, as
well as the machinery, equipment, implements and tools illegally used in the area
where the timber or forest products are found.
Punished then in this section are (1) the cutting, gathering, collection, or removal of timber
or other forest products from the places therein mentioned without any authority; and
(b) possession of timber forest products without the legal documents as required under
existing forest laws and regulations.
Indeed, the word lumber does not appear in Section 68. But conceding ex gratia that this omission
amounts to an exclusion of lumber from the section's coverage, do the facts averred in the
information in the CRIMINAL CASE validly charge a violation of the said section?
A cursory reading of the information readily leads us to an infallible conclusion that lumber is not
solely its subject matter. It is evident therefrom that what are alleged to be in the possession of the
private respondent, without the required legal documents, are truckloads of
(1) almaciga and lauan; and
(2) approximately 200,000 bd. ft. of lumber and shorts of various
species including almaciga and supa.
The "almaciga and lauan" specifically mentioned in no. (1) are not described as "lumber."
They cannot refer to the "lumber" in no. (2) because they are separated by the words
"approximately 200,000 bd. ft." with the conjunction "and," and not with the preposition
"of." They must then be raw forest products or, more specifically, timbers under Section 3(q)
of P.D. No. 705, as amended, which reads:
Sec. 3. Definitions. --
xxx xxx xxx
(q) Forest product means timber, firewood, bark, tree top, resin,
gum, wood, oil, honey, beeswax, nipa, rattan, or other forest
plant, the associated water, fish game, scenic, historical,
recreational and geological resources in forest lands.
It follows then that lumber is only one of the items covered by the information. The public and the
private respondents obviously miscomprehended the averments in the information. Accordingly, even
if lumber is not included in Section 68, the other items therein as noted above fall within the ambit of
the said section, and as to them, the information validly charges an offense.
Our respected brother, Mr. Justice Jose C. Vitug, suggests in his dissenting opinion that this Court go
beyond the four corners of the information for enlightenment as to whether the information
exclusively refers to lumber. With the aid of the pleadings and the annexes thereto, he arrives at the
conclusion that "only lumber has been envisioned in the indictment."
The majority is unable to subscribe to his view. First, his proposition violates the rule that only the
facts alleged in the information vis-a-vis the law violated must be considered in determining whether
an information charges an offense.
Second, the pleadings and annexes he resorted to are insufficient to justify his conclusion. On the
contrary, the Joint Affidavit of Melencio Jalova, Jr., and Araman Belleng, which is one of the annexes
he referred to, 30 cannot lead one to infer that what the team seized was all lumber. Paragraph 8
thereof expressly states:
8. That when inside the compound, the team found approximately
four (4) truckloads of narra shorts, trimmings and slabs and a
negligible amount of narra lumber, and approximately 200,000 bd.
ft. of lumber and shorts of various species including almaciga and
supa which are classified as prohibited wood species. (emphasis
supplied)
In the same vein, the dispositive portion of the resolution 31 of the investigating prosecutor,
which served as the basis for the filing of the information, does not limit itself to lumber;
thus:
WHEREFORE, premises considered, it is hereby recommended that an information
be filed against respondent Ri Chuy Po for illegal possession of 200,000 bd. ft. of
lumber consisting of almaciga and supa and for illegal shipment of almaciga and
lauan in violation of Sec. 63 of PD 705 as amended by E.O. 277, series of 1987.
(emphasis supplied)
The foregoing disquisitions should not, in any manner, be construed as an affirmance of the
respondent Judge's conclusion that lumber is excluded from the coverage of Section 68 of P.D. No.
705, as amended, and thus possession thereof without the required legal documents is not a crime.
On the contrary, this Court rules that such possession is penalized in the said section
because lumber is included in the term timber.
The Revised Forestry Code contains no definition of either timber or lumber. While the former is
included in forest products as defined in paragraph (q) of Section 3, the latter is found in paragraph
(aa) of the same section in the definition of "Processing plant," which reads:
(aa) Processing plant is any mechanical set-up, machine or
combination of machine used for the processing of logs and other
forest raw materials into lumber, veneer, plywood, wallbond,
blockboard, paper board, pulp, paper or other finished wood
products.
This simply means that lumber is a processed log or processed forest raw material. Clearly,
the Code uses the term lumber in its ordinary or common usage. In the 1993 copyright
edition of Webster's Third New International Dictionary, lumber is defined, inter alia, as
"timber or logs after being prepared for the market." 32Simply put, lumber is a processed log
or timber.
It is settled that in the absence of legislative intent to the contrary, words and phrases used in a
statute should be given their plain, ordinary, and common usage meaning. 33 And insofar as
possession of timber without the required legal documents is concerned, Section 68 of P.D. No. 705,
as amended, makes no distinction between raw or processed timber. Neither should we. Ubi lex non
distinguere debemus.
Indisputably, respondent Judge Teresita Dizon-Capulong of Branch 172 of the RTC of Valenzuela,
Metro Manila, committed grave abuse of discretion in granting the motion to quash the information
in the CRIMINAL CASE and in dismissing the said case.
G.R. No. 104988
We find this petition to be without merit. The petitioner has miserably failed to show that the Court
of Appeals committed any reversible error in its assailed decision of 29 November 1991.
It was duly established that on 1 April 1990, the petitioner's truck with Plate No. CCK-322 was coming
out from the petitioner's lumberyard loaded with lauan and almaciga lumber of different sizes and
dimensions which were not accompanied with the required invoices and transport documents. The
seizure of such truck and its cargo was a valid exercise of the power vested upon a forest officer or
employee by Section 80 of P.D. No. 705, as amended by P.D. No. 1775. Then, too, as correctly held by
the trial court and the Court of Appeals in the FIRST CIVIL CASE, the search was conducted on a
moving vehicle. Such a search could be lawfully conducted without a search warrant.
Search of a moving vehicle is one of the five doctrinally accepted exceptions to the constitutional
mandate 34 that no search or seizure shall be made except by virtue of a warrant issued by a judge
after personally determining the existence of probable cause. The other exceptions are (3) search as
an incident to a lawful arrest, (2) seizure of evidence in plain view, (3) customs searches, and (4)
consented warrantless search. 35
We also affirm the rulings of both the trial court and the Court of Appeals that the search on 4 April
1990 was a continuation of the search on 3 April 1990 done under and by virtue of the search warrant
issued on 3 April 1990 by Executive Judge Osorio. Under Section 9, Rule 126 of the Rules of Court, a
search warrant has a lifetime of ten days. Hence, it could be served at any time within the said period,
and if its object or purpose cannot be accomplished in one day, the same may be continued the
following day or days until completed. Thus, when the search under a warrant on one day was
interrupted, it may be continued under the same warrant the following day, provided it is still within
the ten-day period. 36
As to the final plea of the petitioner that the search was illegal because possession of lumber without
the required legal documents is not illegal under Section 68 of P.D. No. 705, as amended,
since lumber is neither specified therein nor included in the term forest product, the same hardly
merits further discussion in view of our ruling in G.R. No. 106424.
G.R. No. 123784
The allegations and arguments set forth in the petition in this case palpally fail to shaw prima
facie that a reversible error has been committed by the Court of Appeals in its challenged decision of
31 July 1995 and resolution of 6 February 1996 in CA-G.R. SP No. 33778. We must, forthwith, deny it
for utter want of merit. There is no need to require the respondents to comment on the petition.
The Court of Appeals correctly dismissed the petitioner's appeal from the judgment of the trial court
in the SECOND CIVIL CASE. The petitioner never disputed the fact that its lumber-dealer's license or
permit had been suspended by Secretary Factoran on 23 April 1990. The suspension was never lifted,
and since the license had only a lifetime of up to 25 September 1990, the petitioner has absolutely no
right to possess, sell, or otherwise dispose of lumber. Accordingly, Secretary Factoran or his
authorized representative had the authority to seize the Lumber pursuant to Section 68-A of P.D. No.
705, as amended, which provides as follows:
Sec. 68-A Administrative Authority of the Department Head or his Duly Authorized
Representative to Order Confiscation. -- In all cases of violations of this Code or
other forest laws, rules and regulations, the Department Head or his duly authorized
representative may order the confiscation of any forest products illegally cut,
gathered, removed, or possessed or abandoned. . . .
The petitioner's insistence that possession or sale of lumber is not penalized must also fail view of our
disquisition and ruling on the same issue in G.R. No. 106424. Besides, the issue is totally irrelevant in
the SECOND CIVIL CASE which involves administrative seizure as a consequence of the violation of the
suspension of the petitioner's license as lumber dealer.
All told then, G.R. No. 104988 and G.R. No. 123784 are nothing more than rituals to cover up blatant
violations of the Revised Forestry Code of the Philippines (P.D. No. 705), as amended. They are
presumably trifling attempts to block the serious efforts of the DENR to enforce the decree, efforts
which deserve the commendation of the public in light of the urgent need to take firm and decisive
action against despoilers of our forests whose continuous destruction only ensures to the generations
to come, if not the present, an inheritance of parched earth incapable of sustaining life. The
Government must not tire in its vigilance to protect the environment by prosecuting without fear or
favor any person who dares to violate our laws for the utilization and protection of our forests.
WHEREFORE, judgment is hereby rendered
1. (a) GRANTING the petition in G.R. No. 106424; (b) SETTING ASIDE and
ANNULLING, for having been rendered with grave abuse of discretion, the
challenged orders of 16 August 1991 and 18 October 1991 of respondent Judge
Teresita Dizon-Capulong, Branch 172, Regional Trial Court of Valenzuela, Metro
Manila, in Criminal Case No. 324-V-91, entitled "People of the Philippines vs. Ri Chuy
Po"; (c) REINSTATING the information in the said criminal case; and (d) DIRECTING
the respondent Judge or her successor to hear and decide the case with purposeful
dispatch; and
2. DENYING the petitions in G.R. No. 104988 and in G. R. No. 123784 for utter failure
of the petitioner to show that the respondent Court of Appeals committed any
reversible error in the challenged decisions of 29 November 1991 in CA-G.R. SP No.
25510 in the FIRST CIVIL CASE and of 31 July 1995 in CA-G.R. SP No. 33778 on the
SECOND CIVIL CASE.
Costs against the petitioner in each of these three cases.
SO ORDERED.
G.R. No. 158182 June 12, 2008
SESINANDO MERIDA, petitioner,
vs.
PEOPLE OF THE PHILIPPINES, respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision2 dated 28 June 2002 and the Resolution dated 14 May
2003 of the Court of Appeals. The 28 June 2002 Decision affirmed the conviction of petitioner
Sesinando Merida (petitioner) for violation of Section 68, 3 Presidential Decree No. 705 (PD 705),4 as
amended by Executive Order No. 277. The Resolution dated 14 May 2003 denied admission of
petitioner's motion for reconsideration.5
The Facts
Petitioner was charged in the Regional Trial Court of Romblon, Romblon, Branch 81 (trial court) with
violation of Section 68 of PD 705, as amended, for "cut[ting], gather[ing], collect[ing] and remov[ing]"
a lone narra tree inside a private land in Mayod, Ipil, Magdiwang, Romblon (Mayod Property) over
which private complainant Oscar M. Tansiongco (Tansiongco) claims ownership. 6
The prosecution evidence showed that on 23 December 1998, Tansiongco learned that petitioner cut
a narra tree in the Mayod Property. Tansiongco reported the matter to Florencio Royo (Royo),
the punong barangay of Ipil. On 24 December 1998,7 Royo summoned petitioner to a meeting with
Tansiongco. When confronted during the meeting about the felled narra tree, petitioner admitted
cutting the tree but claimed that he did so with the permission of one Vicar Calix (Calix) who,
according to petitioner, bought the Mayod Property from Tansiongco in October 1987 under a pacto
de retro sale. Petitioner showed to Royo Calix's written authorization signed by Calix's wife. 8
On 11 January 1999, Tansiongco reported the tree-cutting to the Department of Environment and
Natural Resources (DENR) forester Thelmo S. Hernandez (Hernandez) in Sibuyan, Romblon. When
Hernandez confronted petitioner about the felled tree, petitioner reiterated his earlier claim to Royo
that he cut the tree with Calix's permission. Hernandez ordered petitioner not to convert the felled
tree trunk into lumber.
On 26 January 1999, Tansiongco informed Hernandez that petitioner had converted the narra trunk
into lumber. Hernandez, with other DENR employees and enforcement officers, went to the Mayod
Property and saw that the narra tree had been cut into six smaller pieces of lumber. Hernandez took
custody of the lumber,9 deposited them for safekeeping with Royo, and issued an apprehension
receipt to petitioner. A larger portion of the felled tree remained at the Mayod Property. The DENR
subsequently conducted an investigation on the matter.10
Tansiongco filed a complaint with the Office of the Provincial Prosecutor of Romblon (Provincial
Prosecutor) charging petitioner with violation of Section 68 of PD 705, as amended. During the
preliminary investigation, petitioner submitted a counter-affidavit reiterating his claim that he cut the
narra tree with Calix's permission. The Provincial Prosecutor 11 found probable cause to indict
petitioner and filed the Information with the trial court (docketed as Criminal Case No. 2207).
During the trial, the prosecution presented six witnesses including Tansiongco, Royo, and Hernandez
who testified on the events leading to the discovery of and investigation on the tree-cutting.
Petitioner testified as the lone defense witness and claimed, for the first time, that he had no part in
the tree-cutting.
The Ruling of the Trial Court
In its Decision dated 24 November 2000, the trial court found petitioner guilty as charged, sentenced
him to fourteen (14) years, eight (8) months and one (1) day to twenty (20) years of reclusion
temporal and ordered the seizedlumber forfeited in Tansiongco's favor.12 The trial court dismissed
petitioner's defense of denial in view of his repeated extrajudicial admissions that he cut the narra
tree in the Mayod Property with Calix's permission. With this finding and petitioner's lack of DENR
permit to cut the tree, the trial court held petitioner liable for violation of Section 68 of PD 705, as
amended.
Petitioner appealed to the Court of Appeals reiterating his defense of denial. Petitioner also
contended that (1) the trial court did not acquire jurisdiction over the case because it was based on a
complaint filed by Tansiongco and not by a forest officer as provided under Section 80 of PD 705 and
(2) the penalty imposed by the trial court is excessive.
The Ruling of the Court of Appeals
In its Decision dated 28 June 2002, the Court of Appeals affirmed the trial court's ruling but ordered
the seized lumber confiscated in the government's favor.13 The Court of Appeals sustained the trial
court's finding that petitioner is bound by his extrajudicial admissions of cutting the narra tree in the
Mayod Property without any DENR permit. The Court of Appeals also found nothing irregular in the
filing of the complaint by Tansiongco instead of a DENR forest officer considering that the case
underwent preliminary investigation by the proper officer who filed the Information with the trial
court.
On the imposable penalty, the Court of Appeals, in the dispositive portion of its ruling, sentenced
petitioner to 14 years, 8 months and 1 day to 17 years of reclusion temporal. However, in the body of
its ruling, the Court of Appeals held that "the penalty to be imposed on [petitioner] should be (14)
years, eight (8) months and one (1) day to twenty (20) years of reclusion temporal,"14 the same
penalty the trial court imposed.
Petitioner sought reconsideration but the Court of Appeals, in its Resolution dated 14 May 2003, did
not admit his motion for having been filed late. 15
Hence, this petition. Petitioner raises the following issues:
I. WHETHER x x x SECTION 68 OF P.D. 705 AS AMENDED PROHIBITING THE CUTTING,
GATHERING, COLLECTING AND REMOVING TIMBER OR OTHER FOREST PRODUCTS FROM ANY
FOREST LAND APPLIES TO PETITIONER.
II. WHETHER x x x POSSESSION OF THE NARRA TREE CUT IN PRIVATE LAND CONTESTED BY
VICAR CALIX AND PRIVATE-COMPLAINANT OSCAR TANSIONGCO IS COVERED BY SECTION 80
OF P.D. 705 AS AMENDED.
III. WHETHER PRIVATE-COMPLAINANT CAN INITIATE THE CHARGE EVEN WITHOUT THE
STANDING AUTHORITY COMING FROM THE INVESTIGATING FOREST OFFICER OF THE
DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES AS MANDATED BY SECTION 80
OF P.D. 705 AS AMENDED.
[IV.] WHETHER x x x THE TRIAL COURT ERRED IN TAKING COGNIZANCE OF THE CASE FILED BY
PRIVATE-COMPLAINANT BECAUSE IT WAS NOT THE INVESTIGATING OFFICER AS REQUIRED BY
SECTION 80 OF P.D. 705 AS AMENDED WHO MUST BE THE ONE TO INSTITUTE THE FILING OF
THE SAME.16
In its Comment to the petition, the Office of the Solicitor General (OSG) countered that (1) the trial
court acquired jurisdiction over the case even though Tansiongco, and not a DENR forest officer, filed
the complaint against petitioner and (2) petitioner is liable for violation of Section 68 of PD 705, as
amended.
The Issues
The petition raises the following issues:17
1) Whether the trial court acquired jurisdiction over Criminal Case No. 2207 even though it
was based on a complaint filed by Tansiongco and not by a DENR forest officer; and
2) Whether petitioner is liable for violation of Section 68 of PD 705, as amended.
The Ruling of the Court
The petition has no merit.
The Trial Court Acquired Jurisdiction Over
Criminal Case No. 2207
We sustain the OSG's claim that the trial court acquired jurisdiction over Criminal Case No. 2207. The
Revised Rules of Criminal Procedure (Revised Rules) list the cases which must be initiated by a
complaint filed by specified individuals,18 non-compliance of which ousts the trial court of jurisdiction
from trying such cases.19 However, these cases concern only defamation and other crimes against
chastity20 and not to cases concerning Section 68 of PD 705, as amended. Further, Section 80 of PD
705 does not prohibit an interested person from filing a complaint before any qualified officer for
violation of Section 68 of PD 705, as amended. Section 80 of PD 705 provides in relevant parts:
SECTION 80. Arrest; Institution of criminal actions. - x x x x
Reports and complaints regarding the commission of any of the offenses defined in this
Chapter, not committed in the presence of any forest officer or employee, or any of the
deputized officers or officials, shall immediately be investigated by the forest
officer assigned in the area where the offense was allegedly committed, who shall thereupon
receive the evidence supporting the report or complaint.
If there is prima facie evidence to support the complaint or report, the investigating forest
officer shall file the necessary complaint with the appropriate official authorized by law to
conduct a preliminary investigation of criminal cases and file an information in Court.
(Emphasis supplied)
We held in People v. CFI of Quezon21 that the phrase "reports and complaints" in Section 80 refers to
"reports and complaints as might be brought to the forest officer assigned to the area by other forest
officers or employees of the Bureau of Forest Development or any of the deputized officers or
officials, for violations of forest laws not committed in their presence." 22
Here, it was not "forest officers or employees of the Bureau of Forest Development or any of the
deputized officers or officials" who reported to Hernandez the tree-cutting in the Mayod Property but
Tansiongco, a private citizen who claims ownership over the Mayod Property. Thus, Hernandez cannot
be faulted for not conducting an investigation to determine "if there is prima facie evidence to
support the complaint or report."23 At any rate, Tansiongco was not precluded, either under Section
80 of PD 705 or the Revised Rules, from filing a complaint before the Provincial Prosecutor for
petitioner's alleged violation of Section 68 of PD 705, as amended. For its part, the trial court correctly
took cognizance of Criminal Case No. 2207 as the case falls within its exclusive original jurisdiction. 24
Petitioner is Liable for Cutting Timber in Private
Property Without Permit
Section 68, as amended, one of the 12 acts25 penalized under PD 705, provides:
SECTION 68. Cutting, Gathering and/or Collecting Timber, or Other Forest Products Without
License. - Any person who shall cut, gather, collect, remove timber or other forest products
from any forest land, or timber from alienable or disposable public land, or from private
land, without any authority, or possess timber or other forest products without the legal
documents as required under existing forest laws and regulations, shall be punished with the
penalties imposed under Articles 309 and 310 of the Revised Penal Code: Provided, That in
the case of partnerships, associations, or corporations, the officers who ordered the cutting,
gathering, collection or possession shall be liable, and if such officers are aliens, they shall, in
addition to the penalty, be deported without further proceedings on the part of the
Commission on Immigration and Deportation.
The court shall further order the confiscation in favor of the government of the timber or any
forest products cut, gathered, collected, removed, or possessed as well as the machinery,
equipment, implements and tools illegally used in the area where the timber or forest
products are found. (Emphasis supplied)
Section 68 penalizes three categories of acts: (1) the cutting, gathering, collecting, or removing of
timber or other forest products from any forest land without any authority; (2) the cutting, gathering,
collecting, or removing of timber from alienable or disposable public land, or from private land
without any authority;26 and (3) the possession of timber or other forest products without the legal
documents as required under existing forest laws and regulations. 27 Petitioner stands charged of
having "cut, gathered, collected and removed timber or other forest products from a private
land28 without x x x the necessary permit x x x " thus his liablity, if ever, should be limited only for
"cut[ting], gather[ing], collect[ing] and remov[ing] timber," under the second category. Further, the
prosecution evidence showed that petitioner did not perform any acts of "gathering, collecting, or
removing" but only the act of "cutting" a lone narra tree. Hence, this case hinges on the question of
whether petitioner "cut x x xtimber" in the Mayod Property without a DENR permit. 29
We answer in the affirmative and thus affirm the lower courts' rulings.
On the question of whether petitioner cut a narra tree in the Mayod Property without a DENR permit,
petitioner adopted conflicting positions. Before his trial, petitioner consistently represented to the
authorities that he cut a narra tree in the Mayod Property and that he did so only with Calix's
permission. However, when he testified, petitioner denied cutting the tree in question. We sustain the
lower courts' rulings that petitioner's extrajudicial admissions bind him. 30 Petitioner does not explain
why Royo and Hernandez, public officials who testified under oath in their official capacities, would lie
on the stand to implicate petitioner in a serious criminal offense, not to mention that the acts of these
public officers enjoy the presumption of regularity. Further, petitioner does not deny presenting
Calix's authorization to Royo and Hernandez as his basis for cutting the narra tree in the Mayod
Property. Petitioner has no use of Calix's authorization if, as he claimed during the trial, he did not cut
any tree in the Mayod Property.
We further hold that the lone narre tree petitioner cut from the Mayod Property constitutes "timber"
under Section 68 of PD 705, as amended. PD 705 does not define "timber," only "forest product"
(which circuitously includes "timber.")31 Does the narra tree in question constitute "timber" under
Section 68? The closest this Court came to defining the term "timber" in Section 68 was to provide
that "timber," includes "lumber" or "processed log."32 In other jurisdictions, timber is determined by
compliance with specified dimensions33 or certain "stand age" or "rotation age."34 In Mustang Lumber,
Inc. v. Court of Appeals,35 this Court was faced with a similar task of having to define a term in Section
68 of PD 705 - "lumber" - to determine whether possession of lumber is punishable under that
provision. In ruling in the affirmative, we held that "lumber" should be taken in its ordinary or
common usage meaning to refer to "processed log or timber," thus:
The Revised Forestry Code contains no definition of either timber or lumber. While the
former is included in forest products as defined in paragraph (q) of Section 3, the latter is
found in paragraph (aa) of the same section in the definition of "Processing plant," which
reads:
(aa) Processing plant is any mechanical set-up, machine or combination of machine
used for the processing of logs and other forest raw materials into lumber, veneer,
plywood, wallboard, blackboard, paper board, pulp, paper or other finished wood
products.
This simply means that lumber is a processed log or processed forest raw material. Clearly,
the Code uses the term lumber in its ordinary or common usage. In the 1993 copyright
edition of Webster's Third New International Dictionary, lumber is defined, inter alia, as
"timber or logs after being prepared for the market." Simply put, lumber is a processed log or
timber.
It is settled that in the absence of legislative intent to the contrary, words and phrases used
in a statute should be given their plain, ordinary, and common usage meaning. And in so far
as possession of timber without the required legal documents is concerned, Section 68 of PD
No. 705, as amended, makes no distinction between raw and procesed timber. Neither
should we.36 x x x x (Italicization in the original; boldfacing supplied)
We see no reason why, as in Mustang, the term "timber" under Section 68 cannot be taken in its
common acceptation as referring to "wood used for or suitable for building or for carpentry or
joinery."37 Indeed, tree saplings or tiny tree stems that are too small for use as posts, panelling,
beams, tables, or chairs cannot be considered timber. 38
Here, petitioner was charged with having felled a narra tree and converted the same into "several
pieces of sawn lumber, about three (3) pcs. 2x16x6 and three (3) pcs. 2x18x7 x x x consisting of 111
board feet x x x." These measurements were indicated in the apprehension receipt Hernandez issued
to petitioner on 26 January 1999 which the prosecution introduced in evidence. 39 Further, Hernandez
testified that the larger portion of the felled log left in the Mayod Property "measured 76 something
centimeters [at the big end] while the smaller end measured 65 centimeters and the length was 2.8
meters."40 Undoubtedly, the narra tree petitioner felled and converted to lumber was "timber" fit "for
building or for carpentry or joinery" and thus falls under the ambit of Section 68 of PD 705, as
amended.
The Penalty Imposable on Petitioner
Violation of Section 68 of PD 705, as amended, is punishable as Qualified Theft under Article 310 in
relation to Article 309 of the Revised Penal Code (RPC), thus:
Art. 310. Qualified theft. - The crime of qualified theft shall be punished by the penalties next
higher by two degrees than those respectively specified in the next preceding article x x x.
Art. 309. Penalties. - Any person guilty of theft shall be punished by:
1. The penalty of prisión mayor in its minimum and medium periods, if the value of
the thing stolen is more than 12,000 pesos but does not exceed 22,000 pesos; but if
the value of the thing stolen exceeds the latter amount, the penalty shall be the
maximum period of the one prescribed in this paragraph, and one year for each
additional ten thousand pesos, but the total of the penalty which may be imposed
shall not exceed twenty years. In such cases, and in connection with the accessory
penalties which may be imposed and for the purpose of the other provisions of this
Code, the penalty shall be termed prisión mayor or reclusión temporal, as the case
may be.
2. The penalty of prisión correccional in its medium and maximum periods, if the
value of the thing stolen is more than 6,000 pesos but does not exceed 12,000
pesos.
3. The penalty of prisión correccional in its minimum and medium periods, if the
value of the property stolen is more than 200 pesos but does not exceed 6,000
pesos.
4. Arresto mayor in its medium period to prisión correccional in its minimum period,
if the value of the property stolen is over 50 pesos but does not exceed 200 pesos.
5. Arresto mayor to its full extent, if such value is over 5 pesos but does not exceed
50 pesos.
6. Arresto mayor in its minimum and medium periods, if such value does not exceed
5 pesos.
7. Arresto menor or a fine not exceeding 200 pesos, if the theft is committed under
the circumstances enumerated in paragraph 3 of the next preceding article and the
value of the thing stolen does not exceed 5 pesos. If such value exceeds said
amount, the provisions of any of the five preceding subdivisions shall be made
applicable.
.
 8. Arresto menor in its minimum period or a fine not exceeding 50 pesos, when the
value of the thing stolen is not over 5 pesos, and the offender shall have acted
under the impulse of hunger, poverty, or the difficulty of earning a livelihood for the
support of himself or his family.
The Information filed against petitioner alleged that the six pieces of lumber measuring 111 board
feet were valued at P3,330. However, if the value of the log left at the Mayod Property is included, the
amount increases to P20,930.40. To prove this allegation, the prosecution relied on Hernandez's
testimony that these amounts, as stated in the apprehension receipt he issued, are his "estimates"
based on "prevailing local price."41
This evidence does not suffice. To prove the amount of the property taken for fixing the penalty
imposable against the accused under Article 309 of the RPC, the prosecution must present more than
a mere uncorroborated "estimate" of such fact. 42 In the absence of independent and reliable
corroboration of such estimate, courts may either apply the minimum penalty under Article 309 or fix
the value of the property taken based on the attendant circumstances of the case. 43 In People v.
Dator44 where, as here, the accused was charged with violation of Section 68 of PD 705, as amended,
for possession of lumber without permit, the prosecution's evidence for the lumber's value consisted
of an estimate made by the apprehending authorities whose apparent lack of corroboration was
compounded by the fact that the transmittal letter for the estimate was not presented in evidence.
Accordingly, we imposed on the accused the minimum penalty under Article 309(6) 45 of the RPC.46
Applying Dator in relation to Article 310 of the RPC and taking into account the Indeterminate
Sentence Law, we find it proper to impose on petitioner, under the circumstances obtaining here, the
penalty of four (4) months and one (1) day of arresto mayor, as minimum, to three (3) years, four (4)
months and twenty-one (21) days of prision correcional, as maximum.
WHEREFORE, we AFFIRM the Decision dated 28 June 2002 and the Resolution dated 14 May 2003 of
the Court of Appeals with the modification that petitioner Sesinando Merida is sentenced to four (4)
months and one (1) day of arresto mayor, as minimum, to three (3) years, four (4) months and
twenty-one (21) days of prision correcional, as maximum.
SO ORDERED.
G.R. No. 162243 December 3, 2009
HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her capacity as Secretary of the
Department of Environment and Natural Resources, Petitioner,
vs.
PICOP RESOURCES, INC., Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 164516
PICOP RESOURCES, INC., Petitioner,
vs.
HON. HEHERSON ALVAREZ substituted by HON. ELISEA G. GOZUN, in her capacity as Secretary of the
Department of Environment and Natural Resources Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 171875
THE HON. ANGELO T. REYES (formerly Hon. Elisea G. Gozun), in his capacity as Secretary of the
Department of Environment and Natural Resources (DENR), Petitioner,
vs.
PAPER INDUSTRIES CORP. OF THE PHILIPPINES (PICOP), Respondent.
RESOLUTION
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 2 September 2002, PICOP filed before the Regional Trial Court (RTC) of Quezon City
a Petition for Mandamus1 against then DENR Secretary Heherson T. Alvarez. PICOP seeks the issuance
of a privileged writ of mandamus to compel the DENR Secretary to sign, execute and deliver an IFMA
to PICOP, as well as to –
[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 11 October 2002, the RTC rendered a Decision granting PICOP’s Petition for Mandamus, thus:
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 ₱10 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 25 October 2002, the DENR Secretary filed a Motion for Reconsideration. 4 In a 10 February 2003
Order, the RTC denied the DENR Secretary’s Motion for Reconsideration and granted PICOP’s Motion
for the Issuance of Writ of Mandamus and/or Writ of Mandatory Injunction. 5 The fallo of the 11
October 2002 Decision was practically copied in the 10 February 2003 Order, although there was no
mention of the damages imposed against then DENR Secretary Alvarez. 6 The DENR Secretary filed a
Notice of Appeal7 from the 11 October 2002 Decision and the 10 February 2003 Order.
On 19 February 2004, the Seventh Division of the Court of Appeals affirmed 8 the Decision of the RTC,
to wit:
WHEREFORE, the appealed Decision is hereby AFFIRMED with modification that the order directing
then DENR Secretary Alvarez "to pay petitioner-appellee the sum of P10 million a month beginning
May, 2002 until the conversion to IFMA of TLA No. 43, as amended, is formally effected and the
harvesting from the said area is granted" is hereby deleted. 9
Challenging the deletion of the damages awarded to it, PICOP filed a Motion for Partial
Reconsideration10 of this Decision, which was denied by the Court of Appeals in a 20 July 2004
Resolution.11
The DENR Secretary and PICOP filed with this Court separate Petitions for Review of the 19 February
2004 Court of Appeals Decision. These Petitions were docketed as G.R. No. 162243 and No. 164516,
respectively. These cases were consolidated with G.R. No. 171875, which relates to the lifting of a Writ
of Preliminary Injunction enjoining the execution pending appeal of the foregoing Decision.
On 29 November 2006, this Court rendered the assailed Decision on the Consolidated Petitions:
WHEREFORE, the Petition in G.R. No. 162243 is GRANTED. The Decision of the Court of Appeals
insofar as it affirmed the RTC Decision granting the Petition for Mandamus filed by Paper Industries
Corp. of the Philippines (PICOP) is hereby REVERSED and SET ASIDE. The Petition in G.R. No. 164516
seeking the reversal of the same Decision insofar as it nullified the award of damages in favor of
PICOP is DENIED for lack of merit. The Petition in G.R. No. 171875, assailing the lifting of the
Preliminary Mandatory Injunction in favor of the Secretary of Environment and Natural Resources is
DISMISSED on the ground of mootness.12
On 18 January 2006, PICOP filed the instant Motion for Reconsideration, based on the following
grounds:
I.
THE HONORABLE COURT ERRED IN HOLDING THAT THE CONTRACT WITH PRESIDENTIAL WARRANTY
SIGNED BY THE PRESIDENT OF THE REPUBLIC ON 29 JUNE 1969 ISSUED TO PICOP IS A MERE PERMIT
OR LICENSE AND IS NOT A CONTRACT, PROPERTY OR PROPERTY RIGHT PROTECTED BY THE DUE
PROCESS CLAUSE OF THE CONSTITUTION
II.
THE EVALUATION OF PICOP’S MANAGEMENT OF THE TLA 43 NATURAL FOREST CLEARLY SHOWED
SATISFACTORY PERFORMANCE FOR KEEPING THE NATURAL FOREST GENERALLY INTACT AFTER 50
YEARS OF FOREST OPERATIONS. THIS COMPLETES THE REQUIREMENT FOR AUTOMATIC CONVERSION
UNDER SECTION 9 OF DAO 99-53.
III.
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 FIVE-YEAR FOREST PROTECTION PLAN AND A SEVEN-YEAR
REFORESTATION PLAN FOR THE YEARS UNDER REVIEW.
ii.
PICOP FAILED TO COMPLY WITH THE PAYMENT OF FOREST CHARGES.
iii.
PICOP DID NOT COMPLY WITH THE REQUIREMENT FOR A CERTIFICATION FROM THE NCIP THAT THE
AREA OF TLA 43 DOES NOT OVERLAP WITH ANY ANCESTRAL DOMAIN.
iv.
PICOP FAILED TO HAVE PRIOR CONSULTATION WITH 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 25 OCTOBER 2001 WAS NOT DUE TO ANY SHORTCOMING FROM PICOP BUT DUE TO HIS
DETERMINATION TO EXCLUDE 28,125 HECTARES FROM THE CONVERSION AND OTHER THINGS.
On 15 December 2008, on Motion by PICOP, the Third Division of this Court resolved to refer the
consolidated cases at bar to the Court en banc. On 16 December 2008, this Court sitting en banc
resolved to accept the said cases and set them for oral arguments. Oral arguments were conducted on
10 February 2009.
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 29
July 1969 Document, the so-called Presidential Warranty approved by then President Ferdinand E.
Marcos in favor of PICOP’s predecessor-in-interest, Bislig Bay Lumber Company, Inc. (BBLCI). PICOP’s
cause of action is summarized in paragraphs 1.6 and 4.19 of its Petition for Mandamus:
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 26 April 2002, the IFMA that could
have been granted to PICOP via the automatic conversion provision in DAO No. 99-53 would have
expired on the same date, 26 April 2002, and the PICOP’s Petition for Mandamus would have become
moot.
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 29 July 1969 Presidential Warranty
Base Metals Case
PICOP challenges our ruling that the 1969 Document is not a contract. Before we review this finding,
however, it must be pointed out that one week after the assailed Decision, another division of this
Court promulgated a Decision concerning the very same 1969 Document. Thus, in PICOP Resources,
Inc. v. Base Metals Mineral Resources Corporation,26 five other Justices who were still unaware of this
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 September 25,
1968 is a contract protected by the non-impairment clause of the 1987 Constitution.
An examination of the Presidential Warranty at once reveals that it simply reassures PICOP of the
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 JUSTICE TINGA:
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 And do you confirm that one of the very issues raised by PICOP in that case [PICOP Resources Inc. v.
withdrawn whenever dictated by public interest or public welfare as in this case. 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.
‘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 ATTY. AGABIN:
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 Yes, I believe that statement was made by the Court, your Honor.
is it property or property rights (People vs. Ong Tin, 54 O.G. 7576). x x x"
JUSTICE TINGA:
We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive Secretary:
Yes. And that claim on the part of PICOP necessarily implies that the Presidential Warranty according
"x x x Timber licenses, permits and license agreements are the principal instruments by which the to PICOP is a contract protected by the non-impairment clause.
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
ATTY. AGABIN:
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
Yes, Your Honor.
rescinded by the Chief Executive when national interests so require. Thus, they are not deemed
contracts within the purview of the due process of law clause [See Sections 3(ee) and 20 of Pres.
Decree No. 705, as amended. Also, Tan v. Director of Forestry, G.R. No. L-24548, October 27, 1983, JUSTICE TINGA:
125 SCRA 302]."
Essentially, the PICOP raised the issue of whether the Presidential Warranty is a contract or not.
Since timber licenses are not contracts, the non-impairment clause, which reads:
ATTY. AGABIN:
"SEC. 10. No law impairing the obligation of contracts shall be passed."
Yes, Your Honor.
cannot be invoked.
JUSTICE TINGA:
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 And therefore any ruling on the part of the Court on that issue could not be an obiter dictum.
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 ATTY. AGABIN:

The Motion for Reconsideration was denied with finality on 14 February 2007. A Second Motion for
Reconsideration filed by PICOP was denied on 23 May 2007.
PICOP insists that the pronouncement in Base Metals is a mere obiter dictum, which would not bind
this Court in resolving this Motion for Reconsideration. In the oral arguments, however, upon
questioning from the ponente himself of Base Metals, it was agreed that the issue of whether the
1969 Document is a contract was necessary in the resolution of Base Metals:
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.
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:

ATTY. AGABIN: It was not necessary[?]

This Honorable Court could have just ruled, held that the mining law allows mining activities under a ATTY. AGABIN:
forest reserve without deciding on that issue that was raised by PICOP, your Honor, and therefore we
believe…. To the decision of the Court.

JUSTICE TINGA: JUSTICE TINGA:

It could have been better if PICOP has not raised that issue and had not claimed that the Presidential It was.
Warranty is not a contract.
ATTY. AGABIN:
ATTY. AGABIN:
It was not necessary.
Well, that is correct, your Honor except that the Court could have just avoided that question.
Because… JUSTICE TINGA:

JUSTICE TINGA: It was.

Why[?] ATTY. AGABIN:

ATTY. AGABIN: Yes.

It already settled the issue, the basic issue. JUSTICE TINGA:

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 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
Interpretation of the 1969 Document That Would Be in Harmony with the Constitution 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
To remove any doubts as to the contents of the 1969 Document, the purported Presidential Warranty, 21,580 hectares.
below is a complete text thereof:
We further confirm that your tenure over the area and exclusive right to cut, collect and remove
Republic of the Philippines sawtimber and pulpwood shall be for the period ending on April 26, 1977; said period to be
Department of Agriculture and Natural Resources renewable for other 25 years subject to compliance with constitutional and statutory requirements as
OFFICE OF THE SECRETARY well as with existing policy on timber concessions.
Diliman, Quezon City
The peaceful and adequate enjoyment by you of your area as described and specified in your
D-53, Licenses (T.L.A. No. 43) aforesaid amended Timber License Agreement No. 43 is hereby warranted provided that pertinent
Bislig Bay Lumber Co., Inc. laws, regulations and the terms and conditions of your license agreement are observed.
(Bislig, Surigao)
Very truly yours,
July 29, 1969
(Sgd.) FERNANDO LOPEZ
Bislig Bay Lumber Co., Inc. Secretary of Agriculture
[unreadable word] Bldg. and Natural Resources
Makati, Rizal
Encl.:
S i r s:
RECOMMENDED BY:
This has reference to the request of the Board of Investments through its Chairman in a letter dated
July 16, 1969 for a warranty on the boundaries of your concession area under Timber License (Sgd.) JOSE VIADO
Agreement No. 43, as amended. Acting Director of Forestry

We are made to understand that your company is committed to support the first large scale APPROVED:
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 (Sgd.) FERDINAND E. MARCOS
concession but also by making available funds generated out of your own operations, to supplement President of the Philippines
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 ACCEPTED:
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. BISLIG BAY LBR. CO., INC.

It is in the public interest to promote industries that will enhance the proper conservation of our By:
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
(Sgd.) JOSE E. SORIANO
priority over the usual logging operations hitherto practiced by ordinary timber licensees: For this
President
reason, we are pleased to consider favorably the request.
 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 07 October 1977, TLA No. 43, as amended, was automatically renewed for another
period of twenty five (25) years to expire on 26 April 2002. 30
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. Forest lands cannot
be alienated in favor of private entities. Granting to private entities, via a contract, a permanent,
irrevocable, and exclusive possession of and right over forest lands is tantamount to granting
ownership thereof. PICOP, it should be noted, claims nothing less than having exclusive, continuous
and uninterrupted possession of its concession areas,31 where all other entrants are illegal,32 and
where so-called "illegal settlers and squatters" are apprehended. 33
IFMAs are production-sharing agreements concerning the development and utilization of natural
resources. As such, these agreements "may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and conditions as may be
provided by law." Any superior "contract" requiring the State to issue TLAs and IFMAs whenever they
expire clearly circumvents Section 2, Article XII of the Constitution, which provides for the only
permissible schemes wherein the full control and supervision of the State are not derogated: co-
production, joint venture, or 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 26 April 2002, upon the expiration of the
expected extension of the original TLA period ending on 26 April 1977:
We further confirm that your tenure over the area and exclusive right to cut, collect and remove
sawtimber and pulpwood shall be for the period ending on April 26, 1977; said period to be
renewable for other 25 years subject to compliance with constitutional and statutory requirements as
well as with existing policy on timber concessions.1avvphi1
Any interpretation extending the application of the 1969 Document beyond 26 April 2002 and any
concession that may be granted to PICOP beyond the said date would violate the Constitution, and no
amount of legal hermeneutics can change that. Attempts of PICOP to explain its way out of this
Constitutional provision only led to absurdities, as exemplified in the following excerpt from the oral
arguments:
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. ATTY. AGABIN:

JUSTICE CARPIO: Your Honor, except that we are invoking the warranty, the terms of the warranty….

The TLA here, TLA 43, expired, the first 25 years expired in 1977, correct? JUSTICE CARPIO:

ATTY. AGABIN: Can the warranty prevail over the Constitution?

Yes, Your Honor. ATTY. AGABIN:

JUSTICE CARPIO: Well, it is a vested right, your Honor.

And it was renewed for another 25 years until 2002, the 50th year? JUSTICE CARPIO:

ATTY. AGABIN: Yes, but whatever it is, can it prevail over the Constitution?

Yes, Your Honor. ATTY. AGABIN:

JUSTICE CARPIO: The Constitution itself provides that vested rights should be ….

Now, could PICOP before the end of the 50th year let’s say in 2001, one year before the expiration, JUSTICE CARPIO:
could it have asked for an extension of another 25 years of its TLA agreement[?]
If it is not in violation of specific provision of the Constitution. The Constitution says, 25 years plus
ATTY. AGABIN: another 25 years, that’s the end of it. You mean to say that a President of the Philippines can give
somebody 1,000 years license?
I believe so, Your Honor.
ATTY. AGABIN:
JUSTICE CARPIO:
Well, that is not our position, Your Honor. Because our position is that ….
But the Constitution says, maximum of fifty years. How could you ask for another 25 years of its TLA.
JUSTICE CARPIO:
ATTY. AGABIN:
My question is, what is the maximum term, you said 50 years. So, my next question is, can PICOP
Well, your Honor, we believe on a question like this, this Honorable Court should balance the interest. apply for an extension of another 25 years after 2002, the 50th year?

JUSTICE CARPIO: ATTY. AGABIN:

The Constitution is very clear, you have only a maximum of 50 years, 25 plus another 25. PICOP could Yes, based on the contract of warranty, Your Honor, because the contract of warranty….
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? 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 29 July 1969, could not
have possibly considered the limitations yet to be imposed by future issuances, such as the 1987
Constitution. However, Section 3, Article XVIII of said Constitution, provides:
Section 3. All existing laws, decrees, executive orders, proclamations, letters of instructions, and other
executive issuances not inconsistent with this Constitution shall remain operative until amended,
repealed, or revoked.
In the recent case Sabio v. Gordon,38 we ruled that "(t)he clear import of this provision is that all
existing laws, executive orders, proclamations, letters of instructions and other executive issuances
inconsistent or repugnant to the Constitution are repealed."
When a provision is susceptible of two interpretations, "the one that will render them operative and
effective and harmonious with other provisions of law"39 should be adopted. As the interpretations in
the assailed Decision and in Mr. Justice 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 part44 may amend or alter the description of the boundaries of
the area covered by this license agreement to conform with official surveys and that the
decision of the party of the first part as to the exact location of the said boundaries shall be
final.
III. That if the party of the first part deems it necessary to establish on the ground the
boundary lines of the area granted under this license agreement, the party of the second
part shall furnish to the party of the first part or its representatives as many laborers as it
needs and all the expenses to be incurred on the work including the wages of such laborers
shall be paid by the party of the second part.45
Thus, BBLCI needed an assurance that the boundaries of its concession area, as established in TLA No.
43, as amended, would not be altered despite this provision. Hence, BBLCI endeavored to obtain the
1969 Document, which provides:
We confirm that your Timber License Agreement No. 43, as amended (copy of which is attached as
Annex "A" hereof which shall form part and parcel of this warranty) definitely establishes the
boundary lines of your concession area which consists of permanent forest lands with an aggregate
area of 121,587 hectares and alienable or disposable lands with an aggregate area of approximately
21,580 hectares.
We further confirm that your tenure over the area and exclusive right to cut, collect and remove
sawtimber and pulpwood shall be for the period ending on April 26, 1977; said period to be
renewable for other 25 years subject to compliance with constitutional and statutory requirements as
well as with existing policy on timber concessions.
The peaceful and adequate enjoyment by you of your area as described and specified in your
aforesaid amended Timber License Agreement No. 43 is hereby warranted provided that pertinent
laws, regulations and the terms and conditions of your license agreement are observed. 46
In Koa v. Court of Appeals,47 we ruled that a warranty is a collateral undertaking and is merely part of a
contract. As a collateral undertaking, it follows the principal wherever it goes. When this was pointed
out by the Solicitor General, PICOP changed its designation of the 1969 Document from "Presidential
Warranty" or "government warranty" in all its pleadings prior to our Decision, to "contract with
warranty" in its Motion for Reconsideration. This, however, is belied by the statements in the 29 July
1969 Document, which refers to itself as "this warranty."
Re: Allegation That There Were Mutual Contract Considerations
Had the 29 July 1969 Document been intended as a contract, it could have easily said so. More
importantly, it could have clearly defined the mutual considerations of the parties thereto. It could
have also easily provided for the sanctions for the breach of the mutual considerations specified
therein. PICOP had vigorously argued that the 1969 Document was a contract because of these
mutual considerations, apparently referring to the following paragraph of the 1969 Document:
We are made to understand that your company is committed to support the first large scale
integrated wood processing complex hereinafter called: "The Project") and that such support will be
provided not only in the form of the supply of pulpwood and other wood materials from your
concession but also by making available funds generated out of your own operations, to supplement
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.1avvphi1
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 Philippines.
45. The Decision puts up a lame explanation that "all licensees put up investments in pursuing their
business"
46. Now there are about a hundred timber licenses issued by the Government thru the DENR, but
these are ordinary timber licenses which involve the mere cutting of timber in the concession area,
and nothing else. Records in the DENR shows that no timber licensee has put up an integrated large
wood processing complex in the Philippines except PICOP. 51
PICOP thus argues on the basis of quantity, and wants us to distinguish between the investment of the
tricycle driver and that of the multi-billion corporation. However, not even billions of pesos in
investment can change the fact that natural resources and, therefore, public interest are involved in
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 Philippines, PICOP has, by far, the
largest concession area at 143,167 hectares, a land area more than the size of two Metro
Manilas.52 How can it not expect to also have the largest investment?
Investment Incentives Act
PICOP then claims that the contractual nature of the 1969 Document was brought about by its
issuance in accordance with and pursuant to the Investment Incentives Act. According to PICOP:
The conclusion in the Decision that to construe 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 Philippines are the following:
xxxx
d) Freedom from Expropriation. – There shall be no expropriation by the government of the property
represented by investments or of the property of enterprises except for public use or in the interest of
national welfare and defense and upon payment of just compensation. x x x.
e) Requisition of Investment. – There shall be no requisition of the property represented by the
investment or of the property of enterprises, except in the event of war or national emergency and
only for the duration thereof. Just compensation shall be determined and paid either at the time of
requisition or immediately after cessation of the state of war or national emergency. Payments
received as compensation for the requisitioned property may be remitted in the currency in which the
investment was originally made and at the exchange rate prevailing at the time of remittance, subject
to the provisions of Section seventy-four of republic Act Numbered Two hundred sixty-five.
Section 2 speaks of the policy of the State to encourage Filipino and foreign investments. It does not
speak of how this policy can be implemented. Implementation of this policy is tackled in Sections 5 to
12 of the same law,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.
Forest lands are meant to be enjoyed by countless future generations of Filipinos, and not just by one
logging company. The requirements of reforestation and preservation of the concession areas are
meant to protect them, the future generations, and not PICOP. Reforestation and preservation of the
concession areas are not required of logging companies so that they would have something to cut
again, but so that the forest would remain intact after their operations. That PICOP would not accept
the responsibility to preserve its concession area if it is not assured of tenure thereto does not speak
well of its corporate policies.
Conclusion
In sum, PICOP was not able to prove either of the two things it needed to prove to be entitled to a
Writ of Mandamus against the DENR Secretary. The 1969 Document is not a contract recognized
under the non-impairment clause and, even if we assume for the sake of argument that it is, it did not
enjoin the government to issue an IFMA in 2002 either. These are the essential elements in 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.
Forest Protection and Reforestation Plans
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.
Forest Charges
In determining that PICOP did not have unpaid forest charges, the Court of Appeals relied on the
assumption that if it were true that PICOP had unpaid forest charges, it should not have been issued
an approved Integrated Annual Operation Plan (IAOP) for the year 2001-2002 by Secretary Alvarez
himself.63
In the assailed Decision, we held that the Court of Appeals had been selective in its evaluation of the
IAOP, as it disregarded the part thereof that shows that the IAOP was approved subject to several
conditions, not the least of which was the submission of proof of the updated payment of forest
charges from April 2001 to June 2001.64 We also held that even if we considered for the sake of
argument that the IAOP should not have been issued if PICOP had existing forestry accounts, the
issuance of the IAOP could not be considered proof that PICOP had paid the same. Firstly, the best
evidence of payment is the receipt thereof. PICOP has not presented any evidence that such receipts
were lost or destroyed or could not be produced in court. 65 Secondly, the government cannot be
estopped by the acts of its officers. If PICOP has been issued an IAOP in violation of the law, allegedly
because it may not be issued if PICOP had existing forestry accounts, the government cannot be
estopped from collecting such amounts and providing the necessary sanctions therefor, including the
withholding of the IFMA until such amounts are paid.
We therefore found that, as opposed to the Court of Appeals’ findings, which were based merely on
estoppel of government 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
₱15,056,054.0566 PICOP also allegedly paid late most of its forest charges from 1996
onwards, by reason of which, PICOP is liable for a surcharge of 25% per annum on the tax
due and interest of 20% per annum which now amounts to ₱150,169,485.02. 67 Likewise,
PICOP allegedly had overdue and unpaid silvicultural fees in the amount of ₱2,366,901.00 as
of 30 August 2002.68 Summing up the testimony, therefore, it was alleged that PICOP had
unpaid and overdue forest charges in the sum of ₱167,592,440.90 as of 10 August 2002. 69
 2. Collection letters were sent to PICOP, but no official receipts are extant in the DENR record
in Bislig City evidencing payment of the overdue amount stated in the said collection
letters.70 There were no official receipts for the period covering 22 September 2001 to 26
April 2002.
We also considered these pieces of evidence more convincing than the other ones presented by
PICOP:
1. PICOP presented the certification of Community Environment and Natural Resources
Office (CENRO) Officer Philip A. Calunsag, which refers only to PICOP’s alleged payment of
regular forest charges covering the period from 14 September 2001 to 15 May 2002. 71 We
noted that it does not mention similar payment of the penalties, surcharges and interests
that PICOP incurred in paying late several forest charges, which fact was not rebutted by
PICOP.
2. The 27 May 2002 Certification by CENRO Calunsag specified only the period covering 14
September 2001 to 15 May 2002 and the amount of P53,603,719.85 paid by PICOP without
indicating the corresponding volume and date of production of the logs. This is in contrast to
the findings of SFMS Evangelista, which cover the period from CY 1996 to 30 August 2002
and includes penalties, interests, and surcharges for late payment pursuant to DAO 80, series
of 1987.
3. The 21 August 2002 PICOP-requested certification issued by Bill Collector Amelia D.
Arayan, and attested to by CENRO Calunsag himself, shows that PICOP paid only regular
forest charges for its log production covering 1 July 2001 to 21 September 2001. However,
there were log productions after 21 September 2001, the regular forest charges for which
have not been paid, amounting to ₱15,056,054.05.72 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 ₱81,184,747.70 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, Bislig City by virtue
of DENR Administrative Order No. 96-36, dated 20 November 1996, which states:
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 1
October 2002 Affidavit,74 which was offered as part of his testimony, provides:
2. Sometime in September, 2001 the DENR Secretary was furnished a copy of forest
Management Specialist II (FMS II) Teofila L. Orlanes’ Memorandum dated September 24,
2001 concerning unopaid forest charges of PICOP. Attached to the said Memorandum was a
Memorandum dated September 19, 2001 of Amelia D. Arayan, Bill collector of the DENR R13-
14, Bislig City. Copies of the said Memoranda are attached as Annexes 1 and 2, respectively.
3. The said Memoranda were referred to the FMB Director for appropriate action.
4. Thus, on August 5, 2002, I was directed by the FMB Director to proceed to Region 13 to
gather forestry-related data and validate the report contained in the Memoranda of Ms.
Orlanes and Arayan.
5. On August 6, 2002, I proceeded to DENR Region 13 in Bislig City. A copy of my Travel Order
is attached as Annex 3.
6. Upon my arrival at CENRO, Bislig, surigao del Sur, I coordinated with CENRO Officer Philip
A. Calunsag and requested him to make available to me the records regarding the forest
products assessments of PICOP.
7. After I was provided with the requested records, I evaluated and collected the data.
8. After the evaluation, I found that the unpaid forest charges adverted to in the Memoranda
of Mr. Orlanes and Arayan covering the period from May 8, 2001 to July 7, 2001 had already
been paid but late. I further found out that PICOP had not paid its forest charges covering the
period from September 22, 2001 to April 26, 2002 in the total amount of ₱15,056,054.05.
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 ₱150,169,485.02. Likewise, PICOP has overdue and unpaid silvicultural
fees in the amount of ₱2,366,901.00 from 1996 to the present.
12. In all, PICOP has an outstanding and overdue total obligation of ₱167,592,440.90 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 Philippines, or by a person in the performance of a duty specially enjoined by
law, are prima facie evidence of the facts therein stated.
In Africa v. Caltex,79 we enumerated the following requisites for the admission of entries in official
records as an exception to the hearsay rule: (1) the entries were made by a public officer or a private
person in the performance of a duty; (2) the performance of the duty is especially enjoined by law; (3)
the public officer or the private person had sufficient knowledge of the facts stated by him, which
must have been acquired by him personally or through official information.
The presentation of the records themselves would, therefore, have been admissible as an exception
to the hearsay rule even if the public officer/s who prepared them was/were not presented in court,
provided the above requisites could be adequately proven. In the case at bar, however, neither the
records nor the persons who prepared them were presented in court. Thus, the above requisites
cannot be sufficiently proven. Also, since SFMS Evangelista merely testified based on what those
records contained, his testimony was hearsay evidence twice removed, which was one step too many
to be covered by the 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 DENR83:
As its subtitle suggests, [Section 59 of R.A. No. 8371] requires as a precondition for the issuance of
any concession, license or agreement over natural resources, that a certification be issued by the NCIP
that the area subject of the agreement does not lie within any ancestral domain. The provision does
not vest the NCIP with power over the other agencies of the State as to determine whether to grant
or deny any concession or license or agreement. It merely gives the NCIP the authority to ensure that
the ICCs/IPs have been informed of the agreement and that their consent thereto has been obtained.
Note that the certification applies to agreements over natural resources that do not necessarily lie
within the ancestral domains. For those that are found within the said domains, Sections 7(b) and 57
of the IPRA apply.
PICOP rejects the entire disposition of this Court on the matter, relying on the following theory:
84. It is quite clear that Section 59 of R.A. 8371 does not apply to the automatic conversion of TLA 43
to IFMA.
First, the automatic conversion of TLA 43 to an IFMA is not a new project. It is a mere continuation of
the harvesting process in an area that PICOP had been managing, conserving and reforesting for the
last 50 years since 1952. Hence any pending application for a CADT within the area, cannot affect
much less hold back the automatic conversion. That the government now wishes to change the
tenurial system to an IFMA could not change the PICOP project, in existence and operating for the last
30 (sic) years, into a new one.84
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.
xxxx
87. One can not imagine the terrible damage and chaos to the country, its economy, its people and its
future if a mere claim filed for the issuance of a CADC or CADT will already provide those who filed
the application, the authority or right to stop the renewal or issuance of any concession, license or
lease or any production-sharing agreement. The same interpretation will give such applicants through
a mere application the right to stop or suspend any project that they can cite for not satisfying the
requirements of the consultation process of R.A. 8371. If such interpretation gets enshrined in the
statures of the land, the unscrupulous and the extortionists can put any ongoing or future project or
activity to a stop in any part of the country citing their right from having filed an application for
issuance of a CADC or CADT claim and the legal doctrine established by the Supreme Court in this
PICOP case.85
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 December 11, 1996. The DENR Undersecretary for Field
Operations had recommended another 11 applications for issuance of CADCs. None of the CADCs
overlap the TLA 43 area.
89. However former DENR Secretary Alvarez, in a memorandum dated 13 September, 2002 addressed
to PGMA, insisted that PICOP had to comply with the requirement to secure a Free and Prior Informed
Concent because CADC 095 was issued covering 17,112 hectares of TLA 43.
90. This CADC 095 is a fake CADC and was not validly released by the DENR. While the Legal
Department of the DENR was still in the process of receiving the filings for applicants and the
oppositors to the CADC application, PICOP came across filed copies of a CADC 095 with the PENRO of
Davao Oriental as part of their application for a Community Based Forest Management Agreement
(CBFMA). Further research came across the same group filing copies of the alleged CADC 095 with the
Mines and Geosciences Bureau in Davao City for a mining agreement application. The two
applications had two different versions of the CADCs second page. One had Mr. Romeo T. Acosta
signing as the Social reform Agenda Technical Action Officer, while the other had him signing as the
Head, Community-Based Forest Management Office. One had the word "Eight" crossed out and
"Seven" written to make it appear that the CADC was issued on September 25, 1997, the other made
it appear that there were no alterations and the date was supposed to be originally 25 September
1997.
What is required in Section 59 of Republic Act No. 8379 is a Certification from the NCIP that there was
no overlapping with any Ancestral Domain. PICOP cannot claim that the DENR gravely abused its
discretion for requiring this Certification, on the ground that there was no overlapping. We reiterate
that it is manifestly absurd to claim that the subject lands must first be proven to be part of ancestral
domains before a certification that they are not can be required. As discussed in the assailed Decision,
PICOP did not even seek any certification from the NCIP that the area covered by TLA No. 43, subject
of its IFMA conversion, did not overlap with any ancestral domain. 88
Sanggunian Consultation and Approval
While PICOP did not seek any certification from the NCIP that the 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.
xxxx
(c) It is likewise the policy of the State to require all national agencies and offices to conduct periodic
consultations with appropriate local government units, nongovernmental and 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 31 July 2001 Memorandum of Regional Executive Director (RED) Elias D. Seraspi, Jr., enumerated
the local government units and other groups which had expressed their opposition to PICOP’s
application for IFMA conversion:
7. During the conduct of the performance evaluation of TLA No. 43 issues complaints against PRI were
submitted thru Resolutions and letters. It is important that these are included in this report for
assessment of what are their worth, viz:
xxxx
7.2 Joint Resolution (unnumbered), dated March 19, 2001 of the Barangay Council and Barangay
Tribal Council of Simulao, Boston, Davao Oriental (ANNEX F) opposing the conversion of TLA No. 43
into IFMA over the 17,112 hectares allegedly covered with CADC No. 095.
7.3 Resolution Nos. 10, s-2001 and 05, s-2001 (ANNEXES G & H) of the Bunawan Tribal Council of
Elders (BBMTCE) strongly demanding none renewal of PICOP TLA. They claim to be the rightful owner
of the area it being their alleged ancestral land.
7.4 Resolution No. 4, S-2001 of Sitio Linao, San Jose, Bislig City (ANNEX I) requesting not to renew TLA
43 over the 900 hectares occupied by them.
7.5 Resolution No. 22, S-2001 (ANNEX J) of the Sanguniang Bayan, Lingig, Surigao del Sur not to grant
the conversion of TLA 43 citing the plight of former employees of PRI who were forced to enter and
farm portion of TLA No. 43, after they were laid off.
7.6 SP Resolution No. 2001-113 and CDC Resolution Nos. 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 June 01, 2001 (ANNEX M) Sanguniang Panglungsod of Bislig City
opposing the conversion of TLA 43 to IFMA for the reason that IFMA do not give revenue benefits to
the City.90
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 Province of
Surigao del Sur indorsing the approval of PICOP’s application for IFMA conversion. We ruled that this
cannot be deemed sufficient compliance with the foregoing provision. Surigao del Sur is not the only
province affected by the area covered by the proposed IFMA. As even the Court of Appeals found,
PICOP’s TLA No. 43 traverses the length and breadth not only of Surigao del Sur but also of Agusan del
Sur, Compostela Valley and Davao Oriental. 92
On Motion for Reconsideration, PICOP now argues that the requirement under Sections 26 and 27
does not apply to it:
97. PICOP is not a national agency. Neither is PICOP government owned or controlled. Thus Section 26
does not apply to PICOP.
98. It is very clear that Section 27 refers to projects or programs to be implemented by government
authorities or 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.
Republic Act No. 9175 November 7, 2002
AN ACT REGULATING THE OWNERSHIP, POSSESSION, SALE, IMPORTATION AND USE OF CHAIN
SAWS, PENALIZING VIOLATIONS THEREOF AND FOR OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:
Section 1. Title. - This Act shall be known as the "Chain Saw Act of 2002".
Section 2. Declaration Policy. – It is the policy of the State consistent with the Constitution, to
conserve, develop and protect the forest resources under sustainable management. Toward this end,
the State shall pursue an aggressive forest protection program geared towards eliminating illegal
logging and other forms of forest destruction which are being facilitated with the use of chain saws.
The State shall therefore regulate the ownership, possession, sale, transfer, importation and/or use of
chain saws to prevent them from being used in illegal logging or unauthorized clearing of forests.
Section 3. Definition of Terms. - As used in this Act, the term:
(a) "Chain saw" shall refer to any portable power saw or similar cutting implement, rendered
operative by an electric or internal combustion engine or similar means, that may be used for, but is
not limited to, the felling of trees or the cutting of timber;
(b) "Chain saw dealer" shall refer to a person, natural or juridical, engaged in the manufacture,
importation, distribution, purchase and/or sale of chain saws;

SO ORDERED. (c) "Department" shall refer to the Department of Environment and Natural Resources; and

(d) "Secretary" shall refer to the Secretary of the Department of Environment and Natural Resources.
Section 4. Persons Authorized to Manufacturer, Sell and Import Chain Saws. - Chain saws shall only be
sold and/or imported by manufacturers, dealers and/or private owners who are duly authorized by
the Department.
Section 5. Persons Authorized to Possess and Use a Chain Saw. - The Department is hereby authorized
to issue permits to possess and/or use a chain saw for the felling land/or cutting of trees, timber and
other forest or agro-forest products to any applicant who:
(a) has a subsisting timber license agreement, production sharing agreement, or similar agreements,
or a private land timber permit;
(b) is an orchard and fruit tree farmer;
(c) is an industrial tree farmer;
(d) is a licensed wood processor and the chain saw shall be used for the cutting of timber that has
been legally sold to said applicant; or
(e) shall use the chain saw for a legal purpose.
Agencies of the government that use chain saws in some aspects of their functions must likewise
secure the necessary permit from the Department before operating the same.
Section 6. Registration of Chain Saws. - Within a period of three (3) months from the effectivity
hereof, all persons who own or are otherwise in possession of chain saws must register the same with
the Department, through any of its Community Environment and Natural Resources Office, which
shall issue the corresponding registration certificate or permit if it finds such persons to be qualified
hereunder.
Every permit to possess and/or use a chain saw for legitimate purpose shall be valid for two (2) years
upon issuance: Provided, That permits to possess and use chainsaw issued to non-commercial orchard
and fruit tree farmers shall be valid for a period of five (5) years upon issuance. For this purpose, the
Department shall be allowed to collect reasonable registration fees for the effective implementation
of this Act.
Section 7. Penal Provisions. -
(a) Selling, Purchasing, Re-selling, Transferring, Distributing or Possessing a Chain Saw Without a
Proper Permit. - Any person who sells, purchases, transfer the ownership, distributes or otherwise
disposes or possesses a chain saw without first securing the necessary permit from the Department
shall be punished with imprisonment of four (4) years, two (2) months and one (1) day to six (6) years
or a fine of not less than Fifteen thousand pesos (P15,000.00) but not more Thirty thousand pesos
(30,000.00) or both at the discretion of the court, and the chain saw/s confiscated in favor of the
government.
(2) Unlawful Importation or Manufacturing of Chain Saw. - Any person who imports or manufactures
a chain saw without obtaining prior authorization from the Department shall be punished by
imprisonment of not less than one (1) month nor more than six (6) months and a fine of not less than
One thousand pesos (P1,000.00) for more than Four thousand pesos (P4,000.00).
(3) Tampering of Engine Serial Number. - Any person who is found to have defaced or tampered with
the original registered engine serial number of any chain saw unit shall be punished by imprisonment
of not less than one (1) month nor more than six (6) months and a fine of not less than One thousand
pesos (P1,000.00) nor more than Four thousand pesos (P4,000.00).
(4) Actual Unlawful Use of Chain Saw. - Any person who is found to be in possession of a chain saw
and uses the same to cut trees and timber in forest land or elsewhere except as authorized by the
Department shall be penalized with imprisonment of six (6) years and one (1) day to eight (8) years or
a fine of not less that Thirty thousand pesos (P30,000.00) but not more than Fifty thousand pesos
(P50,000.00) or both at the discretion of the court without prejudice to being prosecuted for a
separate offense that may have been simultaneously committed. The chain saw unlawfully used shall
be likewise confiscated in favor of the government.
If the violation under this Section is committed by or through the command or order of another
person, partnership or corporation, the penalties herein provided shall likewise be imposed on such
other person, or the responsible officer(s) in such partnership or corporation.
If the offender is a public official or employee, in addition to the above penalties, he shall be removed
from office and perpetually disqualified from holding any public office.
The chain saws confiscated under this Section shall be sold at public auction to qualified buyers and
the proceeds thereof shall go to the Department.
Section 8. Reward. - Any person who voluntarily gives information leading to the recovery or
confiscation of an unregistered chain saw and the conviction of persons charged thereof shall be
entitled to a reward equivalent to twenty person (20%) of the value of the chain saw unit(s). The
Department is authorized to include in its budget the amount necessary to carry out the purpose of
this Section.
Section 9. Authority of the Secretary. - To effectively implement the provisions of this Act, the
Secretary shall issue the implementing rules and regulations within ninety (90) days upon approval of
this Act. He shall likewise organize an office within the Department to ensure that requirements
imposed by this Act may be complied with by qualified persons, within the shortest possible time, at
the least possible expense.
In the Province of Palawan, the provisions of this Act shall be implemented by the Palawan Council for
Sustainable Development pursuant to Republic Act No. 7611 or the Strategic Environmental Plan for
Palawan.
Section 10. Revocation of Registration and Permit. - The Secretary may revoke any Certificate of
Registration or permit previously issued to a person found violating the provisions of this Act, or the
rules and regulations issued pursuant thereto.
Section 11. Joint Congressional Oversight Committee. - To monitor and oversee the implementation of
this Act, including the approval of the rules and regulations issued pursuant hereto, there is hereby
created a Joint Congressional Oversight Committee to be composed of the Chairpersons of the Senate
Committee on Environment and Natural Resources and the House Committee on Natural Resources as
Chairperson and Co-Chairperson, five (5) members of each of the Senate and the House of
Representatives who shall be designated by the Senate President and the Speaker of the House of
Representatives as members: Provided, That the two (2) of the five (5) senators and two (2) of the five
(5) House members shall be nominated by the respective Minority Leaders of the Senate and the
House of Representatives.
Section 12. Transitory Provision. - In the interim while the Department is formulating the
implementing rules and regulations to effectively carry out the provisions of this Act, the Bureau of
Customs is prohibited from approving any chain saw importation without clearance from said
Department.
Section 13. Separability Clause. - If, for any reason, any part or provision of this act shall be declared
as unconstitutional or invalid, such parts or provisions not affected thereby shall remain in full force
and effect.
Section 14. Repealing Clause. - all laws, executive orders, presidential decrees, letters of instruction,
rules and regulations, or parts thereof which are inconsistent with any of the provisions of this Act are
hereby repealed and/or amended accordingly.
Section 15. Effectivity. - This Act shall take effect fifteen (15) days after its complete publication in
the Official Gazette or in at least two (2) national newspapers of general circulation, whichever comes
earlier.
G.R. No. 111107 January 10, 1997
LOEONARDO A. PAAT, in his capacity as Officer-in-Charge (OIC), Regional Executive Director (RED),
Region 2 and JOVITO LAYUGAN, JR., in his capacity as Community Environment and Natural
Resources Officer (CENRO), both of the Department of Environment and Natural Resources
(DENR), Petitioners, v. COURT OF APPEALS, HON. RICARDO A. BACULI in his capacity as Presiding
Judge of Branch 2, Regional Trial Court at Tuguegarao, Cagayan, and SPOUSES BIENVENIDO and
VICTORIA DE GUZMAN, Respondents.
TORRES, JR., J.:
Without violating the principle of exhaustion of administrative remedies, may an action
for replevin prosper to recover a movable property which is the subject matter of an administrative
forfeiture proceeding in the Department of Environment and Natural Resources pursuant to Section
68-A of P.D. 705, as amended, entitled The Revised Forestry Code of the Philippines?
Are the Secretary of DENR and his representatives empowered to confiscate and forfeit conveyances
used in transporting illegal forest products in favor of the government?
These are two fundamental questions presented before us for our resolution.
The controversy on hand had its incipiency on May 19, 1989 when the truck of private respondent
Victoria de Guzman while on its way to Bulacan from San Jose, Baggao, Cagayan, was seized by the
Department of Environment and Natural Resources (DENR, for brevity) personnel in Aritao, Nueva
Vizcaya because the driver could not produce the required documents for the forest products found
concealed in the truck. Petitioner Jovito Layugan, the Community Environment and Natural Resources
Officer (CENRO) in Aritao, Cagayan, issued on May 23, 1989 an order of confiscation of the truck and
gave the owner thereof fifteen (15) days within which to submit an explanation why the truck should
not be forfeited. Private respondents, however, failed to submit the required explanation. On June 22,
1989, 1 Regional Executive Director Rogelio Baggayan of DENR sustained petitioner Layugan's action of
confiscation and ordered the forfeiture of the truck invoking Section 68-A of Presidential Decree No.
705 as amended by Executive Order No. 277. Private respondents filed a letter of reconsideration
dated June 28, 1989 of the June 22, 1989 order of Executive Director Baggayan, which was, however,
denied in a subsequent order of July 12, 1989. 2 Subsequently, the case was brought by the petitioners
to the Secretary of DENR pursuant to private respondents' statement in their letter dated June 28,
1989 that in case their letter for reconsideration would be denied then "this letter should be
considered as an appeal to the Secretary." 3 Pending resolution however of the appeal, a suit for
replevin, docketed as Civil Case 4031, was filed by the private respondents against petitioner Layugan
and Executive Director Baggayan 4 with the Regional Trial Court, Branch 2 of Cagayan, 5 which issued a
writ ordering the return of the truck to private respondents. 6 Petitioner Layugan and Executive
Director Baggayan filed a motion to dismiss with the trial court contending, inter alia, that private
respondents had no cause of action for their failure to exhaust administrative remedies. The trial
court denied the motion to dismiss in an order dated December 28, 1989. 7 Their motion for
reconsideration having been likewise denied, a petition for certiorari was filed by the petitioners with
the respondent Court of Appeals which sustained the trial court's order ruling that the question
involved is purely a legal question. 8 Hence, this present petition, 9 with prayer for temporary
restraining order and/or preliminary injunction, seeking to reverse the decision of the respondent
Court of Appeals was filed by the petitioners on September 9, 1993. By virtue of the Resolution dated
September 27, 1993, 10 the prayer for the issuance of temporary restraining order of petitioners was
granted by this Court.
Invoking the doctrine of exhaustion of administrative remedies, petitioners aver that the trial court
could not legally entertain the suit for replevin because the truck was under administrative seizure
proceedings pursuant to Section 68-A of P.D. 705, as amended by E.O. 277. Private respondents, on
the other hand, would seek to avoid the operation of this principle asserting that the instant case falls
within the exception of the doctrine upon the justification that (1) due process was violated because
they were not given the chance to be heard, and (2) the seizure and forfeiture was unlawful on the
grounds: (a) that the Secretary of DENR and his representatives have no authority to confiscate and
forfeit conveyances utilized in transporting illegal forest products, and (b) that the truck as admitted
by petitioners was not used in the commission of the crime.
Upon a thorough and delicate scrutiny of the records and relevant jurisprudence on the matter, we
are of the opinion that the plea of petitioners for reversal is in order.
This Court in a long line of cases has consistently held that before a party is allowed to seek the
intervention of the court, it is a pre-condition that he should have availed of all the means of
administrative processes afforded him. Hence, if a remedy within the administrative machinery can
still be resorted to by giving the administrative officer concerned every opportunity to decide on a
matter that comes within his jurisdiction then such remedy should be exhausted first before court's
judicial power can be sought, The premature invocation of court's intervention is fatal to one's cause
of action. 11 Accordingly, absent any finding of waiver or estoppel the case is susceptible of dismissal
for lack of cause of
action. 12 This doctrine of exhaustion of administrative remedies was not without its practical and legal
reasons, for one thing, availment of administrative remedy entails lesser expenses and provides for a
speedier disposition of controversies. It is no less true to state that the courts of justice for reasons of
comity and convenience will shy away from a dispute until the system of administrative redress has
been completed and complied with so as to give the administrative agency concerned every
opportunity to correct its error and to dispose of the case. However, we are not amiss to reiterate that
the principle of exhaustion of administrative remedies as tested by a battery of cases is not an
ironclad rule. This doctrine is a relative one and its flexibility is called upon by the peculiarity and
uniqueness of the factual and circumstantial settings of a case. Hence, it is disregarded (1) when there
is a violation of due process,13 (2) when the issue involved is purely a legal question, 14 (3) when the
administrative action is patently illegal amounting to lack or excess of jurisdiction, 15 (4) when there is
estoppel on the part of the administrative agency concerned, 16 (5) when there is irreparable
injury,17 (6) when the respondent is a department secretary whose acts as an alter ego of the
President bears the implied and assumed approval of the latter, 18 (7) when to require exhaustion of
administrative remedies would be unreasonable, 19 (8) when it would amount to a nullification of a
claim, 20 (9) when the subject matter is a private land in land case proceedings, 21 (10) when the rule
does not provide a plain, speedy and adequate remedy, and (11) when there are circumstances
indicating the urgency of judicial intervention. 22
In the case at bar, there is no question that the controversy was pending before the Secretary of DENR
when it was forwarded to him following the denial by the petitioners of the motion for
reconsideration of private respondents through the order of July 12, 1989. In their letter of
reconsideration dated June 28, 1989, 23 private respondents clearly recognize the presence of an
administrative forum to which they seek to avail, as they did avail, in the resolution of their case. The
letter, reads, thus:
xxx xxx xxx
If this motion for reconsideration does not merit your favorable action, then this letter should be
considered as an appeal to the
Secretary. 24
It was easy to perceive then that the private respondents looked up to the Secretary for the review
and disposition of their case. By appealing to him, they acknowledged the existence of an adequate
and plain remedy still available and open to them in the ordinary course of the law. Thus, they cannot
now, without violating the principle of exhaustion of administrative remedies, seek court's
intervention by filing an action for replevin for the grant of their relief during the pendency of an
administrative proceedings.
Moreover, it is important to point out that the enforcement of forestry laws, rules and regulations and
the protection, development and management of forest lands fall within the primary and special
responsibilities of the Department of Environment and Natural Resources. By the very nature of its
function, the DENR should be given a free hand unperturbed by judicial intrusion to determine a
controversy which is well within its jurisdiction. The assumption by the trial court, therefore, of the
replevin suit filed by private respondents constitutes an unjustified encroachment into the domain of
the administrative agency's prerogative. The doctrine of primary jurisdiction does not warrant a court
to arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially
lodged with an administrative body of special competence. 25 In Felipe Ismael, Jr. and Co. v. Deputy
Executive Secretary, 26 which was reiterated in the recent case of Concerned Officials of MWSS
vs. Vasquez, 27 this Court held:
Thus, while the administration grapples with the complex and multifarious problems caused by
unbriddled exploitation of these resources, the judiciary will stand clear. A long line of cases establish
the basic rule that the courts will not interfere in matters which are addressed to the sound discretion
of government agencies entrusted with the regulation of activities coming under the special technical
knowledge and training of such agencies.
To sustain the claim of private respondents would in effect bring the instant controversy beyond the
pale of the principle of exhaustion of administrative remedies and fall within the ambit of excepted
cases heretofore stated. However, considering the circumstances prevailing in this case, we can not
but rule out these assertions of private respondents to be without merit. First, they argued that there
was violation of due process because they did not receive the May 23, 1989 order of confiscation of
petitioner Layugan. This contention has no leg to stand on. Due process does not necessarily mean or
require a hearing, but simply an opportunity or right to be heard. 28 One may be heard, not solely by
verbal presentation but also, and perhaps many times more creditably and practicable than oral
argument, through pleadings. 29 In administrative proceedings moreover, technical rules of procedure
and evidence are not strictly applied; administrative process cannot be fully equated with due process
in its strict judicial sense. 30 Indeed, deprivation of due process cannot be successfully invoked where a
party was given the chance to be heard on his motion for reconsideration, 31 as in the instant case,
when private respondents were undisputedly given the opportunity to present their side when they
filed a letter of reconsideration dated June 28, 1989 which was, however, denied in an order of July
12, 1989 of Executive Director Baggayan, In Navarro III vs. Damasco, 32 we ruled that :
The essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of the
action or ruling complained of. A formal or trial type hearing is not at all times and in all instances
essential. The requirements are satisfied when the parties are afforded fair and reasonable
opportunity to explain their side of the controversy at hand. What is frowned upon is the absolute
lack of notice or hearing.
Second, private respondents imputed the patent illegality of seizure and forfeiture of the truck
because the administrative officers of the DENR allegedly have no power to perform these acts under
the law. They insisted that only the court is authorized to confiscate and forfeit conveyances used in
transporting illegal forest products as can be gleaned from the second paragraph of Section 68 of P.D.
705, as amended by E.O. 277. The pertinent provision reads as follows:
Sec. 68. . . .
xxx xxx xxx
The court shall further order the confiscation in favor of the government of the timber or any forest
products cut, gathered, collected, removed, or possessed, as well as
the machinery, equipments, implements and tools illegaly [sic] used in the area where the timber or
forest products are found. (Emphasis ours)
A reading, however, of the law persuades us not to go along with private respondents' thinking not
only because the aforequoted provision apparently does not mention nor include "conveyances" that
can be the subject of confiscation by the courts, but to a large extent, due to the fact that private
respondents' interpretation of the subject provision unduly restricts the clear intention of the law and
inevitably reduces the other provision of Section 68-A, which is quoted herein below:
Sec. 68-A. Administrative Authority of the Department or His Duly Authorized Representative To Order
Confiscation. In all cases of violation of this Code or other forest laws, rules and regulations,
the Department Head or his duly authorized representative, may order the confiscation of any forest
products illegally cut, gathered, removed, or possessed or abandoned, and all conveyances used
either by land, water or air in the commission of the offense and to dispose of the same in accordance
with pertinent laws, regulations and policies on the matter. (Emphasis ours)
It is, thus, clear from the foregoing provision that the Secretary and his duly authorized
representatives are given the authority to confiscate and forfeit any conveyances utilized in violating
the Code or other forest laws, rules and regulations. The phrase "to dispose of the same" is broad
enough to cover the act of forfeiting conveyances in favor of the government. The only limitation is
that it should be made "in accordance with pertinent laws, regulations or policies on the matter." In
the construction of statutes, it must be read in such a way as to give effect to the purpose projected in
the statute. 33 Statutes should be construed in the light of the object to be achieved and the evil or
mischief to be suppressed, and they should be given such construction as will advance the object,
suppress the mischief, and secure the benefits intended. 34 In this wise, the observation of the Solicitor
General is significant, thus:
But precisely because of the need to make forestry laws "more responsive to present situations and
realities" and in view of the "urgency to conserve the remaining resources of the country," that the
government opted to add Section 68-A. This amendatory provision is an administrative remedy totally
separate and distinct from criminal proceedings. More than anything else, it is intended to supplant
the inadequacies that characterize enforcement of forestry laws through criminal actions. The
preamble of EO 277-the law that added Section 68-A to PD 705-is most revealing:
"WHEREAS, there is an urgency to conserve the remaining forest resources of the country for the
benefit and welfare of the present and future generations of Filipinos;
WHEREAS, our forest resources may be effectively conserved and protected through the vigilant
enforcement and implementation of our forestry laws, rules and regulations;
WHEREAS, the implementation of our forestry laws suffers from technical difficulties, due to certain
inadequacies in the penal provisions of the Revised Forestry Code of the Philippines; and
WHEREAS, to overcome this difficulties, there is a need to penalize certain acts more responsive to
present situations and realities;"
It is interesting to note that Section 68-A is a new provision authorizing the DENR to confiscate, not
only "conveyances," but forest products as well. On the other hand, confiscation of forest products by
the "court" in a criminal action has long been provided for in Section 68. If as private respondents
insist, the power on confiscation cannot be exercised except only through the court under Section 68,
then Section 68-A would have no Purpose at all. Simply put, Section 68-A would not have provided
any solution to the problem perceived in EO 277, supra. 35
Private respondents, likewise, contend that the seizure was illegal because the petitioners themselves
admitted in the Order dated July 12, 1989 of Executive Director Baggayan that the truck of private
respondents was not used in the commission of the crime. This order, a copy of which was given to
and received by the counsel of private respondents, reads in part, viz.:
. . . while it is true that the truck of your client was not used by her in the commission of the crime, we
uphold your claim that the truck owner is not liable for the crime and in no case could a criminal case
be filed against her as provided under Article 309 and 310 of the Revised Penal Code. . . 36
We observed that private respondents misread the content of the aforestated order and obviously
misinterpreted the intention of petitioners. What is contemplated by the petitioners when they stated
that the truck "was not used in the commission of the crime" is that it was not used in the
commission of the crime of theft, hence, in no case can a criminal action be filed against the owner
thereof for violation of Article 309 and 310 of the Revised Penal Code. Petitioners did not eliminate
the possibility that the truck was being used in the commission of another crime, that is, the breach
of Section 68 of P.D. 705 as amended by E.O. 277. In the same order of July 12, 1989, petitioners
pointed out:
. . . However, under Section 68 of P.D. 705 as amended and further amended by Executive Order No.
277 specifically provides for the confiscation of the conveyance used in the transport of forest
products not covered by the required legal documents. She may not have been involved in the cutting
and gathering of the product in question but the fact that she accepted the goods for a fee or fare the
same is therefor liable. . . 37
Private respondents, however, contended that there is no crime defined and punishable under
Section 68 other than qualified theft, so that, when petitioners admitted in the July 12, 1989 order
that private respondents could not be charged for theft as provided for under Articles 309 and 310 of
the Revised Penal Code, then necessarily private respondents could not have committed an act
constituting a crime under Section 68. We disagree. For clarity, the provision of Section 68 of P.D. 705
before its amendment by E.O. 277 and the provision of Section 1 of E.O. No. 277 amending the
aforementioned Section 68 are reproduced herein, thus:
Sec. 68. Cutting, gathering and/or collecting timber or other products without license. - Any person
who shall cut, gather, collect, or remove timber or other forest products from any forest land, or
timber from alienable and disposable public lands, or from private lands, without any authority under
a license agreement, lease, license or permit, shall be guilty of qualified theft as defined and punished
under Articles 309 and 310 of the Revised Penal Code . . . (Emphasis ours; Section 68, P.D. 705 before
its amendment by E.O. 277)
Sec. 1. Section 68 of Presidential Decree No. 705, as amended, is hereby amended to read as follows:
Sec. 68. Cutting, gathering and/or collecting timber or other forest products without license. - Any
person who shall cut, gather, collect, remove timber or other forest products from any forest land, or
timber from alienable or disposable public land, or from private land, without any authority, or
possess timber or other forest products without the legal documents as required under existing forest
laws and regulations, shall be punished with the penalties imposed under Articles 309 and 310 of the
Revised Penal Code . . . (Emphasis ours; Section 1, E.O. No. 277 amending Section 68, P.D. 705 as
amended)
With the introduction of Executive Order No. 277 amending Section 68 of P.D. 705, the act of cutting,
gathering, collecting, removing, or possessing forest products without authority constitutes a distinct
offense independent now from the crime of theft under Articles 309 and 310 of the Revised Penal
Code, but the penalty to be imposed is that provided for under Article 309 and 310 of the Revised
Penal Code. This is clear from the language of Executive Order No. 277 when it eliminated the phrase
"shall be guilty of qualified theft as defined and punished under Articles 309 and 310 of the Revised
Penal Code" and inserted the words "shall be punished with the penalties imposed under Article 309
and 310 of the Revised Penal Code". When the statute is clear and explicit, there is hardly room for
any extended court ratiocination or rationalization of the law. 38
From the foregoing disquisition, it is clear that a suit for replevin can not be sustained against the
petitioners for the subject truck taken and retained by them for administrative forfeiture proceedings
in pursuant to Section 68-A of the P.D. 705, as amended. Dismissal of the replevin suit for lack of
cause of action in view of the private respondents' failure to exhaust administrative remedies should
have been the proper course of action by the lower court instead of assuming jurisdiction over the
case and consequently issuing the writ ordering the return of the truck. Exhaustion of the remedies in
the administrative forum, being a condition precedent prior to one's recourse to the courts and more
importantly, being an element of private respondents' right of action, is too significant to be waylaid
by the lower court.
It is worth stressing at this point, that a suit for replevin is founded solely on the claim that the
defendant wrongfully withholds the property sought to be recovered. It lies to recover possession of
personal chattels that are unlawfully detained. 39 "To detain" is defined as to mean "to hold or keep in
custody," 40 and it has been held that there is tortious taking whenever there is an unlawful meddling
with the property, or an exercise or claim of dominion over it, without any pretense of authority or
right; this, without manual seizing of the property is sufficient. 41 Under the Rules of Court, it is
indispensable in replevin proceeding that the plaintiff must show by his own affidavit that he is
entitled to the possession of property, that the property is wrongfully detained by the defendant,
alleging the cause of detention, that the same has not been taken for tax assessment, or seized under
execution, or attachment, or if so seized, that it is exempt from such seizure, and the actual value of
the property. 42 Private respondents miserably failed to convince this Court that a wrongful detention
of the subject truck obtains in the instant case. It should be noted that the truck was seized by the
petitioners because it was transporting forest products without the required permit of the DENR in
manifest contravention of Section 68 of P.D. 705 as amended by E.O 277. Section 68-A of P.D. 705, as
amended, unquestionably warrants the confiscation as well as the disposition by the Secretary of
DENR or his duly authorized representatives of the conveyances used in violating the provision of
forestry laws. Evidently, the continued possession or detention of the truck by the petitioners for
administrative forfeiture proceeding is legally permissible, hence, no wrongful detention exists in the
case at bar.

Moreover, the suit for replevin is never intended as a procedural tool to question the orders of
confiscation and forfeiture issued by the DENR in pursuance to the authority given under P.D. 705, as
amended. Section 8 of the said law is explicit that actions taken by the Director of the Bureau of
Forest Development concerning the enforcement of the provisions of the said law are subject to
review by the Secretary of DENR and that courts may not review the decisions of the Secretary except
through a special civil action for certiorari or prohibition. It reads:

Sec. 8. REVIEW - All actions and decisions of the Director are subject to review, motu propio or upon
appeal of any person aggrieved thereby, by the Department Head whose decision shall be final and
executory after the lapse of thirty (30) days from the receipt of the aggrieved party of said decision,
unless appealed to the President in accordance with Executive Order No. 19, Series of 1966. The
Decision of the Department Head may not be reviewed by the courts except through a special civil
action for certiorari or prohibition.

WHEREFORE, the Petition is GRANTED; the Decision of the respondent Court of Appeals dated
October 16, 1991 and its Resolution dated July 14, 1992 are hereby SET ASIDE AND REVERSED; the
Restraining Order promulgated on September 27, 1993 is hereby made permanent; and the Secretary
of DENR is directed to resolve the controversy with utmost dispatch.

SO ORDERED.
REPUBLIC ACT NO. 9147 July 30, 2001
AN ACT PROVIDING FOR THE CONSERVATION AND PROTECTION OF WILDLIFE RESOURCES AND
THEIR HABITATS, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:
CHAPTER I
GENERAL PROVISIONS
Section 1. Title. This act shall be known as the "Wildlife Resources Conservation and Protection Act."
Section 2. Declaration of Policy. It shall be the policy of the State to conserve the country's wildlife
resources and their habitats for sustainability. In the pursuit of this policy, this Act shall have the
following objectives:
(a) to conserve and protect wildlife species and their habitats to promote ecological balance and
enhance biological diversity;
(b) to regulate the collection and trade of wildlife;
(c) to pursue, with due regard to the national interest, the Philippine commitment to international
conventions, protection of wildlife and their habitats; and
(d) to initiate or support scientific studies on the conservation of biological diversity.
Section 3. Scope of Application. The provisions of this Act shall be enforceable for all wildlife species
found in all areas of the country, including protected areas under Republic Act No. 7586, otherwise
known as the National Integrated Protected Areas System (NIPAS) Act, and critical habitats. This Act
shall also apply to exotic species which are subject to trade, are cultured, maintained and/or bred in
captivity or propagated in the country.
Section 4. Jurisdiction of the Department of Environment and Natural Resources and the Department
of Agriculture. The Department of Environment and Natural Resources (DENR) shall have jurisdiction
over all terrestrial plant and animal species, all turtles and tortoises and wetland species, including
but not limited to crocodiles, waterbirds and all amphibians and dugong. The Department of
Agriculture (DA) shall have jurisdiction over all declared aquatic critical habitats, all aquatic resources
including but not limited to all fishes, aquatic plants, invertebrates and all marine mammals, except
dugong. The secretaries of the DENR and the DA shall review, and by joint administrative order, revise
and regularly update the list of species under their respective jurisdiction. In the Province of Palawan,
jurisdiction herein conferred is vested to the Palawan Council for Sustainable Development pursuant
to Republic Act No. 7611.
CHAPTER II
DEFINITION OF TERMS
Section 5. Definition of Terms. As used in the Act, the term:
(a) "Bioprospecting" means the research, collection and utilization of biological and genetic resources
for purposes of applying the knowledge derived there from solely for commercial purposes;
(b) "By-product or derivatives" means any part taken or substance extracted from wildlife, in raw or in
processed form. This includes stuffed animals and herbarium specimens;
(c) "Captive-breeding/culture or propagation" means the process of producing individuals under
controlled conditions or with human interventions;
(d) "Collection or collecting" means the act of gathering or harvesting wildlife, its by-products or
derivatives;
(e) "Conservation" means preservation and sustainable utilization of wildlife, and/or maintenance,
restoration and enhancement of the habitat;
(f) "Critically endangered species" refers to a species or subspecies that is facing extremely high risk of
extinction in the wild in the immediate future;
(g) "Economically important species" means species or subspecies which have actual or potential
value in trade or utilization for commercial purpose;
(h) "Endangered species" refers to species or subspecies that is not critically endangered but whose
survival in the wild is unlikely if the causal factors continue operating;
(i) "Endemic species" Means species or subspecies which is naturally occurring and found only within
specific areas in the country;
(j) "Exotic species" means species or subspecies which do not naturally occur in the country;
(k) "Export permit" refers to a permit authorizing an individual to bring out wildlife from the
Philippines to any other country;
(l) "Gratuitous permit" means permit issued to any individual or entity engaged in noncommercial
scientific, or educational undertaking to collect wildlife;
(m) "Habitat" means place or environment where species or subspecies naturally occur or has
naturally established its population;
(n) "Import permit" refers to a permit authorizing an individual to bring in wildlife from another
country;
(o) "Indigenous wildlife" means species or subspecies of wildlife naturally occurring or has naturally
established population in the country;
(p) "Introduction" means bringing species into the wild that is outside its natural habitat;
(q) "Reexport permit" refers to a permit authorizing an individual to bring out of the country a
previous imported wildlife;
(r) "Secretary" means either or both the Secretary of the Department of Environment and Natural
Resources and the Secretary of the Department of Agriculture;
(s) "Threatened species" a general term to denote species or subspecies considered as critically
endangered, endangered, vulnerable or other accepted categories of wildlife whose population is at
risk of extinction;
(t) "Trade" means the act of engaging in the exchange, exportation or importation, purchase or sale of
wildlife, their derivatives or by-products, locally or internationally;
(u) "Traditional use" means utilization of wildlife by indigenous people in accordance with written or
unwritten rules, usage, customs and practices traditionally observed, accepted and recognized by
them;
(v) "Transport permit" means a permit issued authorizing an individual to bring wildlife from one
place to another within the territorial jurisdiction of the Philippines;
(w) "Vulnerable species" refers to species or subspecies that is not critically endangered nor
endangered but is under threat from adverse factors throughout their range and is likely to move to
the endangered category in the near future;
(x) "Wildlife" means wild forms and varieties of flora and fauna, in all developmental stages, including
those which are in captivity or are being bred or propagated;
(y) "Wildlife collector's permit" means a permit to take or collect from the wild certain species and
quantities of wildlife for commercial purposes; and
(z) "Wildlife farm/culture permit" means a permit to develop, operate and maintain a wildlife
breeding farm for conservation, trade and/or scientific purposes.
CHAPTER III
CONSERVATION AND PROTECTION OF WILDLIFE RESOURCES
ARTICLE ONE
General Provision
Section 6. Wildlife Information. All activities, as subsequently manifested under this Chapter, shall be
authorized by the Secretary upon proper evaluation of best available information or scientific data
showing that the activity is, or for a purpose, not detrimental to the survival of the species or
subspecies involved and/or their habitat. For this purpose, the Secretary shall regularly update wildlife
information through research.
Section 7. Collection of Wildlife. Collection of wildlife may be allowed in accordance with Section 6 of
this Act:Provided, That in the collection of wildlife, appropriate and acceptable wildlife collection
techniques with least or no detrimental effects to the existing wildlife populations and their habitats
shall, likewise, be required: Provided, further, That collection of wildlife by indigenous people may be
allowed for traditional use and not primarily for trade:Provided, furthermore, That collection and
utilization for said purpose shall not cover threatened species: Provided, finally, That Section 23 of this
Act shall govern the collection of threatened species.
Section 8. Possession of Wildlife. - No person or entity shall be allowed possession of wildlife unless
such person or entity can prove financial and technical capability and facility to maintain said
wildlife: Provided,
That the source was not obtained in violation of this Act.
Section 9. Collection and/or Possession of By-Products and Derivatives. By-products and derivatives
may be collected and/or possessed: Provided, That the source was not obtained in violation of this
Act.
Section 10. Local Transport of Wildlife, By-Products and Derivatives. - Local transport of wildlife, by-
products and derivatives collected or possessed through any other means shall be authorized unless
the same is prejudicial to the wildlife and public health.
Section 11. Exportation and/or Importation of Wildlife. Wildlife species may be exported to or
imported from another country as may be authorized by the Secretary or the designated
representative, subject to strict compliance with the provisions of this Act and rules and regulations
promulgated pursuant thereto: Provided, That the recipient of the wildlife is technically and financially
capable to maintain it.
Section 12. Introduction, Reintroduction or Restocking of Endemic or Indigenous Wildlife. - The
introduction, reintroduction or restocking of endemic and indigenous wildlife shall be allowed only for
population enhancement of recovery purposes subject to prior clearance from the Secretary of the
authorized representative pursuant to Section 6 of this Act. Any proposed introduction shall be
subject to a scientific study which shall focus on the bioecology. The proponent shall also conduct
public consultations with concerned individuals or entities.
Section 13. Introduction of Exotic Wildlife. - No exotic species shall be introduced into the country,
unless a clearance from the Secretary or the authorized representative is first obtained. In no case
shall exotic species be introduced into protected areas covered by Republic Act No. 7586 and to
critical habitats under Section 25 hereof.
In cases where introduction is allowed, it shall be subject to environmental impact study which shall
focus on the bioecology, socioeconomic and related aspects of the area where the species will be
introduced. The proponent shall also be required to secure the prior informed consent from the local
stakeholders.
Section 14. Bioprospecting. - Bioprospecting shall be allowed upon execution of an undertaking by
any proponent, stipulating therein its compliance with and commitment(s) to reasonable terms and
conditions that may be imposed by the Secretary which are necessary to protect biological diversity.
The Secretary or the authorized representative, in consultation with the concerned agencies, before
granting the necessary permit, shall require that prior informed consent be obtained by the applicant
from the concerned indigenous cultural communities, local communities, management board under
Republic Act No. 7586 or private individual or entity. The applicant shall disclose fully the intent and
scope of the bioprospecting activity in a language and process understandable to the community. The
prior informed consent from the indigenous peoples shall be obtained in accordance with existing
laws. The action on the bioprospecting proposal by concerned bodies shall be made within a
reasonable period.
Upon submission of the complete requirements, the Secretary shall act on the research proposal
within a reasonable period.
If the applicant is a foreign entity or individual, a local institution should be actively involved in the
research, collection and, whenever applicable and appropriate in the technological development of
the products derived from the biological and genetic resources.
Section 15. Scientific Researches on Wildlife. Collection and utilization of biological resources for
scientific research and not for commercial purposes shall be allowed upon execution of an
undertaking/agreement with and issuance of a gratuitous permit by the Secretary or the authorized
representative: Provided, That prior clearance from concerned bodies shall be secured before the
issuance of the gratuitous permit: Provided, further, That the last paragraph of Section 14 shall
likewise apply.
Section 16. Biosafety - All activities dealing on genetic engineering and pathogenic organisms in the
Philippines, as well as activities requiring the importation, introduction, field release and breeding of
organisms that are potentially harmful to man and the environment shall be reviewed in accordance
with the biosafety guidelines ensuring public welfare and the protection and conservation of wildlife
and their habitats.
Section 17. Commercial Breeding or Propagation of Wildlife Resources. - Breeding or propagation of
wildlife for commercial purposes shall be allowed by the Secretary or the authorized representative
pursuant to Section 6 through the issuance of wildlife farm culture permit: Provided, That only
progenies of wildlife raised, as well as unproductive parent stock shall be utilized for trade: Provided,
further: That commercial breeding operations for wildlife, whenever appropriate, shall be subject to
an environmental impact study.
Section 18. Economically Important Species. The Secretary, within one (1) year after the effectivity of
this Act, shall establish a list of economically-important species. A population assessment of such
species shall be conducted within a reasonable period and shall be regularly reviewed and updated by
the Secretary.
The Collection of certain species shall only be allowed when the results of the assessment show that,
despite certain extent of collection, the population of such species can still remain viable and capable
of recovering its numbers. For this purpose, the Secretary shall establish a schedule and volume of
allowable harvests.
Whenever an economically important species become threatened, any form of collection shall be
prohibited except for scientific, educational or breeding/propagation purposes, pursuant to the
provisions of this Act.
Section 19. Designation of Management and Scientific Authorities for International Trade in
Endangered Species of Wild Fauna and Flora. For the implementation of International agreement on
international trade in endangered species of wild fauna and fora, the management authorities for
terrestrial and aquatic resources shall be the Protected Areas and Wildlife Bureau (PAWB) of the DENR
and the Bureau of Fisheries and Aquatic Resources (BFAR) of the DA, respectively and that in the
Province of Palawan the implementation hereof is vested to the Palawan Council for Sustainable
Development pursuant to Republic Act No. 7611.
To provide advice to the management authorities, there shall be designated scientific authorities for
terrestrial and aquatic/marine species. For the terrestrial species, the scientific authorities shall be the
Ecosystems Research and Development Bureau (ERDB) of the DENR, the U.P. Institute of Biological
Sciences and the National Museum and other agencies as may be designated by the Secretary. For the
marine and aquatic species, the scientific authorities shall be the BFAR, the U.P. Marine Science
Institute, U.P. Visayas, Siliman University and the National Museum and other agencies as may be
designated by the Secretary: Provided, That in the case of terrestrial species, the ERDB shall chair the
scientific authorities, and in the case of marine and aquatic species, the U.P. Marine Science Institute
shall chair the scientific authorities.
Section 20. Authority of the Secretary to Issue Permits. - The Secretary or the duly authorized
representative, in order to effectively implement this Act, shall issue permits/certifications/clearances
with corresponding period of validity, whenever appropriate, which shall include but not limited to
the following:
determination of aforesaid fee, the production costs shall be given due consideration. Cutflowers,
leaves and the like, produced from farms shall be exempted from the said export fee: Provided,
further, That fees and charges shall be reviewed by the Secretary every two (2) years or as the need
arises and revise the same accordingly, subject to consultation with concerned sectors.
ARTICLE TWO
Protection of Threatened Species
Section 22. Determination of Threatened Species. - The Secretary shall determine whether any wildlife
species or subspecies is threatened, and classify the same as critically endangered, endangered,
vulnerable or other accepted categories based on the best scientific data and with due regard to
internationally accepted criteria, including but not limited to the following:

(a) present or threatened destruction, modification or curtailment of its habitat or range;

(1) Wildlife farm or culture permit 3 to 5 years;

(b) over-utilization for commercial, recreational, scientific or educational purposes;

(2) Wildlife collector's permit 1 to 3 years; (c) inadequacy of existing regulatory mechanisms; and

(d) other natural or man-made factors affecting the existence of wildlife.

(3) Gratuitous permit 1 year; The Secretary shall review, revise and publish the list of categorized threatened wildlife within one (1)
year after effectivity of this Act. Thereafter, the list shall be updated regularly or as the need
arises: Provided, That a species listed as threatened shall not be removed there from within three (3)
years following its initial listing.
(4) Local transport permit 1 to 3 months; and
Upon filing of a petition based on substantial scientific information of any person seeking for the
addition or deletion of a species from the list, the Secretary shall evaluate in accordance with the
relevant factors stated in the first paragraph of this section, the status of the species concerned and
(5) Export/Import/Reexport permit 1 to 6 months. act on said petition within a reasonable period.

These permits may be renewed subject to the guidelines issued by the appropriate agency and upon
consultation with concerned groups.
Section 21. Fees and Charges. - Reasonable fees and charges as may be determined upon consultation
with the concerned groups, and in the amount fixed by the Secretary shall be imposed for the
issuances of permits enumerated in the preceding section.
For the export of wildlife species, an export permit fee of not greater than three percentum (3%) of
the export value, excluding transport costs, shall be charged: Provided, however, That in the
The Secretary shall also prepare and publish a list of wildlife which resembles so closely in appearance
with listed threatened wildlife, which species shall likewise be categorized as threatened.
Section 23. Collection of Threatened Wildlife, By-products and Derivatives The collection of
threatened wildlife, as determined and listed pursuant to this Act, including its by-products and
derivatives, shall be allowed only for scientific, or breeding or propagation purposes in accordance
with Section 6 of this Act: Provided, That only the accredited individuals, business, research,
educational or scientific entities shall be allowed to collect for conservation breeding or propagation
purposes.
Section 24. Conservation Breeding or Propagation of Threatened Species Conservation breeding or
propagation of threatened species shall be encouraged in order to enhance its population in its
natural habitat. It shall be done simultaneously with the rehabilitation and/or protection of the
habitat where the captive-bred or propagated species shall be released, reintroduced or restocked.
Commercial breeding or propagation of threatened species may be allowed provided that the
following minimum requirements are met by the applicant, to wit:
(a) Proven effective breeding and captive management techniques of the species; and
(b) Commitment to undertake commercial breeding in accordance with Section 17 of this Act,
simultaneous with conservation breeding.
The Secretary shall prepare a list of threatened species for commercial breeding and shall regularly
revise or update such list or as the need arises.
Section 25. Establishment of Critical Habitats. - Within two (2) years following the effectivity of this
Act, The Secretary shall designate critical habitats outside protected areas under Republic Act No.
7586, where threatened species are found. Such designation shall be made on the basis of the best
scientific data taking into consideration species endemicity and/or richness, presence of man-made
pressures/threats to the survival of wildlife living in the area, among others.
All designated, critical habitats shall be protected, in coordination with the local government units and
other concerned groups, from any form of exploitation or destruction which may be detrimental to
the survival of the threatened species dependent therein. For such purpose, the Secretary may
acquire, by purchase, donation or expropriation, lands, or interests therein, including the acquisition
of usufruct, establishment of easements or other undertakings appropriate in protecting the critical
habitat.
ARTICLE THREE
Registration of Threatened and Exotic Species
Section 26. Registration of Threatened and Exotic Wildlife in the Possession of Private Persons. - No
person or entity shall be allowed possession of wildlife unless such person or entity can prove
financial and technical capability and facility to maintain said wildlife. Twelve (12) months after the
effectivity of this Act, the Secretary shall set a period, within which persons/entities shall register all
threatened species collected and exotic species imported prior to the effectivity of this Act. However,
when the threatened species is needed for breeding/propagation or research purposes, the State may
acquire the wildlife through a mutually acceptable arrangement.
After the period set has elapsed, threatened wildlife possessed without certificate of registration shall
be confiscated in favor of the government, subject to the penalties herein provided.
All Philippine wildlife which are not listed as threatened prior to the effectivity of this Act but which
may later become so, shall likewise be registered during the period set after the publication of the
updated list of threatened species.
CHAPTER IV
ILLEGAL ACTS
Section 27. Illegal Acts. - Unless otherwise allowed in accordance with this Act, it shall be unlawful for
any person to willfully and knowingly exploit wildlife resources and their habitats, or undertake the
following acts;
(a) killing and destroying wildlife species, except in the following instances;
(i) when it is done as part of the religious rituals of established tribal groups or indigenous
cultural communities;
(ii) when the wildlife is afflicted with an incurable communicable disease;
(iii) when it is deemed necessary to put an end to the misery suffered by the wildlife;
(iv) when it is done to prevent an imminent danger to the life or limb of a human being; and
(v) when the wildlife is killed or destroyed after it has been used in authorized research or
experiments.
(b) inflicting injury which cripples and/or impairs the reproductive system of wildlife species;
(c) effecting any of the following acts in critical habitat(s)
(i) dumping of waste products detrimental to wildlife;
(ii) squatting or otherwise occupying any portion of the critical habitat;
(iii) mineral exploration and/or extraction;
(iv) burning;
(v) logging; and
(vi) quarrying
(d) introduction, reintroduction or restocking of wildlife resources; (a) imprisonment of minimum of four (4) years and one (1) day to six (6) years and/or a fine of Fifty
thousand pesos (P50,000.00) to Five hundred thousand pesos (P500,000.00), if inflicted or
(e) trading of wildlife; undertaken against species listed as critical;

(f) collecting, hunting or possessing wildlife, their by-products and derivatives; (b) imprisonment of two (2) years and one (1) day to four (4) years and/or a fine of Thirty thousand
pesos (P30,000.00) to Two hundred thousand pesos (P200,000.00), if inflicted or undertaken against
(g) gathering or destroying of active nests, nest trees, host plants and the like; endangered species;

(h) maltreating and/or inflicting other injuries not covered by the preceding paragraph; and (c) imprisonment of one (1) year and one (1) day to two (2) years and/or a fine of Twenty thousand
pesos (P20,000.00) to Two hundred thousand pesos (P200,000.00), if inflicted or undertaken against
vulnerable species;
(i) transporting of wildlife.

(d) imprisonment of six (6) months and one (1) day to one (1) year and/or fine of Ten thousand pesos
CHAPTER V
(P10,000.00) to Fifty thousand pesos (P50,000.00), if inflicted or undertaken against other threatened
FINES AND PENALTIES
species; and
Section 28. Penalties for Violations of this Act. For any person who undertakes illegal acts under
(e) imprisonment of one (1) month to six (6) months and/or a fine of Five thousand pesos (P5,000.00)
paragraph (a) of the immediately preceding section to any species as may be categorized pursuant to
to Twenty thousand pesos (P20,000.00), if inflicted or undertaken against other wildlife species.
this Act, the following penalties and/or fines shall be imposed;

For illegal acts under paragraphs (c) and (d) of the immediately preceding section, an imprisonment of
(a) imprisonment of a minimum of six (6) years and one (1) day to twelve (12) years and/or a fine of
one (1) month to eight (8) years and/or a fine of Five thousand pesos (P5,000.00) to Five million pesos
One hundred thousand pesos (P100,000.00) to One million pesos (P1,000,000.00), if inflicted or
(P5,000,000.00) shall be imposed.
undertaken against species listed as critical;

For illegal acts under paragraph (e), the following penalties and/or fines shall be imposed:
(b) imprisonment of four (4) and one (1) day to six (6) years and/or a fine of Fifty thousand pesos
(P50,000.00) to Five hundred thousand pesos (P500,000.00) if inflicted or undertaken against
endangered species; (a) imprisonment of two (2) years and one (1) day to four (4) years and/or a fine of Five thousand
pesos (P5,000.00) to Three hundred thousand pesos (P300,000.00), if inflicted or undertaken against
species listed as critical;
(c) imprisonment of two (2) years and one (1) day to four (4) years and/or a fine of Thirty thousand
pesos (P30,000.00) to Three hundred thousand pesos (P300,000.00), if inflicted or undertaken against
vulnerable species; (b) imprisonment of one (1) year and one (1) day to two (2) years and/or a fine of Two thousand
pesos (P2,000.00) to Two hundred thousand pesos (P200,000.00), if inflicted or undertaken against
endangered species;
(d) imprisonment of one (1) year and one (1) day to two (2) years and/or a fine of Twenty thousand
pesos (P20,000.00) to Two hundred thousand pesos (P200,000.00) if inflicted or undertaken against
other threatened species; and (c) imprisonment of six (6) months and one (1) day to one (1) year and/or a fine of One thousand
pesos (P1,000.00) to One hundred thousand pesos (P100,000.00), if inflicted or undertaken against
vulnerable species;
(e) imprisonment of six (6) months and one (1) day to one (1) year and/or a fine of Ten thousand
pesos (P10,000.00) to One hundred thousand pesos (P100,000.00), if inflicted or undertaken against
other wildlife species. (d) imprisonment of one (1) month and one (1) day to six (6) months and/or a fine of Five hundred
pesos (P500.00) to Fifty thousand pesos (P50,000.00), if inflicted or undertaken against species listed
as threatened species; and
For illegal acts under paragraph (b) of the immediately preceding section, the following penalties
and/or fines shall be imposed;
(e) imprisonment of ten (10) days to one (1) month and/or a fine of Two hundred pesos (P200.00) to
Twenty thousand pesos (P20,000.00), if inflicted or undertaken against other wildlife species.
For illegal acts under paragraphs (f) and (g) of the immediately preceding section, the following
penalties and/or fines shall be imposed:
(a) imprisonment of two (2) years and one (1) day to four (4) years and a fine of Thirty thousand pesos
(P30,000.00) to Three hundred thousand pesos (P300,000.00), if inflicted or undertaken against
species listed as critical;
(b) imprisonment of one (1) year and one (1) day to two (2) years and a fine of Twenty thousand
pesos (P20,000.00) to Two hundred thousand pesos (P200,000.00), if inflicted or undertaken against
endangered species;
(c) imprisonment of six (6) months and one (1) day to one (1) year and a fine of Ten thousand pesos
(P10,000.00) to One hundred thousand pesos (P100,000.00), if inflicted or undertaken against
vulnerable species;
(d) imprisonment of one (1) month and one (1) day to six (6) months and a fine of Five thousand
pesos (P5,000.00) to Fifty thousand pesos (P50,000.00), if inflicted or undertaken against species as
other threatened species; and
(e) imprisonment of ten (10) days to one (1) month and a fine of One thousand pesos (P1,000.00) to
Five thousand pesos (P5,000.00), if inflicted or undertaken against other wildlife species: Provided,
That in case of paragraph (f), where the acts were perpetuated through the means of inappropriate
techniques and devices, the maximum penalty herein provided shall be imposed.
For illegal acts under paragraph (h) and (i) of the immediately preceding section, the following
penalties and/or fines shall be imposed:
(a) imprisonment of six (6) months and one (1) day to one (1) year and a fine of Fifty thousand pesos
(P50,000.00) to One hundred thousand pesos (P100,000.00) if inflicted or undertaken against species
listed as critical species;
(b) imprisonment of three (3) months and one (1) day to six (6) months and a fine of Twenty thousand
pesos (P20,000.00) to Fifty thousand pesos (P50,000.00), if inflicted or undertaken against
endangered species;
(c) imprisonment of one (1) month and one (1) day to three (3) months and a fine of Five thousand
pesos (P5,000.00) to Twenty thousand pesos (P20,000.00), if inflicted or undertaken against
vulnerable species;
(d) imprisonment of ten (10) days to one (1) month and a fine of One thousand pesos (P1,000.00) to
Five thousand pesos (P5,000.00), if inflicted or undertaken against species listed as other threatened
species;
(e) imprisonment of five (5) days to ten (10) days and a fine of Two hundred pesos (P200.00) to One
thousand pesos (P1,000.00), if inflicted or undertaken against other wildlife species.
All wildlife, its derivatives or by-products, and all paraphernalia, tools and conveyances used in
connection with violations of this Act, shall be ipso facto forfeited in favor of the
government; Provided, That where the ownership of the aforesaid conveyances belong to third
persons who has no participation in or knowledge of the illegal acts, the same may be released to said
owner. The apprehending agency shall immediately cause the transfer of all wildlife that have been
seized or recovered to the nearest Wildlife Rescue Center of the Department in the area.
If the offender is an alien, he shall be deported after service and payment of fines, without any further
proceedings.
The fines herein prescribed shall be increased by at least ten percent (10%) every three (3) years to
compensate for inflation and to maintain the deterrent function of such fines.
CHAPTER VI
MISCELLANEOUS PROVISIONS
Section 29. Wildlife Management Fund. There is hereby established a Wildlife Management Fund to
be administered by the Department as a special account in the National Treasury which shall finance
rehabilitation or restoration of habitats affected by acts committed in violation of this Act and support
scientific research, enforcement and monitoring activities, as well as enhancement of capabilities of
relevant agencies.
The Fund shall derive from fines imposed and damages awarded, fees, charges, donations,
endowments, administrative fees or grants in the form of contributions. Contributions to the Fund
shall be exempted from donor taxes and all other tax charges or fees imposed by the government.
Section 30. Deputation of Wildlife Enforcement Officers. - The Secretary shall deputize wildlife
enforcement officers from non-government organizations, citizens groups, community organizations
and other volunteers who have undergone necessary training for this purpose. The Philippine
National Police (PNP), the Armed Forces of the Philippines (AFP), the National Bureau of Investigation
(NBI) and other law enforcement agencies shall designate wildlife enforcement officers. As such, the
wild enforcement officers shall have the full authority to seize illegally traded wildlife and to arrest
violators of this Act subject to existing laws, rules and regulations on arrest and detention.
Section 31. Establishment of National Wildlife Research Centers. The Secretary shall establish national
wildlife research centers for terrestrial and aquatic species to lead in the conduct of scientific
researches on the proper strategies for the conservation and protection of wildlife, including captive
breeding or propagation. In this regard, the Secretary shall encourage the participation of experts
from academic/research institutions and wildlife industry.
Section 32. Wildlife Rescue Center. - The Secretary shall establish or designate wildlife rescue centers
to take temporary custody and care of all confiscated, abandoned and/or donated wildlife to ensure
their welfare and well-being. The Secretary shall formulate guidelines for the disposition of wildlife
from the rescue centers.
Section 33. Creation of Wildlife Traffic Monitoring Units. - The Secretary shall create wildlife traffic
monitoring units in strategic air and seaports all over the country to ensure the strict compliance and
effective implementation of all existing wildlife laws, rules and regulations, including pertinent
international agreements.
Customs officers and/or other authorized government representatives assigned at air or seaports who
may have intercepted wildlife commodities in the discharge of their official functions shall, prior to
further disposition thereof, secure a clearance from the wildlife traffic monitoring unit assigned in the
area.
effective implementation of this Act. Whenever appropriate, coordination in the preparation and
implementation of rules and regulations on joint and inseparable issues shall be done by both
Departments. The commitments of the State to international agreements and protocols shall likewise
be a consideration in the implementation of this Act.
Section 38. Appropriations. - The amount necessary to implement the provisions of this Act shall be
charged against the appropriations of the Department of Environment and Natural Resources in the
current General Appropriations Act. Therefore, such sums as may be necessary to fully implement the
provisions of this Act shall be included in the annual General Appropriations Act.
Section 39. Separability Clause. - Should any provision of this Act be subsequently declared as
unconstitutional, the same shall not affect the validity or the legality of the other provisions.
Section 40. Repealing Clause. - Act Nos. 2590 and 3983, Commonwealth Act No. 63, as amended,
Presidential Decree No. 1219, as amended, Republic Act No. 6147, and other laws, orders and
regulations inconsistent herewith are hereby repealed or amended accordingly.
Section 41. Effectivity. - This Act shall take effect fifteen (15) days after publication in the Official
Gazette or two (2) newspapers of general circulation.

Section 34. Exemption from taxes - Any donation, contribution, bequest, subsidy or financial aid which
may be made to the Department of Environment and Natural Resources or to the Department of REPUBLIC ACT NO. 7586
Agriculture and to NGOs engaged in wildlife conservation duly registered with the Securities and
Exchange Commission as certified by the local government unit, the Department of Environment and
AN ACT PROVIDING FOR THE ESTABLISHMENT AND MANAGEMENT OF NATIONAL INTEGRATED
Natural Resources or the Department of Agriculture, for the conservation and protection of wildlife
PROTECTED AREAS SYSTEM, DEFINING ITS SCOPE AND COVERAGE, AND FOR OTHER PURPOSES
resources and their habitats shall constitute as an allowable deduction from the taxable income of the
donor and shall be exempt from donor's tax.
Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:
Section 35. Flagship Species. Local government units shall initiate conservation measures for endemic
Section 1. Title – This Act shall be known and referred to as the "National Integrated Protected Areas
species in their areas. For this purpose, they may adopt flagship species such as the Cebu black shama
System Act of 1992″.
(copsychus cebuensis), tamaraw (bubalus mindorensis), Philippine tarsier (tarsius syrichta), Philippine
teak (tectona philippinensis), which shall serve as emblems of conservation for the local government
concerned. Section 2. Declaration of Policy – Cognizant of the profound impact of man’s activities on all
components of the natural environment particularly the effect of increasing population, resource
exploitation and industrial advancement and recognizing the critical importance of protecting and
Section 36. Botanical Gardens, Zoological Parks and Other Similar Establishments. The Secretary shall
maintaining the natural biological and physical diversities of the environment notably on areas with
regulate the establishment, operation and maintenance of botanical gardens, zoological parks and
biologically unique features to sustain human life and development, as well as plant and animal life, it
other similar establishments for recreation, education and conservation.
is hereby declared the policy of the State to secure for the Filipino people of present and future
generations the perpetual existence of all native plants and animals through the establishment of a
Section 37. Implementing Rules and Regulations. - Within twelve (12) months following the effectivity
comprehensive system of integrated protected areas within the classification of national park as
of this Act, secretaries of the Department of Environment and Natural Resources and the Department
provided for in the Constitution.
of Agriculture, in coordination with the Committees on Environment and Ecology of the Senate and
the House of Representatives, respectively, shall promulgate respective rules and regulations for the
It is hereby recognized that these areas, although distinct in features, posses common ecological
values that may be incorporated into a holistic plan representative of our natural heritage; that
effective administration of this area is possible only through cooperation among national government,
local government and concerned private organizations; that the use and enjoyment of these
protected areas must be consistent with the principles of biological diversity and sustainable
development.
To this end, there is hereby established a National Integrated Protected Areas System (NIPAS), which
shall encompass outstandingly remarkable areas and biologically important public lands that are
habitats of rare and endangered species of plants and animals, biogeographic zones and related
ecosystems, whether terrestrial, wetland or marine, all of which shall be designated as "protected
areas".
Section 3. Categories – The following categories of protected areas are hereby established:
a. Strict nature reserve;
b. Natural park;
c. Natural monument;
d. Wildlife sanctuary;
e. Protected landscapes and seascapes;
f. Resource reserve;
g. Natural biotic areas; and
h. Other categories established by law, conventions or international agreements which the Philippine
Government is a signatory.
Section 4. Definition of Terms – For purposes of this Act, the following terms shall be defined as
follows:
1. "National Integrated Protected Areas System (NIPAS)" is the classification and administration of all
designated protected areas to maintain essential ecological processes and life-support systems, to
preserve genetic diversity, to ensure sustainable use of resources found therein, and to maintain their
natural conditions to the greatest extent possible;
2. "Protected Area" refers to identified portions of land and water set aside by reason of their unique
physical and biological significance, managed to enhance biological diversity and protected against
destructive human exploitation;
3. "Buffer zones" are identified areas outside the boundaries of and immediately adjacent to
designated protected areas pursuant to Section 8 that need special development control in order to
avoid or minimize harm to the protected area;
4. "Indigenous cultural community" refers to a group of people sharing common bonds of language,
customs, traditions and other distinctive cultural traits and who have since time immemorial,
occupied, possessed and utilized a territory;
5. "National park" refers to a forest reservation essentially of natural wilderness character which has
been withdrawn from settlement, occupancy or any form of exploitation except in conformity with
approved management plan and set aside as such exclusively to conserve the area or preserve the
scenery, the natural and historic objects, wild animals and plants therein and to provide enjoyment of
these features in such areas;
6. "Natural monuments" is a relatively small area focused on protection of small features to protect or
preserve nationally significant natural features on account of their special interest or unique
characteristics;
7. "Natural biotic area" is an area set aside to allow the way of life of societies living in harmony with
the environment to adapt to modern technology at their pace;
8. "Natural park" is a relatively large area not materially altered by human activity where extractive
resource uses are not allowed and maintained to protect outstanding natural and scenic areas of
national or international significance for scientific, educational and recreational use;
9. "Protected landscapes/seascapes" are areas of national significance which are characterized by the
harmonious interaction of man and land while providing opportunities for public enjoyment through
the recreation and tourism within the normal lifestyle and economic activity of these areas;
10. "Resource reserve" is an extensive and relatively isolated and uninhabited area normally with
difficult access designated as such to protect natural resources of the area for future use and prevent
or contain development activities that could affect the resource pending the establishment of
objectives which are based upon appropriate knowledge and planning;
11. "Strict nature reserve" is an area possessing some outstanding ecosystem, features and/or species
of flora and fauna of national scientific importance maintained to protect nature and maintain
processes in an undisturbed state in order to have ecologically representative examples of the natural
environment available for scientific study, environmental monitoring, education, and for the
maintenance of genetic resources in a dynamic and evolutionary state;
12. "Tenured migrant communities" are communities within protected areas which have actually and
continuously occupied such areas for five (5) years before the designation of the same as protected
areas in accordance with this Act and are solely dependent therein for subsistence; and
13. "Wildlife sanctuary" comprises an area which assures the natural conditions necessary to protect
nationally significant species, groups of species, biotic communities or physical features of the
environment where these may require specific human manipulations for their perpetuation.
Section 5. Establishment and Extent of the System – The establishment and operationalization of the
System shall involve the following:
2. An ethnographic study;
3. A protected area resource profile;
4. Land use plans done in coordination with the respective Regional Development Councils; and
5. Such other background studies as will be sufficient bases for selection.
The DENR shall:
1. Notify the public of proposed action through publication in a newspaper of general circulation, and
such other means as the System deems necessary in the area or areas in the vicinity of the affected
land thirty (30) days prior to the public hearing;

1. All areas or islands in the Philippines proclaimed, designated or set aside, pursuant to a law, i. Conduct public hearings at the locations nearest to the area affected;
presidential decree, presidential proclamation or executive order as national park, game refuge, bird
and wildlife sanctuary, wilderness area, strict nature reserve, watershed, mangrove reserve, fish
ii. At least thirty (30) days prior to the date of hearing, advise all Local Government Units (LGUs) in the
sanctuary, natural and historical landmark, protected and managed landscape/seascape as well as
affected areas, national agencies concerned, people’s organizations and non-government
identified virgin forests before the effectivity of this Act are hereby designated as initial components
organizations and invite such officials to submit their views on the proposed action at the hearing not
of the System. The initial components of the System shall be governed by existing laws, rules and
later than thirty (30) days following the date of hearing; and
regulations, not inconsistent with this Act;
iii. Give due consideration to the recommendations at the public hearing; and provide sufficient
2. Within one (1) year from the effectivity of this Act, the DENR shall submit to the Senate and the
explanation for his recommendations contrary to the general sentiments expressed in the public
House of Representatives a map and legal descriptions or natural boundaries of each protected area
hearing;
initially comprising the System. Such maps and legal description shall, by virtue of this Act, constitute
the official documentary representation of the entire System, subject to such changes as Congress
2. Upon receipt of the recommendations of the DENR, the President shall issue a presidential
deems necessary;
proclamation designating the recommended areas as protected areas and providing for measures for
their protection until such time when Congress shall have enacted a law finally declaring such
3. All DENR records pertaining to said protected areas, including maps and legal descriptions or
recommended areas as part of the integrated protected area systems; and
natural boundaries, copies of rules and regulations governing them, copies of public notices of, and
reports submitted to Congress regarding pending additions, eliminations, or modifications shall be
3. Thereafter, the President shall send to the Senate and the House of Representatives his
made available to the public. These legal documents pertaining to protected areas shall also be
recommendations with respect to the designations as protected areas or reclassification of each area
available to the public in the respective DENR Regional Offices, Provincial Environment and Natural
on which review has been completed, together with maps and legal description of boundaries. The
Resources Offices (PENROs) and Community Environment and Natural Resources Offices (CENROs)
President, in his recommendation, may propose the alteration of existing boundaries of any or all
where NIPAS areas are located;
proclaimed protected areas, addition of any contiguous area of public land of predominant physical
and biological value. Nothing contained herein shall limit the President to propose, as part of his
4. Within three (3) years from the effectivity of this Act, the DENR shall study and review each area
recommendation to Congress, additional areas which have not been designated, proclaimed or set
tentatively composing the System as to its suitability or non-suitability for preservation as protected
aside by law, presidential decree, proclamation or executive orders as protected area/s.
area and inclusion in the System according to the categories established in Section 3 hereof and
report its findings to the President as soon as each study is completed. The study must include in each
Section 6. Additional Areas to be Integrated to the System. – Notwithstanding the establishment of
area:
the initial component of the additional areas with outstanding physical features, anthropological
significance and biological diversity in accordance with the provisions of Section 5d.
1. A forest occupants survey;
Section 7. Disestablishment as Protected Area. – When in the opinion of the DENR a certain protected
area should be withdrawn or disestablished, or its boundaries modified as warranted by a study and
sanctioned by the majority of the members of the respective boards for the protected area as herein
established in Section 11, it shall, in turn, advice Congress. Disestablishment of a protected area under
the System or modification of its boundary shall take effect pursuant to an act of Congress. Thereafter,
said area shall revert to the category of public forests unless otherwise classified by Congress:
Provided however, that after disestablishment by Congress, the Secretary may recommend the
transfer of such disestablished area to other government agencies to serve other priority programs of
national interest.
Section 8. Buffer Zones. – For each protected area, there shall be established peripheral buffer zones
when necessary, in the same manner as Congress establishes the protected area, to protect the same
from activities that will directly and indirectly harm it. Such buffer zones shall be included in the
individual protected area management plan that shall prepared for each protected area. The DENR
shall exercise its authority over protected areas as provided in this Act on such area and designated as
buffer zones.
Section 9. Management Plans. – There shall be a general management planning strategy to serve as
guide in formulating individual plans for each protected area. The management planning strategy
shall, at the minimum, promote the adoption and implementation of innovative management
techniques including if necessary, the concept of zoning, buffer zone management for multiple use
and protection, habitat conservation and rehabilitation, diversity management, community
organizing, socioeconomic and scientific researches, site-specific policy development, pest
management, and fire control. The management planning strategy shall also provide guidelines for
the protection of indigenous cultural communities, other tenured migrant communities and sites for
close coordination between and among local agencies of the Government as well as the private
sector.
Each component area of the System shall be planned and administered to further protect and
enhance the permanent preservation of its natural conditions. A management manual shall be
formulated and developed which must contain the following: an individual management plan
prepared by three (3) experts, basic background information, field inventory of the resources within
the area, an assessment of assets and limitations, regional interrelationships, particular objectives for
managing the area, appropriate division of the area into management zones, a review of the
boundaries of the area, and a design of the management programs.
Section 10. Administration and Management of the System. – The National Integrated Protected
Areas System is hereby placed under the control and administration of the Department of
Environment and Natural Resources. For this purpose, there is hereby created a division in the
regional offices of the Department to be called the Protected Areas and Wildlife Division in regions
where protected areas have been established, which shall be under the supervision of a Regional
Technical Director, and shall include subordinate officers, clerks, and employees as may be proposed
by the Secretary, duly approved by the Department of Budget and Management, and appropriated by
the Congress. The Service thus established shall manage protected areas and promote the permanent
preservation, to the greatest extent possible of their natural conditions.
To carry out the mandate of this Act, the Secretary of the DENR is empowered to perform any and all
of the following acts:
a. To conduct studies on various characteristic features and conditions of the different protected
areas, using commonalities in their characteristics, classify and define them into categories and
prescribe permissible or prohibited human activities in each category in the System;
b. To adopt and enforce a land use scheme and zoning plan in adjoining areas for the preservation and
control of activities that may threaten the ecological balance in the protected areas;
c. To cause the preparation of and exercise the power to review all plans and proposals for the
management of protected areas;
d. To promulgate rules and regulations necessary to carry out the provisions of this Act;
e. To deputize field officers and delegate any of his powers under this Act and other laws to expedite
its implementation and enforcement;
f. To fix and prescribe reasonable NIPAS fees to be collected from government agencies or any person,
firm or corporation deriving benefits from the protected areas;
g. To exact administrative fees and fines as authorized in Section 21 for violation of guidelines, rules
and regulations of this Act as would endanger the viability of protected areas;
h. To enter into contracts and/or agreements with private entities or public agencies as may be
necessary to carry out the purposes of this Act;
i. To accept in the name of the Philippine Government and in behalf of NIPAS funds, gifts or bequests
of money for immediate disbursements or other property in the interest of the NIPAS, its activities or
its services;
j. To call on any agency or instrumentality of the Government as well as academic institutions, non-
government organizations and the private sector as may be necessary to accomplish the objectives
and activities of the System;
k. To submit an annual report to the President of the Philippines and to Congress on the status of
protected areas in the country;
l. To establish a uniform marker of the System, including an appropriate and distinctive symbol for
each category in the System, in consultation with appropriate government agencies and public and
private organizations;
m. To determine the specification of the class, type and style of buildings and other structures to be
constructed in protected areas and the materials to be used;
n. Control the construction, operation and maintenance of roads, trails, waterworks, sewerage, fire
protection, and sanitation systems and other public utilities within the protected area;
o. Control occupancy of suitable portions of the protected area and resettle outside of said area forest
occupants therein, with the exception of the members of indigenous communities area; and
p. To perform such other functions as may be directed by the President of the Philippines, and to do
such acts as may be necessary or incidental to the accomplishment of the purpose and objectives of
the System.
Section 11. Protected Area Management Board. – A Protected Area Management Board for each of
the established protected area shall be created and shall be composed of the following: The Regional
Executive Director under whose jurisdiction the protected area is located; one (1) representative from
the autonomous regional government, if applicable; the Provincial Development Officer; one (1)
representative from the municipal government; one (1) representative from each barangay covering
the protected area; one (1) representative from each tribal community, if applicable; and, at least
three (3) representatives from non-government organizations/local community organizations, and if
necessary, one (1) representative from other departments or national government agencies involved
in protected area management.
The Board shall, by a majority vote, decide the allocations for budget, approve proposals for funding,
decide matters relating to planning, peripheral protection and general administration of the area in
accordance with the general management strategy. The members of the Board shall serve for a term
of five (5) years without compensation, except for actual and necessary traveling and subsistence
expenses incurred in the performance of their duties. They shall be appointed by the Secretary of the
DENR as follows:
a. A member who shall be appointed to represent each local government down to barangay level
whose territory or portion is included in the protected area. Each appointee shall be the person
designated by the head of such LGU, except for the Provincial Development Officer who shall serve ex
officio;
b. A member from non-government organizations who shall be endorsed by heads of organizations
which are preferably based in the area or which have established and recognized interest in protected
areas;
c. The RED/s in the region/s where such protected area lies shall sit as ex officio member of the Board
and shall serve as adviser/s in matters related to the technical aspect of management of the area; and
d. The RED shall act as chairman of the Board. When there are two (2) or more REDs in the Board, the
Secretary shall designate one (1) of them to be the Chairman. Vacancies shall be filled in the same
manner as the original appointment.
Section 12. Environmental Impact Assessment. – Proposals for activities which are outside the scope
of the management plan for protected areas shall be subject to an environmental impact assessment
as required by law before they are adopted, and the results thereof shall be taken into consideration
in the decision-making process.
No actual implementation of such activities shall be allowed without the required Environmental
Compliance Certificate (ECC) under the Philippine Environmental Impact Assessment (EIA) system. In
instances where such activities are allowed to be undertaken, the proponent shall plan and carry
them out in such manner as will minimize any adverse effects and take preventive and remedial action
when appropriate. The proponent shall be liable for any damage due to lack of caution or indiscretion.
Section 13. Ancestral Lands and Rights Over Them. – Ancestral lands and customary rights and
interest arising shall be accorded due recognition. The DENR shall prescribe rules and regulations to
govern ancestral lands within protected areas: Provided, that the DENR shall have so power to evict
indigenous communities from their present occupancy nor resettle them to another area without
their consent: Provided, however, That all rules and regulations, whether adversely affecting said
communities or not, shall be subjected to notice and hearing to be participated in by members of
concerned indigenous community.
Section 14. Survey for Energy Resources. – Consistent with the policies declared in Section 2 hereof,
protected areas, except strict nature reserves and natural parks, may be subjected to exploration only
for the purpose of gathering information on energy resources and only if such activity is carried out
with the least damage to surrounding areas. Surveys shall be conducted only in accordance with a
program approved by the DENR, and the result of such surveys shall be made available to the public
and submitted to the President for recommendation to Congress. Any exploitation and utilization of
energy resources found within NIPAS areas shall be allowed only through a law passed by Congress.
Section 15. Areas Under the Management of Other Departments and Government Instrumentalities. –
Should there be protected areas, or portions thereof, under the jurisdiction of government
instrumentalities other than the DENR, such jurisdiction shall, prior to the passage of this Act, remain
in the said department or government instrumentality; Provided, That the department or government
instrumentality exercising administrative jurisdiction over said protected area or a portion thereof
shall coordinate with the DENR in the preparation of its management plans, upon the effectivity of
this Act.
Section 16. Integrated Protected Areas Fund. – There is hereby established a trust fund to be known
as Integrated Protected Areas (IPAS) Fund for purposes of financing projects of the System. The IPAS
may solicit and receive donations, endowments, and grants in the form of contributions, and such
endowment shall be exempted from income or gift taxes and all other taxes, charges or fees imposed
by the Government or any political subdivision or instrumentality thereof.
All incomes generated from the operation of the System or management of wild flora and fauna shall
accrue to the Fund and may be utilized directly by the DENR for the above purpose. These incomes
shall be derived from:
a. Taxes from the permitted sale and export of flora and fauna and other resources from protected
areas;
b. Proceeds from lease of multiple use areas;
c. Contributions from industries and facilities directly benefiting from the protected area; and
d. Such other fees and incomes derived from the operation of the protected area. Disbursements
from the Funds shall be made solely for the protection, maintenance, administration, and
management of the System, and duly approved projects endorsed by the PAMBs, in the amounts
authorized by the DENR.
Section 17. Annual Report to Congress. – At the opening of each session of Congress, the DENR shall
report to the President, for transmission to Congress, on the status of the System, regulation in force
and other pertinent information, together with recommendations.
Section 18. Field Officers. – All officials, technical personnel and forest guards employed in the
integrated protected area service or all persons deputized by the DENR, upon recommendation of the
Management Board shall be considered as field officers and shall have the authority to investigate and
search premises and buildings and make arrests in accordance with the rules on criminal procedure
for the violation of laws and regulations relating to the protected areas. Persons arrested shall be
brought to the nearest police precinct for investigation.
Nothing herein mentioned shall be construed as preventing regular law enforcers and police officers
from arresting any person in the act of violating said laws and regulations.
Section 19. Special Prosecutors. – The Department of Justice shall designate special prosecutors to
prosecute violations of laws, rules and regulations in protected areas.
Section 20. Prohibited Acts. – Except as may be allowed by the nature of their categories and pursuant
to rules and regulations governing the same, the following acts are prohibited within protected areas:
a. Hunting, destroying, disturbing, or mere possession of any plants or animals or products derived
therefrom without a permit from the Management Board;
b. Dumping of any waste products detrimental to the protected area, or to the plants and animals or
inhabitants therein;
c. Use of any motorized equipment without a permit from the Management Board;
d. Mutilating, defacing or destroying objects of natural beauty, or objects of interest to cultural
communities (of scenic value);
e. Damaging and leaving roads and trails in a damaged condition;
f. Squatting, mineral locating, or otherwise occupying any land;
g. Constructing or maintaining any kind of structure, fence or enclosures, conducting any business
enterprise without a permit;
h. Leaving in exposed or unsanitary conditions refuse or debris, or depositing in ground or in bodies of
water; and
i. Altering, removing destroying or defacing boundary marks or signs.
Section 21. Penalties. – Whoever violates this Act or any rules and regulations issued by the
Department pursuant to this Act or whoever is found guilty by a competent court of justice of any of
the offenses in the preceding section shall be fined in the amount of not less than Five thousand
pesos (P5,000) nor more than Five hundred thousand pesos (P500,000), exclusive of the value of the
thing damaged or imprisonment for not less than one (1) year but not more than six (6) years, or
both, as determined by the court: Provided, that, if the area requires rehabilitation or restoration as
determined by the court, the offender shall be required to restore or compensate for the restoration
to the damages: Provided, further, that court shall order the eviction of the offender from the land
and the forfeiture in favor of the Government of all minerals, timber or any species collected or
removed including all equipment, devices and firearms used in connection therewith, and any
construction or improvement made thereon by the offender. If the offender is an association or
corporation, the president or manager shall be directly responsible for the act of his employees and
laborers: Provided, finally, that the DENR may impose administrative fines and penalties consistent
with this Act.
Section 22. Separability Clause. – If any part or section of this Act is declared unconstitutional, such
declaration shall not affect the other parts or sections of this Act.
Section 23. Repealing Clause. – All laws, presidential decrees, executive orders, rules and regulations
inconsistent with any provisions of this Act shall be deemed repealed or modified accordingly.
Section 24. Effectivity Clause. – This Act shall take effect fifteen (15) days after its complete
publication in two (2) newspapers of general circulation.
REPUBLIC ACT NO. 7942 March 3, 1995
AN ACT INSTITUTING A NEW SYSTEM OF MINERAL RESOURCES EXPLORATION, DEVELOPMENT,
UTILIZATION, AND CONSERVATION
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
CHAPTER I
INTRODUCTORY PROVISIONS
Section 1
Title
This Act shall be known as the "Philippine Mining Act of 1995."
Section 2
Declaration of Policy
All mineral resources in public and private lands within the territory and exclusive economic zone of
the Republic of the Philippines are owned by the State. It shall be the responsibility of the State to
promote their rational exploration, development, utilization and conservation through the combined
efforts of government and the private sector in order to enhance national growth in a way that
effectively safeguards the environment and protect the rights of affected communities.
Section 3
Definition of Terms
As used in and for purposes of this Act, the following terms, whether in singular or plural, shall mean:
a. Ancestral lands refers to all lands exclusively and actually possessed, occupied, or utilized by
indigenous cultural communities by themselves or through their ancestors in accordance with their
customs and traditions since time immemorial, and as may be defined and delineated by law.
b. Block or meridional block means an area bounded by one-half (1/2) minute of latitude and one-half
(1/2) minute of longitude, containing approximately eighty-one hectares (81 has.).
c. Bureau means the Mines and Geosciences Bureau under the Department of Environment and
Natural Resources.
d. Carrying capacity refers to the capacity of natural and human environments to accommodate and
absorb change without experiencing conditions of instability and attendant degradation.
e. Contiguous zone refers to water, sea bottom and substratum measured twenty-four nautical miles
(24 n.m.) seaward from the base line of the Philippine archipelago.
f. Contract area means land or body of water delineated for purposes of exploration, development, or
utilization of the minerals found therein.
g. Contractor means a qualified person acting alone or in consortium who is a party to a mineral
agreement or to a financial or technical assistance agreement.
h. Co-production agreement (CA) means an agreement entered into between the Government and
one or more contractors in accordance with Section 26(b) hereof.
i. Department means the Department of Environment and Natural Resources.
j. Development means the work undertaken to explore and prepare an ore body or a mineral deposit
for mining, including the construction of necessary infrastructure and related facilities.
k. Director means the Director of the Mines and Geosciences Bureau.
l. Ecological profile or eco-profile refers to geographic-based instruments for planners and decision-
makers which presents an evaluation of the environmental quality and carrying capacity of an area.
m. Environmental compliance certificate (ECC) refers to the document issued by the government
agency concerned certifying that the project under consideration will not bring about an
unacceptable environmental impact and that the proponent has complied with the requirements of
the environmental impact statement system.
n. Environmental impact statement (EIS) is the document which aims to identify, predict, interpret,
and communicate information regarding changes in environmental quality associated with a proposed
project and which examines the range of alternatives for the objectives of the proposal and their
impact on the environment.
o. Exclusive economic zone means the water, sea bottom and subsurface measured from the baseline
of the Philippine archipelago up to two hundred nautical miles (200 n.m.) offshore.
p. Existing mining/quarrying right means a valid and subsisting mining claim or permit or quarry
permit or any mining lease contract or agreement covering a mineralized area granted/issued under
pertinent mining laws.
q. Exploration means the searching or prospecting for mineral resources by geological, geochemical or
geophysical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any
other means for the purpose of determining the existence, extent, quantity and quality thereof and
the feasibility of mining them for profit.
r. Financial or technical assistance agreement means a contract involving financial or technical
assistance for large-scale exploration, development, and utilization of mineral resources.
s. Force majeure means acts or circumstances beyond the reasonable control of contractor including,
but not limited to, war, rebellion, insurrection, riots, civil disturbance, blockade, sabotage, embargo,
strike, lockout, any dispute with surface owners and other labor disputes, epidemic, earthquake,
storm, flood or other adverse weather conditions, explosion, fire, adverse action by government or by
any instrumentality or subdivision thereof, act of God or any public enemy and any cause that herein
describe over which the affected party has no reasonable control.
t. Foreign-owned corporation means any corporation, partnership, association, or cooperative duly
registered in accordance with law in which less than fifty per centum (50%) of the capital is owned by
Filipino citizens.
u. Government means the government of the Republic of the Philippines.
v. Gross output means the actual market value of minerals or mineral products from its mining area as
defined in the National Internal Revenue Code.
w. Indigenous cultural community means a group or tribe of indigenous Filipinos who have
continuously lived as communities on communally-bounded and defined land since time immemorial
and have succeeded in preserving, maintaining, and sharing common bonds of languages, customs,
traditions, and other distinctive cultural traits, and as may be defined and delineated by law.
x. Joint venture agreement (JVA) means an agreement entered into between the Government and
one or more contractors in accordance with Section 26(c) hereof.
y. Mineral processing means the milling, beneficiation or upgrading of ores or minerals and rocks or
by similar means to convert the same into marketable products.
z. Mine wastes and tailings shall mean soil and rock materials from surface or underground mining
and milling operations with no economic value to the generator of the same.
aa. Minerals refers to all naturally occurring inorganic substance in solid, gas, liquid, or any
intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive
materials, and geothermal energy.
ab. Mineral agreement means a contract between the government and a contractor, involving mineral
production-sharing agreement, co-production agreement, or joint-venture agreement.
ac. Mineral land means any area where mineral resources are found.
ad. Mineral resource means any concentration of minerals/rocks with potential economic value.
ae. Mining area means a portion of the contract area identified by the contractor for purposes of
development, mining, utilization, and sites for support facilities or in the immediate vicinity of the
mining operations.
af. Mining operation means mining activities involving exploration, feasibility, development,
utilization, and processing.
ag. Non-governmental organization (NGO) includes nonstock, nonprofit organizations involved in
activities dealing with resource and environmental conservation, management and protection.
ah. Net assets refers to the property, plant and equipment as reflected in the audited financial
statement of the contractor net of depreciation, as computed for tax purposes, excluding appraisal
increase and construction in progress.
ai. Offshore means the water, sea bottom and subsurface from the shore or coastline reckoned from
the mean low tide level up to the two hundred nautical miles (200 n.m.) exclusive economic zone
including the archipelagic sea and contiguous zone.
aj. Onshore means the landward side from the mean tide elevation, including submerged lands in
lakes, rivers and creeks.
ak. Ore means a naturally occurring substance or material from which a mineral or element can be
mined and/or processed for profit.
al. Permittee means the holder of an exploration permit.
am. Pollution control and infrastructure devices refers to infrastructure, machinery, equipment and/or
improvements used for impounding, treating or neutralizing, precipitating, filtering, conveying and
cleansing mine industrial waste and tailings as well as eliminating or reducing hazardous effects of
solid particles, chemicals, liquids or other harmful byproducts and gases emitted from any facility
utilized in mining operations for their disposal.
au. Regional director means the regional director of any mines regional office under the Department
of Environment and Natural Resources.
av. Regional office means any of the mines regional offices of the Department of Environment and
Natural Resources.

an. President means the President of the Republic of the Philippines. aw. Secretary means the Secretary of the Department of Environment and Natural Resources.

ao. Private land refers to any land belonging to any private person which includes alienable and
disposable land being claimed by a holder, claimant, or occupant who has already acquired a vested
right thereto under the law, although the corresponding certificate or evidence of title or patent has
not been actually issued.
ap. Public land refers to lands of the public domain which have been classified as agricultural lands
and subject to management and disposition or concession under existing laws.
ax. Special allowance refers to payment to the claim-owners or surface right-owners particularly
during the transition period from Presidential Decree No. 463 and Executive Order No. 279, series of
1987.
ay. State means the Republic of the Philippines.
az. Utilization means the extraction or disposition of minerals.

aq. Qualified person means any citizen of the Philippines with capacity to contract, or a corporation, CHAPTER II
partnership, association, or cooperative organized or authorized for the purpose of engaging in GOVERNMENT MANAGEMENT
miring, with technical and financial capability to undertake mineral resources development and duly
registered in accordance with law at least sixty per centum (60%) of the capital of which is owned by
Section 4
citizens of the Philippines: Provided, That a legally organized foreign-owned corporation shall be
Ownership of Mineral Resources
deemed a qualified person for purposes of granting an exploration permit, financial or technical
assistance agreement or mineral processing permit.
Mineral resources are owned by the State and the exploration, development, utilization, and
processing thereof shall be under its full control and supervision. The State may directly undertake
ar. Quarrying means the process of extracting, removing and disposing quarry resources found on or
such activities or it may enter into mineral agreements with contractors.
underneath the surface of private or public land.
The State shall recognize and protect the rights of the indigenous cultural communities to their
as. Quarry permit means a document granted to a qualified person for the extraction and utilization of
ancestral lands as provided for by the Constitution.
quarry resources on public or private lands.
Section 5
at. Quarry resources refers to any common rock or other mineral substances as the Director of Mines
Mineral Reservations
and Geosciences Bureau may declare to be quarry resources such as, but not limited to, andesite,
basalt, conglomerate, coral sand, diatomaceous earth, diorite, decorative stones, gabbro, granite,
When the national interest so requires, such as when there is a need to preserve strategic raw
limestone, marble, marl, red burning clays for potteries and bricks, rhyolite, rock phosphate,
materials for industries critical to national development, or certain minerals for scientific, cultural or
sandstone, serpentine, shale, tuff, volcanic cinders, and volcanic glass: Provided, That such quarry
ecological value, the President may establish mineral reservations upon the recommendation of the
resources do not contain metals or metallic constituents and/or other valuable minerals in
Director through the Secretary. Mining operations in existing mineral reservations and such other
economically workable quantities: Provided, further, That non-metallic minerals such as kaolin,
reservations as may thereafter be established, shall be undertaken by the Department or through a
feldspar, bull quartz, quartz or silica, sand and pebbles, bentonite, talc, asbestos, barite, gypsum,
contractor: Provided, That a small scale-mining cooperative covered by Republic Act No. 7076 shall be
bauxite, magnesite, dolomite, mica, precious and semi-precious stones, and other non-metallic
given preferential right to apply for a small-scale mining agreement for a maximum aggregate area of
minerals that may later be discovered and which the: Director declares the same to be of
twenty-five percent (25%) of such mineral reservation, subject to valid existing mining/quarrying
economically workable quantities, shall not be classified under the category of quarry resources.
rights as provided under Section 112 Chapter XX hereof. All submerged lands within the contiguous
zone and in the exclusive economic zone of the Philippines are hereby declared to be mineral
reservations.
A ten per centum (10%) share of all royalties and revenues to be derived by the government from the
development and utilization of the mineral resources within mineral reservations as provided under
this Act shall accrue to the Mines and Geosciences Bureau to be allotted for special projects and other
administrative expenses related to the exploration and development of other mineral reservations
mentioned in Section 6 hereof.
Section 6
Other Reservations
Mining operations in reserved lands other than mineral reservations may be undertaken by the
Department, subject to limitations as herein provided. In the event that the Department cannot
undertake such activities, they may be undertaken by a qualified person in accordance with the rules
and regulations promulgated by the Secretary. The right to develop and utilize the minerals found
therein shall be awarded by the President under such terms and conditions as recommended by the
Director and approved by the Secretary: Provided, That the party who undertook the exploration of
said reservation shall be given priority. The mineral land so awarded shall be automatically excluded
from the reservation during the term of the agreement: Provided, further, That the right of the lessee
of a valid mining contract existing within the reservation at the time of its establishment shall not be
prejudiced or impaired.
Section 7
Periodic Review of Existing Mineral Reservations
The Secretary shall periodically review existing mineral reservations for the purpose of determining
whether their continued existence is consistent with the national interest, and upon his
recommendation, the President may, by proclamation, alter or modify the boundaries thereof or
revert the same to the public domain without prejudice to prior existing rights.
Section 8
Authority of the Department
The Department shall be the primary government agency responsible for the conservation,
management, development, and proper use of the State's mineral resources including those in
reservations, watershed areas, and lands of the public domain. The Secretary shall have the authority
to enter into mineral agreements on behalf of the Government upon the recommendation of the
Director, promulgate such rules and regulations as may be necessary to implement the intent and
provisions of this Act.
Section 9
Authority of the Bureau
The Bureau shall have direct charge in the administration and disposition of mineral lands and mineral
resources and shall undertake geological, mining, metallurgical, chemical, and other researches as
well as geological and mineral exploration surveys. The Director shall recommend to the Secretary the
granting of mineral agreements to duly qualified persons and shall monitor the compliance by the
contractor of the terms and conditions of the mineral agreements. The Bureau may confiscate surety,
performance and guaranty bonds posted through an order to be promulgated by the Director. The
Director may deputize, when necessary, any member or unit of the Philippine National Police,
barangay, duly registered non-governmental organization (NGO) or any qualified person to police all
mining activities.
Section 10
Regional Offices
There shall be as many regional offices in the country as may be established by the Secretary, upon
the recommendation of the Director.
Section 11
Processing of Applications
The system of processing applications for mining rights shall be prescribed in the rules and regulations
of this Act.
Section 12
Survey, Charting and Delineation of Mining Areas
A sketch plan or map of the contract or mining area prepared by a deputized geodetic engineer
suitable for publication purposes shall be required during the filing of a mineral agreement or
financial or technical assistance agreement application. Thereafter, the contract or mining area shall
be surveyed and monumented by a deputized geodetic engineer or bureau geodetic engineer and the
survey plan shall be approved by the Director before the approval of the mining feasibility.
Section 13
Meridional Blocks
For purposes of the delineation of the contract or mining areas under this Act, the Philippine territory
and its exclusive economic zone shall be divided into meridional blocks of one-half (1/2) minute of
latitude and one-half (1/2) minute of longitude.
Section 14
Recording System
There shall be established a national and regional filing and recording system. A mineral resource
database system shall be set up in the Bureau which shall include, among others, a mineral rights
management system. The Bureau shall publish at least annually, a mineral gazette of nationwide
circulation containing among others, a current list of mineral rights, their location in the map, mining
rules and regulations, other official acts affecting mining, and other information relevant to mineral
resources development. A system and publication fund shall be included in the regular budget of the
Bureau.
CHAPTER III
SCOPE OF APPLICATION
Section 15
Scope of Application
This Act shall govern the exploration, development, utilization and processing of all mineral resources.
Section 16
Opening of Ancestral Lands for Mining Operations
No ancestral land shall be opened for mining-operations without prior consent of the indigenous
cultural community concerned.
Section 17
Royalty Payments for Indigenous Cultural Communities
In the event of an agreement with an indigenous cultural community pursuant to the preceding
section, the royalty payment, upon utilization of the minerals shall be agreed upon by the parties. The
said royalty shall form part of a trust fund for the socioeconomic well-being of the indigenous cultural
community.
Section 18
Areas Open to Mining Operations
Subject to any existing rights or reservations and prior agreements of all parties, all mineral resources
in public or private lands, including timber or forestlands as defined in existing laws, shall be open to
mineral agreements or financial or technical assistance agreement applications. Any conflict that may
arise under this provision shall be heard and resolved by the panel of arbitrators.
Section 19
Areas Closed to Mining Applications
Mineral agreement or financial or technical assistance agreement applications shall not be allowed:
a. In military and other government reservations, except upon prior written clearance by the
government agency concerned;
b. Near or under public or private buildings, cemeteries, archeological and historic sites, bridges,
highways, waterways, railroads, reservoirs, dams or other infrastructure projects, public or private
works including plantations or valuable crops, except upon written consent of the government agency
or private entity concerned;
c. In areas covered by valid and existing mining rights;
d. In areas expressedly prohibited by law;
e. In areas covered by small-scale miners as defined by law unless with prior consent of the small-
scale miners, in which case a royalty payment upon the utilization of minerals shall be agreed upon by
the parties, said royalty forming a trust fund for the socioeconomic development of the community
concerned; and
f. Old growth or virgin forests, proclaimed watershed forest reserves, wilderness areas, mangrove
forests, mossy forests, national parks provincial/municipal forests, parks, greenbelts, game refuge and
bird sanctuaries as defined by law and in areas expressly prohibited under the National Integrated
Protected Areas System (NIPAS) under Republic Act No. 7586, Department Administrative Order No.
25, series of 1992 and other laws.
CHAPTER IV
EXPLORATION PERMIT
Section 20
Exploration Permit
An exploration permit grants the right to conduct exploration for all minerals in specified areas. The
Bureau shall have the authority to grant an exploration Permit to a qualified person.
Section 21
Terms and Conditions of the Exploration Permit
An exploration permit shall be for a period of two (2) years, subject to annual review and
relinquishment or renewal upon the recommendation of the Director.
Section 22
Maximum Areas for Exploration Permit
The maximum area that a qualified person may hold at any one time shall be:
a. Onshore, in any one province
1. for individuals, twenty (20) blocks: and
2. for partnerships, corporations, cooperatives, or associations, two hundred (200) blocks.
b. Onshore, in the entire Philippines
1. for individuals, forty (40) blocks; and
2. for partnerships, corporations, cooperatives, or associations, four hundred (400) blocks.
c. Offshore, beyond five hundred meters (500m) from the mean low tide level:
1. for individuals, one hundred (100) blocks; and
2. for partnerships, corporations, cooperatives, or associations, one thousand (1,000) blocks.
Section 23
Rights and Obligations of the Permittee
An exploration permit shall grant to the permittee, his heirs or successors-in-interest, the right to
enter, occupy and explore the area: Provided, That if private or other parties are affected, the
permittee shall first discuss with the said parties the extent, necessity, and manner of his entry,
occupation and exploration and in case of disagreement, a panel of arbitrators shall resolve the
conflict or disagreement.
The permittee shall undertake an exploration work on the area as specified by its permit based on an
approved work program.
Any expenditure in excess of the yearly budget of the approved work program may be carried forward
and credited to the succeeding years covering the duration of the permit. The Secretary, through the
Director, shall promulgate rules and regulations governing the terms and conditions of the permit.
The permittee may apply for a mineral production sharing agreement, joint venture agreement, co-
production agreement or financial or technical assistance agreement over the permit area, which
application shall be granted if the permittee meets the necessary qualifications and the terms and
conditions of any such agreement: Provided, That the exploration period covered by the exploration
permit shall be included as part of the exploration period of the mineral agreement or financial or
technical assistance agreement.
Section 24
Declaration of Mining Project Feasibility
A holder of an exploration permit who determines the commercial viability of a project covering a
mining area may, within the term of the permit, file with the Bureau a declaration of mining project
feasibility accompanied by a work program for development. The approval of the mining project
feasibility and compliance with other requirements provided in this Act shall entitle the holder to an
exclusive right to a mineral production sharing agreement or other mineral agreements or financial or
technical assistance agreement.
Section 25
Transfer or Assignment
An exploration permit may be transferred or assigned to a qualified person subject to the approval of
the Secretary upon the recommendation of the Director.
CHAPTER V
MINERAL AGREEMENTS
Section 26
Modes of Mineral Agreement
For purposes of mining operations, a mineral agreement may take the following forms as herein
defined:
a. Mineral production sharing agreement is an agreement where the Government grants to the
contractor the exclusive right to conduct mining operations within a contract area and shares in the
gross output. The contractor shall provide the financing, technology, management and personnel
necessary for the implementation of this agreement.
b. Co-production agreement is an agreement between the Government and the contractor wherein
the Government shall provide inputs to the mining operations other than the mineral resource.
c. Joint venture agreement is an agreement where a joint-venture company is organized by the
Government and the contractor with both parties having equity shares. Aside from earnings in equity,
the Government shall be entitled to a share in the gross output.
A mineral agreement shall grant to the contractor the exclusive right to conduct mining operations
and to extract all mineral resources found in the contract area. In addition, the contractor may be
allowed to convert his agreement into any of the modes of mineral agreements or financial or
technical assistance agreement covering the remaining period of the original agreement subject to
the approval of the Secretary.
Section 27
Eligibility
A qualified person may enter into any of the three (3) modes of mineral agreement with the
government for the exploration, development and utilization of mineral resources: Provided, That in
case the applicant has been in the mining industry for any length of time, he should possess a
satisfactory environmental track record as determined by the Mines and Geosciences Bureau and in
consultation with the Environmental Management Bureau of the Department.
Section 28
Maximum Areas for Mineral Agreement
The maximum area that a qualified person may hold at any time under a mineral agreement shall be:
a. Onshore, in any one province
1. for individuals, ten (10) blocks; and
2. for partnerships, cooperatives, associations, or corporations, one hundred (100) blocks.
b. Onshore, in the entire Philippines
1. for individuals, twenty (20) blocks; and
2. for partnerships, cooperatives, associations, or corporations, two hundred (200) blocks.
c. Offshore, in the entire Philippines
1. for individuals fifty (50) blocks;
2. for partnerships, cooperatives, associations, or corporations, five hundred (500) blocks; and
3. for the exclusive economic zone, a larger area to be determined by the Secretary.
The maximum areas mentioned above that a contractor may hold under a mineral agreement shall
not include mining/quarry areas under operating agreements between the contractor and a
claimowner/lessee/permittee/licensee entered into under Presidential Decree No. 463.
Section 29
Filing and Approval of Mineral Agreements
All proposed mineral agreements shall be filed in the region where the areas of interest are located,
except in mineral reservations which shall be filed with the Bureau.
The filing of a proposal for a mineral agreement shall give the proponent the prior right to areas
covered by the same. The proposed mineral agreement will be approved by the Secretary and copies
thereof shall be submitted to the President. Thereafter, the President shall provide a list to Congress
of every approved mineral agreement within thirty (30) days from its approval by the Secretary.
Section 30
Assignment/Transfer
Any assignment or transfer of rights and obligations under any mineral agreement except a financial
or technical assistance agreement shall be subject to the prior approval of the Secretary. Such
assignment or transfer shall be deemed automatically approved if not acted upon by the Secretary
within thirty (30) working days from official receipt thereof, unless patently unconstitutional or illegal.
Section 31
Withdrawal from Mineral Agreements
The contractor may, by giving due notice at any time during the term of the agreement, apply for the
cancellation of the mineral agreement due to causes which, in the opinion of the contractor, make
continued mining operations no longer feasible or viable. The Secretary shall consider the notice and
issue its decision within a period of thirty (30) days: Provided, That the contractor has met all its
financial, fiscal and legal obligations.
Section 32
Terms
Mineral agreements shall have a term not exceeding twenty-five (25) years to start from the date of
execution thereof, and renewable for another term not exceeding twenty-five (25) years under the
same terms and conditions thereof, without prejudice to changes mutually agreed upon by the
parties. After the renewal period, the operation of the mine may be undertaken by the Government
or through a contractor. The contract for the operation of a mine shall be awarded to the highest
bidder in a public bidding after due publication of the notice thereof: Provided, That the contractor
shall have the right to equal the highest bid upon reimbursement of all reasonable expenses of the c. Submission of proof of technical competence, such as, but not limited to, its track record in mineral
highest bidder. resource exploration, development, and utilization; details of technology to be employed in the
proposed operation; and details of technical personnel to undertake the operation;

d. Representations and warranties that the applicant has all the qualifications and none of the
disqualifications for entering into the agreement;
CHAPTER VI
FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT e. Representations and warranties that the contractor has or has access to all the financing,
managerial and technical expertise and, if circumstances demand, the technology required to
Section 33 promptly and effectively carry out the objectives of the agreement with the understanding to timely
Eligibility deploy these resources under its supervision pursuant to the periodic work programs and related
budgets, when proper, providing an exploration period up to two (2) years, extendible for another two
(2) years but subject to annual review by the Secretary in accordance with the implementing rules and
Any qualified person with technical and financial capability to undertake large-scale exploration,
regulations of this Act, and further, subject to the relinquishment obligations;
development, and utilization of mineral resources in the Philippines may enter into a financial or
technical assistance agreement directly with the Government through the Department.
f. Representations and warranties that, except for payments for dispositions for its equity, foreign
investments in local enterprises which are qualified for repatriation, and local supplier's credits and
Section 34
such other generally accepted and permissible financial schemes for raising funds for valid business
Maximum Contract Area
purposes, the contractor shall not raise any form of financing from domestic sources of funds,
whether in Philippine or foreign currency, for conducting its mining operations for and in the contract
The maximum contract area that may be granted per qualified person, subject to relinquishment shall
area;
be:
g. The mining operations shall be conducted in accordance with the provisions of this Act and its
a. 1,000 meridional blocks onshore;
implementing rules and regulations;

b. 4,000 meridional blocks offshore; or

h. Work programs and minimum expenditures commitments;

c. Combinations of a and b provided that it shall not exceed the maximum limits for onshore and
i. Preferential use of local goods and services to the maximum extent practicable;
offshore areas.
j. A stipulation that the contractors are obligated to give preference to Filipinos in all types of mining
Section 35
employment for which they are qualified and that technology shall be transferred to the same;
Terms and Conditions
k. Requiring the proponent to effectively use appropriate anti-pollution technology and facilities to
The following terms, conditions, and warranties shall be incorporated in the financial or technical
protect the environment and to restore or rehabilitate mined out areas and other areas affected by
assistance agreement, to wit:
mine tailings and other forms of pollution or destruction;

a. A firm commitment in the form of a sworn statement, of an amount corresponding to the

l. The contractors shall furnish the Government records of geologic, accounting, and other relevant
expenditure obligation that will be invested in the contract area: Provided, That such amount shall be
data for its mining operations, and that book of accounts and records shall be open for inspection by
subject to changes as may be provided for in the rules and regulations of this Act;
the government;

b. A financial guarantee bond shall be posted in favor of the Government in an amount equivalent to
the expenditure obligation of the applicant for any year;
m. Requiring the proponent to dispose of the minerals and byproducts produced under a financial or
technical assistance agreement at the highest price and more advantageous terms and conditions as
provided for under the rules and regulations of this Act;
n. Provide for consultation and arbitration with respect to the interpretation and implementation of
the terms and conditions of the agreements; and
o. Such other terms and conditions consistent with the Constitution and with this Act as the Secretary
may deem to be for the best interest of the State and the welfare of the Filipino people.
Section 36
Negotiations
A financial or technical assistance agreement shall be negotiated by the Department and executed
and approved by the President. The President shall notify Congress of all financial or technical
assistance agreements within thirty (30) days from execution and approval thereof.
Section 37
Filing and Evaluation of Financial or Technical Assistance Agreement Proposals
All financial or technical assistance agreement proposals shall be filed with the Bureau after payment
of the required processing fees. If the proposal is found to be sufficient and meritorious in form and
substance after evaluation, it shall be recorded with the appropriate government agency to give the
proponent the prior right to the area covered by such proposal: Provided, That existing mineral
agreements, financial or technical assistance agreements and other mining rights are not impaired or
prejudiced thereby. The Secretary shall recommend its approval to the President.
Section 38
Term of Financial or Technical Assistance Agreement
A financial or technical assistance agreement shall have a term not exceeding twenty-five (25) years to
start from the execution thereof, renewable for not more than twenty-five (25) years under such
terms and conditions as may be provided by law.
Section 39
Option to Convert into a Mineral Agreement
The contractor has the option to convert the financial or technical assistance agreement to a mineral
agreement at any time during the term of the agreement, if the economic viability of the contract
area is found to be inadequate to justify large-scale mining operations, after proper notice to the
Secretary as provided for under the implementing rules and regulations: Provided, That the mineral
agreement shall only be for the remaining period of the original agreement.
In the case of a foreign contractor, it shall reduce its equity to forty percent (40%) in the corporation,
partnership, association, or cooperative. Upon compliance with this requirement by the contractor,
the Secretary shall approve the conversion and execute the mineral production-sharing agreement.
Section 40
Assignment/Transfer
A financial or technical assistance agreement may be assigned or transferred, in whole or in part, to a
qualified person subject to the prior approval of the President: Provided, That the President shall
notify Congress of every financial or technical assistance agreement assigned or converted in
accordance with this provision within thirty (30) days from the date of the approval thereof.
Section 41
Withdrawal from Financial or Technical Assistance Agreement
The contractor shall manifest in writing to the Secretary his intention to withdraw from the
agreement, if in his judgment the mining project is no longer economically feasible, even after he has
exerted reasonable diligence to remedy the cause or the situation. The Secretary may accept the
withdrawal: Provided, That the contractor has complied or satisfied all his financial, fiscal or legal
obligations.
CHAPTER VII
SMALL-SCALE MINING
Section 42
Small-scale Mining
Small-scale mining shall continue to be governed by Republic Act No. 7076 and other pertinent laws.
CHAPTER VIII
QUARRY RESOURCES
Section 43
Quarry Permit
Any qualified person may apply to the provincial/city mining regulatory board for a quarry permit on
privately-owned lands and/or public lands for building and construction materials such as marble,
basalt, andesite, conglomerate, tuff, adobe, granite, gabbro, serpentine, inset filling materials, clay for
ceramic tiles and building bricks, pumice, perlite and other similar materials that are extracted by
quarrying from the ground. The provincial governor shall grant the permit after the applicant has
complied with all the requirements as prescribed by the rules and regulations.
The maximum area which a qualified person may hold at any one time shall be five hectares (5 has.):
Provided, That in large-scale quarry operations involving cement raw materials, marble, granite, sand
and gravel and construction aggregates, a qualified person and the government may enter into a
mineral agreement as defined herein.
A quarry permit shall have a term of five (5) years, renewable for like periods but not to exceed a total
term of twenty-five (25) years. No quarry permit shall be issued or granted on any area covered by a
mineral agreement or financial or technical assistance agreement.
Section 44
Quarry Fee and Taxes
A permittee shall, during the term of his permit, pay a quarry fee as provided for under the
implementing rules and regulations. The permittee shall also pay the excise tax as provided by
pertinent laws.
Section 45
Cancellation of Quarry Permit
A quarry permit may be cancelled by the provincial governor for violations of the provisions of this Act
or its implementing rules and regulations or the terms and conditions of said permit: Provided, That
before the cancellation of such permit, the holder thereof shall be given the opportunity to be heard
in an investigation conducted for the purpose.
Section 46
Commercial Sand and Gravel Permit
Any qualified person may be granted a permit by the provincial governor to extract and remove sand
and gravel or other loose or unconsolidated materials which are used in their natural state, without
undergoing processing from an area of not more than five hectares (5 has.) and in such quantities as
may be specified in the permit.
Section 47
Industrial Sand and Gravel Permit
Any qualified person may be granted an industrial sand and gravel permit by the Bureau for the
extraction of sand and gravel and other loose or unconsolidated materials that necessitate the use of
mechanical processing covering an area of more than five hectares (5 has.) at any one time. The
permit shall have a term of five (5) years, renewable for a like period but not to exceed a total term of
twenty-five (25) years.
Section 48
Exclusive Sand and Gravel Permit
Any qualified person may be granted an exclusive sand and gravel permit by the provincial governor
to quarry and utilize sand and gravel or other loose or unconsolidated materials from public lands for
his own use, provided that there will be no commercial disposition thereof.
A mineral agreement or a financial technical assistance agreement contractor shall, however, have the
right to extract and remove sand and gravel and other loose unconsolidated materials without need
of a permit within the area covered by the mining agreement for the exclusive use in the mining
operations: Provided, That monthly reports of the quantity of materials extracted therefrom shall be
submitted to the mines regional office concerned: Provided, further, That said right shall be
coterminous with the expiration of the agreement.
Holders of existing mining leases shall likewise have the same rights as that of a contractor: Provided,
That said right shall be coterminous with the expiry dates of the lease.
Section 49
Government Gratuitous Permit
Any government entity or instrumentality may be granted a gratuitous permit by the provincial
governor to extract sand and gravel, quarry or loose unconsolidated materials needed in the
construction of building and/or infrastructure for public use or other purposes over an area of not
more than two hectares (2 has.) for a period coterminous with said construction.
Section 50
Private Gratuitous Permit
Any owner of land may be granted a private gratuitous permit by the provincial governor.
Section 51
Guano Permit
Any qualified person may be granted a guano permit by the provincial governor to extract and utilize
loose unconsolidated guano and other organic fertilizer materials in any portion of a municipality
where he has established domicile. The permit shall be for specific caves and/or for confined sites
with locations verified by the Department's field officer in accordance with existing rules and
regulations.
Section 52
Gemstone Gathering Permit
Any qualified person may be granted a non-exclusive gemstone gathering permit by the provincial
governor to gather loose stones useful as gemstones in rivers and other locations.
CHAPTER IX
TRANSPORT, SALE AND PROCESSING OF MINERALS
Section 53
Ore Transport Permit
A permit specifying the origin and quantity of non-processed mineral ores or minerals shall be
required for their transport. Transport permits shall be issued by the mines regional director who has
jurisdiction over the area where the ores were extracted. In the case of mineral ores or minerals being
transported from the small-scale mining areas to the custom mills or processing plants, the Provincial
Mining Regulatory Board (PMRB) concerned shall formulate their own policies to govern such
transport of ores produced by small-scale miners. The absence of a permit shall be considered as
prima facie evidence of illegal mining and shall be sufficient cause for the Government to confiscate
the ores or minerals being transported, the tools and equipment utilized, and the vehicle containing
the same. Ore samples not exceeding two metric tons (2 m.t.) to be used exclusively for assay or pilot
test purposes shall be exempted from such requirement.
Section 54
Mineral Trading Registration
No person shall engage in the trading of mineral products, either locally or internationally, unless
registered with the Department of Trade and Industry and accredited by the Department, with a copy
of said registration submitted to the Bureau.
Section 55
Minerals Processing Permit
No person shall engage in the processing of minerals without first securing a minerals processing
permit from the Secretary. Minerals processing permit shall be for a period of five (5) years renewable
for like periods but not to exceed a total term of twenty-five (25) years. In the case of mineral ores or
minerals produced by the small-scale miners, the processing thereof as well as the licensing of their
custom mills, or processing plants shall continue to be governed by the provisions of Republic Act No.
7076.
Section 56
Eligibility of Foreign-owned/-controlled Corporation
A foreign-owned/-controlled corporation may be granted a mineral processing permit.
CHAPTER X
DEVELOPMENT OF MINING COMMUNITIES, SCIENCE AND MINING TECHNOLOGY
Section 57
Expenditure for Community Development and Science and Mining Technology
A contractor shall assist in the development of its mining community, the promotion of the general
welfare of its inhabitants, and the development of science and mining technology.
Section 58
Credited Activities
Activities that may be credited as expenditures for development of mining communities, and science
and mining technology are the following:
a. Any activity or expenditure intended to enhance the development of the mining and neighboring
communities of a mining operation other than those required or provided for under existing laws, or
collective bargaining agreements, and the like; and
b. Any activity or expenditure directed towards the development of geosciences and mining
technology such as, but not limited to, institutional and manpower development, and basic and
applied researches. Appropriate supervision and control mechanisms shall be prescribed in the
implementing rules and regulations of this Act.
Section 59
Training and Development
A contractor shall maintain an effective program of manpower training and development throughout
the term of the mineral agreement and shall encourage and train Filipinos to participate in all aspects
of the mining operations, including the management thereof. For highly-technical and specialized
mining operations, the contractor may, subject to the necessary government clearances, employ
qualified foreigners.
Section 60
Use of Indigenous Goods, Services and Technologies
A contractor shall give preference to the use of local goods, services and scientific and technical
resources in the mining operations, where the same are of equivalent quality, and are available on
equivalent terms as their imported counterparts.
Section 61
Donations/Turn Over of Facilities
Prior to cessation of mining operations occasioned by abandonment or withdrawal of operations, on
public lands by the contractor, the latter shall have a period of one (1) year therefrom within which to
remove his improvements; otherwise, all the social infrastructure and facilities shall be turned over or
donated tax-free to the proper government authorities, national or local, to ensure that said
infrastructure and facilities are continuously maintained and utilized by the host and neighboring
communities.
Section 62
Employment of Filipinos
A contractor shall give preference to Filipino citizens in all types of mining employment within the
country insofar as such citizens are qualified to perform the corresponding work with reasonable
efficiency and without hazard to the safety of the operations. The contractor, however, shall not be
hindered from hiring employees of his own selection, subject to the provisions of Commonwealth Act
No. 613, as amended, for technical and specialized work which, in his judgment and with the approval
of the Director, requires highly-specialized training or long experience in exploration, development or
utilization of mineral resources: Provided, That in no case shall each employment exceed five (5) years
or the payback period as represented in original project study, whichever is longer: Provided, further,
That each foreigner employed as mine manager, vice-president for operations or in an equivalent
managerial position in charge of mining, milling, quarrying or drilling operation shall:
a. Present evidence of his qualification and work experience; or
b. Shall pass the appropriate government licensure examination; or
c. In special cases, may be permitted to work by the Director for a period not exceeding one (1) year:
Provided, however, That if reciprocal privileges are extended to Filipino nationals in the country of
domicile, the Director may grant waivers or exemptions.
CHAPTER XI
SAFETY AND ENVIRONMENTAL PROTECTION
Section 63
Mines Safety and Environmental Protection
All contractors and permittees shall strictly comply with all the mines safety rules and regulations as
may be promulgated by the Secretary concerning the safe and sanitary upkeep of the mining
operations and achieve waste-free and efficient mine development. Personnel of the Department
involved in the implementation of mines safety, health and environmental rules and regulations shall
be covered under Republic Act No. 7305.
Section 64
Mine Labor
No person under sixteen (16) years of age shall be employed in any phase of mining operations and
no person under eighteen (18) years of age shall be employed underground in a mine.
Section 65
Mine Supervision
All mining and quarrying operations that employ more than fifty (50) workers shall have at least one
(1) licensed mining engineer with at least five (5) years of experience in mining operations, and one
(1) registered foreman.
Section 66
Mine Inspection
The regional director shall have exclusive jurisdiction over the safety inspection of all installations,
surface or underground, in mining operations at reasonable hours of the day or night and as much as
possible in a manner that will not impede or obstruct work in progress of a contractor or permittee.
Section 67
Power to Issue Orders
The mines regional director shall, in consultation with the Environmental Management Bureau,
forthwith or within such time as specified in his order, require the contractor to remedy any practice
connected with mining or quarrying operations, which is not in accordance with safety and anti-
pollution laws and regulations. In case of imminent danger to life or property, the mines regional
director may summarily suspend the mining or quarrying operations until the danger is removed, or
appropriate measures are taken by the contractor or permittee.
Section 68
Report of Accidents
In case of any incident or accident, causing or creating the danger of loss of life or serious physical
injuries, the person in charge of operations shall immediately report the same to the regional office
where the operations are situated. Failure to report the same without justifiable reason shall be a
cause for the imposition of administrative sanctions prescribed in the rules and regulations
implementing this Act.
Section 69
Environmental Protection
Every contractor shall undertake an environmental protection and enhancement program covering
the period of the mineral agreement or permit. Such environmental program shall be incorporated in
the work program which the contractor or permittee shall submit as an accompanying document to
the application for a mineral agreement or permit. The work program shall include not only plans
relative to mining operations but also to rehabilitation, regeneration, revegetation and reforestation
of mineralized areas, slope stabilization of mined-out and tailings covered areas, aquaculture,
watershed development and water conservation; and socioeconomic development.
Section 70
Environmental Impact Assessment (EIA)
Except during the exploration period of a mineral agreement or financial or technical assistance
agreement or an exploration permit, an environmental clearance certificate shall be required based
on an environmental impact assessment and procedures under the Philippine Environmental Impact
Assessment System including Sections 26 and 27 of the Local Government Code of 1991 which require
national government agencies to maintain ecological balance, and prior consultation with the local
government units, non-governmental and people's organizations and other concerned sectors of the
community: Provided, That a completed ecological profile of the proposed mining area shall also
constitute part of the environmental impact assessment. People's organizations and non-
governmental organizations shall be allowed and encouraged to participate in ensuring that
contractors/permittees shall observe all the requirements of environmental protection.
Section 71
Rehabilitation
Contractors and permittees shall technically and biologically rehabilitate the excavated, mined-out,
tailings covered and disturbed areas to the condition of environmental safety, as may be provided in
the implementing rules and regulations of this Act. A mine rehabilitation fund shall be created, based
on the contractor's approved work program, and shall be deposited as a trust fund in a government
depository bank and used for physical and social rehabilitation of areas and communities affected by
mining activities and for research on the social, technical and preventive aspects of rehabilitation.
Failure to fulfill the above obligation shall mean immediate suspension or closure of the mining
activities of the contractor/permittee concerned.
CHAPTER XII
AUXILIARY MINING RIGHTS
Section 72
Timber Rights
Any provision of law to the contrary notwithstanding, a contractor may be granted a right to cut trees
or timber within his mining area as may be necessary for his mining operations subject to forestry
laws, rules and regulations: Provided, That if the land covered by the mining area is already covered
by existing timber concessions, the volume of timber needed and the manner of cutting and removal
thereof shall be determined by the mines regional director, upon consultation with the contractor, the
timber concessionaire/permittee and the Forest Management Bureau of the Department: Provided,
further, That in case of disagreement between the contractor and the timber concessionaire, the
matter shall be submitted to the Secretary whose decision shall be final. The contractor shall perform
reforestation work within his mining area in accordance with forestry laws, rules and regulations.
Section 73
Water Rights
A contractor shall have water rights for mining operations upon approval of application with the
appropriate government agency in accordance with existing water laws, rules and regulations
promulgated thereunder: Provided, That water rights already granted or vested through long use,
recognized and acknowledged by local customs, laws, and decisions of courts shall not thereby be
impaired: Provided, further, That the Government reserves the right to regulate water rights and the
reasonable and equitable distribution of water supply so as to prevent the monopoly of the use
thereof.
Section 74
Right to Possess Explosives
A contractor/exploration permittee shall have the right to possess and use explosives within his
contract/permit area as may be necessary for his mining operations upon approval of application with
the appropriate government agency in accordance with existing laws, rules and regulations
promulgated thereunder: Provided, That the Government reserves the right to regulate and control
the explosive accessories to ensure safe mining operations.
Section 75
Easement Rights
When mining areas are so situated that for purposes of more convenient mining operations it is
necessary to build, construct or install on the mining areas or lands owned, occupied or leased by
other persons, such infrastructure as roads, railroads, mills, waste dump sites, tailings ponds,
warehouses, staging or storage areas and port facilities, tramways, runways, airports, electric
transmission, telephone or telegraph lines, dams and their normal flood and catchment areas, sites
for water wells, ditches, canals, new river beds, pipelines, flumes, cuts, shafts, tunnels, or mills, the
contractor, upon payment of just compensation, shall be entitled to enter and occupy said mining
areas or lands.
Section 76
Entry into Private Lands and Concession Areas
Subject to prior notification, holders of mining rights shall not be prevented from entry into private
lands and concession areas by surface owners, occupants, or concessionaires when conducting mining
operations therein: Provided, That any damage done to the property of the surface owner, occupant,
or concessionaire as a consequence of such operations shall be properly compensated as may be
provided for in the implementing rules and regulations: Provided, further, That to guarantee such
compensation, the person authorized to conduct mining operation shall, prior thereto, post a bond
with the regional director based on the type of properties, the prevailing prices in and around the
area where the mining operations are to be conducted, with surety or sureties satisfactory to the
regional director.
CHAPTER XIII
SETTLEMENT OF CONFLICTS
Section 77
Panel of Arbitrators
There shall be a panel of arbitrators in the regional office of the Department composed of three (3)
members, two (2) of whom must be members of the Philippine Bar in good standing and one a
licensed mining engineer or a professional in a related field, and duly designated by the Secretary as
recommended by the Mines and Geosciences Bureau Director. Those designated as members of the
panel shall serve as such in addition to their work in the Department without receiving any additional
compensation As much as practicable, said members shall come from the different bureaus of the
Department in the region. The presiding officer thereof shall be selected by the drawing of lots. His
tenure as presiding officer shall be on a yearly basis. The members of the panel shall perform their
duties and obligations in hearing and deciding cases until their designation is withdrawn or revoked by
the Secretary. Within thirty (30) working days, after the submission of the case by the parties for
decision, the panel shall have exclusive and original jurisdiction to hear and decide on the following:
a. Disputes involving rights to mining areas;
b. Disputes involving mineral agreements or permits;
c. Disputes involving surface owners, occupants and claimholders/concessionaires; and
d. Disputes pending before the Bureau and the Department at the date of the effectivity of this Act.
Section 78
Appellate Jurisdiction
The decision or order of the panel of arbitrators may be appealed by the party not satisfied thereto to
the Mines Adjudication Board within fifteen (15) days from receipt thereof which must decide the
case within thirty (30) days from submission thereof for decision.
Section 79
Mines Adjudication Board
The Mines Adjudication Board shall be composed of three (3) members. The Secretary shall be the
chairman with the Director of the Mines and Geosciences Bureau and the Undersecretary for
Operations of the Department as members thereof. The Board shall have the following powers and
functions:
a. To promulgate rules and regulations governing the hearing and disposition of cases before it, as
well as those pertaining to its internal functions, and such rules and regulations as may be necessary
to carry out its functions;
b. To administer oaths, summon the parties to a controversy, issue subpoenas requiring the
attendance and testimony of witnesses or the production of such books, papers, contracts, records,
statement of accounts, agreements, and other documents as may be material to a just determination
of the matter under investigation, and to testify in any investigation or hearing conducted in
pursuance of this Act;
c. To conduct hearings on all matters within its jurisdiction, proceed to hear and determine the
disputes in the absence of any party thereto who has been summoned or served with notice to
appear, conduct its proceedings or any part thereof in public or in private, adjourn its hearings at any
time and place, refer technical matters or accounts to an expert and to accept his report as evidence
after hearing of the parties upon due notice, direct parties to be joined in or excluded from the
proceedings, correct, amend, or waive any error, defect or irregularity, whether in substance or in
form, give all such directions as it may deem necessary or expedient in the determination of the
dispute before it, and dismiss the mining dispute as part thereof, where it is trivial or where further
proceedings by the Board are not necessary or desirable:
1. To hold any person in contempt, directly or indirectly, and impose appropriate penalties therefor;
and
2. To enjoin any or all acts involving or arising from any case pending before it which, if not restrained
forthwith, may cause grave or irreparable damage to any of the parties to the case or seriously affect
social and economic stability.
In any proceeding before the Board, the rules of evidence prevailing in courts of law or equity shall
not be controlling and it is the spirit and intention of this Act that shall govern. The Board shall use
every and all reasonable means to ascertain the facts in each case speedily and objectively and
without regard to technicalities of law or procedure, all in the interest of due process. In any
proceeding before the Board, the parties may be represented by legal counsel. The findings of fact of
the Board shall be conclusive and binding on the parties and its decision or order shall be final and
executory.
A petition for review by certiorari and question of law may be filed by the aggrieved party with the
Supreme Court within thirty (30) days from receipt of the order or decision of the Board.
CHAPTER XIV
GOVERNMENT SHARE
Section 80
Government Share in Mineral Production Sharing Agreement
The total government share in a mineral production sharing agreement shall be the excise tax on
mineral products as provided in Republic Act No. 7729, amending Section 151(a) of the National
Internal Revenue Code, as amended.
Section 81
Government Share in Other Mineral Agreements
The share of the Government in co-production and joint-venture agreements shall be negotiated by
the Government and the contractor taking into consideration the:
a. capital investment of the project;
b. risks involved;
c. contribution of the project to the economy; and
d. other factors that will provide for a fair and equitable sharing between the Government and the
contractor.
The Government shall also be entitled to compensations for its other contributions which shall be
agreed upon by the parties, and shall consist, among other things, the contractor's income tax, excise
tax, special allowance, withholding tax due from the contractor's foreign stockholders arising from
dividend or interest payments to the said foreign stockholders, in case of a foreign national, and all
such other taxes, duties and fees as provided for under existing laws.
The Government share in financial or technical assistance agreement shall consist of, among other
things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due from
the contractor's foreign stockholders arising from dividend or interest payments to the said foreign
stockholder in case of a foreign national and all such other taxes, duties and fees as provided for
under existing laws.
The collection of Government share in financial or technical assistance agreement shall commence
after the financial or technical assistance agreement contractor has fully recovered its pre-operating
expenses, exploration, and development expenditures, inclusive.
Section 82
Allocation of Government Share
The Government share as referred to in the preceding sections shall be shared and allocated in
accordance with Sections 290 and 292 of Republic Act No. 7160 otherwise known as the Local
Government Code of 1991. In case the development and utilization of mineral resources is
undertaken by a government-owned or -controlled corporation, the sharing and allocation shall be in
accordance with Sections 291 and 292 of the said Code.
CHAPTER XV
TAXES AND FEES
Section 83
Income Taxes
After the lapse of the income tax holiday as provided for in the Omnibus Investments Code, the
contractor shall be liable to pay income tax as provided in the National Internal Revenue Code, as
amended.
Section 84
Excise Tax on Mineral Products
The contractor shall be liable to pay the excise tax on mineral products as provided for under Section
151 of the National Internal Revenue Code: Provided, however, That with respect to a mineral
production sharing agreement, the excise tax on mineral products shall be the government share
under said agreement.
Section 85
Mine Wastes and Tailings Fees
A semi-annual fee to be known as mine wastes and tailings fee is hereby imposed on all operating
mining companies in accordance with the implementing rules and regulations. The mine wastes and
tailings fee shall accrue to a reserve fund to be used exclusively for payment for damages to:
a. Lives and personal safety;
b. Lands, agricultural crops and forest products, marine life and aquatic resources, cultural resources;
and
c. Infrastructure and the revegetation and rehabilitation of silted farm lands and other areas devoted
to agriculture and fishing caused by mining pollution.
This is in addition to the suspension or closure of the activities of the contractor at any time and the
penal sanctions imposed upon the same.
The Secretary is authorized to increase mine wastes and tailings fees, when public interest so
requires, upon the recommendation of the Director.
Section 86
Occupation Fees
There shall be collected from any holder of a mineral agreement, financial or technical assistance
agreement or exploration permit on public or private lands, an annual occupation fee in accordance
with the following schedule:
a. For exploration permit - Five pesos (P5.00) per hectare or fraction thereof per annum;
b. For mineral agreements and financial or technical assistance agreements - Fifty pesos (P50.00) per
hectare or fraction thereof per annum; and
c. For mineral reservation - One hundred pesos (P100.00) per hectare or fraction thereof per annum.
The Secretary is authorized to increase the occupation fees provided herein when the public interest
so requires, upon recommendation of the Bureau Director.
Section 87
Manner of Payment of Fees
The fees shall be paid on the date the mining agreement is registered with the appropriate office and
on the same date every year thereafter. It shall be paid to the treasurer of the municipality or city
where the onshore mining areas are located, or to the Director in case of offshore mining areas. For
this purpose, the appropriate officer shall submit to the treasurer of the municipality or city where
the onshore mining area is located, a complete list of all onshore mining rights registered with his
office, indicating therein the names of the holders, area in hectares, location, and date registered. If
the fee is not paid on the date specified, it shall be increased by twenty-five per centum (25%).
Section 88
Allocation of Occupation Fees
Thirty per centum (30%) of all occupational fees collected from holders of mining rights in onshore
mining areas shall accrue to the province and seventy per centum (70%) to the municipality in which
the onshore mining areas are located. In a chartered city, the full amount shall accrue to the city
concerned.
Section 89
Filing Fees and Other Charges
The Secretary is authorized to charge reasonable filing fees and other charges as he may prescribe in
accordance with the implementing rules and regulations.
CHAPTER XVI
INCENTIVES
Section 90
Incentives
The contractors in mineral agreements, and financial or technical assistance agreements shall be
entitled to the applicable fiscal and non-fiscal incentives as provided for under Executive Order No.
226, otherwise known as the Omnibus Investments Code of 1987. Provided, That holders of
exploration permits may register with the Board of Investments and be entitled to the fiscal incentives
granted under the said Code for the duration of the permits or extensions thereof: Provided, further,
That mining activities shall always be included in the investment priorities plan.
Section 91
Incentives for Pollution Control Devices
Pollution control devices acquired, constructed or installed by contractors shall not be considered as
improvements on the land or building where they are placed, and shall not be subject to real property
and other taxes or assessments: Provided, however, That payment of mine wastes and tailings fees is
not exempted.
Section 92
Income Tax-Carry Forward of Losses
A net operating loss without the benefit of incentives incurred in any of the first ten (10) years of
operations may be carried over as a deduction from taxable income for the next five (5) years
immediately following the year of such loss. The entire amount of the loss shall be carried over to the
first of the five (5) 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 four (4) years.
Section 93
Income Tax-Accelerated Depreciation
Fixed assets may be depreciated as follows:
a. To the extent of not more than twice as fast as the normal rate of depreciation or depreciated at
normal rate of depreciation if the expected life is ten (10) years or less; or
b. Depreciated over any number of years between five (5) years and the expected life if the latter is
more than ten (10) years, and the depreciation thereon allowed as deduction from taxable income:
Provided, That the contractor notifies the Bureau of Internal Revenue at the beginning of the
depreciation period which depreciation rate allowed by this section will be used.
In computing for taxable income, unless otherwise provided in this Act, the contractor may, at his
option, deduct exploration and development expenditures accumulated at cost as of the date of the
prospecting or exploration and development expenditures paid or incurred during the taxable year:
Provided, That the total amount deductible for exploration and development expenditures shall not
exceed twenty-five per centum (25%) of the net income from mining operations. The actual
exploration and development expenditures minus the twenty-five per centum (25%) net income from
mining shall be carried forward to the succeeding years until fully deducted.
Net income from mining operation is defined as gross income from operations less allowable
deductions which are necessary or related to mining operations. Allowable deductions shall include
mining, milling and marketing expenses, depreciation of properties directly used in the mining
operations. This paragraph shall not apply to expenditures for the acquisition or improvement of
property of a character which is subject to the allowances for depreciation.
Section 94
Investment Guarantees
The contractor shall be entitled to the basic rights and guarantees provided in the Constitution and
such other rights recognized by the government as enumerated hereunder:
a. Repatriation of investments. The right to repatriate the entire proceeds of the liquidation of the
foreign investment in the currency in which the investment was originally made and at the exchange
rate prevailing at the time of repatriation.
b. Remittance of earnings. The right to remit earnings from the investment in the currency in which
the foreign investment was originally made and at the exchange rate prevailing at the time of
remittance.
c. Foreign loans and contracts. The right to remit at the exchange rate prevailing at the time of
remittance such sums as may be necessary to meet the payments of interest and principal on foreign
loans and foreign obligations arising from financial or technical assistance contracts.
d. Freedom from expropriation. The right to be free from expropriation by the Government of the
property represented by investments or loans, or of the property of the enterprise except for public
use or in the interest of national welfare or defense and upon payment of just compensation. In such
cases, foreign investors or enterprises shall have the right to remit sums received as compensation for
the expropriated property in the currency in which the investment was originally made and at the
exchange rate prevailing at the time of remittance.
e. Requisition of investment. The right to be free from requisition of the property represented by the
investment or of the property of the enterprises except in case of war or national emergency and only
for the duration thereof. Just compensation shall be determined and paid either at the time 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
investments were originally made and at the exchange rate prevailing at the time of remittance.
f. Confidentiality. Any confidential information supplied by the contractor pursuant to this Act and its
implementing rules and regulations shall be treated as such by the Department and the Government,
and during the term of the project to which it relates.
CHAPTER XVII
GROUND FOR CANCELLATION, REVOCATION, AND TERMINATION
Section 95
Late or Non-filing of Requirements
Failure of the permittee or contractor to comply with any of the requirements provided in this Act or
in its implementing rules and regulations, without a valid reason, shall be sufficient ground for the
suspension of any permit or agreement provided under this Act.
Section 96
Violation of the Terms and Conditions of Permits or Agreements
Violation of the terms and conditions of the permits or agreements shall be a sufficient ground for
cancellation of the same.
Section 97
Non-Payment of Taxes and Fees
Failure to pay the taxes and fees due the Government for two (2) consecutive years shall cause the
cancellation of the exploration permit, mineral agreement, financial or technical assistance agreement
and other agreements and the re-opening of the area subject thereof to new applicants.
Section 98
Suspension or Cancellation of Tar Incentives and Credits
Failure to abide by the terms and conditions of tax incentive and credits shall cause the suspension or
cancellation of said incentives and credits.
Section 99
Falsehood or Omission of Facts in the Statement
All statements made in the exploration permit, mining agreement and financial or technical assistance
agreement shall be considered as conditions and essential parts thereof and any falsehood in said
statements or omission of facts therein which may alter, change or affect substantially the facts set
forth in said statements may cause the revocation and termination of the exploration permit, mining
agreement and financial or technical assistance agreement.
CHAPTER XVIII
ORGANIZATIONAL AND INSTITUTIONAL ARRANGEMENTS
Section 100
From Staff Bureau to Line Bureau
The Mines and Geosciences Bureau is hereby transformed into a line bureau consistent with Section 9
of this Act: Provided, That under the Mines and Geosciences Bureau shall be the necessary mines
regional, district and other pertinent offices - the number and specific functions of which shall be
provided in the implementing rules and regulations of this Act.
CHAPTER XIX
PENAL PROVISIONS
Section 101
False Statements
Any person who knowingly presents any false application, declaration, or evidence to the Government
or publishes or causes to be published any prospectus or other information containing any false
statement relating to mines, mining operations or mineral agreements, financial or technical
assistance agreements and permits shall, upon conviction, be penalized by a fine of not exceeding Ten
thousand pesos (P10,000.00).
Section 102
Illegal Exploration
Any person undertaking exploration work without the necessary exploration permit shall, upon
conviction, be penalized by a fine of not exceeding Fifty thousand pesos (P50,000.00).
Section 103
Theft of Minerals
Any person extracting minerals and disposing the same without a mining agreement, lease, permit,
license, or steals minerals or ores or the products thereof from mines or mills or processing plants
shall, upon conviction, be imprisoned from six (6) months to six (6) years or pay a fine from Ten
thousand pesos (P10,000.00) to Twenty thousand pesos (P20,000.00) or both, at the discretion of the
appropriate court. In addition, he shall be liable to pay damages and compensation for the minerals
removed, extracted, and disposed of. In the case of associations, partnerships, or corporations, the
president and each of the directors thereof shall be responsible for the acts committed by such
association, corporation, or partnership.
Section 104
Destruction of Mining Structures
Any person who willfully destroys or damages structures in or on the mining area or on the mill sites
shall, upon conviction, be imprisoned for a period not to exceed five (5) years and shall, in addition,
pay compensation for the damages which may have been caused thereby.
Section 105
Mines Arson
Any person who willfully sets fire to any mineral stockpile, mine or workings, fittings or a mine, shall
be guilty of arson and shall be punished, upon conviction, by the appropriate court in accordance with
the provisions of the Revised Penal Code and shall, in addition, pay compensation for the damages
caused hereby.
Section 106
Willful Damage to a Mine
Any person who willfully damages a mine, unlawfully causes water to run into a mine, or obstructs
any shaft or passage to a mine, or renders useless, damages or destroys any machine, appliance,
apparatus, rope, chain, tackle, or any other things used in a mine, shall be punished, upon conviction,
by the appropriate court, by imprisonment not exceeding a period of five (5) years and shall, in
addition, pay compensation for the damages caused thereby.
Section 107
Illegal Obstruction to Permittees or Contractors
Any person who, without justifiable cause, prevents or obstructs the holder of any permit, agreement
or lease from undertaking his mining operations shall be punished, upon conviction by the
appropriate court, by a fine not exceeding Five thousand pesos (P5,000.00) or imprisonment not
exceeding one (1) year, or both, at the discretion of the court.
Section 108
Violation of the Terms and Conditions of the Environmental Compliance Certificate
Any person who willfully violates or grossly neglects to abide by the terms and conditions of the
environmental compliance certificate issued to said person and which causes environmental damage
through pollution shall suffer the penalty of imprisonment of six (6) months to six (6) years or a fine of
Fifty thousand pesos (P50,000.00) to Two hundred thousand pesos (P200,000.00), or both, at the
discretion of the court.
Section 109
Illegal Obstruction to Government Officials
Any person who illegally prevents or obstructs the Secretary, the Director or any of their
representatives in the performance of their duties under the provisions of this Act and of the
regulations promulgated hereunder shall be punished upon conviction, by the appropriate court, by a
fine not exceeding Five thousand pesos (P5,000.00) or by imprisonment not exceeding one (1) year, or
both, at the discretion of the court.
Section 110
Other Violations
Any other violation of this Act and its implementing rules and regulations shall constitute an offense
punishable with a fine not exceeding Five thousand pesos (P5,000.00).
Section 111
Fines
The Secretary is authorized to charge fines for late or non-submission of reports in accordance with
the implementing rules and regulations of this Act.
CHAPTER XX
TRANSITORY AND MISCELLANEOUS PROVISIONS
Section 112
Non-Impairment of Existing Mining/Quarrying Rights
All valid and existing mining lease contracts, permits/licenses, leases pending renewal, mineral
production-sharing agreements granted under Executive Order No. 279, at the date of effectivity of
this Act, shall remain valid, shall not be impaired, and shall be recognized by the Government:
Provided, That the provisions of Chapter XIV on government share in mineral production-sharing
agreement and of Chapter XVI on incentives of this Act shall immediately govern and apply to a
mining lessee or contractor unless the mining lessee or contractor indicates his intention to the
secretary, in writing, not to avail of said provisions: Provided, further, That no renewal of mining lease
contracts shall be made after the expiration of its term: Provided, finally, That such leases, production-
sharing agreements, financial or technical assistance agreements shall comply with the applicable
provisions of this Act and its implementing rules and regulations.
Section 113
Recognition of Valid and Existing Mining Claims and Lease/Quarry Applications
Holders of valid and existing mining claims, lease/quarry applications shall be given preferential rights
to enter into any mode of mineral agreement with the government within two (2) years from the
promulgation of the rules and regulations implementing this Act.
Section 114
Separability Clause
If any of the provision of this Act is held or declared to be unconstitutional or invalid by a competent
court, the other provisions hereof shall continue to be in force as if the provision so annulled or
voided had never been incorporated in this Act.
Section 115
Repealing and Amending Clause
All laws, executive orders, presidential decrees, rules and regulations or parts thereof which are
inconsistent with any of the provisions of this Act are hereby repealed or amended accordingly.
Section 116
Effectivity Clause
This Act shall take effect thirty (30) days following its complete publication in two (2) newspapers of
general circulation in the Philippines.

REPUBLIC ACT No. 7076 June 27, 1991
AN ACT CREATING A PEOPLE'S SMALL-SCALE MINING PROGRAM AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Title. – This Act shall be known as the "People's Small-scale Mining Act of 1991."
Section 2. Declaration of Policy. – It is hereby declared of the State to promote, develop, protect and
rationalize viable small-scale mining activities in order to generate more employment opportunities
and provide an equitable sharing of the nation's wealth and natural resources, giving due regard to
existing rights as herein provided.
Section 3. Definitions. – For purposes of this Act, the following terms shall be defined as follows:
(a) "Mineralized areas" refer to areas with naturally occurring mineral deposits of gold, silver,
chromite, kaolin, silica, marble, gravel, clay and like mineral resources;
(b) "Small-scale mining" refers to mining activities which rely heavily on manual labor using
simple implement and methods and do not use explosives or heavy mining equipment;
(c) "Small-scale miners" refer to Filipino citizens who, individually or in the company of other
Filipino citizens, voluntarily form a cooperative duly licensed by the Department of
Environment and Natural Resources to engage, under the terms and conditions of a contract,
in the extraction or removal of minerals or ore-bearing materials from the ground;
(d) "Small-scale mining contract" refers to co-production, joint venture or mineral production
sharing agreement between the State and a small-scale mining contractor for the small-scale
utilization of a plot of mineral land;
(e) "Small-scale mining contractor" refers to an individual or a cooperative of small-scale
miners, registered with the Securities and Exchange Commission or other appropriate
government agency, which has entered into an agreement with the State for the small-scale
utilization of a plot of mineral land within a people's small-scale mining area;
(f) "Active mining area" refers to areas under actual exploration, development, exploitation
or commercial production as determined by the Secretary after the necessary field
investigation or verification including contiguous and geologically related areas belonging to
the same claimowner and/or under contract with an operator, but in no case to exceed the
maximum area allowed by law;
(g) "Existing mining right" refers to perfected and subsisting claim, lease, license or permit
covering a mineralized area prior to its declaration as a people's small-scale mining area;
(h) "Claimowner" refers to a holder of an existing mining right;
(i) "Processor" refers to a person issued a license to engage in the treatment of minerals or
ore-bearing materials such as by gravity concentration, leaching benefication, cyanidation,
cutting, sizing, polishing and other similar activities;
(j) "License" refers to the privilege granted to a person to legitimately pursue his occupation
as a small-scale miner or processor under this Act;
(k) "Mining plan" refers to a two-year program of activities and methodologies employed in
the extraction and production of minerals or ore-bearing materials, including the financial
plan and other resources in support thereof;
(l) "Director" refers to the regional executive director of the Department of Environment and
Natural Resources; and
(m) "Secretary" refers to the Secretary of the Department of Environment and Natural
Resources.
Section 4. People's Small-scale Mining Program. – For the purpose of carrying out the declared policy
provided in Section 2 hereof, there is hereby established a People's Small-scale Mining Program to be
implemented by the Secretary of the Department of Environment and Natural Resources, hereinafter
called the Department, in coordination with other concerned government agencies, designed to
achieve an orderly, systematic and rational scheme for the small-scale development and utilization of
mineral resources in certain mineral areas in order to address the social, economic, technical, and
environmental connected with small-scale mining activities.
The People's Small-scale Mining Program shall include the following features:
(a) The identification, segregation and reservation of certain mineral lands as people's small-
scale mining areas;
(b) The recognition of prior existing rights and productivity;
(c) The encouragement of the formation of cooperatives;
(d) The extension of technical and financial assistance, and other social services;
(e) The extension of assistance in processing and marketing;
 (f) The generation of ancillary livelihood activities;
(g) The regulation of the small-scale mining industry with the view to encourage growth and
productivity; and
(h) The efficient collection of government revenue.
Section 5. Declaration of People's Small-scale Mining Areas. – The Board is hereby authorized to
declare and set aside people's small-scale mining areas in sites onshore suitable for small-scale
mining, subject to review by the Secretary, immediately giving priority to areas already occupied and
actively mined by small-scale miners before August 1, 1987: provided, that such areas are not
considered as active mining areas: provided, further, that the minerals found therein are technically
and commercially suitable for small-scale mining activities: provided, finally, that the areas are not
covered by existing forest rights or reservations and have not been declared as tourist or marine
reserved, parks and wildlife reservations, unless their status as such is withdrawn by competent
authority.
Section 6. Future People's Small-scale Mining Areas. – The following lands, when suitable for small-
scale mining, may be declared by the Board as people's small scale mining areas:
(a) Public lands not subject to any existing right;
(b) Public lands covered by existing mining rights which are not active mining areas; and
(c) Private lands, subject to certain rights and conditions, except those with substantial
improvements or in bona fide and regular use as a yard, stockyard, garden, plant nursery,
plantation, cemetery or burial site, or land situated within one hundred meters (100 m.) from
such cemetery or burial site, water reservoir or a separate parcel of land with an area of ten
thousand square meters (10,000 sq. m.) or less.
Section 7. Ancestral Lands. – No ancestral land may be declared as a people's small-scale mining area
without the prior consent of the cultural communities concerned: provided, that, if ancestral lands
are declared as people's small-scale mining areas, the members of the cultural communities therein
shall be given priority in the awarding of small-scale mining contracts.
Section 8. Registration of Small-scale Miners. – All persons undertaking small-scale mining activities
shall register as miners with the Board and may organize themselves into cooperatives in order to
qualify for the awarding of a people's small-scale mining contract.
Section 9. Award of People's Small-scale Mining Contracts. – A people's small-scale mining contract
may be awarded by the Board to small-scale miners who have voluntarily organized and have duly
registered with the appropriate government agency as an individual miner or cooperative; Provided,
that only one (1) people's small-scale mining contract may be awarded at any one time to a small-
scale mining operations within one (1) year from the date of award: provided, further, that priority
shall be given or city where the small-scale mining area is located.
Applications for a contract shall be subject to a reasonable fee to be paid to the Department of
Environment and Natural Resources regional office having jurisdiction over the area.
Section 10. Extent of Contract Area. – The Board shall determine the reasonable size and shape of
the contract area following the meridional block system established under Presidential Decree No.
463, as amended, otherwise known as the Mineral Resources Development Decree of 1974, but in no
case shall the area exceed twenty hectares (20 has.) per contractor and the depth or length of the
tunnel or adit not exceeding that recommended by the director taking into account the following
circumstances:
(a) Size of membership and capitalization of the cooperative;
(b) Size of mineralized area;
(c) Quantity of mineral deposits;
(d) Safety of miners;
(e) Environmental impact and other considerations; and
(f) Other related circumstances.
Section 11. Easement Rights. – Upon the declaration of a people's small-scale mining area, the
director, in consultation with the operator, claimowner, landowner or lessor of an affected area, shall
determine the right of the small scale miners to existing facilities such as mining and logging roads,
private roads, port and communication facilities, processing plants which are necessary for the
effective implementation of the People's Small-scale Mining Program, subject to payment of
reasonable fees to the operator, claimowner, landowner or lessor.
Section 12. Rights Under a People's Small-scale Mining Contract. – A people's small-scale mining
contract entitles the small-scale mining contractor to the right to mine, extract and dispose of mineral
ores for commercial purposes. In no case shall a small-scale mining contract be subcontracted,
assigned or otherwise transferred.
Section 13. Terms and Conditions of the Contract. – A contract shall have a term of two (2) years,
renewable subject to verification by the Board for like periods as long as the contractor complies with
the provisions set forth in this Act, and confers upon the contractor the right to mine within the
contract area: provided, that the holder of a small-scale mining contract shall have the following
duties and obligations:
(a) Undertake mining activities only in accordance with a mining plan duly approved by the
Board;
(b) Abide by the Mines and Geosciences Bureau and the small-scale Mining Safety Rules and
Regulations;
(c) Comply with his obligations to the holder of an existing mining right;
(d) Pay all taxes, royalties or government production share as are now or may hereafter be
provided by law;
(e) Comply with pertinent rules and regulations on environmental protection and
conservation, particularly those on tree-cutting mineral-processing and pollution control;
(f) File under oath at the end of each month a detailed production and financial report to the
Board; and
(g) Assume responsibility for the safety of persons working in the mines.
Section 14. Rights of Claimowners. – In case a site declared and set aside as a people's-scale mining
area is covered by an existing mining right, the claimowner and the small-scale miners therein are
encouraged to enter into a voluntary and acceptable contractual agreement with respect to the small-
scale utilization of the mineral values from the area under claim. In case of disagreement, the
claimowner shall be entitled to the following rights and privileges:
(a) Exemption from the performance of annual work obligations and payment of occupation
fees, rental, and real property taxes;
(b) Subject to the approval of the Board, free access to the contract area to conduct
metallurgical tests, explorations and other activities, provided such activities do not unduly
interfere with the operations of the small-scale miners; and
(c) Royalty equivalent to one and one half percent (1 1/2%) of the gross value of the metallic
mineral output or one percent (1%) of the gross value of the nonmetallic mineral output to
be paid to the claimowner: provided, that such rights and privileges shall be available only if
he is not delinquent and other performance of his annual work obligations and other
requirements for the last two (2) years prior to the effectivity of this Act.
Section 15. Rights of Private Landowners. – The private landowner or lawful possessor shall be
notified of any plan or petition to declare his land as a people's small-scale mining area. Said
landowner may oppose such plan or petition in an appropriate proceeding and hearing conducted
before the Board.
If a private land is declared as a people's small-scale mining area, the owner and the small-scale
mining contractors are encouraged to enter into a voluntary and acceptable contractual agreement
for the small-scale utilization of the mineral values from the private land: provided, that the owner
shall in all cases be entitled to the payment of actual damages which he may suffer as a result of such
declaration: provided, further, that royalties paid to the owner shall in no case exceed one percent
(1%) of the gross value of the minerals recovered as royalty.
Section 16. Ownership of Milllings. – The small-scale mining contractor shall be the owner of all
milllings produced from the contract area. He may sell thelings or have them processed in any custom
mill in the area: provided, that, if the small-scale mining contractor decide to sell its milllings, the
claimowner shall have a preemptive right to purchase said milllings at the prevailing market price.
Section 17. Sale of Gold. – All gold produced by small-scale miners in any mineral area shall be sold to
the Central Bank, or its duly authorized representatives, which shall buy it at prices competitive with
those prevailing in the world market regardless of volume or weight.
The Central Bank shall establish as many buying stations in gold-rush areas to fully service the
requirements of the small-scale minerals thereat.
Section 18. Custom Mills. – The establishment and operation of safe and efficient customs mills to
process minerals or ore-bearing materials shall be limited to mineral processing zones duly designated
by the local government unit concerned upon recommendation of the Board.
In mining areas where the private sector is unable to establish custom mills, the Government shall
construct such custom mills upon the recommendation of the Board based on the viability of the
project.
The Board shall issue licenses for the operation of custom mills and other processing plants subject to
pollution control and safety standards.
The Department shall establish assay laboratories to cross-check the integrity of custom mills and to
render metallurgical and laboratory services to mines.
Custom mills shall be constituted as withholding agents for the royalties, production share or other
taxes due the Government.
Section 19. Government Share and Allotment. – The revenue to be derived by the Government from
the operation of the mining program herein established shall be subject to the sharing provided in the
Local Government Code.
Section 20. People's Small-scale Mining Protection Fund. – There is hereby created a People's Small-
scale Mining Protection Fund which shall be fifteen percent (15%) of the national government's share
due the Government which shall be used primarily for information dissemination and training of
small-scale miners on safety, health and environmental protection, and the establishment of mine
rescue and recovery teams including the procurement of rescue equipment necessary in cases of
emergencies such as landslides, tunnel collapse, or the like.
The fund shall also be made available to address the needs of the small-scale miners brought about by
accidents and/or fortuitous events.
Section 21. Rescission of Contracts and Administrative Fines. – The noncompliance with the terms
and conditions of the contract or violation of the rules and regulations issued by the Secretary
pursuant to this Act, as well as the abandonment of the mining site by the contractor, shall constitute
a ground for the cancellation of the contracts and the ejectment from the people's small-scale mining
area of the contractor. In addition, the Secretary may impose fines against the violator in an amount
of not less than Twenty thousand pesos (P20,000.00) and not more than One hundred thousand
pesos (P100,000.00). Nonpayment of the fine imposed shall render the small-scale mining contractor
ineligible for other small-scale mining contracts.
Section 22. Reversion of People's Small-scale Mining Areas. – The Secretary, upon recommendation
of the director, shall withdraw the status of the people's small-scale mining area when it can no longer
feasibly operated on a small-scale mining basis or when the safety, health and environmental
conditions warrant that the same shall revert to the State for proper disposition.
Section 23. Actual Occupation by Small-scale Miners. – Small-scale miners who have been in actual
operation of mineral lands on or before August 1, 1987 as determined by the Board shall not be
dispossessed, ejected or removed from said areas: provided, that they comply with the provisions of
this Act.
Section 24. Provincial/City Mining Regulatory Board. – There is hereby created under the direct
supervision and control of the Secretary a provincial/city mining regulatory board, herein called the
Board, which shall be the implementing agency of the Department, and shall exercise the following
powers and functions, subject to review by the Secretary:
(a) Declare and segregate existing gold-rush areas for small-scale mining;
(b) Reserve future gold and other mining areas for small-scale mining;
(c) Award contracts to small-scale miners;
(d) Formulate and implement rules and regulations related to small-scale mining;
(e) Settle disputes, conflicts or litigations over conflicting claims within a people's small-scale
mining area, an area that is declared a small-mining; and
(f) Perform such other functions as may be necessary to achieve the goals and objectives of
this Act.
Section 25. Composition of the Provincial/City Mining Regulatory Board. – The Board shall be
composed of the Department of Environment and Natural Resources representative as Chairman; and
the representative of the governor or city mayor, as the representative of the governor or city mayor,
as the case may be, one (1) small scale mining representative, one (1) big-scale mining representative,
and the representative from a nongovernment organization who shall come from an environmental
group, as members.
The representatives from the private sector shall be nominated by their respective organizations and
appointed by the Department regional director. The Department shall provide the staff support to the
Board.
Section 26. Administrative Supervision over the People's Small-scale Mining Program. – The
Secretary through his representative shall exercise direct supervision and control over the program
and activities of the small-scale miners within the people's small-scale mining area.
The Secretary shall within ninety (90) days from the effectivity of this Act promulgate rules and
regulations to effectively implement the provisions of the same. Priority shall be given to such rules
and regulations that will ensure the least disruption in the operations of the small-scale miners.
Section 27. Penal Sanctions. – Violations of the provisions of this Act or of the rules and regulations
issued pursuant hereto shall be penalized with imprisonment of not less than six (6) months nor more
than six (6) years and shall include the confiscation and seizure of equipment, tools and instruments.
Section 28. Repealing Clause. – All laws, decrees, letters of instruction, executive orders, rules and
regulations, and other issuances, or parts thereof, in conflict or inconsistent with this Act are hereby
repealed or modified accordingly.
Section 29. Separability Clause. – Any section or provision of this Act which may be declared
unconstitutional shall not affect the other sections or provisions hereof.
G.R. No. 163509 December 6, 2006
PICOP RESOURCES, INC., petitioner,
vs.
BASE METALS MINERAL RESOURCES CORPORATION, and THE MINES ADJUDICATION
BOARD,respondents.
DECISION
TINGA, J.:
PICOP Resources, Inc. (PICOP) assails the Decision1 of the Court of Appeals dated November 28, 2003
and its Resolution2 dated May 5, 2004, which respectively denied its petition for review and motion
for reconsideration.
The undisputed facts quoted from the appellate court's Decision are as follows:
In 1987, the Central Mindanao Mining and Development Corporation (CMMCI for brevity)
entered into a Mines Operating Agreement (Agreement for brevity) with Banahaw Mining
and Development Corporation (Banahaw Mining for brevity) whereby the latter agreed to act
as Mine Operator for the exploration, development, and eventual commercial operation of
CMMCI's eighteen (18) mining claims located in Agusan del Sur.
Pursuant to the terms of the Agreement, Banahaw Mining filed applications for Mining Lease
Contracts over the mining claims with the Bureau of Mines. On April 29, 1988, Banahaw
Mining was issued a Mines Temporary Permit authorizing it to extract and dispose of
precious minerals found within its mining claims. Upon its expiration, the temporary permit
was subsequently renewed thrice by the Bureau of Mines, the last being on June 28, 1991.
Since a portion of Banahaw Mining's mining claims was located in petitioner PICOP's logging
concession in Agusan del Sur, Banahaw Mining and petitioner PICOP entered into a
Memorandum of Agreement, whereby, in mutual recognition of each other's right to the
area concerned, petitioner PICOP allowed Banahaw Mining an access/right of way to its
mining claims.
In 1991, Banahaw Mining converted its mining claims to applications for Mineral Production
Sharing Agreements (MPSA for brevity).
While the MPSA were pending, Banahaw Mining, on December 18, 1996, decided to
sell/assign its rights and interests over thirty-seven (37) mining claims in favor of private
respondent Base Metals Mineral Resources Corporation (Base Metals for brevity). The
transfer included mining claims held by Banahaw Mining in its own right as claim owner, as
well as those covered by its mining operating agreement with CMMCI.
Upon being informed of the development, CMMCI, as claim owner, immediately approved
the assignment made by Banahaw Mining in favor of private respondent Base Metals,
thereby recognizing private respondent Base Metals as the new operator of its claims.
On March 10, 1997, private respondent Base Metals amended Banahaw Mining's pending
MPSA applications with the Bureau of Mines to substitute itself as applicant and to submit
additional documents in support of the application. Area clearances from the DENR Regional
Director and Superintendent of the Agusan Marsh and Wildlife Sanctuary were submitted, as
required.
On October 7, 1997, private respondent Base Metals' amended MPSA applications were
published in accordance with the requirements of the Mining Act of 1995.
On November 18, 1997, petitioner PICOP filed with the Mines Geo-Sciences Bureau (MGB),
Caraga Regional Office No. XIII an Adverse Claim and/or Opposition to private respondent
Base Metals' application on the following grounds:
I. THE APPROVAL OF THE APPLICATION AND ISSUANCE OF THE MPSA OF BASE
METALS WILL VIOLATE THE CONSTITUTIONAL MANDATE AGAINST IMPAIRMENT OF
OBLIGATION IN A CONTRACT.
II. THE APPROVAL OF THE APPLICATION WILL DEFEAT THE RIGHTS OF THE HEREIN
ADVERSE CLAIMANT AND/OR OPPOSITOR.
In its Answer to the Adverse Claim and/or Opposition, private respondent Base Metals
alleged that:
a) the Adverse Claim was filed out of time;
b) petitioner PICOP has no rights over the mineral resources on their concession
area. PICOP is asserting a privilege which is not protected by the non-impairment
clause of the Constitution;
c) the grant of the MPSA will not impair the rights of PICOP nor create confusion,
chaos or conflict.
Petitioner PICOP's Reply to the Answer alleged that:
a) the Adverse Claim was filed within the reglementary period;
 b) the grant of MPSA will impair the existing rights of petitioner PICOP;
c) the MOA between PICOP and Banahaw Mining provides for recognition by
Banahaw Mining of the Presidential Warranty awarded in favor of PICOP for the
exclusive possession and enjoyment of said areas.
As a Rejoinder, private respondent Base Metals stated that:
1. it is seeking the right to extract the mineral resources in the applied areas. It is
not applying for any right to the forest resources within the concession areas of
PICOP;
2. timber or forest lands are open to Mining Applications;
3. the grant of the MPSA will not violate the so called "presidential fiat";
4. the MPSA application of Base Metals does not require the consent of PICOP; and
5. it signified its willingness to enter into a voluntary agreement with PICOP on the
matter of compensation for damages. In the absence of such agreement, the matter
will be brought to the Panel of Arbitration in accordance with law.
In refutation thereto, petitioner PICOP alleged in its Rejoinder that:
a) the Adverse Claim filed thru registered mail was sent on time and as prescribed
by existing mining laws and rules and regulations;
b) the right sought by private respondent Base Metals is not absolute but is subject
to existing rights, such as those which the adverse claimant had, that have to be
recognized and respected in a manner provided and prescribed by existing laws as
will be expounded fully later;
c) as a general rule, mining applications within timber or forest lands are subject to
existing rights as provided in Section 18 of RA 7942 or the Philippine Mining Act of
1995 and it is an admitted fact by the private respondent that petitioner PICOP had
forest rights as per Presidential Warranty;
d) while the Presidential Warranty did not expressly state exclusivity, P.D. 705
strengthened the right of occupation, possession and control over the concession
area;
e) the provisions of Section 19 of the Act and Section 15 of IRR expressly require the
written consent of the forest right holder, PICOP.
After the submission of their respective position paper, the Panel Arbitrator issued an Order
dated December 21, 1998, the dispositive portion of which reads as:
WHEREFORE, premises considered, Mineral Production Sharing Agreement
Application Nos. (XIII) 010, 011, 012 of Base Metal Resources Corporation should be
set aside.
The disapproval of private respondent Base Metals' MPSA was due to the following reasons:
Anent the first issue the Panel find (sic) and so hold (sic) that the adverse claim was
filed on time, it being mailed on November 19, 1997, at Metro Manila as evidenced
by Registry Receipt No. 26714. Under the law (sic) the date of mailing is considered
the date of filing.
As to whether or not an MPSA application can be granted on area subject of an
IFMA3 or PTLA4 which is covered by a Presidential Warranty, the panel believes it can
not, unless the grantee consents thereto. Without the grantee's consent, the area is
considered closed to mining location (sec. 19) (b) (No. 2), DAO No. 96-40). The Panel
believe (sic) that mining location in forest or timberland is allowed only if such forest
or timberland is not leased by the government to a qualified person or entity. If it is
leased the consent of the lessor is necessary, in addition to the area clearance to be
issued by the agency concerned before it is subjected to mining operation.
Plantation is considered closed to mining locations because it is off tangent to
mining. Both are extremes. They can not exist at the same time. The other must
necessarily stop before the other operate.
On the other hand, Base Metals Mineral Resources Corporation can not insist the
MPSA application as assignee of Banahaw. PICOP did not consent to the assignment
as embodied in the agreement. Neither did it ratify the Deed of Assignment.
Accordingly, it has no force and effect. Thus, for lack of consent, the MPSA must fall.
On January 11, 1999, private respondent Base Metals filed a Notice of Appeal with public
respondent MAB and alleged in its Appeal Memorandum the following arguments:
1. THE CONSENT OF PICOP IS NOT NECESSARY FOR THE APPROVAL OF BASE METALS'
MPSA APPLICATION.
 2. EVEN ASSUMING SUCH CONSENT IS NECESSARY, PICOP HAD CONSENTED TO BASE
METALS' MPSA APPLICATION.
In Answer thereto, petitioner PICOP alleged that:
1. Consent is necessary for the approval of private respondent's MPSA application;
2. Provisions of Memorandum Order No. 98-03 and IFMA 35 are not applicable to
the instant case;
5
3. Provisions of PD 705 connotes exclusivity for timber license holders; and
4. MOA between private respondent's assignor and adverse claimant provided for
the recognition of the latter's rightful claim over the disputed areas.
Private respondent Base Metals claimed in its Reply that:
1. The withholding of consent by PICOP derogates the State's power to supervise
and control the exploration, utilization and development of all natural resources;
2. Memorandum Order No, 98-03, not being a statute but a mere guideline imposed
by the Secretary of the Department of Environment and Natural Resources (DENR),
can be applied retroactively to MPSA applications which have not yet been finally
resolved;
3. Even assuming that the consent of adverse claimant is necessary for the approval
of Base Metals' application (which is denied), such consent had already been given;
and
4. The Memorandum of Agreement between adverse claimant and Banahaw Mining
proves that the Agusan-Surigao area had been used in the past both for logging and
mining operations.
After the filing of petitioner PICOP's Reply Memorandum, public respondent rendered the
assailed decision setting aside the Panel Arbitrator's order. Accordingly, private respondent
Base Metals' MPSA's were reinstated and given due course subject to compliance with the
pertinent requirements of the existing rules and regulations. 6
The Court of Appeals upheld the decision of the MAB, ruling that the Presidential Warranty of
September 25, 1968 issued by then President Ferdinand E. Marcos merely confirmed the timber
license granted to PICOP and warranted the latter's peaceful and adequate possession and enjoyment
of its concession areas. It was only given upon the request of the Board of Investments to establish
the boundaries of PICOP's timber license agreement. The Presidential Warranty did not convert
PICOP's timber license into a contract because it did not create any obligation on the part of the
government in favor of PICOP. Thus, the non-impairment clause finds no application.
Neither did the Presidential Warranty grant PICOP the exclusive possession, occupation and
exploration of the concession areas covered. If that were so, the government would have effectively
surrendered its police power to control and supervise the exploration, development and utilization of
the country's natural resources.
On PICOP's contention that its consent is necessary for the grant of Base Metals' MPSA, the appellate
court ruled that the amendment to PTLA No. 47 refers to the grant of gratuitous permits, which the
MPSA subject of this case is not. Further, the amendment pertains to the cutting and extraction of
timber for mining purposes and not to the act of mining itself, the intention of the amendment being
to protect the timber found in PICOP's concession areas.
The Court of Appeals noted that the reinstatement of the MPSA does not ipso facto revoke, amend,
rescind or impair PICOP's timber license. Base Metals still has to comply with the requirements for the
grant of a mining permit. The fact, however, that Base Metals had already secured the necessary Area
Status and Clearance from the DENR means that the areas applied for are not closed to mining
operations.
In its Resolution7 dated May 5, 2004, the appellate court denied PICOP's Motion for Reconsideration.
It ruled that PICOP failed to substantiate its allegation that the area applied for is a forest reserve and
is therefore closed to mining operations because it did not identify the particular law which set aside
the contested area as one where mining is prohibited pursuant to applicable laws.
The case is now before us for review.
In its Memorandum8 dated April 6, 2005, PICOP presents the following issues: (1) the 2,756 hectares
subject of Base Metals' MPSA are closed to mining operations except upon PICOP's written consent
pursuant to existing laws, rules and regulations and by virtue of the Presidential Warranty; (2) its
Presidential Warranty is protected by the non-impairment clause of the Constitution; and (3) it does
not raise new issues in its petition.
PICOP asserts that its concession areas are closed to mining operations as these are within the
Agusan-Surigao-Davao forest reserve established under Proclamation No. 369 of then Gov. Gen.
Dwight Davis. The area is allegedly also part of permanent forest established under Republic Act No.
3092 (RA 3092),9 and overlaps the wilderness area where mining applications are expressly prohibited
under RA 7586.10 Hence, the area is closed to mining operations under Sec. 19(f) of RA 7942. 11
PICOP further asserts that to allow mining over a forest or forest reserve would allegedly be
tantamount to changing the classification of the land from forest to mineral land in violation of Sec. 4,
Art. XII of the Constitution and Sec. 1 of RA 3092.
According to PICOP, in 1962 and 1963, blocks A, B and C within the Agusan-Surigao-Davao forest
reserve under Proclamation No. 369 were surveyed as permanent forest blocks in accordance with RA
3092. These areas cover PICOP's PTLA No. 47, part of which later became IFMA No. 35. In turn, the
areas set aside as wilderness as in PTLA No. 47 became the initial components of the NIPAS under Sec.
5(a) of RA 7586. When RA 7942 was signed into law, the areas covered by the NIPAS were expressly
determined as areas where mineral agreements or financial or technical assistance agreement
applications shall not be allowed. PICOP concludes that since there is no evidence that the permanent
forest areas within PTLA No. 47 and IFMA No. 35 have been set aside for mining purposes, the MAB
and the Court of Appeals gravely erred in reinstating Base Metals' MPSA and, in effect, allowing
mining exploration and mining-related activities in the protected areas.
PICOP further argues that under DENR Administrative Order (DAO) No. 96-40 implementing RA 7942,
an exploration permit must be secured before mining operations in government reservations may be
undertaken. There being no exploration permit issued to Banahaw Mining or appended to its MPSA,
the MAB and the Court of Appeals should not have reinstated its application.
PICOP brings to the Court's attention the case of PICOP Resources, Inc. v. Hon. Heherson T.
Alvarez,12 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.
The Presidential Warranty in this case is allegedly not a mere confirmation of PICOP's timber license
but a commitment on the part of the Government that in consideration of PICOP's investment in the
wood-processing business, the Government will assure the availability of the supply of raw materials
at levels adequate to meet projected utilization requirements. The guarantee that PICOP will have
peaceful and adequate possession and enjoyment of its concession areas is impaired by the
reinstatement of Base Metals' MPSA in that the latter's mining activities underneath the area in
dispute will surely undermine PICOP's supply of raw materials on the surface.
Base Metals' obtention of area status and clearance from the DENR is allegedly immaterial, even
misleading. The findings of the DENR Regional Disrector and the superintendent of the Agusan Marsh
and Wildlife Sanctuary are allegedly misplaced because the area applied for is not inside the Agusan
Marsh but in a permanent forest. Moreover, the remarks in the area status itself should have been
considered by the MAB and the appellate court as they point out that the application encroaches on
surveyed timberland projects declared as permanent forests/forest reserves.
Finally, PICOP insists that it has always maintained that the forest areas of PTLA No. 47 and IFMA No.
35 are closed to mining operations. The grounds relied upon in this petition are thus not new issues
but merely amplifications, clarifications and detailed expositions of the relevant constitutional
provisions and statutes regulating the use and preservation of forest reserves, permanent forest, and
protected wilderness areas given that the areas subject of the MPSA are within and overlap PICOP's
PTLA No. 47 and IFMA No. 35 which have been classified and blocked not only as permanent forest
but also as protected wilderness area forming an integral part of the Agusan-Davao-Surigao Forest
Reserve.
In its undated Memorandum,13 Base Metals contends that PICOP never made any reference to land
classification or the exclusion of the contested area from exploration and mining activities except in
the motion for reconsideration it filed with the Court of Appeals. PICOP's object to the MPSA was
allegedly based exclusively on the ground that the application, if allowed to proceed, would constitute
a violation of the constitutional proscription against impairment of the obligation of contracts. It was
upon this issue that the appellate court hinged its Decision in favor of Base Metals, ruling that the
Presidential Warranty merely confirmed PICOP's timber license. The instant petition, which raises new
issues and invokes RA 3092 and RA 7586, is an unwarranted departure from the settled rule that only
issues raised in the proceedings a quo may be elevated on appeal.
Base Metals notes that RA 7586 expressly requires that there be a prior presidential decree,
presidential proclamation, or executive order issued by the President of the Philippines, expressly
proclaiming, designating, and setting aside the wilderness area before the same may be considered
part of the NIPAS as a protected area. Allegedly, PICOP has not shown that such an express
presidential proclamation exists setting aside the subject area as a forest reserve, and excluding the
same from the commerce of man.
PICOP also allegedly misquoted Sec. 19 of RA 7942 by placing a comma between the words
"watershed" and "forest" thereby giving an altogether different and misleading interpretation of the
cited provision. The cited provision, in fact, states that for an area to be closed to mining applications,
the same must be a watershed forest reserve duly identified and proclaimed by the President of the
Philippines. In this case, no presidential proclamation exists setting aside the contested area as such.
Moreover, the Memorandum of Agreement between Banahaw Mining and PICOP is allegedly a clear
and tacit recognition by the latter that the area is open and available for mining activities and that
Banahaw Mining has a right to enter and explore the areas covered by its mining claims.
Base Metals reiterates that the non-impairment clause is a limit on the exercise of legislative power
and not of judicial or quasi-judicial power. The Constitution prohibits the passage of a law which
enlarges, abridges or in any manner changes the intention of the contracting parties. The decision of
the MAB and the Court of Appeals are not legislative acts within the purview of the constitutional
proscription. Besides, the Presidential Warranty is not a contract that may be impaired by the
reinstatement of the MPSA. It is a mere confirmation of PICOP's timber license and draws its life from
PTLA No. 47. Furthermore, PICOP fails to show how the reinstatement of the MPSA will impair its
timber license.
Following the regalian doctrine, Base Metals avers that the State may opt to enter into contractual
arrangements for the exploration, development, and extraction of minerals even it the same should
mean amending, revising, or even revoking PICOP's timber license. To require the State to secure
PICOP's prior consent before it can enter into such contracts allegedly constitutes an undue
delegation of sovereign power.
Base Metals further notes that Presidential Decree No. 705 (PD 705), under which PTLA No. 47, IFMA
No. 35 and the Presidential Warranty were issued, requires notice to PICOP rather than consent
before any mining activity can be commenced in the latter's concession areas.
The Office of the Solicitor General (OSG) filed a Memorandum 14 dated April 21, 2005 on behalf of the
MAB, contending that PICOP's attempt to raise new issues, such as its argument that the contested
area is classified as a permanent forest and hence, closed to mining activities, is offensive to due
process and should not be allowed.
The OSG argues that a timber license is not a contract within the purview of the due process and non-
impairment clauses. The Presidential Warranty merely guarantees PICOP's tenure over its concession
area and covers only the right to cut, collect and remove timber therein. It is a mere collateral
undertaking and cannot amplify PICOP's rights under its PTLA No. 47 and IFMA No. 35. To hold that
the Presidential Warranty is a contract separate from PICOP's timber license effectively gives the latter
PICOP an exclusive, perpetual and irrevocable right over its concession area and impairs the State's
sovereign exercise of its power over the exploration, development, and utilization of natural
resources.
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.
The OSG further asserts that mining operations are legally permissible over PICOP's concession areas.
Allegedly, what is closed to mining applications under RA 7942 are areas proclaimed as watershed
forest reserves. The law does not totally prohibit mining operations over forest reserves. On the
contrary, Sec. 18 of RA 7942 permits mining over forest lands subject to existing rights and
reservations, and PD 705 allows mining over forest lands and forest reservations subject to State
regulation and mining laws. Sec. 19(a) of RA 7942 also provides that mineral activities may be allowed
even over military and other government reservations as long as there is a prior written clearance by
the government agency concerned.
The area status clearances obtained by Base Metals also allegedly show that the area covered by the
MPSA is within timberland, unclassified public forest, and alienable and disposable land. Moreover,
PICOP allegedly chose to cite portions of Apex Mining Corporation v. Garcia,15 to make it appear that
the Court in that case ruled that mining is absolutely prohibited in the Agusan-Surigao-Davao Forest
Reserve. In fact, the Court held that the area is not open to mining location because the proper
procedure is to file an application for a permit to prospect with the Bureau of Forest and
Development.
In addition, PICOP's claimed wilderness area has not been designated as a protected area that would
operate to bar mining operations therein. PICOP failed to prove that the alleged wilderness area has
been designated as an initial component of the NIPAS pursuant to a law, presidential decree,
presidential proclamation or executive order. Hence, it cannot correctly claim that the same falls
within the coverage of the restrictive provisions of RA 7586.
The OSG points out that the Administrative Code of 1917 which RA 3092 amended has been
completely repealed by the Administrative Code of 1978. Sec. 4, Art. XII of the 1987 Constitution, on
the other hand, provides that Congress shall determine the specific limits of forest lands and national
parks, marking clearly their boundaries on the ground. Once this is done, the area thus covered by
said forest lands and national parks may not be expanded or reduced except also by congressional
legislation. Since Congress has yet to enact a law determining the specific limits of the forest lands
covered by Proclamation No. 369 and marking clearly its boundaries on the ground, there can be no
occasion that could give rise to a violation of the constitutional provision.
Moreover, Clauses 10 and 14 of PICOP's IFMA No. 35 specifically provides that the area covered by the
agreement is open for mining if public interest so requires. Likewise, PTLA No. 47 provides that the
area covered by the license agreement may be opened for mining purposes.
Finally, the OSG maintains that pursuant to the State's policy of multiple land use, R.A. No. 7942
provides for appropriate measures for a harmonized utilization of the forest resources and
compensation for whatever damage done to the property of the surface owner or concessionaire as a
consequence of mining operations. Multiple land use is best demonstrated by the Memorandum of
Agreement between PICOP and Banahaw Mining.
First, the procedural question of whether PICOP is raising new issues in the instant petition. It is the
contention of the OSG and Base Metals that PICOP's argument that the area covered by the MPSA is
classified as permanent forest and therefore closed to mining activities was raised for the first time in
PICOP's motion for reconsideration with the Court of Appeals.
Our own perusal of the records of this case reveals that this is not entirely true.
In its Adverse Claim and/or Opposition16 dated November 19, 1997 filed with the MGB Panel of
Arbitrators, PICOP already raised the argument that the area applied for by Base Metals is classified as
a permanent forest determined to be needed for forest purposes pursuant to par. 6, Sec. 3 of PD 705,
as amended. PICOP then proceeded to claim that the area should remain forest land if the purpose of
the presidential fiat were to be followed. It stated:
Technically, the areas applied for by Base Metals are classified as a permanent forest being
land of the public domain determined to be needed for forest purposes (Paragraph 6, Section
3 of Presidential Decree No. 705, as amended) If these areas then are classified and
determined to be needed for forest purpose then they should be developed and should
remain as forest lands. Identifying, delineating and declaring them for other use or uses
 defeats the purpose of the aforecited presidential fiats. Again, if these areas would be
delineated from Oppositor's forest concession, the forest therein would be destroyed and be
lost beyond recovery.17
Base Metals met this argument head on in its Answer18 dated December 1, 1997, in which it
contended that PD 705 does not exclude mining operations in forest lands but merely requires that
there be proper notice to the licensees of the area.
Again in its Petition19 dated January 25, 2003 assailing the reinstatement of Base Metals' MPSA, PICOP
argued that RA 7942 expressly prohibits mining operations in plantation areas such as PICOP's
concession area. Hence, it posited that the MGB Panel of Arbitrators did not commit grave abuse of
discretion when it ruled that without PICOP's consent, the area is closed to mining location.
It is true though that PICOP expounded on the applicability of RA 3092, RA 7586, and RA 7942 for the
first time in its motion for reconsideration of the appellate court's Decision. It was only in its motion
for reconsideration that PICOP argued that the area covered by PTLA No. 47 and IFMA No. 35 are
permanent forest lands covered by RA 7586 which cannot be entered for mining purposes, and shall
remain indefinitely as such for forest uses and cannot be excluded or diverted for other uses except
after reclassification through a law enacted by Congress.
Even so, we hold that that the so-called new issues raised by PICOP are well within the issues framed
by the parties in the proceedings a quo. Thus, they are not, strictly speaking, being raised for the first
time on appeal.20 Besides, Base Metals and the OSG have been given ample opportunity, by way of
the pleadings filed with this Court, to respond to PICOP's arguments. It is in the best interest of justice
that we settle the crucial question of whether the concession area in dispute is open to mining
activities.
We should state at this juncture that the policy of multiple land use is enshrined in our laws towards
the end that the country's natural resources may be rationally explored, developed, utilized and
conserved. The Whereas clauses and declaration of policies of PD 705 state:
WHEREAS, proper classification, management and utilization of the lands of the public
domain to maximize their productivity to meet the demands of our increasing population is
urgently needed;
WHEREAS, to achieve the above purpose, it is necessary to reassess the multiple uses of
forest lands and resources before allowing any utilization thereof to optimize the benefits
that can be derived therefrom;
…
Sec. 2. Policies.—The State hereby adopts the following policies:
a) The multiple uses of forest lands shall be oriented to the development and
progress requirements of the country, the advancement of science and technology,
and the public welfare;
In like manner, RA 7942, recognizing the equiponderance between mining and timber rights, gives a
mining contractor the right to enter a timber concession and cut timber therein provided that the
surface owner or concessionaire shall be properly compensated for any damage done to the property
as a consequence of mining operations. The pertinent provisions on auxiliary mining rights state:
Sec. 72. Timber Rights.—Any provision of law to the contrary notwithstanding, a contractor
may be granted a right to cut trees or timber within his mining areas as may be necessary for
his mining operations subject to forestry laws, rules and regulations: Provided, That if the
land covered by the mining area is already covered by existing timber concessions, the
volume of timber needed and the manner of cutting and removal thereof shall be
determined by the mines regional director, upon consultation with the contractor, the timber
concessionair/permittee and the Forest Management Bureau of the Department: Provided,
further, That in case of disagreement between the contractor and the timber concessionaire,
the matter shall be submitted to the Secretary whose decision shall be final. The contractor
shall perform reforestation work within his mining area in accordance with forestry laws,
rules and regulations.
…
Sec. 76. Entry into Private Lands and Concession Areas.—Subject to prior notification, holders
of mining rights shall not be prevented from entry into private lands and concession areas by
surface owners, occupants, or concessionaires when conducting mining operations
therein: Provided, That any damage done to the property of the surface owner, occupant, or
concessionaire as a consequence of such operations shall be properly compensated as may
be provided for in the implementing rules and regulations: Provided, further, That to
guarantee such compensation, the person authorized to conduct mining operation shall,
prior thereto, post a bond with the regional director based on the type of properties, the
prevailing prices in and around the area where the mining operations are to be conducted,
with surety or sureties satisfactory to the regional director.
With the foregoing predicates, we shall now proceed to analyze PICOP's averments.
PICOP contends that its concession area is within the Agusan-Surigao-Davao Forest Reserve
established under Proclamation No. 369 and is closed to mining application citing several paragraphs
of Sec. 19 of RA 7942.
The cited provision states:
 Sec. 19 Areas Closed to Mining Applications.—Mineral agreement or financial or technical
assistance agreement applications shall not be allowed:
(a) In military and other government reservations, except upon prior written clearance by the
government agency concerned;
… PICOP's obvious misreading of our decision in Apex Mining Co., Inc. v. Garcia, supra, to the effect that
(d) In areas expressly prohibited by law;
…
(f) Old growth or virgin forests, proclaimed watershed forest reserves, wilderness
areas, mangrove forests, mossy forests, national parks, provincial/municipal forests, parks,
greenbelts, game refuge and bird sanctuaries as defined by law in areas expressly prohibited
under the National Ingrated Protected Areas System (NIPAS) under Republic Act No. 7586,
Department Administrative Order No. 25, series of 1992 and other laws. [emphasis supplied]
We analyzed each of the categories under which PICOP claims that its concession area is closed to
mining activities and conclude that PICOP's contention must fail.
Firstly, assuming that the area covered by Base Metals' MPSA is a government reservation, defined as
proclaimed reserved lands for specific purposes other than mineral reservations, 21 such does not
necessarily preclude mining activities in the area. Sec. 15(b) of DAO 96-40 provides that government
reservations may be opened for mining applications upon prior written clearance by the government
agency having jurisdiction over such reservation.
Sec. 6 of RA 7942 also provides that mining operations in reserved lands other than mineral
reservations may be undertaken by the DENR, subject to certain limitations. It provides:
Sec. 6. Other Reservations.—Mining operations in reserved lands other than mineral
reservations may be undertaken by the Department, subject to limitations as herein
provided. In the event that the Department cannot undertake such activities, they may be
undertaken by a qualified person in accordance with the rules and regulations promulgated
by the Secretary. The right to develop and utilize the minerals found therein shall be awarded
by the President under such terms and conditions as recommended by the Director and
approved by the Secretary: Provided, That the party who undertook the exploration of said
reservations shall be given priority. The mineral land so awarded shall be automatically
excluded from the reservation during the term of the agreement: Provided, further, That the
right of the lessee of a valid mining contract existing within the reservation at the time of its
establishment shall not be prejudiced or impaired.
Secondly, RA 7942 does not disallow mining applications in all forest reserves but only
those proclaimed aswatershed forest reserves. There is no evidence in this case that the area covered
by Base Metals' MPSA has been proclaimed as watershed forest reserves.
Even granting that the area covered by the MPSA is part of the Agusan-Davao-Surigao Forest Reserve,
such does not necessarily signify that the area is absolutely closed to mining activities. Contrary to
mineral agreements are not allowed in the forest reserve established under Proclamation 369, the
Court in that case actually ruled that pursuant to PD 463 as amended by PD 1385, one can acquire
mining rights within forest reserves, such as the Agusan-Davao-Surigao Forest Reserve, by initially
applying for a permit to prospect with the Bureau of Forest and Development and subsequently for a
permit to explore with the Bureau of Mines and Geosciences.
Moreover, Sec. 18 RA 7942 allows mining even in timberland or forestty subject to existing rights and
reservations. It provides:
Sec. 18. Areas Open to Mining Operations.—Subject to any existing rights or reservations and
prior agreements of all parties, all mineral resources in public or private lands, including
timber or forestlands as defined in existing laws, shall be open to mineral agreements or
financial or technical assistance agreement applications. Any conflict that may arise under
this provision shall be heard and resolved by the panel of arbitrators.
Similarly, Sec. 47 of PD 705 permits mining operations in forest lands which include the public forest,
the permanent forest or forest reserves, and forest reservations. 22 It states:
Sec. 47. Mining Operations.—Mining operations in forest lands shall be regulated and
conducted with due regard to protection, development and utilization of other surface
resources. Location, prospecting, exploration, utilization or exploitation of mineral resources
in forest reservations shall be governed by mining laws, rules and regulations. No location,
prospecting, exploration, utilization, or exploitation of mineral resources inside forest
concessions shall be allowed unless proper notice has been served upon the licensees
thereof and the prior approval of the Director, secured.
…
Significantly, the above-quoted provision does not require that the consent of existing licensees be
obtained but that they be notified before mining activities may be commenced inside forest
concessions.
DENR Memorandum Order No. 03-98, which provides the guidelines in the issuance of area status
and clearance or consent for mining applications pursuant to RA 7942, provides that timber or forest
lands, military and other government reservations, forest reservations, forest reserves other than
critical watershed forest reserves, and existing DENR Project Areas within timber or forest lands,
reservations and reserves, among others, are open to mining applications subject to area status and
clearance.
To this end, area status clearances or land status certifications have been issued to Base Metals
relative to its mining right application, to wit:
II. MPSA No. 010
1. Portion colored green is the area covered by the aforestated Timberland Project
No. 31-E, Block A and Project No. 59-C, Block A, L.C. Map No. 2466 certified as such
on June 30, 1961; and
2. Shaded brown represent CADC claim.23
III. MPSA No. 011
1. The area applied covers the Timberland, portion of Project No. 31-E, Block-E, L.C.
Map No. 2468 and Project No. 36-A Block II, Alienable and Disposable Land, L.C.
Map No. 1822, certified as such on June 30, 1961 and January 1, 1955, respectively;
2. The green shade is the remaining portion of Timber Land Project;
3. The portion colored brown is an applied and CADC areas;
4. Red shade denotes alienable and disposable land. 24
IV. MPSA No. 012
Respectfully returned herewith is the folder of Base Metals Mineral Resources
Corporation, applied under Mineral Production Sharing Agreement (MPSA (XIII)
012), referred to this office per memorandum dated August 5, 1997 for Land status
certification and the findings based on available references file this office, the site is
within the unclassified Public Forest of the LGU, Rosario, Agusan del Sur. The shaded
portion is the wilderness area of PICOP Resources Incorporated (PRI), Timber
License Agreement.25
V. MPSA No. 013
1. The area status shaded green falls within Timber Land, portion of Project No. 31-
E, Block-A, Project No. 59-C, Block-A, L.C. Map No. 2468 certified as such on June 30,
1961;
2. Colored brown denotes a portion claimed as CADC areas;
3. Violet shade represent a part of reforestation project of PRI concession; and
4. The yellow color is identical to unclassified Public Forest of said LGU and the area
inclosed in Red is the wilderness area of PICOP Resources, Inc. (PRI), Timber License
Agreement.26
Thirdly, PICOP failed to present any evidence that the area covered by the MPSA is a protected
wilderness area designated as an initial component of the NIPAS pursuant to a law, presidential
decree, presidential proclamation or executive order as required by RA 7586.
Sec. 5(a) of RA 7586 provides:
Sec. 5. Establishment and Extent of the System.—The establishment and operationalization of
the System shall involve the following:
(a) All areas or islands in the Philippines proclaimed, designated or set aside, pursuant to a
law, presidential decree, presidential proclamation or executive order as national park,
game refuge, bird and wildlife sanctuary, wilderness area, strict nature reserve, watershed,
mangrove reserve, fish sanctuary, natural and historical landmark, protected and managed
landscape/seascape as well as identified virgin forests before the effectivity of this Act are
hereby designated as initial components of the System. The initial components of the System
shall be governed by existing laws, rules and regulations, not inconsistent with this Act.
Although the above-cited area status and clearances, particularly those pertaining to MPSA Nos. 012
and 013, state that portions thereof are within the wilderness area of PICOP, there is no showing that
this supposed wilderness area has been proclaimed, designated or set aside as such, pursuant to a
law, presidential decree, presidential proclamation or executive order. It should be emphasized that it
is only when this area has been so designated that Sec. 20 of RA 7586, which prohibits mineral
locating within protected areas, becomes operational.
From the foregoing, there is clearly no merit to PICOP's contention that the area covered by Base
Metals' MPSA is, by law, closed to mining activities.
Finally, we do not subscribe to PICOP's argument that the Presidential Warranty dated September 25,
1968 is a contract protected by the non-impairment clause of the 1987 Constitution.
An examination of the Presidential Warranty at once reveals that it simply reassures PICOP of the
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 IFMA 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. Factoran27 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, October 27, 1983, 125 SCRA 302]."
Since timber licenses are not contracts, the non-impairment clause, which reads:
"Sec. 10. No law impairing the obligation of contracts shall be passed."
cannot be invoked.28 [emphasis supplied]
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.
In closing, we should lay emphasis on the fact that the reinstatement of Base Metals' MPSA does not
automatically result in its approval. Base Metals still has to comply with the requirements outlined in
DAO 96-40, including the publication/posting/radio announcement of its mineral agreement
application.
IN VIEW OF THE FOREGOING, the instant petition is DENIED. The Decision of the Court of Appeals
November 28, 2003 is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. Nos. 152613 & 152628 November 20, 2009
APEX MINING CO., INC., petitioner,
vs.
SOUTHEAST MINDANAO GOLD MINING CORP., the mines adjudication board, provincial mining
regulatory board (PMRB-DAVAO), MONKAYO INTEGRATED SMALL SCALE MINERS ASSOCIATION,
INC., ROSENDO VILLAFLOR, BALITE COMMUNAL PORTAL MINING COOPERATIVE, DAVAO UNITED
MINERS COOPERATIVE, ANTONIO DACUDAO, PUTING-BATO GOLD MINERS COOPERATIVE, ROMEO
ALTAMERA, THELMA CATAPANG, LUIS GALANG, RENATO BASMILLO, FRANCISCO YOBIDO, EDUARDO
GLORIA, EDWIN ASION, MACARIO HERNANDEZ, REYNALDO CARUBIO, ROBERTO BUNIALES, RUDY
ESPORTONO, ROMEO CASTILLO, JOSE REA, GIL GANADO, PRIMITIVA LICAYAN, LETICIA ALQUEZA and
JOEL BRILLANTES Management Mining Corporation, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 152619-20
BALITE COMMUNAL PORTAL MINING COOPERATIVE, petitioner,
vs.
SOUTHEAST MINDANAO GOLD MINING CORP., APEX MINING CO., INC., The Mines Adjudication
Board, Provincial Mining Regulatory Board (PMRB-DAVAO), MONKAYO INTEGRATED SMALL SCALE
MINERS ASSOCIATION, INC., ROSENDO VILLAFLOR, DAVAO UNITED MINERS COOPERATIVE,
ANTONIO DACUDAO, PUTING-BATO GOLD MINERS COOPERATIVE, ROMEO ALTAMERA, THELMA
CATAPANG, LUIS GALANG, RENATO BASMILLO, FRANCISCO YOBIDO, EDUARDO GLORIA, EDWIN
ASION, MACARIO HERNANDEZ, REYNALDO CARUBIO, ROBERTO BUNIALES, RUDY ESPORTONO,
ROMEO CASTILLO, JOSE REA, GIL GANADO, PRIMITIVA LICAYAN, LETICIA ALQUEZA and JOEL
BRILLANTES Management Mining Corporation, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 152870-71
THE MINES ADJUDICATION BOARD AND ITS MEMBERS, THE HON. VICTOR O. RAMOS (Chairman),
UNDERSECRETARY VIRGILIO MARCELO (Member) and DIRECTOR HORACIO RAMOS
(Member), petitioners,
vs.
SOUTHEAST MINDANAO GOLD MINING CORPORATION, Respondent.
RESOLUTION
CHICO-NAZARIO, J.:
This resolves the motion for reconsideration dated 12 July 2006, filed by Southeast Mindanao Gold
Mining Corporation (SEM), of this Court’s Decision dated 23 June 2006 (Assailed Decision). The
Assailed Decision held that the assignment of Exploration Permit (EP) 133 in favor of SEM violated one
of the conditions stipulated in the permit, i.e., that the same shall be for the exclusive use and benefit
of Marcopper Mining Corporation (MMC) or its duly authorized agents. Since SEM did not claim or
submit evidence that it was a designated agent of MMC, the latter cannot be considered as an agent
of the former that can use EP 133 and benefit from it. It also ruled that the transfer of EP 133 violated
Presidential Decree No. 463, which requires that the assignment of a mining right be made with the
prior approval of the Secretary of the Department of Environment and Natural Resources (DENR).
Moreover, the Assailed Decision pointed out that EP 133 expired by non-renewal since it was not
renewed before or after its expiration.
The Assailed Decision likewise upheld the validity of Proclamation No. 297 absent any question
against its validity. In view of this, and considering that under Section 5 of Republic Act No. 7942,
otherwise known as the "Mining Act of 1995," mining operations in mineral reservations may be
undertaken directly by the State or through a contractor, the Court deemed the issue of ownership of
priority right over the contested Diwalwal Gold Rush Area as having been overtaken by the said
proclamation. Thus, it was held in the Assailed Decision that it is now within the prerogative of the
Executive Department to undertake directly the mining operations of the disputed area or to award
the operations to private entities including petitioners Apex and Balite, subject to applicable laws,
rules and regulations, and provided that these private entities are qualified.
SEM also filed a Motion for Referral of Case to the Court En Banc and for Oral Arguments dated 22
August 2006.
Apex, for its part, filed a Motion for Clarification of the Assailed Decision, praying that the Court
elucidate on the Decision’s pronouncement that "mining operations, are now, therefore within the full
control of the State through the executive branch." Moreover, Apex asks this Court to order the Mines
and Geosciences Board (MGB) to accept its application for an exploration permit.
In its Manifestation and Motion dated 28 July 2006, Balite echoes the same concern as that of Apex
on the actual takeover by the State of the mining industry in the disputed area to the exclusion of the
private sector. In addition, Balite prays for this Court to direct MGB to accept its application for an
exploration permit.
Camilo Banad, et al., likewise filed a motion for reconsideration and prayed that the disputed area be
awarded to them.
In the Resolution dated 15 April 2008, the Court En Banc resolved to accept the instant cases. The
Court, in a resolution dated 29 April 2008, resolved to set the cases for Oral Argument on 1 July 2008.
During the Oral Argument, the Court identified the following principal issues to be discussed by the
parties:
1. Whether the transfer or assignment of Exploration Permit (EP) 133 by MMC to SEM was
validly made without violating any of the terms and conditions set forth in Presidential
Decree No. 463 and EP 133 itself.
2. Whether Southeast Mindanao Mining Corp. acquired a vested right over the disputed
area, which constitutes a property right protected by the Constitution.
3. Whether the assailed Decision dated 23 June 2006 of the Third Division in this case is
contrary to and overturns the earlier Decision of this Court in Apex v. Garcia (G.R. No. 92605,
16 July 1991, 199 SCRA 278).
4. Whether the issuance of Proclamation No. 297 declaring the disputed area as mineral
reservation outweighs the claims of SEM, Apex Mining Co. Inc. and Balite Communal Portal
Mining Cooperative over the Diwalwal Gold Rush Area.
5. Whether the issue of the legality/constitutionality of Proclamation No. 297 was belatedly
raised.
6. Assuming that the legality/constitutionality of Proclamation No. 297 was timely raised,
whether said proclamation violates any of the following:
a. Article XII, Section 4 of the Constitution;
 b. Section 1 of Republic Act No. 3092;
c. Section 14 of the Administrative Code of 1987;
d. Section 5(a) of Republic Act No. 7586;
e. Section 4(a) of Republic Act No. 6657; and
f. Section 2, Subsection 2.1.2 of Executive Order No. 318 dated 9 June 2004.
After hearing the arguments of the parties, the Court required them to submit their respective
memoranda. Memoranda were accordingly filed by SEM, Apex, Balite and Mines Adjudication Board
(MAB).
We shall resolve the second issue before dwelling on the first, third and the rest of the issues.
MMC or SEM Did Not Have Vested Rights Over the Diwalwal Gold Rush Area
Petitioner SEM vigorously argues that Apex Mining Co., Inc. v. Garcia 1 vested in MMC mining rights
over the disputed area. It claims that the mining rights that MMC acquired under the said case were
the ones assigned to SEM, and not the right to explore under MMC’s EP 133. It insists that mining
rights, once obtained, continue to subsist regardless of the validity of the exploration permit; thus,
mining rights are independent of the exploration permit and therefore do not expire with the permit.
SEM insists that a mining right is a vested property right that not even the government can take away.
To support this thesis, SEM cites this Court’s ruling in McDaniel v. Apacible and Cuisia 2 and in Gold
Creek Mining Corporation v. Rodriguez,3 which were decided in 1922 and 1938, respectively.
McDaniel and Gold Creek Mining Corporation are not in point.
In 1916, McDaniel, petitioner therein, located minerals, i.e., petroleum, on an unoccupied public land
and registered his mineral claims with the office of the mining recorder pursuant to the Philippine Bill
of 1902, where a mining claim locator, soon after locating the mine, enjoyed possessory rights with
respect to such mining claim with or without a patent therefor. In that case, the Agriculture Secretary,
by virtue of Act No. 2932, approved in 1920, which provides that "all public lands may be leased by
the then Secretary of Agriculture and Natural Resources," was about to grant the application for lease
of therein respondent, overlapping the mining claims of the subject petitioner. Petitioner argued that,
being a valid locator, he had vested right over the public land where his mining claims were located.
There, the Court ruled that the mining claim perfected under the Philippine Bill of 1902, is "property
in the highest sense of that term, which may be sold and conveyed, and will pass by descent, and is
not therefore subject to the disposal of the Government." The Court then declared that since
petitioner had already perfected his mining claim under the Philippine Bill of 1902, a subsequent
statute, i.e., Act No. 2932, could not operate to deprive him of his already perfected mining claim,
without violating his property right.
Gold Creek Mining reiterated the ruling in McDaniel that a perfected mining claim under the
Philippine Bill of 1902 no longer formed part of the public domain; hence, such mining claim does not
come within the prohibition against the alienation of natural resources under Section 1, Article XII of
the 1935 Constitution.
Gleaned from the ruling on the foregoing cases is that for this law to apply, it must be established that
the mining claim must have been perfected when the Philippine Bill of 1902 was still in force and
effect. This is so because, unlike the subsequent laws that prohibit the alienation of mining lands, the
Philippine Bill of 1902 sanctioned the alienation of mining lands to private individuals. The Philippine
Bill of 1902 contained provisions for, among many other things, the open and free exploration,
occupation and purchase of mineral deposits and the land where they may be found. It declared "all
valuable mineral deposits in public lands in the Philippine Islands, both surveyed and unsurveyed x x x
to be free and open to exploration, occupation, and purchase, and the land in which they are found to
occupation and purchase, by citizens of the United States, or of said Islands x x x." 4 Pursuant to this
law, the holder of the mineral claim is entitled to all the minerals that may lie within his claim,
provided he does three acts: First, he enters the mining land and locates a plot of ground measuring,
where possible, but not exceeding, one thousand feet in length by one thousand feet in breadth, in as
nearly a rectangular form as possible.5 Second, the mining locator has to record the mineral claim in
the mining recorder within thirty (30) days after the location thereof. 6 Lastly, he must comply with the
annual actual work requirement.7 Complete mining rights, namely, the rights to explore, develop and
utilize, are acquired by a mining locator by simply following the foregoing requirements.1avvphi1
With the effectivity of the 1935 Constitution, where the regalian doctrine was adopted, it was
declared that all natural resources of the Philippines, including mineral lands and minerals, were
property belonging to the State.8 Excluded, however, from the property of public domain were the
mineral lands and minerals that were located and perfected by virtue of the Philippine Bill of 1902,
since they were already considered private properties of the locators. 9
Commonwealth Act No. 137 or the Mining Act of 1936, which expressly adopted the regalian doctrine
following the provision of the 1935 Constitution, also proscribed the alienation of mining lands and
granted only lease rights to mining claimants, who were prohibited from purchasing the mining claim
itself.
When Presidential Decree No. 463, which revised Commonwealth Act No. 137, was in force in 1974, it
likewise recognized the regalian doctrine embodied in the 1973 Constitution. It declared that all
mineral deposits and public and private lands belonged to the state while, nonetheless, recognizing
mineral rights that had already been existing under the Philippine Bill of 1902 as being beyond the
purview of the regalian doctrine.10 The possessory rights of mining claim holders under the Philippine
Bill of 1902 remained intact and effective, and such rights were recognized as property rights that the
holders could convey or pass by descent.11
In the instant cases, SEM does not aver or prove that its mining rights had been perfected and
completed when the Philippine Bill of 1902 was still the operative law. Surely, it is impossible for SEM
to successfully assert that it acquired mining rights over the disputed area in accordance with the
same bill, since it was only in 1984 that MMC, SEM’s predecessor-in-interest, filed its declaration of
locations and its prospecting permit application in compliance with Presidential Decree No. 463. It
was on 1 July 1985 and 10 March 1986 that a Prospecting Permit and EP 133, respectively, were
issued to MMC. Considering these facts, there is no possibility that MMC or SEM could have acquired
a perfected mining claim under the auspices of the Philippine Bill of 1902. Whatever mining rights
MMC had that it invalidly transferred to SEM cannot, by any stretch of imagination, be considered
"mining rights" as contemplated under the Philippine Bill of 1902 and immortalized in McDaniel and
Gold Creek Mining.
SEM likens EP 133 with a building permit. SEM likewise equates its supposed rights attached to the
exploration permit with the rights that a private property land owner has to said landholding. This
analogy has no basis in law. As earlier discussed, under the 1935, 1973 and 1987 Constitutions,
national wealth, such as mineral resources, are owned by the State and not by their discoverer. The
discoverer or locator can only develop and utilize said minerals for his own benefit if he has complied
with all the requirements set forth by applicable laws and if the State has conferred on him such right
through permits, concessions or agreements. In other words, without the imprimatur of the State,
any mining aspirant does not have any definitive right over the mineral land because, unlike a private
landholding, mineral land is owned by the State, and the same cannot be alienated to any private
person as explicitly stated in Section 2, Article XIV of the 1987 Constitution:
All lands of public domain, waters, minerals x x x and all other natural resources are owned by the
State. With the exception of agricultural lands, all other natural resources shall not be alienated.
(Emphases supplied.)
Further, a closer scrutiny of the deed of assignment in favor of SEM reveals that MMC assigned to the
former the rights and interests it had in EP 133, thus:
1. That for ONE PESO (₱1.00) and other valuable consideration received by the ASSIGNOR from the
ASSIGNEE, the ASSIGNOR hereby ASSIGNS, TRANSFERS and CONVEYS unto the ASSIGNEE whatever
rights or interest the ASSIGNOR may have in the area situated in Monkayo, Davao del Norte and
Cateel, Davao Oriental, identified as Exploration Permit No. 133 and Application for a Permit to
Prospect in Bunawan, Agusan del Sur respectively. (Emphasis supplied.)
It is evident that what MMC had over the disputed area during the assignment was an exploration
permit. Clearly, the right that SEM acquired was limited to exploration, only because MMC was a
mere holder of an exploration permit. As previously explained, SEM did not acquire the rights
inherent in the permit, as the assignment by MMC to SEM was done in violation of the condition
stipulated in the permit, and the assignment was effected without the approval of the proper
authority in contravention of the provision of the mining law governing at that time. In addition, the
permit expired on 6 July 1994. It is, therefore, quite clear that SEM has no right over the area.
Even assuming arguendo that SEM obtained the rights attached in EP 133, said rights cannot be
considered as property rights protected under the fundamental law.
An exploration permit does not automatically ripen into a right to extract and utilize the minerals;
much less does it develop into a vested right. The holder of an exploration permit only has the right to
conduct exploration works on the area awarded. Presidential Decree No. 463 defined exploration as
"the examination and investigation of lands supposed to contain valuable minerals, by drilling,
trenching, shaft sinking, tunneling, test pitting and other means, for the purpose of probing the
presence of mineral deposits and the extent thereof." Exploration does not include development and
exploitation of the minerals found. Development is defined by the same statute as the steps
necessarily taken to reach an ore body or mineral deposit so that it can be mined, whereas
exploitation is defined as "the extraction and utilization of mineral deposits." An exploration permit is
nothing more than a mere right accorded to its holder to be given priority in the government’s
consideration in the granting of the right to develop and utilize the minerals over the area. An
exploration permit is merely inchoate, in that the holder still has to comply with the terms and
conditions embodied in the permit. This is manifest in the language of Presidential Decree No. 463,
thus:
Sec. 8. x x x The right to exploit therein shall be awarded by the President under such terms and
conditions as recommended by the Director and approved by the Secretary Provided, That the
persons or corporations who undertook prospecting and exploration of said area shall be given
priority.
In La Bugal-B’laan Tribal Association, Inc. v. Ramos, 12 this Court emphasized:
Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a qualified person the right
to conduct exploration for all minerals in specified areas. Such a permit does not amount to an
authorization to extract and carry off the mineral resources that may be discovered. x x x.
Pursuant to Section 24 of RA 7942, an exploration permit grantee who determines the commercial
viability of a mining area may, within the term of the permit, file with the MGB a declaration of mining
project feasibility accompanied by a work program for development. The approval of the mining
project feasibility and compliance with other requirements of RA 7942 vests in the grantee the
exclusive right to an MPSA or any other mineral agreement, or to an FTAA. (Underscoring ours.)
The non-acquisition by MMC or SEM of any vested right over the disputed area is supported by this
Court’s ruling in Southeast Mindanao Gold Mining Corporation v. Balite Portal Mining Cooperative 13 :
Clearly then, the Apex Mining case did not invest petitioner with any definite right to the Diwalwal
mines which it could now set up against respondent BCMC and other mining groups.
Incidentally, it must likewise be pointed out that under no circumstances may petitioner’s rights under
EP No. 133 be regarded as total and absolute. As correctly held by the Court of Appeals in its
challenged decision, EP No. 133 merely evidences a privilege granted by the State, which may be
amended, modified or rescinded when the national interest so requires. x x x. (Underscoring
supplied.)
Unfortunately, SEM cannot be given priority to develop and exploit the area covered by EP 133
because, as discussed in the assailed Decision, EP 133 expired by non-renewal on 6 July 1994. Also, as
already mentioned, the transfer of the said permit to SEM was without legal effect because it was
done in contravention of Presidential Decree No. 463 which requires prior approval from the proper
authority. Simply told, SEM holds nothing for it to be entitled to conduct mining activities in the
disputed mineral land.
SEM wants to impress on this Court that its alleged mining rights, by virtue of its being a transferee of
EP 133, is similar to a Financial and Technical Assistance Agreement (FTAA) of a foreign contractor,
which merits protection by the due process clause of the Constitution. SEM cites La Bugal-B’laan
Tribal Association, Inc. v. Ramos,14 as follows:
To say that an FTAA is just like a mere timber license or permit and does not involve contract or
property rights which merit protection by the due process clause of the Constitution, and may
therefore be revoked or cancelled in the blink of an eye, is to adopt a well-nigh confiscatory stance; at
the very least, it is downright dismissive of the property rights of businesspersons and corporate
entities that have investments in the mining industry, whose investments, operations and
expenditures do contribute to the general welfare of the people, the coffers of government, and the
strength of the economy. x x x.
Again, this argument is not meritorious. SEM did not acquire the rights attached to EP 133, since their
transfer was without legal effect. Granting for the sake of argument that SEM was a valid transferee of
the permit, its right is not that of a mining contractor. An exploration permit grantee is vested with the
right to conduct exploration only, while an FTAA or MPSA contractor is authorized to extract and carry
off the mineral resources that may be discovered in the area. 15 An exploration permit holder still has
to comply with the mining project feasibility and other requirements under the mining law. It has to
obtain approval of such accomplished requirements from the appropriate government agencies. Upon
obtaining this approval, the exploration permit holder has to file an application for an FTAA or an
MPSA and have it approved also. Until the MPSA application of SEM is approved, it cannot lawfully
claim that it possesses the rights of an MPSA or FTAA holder, thus:
x x x prior to the issuance of such FTAA or mineral agreement, the exploration permit grantee (or
prospective contractor) cannot yet be deemed to have entered into any contract or agreement with
the State x x x.16
But again, SEM is not qualified to apply for an FTAA or any mineral agreement, considering that it is
not a holder of a valid exploration permit, since EP 133 expired by non-renewal and the transfer to it
of the same permit has no legal value.
More importantly, assuming arguendo that SEM has a valid exploration permit, it cannot assert any
mining right over the disputed area, since the State has taken over the mining operations therein,
pursuant to Proclamation No. 297 issued by the President on 25 November 2002. The Court has
consistently ruled that the nature of a natural resource exploration permit is analogous to that of a
license. In Republic v. Rosemoor Mining and Development Corporation, this Court articulated:
Like timber permits, mining exploration permits do not vest in the grantee any permanent or
irrevocable right within the purview of the non-impairment of contract and due process clauses of the
Constitution, since the State, under its all-encompassing police power, may alter, modify or amend the
same, in accordance with the demands of the general welfare. 17 (Emphasis supplied.)
As a mere license or privilege, an exploration permit can be validly amended by the President of the
Republic when national interests suitably necessitate. The Court instructed thus:
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 the public welfare is
promoted. x x x They may be validly amended, modified, replaced or rescinded by the Chief Executive
when national interests so require.18
Recognizing the importance of the country’s natural resources, not only for national economic
development, but also for its security and national defense, Section 5 of Republic Act No. 7942
empowers the President, when the national interest so requires, to establish mineral reservations
where mining operations shall be undertaken directly by the State or through a contractor, viz:
SEC 5. Mineral Reservations. – When the national interest so requires, such as when there is a need to
preserve strategic raw materials for industries critical to national development, or certain minerals for
scientific, cultural or ecological value, the President may establish mineral reservations upon the
recommendation of the Director through the Secretary. Mining operations in existing mineral
reservations and such other reservations as may thereafter be established, shall be undertaken by the
Department or through a contractor x x x. (Emphasis supplied.)
Due to the pressing concerns in the Diwalwal Gold Rush Area brought about by unregulated small to
medium-scale mining operations causing ecological, health and peace and order problems, the
President, on 25 November 2002, issued Proclamation No. 297, which declared the area as a mineral
reservation and as an environmentally critical area. This executive fiat was aimed at preventing the
further dissipation of the natural environment and rationalizing the mining operations in the area in
order to attain an orderly balance between socio-economic growth and environmental protection.
The area being a mineral reservation, the Executive Department has full control over it pursuant to
Section 5 of Republic Act No. 7942. It can either directly undertake the exploration, development and
utilization of the minerals found therein, or it can enter into agreements with qualified entities. Since
the Executive Department now has control over the exploration, development and utilization of the
resources in the disputed area, SEM’s exploration permit, assuming that it is still valid, has been
effectively withdrawn. The exercise of such power through Proclamation No. 297 is in accord with jura
regalia, where the State exercises its sovereign power as owner of lands of the public domain and the
mineral deposits found within. Thus, Article XII, Section 2 of the 1987 Constitution emphasizes:
SEC. 2. All lands of the public domain, water, 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 product-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of whose capital is owned by such citizens.
(Emphasis supplied.)
Furthermore, said proclamation cannot be denounced as offensive to the fundamental law because
the State is sanctioned to do so in the exercise of its police power. 19 The issues on health and peace
and order, as well the decadence of the forest resources brought about by unregulated mining in the
area, are matters of national interest. The declaration of the Chief Executive making the area a
mineral reservation, therefore, is sanctioned by Section 5 of Republic Act No. 7942.
The Assignment of EP No. 133 by MMC in Favor of SEM Violated Section 97 of Presidential Decree No.
463 and the Terms and Conditions Set Forth in the Permit
SEM claims that the approval requirement under Section 97 of Presidential Decree No. 463 is not
applicable to this case, because MMC neither applied for nor was granted a mining lease contract. The
said provision states:
SEC. 97. Assignment of Mining Rights. – A mining lease contract or any interest therein shall not be
transferred, assigned, or subleased without the prior approval of the Secretary: Provided, that such
transfer, assignment or sublease may be made only to a qualified person possessing the resources and
capability to continue the mining operations of the lessee and that the assignor has complied with all
the obligations of the lease: Provided, further, That such transfer or assignment shall be duly
registered with the office of the mining recorder concerned. (Emphasis supplied.)
Exploration Permit 133 was issued in favor of MMC on 10 March 1986, when Presidential Decree No.
463 was still the governing law. Presidential Decree No. 463 pertains to the old system of exploration,
development and utilization of natural resources through "license, concession or lease." 20
Pursuant to this law, a mining lease contract confers on the lessee or his successors the right to
extract, to remove, process and utilize the mineral deposits found on or underneath the surface of his
mining claims covered by the lease. The lessee may also enter into a service contract for the
exploration, development and exploitation of the minerals from the lands covered by his lease, to wit:
SEC. 44. A mining lease contract shall grant to the lessee, his heirs, successors, and assigns the right to
extract all mineral deposits found on or underneath the surface of his mining claims covered by the
lease, continued vertically downward; to remove, process, and otherwise utilize the mineral deposits
for his own benefit; and to use the lands covered by the lease for the purpose or purposes specified
therein x x x That a lessee may on his own or through the Government, enter into a service contract…
for the exploration, development and exploitation of his claims and the processing and marketing of
the product thereof, subject to the rules and regulations that shall be promulgated by the Director,
with the approval of the Secretary x x x. (Emphases supplied.)
In other words, the lessee’s interests are not only limited to the extraction or utilization of the
minerals in the contract area, but also to include the right to explore and develop the same. This right
to explore the mining claim or the contract area is derived from the exploration permit duly issued by
the proper authority. An exploration permit is, thus, covered by the term "any other interest therein."
Section 97 is entitled, "Assignment of Mining Rights." This alone gives a hint that before mining rights
-- namely, the rights to explore, develop and utilize -- are transferred or assigned, prior approval must
be obtained from the DENR Secretary. An exploration permit, thus, cannot be assigned without the
imprimatur of the Secretary of the DENR.
It is instructive to note that under Section 13 of Presidential Decree No. 463, the prospecting and
exploration of minerals in government reservations, such as forest reservations, are prohibited, except
with the permission of the government agency concerned. It is the government agency concerned
that has the prerogative to conduct prospecting, exploration and exploitation of such reserved
lands.21 It is only in instances wherein said government agency, in this case the Bureau of Mines,
cannot undertake said mining operations that qualified persons may be allowed by the government to
undertake such operations. PNOC-EDC v. Veneracion, Jr.22 outlines the five requirements for acquiring
mining rights in reserved lands under Presidential Decree No. 463: (1) a prospecting permit from the
agency that has jurisdiction over the land; (2) an exploration permit from the Bureau of Mines and
Geo-Sciences (BMGS); (3) if the exploration reveals the presence of commercial deposit, application
to BMGS by the permit holder for the exclusion of the area from the reservation; (4) a grant by the
President of the application to exclude the area from the reservation; and (5) a mining agreement
(lease, license or concession) approved by the DENR Secretary.
Here, MMC met the first and second requirements and obtained an exploration permit over the
disputed forest reserved land. Although MMC still has to prove to the government that it is qualified
to develop and utilize the subject mineral land, as it has yet to go through the remaining process
before it can secure a lease agreement, nonetheless, it is bound to follow Section 97 of Presidential
Decree No. 463. The logic is not hard to discern. If a lease holder, who has already demonstrated to
the government his capacity and qualifications to further develop and utilize the minerals within the
contract area, is prohibited from transferring his mining rights (rights to explore, develop and utilize),
with more reason will this proscription apply with extra force to a mere exploration permit holder
who is yet to exhibit his qualifications in conducting mining operations. The rationale for the approval
requirement under Section 97 of Presidential Decree No. 463 is not hard to see. Exploration permits
are strictly granted to entities or individuals possessing the resources and capability to undertake
mining operations. Mining industry is a major support of the national economy and the continuous
and intensified exploration, development and wise utilization of mining resources is vital for national
development. For this reason, Presidential Decree No. 463 makes it imperative that in awarding
mining operations, only persons possessing the financial resources and technical skill for modern
exploratory and development techniques are encouraged to undertake the exploration, development
and utilization of the country’s natural resources. The preamble of Presidential Decree No. 463
provides thus:
WHEREAS, effective and continuous mining operations require considerable outlays of capital and
resources, and make it imperative that persons possessing the financial resources and technical skills
for modern exploratory and development techniques be encouraged to undertake the exploration,
development and exploitation of our mineral resources;
The Court has said that a "preamble" is the key to understanding the statute, written to open the
minds of the makers to the mischiefs that are to be remedied, and the purposes that are to be
accomplished, by the provisions of the statute.23 As such, when the statute itself is ambiguous and
difficult to interpret, the preamble may be resorted to as a key to understanding the statute.
Indubitably, without the scrutiny by the government agency as to the qualifications of the would-be
transferee of an exploration permit, the same may fall into the hands of non-qualified entities, which
would be counter-productive to the development of the mining industry. It cannot be overemphasized
that the exploration, development and utilization of the country’s natural resources are matters vital
to the public interest and the general welfare; hence, their regulation must be of utmost concern to
the government, since these natural resources are not only critical to the nation’s security, but they
also ensure the country’s survival as a viable and sovereign republic. 24
The approval requirement of the Secretary of the DENR for the assignment of exploration permits is
bolstered by Section 25 of Republic Act No. 7942 (otherwise known as the Philippine Mining Act of
1995), which provides that:
Sec. 25. Transfer or Assignment. – An exploration permit may be transferred or assigned to a qualified
person subject to the approval of the Secretary upon the recommendation of the Director.
SEM further posits that Section 97 of Presidential Decree No. 463, which requires the prior approval
of the DENR when there is a transfer of mining rights, cannot be applied to the assignment of EP 133
executed by MMC in favor of SEM because during the execution of the Deed of Assignment on 16
February 1994, Executive Order No. 27925became the governing statute, inasmuch as the latter
abrogated the old mining system -- i.e., license, concession or lease -- which was espoused by the
former.
This contention is not well taken. While Presidential Decree No. 463 has already been repealed by
Executive Order No. 279, the administrative aspect of the former law nonetheless remains applicable.
Hence, the transfer or assignment of exploration permits still needs the prior approval of the
Secretary of the DENR. As ruled in Miners Association of the Philippines, Inc. v. Factoran, Jr. 26 :
Presidential Decree No. 463, as amended, pertains to the old system of exploration, development and
utilization of natural resources through "license, concession or lease" which, however, has been
disallowed by Article XII, Section 2 of the 1987 Constitution. By virtue of the said constitutional
mandate and its implementing law, Executive Order No. 279, which superseded Executive Order No.
211, the provisions dealing on "license, concession, or lease" of mineral resources under Presidential
Decree No. 463, as amended, and other existing mining laws are deemed repealed and, therefore,
ceased to operate as the governing law. In other words, in all other areas of administration and
management of mineral lands, the provisions of Presidential Decree No. 463, as amended, and other
existing mining laws, still govern. (Emphasis supplied.)
Not only did the assignment of EP 133 to SEM violate Section 97 of Presidential Decree No. 463, it
likewise transgressed one of the conditions stipulated in the grant of the said permit. The following
terms and conditions attached to EP 133 are as follows: 27
1. That the permittee shall abide by the work program submitted with the application or
statements made later in support thereof, and which shall be considered as conditions and
essential parts of this permit;
2. That permittee shall maintain a complete record of all activities and accounting of all
expenditures incurred therein subject to periodic inspection and verification at reasonable
intervals by the Bureau of Mines at the expense of the applicant;
3. That the permittee shall submit to the Director of Mines within 15 days after the end of
each calendar quarter a report under oath of a full and complete statement of the work done
in the area covered by the permit;
4. That the term of this permit shall be for two (2) years to be effective from this date,
renewable for the same period at the discretion of the Director of Mines and upon request of
the applicant;
5. That the Director of Mines may at any time cancel this permit for violation of its provision
or in case of trouble or breach of peace arising in the area subject hereof by reason of
conflicting interests without any responsibility on the part of the government as to
expenditures for exploration that might have been incurred, or as to other damages that
might have been suffered by the permittee;
6. That this permit shall be for the exclusive use and benefit of the permittee or his duly
authorized agents and shall be used for mineral exploration purposes only and for no other
purpose.
It must be noted that under Section 9028 of Presidential Decree No. 463, which was the applicable
statute during the issuance of EP 133, the DENR Secretary, through the Director of the Bureau of
Mines and Geosciences, was charged with carrying out the said law. Also, under Commonwealth Act
No. 136, also known as "An Act Creating the Bureau of Mines," which was approved on 7 November
1936, the Director of Mines had the direct charge of the administration of the mineral lands and
minerals; and of the survey, classification, lease or any other form of concession or disposition thereof
under the Mining Act.29 This power of administration included the power to prescribe terms and
conditions in granting exploration permits to qualified entities.
Thus, in the grant of EP 133 in favor of the MMC, the Director of the BMG acted within his power in
laying down the terms and conditions attendant thereto. MMC and SEM did not dispute the
reasonableness of said conditions.
Quite conspicuous is the fact that neither MMC nor SEM denied that they were unaware of the terms
and conditions attached to EP 133. MMC and SEM did not present any evidence that they objected to
these conditions. Indubitably, MMC wholeheartedly accepted these terms and conditions, which
formed part of the grant of the permit. MMC agreed to abide by these conditions. It must be
accentuated that a party to a contract cannot deny its validity, without outrage to one’s sense of
justice and fairness, after enjoying its benefits. 30 Where parties have entered into a well-defined
contractual relationship, it is imperative that they should honor and adhere to their rights and
obligations as stated in their contracts, because obligations arising from these have the force of law
between the contracting parties and should be complied with in good faith. 31 Condition Number 6
categorically states that the permit shall be for the exclusive use and benefit of MMC or its duly
authorized agents. While it may be true that SEM, the assignee of EP 133, is a 100% subsidiary
corporation of MMC, records are bereft of any evidence showing that the former is the duly
authorized agent of the latter. This Court cannot condone such utter disregard on the part of MMC to
honor its obligations under the permit. Undoubtedly, having violated this condition, the assignment of
EP 133 to SEM is void and has no legal effect.
To boot, SEM squandered whatever rights it assumed it had under EP 133. On 6 July 1993, EP 133 was
extended for twelve more months or until 6 July 1994. MMC or SEM, however, never renewed EP 133
either prior to or after its expiration. Thus, EP 133 expired by non-renewal on 6 July 1994. With the
expiration of EP 133 on 6 July 1994, MMC lost any right to the Diwalwal Gold Rush Area.
The Assailed Decision Resolved Facts and Issues That Transpired after the Promulgation of Apex
Mining Co., Inc. v. Garcia
SEM asserts that the 23 June 2006 Decision reversed the 16 July 1991 Decision of the Court en banc
entitled, "Apex Mining Co., Inc. v. Garcia."32
The assailed Decision DID NOT overturn the 16 July 1991 Decision in Apex Mining Co., Inc. v. Garcia.
It must be pointed out that what Apex Mining Co., Inc. v. Garcia resolved was the issue of which,
between Apex and MMC, availed itself of the proper procedure in acquiring the right to prospect and
to explore in the Agusan-Davao-Surigao Forest Reserve. Apex registered its Declarations of Location
(DOL) with the then BMGS, while MMC was granted a permit to prospect by the Bureau of Forest
Development (BFD) and was subsequently granted an exploration permit by the BMGS. Taking into
consideration Presidential Decree No. 463, which provides that "mining rights within forest
reservation can be acquired by initially applying for a permit to prospect with the BFD and
subsequently for a permit to explore with the BMGS," the Court therein ruled that MMC availed itself
of the proper procedure to validly operate within the forest reserve or reservation.
While it is true that Apex Mining Co., Inc. v. Garcia settled the issue of which between Apex and MMC
was legally entitled to explore in the disputed area, such rights, though, were extinguished by
subsequent events that transpired after the decision was promulgated. These subsequent events,
which were not attendant in Apex Mining Co., Inc. v. Garcia 33 dated 16 July 1991, are the following:
(1) the expiration of EP 133 by non-renewal on 6 July 1994;
(2) the transfer/assignment of EP 133 to SEM on 16 February 1994 which was done in
violation to the condition of EP 133 proscribing its transfer;
(3) the transfer/assignment of EP 133 to SEM is without legal effect for violating PD 463
which mandates that the assignment of mining rights must be with the prior approval of the
Secretary of the DENR.
Moreover, in Southeast Mindanao Gold Mining Corporation v. Balite Portal Mining Cooperative, 34 the
Court, through Associate Justice Consuelo Ynares-Santiago (now retired), declared that Apex Mining
Co., Inc. v. Garcia did not deal with the issues of the expiration of EP 133 and the validity of the
transfer of EP 133 to SEM, viz:
Neither can the Apex Mining case foreclose any question pertaining to the continuing validity of EP
No. 133 on grounds which arose after the judgment in said case was promulgated. While it is true that
the Apex Mining case settled the issue of who between Apex and Marcopper validly acquired mining
rights over the disputed area by availing of the proper procedural requisites mandated by law, it
certainly did not deal with the question raised by the oppositors in the Consolidated Mines cases, i.e.,
whether EP No. 133 had already expired and remained valid subsequent to its transfer by Marcopper
to petitioner. (Emphasis supplied.)
What is more revealing is that in the Resolution dated 26 November 1992, resolving the motion for
reconsideration of Apex Mining Co., Inc. v. Garcia, the Court clarified that the ruling on the said
decision was binding only between Apex and MMC and with respect the particular issue raised
therein. Facts and issues not attendant to the said decision, as in these cases, are not settled by the
same. A portion of the disposition of the Apex Mining Co., Inc. v. Garcia Resolution dated 26
November 1992 decrees:
x x x The decision rendered in this case is conclusive only between the parties with respect to the
particular issue herein raised and under the set of circumstances herein prevailing. In no case should
the decision be considered as a precedent to resolve or settle claims of persons/entities not parties
hereto. Neither is it intended to unsettle rights of persons/entities which have been acquired or which
may have accrued upon reliance on laws passed by the appropriate agencies. (Emphasis supplied.)
The Issue of the Constitutionality of Proclamation Is Raised Belatedly
In its last-ditch effort to salvage its case, SEM contends that Proclamation No. 297, issued by President
Gloria Macapagal-Arroyo and declaring the Diwalwal Gold Rush Area as a mineral reservation, is
invalid on the ground that it lacks the concurrence of Congress as mandated by Section 4, Article XII of
the Constitution; Section 1 of Republic Act No. 3092; Section 14 of Executive Order No. 292, otherwise
known as the Administrative Code of 1987; Section 5(a) of Republic Act No. 7586, and Section 4(a) of
Republic Act No. 6657.
It is well-settled that when questions of constitutionality are raised, the court can exercise its power
of judicial review only if the following requisites are present: (1) an actual and appropriate case exists;
(2) there is a personal and substantial interest of the party raising the constitutional question; (3) the
exercise of judicial review is pleaded at the earliest opportunity; and (4) the constitutional question is
the lis mota of the case.
Taking into consideration the foregoing requisites of judicial review, it is readily clear that the third
requisite is absent. The general rule is that the question of constitutionality must be raised at the
earliest opportunity, so that if it is not raised in the pleadings, ordinarily it may not be raised at the
trial; and if not raised in the trial court, it will not be considered on appeal. 35
In the instant case, it must be pointed out that in the Reply to Respondent SEM’s Consolidated
Comment filed on 20 May 2003, MAB mentioned Proclamation No. 297, which was issued on 25
November 2002. This proclamation, according to the MAB, has rendered SEM’s claim over the
contested area moot, as the President has already declared the same as a mineral reservation and as
an environmentally critical area. SEM did not put to issue the validity of said proclamation in any of its
pleadings despite numerous opportunities to question the same. It was only after the assailed
Decision was promulgated -- i.e., in SEM’s Motion for Reconsideration of the questioned Decision filed
on 13 July 2006 and its Motion for Referral of the Case to the Court En Banc and for Oral Arguments
filed on 22 August 2006 -- that it assailed the validity of said proclamation.
Certainly, posing the question on the constitutionality of Proclamation No. 297 for the first time in its
Motion for Reconsideration is, indeed, too late. 36
In fact, this Court, when it rendered the Decision it merely recognized that the questioned
proclamation came from a co-equal branch of government, which entitled it to a strong presumption
of constitutionality.37 The presumption of its constitutionality stands inasmuch as the parties in the
instant cases did not question its validity, much less present any evidence to prove that the same is
unconstitutional. This is in line with the precept that administrative issuances have the force and
effect of law and that they benefit from the same presumption of validity and constitutionality
enjoyed by statutes.38
Proclamation No. 297 Is in Harmony with Article XII, Section 4, of the Constitution
At any rate, even if this Court were to consider the arguments belatedly raised by SEM, said
arguments are not meritorious.
SEM asserts that Article XII, Section 4 of the Constitution, bars the President from excluding forest
reserves/reservations and proclaiming the same as mineral reservations, since the power to de-
classify them resides in Congress.
Section 4, Article XII of the Constitution reads:
The Congress shall as soon as possible, determine by law the specific limits of forest lands and
national parks, marking clearly their boundaries on the ground. Thereafter, such forest lands and
national parks shall be conserved and may not be increased nor diminished, except by law. The
Congress shall provide, for such periods as it may determine, measures to prohibit logging in
endangered forests and in watershed areas.
The above-quoted provision says that the area covered by forest lands and national parks may not be
expanded or reduced, unless pursuant to a law enacted by Congress. Clear in the language of the
constitutional provision is its prospective tenor, since it speaks in this manner: "Congress shall as soon
as possible." It is only after the specific limits of the forest lands shall have been determined by the
legislature will this constitutional restriction apply. SEM does not allege nor present any evidence that
Congress had already enacted a statute determining with specific limits forest lands and national
parks. Considering the absence of such law, Proclamation No. 297 could not have violated Section 4,
Article XII of the 1987 Constitution. In PICOP Resources, Inc. v. Base Metals Mineral Resources
Corporation,39 the Court had the occasion to similarly rule in this fashion:
x x x Sec. 4, Art. XII of the 1987 Constitution, on the other hand, provides that Congress shall
determine the specific limits of forest lands and national parks, marking clearly their boundaries on
the ground. Once this is done, the area thus covered by said forest lands and national parks may not
be expanded or reduced except also by congressional legislation. Since Congress has yet to enact a
law determining the specific limits of the forest lands covered by Proclamation No. 369 and marking
clearly its boundaries on the ground, there can be no occasion that could give rise to a violation of the
constitutional provision.
Section 4, Article XII of the Constitution, addresses the concern of the drafters of the 1987
Constitution about forests and the preservation of national parks. This was brought about by the
drafters’ awareness and fear of the continuing destruction of this country’s forests. 40 In view of this
concern, Congress is tasked to fix by law the specific limits of forest lands and national parks, after
which the trees in these areas are to be taken care of. 41 Hence, these forest lands and national parks
that Congress is to delimit through a law could be changed only by Congress.
In addition, there is nothing in the constitutional provision that prohibits the President from declaring
a forest land as an environmentally critical area and from regulating the mining operations therein by
declaring it as a mineral reservation in order to prevent the further degradation of the forest
environment and to resolve the health and peace and order problems that beset the area.
A closer examination of Section 4, Article XII of the Constitution and Proclamation No. 297 reveals
that there is nothing contradictory between the two. Proclamation No. 297, a measure to attain and
maintain a rational and orderly balance between socio-economic growth and environmental
protection, jibes with the constitutional policy of preserving and protecting the forest lands from
being further devastated by denudation. In other words, the proclamation in question is in line with
Section 4, Article XII of the Constitution, as the former fosters the preservation of the forest
environment of the Diwalwal area and is aimed at preventing the further degradation of the same.
These objectives are the very same reasons why the subject constitutional provision is in place.
What is more, jurisprudence has recognized the policy of multiple land use in our laws towards the
end that the country’s precious natural resources may be rationally explored, developed, utilized and
conserved.42 It has been held that forest reserves or reservations can at the same time be open to
mining operations, provided a prior written clearance by the government agency having jurisdiction
over such reservation is obtained. In other words mineral lands can exist within forest reservations.
These two terms are not anti-thetical. This is made manifest if we read Section 47 of Presidential
Decree No. 705 or the Revised Forestry Code of the Philippines, which provides:
Mining operations in forest lands shall be regulated and conducted with due regard to protection,
development and utilization of other surface resources. Location, prospecting, exploration, utilization
or exploitation of mineral resources in forest reservations shall be governed by mining laws, rules and
regulations. (Emphasis supplied.)
Also, Section 6 of Republic Act No. 7942 or the Mining Act of 1995, states that mining operations in
reserved lands other than mineral reservations, such as forest reserves/reservations, are allowed, viz:
Mining operations in reserved lands other than mineral reservations may be undertaken by the
Department, subject to limitations as herein provided. In the event that the Department cannot
undertake such activities, they may be undertaken by a qualified person in accordance with the rules
and regulations promulgated by the Secretary. (Emphasis supplied.)
Since forest reservations can be made mineral lands where mining operations are conducted, then
there is no argument that the disputed land, which lies within a forest reservation, can be declared as
a mineral reservation as well.
Republic Act No. 7942 Otherwise Known as the "Philippine Mining Act of 1995," is the Applicable Law
Determined to rivet its crumbling cause, SEM then argues that Proclamation No. 297 is invalid, as it
transgressed the statutes governing the exclusion of areas already declared as forest reserves, such as
Section 1 of Republic Act No. 3092,43 Section 14 of the Administrative Code of 1987, Section 5(a) of
Republic Act No. 7586,44 and Section 4(a) of Republic Act No. 6657. 45
Citing Section 1 of Republic Act No. 3092, which provides as follows:
Upon the recommendation of the Director of Forestry, with the approval of the Department Head, the
President of the Philippines shall set apart forest reserves which shall include denuded forest lands
from the public lands and he shall by proclamation declare the establishment of such forest reserves
and the boundaries thereof, and thereafter such forest reserves shall not be entered, or otherwise
disposed of, but shall remain indefinitely as such for forest uses.
The President of the Philippines may, in like manner upon the recommendation of the Director of
Forestry, with the approval of the Department head, by proclamation, modify the boundaries of any
such forest reserve to conform with subsequent precise survey but not to exclude any portion thereof
except with the concurrence of Congress.(Underscoring supplied.)
SEM submits that the foregoing provision is the governing statute on the exclusion of areas already
declared as forest reserves. Thus, areas already set aside by law as forest reserves are no longer
within the proclamation powers of the President to modify or set aside for any other purposes such as
mineral reservation.
To bolster its contention that the President cannot disestablish forest reserves into mineral
reservations, SEM makes reference to Section 14, Chapter 4, Title I, Book III of the Administrative
Code of 1987, which partly recites:
The President shall have the power to reserve for settlement or public use, and for specific public
purposes, any of the lands of the public domain, the use of which is not otherwise directed by law.
The reserved land shall thereafter remain subject to the specific public purpose indicated until
otherwise provided by law or proclamation. (Emphases supplied.)
SEM further contends that Section 7 of Republic Act No. 7586, 46 which declares that the
disestablishment of a protected area shall be done by Congress, and Section 4(a) of Republic Act No.
6657,47 which in turn requires a law passed by Congress before any forest reserve can be reclassified,
militate against the validity of Proclamation No. 297.
Proclamation No. 297, declaring a certain portion of land located in Monkayo, Compostela Valley, with
an area of 8,100 hectares, more or less, as a mineral reservation, was issued by the President
pursuant to Section 5 of Republic Act No. 7942, also known as the "Philippine Mining Act of 1995."
Proclamation No. 297 did not modify the boundaries of the Agusan-Davao-Surigao Forest Reserve
since, as earlier discussed, mineral reservations can exist within forest reserves because of the
multiple land use policy. The metes and bounds of a forest reservation remain intact even if, within
the said area, a mineral land is located and thereafter declared as a mineral reservation.
More to the point, a perusal of Republic Act No. 3092, "An Act to Amend Certain Sections of the
Revised Administrative Code of 1917," which was approved on 17 August 1961, and the
Administrative Code of 1987, shows that only those public lands declared by the President as reserved
pursuant to these two statutes are to remain subject to the specific purpose. The tenor of the cited
provisions, namely: "the President of the Philippines shall set apart forest reserves" and "the reserved
land shall thereafter remain," speaks of future public reservations to be declared, pursuant to these
two statutes. These provisions do not apply to forest reservations earlier declared as such, as in this
case, which was proclaimed way back on 27 February 1931, by Governor General Dwight F. Davis
under Proclamation No. 369.
Over and above that, Section 5 of Republic Act No. 7942 authorizes the President to establish mineral
reservations, to wit:
Sec. 5. Mineral Reservations. - When the national interest so requires, such as when there is a need to
preserve strategic raw materials for industries critical to national development, or certain minerals for
scientific, cultural or ecological value, the President may establish mineral reservations upon the
recommendation of the Director through the Secretary. Mining operations in existing mineral
reservations and such other reservations as may thereafter be established, shall be undertaken by the
Department or through a contractor x x x. (Emphasis supplied.)
It is a rudimentary principle in legal hermeneutics that where there are two acts or provisions, one of
which is special and particular and certainly involves the matter in question, the other general, which,
if standing alone, would include the matter and thus conflict with the special act or provision, the
special act must as intended be taken as constituting an exception to the general act or provision,
especially when such general and special acts or provisions are contemporaneous, as the Legislature is
not to be presumed to have intended a conflict.
Hence, it has become an established rule of statutory construction that where one statute deals with
a subject in general terms, and another deals with a part of the same subject in a more detailed way,
the two should be harmonized if possible; but if there is any conflict, the latter shall prevail regardless
of whether it was passed prior to the general statute. Or where two statutes are of contrary tenor or
of different dates but are of equal theoretical application to a particular case, the one specially
designed therefor should prevail over the other.
It must be observed that Republic Act No. 3092, "An Act to Amend Certain Sections of the Revised
Administrative Code of 1917," and the Administrative Code of 1987, are general laws. Section 1 of
Republic Act No. 3092 and Section 14 of the Administrative Code of 1987 require the concurrence of
Congress before any portion of a forest reserve can be validly excluded therefrom. These provisions
are broad since they deal with all kinds of exclusion or reclassification relative to forest reserves, i.e.,
forest reserve areas can be transformed into all kinds of public purposes, not only the establishment
of a mineral reservation. Section 5 of Republic Act No. 7942 is a special provision, as it specifically
treats of the establishment of mineral reservations only. Said provision grants the President the power
to proclaim a mineral land as a mineral reservation, regardless of whether such land is also an existing
forest reservation.
Sec. 5(a) of Republic Act No. 7586 provides:
Sec. 5. Establishment and Extent of the System. — The establishment and operationalization of the
System shall involve the following:
(a) All areas or islands in the Philippines proclaimed, designated or set aside, pursuant to a law,
presidential decree, presidential proclamation or executive order as national park, game refuge, bird
and wildlife sanctuary, wilderness area, strict nature reserve, watershed, mangrove reserve, fish
sanctuary, natural and historical landmark, protected and managed landscape/seascape as well as
identified virgin forests before the effectivity of this Act are hereby designated as initial components
of the System. The initial components of the System shall be governed by existing laws, rules and
regulations, not inconsistent with this Act.
Glaring in the foregoing enumeration of areas comprising the initial component of the NIPAS System
under Republic Act No. 7586 is the absence of forest reserves. Only protected areas enumerated
under said provision cannot be modified. Since the subject matter of Proclamation No. 297 is a forest
reservation proclaimed as a mineral reserve, Republic Act No. 7586 cannot possibly be made
applicable. Neither can Proclamation No. 297 possibly violate said law.
Similarly, Section 4(a) of Republic Act No. 6657 cannot be made applicable to the instant case.
Section 4(a) of Republic Act No. 6657 reads:
All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No
reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval
of this Act until Congress, taking into account ecological, developmental and equity considerations,
shall have determined by law, the specific limits of the public domain. (Underscoring supplied.)
Section 4(a) of Republic Act No. 6657 prohibits the reclassification of forest or mineral lands into
agricultural lands until Congress shall have determined by law the specific limits of the public domain.
A cursory reading of this provision will readily show that the same is not relevant to the instant
controversy, as there has been no reclassification of a forest or mineral land into an agricultural land.
Furthermore, the settled rule of statutory construction is that if two or more laws of different dates
and of contrary tenors are of equal theoretical application to a particular case, the statute of later
date must prevail being a later expression of legislative will. 48
In the case at bar, there is no question that Republic Act No. 7942 was signed into law later than
Republic Act No. 3092, the Administrative Code of 1987, 49 Republic Act No. 7586 and Republic Act No.
6657. Applying the cited principle, the provisions of Republic Act No. 3092, the Administrative Code of
1987, Republic Act No. 7586 and Republic Act No. 6657 cited by SEM must yield to Section 5 of
Republic Act No. 7942.
Camilo Banad, et al., Cannot Seek Relief from This Court
Camilo Banad and his group admit that they are members of the Balite Cooperative. They, however,
claim that they are distinct from Balite and move that this Court recognize them as prior mining
locators.
Unfortunately for them, this Court cannot grant any relief they seek. Records reveal that although
they were parties to the instant cases before the Court of Appeals, they did not file a petition for
review before this Court to contest the decision of the appellate court. The only petitioners in the
instant cases are the MAB, SEM, Balite and Apex. Consequently, having no personality in the instant
cases, they cannot seek any relief from this Court.
Apex’s Motion for Clarification and Balite’s Manifestation and Motion
In its Motion for Clarification, Apex desires that the Court elucidate the assailed Decision’s
pronouncement that "mining operations, are now, therefore within the full control of the State
through the executive branch" and place the said pronouncement in the proper perspective as the
declaration in La Bugal-B’Laan, which states that –
The concept of control adopted in Section 2 of Article XII must be taken to mean less than dictatorial,
all-encompassing control; but nevertheless sufficient to give the State the power to direct, restrain,
regulate and govern the affairs of the extractive enterprise.50
Apex states that the subject portion of the assailed Decision could send a chilling effect to potential
investors in the mining industry, who may be of the impression that the State has taken over the
mining industry, not as regulator but as an operator. It is of the opinion that the State cannot directly
undertake mining operations.
Moreover, Apex is apprehensive of the following portion in the questioned Decision– "The State can
also opt to award mining operations in the mineral reservation to private entities including petitioner
Apex and Balite, if it wishes." It avers that the phrase "if it wishes" may whimsically be interpreted to
mean a blanket authority of the administrative authority to reject the former’s application for an
exploration permit even though it complies with the prescribed policies, rules and regulations.1 a vv p
hi1
Apex likewise asks this Court to order the MGB to accept its application for an exploration permit.
Balite echoes the same concern as that of Apex on the actual take-over by the State of the mining
industry in the disputed area to the exclusion of the private sector. In addition, Balite prays that this
Court direct MGB to accept Balite’s application for an exploration permit.
Contrary to the contention of Apex and Balite, the fourth paragraph of Section 2, Article XII of the
Constitution and Section 5 of Republic Act No. 7942 sanctions the State, through the executive
department, to undertake mining operations directly, as an operator and not as a mere regulator of
mineral undertakings. This is made clearer by the fourth paragraph of Section 2, Article XII of the 1987
Constitution, which provides in part:
SEC. 2. x x x 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. x x x. (Emphasis supplied.)
Also, Section 5 of Republic Act No. 7942 states that the mining operations in mineral reservations shall
be undertaken by the Department of Environment and Natural Resources or a contractor, to wit:
SEC. 5. Mineral Reservations. – When the national interest so requires, such as when there is a need
to preserve strategic raw materials for industries critical to national development, or certain minerals
for scientific, cultural or ecological value, the President may establish mineral reservations upon the
recommendation of the Director through the Secretary. Mining operations in existing mineral
reservations and such other reservations as may thereafter be established, shall be undertaken by the
Department or through a contractor x x x. (Emphasis supplied.)
Undoubtedly, the Constitution, as well as Republic Act No. 7942, allows the executive department to
undertake mining operations. Besides, La Bugal-B’Laan, cited by Apex, did not refer to the fourth
sentence of Section 2, Article XII of the Constitution, but to the third sentence of the said provision,
which states:
SEC. 2. x x x The exploration, development, and utilization of natural resources shall be under the full
control and supervision of the State. x x x.
Pursuant to Section 5 of Republic Act No. 7942, the executive department has the option to undertake
directly the mining operations in the Diwalwal Gold Rush Area or to award mining operations therein
to private entities. The phrase "if it wishes" must be understood within the context of this provision.
Hence, the Court cannot dictate this co-equal branch to choose which of the two options to select. It
is the sole prerogative of the executive department to undertake directly or to award the mining
operations of the contested area.
Even assuming that the proper authority may decide to award the mining operations of the disputed
area, this Court cannot arrogate unto itself the task of determining who, among the applicants, is
qualified. It is the duty of the appropriate administrative body to determine the qualifications of the
applicants. It is only when this administrative body whimsically denies the applications of qualified
applicants that the Court may interfere. But until then, the Court has no power to direct said
administrative body to accept the application of any qualified applicant.
In view of this, the Court cannot grant the prayer of Apex and Balite asking the Court to direct the
MGB to accept their applications pending before the MGB.
SEM’s Manifestation and Motion dated 25 January 2007
SEM wants to emphasize that its predecessor-in-interest, Marcopper or MMC, complied with the
mandatory exploration work program, required under EP 133, by attaching therewith quarterly
reports on exploration work from 20 June 1986 to March 1994.
It must be observed that this is the very first time at this very late stage that SEM has presented the
quarterly exploration reports. From the early phase of this controversy, SEM did not disprove the
arguments of the other parties that Marcopper violated the terms under EP 133, among other
violations, by not complying with the mandatory exploration work program. Neither did it present
evidence for the appreciation of the lower tribunals. Hence, the non-compliance with the mandatory
exploration work program was not made an issue in any stage of the proceedings. The rule is that an
issue that was not raised in the lower court or tribunal cannot be raised for the first time on appeal, as
this would violate the basic rules of fair play, justice and due process. 51 Thus, this Court cannot take
cognizance of the issue of whether or not MMC complied with the mandatory work program.
In sum, this Court finds:
1. The assailed Decision did not overturn the 16 July 1991 Decision in Apex Mining Co., Inc. v.
Garcia. The former was decided on facts and issues that were not attendant in the latter,
such as the expiration of EP 133, the violation of the condition embodied in EP 133
prohibiting its assignment, and the unauthorized and invalid assignment of EP 133 by MMC
to SEM, since this assignment was effected without the approval of the Secretary of DENR;
2. SEM did not acquire vested right over the disputed area because its supposed right was
extinguished by the expiration of its exploration permit and by its violation of the condition
prohibiting the assignment of EP 133 by MMC to SEM. In addition, even assuming that SEM
has a valid exploration permit, such is a mere license that can be withdrawn by the State. In
fact, the same has been withdrawn by the issuance of Proclamation No. 297, which places
the disputed area under the full control of the State through the Executive Department;
3. The approval requirement under Section 97 of Presidential Decree No. 463 applies to the
assignment of EP 133 by MMC to SEM, since the exploration permit is an interest in a mining
lease contract;
4. The issue of the constitutionality and the legality of Proclamation No. 297 was raised
belatedly, as SEM questions the same for the first time in its Motion for Reconsideration.
Even if the issue were to be entertained, the said proclamation is found to be in harmony
with the Constitution and other existing statutes;
5. The motion for reconsideration of Camilo Banad, et al. cannot be passed upon because
they are not parties to the instant cases;
6. The prayers of Apex and Balite asking the Court to direct the MGB to accept their
applications for exploration permits cannot be granted, since it is the Executive Department
that has the prerogative to accept such applications, if ever it decides to award the mining
operations in the disputed area to a private entity;
7. The Court cannot pass upon the issue of whether or not MMC complied with the
mandatory exploration work program, as such was a non-issue and was not raised before the
Court of Appeals and the lower tribunals.
WHEREFORE, premises considered, the Court holds:
1. The Motions for Reconsideration filed by Camilo Banad, et al. and Southeast Mindanao
Gold Mining Corporation are DENIED for lack of merit;
2. The Motion for Clarification of Apex Mining Co., Inc. and the Manifestation and Motion of
the Balite Communal Portal Mining Cooperative, insofar as these motions/manifestation ask
the Court to direct the Mines and Geo-Sciences Bureau to accept their respective
applications for exploration permits, are DENIED;
3. The Manifestation and Urgent Motion dated 25 January 2007 of Southeast Mindanao Gold
Mining Corporation is DENIED.
4. The State, through the Executive Department, should it so desire, may now award mining
operations in the disputed area to any qualified entities it may determine. The Mines and
Geosciences Bureau may process exploration permits pending before it, taking into
consideration the applicable mining laws, rules and regulations relative thereto.
SO ORDERED.
G.R. No. 127882 December 1, 2004
LA BUGAL-B'LAAN TRIBAL ASSOCIATION, INC., Represented by its Chairman F'LONG MIGUEL M.
LUMAYONG; WIGBERTO E. TAÑADA; PONCIANO BENNAGEN; JAIME TADEO; RENATO R.
CONSTANTINO JR.; F'LONG AGUSTIN M. DABIE; ROBERTO P. AMLOY; RAQIM L. DABIE; SIMEON H.
DOLOJO; IMELDA M. GANDON; LENY B. GUSANAN; MARCELO L. GUSANAN; QUINTOL A. LABUAYAN;
LOMINGGES D. LAWAY; BENITA P. TACUAYAN; Minors JOLY L. BUGOY, Represented by His Father
UNDERO D. BUGOY and ROGER M. DADING; Represented by His Father ANTONIO L. DADING; ROMY
M. LAGARO, Represented by His Father TOTING A. LAGARO; MIKENY JONG B. LUMAYONG,
Represented by His Father MIGUEL M. LUMAYONG; RENE T. MIGUEL, Represented by His Mother
EDITHA T. MIGUEL; ALDEMAR L. SAL, Represented by His Father DANNY M. SAL; DAISY RECARSE,
Represented by Her Mother LYDIA S. SANTOS; EDWARD M. EMUY; ALAN P. MAMPARAIR; MARIO L.
MANGCAL; ALDEN S. TUSAN; AMPARO S. YAP; VIRGILIO CULAR; MARVIC M.V.F. LEONEN; JULIA
REGINA CULAR, GIAN CARLO CULAR, VIRGILIO CULAR JR., Represented by Their Father VIRGILIO
CULAR; PAUL ANTONIO P. VILLAMOR, Represented by His Parents JOSE VILLAMOR and ELIZABETH
PUA-VILLAMOR; ANA GININA R. TALJA, Represented by Her Father MARIO JOSE B. TALJA;
SHARMAINE R. CUNANAN, Represented by Her Father ALFREDO M. CUNANAN; ANTONIO JOSE A.
VITUG III, Represented by His Mother ANNALIZA A. VITUG, LEAN D. NARVADEZ, Represented by His
Father MANUEL E. NARVADEZ JR.; ROSERIO MARALAG LINGATING, Represented by Her Father RIO
OLIMPIO A. LINGATING; MARIO JOSE B. TALJA; DAVID E. DE VERA; MARIA MILAGROS L. SAN JOSE;
Sr. SUSAN O. BOLANIO, OND; LOLITA G. DEMONTEVERDE; BENJIE L. NEQUINTO; 1 ROSE LILIA S.
ROMANO; ROBERTO S. VERZOLA; EDUARDO AURELIO C. REYES; LEAN LOUEL A. PERIA, Represented
by His Father ELPIDIO V. PERIA;2 GREEN FORUM PHILIPPINES; GREEN FORUM WESTERN VISAYAS
(GF-WV); ENVIRONMENTAL LEGAL ASSISTANCE CENTER (ELAC); KAISAHAN TUNGO SA KAUNLARAN
NG KANAYUNAN AT REPORMANG PANSAKAHAN (KAISAHAN); 3 PARTNERSHIP FOR AGRARIAN
REFORM and RURAL DEVELOPMENT SERVICES, INC. (PARRDS); PHILIPPINE PARTNERSHIP FOR THE
DEVELOPMENT OF HUMAN RESOURCES IN THE RURAL AREAS, INC. (PHILDHRRA); WOMEN'S LEGAL
BUREAU (WLB); CENTER FOR ALTERNATIVE DEVELOPMENT INITIATIVES, INC. (CADI); UPLAND
DEVELOPMENT INSTITUTE (UDI); KINAIYAHAN FOUNDATION, INC.; SENTRO NG ALTERNATIBONG
LINGAP PANLIGAL (SALIGAN); and LEGAL RIGHTS AND NATURAL RESOURCES CENTER, INC.
(LRC), petitioners,
vs.
VICTOR O. RAMOS, Secretary, Department of Environment and Natural Resources (DENR); HORACIO
RAMOS, Director, Mines and Geosciences Bureau (MGB-DENR); RUBEN TORRES, Executive
Secretary; and WMC (PHILIPPINES), INC.,4 respondents.
RESOLUTION
PANGANIBAN, J.:
All mineral resources are owned by the State. Their exploration, development and utilization (EDU)
must always be subject to the full control and supervision of the State. More specifically, given the
inadequacy of Filipino capital and technology in large-scale EDU activities, the State may secure the
help of foreign companies in all relevant matters -- especially financial and technical assistance --
provided that, at all times, the State maintains its right of full control. The foreign assistor or
contractor assumes all financial, technical and entrepreneurial risks in the EDU activities; hence, it
may be given reasonable management, operational, marketing, audit and other prerogatives to
protect its investments and to enable the business to succeed.
Full control is not anathematic to day-to-day management by the contractor, provided that the State
retains the power to direct overall strategy; and to set aside, reverse or modify plans and actions of
the contractor. The idea of full control is similar to that which is exercised by the board of directors of
a private corporation: the performance of managerial, operational, financial, marketing and other
functions may be delegated to subordinate officers or given to contractual entities, but the board
retains full residual control of the business.
Who or what organ of government actually exercises this power of control on behalf of the State? The
Constitution is crystal clear: the President. Indeed, the Chief Executive is the official constitutionally
mandated to "enter into agreements with foreign owned corporations." On the other hand, Congress
may review the action of the President once it is notified of "every contract entered into in
accordance with this [constitutional] provision within thirty days from its execution." In contrast to
this express mandate of the President and Congress in the EDU of natural resources, Article XII of the
Constitution is silent on the role of the judiciary. However, should the President and/or Congress
gravely abuse their discretion in this regard, the courts may -- in a proper case -- exercise their residual
duty under Article VIII. Clearly then, the judiciary should not inordinately interfere in the exercise of
this presidential power of control over the EDU of our natural resources.
The Constitution should be read in broad, life-giving strokes. It should not be used to strangulate
economic growth or to serve narrow, parochial interests. Rather, it should be construed to grant the
President and Congress sufficient discretion and reasonable leeway to enable them to attract foreign
investments and expertise, as well as to secure for our people and our posterity the blessings of
prosperity and peace.
On the basis of this control standard, this Court upholds the constitutionality of the Philippine Mining
Law, its Implementing Rules and Regulations -- insofar as they relate to financial and technical
agreements -- as well as the subject Financial and Technical Assistance Agreement (FTAA). 5
Background
The Petition for Prohibition and Mandamus before the Court challenges the constitutionality of (1)
Republic Act No. [RA] 7942 (The Philippine Mining Act of 1995); (2) its Implementing Rules and
Regulations (DENR Administrative Order No. [DAO] 96-40); and (3) the FTAA dated March 30,
1995,6 executed by the government with Western Mining Corporation (Philippines), Inc. (WMCP). 7
On January 27, 2004, the Court en banc promulgated its Decision8 granting the Petition and declaring
the unconstitutionality of certain provisions of RA 7942, DAO 96-40, as well as of the entire FTAA
executed between the government and WMCP, mainly on the finding that FTAAs are service contracts
prohibited by the 1987 Constitution.
The Decision struck down the subject FTAA for being similar to service contracts, 9 which, though
permitted under the 1973 Constitution,10 were subsequently denounced for being antithetical to the
principle of sovereignty over our natural resources, because they allowed foreign control over the
exploitation of our natural resources, to the prejudice of the Filipino nation.
The Decision quoted several legal scholars and authors who had criticized service contracts for, inter
alia, vesting in the foreign contractor exclusive management and control of the enterprise, including
operation of the field in the event petroleum was discovered; control of production, expansion and
development; nearly unfettered control over the disposition and sale of the products
discovered/extracted; effective ownership of the natural resource at the point of extraction; and
beneficial ownership of our economic resources. According to the Decision, the 1987 Constitution
(Section 2 of Article XII) effectively banned such service contracts.
Subsequently, respondents filed separate Motions for Reconsideration. In a Resolution dated March 9,
2004, the Court required petitioners to comment thereon. In the Resolution of June 8, 2004, it set the
case for Oral Argument on June 29, 2004.
After hearing the opposing sides, the Court required the parties to submit their respective
Memoranda in amplification of their arguments. In a Resolution issued later the same day, June 29,
2004, the Court noted, inter alia, the Manifestation and Motion (in lieu of comment) filed by the
Office of the Solicitor General (OSG) on behalf of public respondents. The OSG said that it was not
interposing any objection to the Motion for Intervention filed by the Chamber of Mines of the
Philippines, Inc. (CMP) and was in fact joining and adopting the latter's Motion for Reconsideration.
Memoranda were accordingly filed by the intervenor as well as by petitioners, public respondents,
and private respondent, dwelling at length on the three issues discussed below. Later, WMCP
submitted its Reply Memorandum, while the OSG -- in obedience to an Order of this Court -- filed a
Compliance submitting copies of more FTAAs entered into by the government.
Three Issues Identified by the Court
During the Oral Argument, the Court identified the three issues to be resolved in the present
controversy, as follows:
1. Has the case been rendered moot by the sale of WMC shares in WMCP to Sagittarius (60 percent of
Sagittarius' equity is owned by Filipinos and/or Filipino-owned corporations while 40 percent is owned
by Indophil Resources NL, an Australian company) and by the subsequent transfer and registration of
the FTAA from WMCP to Sagittarius?
2. Assuming that the case has been rendered moot, would it still be proper to resolve the
constitutionality of the assailed provisions of the Mining Law, DAO 96-40 and the WMCP FTAA?
3. What is the proper interpretation of the phrase Agreements Involving Either Technical or Financial
Assistancecontained in paragraph 4 of Section 2 of Article XII of the Constitution?
Should the Motion for Reconsideration Be Granted?
Respondents' and intervenor's Motions for Reconsideration should be granted, for the reasons
discussed below. The foregoing three issues identified by the Court shall now be taken up seriatim.
First Issue:
Mootness
In declaring unconstitutional certain provisions of RA 7942, DAO 96-40, and the WMCP FTAA, the
majority Decision agreed with petitioners' contention that the subject FTAA had been executed in
violation of Section 2 of Article XII of the 1987 Constitution. According to petitioners, the FTAAs
entered into by the government with foreign-owned corporations are limited by the fourth paragraph
of the said provision to agreements involving only technical or financial assistance for large-scale
exploration, development and utilization of minerals, petroleum and other mineral oils. Furthermore,
the foreign contractor is allegedly permitted by the FTAA in question to fully manage and control the
mining operations and, therefore, to acquire "beneficial ownership" of our mineral resources.
The Decision merely shrugged off the Manifestation by WMPC informing the Court (1) that on January
23, 2001, WMC had sold all its shares in WMCP to Sagittarius Mines, Inc., 60 percent of whose equity
was held by Filipinos; and (2) that the assailed FTAA had likewise been transferred from WMCP to
Sagittarius.11 The ponencia declared that the instant case had not been rendered moot by the transfer
and registration of the FTAA to a Filipino-owned corporation, and that the validity of the said transfer
remained in dispute and awaited final judicial determination. 12Patently therefore, the Decision is
anchored on the assumption that WMCP had remained a foreign corporation.
The crux of this issue of mootness is the fact that WMCP, at the time it entered into the
FTAA, happened to be wholly owned by WMC Resources International Pty., Ltd. (WMC), which in turn
was a wholly owned subsidiary of Western Mining Corporation Holdings Ltd., a publicly listed major
Australian mining and exploration company.
The nullity of the FTAA was obviously premised upon the contractor being a foreign corporation. Had
the FTAA been originally issued to a Filipino-owned corporation, there would have been no
constitutionality issue to speak of. Upon the other hand, the conveyance of the WMCP FTAA to a
Filipino corporation can be likened to the sale of land to a foreigner who subsequently acquires
Filipino citizenship, or who later resells the same land to a Filipino citizen. The conveyance would be
validated, as the property in question would no longer be owned by a disqualified vendee.
And, inasmuch as the FTAA is to be implemented now by a Filipino corporation, it is no longer possible
for the Court to declare it unconstitutional. The case pending in the Court of Appeals is a dispute
between two Filipino companies (Sagittarius and Lepanto), both claiming the right to purchase the
foreign shares in WMCP. So, regardless of which side eventually wins, the FTAA would still be in the
hands of a qualified Filipino company. Considering that there is no longer any justiciable controversy,
the plea to nullify the Mining Law has become a virtual petition for declaratory relief, over which this
Court has no original jurisdiction.
In their Final Memorandum, however, petitioners argue that the case has not become moot,
considering the invalidity of the alleged sale of the shares in WMCP from WMC to Sagittarius, and of
the transfer of the FTAA from WMCP to Sagittarius, resulting in the change of contractor in the FTAA
in question. And even assuming that the said transfers were valid, there still exists an actual case
predicated on the invalidity of RA 7942 and its Implementing Rules and Regulations (DAO 96-40).
Presently, we shall discuss petitioners' objections to the transfer of both the shares and the FTAA. We
shall take up the alleged invalidity of RA 7942 and DAO 96-40 later on in the discussion of the third
issue.
No Transgression of the Constitution
by the Transfer of the WMCP Shares
Petitioners claim, first, that the alleged invalidity of the transfer of the WMCP shares to Sagittarius
violates the fourth paragraph of Section 2 of Article XII of the Constitution; second, that it is contrary
to the provisions of the WMCP FTAA itself; and third, that the sale of the shares is suspect and should
therefore be the subject of a case in which its validity may properly be litigated.
On the first ground, petitioners assert that paragraph 4 of Section 2 of Article XII permits the
government to enter into FTAAs only with foreign-owned corporations. Petitioners insist that the first
paragraph of this constitutional provision limits the participation of Filipino corporations in the
exploration, development and utilization of natural resources to only three species of contracts --
production sharing, co-production and joint venture -- to the exclusion of all other arrangements or
variations thereof, and the WMCP FTAA may therefore not be validly assumed and implemented by
Sagittarius. In short, petitioners claim that a Filipino corporation is not allowed by the Constitution to
enter into an FTAA with the government.
However, a textual analysis of the first paragraph of Section 2 of Article XII does not support
petitioners' argument. The pertinent part of the said provision states: "Sec. 2. x x x The exploration,
development and utilization of natural resources shall be under the full control and supervision of the
State. The State may directly undertake such activities, or it may enter into co-production, joint
venture, or production-sharing agreements with Filipino citizens, or corporations or associations at
least sixty per centum of whose capital is owned by such citizens. x x x." Nowhere in the provision is
there any express limitation or restriction insofar as arrangements other than the three
aforementioned contractual schemes are concerned.
Neither can one reasonably discern any implied stricture to that effect. Besides, there is no basis to
believe that the framers of the Constitution, a majority of whom were obviously concerned with
furthering the development and utilization of the country's natural resources, could have wanted to
restrict Filipino participation in that area. This point is clear, especially in the light of the overarching
constitutional principle of giving preference and priority to Filipinos and Filipino corporations in the
development of our natural resources.
Besides, even assuming (purely for argument's sake) that a constitutional limitation barring Filipino
corporations from holding and implementing an FTAA actually exists, nevertheless, such provision
would apply only to the transfer of the FTAA to Sagittarius, but definitely not to the sale of WMC's
equity stake in WMCP to Sagittarius. Otherwise, an unreasonable curtailment of property rights
without due process of law would ensue. Petitioners' argument must therefore fail.
FTAA Not Intended
Solely for Foreign Corporation
Equally barren of merit is the second ground cited by petitioners -- that the FTAA was intended to
apply solely to a foreign corporation, as can allegedly be seen from the provisions therein. They
manage to cite only one WMCP FTAA provision that can be regarded as clearly intended to apply only
to a foreign contractor: Section 12, which provides for international commercial arbitration under the
auspices of the International Chamber of Commerce, after local remedies are exhausted. This
provision, however, does not necessarily imply that the WMCP FTAA cannot be transferred to and
assumed by a Filipino corporation like Sagittarius, in which event the said provision should simply be
disregarded as a superfluity.
No Need for a Separate
Litigation of the Sale of Shares
Petitioners claim as third ground the "suspicious" sale of shares from WMC to Sagittarius; hence, the
need to litigate it in a separate case. Section 40 of RA 7942 (the Mining Law) allegedly requires the
President's prior approval of a transfer.
A re-reading of the said provision, however, leads to a different conclusion. "Sec.
40. Assignment/Transfer -- A financial or technical assistance agreement may be assigned or
transferred, in whole or in part, to a qualified person subject to the prior approval of the President:
Provided, That the President shall notify Congress of every financial or technical assistance agreement
assigned or converted in accordance with this provision within thirty (30) days from the date of the
approval thereof."
Section 40 expressly applies to the assignment or transfer of the FTAA, not to the sale and transfer of
shares of stock in WMCP. Moreover, when the transferee of an FTAA is another foreign corporation,
there is a logical application of the requirement of prior approval by the President of the Republic and
notification to Congress in the event of assignment or transfer of an FTAA. In this situation, such
approval and notification are appropriate safeguards, considering that the new contractor is the
subject of a foreign government.
On the other hand, when the transferee of the FTAA happens to be a Filipino corporation, the need
for such safeguard is not critical; hence, the lack of prior approval and notification may not be
deemed fatal as to render the transfer invalid. Besides, it is not as if approval by the President is
entirely absent in this instance. As pointed out by private respondent in its Memorandum,13 the issue
of approval is the subject of one of the cases brought by Lepanto against Sagittarius in GR No. 162331.
That case involved the review of the Decision of the Court of Appeals dated November 21, 2003 in CA-
GR SP No. 74161, which affirmed the DENR Order dated December 31, 2001 and the Decision of the
Office of the President dated July 23, 2002, both approving the assignment of the WMCP FTAA to
Sagittarius.
Petitioners also question the sale price and the financial capacity of the transferee. According to the
Deed of Absolute Sale dated January 23, 2001, executed between WMC and Sagittarius, the price of
the WMCP shares was fixed at US$9,875,000, equivalent to P553 million at an exchange rate of 56:1.
Sagittarius had an authorized capital stock of P250 million and a paid up capital of P60 million.
Therefore, at the time of approval of the sale by the DENR, the debt-to-equity ratio of the transferee
was over 9:1 -- hardly ideal for an FTAA contractor, according to petitioners.
However, private respondents counter that the Deed of Sale specifically provides that the payment of
the purchase price would take place only after Sagittarius' commencement of commercial production
from mining operations, if at all. Consequently, under the circumstances, we believe it would not be
reasonable to conclude, as petitioners did, that the transferee's high debt-to-equity ratio per se
necessarily carried negative implications for the enterprise; and it would certainly be improper to
invalidate the sale on that basis, as petitioners propose.
FTAA Not Void,
Thus Transferrable
To bolster further their claim that the case is not moot, petitioners insist that the FTAA is void and,
hence cannot be transferred; and that its transfer does not operate to cure the constitutional infirmity
that is inherent in it; neither will a change in the circumstances of one of the parties serve to ratify the
void contract.
While the discussion in their Final Memorandum was skimpy, petitioners in their Comment (on the
MR) did ratiocinate that this Court had declared the FTAA to be void because, at the time it was
executed with WMCP, the latter was a fully foreign-owned corporation, in which the former vested full
control and management with respect to the exploration, development and utilization of mineral
resources, contrary to the provisions of paragraph 4 of Section 2 of Article XII of the Constitution. And
since the FTAA was per se void, no valid right could be transferred; neither could it be ratified, so
petitioners conclude.
Petitioners have assumed as fact that which has yet to be established. First and foremost, the Decision
of this Court declaring the FTAA void has not yet become final. That was precisely the reason the
Court still heard Oral Argument in this case. Second, the FTAA does not vest in the foreign corporation
full control and supervision over the exploration, development and utilization of mineral resources, to
the exclusion of the government. This point will be dealt with in greater detail below; but for now,
suffice it to say that a perusal of the FTAA provisions will prove that the government has effective
overall direction and control of the mining operations, including marketing and product pricing, and
that the contractor's work programs and budgets are subject to its review and approval or
disapproval.
As will be detailed later on, the government does not have to micro-manage the mining operations
and dip its hands into the day-to-day management of the enterprise in order to be considered as
having overall control and direction. Besides, for practical and pragmatic reasons, there is a need for
government agencies to delegate certain aspects of the management work to the contractor. Thus the
basis for declaring the FTAA void still has to be revisited, reexamined and reconsidered.
Petitioners sniff at the citation of Chavez v. Public Estates Authority,14 and Halili v. CA,15 claiming that
the doctrines in these cases are wholly inapplicable to the instant case.
Chavez clearly teaches: "Thus, the Court has ruled consistently that where a Filipino citizen sells land
to an alien who later sells the land to a Filipino, the invalidity of the first transfer is corrected by the
subsequent sale to a citizen. Similarly, where the alien who buys the land subsequently acquires
Philippine citizenship, the sale is validated since the purpose of the constitutional ban to limit land
ownership to Filipinos has been achieved. In short, the law disregards the constitutional
disqualification of the buyer to hold land if the land is subsequently transferred to a qualified party, or
the buyer himself becomes a qualified party."16
In their Comment, petitioners contend that in Chavez and Halili, the object of the transfer (the land)
was not what was assailed for alleged unconstitutionality. Rather, it was the transaction that was
assailed; hence subsequent compliance with constitutional provisions would cure its infirmity. In
contrast, in the instant case it is the FTAA itself, the object of the transfer, that is being assailed as
invalid and unconstitutional. So, petitioners claim that the subsequent transfer of a void FTAA to a
Filipino corporation would not cure the defect.
Petitioners are confusing themselves. The present Petition has been filed, precisely because the
grantee of the FTAA was a wholly owned subsidiary of a foreign corporation. It cannot be gainsaid that
anyone would have asserted that the same FTAA was void if it had at the outset been issued to a
Filipino corporation. The FTAA, therefore, is not per se defective or unconstitutional. It was
questioned only because it had been issued to an allegedly non-qualified, foreign-owned corporation.
We believe that this case is clearly analogous to Halili, in which the land acquired by a non-Filipino
was re-conveyed to a qualified vendee and the original transaction was thereby cured.
Paraphrasing Halili, the same rationale applies to the instant case: assuming arguendo the invalidity of
its prior grant to a foreign corporation, the disputed FTAA -- being now held by a Filipino corporation
-- can no longer be assailed; the objective of the constitutional provision -- to keep the exploration,
development and utilization of our natural resources in Filipino hands -- has been served.
More accurately speaking, the present situation is one degree better than that obtaining in Halili, in
which the original sale to a non-Filipino was clearly and indisputably violative of the constitutional
prohibition and thus void ab initio. In the present case, the issuance/grant of the subject FTAA to the
then foreign-owned WMCP was not illegal, void or unconstitutional at the time. The matter had to be
brought to court, precisely for adjudication as to whether the FTAA and the Mining Law had indeed
violated the Constitution. Since, up to this point, the decision of this Court declaring the FTAA void has
yet to become final, to all intents and purposes, the FTAA must be deemed valid and constitutional. 17
At bottom, we find completely outlandish petitioners' contention that an FTAA could be entered into
by the government only with a foreign corporation, never with a Filipino enterprise. Indeed, the
nationalistic provisions of the Constitution are all anchored on the protection of Filipino interests.
How petitioners can now argue that foreigners have the exclusive right to FTAAs totally overturns the
entire basis of the Petition -- preference for the Filipino in the exploration, development and
utilization of our natural resources. It does not take deep knowledge of law and logic to understand
that what the Constitution grants to foreigners should be equally available to Filipinos.
Second Issue:
Whether the Court Can Still Decide the Case,
Even Assuming It Is Moot
All the protagonists are in agreement that the Court has jurisdiction to decide this controversy, even
assuming it to be moot.
Petitioners stress the following points. First, while a case becomes moot and academic when "there is
no more actual controversy between the parties or no useful purpose can be served in passing upon
the merits,"18 what is at issue in the instant case is not only the validity of the WMCP FTAA, but also
the constitutionality of RA 7942 and its Implementing Rules and Regulations. Second, the acts of
private respondent cannot operate to cure the law of its alleged unconstitutionality or to divest this
Court of its jurisdiction to decide. Third, the Constitution imposes upon the Supreme Court the duty
to declare invalid any law that offends the Constitution.
Petitioners also argue that no amendatory laws have been passed to make the Mining Act of 1995
conform to constitutional strictures (assuming that, at present, it does not); that public respondents
will continue to implement and enforce the statute until this Court rules otherwise; and that the said
law continues to be the source of legal authority in accepting, processing and approving numerous
applications for mining rights.
Indeed, it appears that as of June 30, 2002, some 43 FTAA applications had been filed with the Mines
and Geosciences Bureau (MGB), with an aggregate area of 2,064,908.65 hectares -- spread over
Luzon, the Visayas and Mindanao19 -- applied for. It may be a bit far-fetched to assert, as petitioners
do, that each and every FTAA that was entered into under the provisions of the Mining Act "invites
potential litigation" for as long as the constitutional issues are not resolved with finality.
Nevertheless, we must concede that there exists the distinct possibility that one or more of the future
FTAAs will be the subject of yet another suit grounded on constitutional issues.
But of equal if not greater significance is the cloud of uncertainty hanging over the mining industry,
which is even now scaring away foreign investments. Attesting to this climate of anxiety is the fact
that the Chamber of Mines of the Philippines saw the urgent need to intervene in the case and to
present its position during the Oral Argument; and that Secretary General Romulo Neri of the National
Economic Development Authority (NEDA) requested this Court to allow him to speak, during that Oral
Argument, on the economic consequences of the Decision of January 27, 2004. 20
We are convinced. We now agree that the Court must recognize the exceptional character of the
situation and the paramount public interest involved, as well as the necessity for a ruling to put an
end to the uncertainties plaguing the mining industry and the affected communities as a result of
doubts cast upon the constitutionality and validity of the Mining Act, the subject FTAA and future
FTAAs, and the need to avert a multiplicity of suits. Paraphrasing Gonzales v. Commission on
Elections,21 it is evident that strong reasons of public policy demand that the constitutionality issue be
resolved now.22
In further support of the immediate resolution of the constitutionality issue, public respondents
cite Acop v. Guingona,23 to the effect that the courts will decide a question -- otherwise moot and
academic -- if it is "capable of repetition, yet evading review."24 Public respondents ask the Court to
avoid a situation in which the constitutionality issue may again arise with respect to another FTAA, the
resolution of which may not be achieved until after it has become too late for our mining industry to
grow out of its infancy. They also recall Salonga v. Cruz Paño,25 in which this Court declared that "(t)he
Court also has the duty to formulate guiding and controlling constitutional principles, precepts,
doctrines or rules. It has the symbolic function of educating the bench and bar on the extent of
protection given by constitutional guarantees. x x x."
The mootness of the case in relation to the WMCP FTAA led the undersigned ponente to state in his
dissent to the Decision that there was no more justiciable controversy and the plea to nullify the
Mining Law has become a virtual petition for declaratory relief. 26 The entry of the Chamber of Mines
of the Philippines, Inc., however, has put into focus the seriousness of the allegations of
unconstitutionality of RA 7942 and DAO 96-40 which converts the case to one for prohibition 27 in the
enforcement of the said law and regulations.
Indeed, this CMP entry brings to fore that the real issue in this case is whether paragraph 4 of Section
2 of Article XII of the Constitution is contravened by RA 7942 and DAO 96-40, not whether it was
violated by specific acts implementing RA 7942 and DAO 96-40. "[W]hen an act of the legislative
department is seriously alleged to have infringed the Constitution, settling the controversy becomes
the duty of this Court. By the mere enactment of the questioned law or the approval of the
challenged action, the dispute is said to have ripened into a judicial controversy even without any
other overt act."28 This ruling can be traced from Tañada v. Angara,29 in which the Court said:
"In seeking to nullify an act of the Philippine Senate on the ground that it contravenes the
Constitution, the petition no doubt raises a justiciable controversy. Where an action of the
legislative branch is seriously alleged to have infringed the Constitution, it becomes not only
the right but in fact the duty of the judiciary to settle the dispute.
xxxxxxxxx
"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." 30
Additionally, the entry of CMP into this case has also effectively forestalled any possible objections
arising from the standing or legal interest of the original parties.
For all the foregoing reasons, we believe that the Court should proceed to a resolution of the
constitutional issues in this case.
Third Issue:
The Proper Interpretation of the Constitutional Phrase
"Agreements Involving Either Technical or Financial Assistance"
The constitutional provision at the nucleus of the controversy is paragraph 4 of Section 2 of Article XII
of the 1987 Constitution. In order to appreciate its context, Section 2 is reproduced in full:
"Sec. 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.
"The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea,
and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino
citizens.
"The Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish-
workers in rivers, lakes, bays and lagoons.
"The President may enter into agreements with foreign-owned corporations involving either
technical or financial assistance for large-scale exploration, development, and utilization of
minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of
the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.
"The President shall notify the Congress of every contract entered into in accordance with
this provision, within thirty days from its execution." 31
No Restriction of Meaning by
a Verba Legis Interpretation
To interpret the foregoing provision, petitioners adamantly assert that the language of the
Constitution should prevail; that the primary method of interpreting it is to seek the ordinary meaning
of the words used in its provisions. They rely on rulings of this Court, such as the following:
"The fundamental principle in constitutional construction however is that the primary source
from which to ascertain constitutional intent or purpose is the language of the provision
itself. The presumption is that the words in which the constitutional provisions are couched
express the objective sought to be attained. In other words, verba legis prevails. Only when
the meaning of the words used is unclear and equivocal should resort be made to extraneous
aids of construction and interpretation, such as the proceedings of the Constitutional
Commission or Convention to shed light on and ascertain the true intent or purpose of the
provision being construed."32
Very recently, in Francisco v. The House of Representatives,33 this Court indeed had the occasion to
reiterate the well-settled principles of constitutional construction:
"First, verba legis, that is, wherever possible, the words used in the Constitution must be
given their ordinary meaning except where technical terms are employed. x x x.
 xxxxxxxxx
"Second, where there is ambiguity, ratio legis est anima. The words of the Constitution should
be interpreted in accordance with the intent of its framers. x x x.
xxxxxxxxx
"Finally, ut magis valeat quam pereat. The Constitution is to be interpreted as a whole."34
For ease of reference and in consonance with verba legis, we reconstruct and stratify the aforequoted
Section 2 as follows:
1. All natural resources are owned by the State. Except for agricultural lands, natural
resources cannot be alienated by the State.
2. The exploration, development and utilization (EDU) of natural resources shall be under the
full control and supervision of the State.
3. The State may undertake these EDU activities through either of the following:
(a) By itself directly and solely
(b) By (i) co-production; (ii) joint venture; or (iii) production sharing agreements with
Filipino citizens or corporations, at least 60 percent of the capital of which is owned
by such citizens
4. Small-scale utilization of natural resources may be allowed by law in favor of Filipino
citizens.
5. For large-scale EDU of minerals, petroleum and other mineral oils, the President may enter
into "agreements with foreign-owned corporations involving either technical or financial
assistance according to the general terms and conditions provided by law x x x."
Note that in all the three foregoing mining activities -- exploration, development and utilization -- the
State may undertake such EDU activities by itself or in tandem with Filipinos or Filipino corporations,
except in two instances: first, in small-scale utilization of natural resources, which Filipinos may be
allowed by law to undertake; and second, in large-scale EDU of minerals, petroleum and mineral oils,
which may be undertaken by the State via "agreementswith foreign-owned corporations involving
either technical or financial assistance" as provided by law.
Petitioners claim that the phrase "agreements x x x involving either technical or financial
assistance" simply means technical assistance or financial assistance agreements, nothing more and
nothing else. They insist that there is no ambiguity in the phrase, and that a plain reading of
paragraph 4 quoted above leads to the inescapable conclusion that what a foreign-owned corporation
may enter into with the government is merely an agreement for eitherfinancial or technical
assistance only, for the large-scale exploration, development and utilization of minerals, petroleum
and other mineral oils; such a limitation, they argue, excludes foreign management and operation of a
mining enterprise.35
This restrictive interpretation, petitioners believe, is in line with the general policy enunciated by the
Constitution reserving to Filipino citizens and corporations the use and enjoyment of the country's
natural resources. They maintain that this Court's Decision 36 of January 27, 2004 correctly declared the
WMCP FTAA, along with pertinent provisions of RA 7942, void for allowing a foreign contractor to
have direct and exclusive management of a mining enterprise. Allowing such a privilege not only runs
counter to the "full control and supervision" that the State is constitutionally mandated to exercise
over the exploration, development and utilization of the country's natural resources; doing so also
vests in the foreign company "beneficial ownership" of our mineral resources. It will be recalled that
the Decision of January 27, 2004 zeroed in on "management or other forms of assistance" or other
activities associated with the "service contracts" of the martial law regime, since "the management or
operation of mining activities by foreign contractors, which is the primary feature of service contracts,
was precisely the evil that the drafters of the 1987 Constitution sought to eradicate."
On the other hand, the intervenor37 and public respondents argue that the FTAA allowed by paragraph
4 is not merely an agreement for supplying limited and specific financial or technical services to the
State. Rather, such FTAA is a comprehensive agreement for the foreign-owned
corporation's integrated exploration, development and utilization of mineral, petroleum or other
mineral oils on a large-scale basis. The agreement, therefore, authorizes the foreign contractor's
rendition of a whole range of integrated and comprehensive services, ranging from the discovery to
the development, utilization and production of minerals or petroleum products.
We do not see how applying a strictly literal or verba legis interpretation of paragraph 4 could
inexorably lead to the conclusions arrived at in the ponencia. First, the drafters' choice of words --
their use of the phrase agreements x x x involving either technical or financial assistance -- does not
indicate the intent to exclude other modes of assistance. The drafters opted to use involving when
they could have simply said agreements for financial or technical assistance, if that was their intention
to begin with. In this case, the limitation would be very clear and no further debate would ensue.
In contrast, the use of the word "involving" signifies the possibility of the inclusion of other forms of
assistance or activities having to do with, otherwise related to or compatible with financial or
technical assistance. The word "involving" as used in this context has three connotations that can be
differentiated thus: one, the sense of "concerning," "having to do with," or "affecting"; two,
"entailing," "requiring," "implying" or "necessitating"; and three, "including," "containing" or
"comprising."38
Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the word "involving,"
when understood in the sense of "including," as in including technical or financial
assistance, necessarily implies that there are activities other than those that are being included. In
other words, if an agreement includes technical or financial assistance, there is apart from such
assistance -- something else already in, and covered or may be covered by, the said agreement.
In short, it allows for the possibility that matters, other than those explicitly mentioned, could be
made part of the agreement. Thus, we are now led to the conclusion that the use of the word
"involving" implies that these agreements with foreign corporations are not limited to mere financial
or technical assistance. The difference in sense becomes very apparent when we juxtapose
"agreements for technical or financial assistance" against "agreements including technical or financial
assistance." This much is unalterably clear in a verba legis approach.
Second, if the real intention of the drafters was to confine foreign corporations to financial or
technical assistance and nothing more, their language would have certainly been so unmistakably
restrictive and stringent as to leave no doubt in anyone's mind about their true intent. For example,
they would have used the sentence foreign corporations are absolutely prohibited from involvement
in the management or operation of mining or similar ventures or words of similar import. A search for
such stringent wording yields negative results. Thus, we come to the inevitable conclusion that there
was a conscious and deliberate decision to avoid the use of restrictive wording that bespeaks an
intent not to use the expression "agreements x x x involving either technical or financial assistance"
in an exclusionary and limiting manner.
Deletion of "Service Contracts" to
Avoid Pitfalls of Previous Constitutions,
Not to Ban Service Contracts Per Se
Third, we do not see how a verba legis approach leads to the conclusion that "the management or
operation of mining activities by foreign contractors, which is the primary feature of service contracts,
was precisely the evil that the drafters of the 1987 Constitution sought to eradicate." Nowhere in the
above-quoted Section can be discerned the objective to keep out of foreign hands the management
or operation of mining activities or the plan to eradicate service contracts as these were understood
in the 1973 Constitution. Still, petitioners maintain that the deletion or omission from the 1987
Constitution of the term "service contracts" found in the 1973 Constitution sufficiently proves the
drafters' intent to exclude foreigners from the management of the affected enterprises.
To our mind, however, such intent cannot be definitively and conclusively established from the mere
failure to carry the same expression or term over to the new Constitution, absent a more specific,
explicit and unequivocal statement to that effect. What petitioners seek (a complete ban on foreign
participation in the management of mining operations, as previously allowed by the earlier
Constitutions) is nothing short of bringing about a momentous sea change in the economic and
developmental policies; and the fundamentally capitalist, free-enterprise philosophy of our
government. We cannot imagine such a radical shift being undertaken by our government, to the
great prejudice of the mining sector in particular and our economy in general, merely on the basis of
the omission of the terms service contract from or the failure to carry them over to the new
Constitution. There has to be a much more definite and even unarguable basis for such a drastic
reversal of policies.
Fourth, a literal and restrictive interpretation of paragraph 4, such as that proposed by petitioners,
suffers from certain internal logical inconsistencies that generate ambiguities in the understanding of
the provision. As the intervenor pointed out, there has never been any constitutional or statutory
provision that reserved to Filipino citizens or corporations, at least 60 percent of which is Filipino-
owned, the rendition of financial or technical assistance to companies engaged in mining or the
development of any other natural resource. The taking out of foreign-currency or peso-denominated
loans or any other kind of financial assistance, as well as the rendition of technical assistance --
whether to the State or to any other entity in the Philippines -- has never been restricted in favor of
Filipino citizens or corporations having a certain minimum percentage of Filipino equity. Such a
restriction would certainly be preposterous and unnecessary. As a matter of fact, financial, and even
technical assistance, regardless of the nationality of its source, would be welcomed in the mining
industry anytime with open arms, on account of the dearth of local capital and the need to
continually update technological know-how and improve technical skills.
There was therefore no need for a constitutional provision specifically allowing foreign-owned
corporations to render financial or technical assistance, whether in respect of mining or some other
resource development or commercial activity in the Philippines. The last point needs to be
emphasized: if merely financial or technical assistance agreements are allowed, there would be no
need to limit them to large-scale mining operations, as there would be far greater need for them in
the smaller-scale mining activities (and even in non-mining areas). Obviously, the provision in
question was intended to refer to agreements other than those for mere financial or technical
assistance.
In like manner, there would be no need to require the President of the Republic to report to Congress,
if only financial or technical assistance agreements are involved. Such agreements are in the nature of
foreign loans that -- pursuant to Section 20 of Article VII39 of the 1987 Constitution -- the President
may contract or guarantee, merely with the prior concurrence of the Monetary Board. In turn, the
Board is required to report to Congress within thirty days from the end of every quarter of the
calendar year, not thirty days after the agreement is entered into.
And if paragraph 4 permits only agreements for loans and other forms of financial, or technical
assistance, what is the point of requiring that they be based on real contributions to the economic
growth and general welfare of the country? For instance, how is one to measure and assess the "real
contributions" to the "economic growth" and "general welfare" of the country that may ensue from a
foreign-currency loan agreement or a technical-assistance agreement for, say, the refurbishing of an
existing power generating plant for a mining operation somewhere in Mindanao? Such a criterion
would make more sense when applied to a major business investment in a principal sector of the
industry.
The conclusion is clear and inescapable -- a verba legis construction shows that paragraph 4 is not to
be understood as one limited only to foreign loans (or other forms of financial support) and to
technical assistance. There is definitely more to it than that. These are provisions permitting
participation by foreign companies; requiring the President's report to Congress; and using, as
yardstick, contributions based on economic growth and general welfare. These were neither
accidentally inserted into the Constitution nor carelessly cobbled together by the drafters in lip
service to shallow nationalism. The provisions patently have significance and usefulness in a context
that allows agreements with foreign companies to include more than mere financial or technical
assistance.
Fifth, it is argued that Section 2 of Article XII authorizes nothing more than a rendition of specific and
limited financial service or technical assistance by a foreign company. This argument begs the
question "To whom or for whom would it be rendered"? or Who is being assisted? If the answer is
"The State," then it necessarily implies that the State itself is the one directly and solely undertaking
the large-scale exploration, development and utilization of a mineral resource, so it follows that the
State must itself bear the liability and cost of repaying the financing sourced from the foreign lender
and/or of paying compensation to the foreign entity rendering technical assistance.
However, it is of common knowledge, and of judicial notice as well, that the government is and has for
many many years been financially strapped, to the point that even the most essential services have
suffered serious curtailments -- education and health care, for instance, not to mention judicial
services -- have had to make do with inadequate budgetary allocations. Thus, government has had to
resort to build-operate-transfer and similar arrangements with the private sector, in order to get vital
infrastructure projects built without any governmental outlay.
The very recent brouhaha over the gargantuan "fiscal crisis" or "budget deficit" merely confirms what
the ordinary citizen has suspected all along. After the reality check, one will have to admit the
implausibility of a direct undertaking -- by the State itself -- of large-scale exploration, development
and utilization of minerals, petroleum and other mineral oils. Such an undertaking entails not only
humongous capital requirements, but also the attendant risk of never finding and developing
economically viable quantities of minerals, petroleum and other mineral oils. 40
It is equally difficult to imagine that such a provision restricting foreign companies to the rendition of
only financial or technical assistance to the government was deliberately crafted by the drafters of the
Constitution, who were all well aware of the capital-intensive and technology-oriented nature of
large-scale mineral or petroleum extraction and the country's deficiency in precisely those areas. 41 To
say so would be tantamount to asserting that the provision was purposely designed to ladle the large-
scale development and utilization of mineral, petroleum and related resources with impossible
conditions; and to remain forever and permanently "reserved" for future generations of Filipinos.
A More Reasonable Look
at the Charter's Plain Language
Sixth, we shall now look closer at the plain language of the Charter and examining the logical
inferences. The drafters chose to emphasize and highlight agreements x x x involving either technical
or financial assistance in relation to foreign corporations' participation in large-scale EDU. The
inclusion of this clause on "technical or financial assistance" recognizes the fact that foreign business
entities and multinational corporations are the ones with the resources and know-how to provide
technical and/or financial assistance of the magnitude and type required for large-scale exploration,
development and utilization of these resources.
The drafters -- whose ranks included many academicians, economists, businessmen, lawyers,
politicians and government officials -- were not unfamiliar with the practices of foreign corporations
and multinationals.
Neither were they so naïve as to believe that these entities would provide "assistance" without
conditionalities or some quid pro quo. Definitely, as business persons well know and as a matter of
judicial notice, this matter is not just a question of signing a promissory note or executing a
technology transfer agreement. Foreign corporations usually require that they be given a say in the
management, for instance, of day-to-day operations of the joint venture. They would demand the
appointment of their own men as, for example, operations managers, technical experts, quality
control heads, internal auditors or comptrollers. Furthermore, they would probably require seats on
the Board of Directors -- all these to ensure the success of the enterprise and the repayment of the
loans and other financial assistance and to make certain that the funding and the technology they
supply would not go to waste. Ultimately, they would also want to protect their business reputation
and bottom lines.42
In short, the drafters will have to be credited with enough pragmatism and savvy to know that these
foreign entities will not enter into such "agreements involving assistance" without requiring
arrangements for the protection of their investments, gains and benefits.
Thus, by specifying such "agreements involving assistance," the drafters necessarily gave implied
assent to everything that these agreements necessarily entailed; or that could reasonably be deemed
necessary to make them tenable and effective, including management authority with respect to the
day-to-day operations of the enterprise and measures for the protection of the interests of the foreign
corporation, PROVIDED THAT Philippine sovereignty over natural resources and full control over the
enterprise undertaking the EDU activities remain firmly in the State.
Petitioners' Theory Deflated by the
Absence of Closing-Out Rules or Guidelines
Seventh and final point regarding the plain-language approach, one of the practical difficulties that
results from it is the fact that there is nothing by way of transitory provisions that would serve to
confirm the theory that the omission of the term "service contract" from the 1987 Constitution
signaled the demise of service contracts.
The framers knew at the time they were deliberating that there were various service contracts extant
and in force and effect, including those in the petroleum industry. Many of these service contracts
were long-term (25 years) and had several more years to run. If they had meant to ban service
contracts altogether, they would have had to provide for the termination or pretermination of the
existing contracts. Accordingly, they would have supplied the specifics and the when and how of
effecting the extinguishment of these existing contracts (or at least the mechanics for determining
them); and of putting in place the means to address the just claims of the contractors for
compensation for their investments, lost opportunities, and so on, if not for the recovery thereof.
If the framers had intended to put an end to service contracts, they would have at least left specific
instructions to Congress to deal with these closing-out issues, perhaps by way of general guidelines
and a timeline within which to carry them out. The following are some extant examples of such
transitory guidelines set forth in Article XVIII of our Constitution:
"Section 23. Advertising entities affected by paragraph (2), Section 11 of Article XVI of this
Constitution shall have five years from its ratification to comply on a graduated and
proportionate basis with the minimum Filipino ownership requirement therein.
xxxxxxxxx
"Section 25. After the expiration in 1991 of the Agreement between the Republic of the
Philippines and the United States of America concerning military bases, foreign military
bases, troops, or facilities shall not be allowed in the Philippines except under a treaty duly
concurred in by the Senate and, when the Congress so requires, ratified by a majority of the
votes cast by the people in a national referendum held for that purpose, and recognized as a
treaty by the other contracting State.
"Section 26. The authority to issue sequestration or freeze orders under Proclamation No. 3
dated March 25, 1986 in relation to the recovery of ill-gotten wealth shall remain operative
for not more than eighteen months after the ratification of this Constitution. However, in the
national interest, as certified by the President, the Congress may extend such period.
A sequestration or freeze order shall be issued only upon showing of a prima facie case. The
order and the list of the sequestered or frozen properties shall forthwith be registered with
the proper court. For orders issued before the ratification of this Constitution, the
corresponding judicial action or proceeding shall be filed within six months from its
ratification. For those issued after such ratification, the judicial action or proceeding shall be
commenced within six months from the issuance thereof.
The sequestration or freeze order is deemed automatically lifted if no judicial action or
proceeding is commenced as herein provided." 43]
It is inconceivable that the drafters of the Constitution would leave such an important matter -- an
expression of sovereignty as it were -- indefinitely hanging in the air in a formless and ineffective
state. Indeed, the complete absence of even a general framework only serves to further deflate
petitioners' theory, like a child's balloon losing its air.
Under the circumstances, the logical inconsistencies resulting from petitioners' literal and
purely verba legisapproach to paragraph 4 of Section 2 of Article XII compel a resort to other aids to
interpretation.
Petitioners' Posture Also Negated
by Ratio Legis Et Anima
Thus, in order to resolve the inconsistencies, incongruities and ambiguities encountered and to supply
the deficiencies of the plain-language approach, there is a need for recourse to the proceedings of the
1986 Constitutional Commission. There is a need for ratio legis et anima.
Service Contracts Not
"Deconstitutionalized"
Pertinent portions of the deliberations of the members of the Constitutional Commission (ConCom)
conclusively show that they discussed agreements involving either technical or financial assistance in
the same breadth as service contracts and used the terms interchangeably. The following exchange
between Commissioner Jamir (sponsor of the provision) and Commissioner Suarez irrefutably proves
that the "agreements involving technical or financial assistance" were none other than service
contracts.
THE PRESIDENT. Commissioner Jamir is recognized. We are still on Section 3.
MR. JAMIR. Yes, Madam President. With respect to the second paragraph of Section 3, my
amendment by substitution reads: THE PRESIDENT MAY ENTER INTO AGREEMENTS WITH
FOREIGN-OWNED CORPORATIONS INVOLVING EITHER TECHNICAL OR FINANCIAL ASSISTANCE
FOR LARGE-SCALE EXPLORATION, DEVELOPMENT AND UTILIZATION OF NATURAL RESOURCES
ACCORDING TO THE TERMS AND CONDITIONS PROVIDED BY LAW.
MR. VILLEGAS. The Committee accepts the amendment. Commissioner Suarez will give the
background.
MR. JAMIR. Thank you.
THE PRESIDENT. Commissioner Suarez is recognized.
MR. SUAREZ. Thank you, Madam President.
 Will Commissioner Jamir answer a few clarificatory questions?
MR. JAMIR. Yes, Madam President.
MR. SUAREZ. This particular portion of the section has reference to what was popularly
known before as service contracts, among other things, is that correct?
MR. JAMIR. Yes, Madam President.
MR. SUAREZ. As it is formulated, the President may enter into service contracts but subject
to the guidelines that may be promulgated by Congress?
MR. JAMIR. That is correct.
MR. SUAREZ. Therefore, that aspect of negotiation and consummation will fall on the
President, not upon Congress?
MR. JAMIR. That is also correct, Madam President.
MR. SUAREZ. Except that all of these contracts, service or otherwise, must be made strictly
in accordance with guidelines prescribed by Congress?
MR. JAMIR. That is also correct.
MR. SUAREZ. And the Gentleman is thinking in terms of a law that uniformly covers
situations of the same nature?
MR. JAMIR. That is 100 percent correct.
MR. SUAREZ. I thank the Commissioner.
MR. JAMIR. Thank you very much.44
The following exchange leaves no doubt that the commissioners knew exactly what they were dealing
with: service contracts.
THE PRESIDENT. Commissioner Gascon is recognized.
MR. GASCON. Commissioner Jamir had proposed an amendment with regard to
special service contractswhich was accepted by the Committee. Since the Committee has
accepted it, I would like to ask some questions.
THE PRESIDENT. Commissioner Gascon may proceed.
MR. GASCON. As it is proposed now, such service contracts will be entered into by the
President with the guidelines of a general law on service contract to be enacted by Congress.
Is that correct?
MR. VILLEGAS. The Commissioner is right, Madam President.
MR. GASCON. According to the original proposal, if the President were to enter into a
particular agreement, he would need the concurrence of Congress. Now that it has been
changed by the proposal of Commissioner Jamir in that Congress will set the general law to
which the President shall comply, the President will, therefore, not need the concurrence of
Congress every time he enters into service contracts. Is that correct?
MR. VILLEGAS. That is right.
MR. GASCON. The proposed amendment of Commissioner Jamir is in indirect contrast to my
proposed amendment, so I would like to object and present my proposed amendment to the
body.
xxxxxxxxx
MR. GASCON. Yes, it will be up to the body.
I feel that the general law to be set by Congress as regard service contract agreements which
the President will enter into might be too general or since we do not know the content yet of
such a law, it might be that certain agreements will be detrimental to the interest of the
Filipinos. This is in direct contrast to my proposal which provides that there be effective
constraints in the implementation of service contracts.
So instead of a general law to be passed by Congress to serve as a guideline to the President
when entering into service contract agreements, I propose that every service
contract entered into by the President would need the concurrence of Congress, so as to
assure the Filipinos of their interests with regard to the issue in Section 3 on all lands of the
public domain. My alternative amendment, which we will discuss later, reads: THAT THE
PRESIDENT SHALL ENTER INTO SUCH AGREEMENTS ONLY WITH THE CONCURRENCE OF TWO-
THIRDS VOTE OF ALL THE MEMBERS OF CONGRESS SITTING SEPARATELY.
xxxxxxxxx
MR. BENGZON. The reason we made that shift is that we realized the original proposal could
breed corruption. By the way, this is not just confined to service contracts but also
to financial assistance. If we are going to make every single contract subject to the
concurrence of Congress – which, according to the Commissioner's amendment is the
concurrence of two-thirds of Congress voting separately – then (1) there is a very great
chance that each contract will be different from another; and (2) there is a great temptation
that it would breed corruption because of the great lobbying that is going to happen. And we
do not want to subject our legislature to that.
Now, to answer the Commissioner's apprehension, by "general law," we do not mean
statements of motherhood. Congress can build all the restrictions that it wishes into that
general law so that every contract entered into by the President under that specific area will
have to be uniform. The President has no choice but to follow all the guidelines that will be
provided by law.
MR. GASCON. But my basic problem is that we do not know as of yet the contents of such a
general law as to how much constraints there will be in it. And to my mind, although the
Committee's contention that the regular concurrence from Congress would subject Congress
to extensive lobbying, I think that is a risk we will have to take since Congress is a body of
representatives of the people whose membership will be changing regularly as there will be
changing circumstances every time certain agreements are made. It would be best then to
keep in tab and attuned to the interest of the Filipino people, whenever the President enters
into any agreement with regard to such an important matter as technical or financial
assistance for large-scale exploration, development and utilization of natural resources or
service contracts, the people's elected representatives should be on top of it.
xxxxxxxxx
MR. OPLE. Madam President, we do not need to suspend the session. If Commissioner
Gascon needs a few minutes, I can fill up the remaining time while he completes his
proposed amendment. I just wanted to ask Commissioner Jamir whether he would entertain
a minor amendment to his amendment, and it reads as follows: THE PRESIDENT SHALL
SUBSEQUENTLY NOTIFY CONGRESS OF EVERY SERVICE CONTRACT ENTERED INTO IN
ACCORDANCE WITH THE GENERAL LAW. I think the reason is, if I may state it briefly, as
Commissioner Bengzon said, Congress can always change the general law later on to conform
to new perceptions of standards that should be built into service contracts. But the only way
Congress can do this is if there were a notification requirement from the Office of the
President that such service contracts had been entered into, subject then to the scrutiny of
the Members of Congress. This pertains to a situation where the service contracts are
already entered into, and all that this amendment seeks is the reporting requirement from
the Office of the President. Will Commissioner Jamir entertain that?
MR. JAMIR. I will gladly do so, if it is still within my power.
MR. VILLEGAS. Yes, the Committee accepts the amendment.
xxxxxxxxx
SR. TAN. Madam President, may I ask a question?
THE PRESIDENT. Commissioner Tan is recognized.
SR. TAN. Am I correct in thinking that the only difference between these future service
contracts and the past service contracts under Mr. Marcos is the general law to be enacted
by the legislature and the notification of Congress by the President? That is the only
difference, is it not?
MR. VILLEGAS. That is right.
SR. TAN. So those are the safeguards.
MR. VILLEGAS. Yes. There was no law at all governing service contracts before.
SR. TAN. Thank you, Madam President.45
More Than Mere Financial
and Technical Assistance
Entailed by the Agreements
The clear words of Commissioner Jose N. Nolledo quoted below explicitly and eloquently demonstrate
that the drafters knew that the agreements with foreign corporations were going to entail not mere
technical or financial assistance but, rather, foreign investment in and management of an enterprise
involved in large-scale exploration, development and utilization of minerals, petroleum, and other
mineral oils.
THE PRESIDENT. Commissioner Nolledo is recognized.
MR. NOLLEDO. Madam President, I have the permission of the Acting Floor Leader to speak
for only two minutes in favor of the amendment of Commissioner Gascon.
THE PRESIDENT. Commissioner Nolledo may proceed.
MR. NOLLEDO. With due respect to the members of the Committee and Commissioner Jamir,
I am in favor of the objection of Commissioner Gascon.
Madam President, I was one of those who refused to sign the 1973 Constitution,
and one of the reasons is that there were many provisions in the Transitory
Provisions therein that favored aliens. I was shocked when I read a provision
 authorizing service contracts while we, in this Constitutional Commission, provided
for Filipino control of the economy. We are, therefore, providing for exceptional
instances where aliens may circumvent Filipino control of our economy. And one
way of circumventing the rule in favor of Filipino control of the economy is to
recognize service contracts.
As far as I am concerned, if I should have my own way, I am for the complete
deletion of this provision. However, we are presenting a compromise in the sense
that we are requiring a two-thirds vote of all the Members of Congress as a
safeguard. I think we should not mistrust the future Members of Congress by saying
that the purpose of this provision is to avoid corruption. We cannot claim that they
are less patriotic than we are. I think the Members of this Commission should know
that entering into service contracts is an exception to the rule on protection of
natural resources for the interest of the nation, and therefore, being an exception it
should be subject, whenever possible, to stringent rules. It seems to me that we are
liberalizing the rules in favor of aliens.
I say these things with a heavy heart, Madam President. I do not claim to be a
nationalist, but I love my country. Although we need investments, we must adopt
safeguards that are truly reflective of the sentiments of the people and not mere
cosmetic safeguards as they now appear in the Jamir amendment. (Applause)
Thank you, Madam President.46
Another excerpt, featuring then Commissioner (now Chief Justice) Hilario G. Davide Jr., indicates the
limitations of the scope of such service contracts -- they are valid only in regard to minerals,
petroleum and other mineral oils, not to all natural resources.
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. Thank you, Madam President. This is an amendment to the Jamir amendment
and also to the Ople amendment. I propose to delete "NATURAL RESOURCES" and substitute
it with the following: MINERALS, PETROLEUM AND OTHER MINERAL OILS. On the Ople
amendment, I propose to add: THE NOTIFICATION TO CONGRESS SHALL BE WITHIN THIRTY
DAYS FROM THE EXECUTION OF THE SERVICE CONTRACT.
THE PRESIDENT. What does the Committee say with respect to the first amendment in lieu of
"NATURAL RESOURCES"?
MR. VILLEGAS. Could Commissioner Davide explain that?
MR. DAVIDE. Madam President, with the use of "NATURAL RESOURCES" here, it would
necessarily include all lands of the public domain, our marine resources, forests, parks and so
on. So we would like to limit the scope of these service contracts to those areas really where
these may be needed, the exploitation, development and exploration of minerals, petroleum
and other mineral oils. And so, we believe that we should really, if we want to grant service
contracts at all, limit the same to only those particular areas where Filipino capital may not
be sufficient, and not to all natural resources.
MR. SUAREZ. Just a point of clarification again, Madam President. When the Commissioner
made those enumerations and specifications, I suppose he deliberately did not include
"agricultural land"?
MR. DAVIDE. That is precisely the reason we have to enumerate what these resources are
into which service contracts may enter. So, beyond the reach of any service contract will be
lands of the public domain, timberlands, forests, marine resources, fauna and flora, wildlife
and national parks.47
After the Jamir amendment was voted upon and approved by a vote of 21 to 10 with 2 abstentions,
Commissioner Davide made the following statement, which is very relevant to our quest:
THE PRESIDENT. Commissioner Davide is recognized.
MR. DAVIDE. I am very glad that Commissioner Padilla emphasized minerals, petroleum and
mineral oils. The Commission has just approved the possible foreign entry into the
development, exploration and utilization of these minerals, petroleum and other mineral oils
by virtue of the Jamir amendment. I voted in favor of the Jamir amendment because it will
eventually give way to vesting in exclusively Filipino citizens and corporations wholly owned
by Filipino citizens the right to utilize the other natural resources. This means that as a matter
of policy, natural resources should be utilized and exploited only by Filipino citizens or
corporations wholly owned by such citizens. But by virtue of the Jamir amendment, since we
feel that Filipino capital may not be enough for the development and utilization of minerals,
petroleum and other mineral oils, the President can enter into service contracts with foreign
corporations precisely for the development and utilization of such resources. And so, there is
nothing to fear that we will stagnate in the development of minerals, petroleum and mineral
oils because we now allow service contracts. x x x."48
The foregoing are mere fragments of the framers' lengthy discussions of the provision dealing
with agreements x x x involving either technical or financial assistance, which ultimately became
paragraph 4 of Section 2 of Article XII of the Constitution. Beyond any doubt, the members of the
ConCom were actually debating about the martial-law-era service contracts for which they were
crafting appropriate safeguards.
In the voting that led to the approval of Article XII by the ConCom, the explanations given by
Commissioners Gascon, Garcia and Tadeo indicated that they had voted to reject this provision on
account of their objections to the "constitutionalization" of the "service contract" concept.
Mr. Gascon said, "I felt that if we would constitutionalize any provision on service contracts, this
should always be with the concurrence of Congress and not guided only by a general law to be
promulgated by Congress."49 Mr. Garcia explained, "Service contracts are given constitutional
legitimization in Sec. 3, even when they have been proven to be inimical to the interests of the nation,
providing, as they do, the legal loophole for the exploitation of our natural resources for the benefit of
foreign interests."50 Likewise, Mr. Tadeo cited inter alia the fact that service contracts continued to
subsist, enabling foreign interests to benefit from our natural resources. 51 It was hardly likely that
these gentlemen would have objected so strenuously, had the provision called for mere technical or
financial assistance and nothing more.
The deliberations of the ConCom and some commissioners' explanation of their votes leave no room
for doubt that the service contract concept precisely underpinned the commissioners' understanding
of the "agreements involving either technical or financial assistance."
Summation of the
Concom Deliberations
At this point, we sum up the matters established, based on a careful reading of the ConCom
deliberations, as follows:
· In their deliberations on what was to become paragraph 4, the framers used the
term service contracts in referring to agreements x x x involving either technical or financial
assistance.
· They spoke of service contracts as the concept was understood in the 1973 Constitution.
· It was obvious from their discussions that they were not about to ban or eradicate service
contracts.
· Instead, they were plainly crafting provisions to put in place safeguards that would
eliminate or minimize the abuses prevalent during the marital law regime. In brief, they were
going to permit service contracts with foreign corporations as contractors, but with safety
measures to prevent abuses, as an exception to the general norm established in the first
paragraph of Section 2 of Article XII. This provision reserves or limits to Filipino citizens -- and
corporations at least 60 percent of which is owned by such citizens -- the exploration,
development and utilization of natural resources.
· This provision was prompted by the perceived insufficiency of Filipino capital and the felt
need for foreign investments in the EDU of minerals and petroleum resources.
· The framers for the most part debated about the sort of safeguards that would be
considered adequate and reasonable. But some of them, having more "radical" leanings,
wanted to ban service contracts altogether; for them, the provision would permit aliens to
exploit and benefit from the nation's natural resources, which they felt should be reserved
only for Filipinos.
· In the explanation of their votes, the individual commissioners were heard by the entire
body. They sounded off their individual opinions, openly enunciated their philosophies, and
supported or attacked the provisions with fervor. Everyone's viewpoint was heard.
· In the final voting, the Article on the National Economy and Patrimony -- including
paragraph 4 allowing service contracts with foreign corporations as an exception to the
general norm in paragraph 1 of Section 2 of the same article -- was resoundingly approved by
a vote of 32 to 7, with 2 abstentions.
Agreements Involving Technical
or Financial Assistance Are
Service Contracts With Safeguards
From the foregoing, we are impelled to conclude that the phrase agreements involving either
technical or financial assistance, referred to in paragraph 4, are in fact service contracts. But unlike
those of the 1973 variety, the new ones are between foreign corporations acting as contractors on the
one hand; and on the other, the government as principal or "owner" of the works. In the new service
contracts, the foreign contractors provide capital, technology and technical know-how, and
managerial expertise in the creation and operation of large-scale mining/extractive enterprises; and
the government, through its agencies (DENR, MGB), actively exercises control and supervision over
the entire operation.
Such service contracts may be entered into only with respect to minerals, petroleum and other
mineral oils. The grant thereof is subject to several safeguards, among which are these requirements:
(1) The service contract shall be crafted in accordance with a general law that will set
standard or uniform terms, conditions and requirements, presumably to attain a certain
uniformity in provisions and avoid the possible insertion of terms disadvantageous to the
country.
 (2) The President shall be the signatory for the government because, supposedly before an
agreement is presented to the President for signature, it will have been vetted several times
over at different levels to ensure that it conforms to law and can withstand public scrutiny.
(3) Within thirty days of the executed agreement, the President shall report it to Congress to
give that branch of government an opportunity to look over the agreement and interpose
timely objections, if any.
Use of the Record of the
ConCom to Ascertain Intent
At this juncture, we shall address, rather than gloss over, the use of the "framers' intent" approach,
and the criticism hurled by petitioners who quote a ruling of this Court:
"While it is permissible in this jurisdiction to consult the debates and proceedings of the
constitutional convention in order to arrive at the reason and purpose of the resulting
Constitution, resort thereto may be had only when other guides fail as said proceedings are
powerless to vary the terms of the Constitution when the meaning is clear. Debates in the
constitutional convention 'are of value as showing the views of the individual members, and
as indicating the reason for their votes, but they give us no light as to the views of the large
majority who did not talk, much less the mass of our fellow citizens whose votes at the polls
gave that instrument the force of fundamental law. We think it safer to construe the
constitution from what appears upon its face.' The proper interpretation therefore depends
more on how it was understood by the people adopting it than in the framers' understanding
thereof."52
The notion that the deliberations reflect only the views of those members who spoke out and not the
views of the majority who remained silent should be clarified. We must never forget that those who
spoke out were heard by those who remained silent and did not react. If the latter were silent
because they happened not to be present at the time, they are presumed to have read the minutes
and kept abreast of the deliberations. By remaining silent, they are deemed to have signified their
assent to and/or conformity with at least some of the views propounded or their lack of objections
thereto. It was incumbent upon them, as representatives of the entire Filipino people, to follow the
deliberations closely and to speak their minds on the matter if they did not see eye to eye with the
proponents of the draft provisions.
In any event, each and every one of the commissioners had the opportunity to speak out and to vote
on the matter. Moreover, the individual explanations of votes are on record, and they show where
each delegate stood on the issues. In sum, we cannot completely denigrate the value or usefulness
of the record of the ConCom, simply because certain members chose not to speak out.
It is contended that the deliberations therein did not necessarily reflect the thinking of the voting
population that participated in the referendum and ratified the Constitution. Verily, whether we like it
or not, it is a bit too much to assume that every one of those who voted to ratify the proposed
Charter did so only after carefully reading and mulling over it, provision by provision.
Likewise, it appears rather extravagant to assume that every one of those who did in fact bother to
read the draft Charter actually understood the import of its provisions, much less analyzed it vis-à-vis
the previous Constitutions. We believe that in reality, a good percentage of those who voted in favor
of it did so more out of faith and trust. For them, it was the product of the hard work and careful
deliberation of a group of intelligent, dedicated and trustworthy men and women of integrity and
conviction, whose love of country and fidelity to duty could not be questioned.
In short, a large proportion of the voters voted "yes" because the drafters, or a majority of them,
endorsed the proposed Constitution. What this fact translates to is the inescapable conclusion that
many of the voters in the referendum did not form their own isolated judgment about the draft
Charter, much less about particular provisions therein. They only relied or fell back and acted upon
the favorable endorsement or recommendation of the framers as a group. In other words, by
voting yes, they may be deemed to have signified their voluntary adoption of the understanding and
interpretation of the delegates with respect to the proposed Charter and its particular provisions. "If
it's good enough for them, it's good enough for me;" or, in many instances, "If it's good enough for
President Cory Aquino, it's good enough for me."
And even for those who voted based on their own individual assessment of the proposed Charter,
there is no evidence available to indicate that their assessment or understanding of its provisions was
in fact different from that of the drafters. This unwritten assumption seems to be petitioners' as well.
For all we know, this segment of voters must have read and understood the provisions of the
Constitution in the same way the framers had, an assumption that would account for the favorable
votes.
Fundamentally speaking, in the process of rewriting the Charter, the members of the ConCom as a
group were supposed to represent the entire Filipino people. Thus, we cannot but regard their views
as being very much indicative of the thinking of the people with respect to the matters deliberated
upon and to the Charter as a whole.
It is therefore reasonable and unavoidable to make the following conclusion, based on the above
arguments. As written by the framers and ratified and adopted by the people, the Constitution
allows the continued use of service contracts with foreign corporations -- as contractors who would
invest in and operate and manage extractive enterprises, subject to the full control and supervision
of the State -- sans the abuses of the past regime. The purpose is clear: to develop and utilize our
mineral, petroleum and other resources on a large scale for the immediate and tangible benefit of
the Filipino people.
In view of the foregoing discussion, we should reverse the Decision of January 27, 2004, and in fact
now hold a view different from that of the Decision, which had these findings: (a) paragraph 4 of
Section 2 of Article XII limits foreign involvement in the local mining industry to agreements strictly for
either financial or technical assistance only; (b) the same paragraph precludes agreements that grant
to foreign corporations the management of local mining operations, as such agreements are
purportedly in the nature of service contracts as these were understood under the 1973 Constitution;
(c) these service contracts were supposedly "de-constitutionalized" and proscribed by the omission of
the term service contracts from the 1987 Constitution; (d) since the WMCP FTAA contains provisions
permitting the foreign contractor to manage the concern, the said FTAA is invalid for being a
prohibited service contract; and (e) provisions of RA 7942 and DAO 96-40, which likewise grant
managerial authority to the foreign contractor, are also invalid and unconstitutional.
Ultimate Test: State's "Control"
Determinative of Constitutionality
But we are not yet at the end of our quest. Far from it. It seems that we are confronted with a
possible collision of constitutional provisions. On the one hand, paragraph 1 of Section 2 of Article XII
explicitly mandates the State to exercise "full control and supervision" over the exploration,
development and utilization of natural resources. On the other hand, paragraph 4 permits
safeguarded service contracts with foreign contractors. Normally, pursuant thereto, the contractors
exercise management prerogatives over the mining operations and the enterprise as a whole. There is
thus a legitimate ground to be concerned that either the State's full control and supervision may rule
out any exercise of management authority by the foreign contractor; or, the other way around,
allowing the foreign contractor full management prerogatives may ultimately negate the State's full
control and supervision.
Ut Magis Valeat
Quam Pereat
Under the third principle of constitutional construction laid down in Francisco -- ut magis valeat quam
pereat -- every part of the Constitution is to be given effect, and the Constitution is to be read and
understood as a harmonious whole. Thus, "full control and supervision" by the State must be
understood as one that does not preclude the legitimate exercise of management prerogatives by the
foreign contractor. Before any further discussion, we must stress the primacy and supremacy of the
principle of sovereignty and State control and supervision over all aspects of exploration,
development and utilization of the country's natural resources, as mandated in the first paragraph of
Section 2 of Article XII.
But in the next breadth we have to point out that "full control and supervision" cannot be taken
literally to mean that the State controls and supervises everything involved, down to the minutest
details, and makes all decisions required in the mining operations. This strained concept of control
and supervision over the mining enterprise would render impossible the legitimate exercise by the
contractors of a reasonable degree of management prerogative and authority necessary and
indispensable to their proper functioning.
For one thing, such an interpretation would discourage foreign entry into large-scale exploration,
development and utilization activities; and result in the unmitigated stagnation of this sector, to the
detriment of our nation's development. This scenario renders paragraph 4 inoperative and useless.
And as respondents have correctly pointed out, the government does not have to micro-manage the
mining operations and dip its hands into the day-to-day affairs of the enterprise in order for it to be
considered as having full control and supervision.
The concept of control53 adopted in Section 2 of Article XII must be taken to mean less than dictatorial,
all-encompassing control; but nevertheless sufficient to give the State the power to direct, restrain,
regulate and govern the affairs of the extractive enterprises. Control by the State may be on a macro
level, through the establishment of policies, guidelines, regulations, industry standards and similar
measures that would enable the government to control the conduct of affairs in various enterprises
and restrain activities deemed not desirable or beneficial.
The end in view is ensuring that these enterprises contribute to the economic development and
general welfare of the country, conserve the environment, and uplift the well-being of the affected
local communities. Such a concept of control would be compatible with permitting the foreign
contractor sufficient and reasonable management authority over the enterprise it invested in, in order
to ensure that it is operating efficiently and profitably, to protect its investments and to enable it to
succeed.
The question to be answered, then, is whether RA 7942 and its Implementing Rules enable the
government to exercise that degree of control sufficient to direct and regulate the conduct of affairs
of individual enterprises and restrain undesirable activities.
On the resolution of these questions will depend the validity and constitutionality of certain
provisions of the Philippine Mining Act of 1995 (RA 7942) and its Implementing Rules and Regulations
(DAO 96-40), as well as the WMCP FTAA.
Indeed, petitioners charge54 that RA 7942, as well as its Implementing Rules and Regulations, makes it
possible for FTAA contracts to cede full control and management of mining enterprises over to fully
foreign-owned corporations, with the result that the State is allegedly reduced to a passive regulator
dependent on submitted plans and reports, with weak review and audit powers. The State does not
supposedly act as the owner of the natural resources for and on behalf of the Filipino people; it
practically has little effective say in the decisions made by the enterprise. Petitioners then conclude
that the law, the implementing regulations, and the WMCP FTAA cede "beneficial ownership" of the
mineral resources to the foreign contractor.
A careful scrutiny of the provisions of RA 7942 and its Implementing Rules belies petitioners' claims.
Paraphrasing the Constitution, Section 4 of the statute clearly affirms the State's control thus:
 "Sec. 4. Ownership of Mineral Resources. – Mineral resources are owned by the State and the
exploration, development, utilization and processing thereof shall be under its full control
and supervision. The State may directly undertake such activities or it may enter into mineral
agreements with contractors.
"The State shall recognize and protect the rights of the indigenous cultural communities to
their ancestral lands as provided for by the Constitution."
The aforequoted provision is substantively reiterated in Section 2 of DAO 96-40 as follows:
"Sec. 2. Declaration of Policy. All mineral resources in public and private lands within the
territory and exclusive economic zone of the Republic of the Philippines are owned by the
State. It shall be the responsibility of the State to promote their rational exploration,
development, utilization and conservation through the combined efforts of the Government
and private sector in order to enhance national growth in a way that effectively safeguards
the environment and protects the rights of affected communities."
Sufficient Control Over Mining
Operations Vested in the State
by RA 7942 and DAO 96-40
RA 7942 provides for the State's control and supervision over mining operations. The following
provisions thereof establish the mechanism of inspection and visitorial rights over mining operations
and institute reportorial requirements in this manner:
1. Sec. 8 which provides for the DENR's power of over-all supervision and periodic review for
"the conservation, management, development and proper use of the State's mineral
resources";
2. Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB) under the DENR to
exercise "direct charge in the administration and disposition of mineral resources", and
empowers the MGB to "monitor the compliance by the contractor of the terms and
conditions of the mineral agreements", "confiscate surety and performance bonds", and
deputize whenever necessary any member or unit of the Phil. National Police, barangay, duly
registered non-governmental organization (NGO) or any qualified person to police mining
activities;
3. Sec. 66 which vests in the Regional Director "exclusive jurisdiction over safety inspections
of all installations, whether surface or underground", utilized in mining operations.
4. Sec. 35, which incorporates into all FTAAs the following terms, conditions and warranties:
"(g) Mining operations shall be conducted in accordance with the provisions of the
Act and its IRR.
"(h) Work programs and minimum expenditures commitments.
xxxxxxxxx
"(k) Requiring proponent to effectively use appropriate anti-pollution technology
and facilities to protect the environment and restore or rehabilitate mined-out
areas.
"(l) The contractors shall furnish the Government records of geologic, accounting
and other relevant data for its mining operation, and that books of accounts and
records shall be open for inspection by the government. x x x.
"(m) Requiring the proponent to dispose of the minerals at the highest price and
more advantageous terms and conditions.
"(n) x x x x x x x x x
"(o) Such other terms and conditions consistent with the Constitution and with this
Act as the Secretary may deem to be for the best interest of the State and the
welfare of the Filipino people."
The foregoing provisions of Section 35 of RA 7942 are also reflected and
implemented in Section 56 (g), (h), (l), (m) and (n) of the Implementing Rules, DAO
96-40.
Moreover, RA 7942 and DAO 96-40 also provide various stipulations confirming the government's
control over mining enterprises:
· The contractor is to relinquish to the government those portions of the contract area not
needed for mining operations and not covered by any declaration of mining feasibility
(Section 35-e, RA 7942; Section 60, DAO 96-40).
· The contractor must comply with the provisions pertaining to mine safety, health and
environmental protection (Chapter XI, RA 7942; Chapters XV and XVI, DAO 96-40).
· For violation of any of its terms and conditions, government may cancel an FTAA. (Chapter
XVII, RA 7942; Chapter XXIV, DAO 96-40).
· An FTAA contractor is obliged to open its books of accounts and records for inspection by · The FTAA contractor is obliged to submit reports (on quarterly, semi-annual or annual basis
the government (Section 56-m, DAO 96-40). as the case may be; per Section 270, DAO 96-40), pertaining to the following:

· An FTAA contractor has to dispose of the minerals and by-products at the highest market 1. Exploration
price and register with the MGB a copy of the sales agreement (Section 56-n, DAO 96-40).
2. Drilling
· MGB is mandated to monitor the contractor's compliance with the terms and conditions of
the FTAA; and to deputize, when necessary, any member or unit of the Philippine National 3. Mineral resources and reserves
Police, the barangay or a DENR-accredited nongovernmental organization to police mining
activities (Section 7-d and -f, DAO 96-40). 4. Energy consumption

· An FTAA cannot be transferred or assigned without prior approval by the President (Section 5. Production
40, RA 7942; Section 66, DAO 96-40).
6. Sales and marketing
· A mining project under an FTAA cannot proceed to the
construction/development/utilization stage, unless its Declaration of Mining Project
7. Employment
Feasibility has been approved by government (Section 24, RA 7942).
8. Payment of taxes, royalties, fees and other Government Shares
· The Declaration of Mining Project Feasibility filed by the contractor cannot be approved
without submission of the following documents:
9. Mine safety, health and environment
1. Approved mining project feasibility study (Section 53-d, DAO 96-40)
10. Land use
2. Approved three-year work program (Section 53-a-4, DAO 96-40)
11. Social development
3. Environmental compliance certificate (Section 70, RA 7942)
12. Explosives consumption
4. Approved environmental protection and enhancement program (Section 69, RA
· An FTAA pertaining to areas within government reservations cannot be granted without a
7942)
written clearance from the government agencies concerned (Section 19, RA 7942; Section
54, DAO 96-40).
5. Approval by the Sangguniang Panlalawigan/Bayan/Barangay (Section 70, RA 7942;
Section 27, RA 7160)
· An FTAA contractor is required to post a financial guarantee bond in favor of the
government in an amount equivalent to its expenditures obligations for any particular year.
6. Free and prior informed consent by the indigenous peoples concerned, including
This requirement is apart from the representations and warranties of the contractor that it
payment of royalties through a Memorandum of Agreement (Section 16, RA 7942;
has access to all the financing, managerial and technical expertise and technology necessary
Section 59, RA 8371)
to carry out the objectives of the FTAA (Section 35-b, -e, and -f, RA 7942).

· The FTAA contractor is obliged to assist in the development of its mining community,
· Other reports to be submitted by the contractor, as required under DAO 96-40, are as
promotion of the general welfare of its inhabitants, and development of science and mining
follows: an environmental report on the rehabilitation of the mined-out area and/or mine
technology (Section 57, RA 7942).
waste/tailing covered area, and anti-pollution measures undertaken (Section 35-a-2); annual
reports of the mining operations and records of geologic accounting (Section 56-m); annual
progress reports and final report of exploration activities (Section 56-2).
 · Other programs required to be submitted by the contractor, pursuant to DAO 96-40, are the
following: a safety and health program (Section 144); an environmental work program
(Section 168); an annual environmental protection and enhancement program (Section 171).
The foregoing gamut of requirements, regulations, restrictions and limitations imposed upon the FTAA
contractor by the statute and regulations easily overturns petitioners' contention. The setup under RA
7942 and DAO 96-40 hardly relegates the State to the role of a "passive regulator" dependent on
submitted plans and reports. On the contrary, the government agencies concerned are empowered to
approve or disapprove -- hence, to influence, direct and change -- the various work programs and the
corresponding minimum expenditure commitments for each of the exploration, development and
utilization phases of the mining enterprise.
Once these plans and reports are approved, the contractor is bound to comply with its commitments
therein. Figures for mineral production and sales are regularly monitored and subjected to
government review, in order to ensure that the products and by-products are disposed of at the best
prices possible; even copies of sales agreements have to be submitted to and registered with MGB.
And the contractor is mandated to open its books of accounts and records for scrutiny, so as to enable
the State to determine if the government share has been fully paid.
The State may likewise compel the contractor's compliance with mandatory requirements on mine
safety, health and environmental protection, and the use of anti-pollution technology and facilities.
Moreover, the contractor is also obligated to assist in the development of the mining community and
to pay royalties to the indigenous peoples concerned.
Cancellation of the FTAA may be the penalty for violation of any of its terms and conditions and/or
noncompliance with statutes or regulations. This general, all-around, multipurpose sanction is no
trifling matter, especially to a contractor who may have yet to recover the tens or hundreds of millions
of dollars sunk into a mining project.
Overall, considering the provisions of the statute and the regulations just discussed, we believe that
the State definitely possesses the means by which it can have the ultimate word in the operation of
the enterprise, set directions and objectives, and detect deviations and noncompliance by the
contractor; likewise, it has the capability to enforce compliance and to impose sanctions, should the
occasion therefor arise.
In other words, the FTAA contractor is not free to do whatever it pleases and get away with it; on
the contrary, it will have to follow the government line if it wants to stay in the enterprise.
Ineluctably then, RA 7942 and DAO 96-40 vest in the government more than a sufficient degree of
control and supervision over the conduct of mining operations.
Section 3(aq) of RA 7942
Not Unconstitutional
An objection has been expressed that Section 3(aq) 55 of RA 7942 -- which allows a foreign contractor
to apply for and hold an exploration permit -- is unconstitutional. The reasoning is that Section 2 of
Article XII of the Constitution does not allow foreign-owned corporations to undertake mining
operations directly. They may act only as contractors of the State under an FTAA; and the State, as the
party directly undertaking exploitation of its natural resources, must hold through the government all
exploration permits and similar authorizations. Hence, Section 3(aq), in permitting foreign-owned
corporations to hold exploration permits, is unconstitutional.
The objection, however, is not well-founded. While the Constitution mandates the State to exercise
full control and supervision over the exploitation of mineral resources, nowhere does it require the
government to hold all exploration permits and similar authorizations. In fact, there is no prohibition
at all against foreign or local corporations or contractors holding exploration permits. The reason is
not hard to see.
Pursuant to Section 20 of RA 7942, an exploration permit merely grants to a qualified person the right
to conduct exploration for all minerals in specified areas. Such a permit does not amount to an
authorization to extract and carry off the mineral resources that may be discovered. This phase
involves nothing but expenditures for exploring the contract area and locating the mineral bodies. As
no extraction is involved, there are no revenues or incomes to speak of. In short, the exploration
permit is an authorization for the grantee to spend its own funds on exploration programs that are
pre-approved by the government, without any right to recover anything should no minerals in
commercial quantities be discovered. The State risks nothing and loses nothing by granting these
permits to local or foreign firms; in fact, it stands to gain in the form of data generated by the
exploration activities.
Pursuant to Section 24 of RA 7942, an exploration permit grantee who determines the commercial
viability of a mining area may, within the term of the permit, file with the MGB a declaration of mining
project feasibility accompanied by a work program for development. The approval of the mining
project feasibility and compliance with other requirements of RA 7942 vests in the grantee the
exclusive right to an MPSA or any other mineral agreement, or to an FTAA.
Thus, the permit grantee may apply for an MPSA, a joint venture agreement, a co-production
agreement, or an FTAA over the permit area, and the application shall be approved if the permit
grantee meets the necessary qualifications and the terms and conditions of any such agreement.
Therefore, the contractor will be in a position to extract minerals and earn revenues only when the
MPSA or another mineral agreement, or an FTAA, is granted. At that point, the contractor's rights and
obligations will be covered by an FTAA or a mineral agreement.
But prior to the issuance of such FTAA or mineral agreement, the exploration permit grantee (or
prospective contractor) cannot yet be deemed to have entered into any contract or agreement with
the State, and the grantee would definitely need to have some document or instrument as evidence
of its right to conduct exploration works within the specified area. This need is met by the exploration
permit issued pursuant to Sections 3(aq), 20 and 23 of RA 7942.
In brief, the exploration permit serves a practical and legitimate purpose in that it protects the
interests and preserves the rights of the exploration permit grantee (the would-be contractor) --
foreign or local -- during the period of time that it is spending heavily on exploration works, without
yet being able to earn revenues to recoup any of its investments and expenditures. Minus this
permit and the protection it affords, the exploration works and expenditures may end up benefiting
only claim-jumpers. Such a possibility tends to discourage investors and contractors. Thus, Section
3(aq) of RA 7942 may not be deemed unconstitutional.
The Terms of the WMCP FTAA
A Deference to State Control
A perusal of the WMCP FTAA also reveals a slew of stipulations providing for State control and
supervision:
1. The contractor is obligated to account for the value of production and sale of minerals
(Clause 1.4).
2. The contractor's work program, activities and budgets must be approved by/on behalf of
the State (Clause 2.1).
3. The DENR secretary has the power to extend the exploration period (Clause 3.2-a).
4. Approval by the State is necessary for incorporating lands into the FTAA contract area
(Clause 4.3-c).
5. The Bureau of Forest Development is vested with discretion in regard to approving the
inclusion of forest reserves as part of the FTAA contract area (Clause 4.5).
6. The contractor is obliged to relinquish periodically parts of the contract area not needed
for exploration and development (Clause 4.6).
7. A Declaration of Mining Feasibility must be submitted for approval by the State (Clause
4.6-b).
8. The contractor is obligated to report to the State its exploration activities (Clause 4.9).
9. The contractor is required to obtain State approval of its work programs for the succeeding
two-year periods, containing the proposed work activities and expenditures budget related
to exploration (Clause 5.1).
10. The contractor is required to obtain State approval for its proposed expenditures for
exploration activities (Clause 5.2).
11. The contractor is required to submit an annual report on geological, geophysical,
geochemical and other information relating to its explorations within the FTAA area (Clause
5.3-a).
12. The contractor is to submit within six months after expiration of exploration period a final
report on all its findings in the contract area (Clause 5.3-b).
13. The contractor, after conducting feasibility studies, shall submit a declaration of mining
feasibility, along with a description of the area to be developed and mined, a description of
the proposed mining operations and the technology to be employed, and a proposed work
program for the development phase, for approval by the DENR secretary (Clause 5.4).
14. The contractor is obliged to complete the development of the mine, including
construction of the production facilities, within the period stated in the approved work
program (Clause 6.1).
15. The contractor is obligated to submit for approval of the DENR secretary a work program
covering each period of three fiscal years (Clause 6.2).
16. The contractor is to submit reports to the DENR secretary on the production, ore
reserves, work accomplished and work in progress, profile of its work force and management
staff, and other technical information (Clause 6.3).
17. Any expansions, modifications, improvements and replacements of mining facilities shall
be subject to the approval of the secretary (Clause 6.4).
18. The State has control with respect to the amount of funds that the contractor may
borrow within the Philippines (Clause 7.2).
19. The State has supervisory power with respect to technical, financial and marketing issues
(Clause 10.1-a).
20. The contractor is required to ensure 60 percent Filipino equity in the contractor, within
ten years of recovering specified expenditures, unless not so required by subsequent
legislation (Clause 10.1).
21. The State has the right to terminate the FTAA for the contractor's unremedied substantial
breach thereof (Clause 13.2);
 22. The State's approval is needed for any assignment of the FTAA by the contractor to an
entity other than an affiliate (Clause 14.1).
We should elaborate a little on the work programs and budgets, and what they mean with respect to
the State's ability to exercise full control and effective supervision over the enterprise. For instance,
throughout the initial five-year exploration and feasibility phase of the project, the contractor is
mandated by Clause 5.1 of the WMCP FTAA to submit a series of work programs (copy furnished the
director of MGB) to the DENR secretary for approval. The programs will detail the contractor's
proposed exploration activities and budget covering each subsequent period of two fiscal years.
In other words, the concerned government officials will be informed beforehand of the proposed
exploration activities and expenditures of the contractor for each succeeding two-year period, with
the right to approve/disapprove them or require changes or adjustments therein if deemed
necessary.
Likewise, under Clause 5.2(a), the amount that the contractor was supposed to spend for exploration
activities during the first contract year of the exploration period was fixed at not less than P24 million;
and then for the succeeding years, the amount shall be as agreed between the DENR secretary and
the contractor prior to the commencement of each subsequent fiscal year. If no such agreement is
arrived upon, the previous year's expenditure commitment shall apply.
This provision alone grants the government through the DENR secretary a very big say in the
exploration phase of the project. This fact is not something to be taken lightly, considering that
the government has absolutely no contribution to the exploration expenditures or work activities and
yet is given veto power over such a critical aspect of the project. We cannot but construe as very
significant such a degree of control over the project and, resultantly, over the mining enterprise itself.
Following its exploration activities or feasibility studies, if the contractor believes that any part of the
contract area is likely to contain an economic mineral resource, it shall submit to the DENR secretary a
declaration of mining feasibility (per Clause 5.4 of the FTAA), together with a technical description of
the area delineated for development and production, a description of the proposed mining operations
including the technology to be used, a work program for development, an environmental impact
statement, and a description of the contributions to the economic and general welfare of the country
to be generated by the mining operations (pursuant to Clause 5.5).
The work program for development is subject to the approval of the DENR secretary. Upon its
approval, the contractor must comply with it and complete the development of the mine, including
the construction of production facilities and installation of machinery and equipment, within the
period provided in the approved work program for development (per Clause 6.1).
Thus, notably, the development phase of the project is likewise subject to the control and supervision
of the government. It cannot be emphasized enough that the proper and timely construction and
deployment of the production facilities and the development of the mine are of pivotal significance to
the success of the mining venture. Any missteps here will potentially be very costly to remedy. Hence,
the submission of the work program for development to the DENR secretary for approval is
particularly noteworthy, considering that so many millions of dollars worth of investments -- courtesy
of the contractor -- are made to depend on the State's consideration and action.
Throughout the operating period, the contractor is required to submit to the DENR secretary for
approval, copy furnished the director of MGB, work programs covering each period of three fiscal
years (per Clause 6.2). During the same period (per Clause 6.3), the contractor is mandated to submit
various quarterly and annual reports to the DENR secretary, copy furnished the director of MGB, on
the tonnages of production in terms of ores and concentrates, with corresponding grades, values and
destinations; reports of sales; total ore reserves, total tonnage of ores, work accomplished and work
in progress (installations and facilities related to mining operations), investments made or committed,
and so on and so forth.
Under Section VIII, during the period of mining operations, the contractor is also required to submit to
the DENR secretary (copy furnished the director of MGB) the work program and corresponding
budget for the contract area, describing the mining operations that are proposed to be carried out
during the period covered. The secretary is, of course, entitled to grant or deny approval of any work
program or budget and/or propose revisions thereto. Once the program/budget has been approved,
the contractor shall comply therewith.
In sum, the above provisions of the WMCP FTAA taken together, far from constituting a surrender of
control and a grant of beneficial ownership of mineral resources to the contractor in question, bestow
upon the State more than adequate control and supervision over the activities of the contractor
and the enterprise.
No Surrender of Control
Under the WMCP FTAA
Petitioners, however, take aim at Clause 8.2, 8.3, and 8.5 of the WMCP FTAA which, they say, amount
to a relinquishment of control by the State, since it "cannot truly impose its own discretion" in respect
of the submitted work programs.
"8.2. The Secretary shall be deemed to have approved any Work Programme or Budget or
variation thereofsubmitted by the Contractor unless within sixty (60) days after submission
by the Contractor the Secretary gives notice declining such approval or proposing a revision
of certain features and specifying its reasons therefor ('the Rejection Notice').
8.3. If the Secretary gives a Rejection Notice, the Parties shall promptly meet and endeavor to
agree on amendments to the Work Programme or Budget. If the Secretary and the
Contractor fail to agree on the proposed revision within 30 days from delivery of the
Rejection Notice then the Work Programme or Budget or variation thereof proposed by the
 Contractor shall be deemed approved, so as not to unnecessarily delay the performance of
the Agreement.
8.4. x x x x x x x x x
8.5. So far as is practicable, the Contractor shall comply with any approved Work Programme
and Budget. It is recognized by the Secretary and the Contractor that the details of any Work
Programmes or Budgets may require changes in the light of changing circumstances. The
Contractor may make such changes without approval of the Secretary provided they do not
change the general objective of any Work Programme, nor entail a downward variance of
more than twenty per centum (20percent) of the relevant Budget. All other variations to an
approved Work Programme or Budget shall be submitted for approval of the Secretary."
From the provisions quoted above, petitioners generalize by asserting that the government does not
participate in making critical decisions regarding the operations of the mining firm. Furthermore,
while the State can require the submission of work programs and budgets, the decision of the
contractor will still prevail, if the parties have a difference of opinion with regard to matters affecting
operations and management.
We hold, however, that the foregoing provisions do not manifest a relinquishment of control. For
instance, Clause 8.2 merely provides a mechanism for preventing the business or mining operations
from grinding to a complete halt as a result of possibly over-long and unjustified delays in the
government's handling, processing and approval of submitted work programs and budgets. Anyway,
the provision does give the DENR secretary more than sufficient time (60 days) to react to submitted
work programs and budgets. It cannot be supposed that proper grounds for objecting thereto, if any
exist, cannot be discovered within a period of two months.
On the other hand, Clause 8.3 seeks to provide a temporary, stop-gap solution in the event a
disagreement over the submitted work program or budget arises between the State and the
contractor and results in a stalemate or impasse, in order that there will be no unreasonably long
delays in the performance of the works.
These temporary or stop-gap solutions are not necessarily evil or wrong. Neither does it follow that
the government will inexorably be aggrieved if and when these temporary remedies come into
play. First, avoidance of long delays in these situations will undoubtedly redound to the benefit of the
State as well as the contractor. Second, who is to say that the work program or budget proposed by
the contractor and deemed approved under Clause 8.3 would not be the better or more reasonable
or more effective alternative? The contractor, being the "insider," as it were, may be said to be in a
better position than the State -- an outsider looking in -- to determine what work program or budget
would be appropriate, more effective, or more suitable under the circumstances.
All things considered, we take exception to the characterization of the DENR secretary as a
subservient nonentity whom the contractor can overrule at will, on account of Clause 8.3. And neither
is it true that under the same clause, the DENR secretary has no authority whatsoever to disapprove
the work program. As Respondent WMCP reasoned in its Reply-Memorandum, the State -- despite
Clause 8.3 -- still has control over the contract area and it may, as sovereign authority, prohibit work
thereon until the dispute is resolved. And ultimately, the State may terminate the agreement,
pursuant to Clause 13.2 of the same FTAA, citing substantial breach thereof. Hence, it clearly retains
full and effective control of the exploitation of the mineral resources.
On the other hand, Clause 8.5 is merely an acknowledgment of the parties' need for flexibility, given
that no one can accurately forecast under all circumstances, or predict how situations may change.
Hence, while approved work programs and budgets are to be followed and complied with as far as
practicable, there may be instances in which changes will have to be effected, and effected rapidly,
since events may take shape and unfold with suddenness and urgency. Thus, Clause 8.5 allows the
contractor to move ahead and make changes without the express or implicit approval of the DENR
secretary. Such changes are, however, subject to certain conditions that will serve to limit or restrict
the variance and prevent the contractor from straying very far from what has been approved.
Clause 8.5 provides the contractor a certain amount of flexibility to meet unexpected situations, while
still guaranteeing that the approved work programs and budgets are not abandoned altogether.
Clause 8.5 does not constitute proof that the State has relinquished control. And ultimately, should
there be disagreement with the actions taken by the contractor in this instance as well as under
Clause 8.3 discussed above, the DENR secretary may resort to cancellation/termination of the FTAA as
the ultimate sanction.
Discretion to Select Contract
Area Not an Abdication of Control
Next, petitioners complain that the contractor has full discretion to select -- and the government has
no say whatsoever as to -- the parts of the contract area to be relinquished pursuant to Clause 4.6 of
the WMCP FTAA.56This clause, however, does not constitute abdication of control. Rather, it is a mere
acknowledgment of the fact that the contractor will have determined, after appropriate exploration
works, which portions of the contract area do not contain minerals in commercial quantities sufficient
to justify developing the same and ought therefore to be relinquished. The State cannot just
substitute its judgment for that of the contractor and dictate upon the latter which areas to give up.
Moreover, we can be certain that the contractor's self-interest will propel proper and efficient
relinquishment. According to private respondent,57 a mining company tries to relinquish as much non-
mineral areas as soon as possible, because the annual occupation fees paid to the government are
based on the total hectarage of the contract area, net of the areas relinquished. Thus, the larger the
remaining area, the heftier the amount of occupation fees to be paid by the contractor. Accordingly,
relinquishment is not an issue, given that the contractor will not want to pay the annual occupation
fees on the non-mineral parts of its contract area. Neither will it want to relinquish promising sites,
which other contractors may subsequently pick up.
Government Not a Subcontractor
Petitioners further maintain that the contractor can compel the government to exercise its power of
eminent domain to acquire surface areas within the contract area for the contractor's use. Clause 10.2
(e) of the WMCP FTAA provides that the government agrees that the contractor shall "(e) have the
right to require the Government at the Contractor's own cost, to purchase or acquire surface areas for
and on behalf of the Contractor at such price and terms as may be acceptable to the contractor. At the
termination of this Agreement such areas shall be sold by public auction or tender and the Contractor
shall be entitled to reimbursement of the costs of acquisition and maintenance, adjusted for inflation,
from the proceeds of sale."
According to petitioners, "government becomes a subcontractor to the contractor" and may, on
account of this provision, be compelled "to make use of its power of eminent domain, not for public
purposes but on behalf of a private party, i.e., the contractor." Moreover, the power of the courts to
determine the amount corresponding to the constitutional requirement of just compensation has
allegedly also been contracted away by the government, on account of the latter's commitment that
the acquisition shall be at such terms as may be acceptable to the contractor.
However, private respondent has proffered a logical explanation for the provision. 58 Section 10.2(e)
contemplates a situation applicable to foreign-owned corporations. WMCP, at the time of the
execution of the FTAA, was a foreign-owned corporation and therefore not qualified to own land. As
contractor, it has at some future date to construct the infrastructure -- the mine processing plant, the
camp site, the tailings dam, and other infrastructure -- needed for the large-scale mining operations. It
will then have to identify and pinpoint, within the FTAA contract area, the particular surface areas
with favorable topography deemed ideal for such infrastructure and will need to acquire the surface
rights. The State owns the mineral deposits in the earth, and is also qualified to own land.
Section 10.2(e) sets forth the mechanism whereby the foreign-owned contractor, disqualified to own
land, identifies to the government the specific surface areas within the FTAA contract area to be
acquired for the mine infrastructure. The government then acquires ownership of the surface land
areas on behalf of the contractor, in order to enable the latter to proceed to fully implement the FTAA.
The contractor, of course, shoulders the purchase price of the land. Hence, the provision allows it,
after termination of the FTAA, to be reimbursed from proceeds of the sale of the surface areas, which
the government will dispose of through public bidding. It should be noted that this provision will not
be applicable to Sagittarius as the present FTAA contractor, since it is a Filipino corporation qualified
to own and hold land. As such, it may therefore freely negotiate with the surface rights owners and
acquire the surface property in its own right.
Clearly, petitioners have needlessly jumped to unwarranted conclusions, without being aware of the
rationale for the said provision. That provision does not call for the exercise of the power of eminent
domain -- and determination of just compensation is not an issue -- as much as it calls for a qualified
party to acquire the surface rights on behalf of a foreign-owned contractor.
Rather than having the foreign contractor act through a dummy corporation, having the State do the
purchasing is a better alternative. This will at least cause the government to be aware of such
transaction/s and foster transparency in the contractor's dealings with the local property owners. The
government, then, will not act as a subcontractor of the contractor; rather, it will facilitate the
transaction and enable the parties to avoid a technical violation of the Anti-Dummy Law.
Absence of Provision
Requiring Sale at Posted
Prices Not Problematic
The supposed absence of any provision in the WMCP FTAA directly and explicitly requiring the
contractor to sell the mineral products at posted or market prices is not a problem. Apart from Clause
1.4 of the FTAA obligating the contractor to account for the total value of mineral production and the
sale of minerals, we can also look to Section 35 of RA 7942, which incorporates into all FTAAs certain
terms, conditions and warranties, including the following:
"(l) The contractors shall furnish the Government records of geologic, accounting and other
relevant data for its mining operation, and that books of accounts and records shall be open
for inspection by the government.x x x
(m) Requiring the proponent to dispose of the minerals at the highest price and more
advantageous terms and conditions."
For that matter, Section 56(n) of DAO 99-56 specifically obligates an FTAA contractor to dispose of the
minerals and by-products at the highest market price and to register with the MGB a copy of the sales
agreement. After all, the provisions of prevailing statutes as well as rules and regulations are deemed
written into contracts.
Contractor's Right to Mortgage
Not Objectionable Per Se
Petitioners also question the absolute right of the contractor under Clause 10.2 (l) to mortgage and
encumber not only its rights and interests in the FTAA and the infrastructure and improvements
introduced, but also the mineral products extracted. Private respondents do not touch on this matter,
but we believe that this provision may have to do with the conditions imposed by the creditor-banks
of the then foreign contractor WMCP to secure the lendings made or to be made to the latter.
Ordinarily, banks lend not only on the security of mortgages on fixed assets, but also on
encumbrances of goods produced that can easily be sold and converted into cash that can be applied
to the repayment of loans. Banks even lend on the security of accounts receivable that are collectible
within 90 days.59
It is not uncommon to find that a debtor corporation has executed deeds of assignment "by way of
security" over the production for the next twelve months and/or the proceeds of the sale thereof -- or
the corresponding accounts receivable, if sold on terms -- in favor of its creditor-banks. Such deeds
may include authorizing the creditors to sell the products themselves and to collect the sales
proceeds and/or the accounts receivable.
Seen in this context, Clause 10.2(l) is not something out of the ordinary or objectionable. In any case,
as will be explained below, even if it is allowed to mortgage or encumber the mineral end-products
themselves, the contractor is not freed of its obligation to pay the government its basic and additional
shares in the net mining revenue, which is the essential thing to consider.
In brief, the alarum raised over the contractor's right to mortgage the minerals is simply unwarranted.
Just the same, the contractor must account for the value of mineral production and the sales
proceeds therefrom. Likewise, under the WMCP FTAA, the government remains entitled to its sixty
percent share in the net mining revenues of the contractor. The latter's right to mortgage the minerals
does not negate the State's right to receive its share of net mining revenues.
Shareholders Free to Sell Their Stocks
Petitioners likewise criticize Clause 10.2(k), which gives the contractor authority "to change its equity
structure at any time." This provision may seem somewhat unusual, but considering that WMCP then
was 100 percent foreign-owned, any change would mean that such percentage would either stay
unaltered or be decreased in favor of Filipino ownership. Moreover, the foreign-held shares may
change hands freely. Such eventuality is as it should be.
We believe it is not necessary for government to attempt to limit or restrict the freedom of the
shareholders in the contractor to freely transfer, dispose of or encumber their shareholdings,
consonant with the unfettered exercise of their business judgment and discretion. Rather, what is
critical is that, regardless of the identity, nationality and percentage ownership of the various
shareholders of the contractor -- and regardless of whether these shareholders decide to take the
company public, float bonds and other fixed-income instruments, or allow the creditor-banks to take
an equity position in the company -- the foreign-owned contractor is always in a position to render the
services required under the FTAA, under the direction and control of the government.
Contractor's Right to Ask
For Amendment Not Absolute
With respect to Clauses 10.4(e) and (i), petitioners complain that these provisions bind government to
allow amendments to the FTAA if required by banks and other financial institutions as part of the
conditions for new lendings. However, we do not find anything wrong with Clause 10.4(e), which only
states that "if the Contractor seeks to obtain financing contemplated herein from banks or other
financial institutions, (the Government shall) cooperate with the Contractor in such efforts provided
that such financing arrangements will in no event reduce the Contractor's obligations or the
Government's rights hereunder." The colatilla obviously safeguards the State's interests; if breached, it
will give the government cause to object to the proposed amendments.
On the other hand, Clause 10.4(i) provides that "the Government shall favourably consider any
request from [the] Contractor for amendments of this Agreement which are necessary in order for the
Contractor to successfully obtain the financing." Petitioners see in this provision a complete
renunciation of control. We disagree.
The proviso does not say that the government shall grant any request for amendment. Clause 10.4(i)
only obliges the State to favorably consider any such request, which is not at all unreasonable, as it is
not equivalent to saying that the government must automatically consent to it. This provision should
be read together with the rest of the FTAA provisions instituting government control and supervision
over the mining enterprise. The clause should not be given an interpretation that enables the
contractor to wiggle out of the restrictions imposed upon it by merely suggesting that certain
amendments are requested by the lenders.
Rather, it is up to the contractor to prove to the government that the requested changes to the FTAA
are indispensable, as they enable the contractor to obtain the needed financing; that without such
contract changes, the funders would absolutely refuse to extend the loan; that there are no other
sources of financing available to the contractor (a very unlikely scenario); and that without the
needed financing, the execution of the work programs will not proceed. But the bottom line is, in the
exercise of its power of control, the government has the final say on whether to approve or
disapprove such requested amendments to the FTAA. In short, approval thereof is not mandatory on
the part of the government.
In fine, the foregoing evaluation and analysis of the aforementioned FTAA provisions sufficiently
overturns petitioners' litany of objections to and criticisms of the State's alleged lack of control.
Financial Benefits Not
Surrendered to the Contractor
One of the main reasons certain provisions of RA 7942 were struck down was the finding mentioned
in the Decision that beneficial ownership of the mineral resources had been conveyed to the
contractor. This finding was based on the underlying assumption, common to the said provisions, that
the foreign contractor manages the mineral resources in the same way that foreign contractors in
service contracts used to. "By allowing foreign contractors to manage or operate all the aspects of the
mining operation, the above-cited provisions of R.A. No. 7942 have in effect conveyed beneficial
ownership over the nation's mineral resources to these contractors, leaving the State with nothing but
bare title thereto."60 As the WMCP FTAA contained similar provisions deemed by the ponente to be
abhorrent to the Constitution, the Decision struck down the Contract as well.
Beneficial ownership has been defined as ownership recognized by law and capable of being enforced
in the courts at the suit of the beneficial owner. 61 Black's Law Dictionary indicates that the term is
used in two senses: first, to indicate the interest of a beneficiary in trust property (also called
"equitable ownership"); and second, to refer to the power of a corporate shareholder to buy or sell
the shares, though the shareholder is not registered in the corporation's books as the owner. 62 Usually,
beneficial ownership is distinguished from naked ownership, which is the enjoyment of all the
benefits and privileges of ownership, as against possession of the bare title to property.
An assiduous examination of the WMCP FTAA uncovers no indication that it confers upon WMCP
ownership, beneficial or otherwise, of the mining property it is to develop, the minerals to be
produced, or the proceeds of their sale, which can be legally asserted and enforced as against the
State.
As public respondents correctly point out, any interest the contractor may have in the proceeds of the
mining operation is merely the equivalent of the consideration the government has undertaken to pay
for its services. All lawful contracts require such mutual prestations, and the WMCP FTAA is no
different. The contractor commits to perform certain services for the government in respect of the
mining operation, and in turn it is to be compensated out of the net mining revenues generated from
the sale of mineral products. What would be objectionable is a contractual provision that unduly
benefits the contractor far in excess of the service rendered or value delivered, if any, in exchange
therefor.
A careful perusal of the statute itself and its implementing rules reveals that neither RA 7942 nor DAO
99-56 can be said to convey beneficial ownership of any mineral resource or product to any foreign
FTAA contractor.
Equitable Sharing
of Financial Benefits
On the contrary, DAO 99-56, entitled "Guidelines Establishing the Fiscal Regime of Financial or
Technical Assistance Agreements" aims to ensure an equitable sharing of the benefits derived from
mineral resources. These benefits are to be equitably shared among the government (national and
local), the FTAA contractor, and the affected communities. The purpose is to ensure sustainable
mineral resources development; and a fair, equitable, competitive and stable investment regime for
the large-scale exploration, development and commercial utilization of minerals. The general
framework or concept followed in crafting the fiscal regime of the FTAA is based on the principle that
the government expects real contributions to the economic growth and general welfare of the
country, while the contractor expects a reasonable return on its investments in the project. 63
Specifically, under the fiscal regime, the government's expectation is, inter alia, the receipt of its share
from the taxes and fees normally paid by a mining enterprise. On the other hand, the FTAA contractor
is granted by the government certain fiscal and non-fiscal incentives 64 to help support the former's
cash flow during the most critical phase (cost recovery) and to make the Philippines competitive with
other mineral-producing countries. After the contractor has recovered its initial investment, it will pay
all the normal taxes and fees comprising the basic share of the government, plus an additional share
for the government based on the options and formulae set forth in DAO 99-56.
The said DAO spells out the financial benefits the government will receive from an FTAA, referred to
as "the Government Share," composed of a basic government share and an additional government
share.
The basic government share is comprised of all direct taxes, fees and royalties, as well as other
payments made by the contractor during the term of the FTAA. These are amounts paid directly to (i)
the national government (through the Bureau of Internal Revenue, Bureau of Customs, Mines &
Geosciences Bureau and other national government agencies imposing taxes or fees), (ii) the local
government units where the mining activity is conducted, and (iii) persons and communities directly
affected by the mining project. The major taxes and other payments constituting the basic
government share are enumerated below: 65
Payments to the National Government:
· Excise tax on minerals - 2 percent of the gross output of mining operations
· Contractor' income tax - maximum of 32 percent of taxable income for
corporations
· Customs duties and fees on imported capital equipment -the rate is set by the
Tariff and Customs Code (3-7 percent for chemicals; 3-10 percent for explosives; 3-
15 percent for mechanical and electrical equipment; and 3-10 percent for vehicles,
aircraft and vessels
· VAT on imported equipment, goods and services – 10 percent of value
· Royalties due the government on minerals extracted from mineral reservations, if
applicable – 5 percent of the actual market value of the minerals produced
· Documentary stamp tax - the rate depends on the type of transaction
· Capital gains tax on traded stocks - 5 to 10 percent of the value of the shares
· Withholding tax on interest payments on foreign loans -15 percent of the amount
of interest
· Withholding tax on dividend payments to foreign stockholders – 15 percent of the
dividend
· Wharfage and port fees
· Licensing fees (for example, radio permit, firearms permit, professional fees)
 · Other national taxes and fees. The additional government share is computed by using one of three options or schemes presented in
DAO 99-56: (1) a fifty-fifty sharing in the cumulative present value of cash flows; (2) the share based
Payments to Local Governments: on excess profits; and (3) the sharing based on the cumulative net mining revenue. The particular
formula to be applied will be selected by the contractor, with a written notice to the government prior
· Local business tax - a maximum of 2 percent of gross sales or receipts (the rate to the commencement of the development and construction phase of the mining project. 66
varies among local government units)
Proceeds from the government shares arising from an FTAA contract are distributed to and received
· Real property tax - 2 percent of the fair market value of the property, based on an by the different levels of government in the following proportions:
assessment level set by the local government

· Special education levy - 1 percent of the basis used for the real property tax National Government 50 percent

· Occupation fees - PhP50 per hectare per year; PhP100 per hectare per year if
located in a mineral reservation
Provincial Government 10 percent
· Community tax - maximum of PhP10,500 per year

· All other local government taxes, fees and imposts as of the effective date of the
FTAA - the rate and the type depend on the local government Municipal Government 20 percent

Other Payments:

· Royalty to indigenous cultural communities, if any – 1 percent of gross output from Affected Barangays 20 percent
mining operations

· Special allowance - payment to claim owners and surface rights holders

The portion of revenues remaining after the deduction of the basic and additional government shares
is what goes to the contractor.
Apart from the basic share, an additional government share is also collected from the FTAA
contractor in accordance with the second paragraph of Section 81 of RA 7942, which provides that the
Government's Share in an
government share shall be comprised of, among other things, certain taxes, duties and fees. The
FTAA Not Consisting Solely
subject proviso reads:
of Taxes, Duties and Fees
"The Government share in a financial or technical assistance agreement shall consist of, among other
In connection with the foregoing discussion on the basic and additional government shares, it is
things, the contractor's corporate income tax, excise tax, special allowance, withholding tax due from
pertinent at this juncture to mention the criticism leveled at the second paragraph of Section 81 of RA
the contractor's foreign stockholders arising from dividend or interest payments to the said foreign
7942, quoted earlier. The said proviso has been denounced, because, allegedly, the State's share in
stockholder in case of a foreign national, and all such other taxes, duties and fees as provided for
FTAAs with foreign contractors has been limited to taxes, fees and duties only; in effect, the State has
under existing laws." (Bold types supplied.)
been deprived of a share in the after-tax income of the enterprise. In the face of this allegation, one
has to consider that the law does not define the term among other things; and the Office of the
The government, through the DENR and the MGB, has interpreted the insertion of the phrase among
Solicitor General, in its Motion for Reconsideration, appears to have erroneously claimed that the
other things as signifying that the government is entitled to an "additional government share" to be
phrase refers to indirect taxes.
paid by the contractor apart from the "basic share," in order to attain a fifty-fifty sharing of net
benefits from mining.
The law provides no definition of the term among other things, for the reason that Congress
deliberately avoided setting unnecessary limitations as to what may constitute compensation to the
State for the exploitation and use of mineral resources. But the inclusion of that phrase clearly and
unmistakably reveals the legislative intent to have the State collect more than just the usual taxes,
duties and fees. Certainly, there is nothing in that phrase -- or in the second paragraph of Section 81 --
that would suggest that such phrase should be interpreted as referring only to taxes, duties, fees and
the like.
Precisely for that reason, to fulfill the legislative intent behind the inclusion of the phrase among
other things in the second paragraph of Section 81,67 the DENR structured and formulated in DAO 99-
56 the said additional government share. Such a share was to consist not of taxes, but of a share in
the earnings or cash flows of the mining enterprise. The additional government share was to be paid
by the contractor on top of the basic share, so as to achieve a fifty-fifty sharing -- between the
government and the contractor -- of net benefits from mining. In the Ramos-DeVera paper, the
explanation of the three options or formulas68 -- presented in DAO 99-56 for the computation of the
additional government share -- serves to debunk the claim that the government's take from an FTAA
consists solely of taxes, fees and duties.
Unfortunately, the Office of the Solicitor General -- although in possession of the relevant data --
failed to fully replicate or echo the pertinent elucidation in the Ramos-DeVera paper regarding the
three schemes or options for computing the additional government share presented in DAO 99-56.
Had due care been taken by the OSG, the Court would have been duly apprised of the real nature and
particulars of the additional share.
But, perhaps, on account of the esoteric discussion in the Ramos-DeVera paper, and the even more
abstruse mathematical jargon employed in DAO 99-56, the OSG omitted any mention of the three
options. Instead, the OSG skipped to a side discussion of the effect of indirect taxes, which
had nothing at all to do with the additional government share, to begin with. Unfortunately, this move
created the wrong impression, pointed out in Justice Antonio T. Carpio's Opinion, that the OSG had
taken the position that the additional government share consisted of indirect taxes.
In any event, what is quite evident is the fact that the additional government share, as formulated,
has nothing to do with taxes -- direct or indirect -- or with duties, fees or charges. To repeat, it is over
and above the basic government share composed of taxes and duties. Simply put, the additional share
may be (a) an amount that will result in a 50-50 sharing of the cumulative present value of the cash
flows69 of the enterprise; (b) an amount equivalent to 25 percent of the additional or excess profits of
the enterprise, reckoned against a benchmark return on investments; or (c) an amount that will result
in a fifty-fifty sharing of the cumulative net mining revenue from the end of the recovery period up to
the taxable year in question. The contractor is required to select one of the three options or formulae
for computing the additional share, an option it will apply to all of its mining operations.
As used above, "net mining revenue" is defined as the gross output from mining operations for a
calendar year, less deductible expenses (inclusive of taxes, duties and fees). Such revenue would
roughly be equivalent to "taxable income" or income before income tax. Definitely, as compared with,
say, calculating the additional government share on the basis of net income (after income tax), the
net mining revenue is a better and much more reasonable basis for such computation, as it gives a
truer picture of the profitability of the company.
To demonstrate that the three options or formulations will operate as intended, Messrs. Ramos and
de Vera also performed some quantifications of the government share via a financial modeling of
each of the three options discussed above. They found that the government would get the highest
share from the option that is based on the net mining revenue, as compared with the other two
options, considering only the basic and the additional shares; and that, even though production rate
decreases, the government share will actually increase when the net mining revenue and the
additional profit-based options are used.
Furthermore, it should be noted that the three options or formulae do not yet take into account the
indirect taxes70and other financial contributions71 of mining projects. These indirect taxes and other
contributions are real and actual benefits enjoyed by the Filipino people and/or government. Now, if
some of the quantifiable items are taken into account in the computations, the financial modeling
would show that the total government share increases to 60 percent or higher -- in one instance, as
much as 77 percent and even 89 percent -- of the net present value of total benefits from the project.
As noted in the Ramos-DeVera paper, these results are not at all shabby, considering that the
contractor puts in all the capital requirements and assumes all the risks, without the government
having to contribute or risk anything.
Despite the foregoing explanation, Justice Carpio still insisted during the Court's deliberations that the
phrase among other things refers only to taxes, duties and fees. We are bewildered by his position. On
the one hand, he condemns the Mining Law for allegedly limiting the government's benefits only to
taxes, duties and fees; and on the other, he refuses to allow the State to benefit from the correct and
proper interpretation of the DENR/MGB. To remove all doubts then, we hold that the State's share is
not limited to taxes, duties and fees only and that the DENR/MGB interpretation of the phrase among
other things is correct. Definitely, this DENR/MGB interpretation is not only legally sound, but also
greatly advantageous to the government.
One last point on the subject. The legislature acted judiciously in not defining the terms among other
things and, instead, leaving it to the agencies concerned to devise and develop the various modes of
arriving at a reasonable and fair amount for the additional government share. As can be seen from
DAO 99-56, the agencies concerned did an admirable job of conceiving and developing not just one
formula, but three different formulae for arriving at the additional government share. Each of these
options is quite fair and reasonable; and, as Messrs. Ramos and De Vera stated, other alternatives or
schemes for a possible improvement of the fiscal regime for FTAAs are also being studied by the
government.
Besides, not locking into a fixed definition of the term among other things will ultimately be more
beneficial to the government, as it will have that innate flexibility to adjust to and cope with rapidly
changing circumstances, particularly those in the international markets. Such flexibility is especially
significant for the government in terms of helping our mining enterprises remain competitive in world
markets despite challenging and shifting economic scenarios.
In conclusion, we stress that we do not share the view that in FTAAs with foreign contractors under
RA 7942, the government's share is limited to taxes, fees and duties. Consequently, we find the
attacks on the second paragraph of Section 81 of RA 7942 totally unwarranted.
Collections Not Made Uncertain
by the Third Paragraph of Section 81
72
The third or last paragraph of Section 81 provides that the government share in FTAAs shall be
collected when the contractor shall have recovered its pre-operating expenses and exploration and
development expenditures. The objection has been advanced that, on account of the proviso, the
collection of the State's share is not even certain, as there is no time limit in RA 7942 for this grace
period or recovery period.
We believe that Congress did not set any time limit for the grace period, preferring to leave it to the
concerned agencies, which are, on account of their technical expertise and training, in a better
position to determine the appropriate durations for such recovery periods. After all, these recovery
periods are determined, to a great extent, by technical and technological factors peculiar to the
mining industry. Besides, with developments and advances in technology and in the geosciences, we
cannot discount the possibility of shorter recovery periods. At any rate, the concerned agencies have
not been remiss in this area. The 1995 and 1996 Implementing Rules and Regulations of RA 7942
specify that the period of recovery, reckoned from the date of commercial operation, shall be for a
period not exceeding five years, or until the date of actual recovery, whichever comes earlier.
Approval of Pre-Operating
Expenses Required by RA 7942
Still, RA 7942 is criticized for allegedly not requiring government approval of pre-operating,
exploration and development expenses of the foreign contractors, who are in effect given unfettered
discretion to determine the amounts of such expenses. Supposedly, nothing prevents the contractors
from recording such expenses in amounts equal to the mining revenues anticipated for the first 10 or
15 years of commercial production, with the result that the share of the State will be zero for the first
10 or 15 years. Moreover, under the circumstances, the government would be unable to say when it
would start to receive its share under the FTAA.
We believe that the argument is based on incorrect information as well as speculation. Obviously,
certain crucial provisions in the Mining Law were overlooked. Section 23, dealing with the rights and
obligations of the exploration permit grantee, states: "The permittee shall undertake exploration work
on the area as specified by its permit based on an approved work program." The next proviso
reads: "Any expenditure in excess of the yearly budget of the approved work program may be carried
forward and credited to the succeeding years covering the duration of the permit. x x x." (underscoring
supplied)
Clearly, even at the stage of application for an exploration permit, the applicant is required to submit
-- for approval by the government -- a proposed work program for exploration, containing a yearly
budget of proposed expenditures. The State has the opportunity to pass upon (and approve or reject)
such proposed expenditures, with the foreknowledge that -- if approved -- these will subsequently be
recorded as pre-operating expenses that the contractor will have to recoup over the grace period.
That is not all.
Under Section 24, an exploration permit holder who determines the commercial viability of a project
covering a mining area may, within the term of the permit, file with the Mines and Geosciences
Bureau a declaration of mining project feasibility. This declaration is to be accompanied by a work
program for development for the Bureau's approval, the necessary prelude for entering into an FTAA,
a mineral production sharing agreement (MPSA), or some other mineral agreement. At this stage, too,
the government obviously has the opportunity to approve or reject the proposed work program and
budgeted expenditures for development works on the project. Such expenditures will ultimately
become the pre-operating and development costs that will have to be recovered by the contractor.
Naturally, with the submission of approved work programs and budgets for the exploration and the
development/construction phases, the government will be able to scrutinize and approve or
reject such expenditures. It will be well-informed as to the amounts of pre-operating and other
expenses that the contractor may legitimately recover and the approximate period of time needed to
effect such a recovery. There is therefore no way the contractor can just randomly post any amount of
pre-operating expenses and expect to recover the same.
The aforecited provisions on approved work programs and budgets have counterparts in Section 35,
which deals with the terms and conditions exclusively applicable to FTAAs. The said provision requires
certain terms and conditions to be incorporated into FTAAs; among them, "a firm commitment x x x of
an amount corresponding to the expenditure obligation that will be invested in the contract
area" and "representations and warranties x x x to timely deploy these [financing, managerial and
technical expertise and technological] resources under its supervision pursuant to the periodic work
programs and related budgets x x x," as well as "work programs and minimum expenditures
commitments." (underscoring supplied)
Unarguably, given the provisions of Section 35, the State has every opportunity to pass upon the
proposed expenditures under an FTAA and approve or reject them. It has access to all the information
it may need in order to determine in advance the amounts of pre-operating and developmental
expenses that will have to be recovered by the contractor and the amount of time needed for such
recovery.
In summary, we cannot agree that the third or last paragraph of Section 81 of RA 7942 is in any
manner unconstitutional.
No Deprivation of Beneficial Rights
It is also claimed that aside from the second and the third paragraphs of Section 81 (discussed above),
Sections 80, 84 and 112 of RA 7942 also operate to deprive the State of beneficial rights of ownership
over mineral resources; and give them away for free to private business enterprises (including foreign
owned corporations). Likewise, the said provisions have been construed as constituting, together with
Section 81, an ingenious attempt to resurrect the old and discredited system of "license, concession
or lease."
Specifically, Section 80 is condemned for limiting the State's share in a mineral production-sharing
agreement (MPSA) to just the excise tax on the mineral product. Under Section 151(A) of the Tax
Code, such tax is only 2 percent of the market value of the gross output of the minerals.
The colatilla in Section 84, the portion considered offensive to the Constitution, reiterates the same
limitation made in Section 80.73
It should be pointed out that Section 80 and the colatilla in Section 84 pertain only to MPSAs and
have no application to FTAAs. These particular statutory provisions do not come within the issues that
were defined and delineated by this Court during the Oral Argument -- particularly the third issue,
which pertained exclusively to FTAAs. Neither did the parties argue upon them in their pleadings.
Hence, this Court cannot make any pronouncement in this case regarding the constitutionality of
Sections 80 and 84 without violating the fundamental rules of due process. Indeed, the two provisos
will have to await another case specifically placing them in issue.
On the other hand, Section 11274 is disparaged for allegedly reverting FTAAs and all mineral
agreements to the old and discredited "license, concession or lease" system. This Section states in
relevant part that "the provisions of Chapter XIV [which includes Sections 80 to 82] on government
share in mineral production-sharing agreement x x x shall immediately govern and apply to a mining
lessee or contractor." (underscoring supplied) This provision is construed as signifying that the 2
percent excise tax which, pursuant to Section 80, comprises the government share in MPSAs shall now
also constitute the government share in FTAAs -- as well as in co-production agreements and joint
venture agreements -- to the exclusion of revenues of any other nature or from any other source.
Apart from the fact that Section 112 likewise does not come within the issues delineated by this Court
during the Oral Argument, and was never touched upon by the parties in their pleadings, it must also
be noted that the criticism hurled against this Section is rooted in unwarranted conclusions made
without considering other relevant provisions in the statute. Whether Section 112 may properly apply
to co-production or joint venture agreements, the fact of the matter is that it cannot be made to
apply to FTAAs.
First, Section 112 does not specifically mention or refer to FTAAs; the only reason it is being applied to
them at all is the fact that it happens to use the word "contractor." Hence, it is a bit of a stretch to
insist that it covers FTAAs as well. Second, mineral agreements, of which there are three types --
MPSAs, co-production agreements, and joint venture agreements -- are covered by Chapter V of RA
7942. On the other hand, FTAAs are covered by and in fact are the subject of Chapter VI, an entirely
different chapter altogether. The law obviously intends to treat them as a breed apart from mineral
agreements, since Section 35 (found in Chapter VI) creates a long list of specific terms, conditions,
commitments, representations and warranties -- which have not been made applicable to mineral
agreements -- to be incorporated into FTAAs.
Third, under Section 39, the FTAA contractor is given the option to "downgrade" -- to convert the
FTAA into a mineral agreement at any time during the term if the economic viability of the contract
area is inadequate to sustain large-scale mining operations. Thus, there is no reason to think that the
law through Section 112 intends to exact from FTAA contractors merely the same government share
(a 2 percent excise tax) that it apparently demands from contractors under the three forms of mineral
agreements. In brief, Section 112 does not apply to FTAAs.
Notwithstanding the foregoing explanation, Justices Carpio and Morales maintain that the Court must
rule now on the constitutionality of Sections 80, 84 and 112, allegedly because the WMCP FTAA
contains a provision which grants the contractor unbridled and "automatic" authority to convert the
FTAA into an MPSA; and should such conversion happen, the State would be prejudiced since its share
would be limited to the 2 percent excise tax. Justice Carpio adds that there are five MPSAs already
signed just awaiting the judgment of this Court on respondents' and intervenor's Motions for
Reconsideration. We hold however that, at this point, this argument is based on pure speculation. The
Court cannot rule on mere surmises and hypothetical assumptions, without firm factual anchor. We
repeat: basic due process requires that we hear the parties who have a real legal interest in the
MPSAs (i.e. the parties who executed them) before these MPSAs can be reviewed, or worse, struck
down by the Court. Anything less than that requirement would be arbitrary and capricious.
In any event, the conversion of the present FTAA into an MPSA is problematic. First, the contractor
must comply with the law, particularly Section 39 of RA 7942; inter alia, it must convincingly show
that the "economic viability of the contract is found to be inadequate to justify large-scale mining
operations;" second, it must contend with the President's exercise of the power of State control over
the EDU of natural resources; and third, it will have to risk a possible declaration of the
unconstitutionality (in a proper case) of Sections 80, 84 and 112.
The first requirement is not as simple as it looks. Section 39 contemplates a situation in which an FTAA
has already been executed and entered into, and is presumably being implemented, when the
contractor "discovers" that the mineral ore reserves in the contract area are not sufficient to justify
large-scale mining, and thus the contractor requests the conversion of the FTAA into an MPSA. The
contractor in effect needs to explain why, despite its exploration activities, including the conduct of
various geologic and other scientific tests and procedures in the contract area, it was unable to
determine correctly the mineral ore reserves and the economic viability of the area. The contractor
must explain why, after conducting such exploration activities, it decided to file a declaration of
mining feasibility, and to apply for an FTAA, thereby leading the State to believe that the area could
sustain large-scale mining. The contractor must justify fully why its earlier findings, based on scientific
procedures, tests and data, turned out to be wrong, or were way off. It must likewise prove that
its new findings, also based on scientific tests and procedures, are correct. Right away, this puts the
contractor's technical capabilities and expertise into serious doubt. We wonder if anyone would relish
being in this situation. The State could even question and challenge the contractor's qualification and
competence to continue the activity under an MPSA.
All in all, while there may be cogent grounds to assail the aforecited Sections, this Court -- on
considerations of due process -- cannot rule upon them here. Anyway, if later on these Sections are
declared unconstitutional, such declaration will not affect the other portions since they are clearly
separable from the rest.
Our Mineral Resources Not
Given Away for Free by RA 7942
Nevertheless, if only to disabuse our minds, we should address the contention that our mineral
resources are effectively given away for free by the law (RA 7942) in general and by Sections 80, 81,
84 and 112 in particular.
Foreign contractors do not just waltz into town one day and leave the next, taking away mineral
resources without paying anything. In order to get at the minerals, they have to invest huge sums of
money (tens or hundreds of millions of dollars) in exploration works first. If the exploration proves
unsuccessful, all the cash spent thereon will not be returned to the foreign investors; rather, those
funds will have been infused into the local economy, to remain there permanently. The benefits
therefrom cannot be simply ignored. And assuming that the foreign contractors are successful in
finding ore bodies that are viable for commercial exploitation, they do not just pluck out the minerals
and cart them off. They have first to build camp sites and roadways; dig mine shafts and connecting
tunnels; prepare tailing ponds, storage areas and vehicle depots; install their machinery and
equipment, generator sets, pumps, water tanks and sewer systems, and so on.
In short, they need to expend a great deal more of their funds for facilities, equipment and supplies,
fuel, salaries of local labor and technical staff, and other operating expenses. In the meantime, they
also have to pay taxes,75 duties, fees, and royalties. All told, the exploration, pre-feasibility, feasibility,
development and construction phases together add up to as many as eleven years. 76 The contractors
have to continually shell out funds for the duration of over a decade, before they can commence
commercial production from which they would eventually derive revenues. All that money translates
into a lot of "pump-priming" for the local economy.
Granted that the contractors are allowed subsequently to recover their pre-operating expenses, still,
that eventuality will happen only after they shall have first put out the cash and fueled the economy.
Moreover, in the process of recouping their investments and costs, the foreign contractors do not
actually pull out the money from the economy. Rather, they recover or recoup their investments out
of actual commercial production by not paying a portion of the basic government share
corresponding to national taxes, along with the additional government share, for a period of not more
than five years77 counted from the commencement of commercial production.
It must be noted that there can be no recovery without commencing actual commercial production. In
the meantime that the contractors are recouping costs, they need to continue operating; in order to
do so, they have to disburse money to meet their various needs. In short, money is continually infused
into the economy.
The foregoing discussion should serve to rid us of the mistaken belief that, since the foreign
contractors are allowed to recover their investments and costs, the end result is that they practically
get the minerals for free, which leaves the Filipino people none the better for it.
All Businesses Entitled
to Cost Recovery
Let it be put on record that not only foreign contractors, but all businessmen and all business entities
in general, have to recoup their investments and costs. That is one of the first things a student learns
in business school. Regardless of its nationality, and whether or not a business entity has a five-year
cost recovery period, it will -- must -- have to recoup its investments, one way or another. This is just
common business sense. Recovery of investments is absolutely indispensable for business survival;
and business survival ensures soundness of the economy, which is critical and contributory to the
general welfare of the people. Even government corporations must recoup their investments in order
to survive and continue in operation. And, as the preceding discussion has shown, there is no business
that gets ahead or earns profits without any cost to it.
It must also be stressed that, though the State owns vast mineral wealth, such wealth is not readily
accessible or transformable into usable and negotiable currency without the intervention of the
credible mining companies. Those untapped mineral resources, hidden beneath tons of earth and
rock, may as well not be there for all the good they do us right now. They have first to be extracted
and converted into marketable form, and the country needs the foreign contractor's funds,
technology and know-how for that.
After about eleven years of pre-operation and another five years for cost recovery, the foreign
contractors will have just broken even. Is it likely that they would at that point stop their operations
and leave? Certainly not. They have yet to make profits. Thus, for the remainder of the contract term,
they must strive to maintain profitability. During this period, they pay the whole of the basic
government share and the additional government share which, taken together with indirect taxes and
other contributions, amount to approximately 60 percent or more of the entire financial benefits
generated by the mining venture.
In sum, we can hardly talk about foreign contractors taking our mineral resources for free. It takes a
lot of hard cash to even begin to do what they do. And what they do in this country ultimately
benefits the local economy, grows businesses, generates employment, and creates infrastructure, as
discussed above. Hence, we definitely disagree with the sweeping claim that no FTAA under Section
81 will ever make any real contribution to the growth of the economy or to the general welfare of the
country. This is not a plea for foreign contractors. Rather, this is a question of focusing the judicial
spotlight squarely on all the pertinent facts as they bear upon the issue at hand, in order to avoid
leaping precipitately to ill-conceived conclusions not solidly grounded upon fact.
Repatriation of After-Tax Income
Another objection points to the alleged failure of the Mining Law to ensure real contributions to the
economic growth and general welfare of the country, as mandated by Section 2 of Article XII of the
Constitution. Pursuant to Section 81 of the law, the entire after-tax income arising from the
exploitation of mineral resources owned by the State supposedly belongs to the foreign contractors,
which will naturally repatriate the said after-tax income to their home countries, thereby resulting in
no real contribution to the economic growth of this country. Clearly, this contention is premised on
erroneous assumptions.
First, as already discussed in detail hereinabove, the concerned agencies have correctly interpreted
the second paragraph of Section 81 of RA 7942 to mean that the government is entitled to an
additional share, to be computed based on any one of the following factors: net mining revenues, the
present value of the cash flows, or excess profits reckoned against a benchmark rate of return on
investments. So it is not correct to say that all of the after-tax income will accrue to the foreign FTAA
contractor, as the government effectively receives a significant portion thereof.
Second, the foreign contractors can hardly "repatriate the entire after-tax income to their home
countries." Even a bit of knowledge of corporate finance will show that it will be impossible to
maintain a business as a "going concern" if the entire "net profit" earned in any particular year will be
taken out and repatriated. The "net income" figure reflected in the bottom line is a mere accounting
figure not necessarily corresponding to cash in the bank, or other quick assets. In order to produce
and set aside cash in an amount equivalent to the bottom line figure, one may need to sell off assets
or immediately collect receivables or liquidate short-term investments; but doing so may very likely
disrupt normal business operations.
In terms of cash flows, the funds corresponding to the net income as of a particular point in time
are actually in usein the normal course of business operations. Pulling out such net income disrupts
the cash flows and cash position of the enterprise and, depending on the amount being taken out,
could seriously cripple or endanger the normal operations and financial health of the business
enterprise. In short, no sane business person, concerned with maintaining the mining enterprise as
a going concern and keeping a foothold in its market, can afford to repatriate the entire after-tax
income to the home country.
The State's Receipt of Sixty
Percent of an FTAA Contractor's
After-Tax Income Not Mandatory
We now come to the next objection which runs this way: In FTAAs with a foreign contractor, the State
must receive at least 60 percent of the after-tax income from the exploitation of its mineral resources.
This share is the equivalent of the constitutional requirement that at least 60 percent of the capital,
and hence 60 percent of the income, of mining companies should remain in Filipino hands.
First, we fail to see how we can properly conclude that the Constitution mandates the State to extract
at least 60 percent of the after-tax income from a mining company run by a foreign contractor. The
argument is that the Charter requires the State's partner in a co-production agreement, joint venture
agreement or MPSA to be a Filipino corporation (at least 60 percent owned by Filipino citizens).
We question the logic of this reasoning, premised on a supposedly parallel or analogous situation. We
are, after all, dealing with an essentially different equation, one that involves different elements. The
Charter did not intend to fix an iron-clad rule on the 60 percent share, applicable to all situations at
all times and in all circumstances.If ever such was the intention of the framers, they would have spelt
it out in black and white. Verba legis will serve to dispel unwarranted and untenable conclusions.
Second, if we would bother to do the math, we might better appreciate the impact (and
reasonableness) of what we are demanding of the foreign contractor. Let us use
a simplified illustration. Let us base it on gross revenues of, say, P500. After deducting operating
expenses, but prior to income tax, suppose a mining firm makes a taxable incomeof P100. A corporate
income tax of 32 percent results in P32 of taxable income going to the government, leaving the mining
firm with P68. Government then takes 60 percent thereof, equivalent to P40.80, leaving only P27.20
for the mining firm.
At this point the government has pocketed P32.00 plus P40.80, or a total of P72.80 for every P100 of
taxable income, leaving the mining firm with only P27.20. But that is not all. The government has also
taken 2 percent excise tax "off the top," equivalent to another P10. Under the minimum 60 percent
proposal, the government nets around P82.80 (not counting other taxes, duties, fees and charges)
from a taxable income of P100 (assuming gross revenues of P500, for purposes of illustration). On the
other hand, the foreign contractor, which provided all the capital, equipment and labor, and took all
the entrepreneurial risks -- receives P27.20. One cannot but wonder whether such a distribution is
even remotely equitable and reasonable, considering the nature of the mining business. The amount
of P82.80 out of P100.00 is really a lot – it does not matter that we call part of it excise tax or income
tax, and another portion thereof income from exploitation of mineral resources. Some might think it
wonderful to be able to take the lion's share of the benefits. But we have to ask ourselves if we are
really serious in attracting the investments that are the indispensable and key element in generating
the monetary benefits of which we wish to take the lion's share. Fairness is a credo not only in law,
but also in business.
Third, the 60 percent rule in the petroleum industry cannot be insisted upon at all times in the mining
business. The reason happens to be the fact that in petroleum operations, the bulk of expenditures is
in exploration, but once the contractor has found and tapped into the deposit, subsequent
investments and expenditures are relatively minimal. The crude (or gas) keeps gushing out, and the
work entailed is just a matter of piping, transporting and storing. Not so in mineral mining. The ore
body does not pop out on its own. Even after it has been located, the contractor must continually
invest in machineries and expend funds to dig and build tunnels in order to access and extract the
minerals from underneath hundreds of tons of earth and rock.
As already stated, the numerous intrinsic differences involved in their respective operations and
requirements, cost structures and investment needs render it highly inappropriate to use petroleum
operations FTAAs as benchmarks for mining FTAAs. Verily, we cannot just ignore the realities of
the distinctly different situations and stubbornly insist on the "minimum 60 percent."
The Mining and the Oil Industries
Different From Each Other
To stress, there is no independent showing that the taking of at least a 60 percent share in the after-
tax income of a mining company operated by a foreign contractor is fair and reasonable under most if
not all circumstances. The fact that some petroleum companies like Shell acceded to such percentage
of sharing does not ipso facto mean that it is per se reasonable and applicable to non-petroleum
situations (that is, mining companies) as well. We can take judicial notice of the fact that there are,
after all, numerous intrinsic differences involved in their respective operations and equipment or
technological requirements, costs structures and capital investment needs, and product pricing and
markets.
There is no showing, for instance, that mining companies can readily cope with a 60 percent
government share in the same way petroleum companies apparently can. What we have is a
suggestion to enforce the 60 percent quota on the basis of a disjointed analogy. The only factor
common to the two disparate situations is the extraction of natural resources.
Indeed, we should take note of the fact that Congress made a distinction between mining firms and
petroleum companies. In Republic Act No. 7729 -- "An Act Reducing the Excise Tax Rates on Metallic
and Non-Metallic Minerals and Quarry Resources, Amending for the Purpose Section 151(a) of the
National Internal Revenue Code, as amended" -- the lawmakers fixed the excise tax rate on metallic
and non-metallic minerals at two percent of the actual market value of the annual gross output at the
time of removal. However, in the case of petroleum, the lawmakers set the excise tax rate for the first
taxable sale at fifteen percent of the fair international market price thereof.
There must have been a very sound reason that impelled Congress to impose two very dissimilar
excise tax rate. We cannot assume, without proof, that our honorable legislators acted arbitrarily,
capriciously and whimsically in this instance. We cannot just ignore the reality of two distinctly
different situations and stubbornly insist on going "minimum 60 percent."
To repeat, the mere fact that gas and oil exploration contracts grant the State 60 percent of the net
revenues does not necessarily imply that mining contracts should likewise yield a minimum of 60
percent for the State. Jumping to that erroneous conclusion is like comparing apples with oranges.
The exploration, development and utilization of gas and oil are simply different from those of mineral
resources.
To stress again, the main risk in gas and oil is in the exploration. But once oil in commercial quantities
is struck and the wells are put in place, the risk is relatively over and black gold simply flows out
continuously with comparativelyless need for fresh investments and technology.
On the other hand, even if minerals are found in viable quantities, there is still need for continuous
fresh capital and expertise to dig the mineral ores from the mines. Just because deposits of mineral
ores are found in one area is no guarantee that an equal amount can be found in the adjacent areas.
There are simply continuing risks and need for more capital, expertise and industry all the time.
Note, however, that the indirect benefits -- apart from the cash revenues -- are much more in the
mineral industry. As mines are explored and extracted, vast employment is created, roads and other
infrastructure are built, and other multiplier effects arise. On the other hand, once oil wells start
producing, there is less need for employment. Roads and other public works need not be constructed
continuously. In fine, there is no basis for saying that government revenues from the oil industry and
from the mineral industries are to be identical all the time.
Fourth, to our mind, the proffered "minimum 60 percent" suggestion tends to limit the flexibility and
tie the hands of government, ultimately hampering the country's competitiveness in the international
market, to the detriment of the Filipino people. This "you-have-to-give-us-60-percent-of-after-tax-
income-or-we-don't-do- business-with-you" approach is quite perilous. True, this situation may not
seem too unpalatable to the foreign contractor during good years, when international market prices
are up and the mining firm manages to keep its costs in check. However, under unfavorable economic
and business conditions, with costs spiraling skywards and minerals prices plummeting, a mining firm
may consider itself lucky to make just minimal profits.
The inflexible, carved-in-granite demand for a 60 percent government share may spell the end of the
mining venture, scare away potential investors, and thereby further worsen the already dismal
economic scenario. Moreover, such an unbending or unyielding policy prevents the government from
responding appropriately to changing economic conditions and shifting market forces. This inflexibility
further renders our country less attractive as an investment option compared with other countries.
And fifth, for this Court to decree imperiously that the government's share should be not less than 60
percent of the after-tax income of FTAA contractors at all times is nothing short of dictating upon the
government. The result, ironically, is that the State ends up losing control. To avoid compromising the
State's full control and supervision over the exploitation of mineral resources, this Court must back off
from insisting upon a "minimum 60 percent" rule. It is sufficient that the State has the power and
means, should it so decide, to get a 60 percent share (or more) in the contractor's net mining
revenues or after-tax income, or whatever other basis the government may decide to use in reckoning
its share. It is not necessary for it to do so in every case, regardless of circumstances.
In fact, the government must be trusted, must be accorded the liberty and the utmost flexibility to
deal, negotiate and transact with contractors and third parties as it sees fit; and upon terms that it
ascertains to be most favorable or most acceptable under the circumstances, even if it means agreeing
to less than 60 percent. Nothing must prevent the State from agreeing to a share less than that,
should it be deemed fit; otherwise the State will be deprived of full control over mineral exploitation
that the Charter has vested in it.
To stress again, there is simply no constitutional or legal provision fixing the minimum share of the
government in an FTAA at 60 percent of the net profit. For this Court to decree such minimum is to
wade into judicial legislation, and thereby inordinately impinge on the control power of the State. Let
it be clear: the Court is not against the grant of more benefits to the State; in fact, the more the
better. If during the FTAA negotiations, the President can secure 60 percent, 78 or even 90 percent, then
all the better for our people. But, if under the peculiar circumstances of a specific contract, the
President could secure only 50 percent or 55 percent, so be it. Needless to say, the President will have
to report (and be responsible for) the specific FTAA to Congress, and eventually to the people.
Finally, if it should later be found that the share agreed to is grossly disadvantageous to the
government, the officials responsible for entering into such a contract on its behalf will have to
answer to the courts for their malfeasance. And the contract provision voided. But this Court would
abuse its own authority should it force the government's hand to adopt the 60 percent demand of
some of our esteemed colleagues.
Capital and Expertise Provided,
Yet All Risks Assumed by Contractor
Here, we will repeat what has not been emphasized and appreciated enough: the fact that the
contractor in an FTAA provides all the needed capital, technical and managerial expertise, and
technology required to undertake the project.
In regard to the WMCP FTAA, the then foreign-owned WMCP as contractor committed, at the very
outset, to make capital investments of up to US$50 million in that single mining project. WMCP claims
to have already poured in well over P800 million into the country as of February 1998, with more in
the pipeline. These resources, valued in the tens or hundreds of millions of dollars, are invested in a
mining project that provides no assurance whatsoever that any part of the investment will be
ultimately recouped.
At the same time, the contractor must comply with legally imposed environmental standards and the
social obligations, for which it also commits to make significant expenditures of funds. Throughout,
the contractor assumes all the risks79 of the business, as mentioned earlier. These risks are indeed very
high, considering that the rate of success in exploration is extremely low. The probability of finding
any mineral or petroleum in commercially viable quantities is estimated to be about 1:1,000 only. On
that slim chance rides the contractor's hope of recouping investments and generating profits. And
when the contractor has recouped its initial investments in the project, the government share
increases to sixty percent of net benefits -- without the State ever being in peril of incurring costs,
expenses and losses.
And even in the worst possible scenario -- an absence of commercial quantities of minerals to justify
development -- the contractor would already have spent several million pesos for exploration works,
before arriving at the point in which it can make that determination and decide to cut its losses. In
fact, during the first year alone of the exploration period, the contractor was already committed to
spend not less than P24 million. The FTAA therefore clearly ensures benefits for the local economy,
courtesy of the contractor.
All in all, this setup cannot be regarded as disadvantageous to the State or the Filipino people; it
certainly cannot be said to convey beneficial ownership of our mineral resources to foreign
contractors.
Deductions Allowed by the
WMCP FTAA Reasonable
Petitioners question whether the State's weak control might render the sharing arrangements
ineffective. They cite the so-called "suspicious" deductions allowed by the WMCP FTAA in arriving at
the net mining revenue, which is the basis for computing the government share. The WMCP FTAA, for
instance, allows expenditures for "development within and outside the Contract Area relating to the
Mining Operations,"80 "consulting fees incurred both inside and outside the Philippines for work
related directly to the Mining Operations,"81 and "the establishment and administration of field offices
including administrative overheads incurred within and outside the Philippines which are properly
allocatable to the Mining Operations and reasonably related to the performance of the Contractor's
obligations and exercise of its rights under this Agreement." 82
It is quite well known, however, that mining companies do perform some marketing activities abroad
in respect of selling their mineral products and by-products. Hence, it would not be improper to allow
the deduction of reasonable consulting fees incurred abroad, as well as administrative expenses and
overheads related to marketing offices also located abroad -- provided that these deductions are
directly related or properly allocatable to the mining operations and reasonably related to the
performance of the contractor's obligations and exercise of its rights. In any event, more facts are
needed. Until we see how these provisions actually operate, mere "suspicions" will not suffice to
propel this Court into taking action.
Section 7.9 of the WMCP FTAA
Invalid and Disadvantageous
Having defended the WMCP FTAA, we shall now turn to two defective provisos. Let us start with
Section 7.9 of the WMCP FTAA. While Section 7.7 gives the government a 60 percent share in the net
mining revenues of WMCP from the commencement of commercial production, Section 7.9 deprives
the government of part or all of the said 60 percent. Under the latter provision, should WMCP's
foreign shareholders -- who originally owned 100 percent of the equity -- sell 60 percent or more of its
outstanding capital stock to a Filipino citizen or corporation, the State loses its right to receive its 60
percent share in net mining revenues under Section 7.7.
Section 7.9 provides:
The percentage of Net Mining Revenues payable to the Government pursuant to Clause 7.7
shall be reduced by 1percent of Net Mining Revenues for every 1percent ownership interest in
the Contractor (i.e., WMCP) held by a Qualified Entity.83
Evidently, what Section 7.7 grants to the State is taken away in the next breath by Section 7.9 without
any offsetting compensation to the State. Thus, in reality, the State has no vested right to receive any
income from the FTAA for the exploitation of its mineral resources. Worse, it would seem that what is
given to the State in Section 7.7 is by mere tolerance of WMCP's foreign stockholders, who can at any
time cut off the government's entire 60 percent share. They can do so by simply selling 60 percent of
WMCP's outstanding capital stock to a Philippine citizen or corporation. Moreover, the proceeds of
such sale will of course accrue to the foreign stockholders of WMCP, not to the State.
The sale of 60 percent of WMCP's outstanding equity to a corporation that is 60 percent Filipino-
owned and 40 percent foreign-owned will still trigger the operation of Section 7.9. Effectively, the
State will lose its right to receive all 60 percent of the net mining revenues of WMCP; and foreign
stockholders will own beneficially up to 64 percent of WMCP, consisting of the remaining 40 percent
foreign equity therein, plus the 24 percent pro-rata share in the buyer-corporation. 84
In fact, the January 23, 2001 sale by WMCP's foreign stockholder of the entire outstanding equity in
WMCP to Sagittarius Mines, Inc. -- a domestic corporation at least 60 percent Filipino owned -- may
be deemed to have automatically triggered the operation of Section 7.9, without need of further
action by any party, and removed the State's right to receive the 60 percent share in net mining
revenues.
At bottom, Section 7.9 has the effect of depriving the State of its 60 percent share in the net mining
revenues of WMCP without any offset or compensation whatsoever. It is possible that the inclusion of
the offending provision was initially prompted by the desire to provide some form of incentive for the
principal foreign stockholder in WMCP to eventually reduce its equity position and ultimately divest in
favor of Filipino citizens and corporations. However, as finally structured, Section 7.9 has the
deleterious effect of depriving government of the entire 60 percent share in WMCP's net mining
revenues, without any form of compensation whatsoever. Such an outcome is completely
unacceptable.
The whole point of developing the nation's natural resources is to benefit the Filipino people, future
generations included. And the State as sovereign and custodian of the nation's natural wealth is
mandated to protect, conserve, preserve and develop that part of the national patrimony for their
benefit. Hence, the Charter lays great emphasis on "real contributions to the economic growth and
general welfare of the country"85 as essential guiding principles to be kept in mind when negotiating
the terms and conditions of FTAAs.
Earlier, we held (1) that the State must be accorded the liberty and the utmost flexibility to deal,
negotiate and transact with contractors and third parties as it sees fit, and upon terms that it
ascertains to be most favorable or most acceptable under the circumstances, even if that should
mean agreeing to less than 60 percent; (2) that it is not necessary for the State to extract a 60 percent
share in every case and regardless of circumstances; and (3) that should the State be prevented from
agreeing to a share less than 60 percent as it deems fit, it will be deprived of the full control over
mineral exploitation that the Charter has vested in it.
That full control is obviously not an end in itself; it exists and subsists precisely because of the need to
serve and protect the national interest. In this instance, national interest finds particular application in
the protection of the national patrimony and the development and exploitation of the country's
mineral resources for the benefit of the Filipino people and the enhancement of economic growth
and the general welfare of the country. Undoubtedly, such full control can be misused and abused,
as we now witness.
Section 7.9 of the WMCP FTAA effectively gives away the State's share of net mining revenues
(provided for in Section 7.7) without anything in exchange. Moreover, this outcome constitutes unjust
enrichment on the part of the local and foreign stockholders of WMCP. By their mere divestment of up
to 60 percent equity in WMCP in favor of Filipino citizens and/or corporations, the local and foreign
stockholders get a windfall. Their share in the net mining revenues of WMCP is automatically
increased, without their having to pay the government anything for it. In short, the provision in
question is without a doubt grossly disadvantageous to the government, detrimental to the interests
of the Filipino people, and violative of public policy.
Moreover, it has been reiterated in numerous decisions 86 that the parties to a contract may establish
any agreements, terms and conditions that they deem convenient; but these should not be contrary
to law, morals, good customs, public order or public policy. 87 Being precisely violative of anti-graft
provisions and contrary to public policy, Section 7.9 must therefore be stricken off as invalid.
Whether the government officials concerned acceded to that provision by sheer mistake or with full
awareness of the ill consequences, is of no moment. It is hornbook doctrine that the principle of
estoppel does not operate against the government for the act of its agents, 88 and that it is never
estopped by any mistake or error on their part. 89 It is therefore possible and proper to rectify the
situation at this time. Moreover, we may also say that the FTAA in question does not involve mere
contractual rights; being impressed as it is with public interest, the contractual provisions and
stipulations must yield to the common good and the national interest.
Since the offending provision is very much separable 90 from Section 7.7 and the rest of the FTAA, the
deletion of Section 7.9 can be done without affecting or requiring the invalidation of the WMCP FTAA
itself. Such a deletion will preserve for the government its due share of the benefits. This way, the
mandates of the Constitution are complied with and the interests of the government fully protected,
while the business operations of the contractor are not needlessly disrupted.
Section 7.8(e) of the WMCP FTAA
Also Invalid and Disadvantageous
Section 7.8(e) of the WMCP FTAA is likewise invalid. It provides thus:
"7.8 The Government Share shall be deemed to include all of the following sums:
"(a) all Government taxes, fees, levies, costs, imposts, duties and royalties including
excise tax, corporate income tax, customs duty, sales tax, value added tax,
occupation and regulatory fees, Government controlled price stabilization schemes,
any other form of Government backed schemes, any tax on dividend payments by
the Contractor or its Affiliates in respect of revenues from the Mining Operations
and any tax on interest on domestic and foreign loans or other financial
arrangements or accommodations, including loans extended to the Contractor by its
stockholders;
"(b) any payments to local and regional government, including taxes, fees, levies,
costs, imposts, duties, royalties, occupation and regulatory fees and infrastructure
contributions;
"(c) any payments to landowners, surface rights holders, occupiers, indigenous
people or Claimowners;
"(d) costs and expenses of fulfilling the Contractor's obligations to contribute to
national development in accordance with Clause 10.1(i) (1) and 10.1(i) (2);
"(e) an amount equivalent to whatever benefits that may be extended in the future
by the Government to the Contractor or to financial or technical assistance
agreement contractors in general;
"(f) all of the foregoing items which have not previously been offset against the
Government Share in an earlier Fiscal Year, adjusted for inflation." (underscoring
supplied)
Section 7.8(e) is out of place in the FTAA. It makes no sense why, for instance, money spent by the
government for the benefit of the contractor in building roads leading to the mine site should still be
deductible from the State's share in net mining revenues. Allowing this deduction results in benefiting
the contractor twice over. It constitutes unjust enrichment on the part of the contractor at the
expense of the government, since the latter is effectively being made to pay twice for the same
item.91 For being grossly disadvantageous and prejudicial to the government and contrary to public
policy, Section 7.8(e) is undoubtedly invalid and must be declared to be without effect. Fortunately,
this provision can also easily be stricken off without affecting the rest of the FTAA.
Nothing Left Over
After Deductions?
In connection with Section 7.8, an objection has been raised: Specified in Section 7.8 are numerous
items of deduction from the State's 60 percent share. After taking these into account, will the State
ever receive anything for its ownership of the mineral resources?
We are confident that under normal circumstances, the answer will be yes. If we examine the various
items of "deduction" listed in Section 7.8 of the WMCP FTAA, we will find that they correspond closely
to the components or elements of the basic government share established in DAO 99-56, as
discussed in the earlier part of this Opinion.
Likewise, the balance of the government's 60 percent share -- after netting out the items of deduction
listed in Section 7.8 --corresponds closely to the additional government share provided for in DAO 99-
56 which, we once again stress, has nothing at all to do with indirect taxes. The Ramos-DeVera
paper92 concisely presents the fiscal contribution of an FTAA under DAO 99-56 in this equation:
Receipts from an FTAA = basic gov't share + add'l gov't share
Transposed into a similar equation, the fiscal payments system from the WMCP FTAA assumes the
following formulation:
Government's 60 percent share in net mining revenues of WMCP = items listed in Sec. 7.8 of
the FTAA + balance of Gov't share, payable 4 months from the end of the fiscal year
It should become apparent that the fiscal arrangement under the WMCP FTAA is very similar to that
under DAO 99-56, with the "balance of government share payable 4 months from end of fiscal year"
being the equivalent of the additional government share computed in accordance with the "net-
mining-revenue-based option" under DAO 99-56, as discussed above. As we have emphasized earlier,
we find each of the three options for computing the additional government share -- as presented in
DAO 99-56 -- to be sound and reasonable.
We therefore conclude that there is nothing inherently wrong in the fiscal regime of the WMCP
FTAA, and certainly nothing to warrant the invalidation of the FTAA in its entirety.
Section 3.3 of the WMCP
FTAA Constitutional
Section 3.3 of the WMCP FTAA is assailed for violating supposed constitutional restrictions on the
term of FTAAs. The provision in question reads:
 "3.3 This Agreement shall be renewed by the Government for a further period of twenty-five
(25) years under the same terms and conditions provided that the Contractor lodges a
request for renewal with the Government not less than sixty (60) days prior to the expiry of
the initial term of this Agreement and provided that the Contractor is not in breach of any of
the requirements of this Agreement."
Allegedly, the above provision runs afoul of Section 2 of Article XII of the 1987 Constitution, which
states:
"Sec. 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.
"The State shall protect the nation's marine wealth in its archipelagic waters, territorial sea,
and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino
citizens.
"The Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish-
workers in rivers, lakes, bays and lagoons.
"The President may enter into agreements with foreign-owned corporations involving either
technical or financial assistance for large-scale exploration, development, and utilization of
minerals, petroleum, and other mineral oils according to the general terms and conditions
provided by law, based on real contributions to the economic growth and general welfare of
the country. In such agreements, the State shall promote the development and use of local
scientific and technical resources.
"The President shall notify the Congress of every contract entered into in accordance with
this provision, within thirty days from its execution." 93
We hold that the term limitation of twenty-five years does not apply to FTAAs. The reason is that the
above provision is found within paragraph 1 of Section 2 of Article XII, which refers to mineral
agreements -- co-production agreements, joint venture agreements and mineral production-sharing
agreements -- which the government may enter into with Filipino citizens and corporations, at least
60 percent owned by Filipino citizens. The word "such" clearly refers to these three mineral
agreements -- CPAs, JVAs and MPSAs -- not to FTAAs.
Specifically, FTAAs are covered by paragraphs 4 and 5 of Section 2 of Article XII of the Constitution. It
will be noted that there are no term limitations provided for in the said paragraphs dealing with
FTAAs. This shows that FTAAs are sui generis, in a class of their own. This omission was obviously a
deliberate move on the part of the framers. They probably realized that FTAAs would be different in
many ways from MPSAs, JVAs and CPAs. The reason the framers did not fix term limitations applicable
to FTAAs is that they preferred to leave the matter to the discretion of the legislature and/or the
agencies involved in implementing the laws pertaining to FTAAs, in order to give the latter enough
flexibility and elbow room to meet changing circumstances.
Note also that, as previously stated, the exploratory phrases of an FTAA lasts up to eleven years.
Thereafter, a few more years would be gobbled up in start-up operations. It may take fifteen years
before an FTAA contractor can start earning profits. And thus, the period of 25 years may really be
short for an FTAA. Consider too that in this kind of agreement, the contractor assumes all
entrepreneurial risks. If no commercial quantities of minerals are found, the contractor bears all
financial losses. To compensate for this long gestation period and extra business risks, it would not be
totally unreasonable to allow it to continue EDU activities for another twenty five years.
In any event, the complaint is that, in essence, Section 3.3 gives the contractor the power to compel
the government to renew the WMCP FTAA for another 25 years and deprives the State of any say on
whether to renew the contract.
While we agree that Section 3.3 could have been worded so as to prevent it from favoring the
contractor, this provision does not violate any constitutional limits, since the said term limitation does
not apply at all to FTAAs. Neither can the provision be deemed in any manner to be illegal, as no law is
being violated thereby. It is certainly not illegal for the government to waive its option to refuse the
renewal of a commercial contract.
Verily, the government did not have to agree to Section 3.3. It could have said "No" to the stipulation,
but it did not. It appears that, in the process of negotiations, the other contracting party was able to
convince the government to agree to the renewal terms. Under the circumstances, it does not seem
proper for this Court to intervene and step in to undo what might have perhaps been a possible
miscalculation on the part of the State. If government believes that it is or will be aggrieved by the
effects of Section 3.3, the remedy is the renegotiation of the provision in order to provide the State
the option to not renew the FTAA.
Financial Benefits for Foreigners
Not Forbidden by the Constitution
Before leaving this subject matter, we find it necessary for us to rid ourselves of the false belief that
the Constitution somehow forbids foreign-owned corporations from deriving financial benefits from
the development of our natural or mineral resources.
The Constitution has never prohibited foreign corporations from acquiring and enjoying "beneficial
interest" in the development of Philippine natural resources. The State itself need not directly
undertake exploration, development, and utilization activities. Alternatively, the Constitution
authorizes the government to enter into joint venture agreements (JVAs), co-production agreements
(CPAs) and mineral production sharing agreements (MPSAs) with contractors who are Filipino citizens
or corporations that are at least 60 percent Filipino-owned. They may do the actual "dirty work" -- the
mining operations.
In the case of a 60 percent Filipino-owned corporation, the 40 percent individual and/or
corporate non-Filipino stakeholders obviously participate in the beneficial interest derived from the
development and utilization of our natural resources. They may receive by way of dividends, up to 40
percent of the contractor's earnings from the mining project. Likewise, they may have a say in the
decisions of the board of directors, since they are entitled to representation therein to the extent of
their equity participation, which the Constitution permits to be up to 40 percent of the contractor's
equity. Hence, the non-Filipino stakeholders may in that manner also participate in the management
of the contractor's natural resource development work. All of this is permitted by our Constitution, for
any natural resource, and without limitation even in regard to the magnitude of the mining project or
operations (see paragraph 1 of Section 2 of Article XII).
It is clear, then, that there is nothing inherently wrong with or constitutionally objectionable about the
idea of foreign individuals and entities having or enjoying "beneficial interest" in -- and participating in
the management of operations relative to -- the exploration, development and utilization of our
natural resources.
FTAA More Advantageous
Than Other Schemes
Like CPA, JVA and MPSA
A final point on the subject of beneficial interest. We believe the FTAA is a more advantageous
proposition for the government as compared with other agreements permitted by the Constitution. In
a CPA that the government enters into with one or more contractors, the government shall provide
inputs to the mining operations other than the mineral resource itself. 94
In a JVA, a JV company is organized by the government and the contractor, with both parties having
equity shares (investments); and the contractor is granted the exclusive right to conduct mining
operations and to extract minerals found in the area.95 On the other hand, in an MPSA, the
government grants the contractor the exclusive right to conduct mining operations within the contract
area and shares in the gross output; and the contractor provides the necessary financing, technology,
management and manpower.
The point being made here is that, in two of the three types of agreements under consideration,
the government has to ante up some risk capital for the enterprise. In other words, government funds
(public moneys) are withdrawn from other possible uses, put to work in the venture and placed at
risk in case the venture fails. This notwithstanding, management and control of the operations of the
enterprise are -- in all three arrangements -- in the hands of the contractor, with the government
being mainly a silent partner. The three types of agreement mentioned above apply to any natural
resource, without limitation and regardless of the size or magnitude of the project or operations.
In contrast to the foregoing arrangements, and pursuant to paragraph 4 of Section 2 of Article XII, the
FTAA is limited to large-scale projects and only for minerals, petroleum and other mineral oils. Here,
the Constitution removes the 40 percent cap on foreign ownership and allows the foreign corporation
to own up to 100 percent of the equity. Filipino capital may not be sufficient on account of the size of
the project, so the foreign entity may have to ante up all the risk capital.
Correlatively, the foreign stakeholder bears up to 100 percent of the risk of loss if the project fails. In
respect of the particular FTAA granted to it, WMCP (then 100 percent foreign owned) was
responsible, as contractor, for providing the entire equity, including all the inputs for the project. It
was to bear 100 percent of the risk of loss if the project failed, but its maximum potential "beneficial
interest" consisted only of 40 percent of the net beneficial interest, because the other 60 percent is
the share of the government, which will never be exposed to any risk of loss whatsoever.
In consonance with the degree of risk assumed, the FTAA vested in WMCP the day-to-day
management of the mining operations. Still such management is subject to the overall control and
supervision of the State in terms of regular reporting, approvals of work programs and budgets, and
so on.
So, one needs to consider in relative terms, the costs of inputs for, degree of risk attendant to, and
benefits derived or to be derived from a CPA, a JVA or an MPSA vis-à-vis those pertaining to an FTAA.
It may not be realistically asserted that the foreign grantee of an FTAA is being unduly favored or
benefited as compared with a foreign stakeholder in a corporation holding a CPA, a JVA or an MPSA.
Seen the other way around, the government is definitely better off with an FTAA than a CPA, a JVA or
an MPSA.
Developmental Policy on the Mining Industry
During the Oral Argument and in their Final Memorandum, petitioners repeatedly urged the Court to
consider whether mining as an industry and economic activity deserved to be accorded priority,
preference and government support as against, say, agriculture and other activities in which Filipinos
and the Philippines may have an "economic advantage." For instance, a recent US study 96 reportedly
examined the economic performance of all local US counties that were dependent on mining and 20
percent of whose labor earnings between 1970 and 2000 came from mining enterprises.
The study -- covering 100 US counties in 25 states dependent on mining -- showed that per capita
income grew about 30 percent less in mining-dependent communities in the 1980s and 25 percent
less for the entire period 1980 to 2000; the level of per capita income was also lower. Therefore, given
the slower rate of growth, the gap between these and other local counties increased.
Petitioners invite attention to the OXFAM America Report's warning to developing nations that mining
brings with it serious economic problems, including increased regional inequality, unemployment and
poverty. They also cite the final report97 of the Extractive Industries Review project commissioned by
the World Bank (the WB-EIR Report), which warns of environmental degradation, social disruption,
conflict, and uneven sharing of benefits with local communities that bear the negative social and
environmental impact. The Report suggests that countries need to decide on the best way to exploit
their natural resources, in order to maximize the value added from the development of their
resources and ensure that they are on the path to sustainable development once the resources run
out.
Whatever priority or preference may be given to mining vis-à-vis other economic or non-economic
activities is a question of policy that the President and Congress will have to address; it is not for this
Court to decide. This Court declares what the Constitution and the laws say, interprets only when
necessary, and refrains from delving into matters of policy.
Suffice it to say that the State control accorded by the Constitution over mining activities assures a
proper balancing of interests. More pointedly, such control will enable the President to demand the
best mining practices and the use of the best available technologies to protect the environment and
to rehabilitate mined-out areas. Indeed, under the Mining Law, the government can ensure the
protection of the environment during and after mining. It can likewise provide for the mechanisms to
protect the rights of indigenous communities, and thereby mold a more socially-responsive,
culturally-sensitive and sustainable mining industry.
Early on during the launching of the Presidential Mineral Industry Environmental Awards on February
6, 1997, then President Fidel V. Ramos captured the essence of balanced and sustainable mining in
these words:
"Long term, high profit mining translates into higher revenues for government, more decent
jobs for the population, more raw materials to feed the engines of downstream and allied
industries, and improved chances of human resource and countryside development by
creating self-reliant communities away from urban centers.
xxxxxxxxx
"Against a fragile and finite environment, it is sustainability that holds the key. In sustainable
mining, we take a middle ground where both production and protection goals are balanced,
and where parties-in-interest come to terms."
Neither has the present leadership been remiss in addressing the concerns of sustainable mining
operations. Recently, on January 16, 2004 and April 20, 2004, President Gloria Macapagal Arroyo
issued Executive Orders Nos. 270 and 270-A, respectively, "to promote responsible mineral resources
exploration, development and utilization, in order to enhance economic growth, in a manner that
adheres to the principles of sustainable development and with due regard for justice and equity,
sensitivity to the culture of the Filipino people and respect for Philippine sovereignty." 98
REFUTATION OF DISSENTS
The Court will now take up a number of other specific points raised in the dissents of Justices Carpio
and Morales.
1. Justice Morales introduced us to Hugh Morgan, former president and chief executive officer of
Western Mining Corporation (WMC) and former president of the Australian Mining Industry Council,
who spearheaded the vociferous opposition to the filing by aboriginal peoples of native title claims
against mining companies in Australia in the aftermath of the landmark Mabo decision by the
Australian High Court. According to sources quoted by our esteemed colleague, Morgan was also
a racist and a bigot. In the course of protesting Mabo, Morgan allegedly uttered derogatory remarks
belittling the aboriginal culture and race.
An unwritten caveat of this introduction is that this Court should be careful not to permit the entry
of the likes of Hugh Morgan and his hordes of alleged racist-bigots at WMC. With all due respect, such
scare tactics should have no place in the discussion of this case. We are deliberating on the
constitutionality of RA 7942, DAO 96-40 and the FTAA originally granted to WMCP, which had been
transferred to Sagittarius Mining, a Filipino corporation. We are not discussing the apparition of white
Anglo-Saxon racists/bigots massing at our gates.
2. On the proper interpretation of the phrase agreements involving either technical or financial
assistance, Justice Morales points out that at times we "conveniently omitted" the use of the
disjunctive either…or, which according to her denotes restriction; hence the phrase must be deemed
to connote restriction and limitation.
But, as Justice Carpio himself pointed out during the Oral Argument, the disjunctive phrase either
technical or financial assistance would, strictly speaking, literally mean that a foreign contractor
may provide only one or the other, but not both. And if both technical and financial assistance were
required for a project, the State would have to deal with at least two different foreign contractors --
one for financial and the other for technical assistance. And following on that, a foreign contractor,
though very much qualified to provide both kinds of assistance, would nevertheless be prohibited
from providing one kind as soon as it shall have agreed to provide the other.
But if the Court should follow this restrictive and literal construction, can we really find two (or more)
contractors who are willing to participate in one single project -- one to provide the "financial
assistance" only and the other the "technical assistance" exclusively; it would be excellent if these two
or more contractors happen to be willing and are able to cooperate and work closely together on the
same project (even if they are otherwise competitors). And it would be superb if no conflicts would
arise between or among them in the entire course of the contract. But what are the chances things
will turn out this way in the real world? To think that the framers deliberately imposed this kind of
restriction is to say that they were either exceedingly optimistic, or incredibly naïve. This begs the
question -- What laudable objective or purpose could possibly be served by such strict and restrictive
literal interpretation?
3. Citing Oposa v. Factoran Jr., Justice Morales claims that a service contract is not a contract or
property right which merits protection by the due process clause of the Constitution, but merely a
license or privilege which may be validly revoked, rescinded or withdrawn by executive action
whenever dictated by public interest or public welfare.
Oposa cites Tan v. Director of Forestry and Ysmael v. Deputy Executive Secretary as authority. The
latter cases dealt specifically with timber licenses only. Oposa allegedly reiterated that 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
property or a property right, nor does it create a vested right; nor is it taxation. Thus this Court held
that the granting of license does not create irrevocable rights, neither is it property or property rights.
Should Oposa be deemed applicable to the case at bar, on the argument that natural resources are
also involved in this situation? We do not think so. A grantee of a timber license, permit or license
agreement gets to cut the timber already growing on the surface; it need not dig up tons of earth to
get at the logs. In a logging concession, the investment of the licensee is not as substantial as the
investment of a large-scale mining contractor. If a timber license were revoked, the licensee packs up
its gear and moves to a new area applied for, and starts over; what it leaves behind are mainly the
trails leading to the logging site.
In contrast, the mining contractor will have sunk a great deal of money (tens of millions of dollars)
into the ground, so to speak, for exploration activities, for development of the mine site and
infrastructure, and for the actual excavation and extraction of minerals, including the extensive
tunneling work to reach the ore body. The cancellation of the mining contract will utterly deprive the
contractor of its investments (i.e., prevent recovery of investments), most of which cannot be pulled
out.
To say that an FTAA is just like a mere timber license or permit and does not involve contract or
property rights which merit protection by the due process clause of the Constitution, and may
therefore be revoked or cancelled in the blink of an eye, is to adopt a well-nigh confiscatory stance; at
the very least, it is downright dismissive of the property rights of businesspersons and corporate
entities that have investments in the mining industry, whose investments, operations and
expenditures do contribute to the general welfare of the people, the coffers of government, and the
strength of the economy. Such a pronouncement will surely discourage investments (local and
foreign) which are critically needed to fuel the engine of economic growth and move this country out
of the rut of poverty. In sum, Oposa is not applicable.
4. Justice Morales adverts to the supposedly "clear intention" of the framers of the Constitution to
reserve our natural resources exclusively for the Filipino people. She then quoted from the records of
the ConCom deliberations a passage in which then Commissioner Davide explained his vote, arguing
in the process that aliens ought not be allowed to participate in the enjoyment of our natural
resources. One passage does not suffice to capture the tenor or substance of the entire extensive
deliberations of the commissioners, or to reveal the clear intention of the framers as a group. A re-
reading of the entire deliberations (quoted here earlier) is necessary if we are to understand the true
intent of the framers.
5. Since 1935, the Filipino people, through their Constitution, have decided that the retardation or
delay in the exploration, development or utilization of the nation's natural resources is merely
secondary to the protection and preservation of their ownership of the natural resources, so says
Justice Morales, citing Aruego. If it is true that the framers of the 1987 Constitution did not care much
about alleviating the retardation or delay in the development and utilization of our natural
resources, why did they bother to write paragraph 4 at all? Were they merely paying lip service to
large-scale exploration, development and utilization? They could have just completely ignored the
subject matter and left it to be dealt with through a future constitutional amendment. But we have to
harmonize every part of the Constitution and to interpret each provision in a manner that would give
life and meaning to it and to the rest of the provisions. It is obvious that a literal interpretation of
paragraph 4 will render it utterly inutile and inoperative.
6. According to Justice Morales, the deliberations of the Constitutional Commission do not support
our contention that the framers, by specifying such agreements involving financial or technical
assistance, necessarily gave implied assent to everything that these agreements implicitly entailed, or
that could reasonably be deemed necessary to make them tenable and effective, including
management authority in the day-to-day operations. As proof thereof, she quotes one single
passage from the ConCom deliberations, consisting of an exchange among Commissioners Tingson,
Garcia and Monsod.
However, the quoted exchange does not serve to contradict our argument; it even bolsters it. Comm.
Christian Monsod was quoted as saying: "xxx I think we have to make a distinction that it is not really
realistic to say that we will borrow on our own terms. Maybe we can say that we inherited unjust
loans, and we would like to repay these on terms that are not prejudicial to our own growth. But the
general statement that we should only borrow on our own terms is a bit unrealistic." Comm. Monsod
is one who knew whereof he spoke.
7. Justice Morales also declares that the optimal time for the conversion of an FTAA into an MPSA is
after completion of the exploration phase and just before undertaking the development and
construction phase, on account of the fact that the requirement for a minimum investment of $50
million is applicable only during the development, construction and utilization phase, but not during
the exploration phase, when the foreign contractor need merely comply with minimum ground
expenditures. Thus by converting, the foreign contractor maximizes its profits by avoiding its
obligation to make the minimum investment of $50 million.
This argument forgets that the foreign contractor is in the game precisely to make money. In order to
come anywhere near profitability, the contractor must first extract and sell the mineral ore. In order
to do that, it must also develop and construct the mining facilities, set up its machineries and
equipment and dig the tunnels to get to the deposit. The contractor is thus compelled to expend
funds in order to make profits. If it decides to cut back on investments and expenditures, it will
necessarily sacrifice the pace of development and utilization; it will necessarily sacrifice the amount of
profits it can make from the mining operations. In fact, at certain less-than-optimal levels of
operation, the stream of revenues generated may not even be enough to cover variable expenses, let
alone overhead expenses; this is a dismal situation anyone would want to avoid. In order to make
money, one has to spend money. This truism applies to the mining industry as well.
8. Mortgaging the minerals to secure a foreign FTAA contractor's obligations is anomalous, according
to Justice Morales since the contractor was from the beginning obliged to provide all financing
needed for the mining operations. However, the mortgaging of minerals by the contractor
does not necessarily signify that the contractor is unable to provide all financing required for the
project, or that it does not have the financial capability to undertake large-scale operations.
Mortgaging of mineral products, just like the assignment (by way of security) of manufactured goods
and goods in inventory, and the assignment of receivables, is an ordinary requirement of banks, even
in the case of clients with more than sufficient financial resources. And nowadays, even the richest
and best managed corporations make use of bank credit facilities -- it does not necessarily signify that
they do not have the financial resources or are unable to provide the financing on their own; it is just
a manner of maximizing the use of their funds.
9. Does the contractor in reality acquire the surface rights "for free," by virtue of the fact that it is
entitled to reimbursement for the costs of acquisition and maintenance, adjusted for inflation? We
think not. The "reimbursement" is possible only at the end of the term of the contract, when the
surface rights will no longer be needed, and the land previously acquired will have to be disposed of,
in which case the contractor gets reimbursement from the sales proceeds. The contractor has to pay
out the acquisition price for the land. That money will belong to the seller of the land. Only if and
when the land is finally sold off will the contractor get any reimbursement. In other words, the
contractor will have been cash-out for the entire duration of the term of the contract -- 25 or 50 years,
depending. If we calculate the cost of money at say 12 percent per annum, that is the cost or
opportunity loss to the contractor, in addition to the amount of the acquisition price. 12 percent per
annum for 50 years is 600 percent; this, without any compounding yet. The cost of money is therefore
at least 600 percent of the original acquisition cost; it is in addition to the acquisition cost. "For free"?
Not by a long shot.
10. The contractor will acquire and hold up to 5,000 hectares? We doubt it. The acquisition by the
State of land for the contractor is just to enable the contractor to establish its mine site, build its
facilities, establish a tailings pond, set up its machinery and equipment, and dig mine shafts and
tunnels, etc. It is impossible that the surface requirement will aggregate 5,000 hectares. Much of the
operations will consist of the tunneling and digging underground, which will not require possessing or
using any land surface. 5,000 hectares is way too much for the needs of a mining operator. It simply
will not spend its cash to acquire property that it will not need; the cash may be better employed for
the actual mining operations, to yield a profit.
11. Justice Carpio claims that the phrase among other things (found in the second paragraph of
Section 81 of the Mining Act) is being incorrectly treated as a delegation of legislative power to the
DENR secretary to issue DAO 99-56 and prescribe the formulae therein on the State's share from
mining operations. He adds that the phrase among other things was not intended as a delegation of
legislative power to the DENR secretary, much less could it be deemed a valid delegation of legislative
power, since there is nothing in the second paragraph of Section 81 which can be said to grant any
delegated legislative power to the DENR secretary. And even if there were, such delegation would be
void, for lack of any standards by which the delegated power shall be exercised.
While there is nothing in the second paragraph of Section 81 which can directly be construed as a
delegation of legislative power to the DENR secretary, it does not mean that DAO 99-56 is invalid per
se, or that the secretary acted without any authority or jurisdiction in issuing DAO 99-56. As we stated
earlier in our Prologue, "Who or what organ of government actually exercises this power of control on
behalf of the State? The Constitution is crystal clear: the President. Indeed, the Chief Executive is the
official constitutionally mandated to 'enter into agreements with foreign owned corporations.' On the
other hand, Congress may review the action of the President once it is notified of 'every contract
entered into in accordance with this [constitutional] provision within thirty days from its execution.'"It
is the President who is constitutionally mandated to enter into FTAAs with foreign corporations, and
in doing so, it is within the President's prerogative to specify certain terms and conditions of the
FTAAs, for example, the fiscal regime of FTAAs -- i.e., the sharing of the net mining revenues between
the contractor and the State.
Being the President's alter ego with respect to the control and supervision of the mining industry, the
DENR secretary, acting for the President, is necessarily clothed with the requisite authority and power
to draw up guidelines delineating certain terms and conditions, and specifying therein the terms of
sharing of benefits from mining, to be applicable to FTAAs in general. It is important to remember that
DAO 99-56 has been in existence for almost six years, and has not been amended or revoked by the
President.
The issuance of DAO 99-56 did not involve the exercise of delegated legislative power. The legislature
did not delegate the power to determine the nature, extent and composition of the items that would
come under the phrase among other things. The legislature's power pertains to the imposition
of taxes, duties and fees. This power was not delegated to the DENR secretary. But the power to
negotiate and enter into FTAAs was withheld from Congress, and reserved for the President. In
determining the sharing of mining benefits, i.e., in specifying what the phrase among other
things include, the President (through the secretary acting in his/her behalf) was not determining the
amount or rate of taxes, duties and fees, but rather the amount of INCOME to be derived from
minerals to be extracted and sold, income which belongs to the State as owner of the mineral
resources. We may say that, in the second paragraph of Section 81, the legislature in a sense intruded
partially into the President's sphere of authority when the former provided that
"The Government share in financial or technical assistance agreement shall consist of, among
other things, the contractor's corporate income tax, excise tax, special allowance,
withholding tax due from the contractor's foreign stockholders arising from dividend or
interest payments to the said foreign stockholder in case of a foreign national and all such
other taxes, duties and fees as provided for under existing laws." (Italics supplied)
But it did not usurp the President's authority since the provision merely included the enumerated
items as part of the government share, without foreclosing or in any way preventing (as in fact
Congress could not validly prevent) the President from determining what constitutes the State's
compensation derived from FTAAs. In this case, the President in effect directed the inclusion or
addition of "other things," viz., INCOME for the owner of the resources, in the government's share,
while adopting the items enumerated by Congress as part of the government share also.
12. Justice Carpio's insistence on applying the ejusdem generis rule of statutory construction to the
phrase among other things is therefore useless, and must fall by the wayside. There is no point trying
to construe that phrase in relation to the enumeration of taxes, duties and fees found in paragraph 2
of Section 81, precisely because "the constitutional power to prescribe the sharing of mining income
between the State and mining companies,"to quote Justice Carpio pursuant to an FTAA
is constitutionally lodged with the President, not with Congress. It thus makes no sense to persist in
giving the phrase among other things a restricted meaning referring only to taxes, duties and fees.
13. Strangely, Justice Carpio claims that the DENR secretary can change the formulae in DAO 99-56
any time even without the approval of the President, and the secretary is the sole authority to
determine the amount of consideration that the State shall receive in an FTAA, because Section 5 of
the DAO states that "xxx any amendment of an FTAA other than the provision on fiscal regime shall
require the negotiation with the Negotiation Panel and the recommendation of the Secretary for
approval of the President xxx". Allegedly, because of that provision, if an amendment in the FTAA
involves non-fiscal matters, the amendment requires approval of the President, but if the amendment
involves a change in the fiscal regime, the DENR secretary has the final authority, and approval of the
President may be dispensed with; hence the secretary is more powerful than the President.
We believe there is some distortion resulting from the quoted provision being taken out of context.
Section 5 of DAO 99-56 reads as follows:
"Section 5. Status of Existing FTAAs. All FTAAs approved prior to the effectivity of this
Administrative Order shall remain valid and be recognized by the Government: Provided,
That should a Contractor desire to amend its FTAA, it shall do so by filing a Letter of Intent
(LOI) to the Secretary thru the Director. Provided, further, That if the Contractor desires to
amend the fiscal regime of its FTAA, it may do so by seeking for the amendment of its FTAA's
whole fiscal regime by adopting the fiscal regime provided hereof: Provided, finally, That any
amendment of an FTAA other than the provision on fiscal regime shall require the
negotiation with the Negotiating Panel and the recommendation of the Secretary for
approval of the President of the Republic of the Philippines." (underscoring supplied)
It looks like another case of misapprehension. The proviso being objected to by Justice Carpio is
actually preceded by a phrase that requires a contractor desiring to amend the fiscal regime of its
FTAA, to amend the same by adopting the fiscal regime prescribed in DAO 99-56 -- i.e., solely in that
manner, and in no other. Obviously, since DAO 99-56 was issued by the secretary under the
authority and with the presumed approval of the President, the amendment of an FTAA by merely
adopting the fiscal regime prescribed in said DAO 99-56 (and nothing more) need not have the
express clearance of the President anymore. It is as if the same had been pre-approved. We cannot
fathom the complaint that that makes the secretary more powerful than the President, or that the
former is trying to hide things from the President or Congress.
14. Based on the first sentence of Section 5 of DAO 99-56, which states "[A]ll FTAAs approved prior to
the effectivity of this Administrative Order shall remain valid and be recognized by the Government",
Justice Carpio concludes that said Administrative Order allegedly exempts FTAAs approved prior to its
effectivity -- like the WMCP FTAA -- from having to pay the State any share from their mining income,
apart from taxes, duties and fees.
We disagree. What we see in black and white is the statement that the FTAAs approved before the
DAO came into effect are to continue to be valid and will be recognized by the State. Nothing is said
about their fiscal regimes. Certainly, there is no basis to claim that the contractors under said FTAAs
were being exempted from paying the government a share in their mining incomes.
For the record, the WMCP FTAA is NOT and has never been exempt from paying the government
share. The WMCP FTAA has its own fiscal regime -- Section 7.7 -- which gives the government a 60
percent share in the net mining revenues of WMCP from the commencement of commercial
production.
For that very reason, we have never said that DAO 99-56 is the basis for claiming that the WMCP FTAA
has a consideration. Hence, we find quite out of place Justice Carpio's statement that ironically, DAO
99-56, the very authority cited to support the claim that the WMCP FTAA has a consideration, does
not apply to the WMCP FTAA. By its own express terms, DAO 99-56 does not apply to FTAAs executed
before the issuance of DAO 99-56, like the WMCP FTAA. The majority's position has allegedly no leg to
stand on since even DAO 99-56, assuming it is valid, cannot save the WMCP FTAA from want of
consideration. Even assuming arguendo that DAO 99-56 does not apply to the WMCP FTAA,
nevertheless, the WMCP FTAA has its own fiscal regime, found in Section 7.7 thereof. Hence, there is
no such thing as "want of consideration" here.
Still more startling is this claim: The majority supposedly agrees that the provisions of the WMCP
FTAA, which grant a sham consideration to the State, are void. Since the majority agrees that the
WMCP FTAA has a sham consideration, the WMCP FTAA thus lacks the third element of a valid
contract. The Decision should declare the WMCP FTAA void for want of consideration unless it treats
the contract as an MPSA under Section 80. Indeed the only recourse of WMCP to save the validity of
its contract is to convert it into an MPSA.
To clarify, we said that Sections 7.9 and 7.8(e) of the WMCP FTAA are provisions grossly
disadvantageous to government and detrimental to the interests of the Filipino people, as well as
violative of public policy, and must therefore be stricken off as invalid. Since the offending provisions
are very much separable from Section 7.7 and the rest of the FTAA, the deletion of Sections 7.9 and
7.8(e) can be done without affecting or requiring the invalidation of the WMCP FTAA itself, and such
deletion will preserve for government its due share of the 60 percent benefits. Therefore, the WMCP
FTAA is NOT bereft of a valid consideration (assuming for the nonce that indeed this is the
"consideration" of the FTAA).
SUMMATION
To conclude, a summary of the key points discussed above is now in order.
The Meaning of "Agreements Involving
Either Technical or Financial Assistance"
Applying familiar principles of constitutional construction to the phrase agreements involving either
technical or financial assistance, the framers' choice of words does not indicate the intent to exclude
other modes of assistance, but rather implies that there are other things being included or possibly
being made part of the agreement, apart from financial or technical assistance. The drafters avoided
the use of restrictive and stringent phraseology; a verba legis scrutiny of Section 2 of Article XII of the
Constitution discloses not even a hint of a desire to prohibit foreign involvement in the management
or operation of mining activities, or to eradicate service contracts. Such moves would necessarily
imply an underlying drastic shift in fundamental economic and developmental policies of the State.
That change requires a much more definite and irrefutable basis than mere omission of the words
"service contract" from the new Constitution.
Furthermore, a literal and restrictive interpretation of this paragraph leads to logical inconsistencies. A
constitutional provision specifically allowing foreign-owned corporations to render financial or
technical assistance in respect of mining or any other commercial activity was clearly unnecessary;
the provision was meant to refer to more than mere financial or technical assistance.
Also, if paragraph 4 permits only agreements for financial or technical assistance, there would be no
point in requiring that they be "based on real contributions to the economic growth and general
welfare of the country." And considering that there were various long-term service contracts still in
force and effect at the time the new Charter was being drafted, the absence of any transitory
provisions to govern the termination and closing-out of the then existing service contracts strongly
militates against the theory that the mere omission of "service contracts" signaled their prohibition by
the new Constitution.
Resort to the deliberations of the Constitutional Commission is therefore unavoidable, and a careful
scrutiny thereof conclusively shows that the ConCom members discussed agreements involving either
technical or financial assistance in the same sense as service contracts and used the terms
interchangeably. The drafters in fact knew that the agreements with foreign corporations were going
to entail not mere technical or financial assistance but, rather, foreign investment in and management
of an enterprise for large-scale exploration, development and utilization of minerals.
The framers spoke about service contracts as the concept was understood in the 1973 Constitution. It
is obvious from their discussions that they did not intend to ban or eradicate service contracts.
Instead, they were intent on crafting provisions to put in place safeguards that would eliminate or
minimize the abuses prevalent during the martial law regime. In brief, they were going to permit
service contracts with foreign corporations as contractors, but with safety measures to prevent
abuses, as an exception to the general norm established in the first paragraph of Section 2 of Article
XII, which reserves or limits to Filipino citizens and corporations at least 60 percent owned by such
citizens the exploration, development and utilization of mineral or petroleum resources. This was
prompted by the perceived insufficiency of Filipino capital and the felt need for foreign expertise in
the EDU of mineral resources.
Despite strong opposition from some ConCom members during the final voting, the Article on the
National Economy and Patrimony -- including paragraph 4 allowing service contracts with foreign
corporations as an exception to the general norm in paragraph 1 of Section 2 of the same Article --
was resoundingly and overwhelmingly approved.
The drafters, many of whom were economists, academicians, lawyers, businesspersons and politicians
knew that foreign entities will not enter into agreements involving assistance without requiring
measures of protection to ensure the success of the venture and repayment of their investments,
loans and other financial assistance, and ultimately to protect the business reputation of the foreign
corporations. The drafters, by specifying such agreements involving assistance, necessarily gave
implied assent to everything that these agreements entailed or that could reasonably be deemed
necessary to make them tenable and effective -- including management authority with respect to the
day-to-day operations of the enterprise, and measures for the protection of the interests of the
foreign corporation, at least to the extent that they are consistent with Philippine sovereignty over
natural resources, the constitutional requirement of State control, and beneficial ownership of natural
resources remaining vested in the State.
From the foregoing, it is clear that agreements involving either technical or financial
assistance referred to in paragraph 4 are in fact service contracts, but such new service contracts are
between foreign corporations acting as contractors on the one hand, and on the other hand
government as principal or "owner" (of the works), whereby the foreign contractor provides the
capital, technology and technical know-how, and managerial expertise in the creation and operation
of the large-scale mining/extractive enterprise, and government through its agencies (DENR, MGB)
actively exercises full control and supervision over the entire enterprise.
Such service contracts may be entered into only with respect to minerals, petroleum and other
mineral oils. The grant of such service contracts is subject to several safeguards, among them: (1) that
the service contract be crafted in accordance with a general law setting standard or uniform terms,
conditions and requirements; (2) the President be the signatory for the government; and (3) the
President report the executed agreement to Congress within thirty days.
Ultimate Test: Full State Control
To repeat, the primacy of the principle of the State's sovereign ownership of all mineral resources, and
its full control and supervision over all aspects of exploration, development and utilization of natural
resources must be upheld. But "full control and supervision" cannot be taken literally to mean that
the State controls and supervises everything down to the minutest details and makes all required
actions, as this would render impossible the legitimate exercise by the contractor of a reasonable
degree of management prerogative and authority, indispensable to the proper functioning of the
mining enterprise. Also, government need not micro-manage mining operations and day-to-day affairs
of the enterprise in order to be considered as exercising full control and supervision.
Control, as utilized in Section 2 of Article XII, must be taken to mean a degree of control sufficient to
enable the State to direct, restrain, regulate and govern the affairs of the extractive enterprises.
Control by the State may be on a macro level, through the establishment of policies, guidelines,
regulations, industry standards and similar measures that would enable government to regulate the
conduct of affairs in various enterprises, and restrain activities deemed not desirable or beneficial,
with the end in view of ensuring that these enterprises contribute to the economic development and
general welfare of the country, conserve the environment, and uplift the well-being of the local
affected communities. Such a degree of control would be compatible with permitting the foreign
contractor sufficient and reasonable management authority over the enterprise it has invested in, to
ensure efficient and profitable operation.
Government Granted Full Control
by RA 7942 and DAO 96-40
Baseless are petitioners' sweeping claims that RA 7942 and its Implementing Rules and Regulations
make it possible for FTAA contracts to cede full control and management of mining enterprises over to
fully foreign owned corporations. Equally wobbly is the assertion that the State is reduced to a passive
regulator dependent on submitted plans and reports, with weak review and audit powers and little
say in the decision-making of the enterprise, for which reasons "beneficial ownership" of the mineral
resources is allegedly ceded to the foreign contractor.
As discussed hereinabove, the State's full control and supervision over mining operations are ensured
through the following provisions in RA 7942: Sections 8, 9, 16, 19, 24, 35[(b), (e), (f), (g), (h), (k), (l),
(m) and (o)], 40, 57, 66, 69, 70, and Chapters XI and XVII; as well as the following provisions of DAO
96-40: Sections7[(d) and (f)], 35(a-2), 53[(a-4) and (d)], 54, 56[(g), (h), (l), (m) and (n)], 56(2), 60, 66,
144, 168, 171 and 270, and also Chapters XV, XVI and XXIV.
Through the foregoing provisions, the government agencies concerned are empowered to approve or
disapprove -- hence, in a position to influence, direct, and change -- the various work programs and
the corresponding minimum expenditure commitments for each of the exploration, development and
utilization phases of the enterprise. Once they have been approved, the contractor's compliance with
its commitments therein will be monitored. Figures for mineral production and sales are regularly
monitored and subjected to government review, to ensure that the products and by-products are
disposed of at the best prices; copies of sales agreements have to be submitted to and registered with
MGB.
The contractor is mandated to open its books of accounts and records for scrutiny, to enable the State
to determine that the government share has been fully paid. The State may likewise compel
compliance by the contractor with mandatory requirements on mine safety, health and environmental
protection, and the use of anti-pollution technology and facilities. The contractor is also obligated to
assist the development of the mining community, and pay royalties to the indigenous peoples
concerned. And violation of any of the FTAA's terms and conditions, and/or non-compliance with
statutes or regulations, may be penalized by cancellation of the FTAA. Such sanction is significant to a
contractor who may have yet to recover the tens or hundreds of millions of dollars sunk into a mining
project.
Overall, the State definitely has a pivotal say in the operation of the individual enterprises, and can set
directions and objectives, detect deviations and non-compliances by the contractor, and enforce
compliance and impose sanctions should the occasion arise. Hence, RA 7942 and DAO 96-40 vest in
government more than a sufficient degree of control and supervision over the conduct of mining
operations.
Section 3(aq) of RA 7942 was objected to as being unconstitutional for allowing a foreign contractor
to apply for and hold an exploration permit. During the exploration phase, the permit grantee (and
prospective contractor) is spending and investing heavily in exploration activities without yet being
able to extract minerals and generate revenues. The exploration permit issued under Sections 3(aq),
20 and 23 of RA 7942, which allows exploration but not extraction, serves to protect the interests and
rights of the exploration permit grantee (and would-be contractor), foreign or local. Otherwise, the
exploration works already conducted, and expenditures already made, may end up only benefiting
claim-jumpers. Thus, Section 3(aq) of RA 7942 is not unconstitutional.
WMCP FTAA Likewise Gives the
State Full Control and Supervision
The WMCP FTAA obligates the contractor to account for the value of production and sale of minerals submitted work programs and budgets. Clause 8.3 seeks to provide a temporary, stop-gap solution in
(Clause 1.4); requires that the contractor's work program, activities and budgets be approved by the case a disagreement between the State and the contractor (over the proposed work program or
State (Clause 2.1); gives the DENR secretary power to extend the exploration period (Clause 3.2-a); budget submitted by the contractor) should result in a deadlock or impasse, to avoid unreasonably
requires approval by the State for incorporation of lands into the contract area (Clause 4.3-c); requires long delays in the performance of the works.
Bureau of Forest Development approval for inclusion of forest reserves as part of the FTAA contract
area (Clause 4.5); obligates the contractor to periodically relinquish parts of the contract area not The State, despite Clause 8.3, still has control over the contract area, and it may, as sovereign
needed for exploration and development (Clause 4.6); requires submission of a declaration of mining authority, prohibit work thereon until the dispute is resolved, or it may terminate the FTAA, citing
feasibility for approval by the State (Clause 4.6-b); obligates the contractor to report to the State the substantial breach thereof. Hence, the State clearly retains full and effective control.
results of its exploration activities (Clause 4.9); requires the contractor to obtain State approval for its
work programs for the succeeding two year periods, containing the proposed work activities and Clause 8.5, which allows the contractor to make changes to approved work programs and budgets
expenditures budget related to exploration (Clause 5.1); requires the contractor to obtain State without the prior approval of the DENR secretary, subject to certain limitations with respect to the
approval for its proposed expenditures for exploration activities (Clause 5.2); requires the contractor variance/s, merely provides the contractor a certain amount of flexibility to meet unexpected
to submit an annual report on geological, geophysical, geochemical and other information relating to situations, while still guaranteeing that the approved work programs and budgets are not abandoned
its explorations within the FTAA area (Clause 5.3-a); requires the contractor to submit within six altogether. And if the secretary disagrees with the actions taken by the contractor in this instance, he
months after expiration of exploration period a final report on all its findings in the contract area may also resort to cancellation/termination of the FTAA as the ultimate sanction.
(Clause 5.3-b); requires the contractor after conducting feasibility studies to submit a declaration of
mining feasibility, along with a description of the area to be developed and mined, a description of
Clause 4.6 of the WMCP FTAA gives the contractor discretion to select parts of the contract area to be
the proposed mining operations and the technology to be employed, and the proposed work program
relinquished. The State is not in a position to substitute its judgment for that of the contractor, who
for the development phase, for approval by the DENR secretary (Clause 5.4); obligates the contractor
knows exactly which portions of the contract area do not contain minerals in commercial quantities
to complete the development of the mine, including construction of the production facilities, within
and should be relinquished. Also, since the annual occupation fees paid to government are based on
the period stated in the approved work program (Clause 6.1); requires the contractor to submit for
the total hectarage of the contract area, net of the areas relinquished, the contractor's self-interest
approval a work program covering each period of three fiscal years (Clause 6.2); requires the
will assure proper and efficient relinquishment.
contractor to submit reports to the secretary on the production, ore reserves, work accomplished and
work in progress, profile of its work force and management staff, and other technical information
Clause 10.2(e) of the WMCP FTAA does not mean that the contractor can compel government to use
(Clause 6.3); subjects any expansions, modifications, improvements and replacements of mining
its power of eminent domain. It contemplates a situation in which the contractor is a foreign-owned
facilities to the approval of the secretary (Clause 6.4); subjects to State control the amount of funds
corporation, hence, not qualified to own land. The contractor identifies the surface areas needed for
that the contractor may borrow within the Philippines (Clause 7.2); subjects to State supervisory
it to construct the infrastructure for mining operations, and the State then acquires the surface rights
power any technical, financial and marketing issues (Clause 10.1-a); obligates the contractor to ensure
on behalf of the former. The provision does not call for the exercise of the power of eminent domain
60 percent Filipino equity in the contractor within ten years of recovering specified expenditures
(or determination of just compensation); it seeks to avoid a violation of the anti-dummy law.
unless not so required by subsequent legislation (Clause 10.1); gives the State the right to terminate
the FTAA for unremedied substantial breach thereof by the contractor (Clause 13.2); requires State
approval for any assignment of the FTAA by the contractor to an entity other than an affiliate (Clause Clause 10.2(l) of the WMCP FTAA giving the contractor the right to mortgage and encumber the
14.1). mineral products extracted may have been a result of conditions imposed by creditor-banks to secure
the loan obligations of WMCP. Banks lend also upon the security of encumbrances on goods
produced, which can be easily sold and converted into cash and applied to the repayment of loans.
In short, the aforementioned provisions of the WMCP FTAA, far from constituting a surrender of
Thus, Clause 10.2(l) is not something out of the ordinary. Neither is it objectionable, because even
control and a grant of beneficial ownership of mineral resources to the contractor in question, vest
though the contractor is allowed to mortgage or encumber the mineral end-products themselves, the
the State with control and supervision over practically all aspects of the operations of the FTAA
contractor is not thereby relieved of its obligation to pay the government its basic and additional
contractor, including the charging of pre-operating and operating expenses, and the disposition of
shares in the net mining revenue. The contractor's ability to mortgage the minerals does not negate
mineral products.
the State's right to receive its share of net mining revenues.
There is likewise no relinquishment of control on account of specific provisions of the WMCP FTAA.
Clause 10.2(k) which gives the contractor authority "to change its equity structure at any time,"
Clause 8.2 provides a mechanism to prevent the mining operations from grinding to a complete halt
means that WMCP, which was then 100 percent foreign owned, could permit Filipino equity
as a result of possible delays of more than 60 days in the government's processing and approval of
ownership. Moreover, what is important is that the contractor, regardless of its ownership, is always in
a position to render the services required under the FTAA, under the direction and control of the
government.
Clauses 10.4(e) and (i) bind government to allow amendments to the FTAA if required by banks and
other financial institutions as part of the conditions of new lendings. There is nothing objectionable
here, since Clause 10.4(e) also provides that such financing arrangements should in no event reduce
the contractor's obligations or the government's rights under the FTAA. Clause 10.4(i) provides that
government shall "favourably consider" any request for amendments of this agreement necessary for
the contractor to successfully obtain financing. There is no renunciation of control, as the proviso
does not say that government shall automatically grant any such request. Also, it is up to the
contractor to prove the need for the requested changes. The government always has the final say on
whether to approve or disapprove such requests.
In fine, the FTAA provisions do not reduce or abdicate State control.
No Surrender of Financial Benefits
The second paragraph of Section 81 of RA 7942 has been denounced for allegedly limiting the State's
share in FTAAs with foreign contractors to just taxes, fees and duties, and depriving the State of
a share in the after-tax income of the enterprise. However, the inclusion of the phrase "among other
things" in the second paragraph of Section 81 clearly and unmistakably reveals the legislative intent to
have the State collect more than just the usual taxes, duties and fees.
Thus, DAO 99-56, the "Guidelines Establishing the Fiscal Regime of Financial or Technical Assistance
Agreements," spells out the financial benefits government will receive from an FTAA, as consisting of
not only a basic government share, comprised of all direct taxes, fees and royalties, as well as other
payments made by the contractor during the term of the FTAA, but also an additional government
share, being a share in the earnings or cash flows of the mining enterprise, so as to achieve a fifty-
fifty sharing of net benefits from mining between the government and the contractor.
The additional government share is computed using one of three (3) options or schemes detailed in
DAO 99-56, viz., (1) the fifty-fifty sharing of cumulative present value of cash flows; (2) the excess
profit-related additional government share; and (3) the additional sharing based on the cumulative
net mining revenue. Whichever option or computation is used, the additional government share has
nothing to do with taxes, duties, fees or charges. The portion of revenues remaining after the
deduction of the basic and additional government shares is what goes to the contractor.
The basic government share and the additional government share do not yet take into account the
indirect taxes and other financial contributions of mining projects, which are real and actual benefits
enjoyed by the Filipino people; if these are taken into account, total government share increases to 60
percent or higher (as much as 77 percent, and 89 percent in one instance) of the net present value of
total benefits from the project.
The third or last paragraph of Section 81 of RA 7942 is slammed for deferring the payment of the
government share in FTAAs until after the contractor shall have recovered its pre-operating expenses,
exploration and development expenditures. Allegedly, the collection of the State's share is rendered
uncertain, as there is no time limit in RA 7942 for this grace period or recovery period. But although
RA 7942 did not limit the grace period, the concerned agencies (DENR and MGB) in formulating the
1995 and 1996 Implementing Rules and Regulations provided that the period of recovery, reckoned
from the date of commercial operation, shall be for a period not exceeding five years, or until the date
of actual recovery, whichever comes earlier.
And since RA 7942 allegedly does not require government approval for the pre-operating, exploration
and development expenses of the foreign contractors, it is feared that such expenses could be bloated
to wipe out mining revenues anticipated for 10 years, with the result that the State's share is zero for
the first 10 years. However, the argument is based on incorrect information.
Under Section 23 of RA 7942, the applicant for exploration permit is required to submit a proposed
work program for exploration, containing a yearly budget of proposed expenditures, which the State
passes upon and either approves or rejects; if approved, the same will subsequently be recorded as
pre-operating expenses that the contractor will have to recoup over the grace period.
Under Section 24, when an exploration permittee files with the MGB a declaration of mining project
feasibility, it must submit a work program for development, with corresponding budget, for approval
by the Bureau, before government may grant an FTAA or MPSA or other mineral agreements; again,
government has the opportunity to approve or reject the proposed work program and budgeted
expenditures for development works, which will become the pre-operating and development costs
that will have to be recovered. Government is able to know ahead of time the amounts of pre-
operating and other expenses to be recovered, and the approximate period of time needed therefor.
The aforecited provisions have counterparts in Section 35, which deals with the terms and conditions
exclusively applicable to FTAAs. In sum, the third or last paragraph of Section 81 of RA 7942 cannot be
deemed defective.
Section 80 of RA 7942 allegedly limits the State's share in a mineral production-sharing agreement
(MPSA) to just the excise tax on the mineral product, i.e., only 2 percent of market value of the
minerals. The colatilla in Section 84 reiterates the same limitation in Section 80. However, these two
provisions pertain only to MPSAs, and have no application to FTAAs. These particular provisions do
not come within the issues defined by this Court. Hence, on due process grounds, no
pronouncement can be made in this case in respect of the constitutionality of Sections 80 and 84.
Section 112 is disparaged for reverting FTAAs and all mineral agreements to the old "license,
concession or lease" system, because it allegedly effectively reduces the government share in FTAAs
to just the 2 percent excise tax which pursuant to Section 80 comprises the government share in
MPSAs. However, Section 112 likewise does not come within the issues delineated by this Court, and
was never touched upon by the parties in their pleadings. Moreover, Section 112 may not properly
apply to FTAAs. The mining law obviously meant to treat FTAAs as a breed apart from mineral
agreements. There is absolutely no basis to believe that the law intends to exact from FTAA
contractors merely the same government share (i.e., the 2 percent excise tax) that it apparently
demands from contractors under the three forms of mineral agreements.
While there is ground to believe that Sections 80, 84 and 112 are indeed unconstitutional, they
cannot be ruled upon here. In any event, they are separable; thus, a later finding of nullity will not
affect the rest of RA 7942.
In fine, the challenged provisions of RA 7942 cannot be said to surrender financial benefits from an
FTAA to the foreign contractors.
Moreover, there is no concrete basis for the view that, in FTAAs with a foreign contractor, the State
must receive at least 60 percent of the after-tax income from the exploitation of its mineral resources,
and that such share is the equivalent of the constitutional requirement that at least 60 percent of the
capital, and hence 60 percent of the income, of mining companies should remain in Filipino hands.
Even if the State is entitled to a 60 percent share from other mineral agreements (CPA, JVA and
MPSA), that would not create a parallel or analogous situation for FTAAs. We are dealing with an
essentially different equation. Here we have the old apples and oranges syndrome.
The Charter did not intend to fix an iron-clad rule of 60 percent share, applicable to all situations,
regardless of circumstances. There is no indication of such an intention on the part of the framers.
Moreover, the terms and conditions of petroleum FTAAs cannot serve as standards for mineral mining
FTAAs, because the technical and operational requirements, cost structures and investment needs
of off-shore petroleum exploration and drilling companies do not have the remotest resemblance to
those of on-shore mining companies.
To take the position that government's share must be not less than 60 percent of after-tax income of
FTAA contractors is nothing short of this Court dictating upon the government. The State resultantly
ends up losing control. To avoid compromising the State's full control and supervision over the
exploitation of mineral resources, there must be no attempt to impose a "minimum 60 percent" rule.
It is sufficient that the State has the power and means, should it so decide, to get a 60 percent share
(or greater); and it is not necessary that the State does so in every case.
Invalid Provisions of the WMCP FTAA
Section 7.9 of the WMCP FTAA clearly renders illusory the State's 60 percent share of WMCP's
revenues. Under Section 7.9, should WMCP's foreign stockholders (who originally owned 100 percent
of the equity) sell 60 percent or more of their equity to a Filipino citizen or corporation, the State
loses its right to receive its share in net mining revenues under Section 7.7, without any offsetting
compensation to the State. And what is given to the State in Section 7.7 is by mere tolerance of
WMCP's foreign stockholders, who can at any time cut off the government's entire share by simply
selling 60 percent of WMCP's equity to a Philippine citizen or corporation.
In fact, the sale by WMCP's foreign stockholder on January 23, 2001 of the entire outstanding equity
in WMCP to Sagittarius Mines, Inc., a domestic corporation at least 60 percent Filipino owned, can be
deemed to have automatically triggered the operation of Section 7.9 and removed the State's right to
receive its 60 percent share. Section 7.9 of the WMCP FTAA has effectively given away the State's
share without anything in exchange.
Moreover, it constitutes unjust enrichment on the part of the local and foreign stockholders in WMCP,
because by the mere act of divestment, the local and foreign stockholders get a windfall, as their
share in the net mining revenues of WMCP is automatically increased, without having to pay anything
for it.
Being grossly disadvantageous to government and detrimental to the Filipino people, as well as
violative of public policy, Section 7.9 must therefore be stricken off as invalid. The FTAA in question
does not involve mere contractual rights but, being impressed as it is with public interest, the
contractual provisions and stipulations must yield to the common good and the national interest.
Since the offending provision is very much separable from the rest of the FTAA, the deletion of Section
7.9 can be done without affecting or requiring the invalidation of the entire WMCP FTAA itself.
Section 7.8(e) of the WMCP FTAA likewise is invalid, since by allowing the sums spent by government
for the benefit of the contractor to be deductible from the State's share in net mining revenues, it
results in benefiting the contractor twice over. This constitutes unjust enrichment on the part of the
contractor, at the expense of government. For being grossly disadvantageous and prejudicial to
government and contrary to public policy, Section 7.8(e) must also be declared without effect. It may
likewise be stricken off without affecting the rest of the FTAA.
EPILOGUE
AFTER ALL IS SAID AND DONE, it is clear that there is unanimous agreement in the Court upon the key
principle that the State must exercise full control and supervision over the exploration, development
and utilization of mineral resources.
The crux of the controversy is the amount of discretion to be accorded the Executive Department,
particularly the President of the Republic, in respect of negotiations over the terms of FTAAs,
particularly when it comes to the government share of financial benefits from FTAAs. The Court
believes that it is not unconstitutional to allow a wide degree of discretion to the Chief Executive,
given the nature and complexity of such agreements, the humongous amounts of capital and
financing required for large-scale mining operations, the complicated technology needed, and the
intricacies of international trade, coupled with the State's need to maintain flexibility in its dealings, in
order to preserve and enhance our country's competitiveness in world markets.
We are all, in one way or another, sorely affected by the recently reported scandals involving
corruption in high places, duplicity in the negotiation of multi-billion peso government contracts, huge
payoffs to government officials, and other malfeasances; and perhaps, there is the desire to see some
measures put in place to prevent further abuse. However, dictating upon the President what
minimum share to get from an FTAA is not the solution.It sets a bad precedent since such a
move institutionalizes the very reduction if not deprivation of the State's control. The remedy may be
worse than the problem it was meant to address. In any event, provisions in such future agreements
which may be suspected to be grossly disadvantageous or detrimental to government may be
challenged in court, and the culprits haled before the bar of justice.
Verily, under the doctrine of separation of powers and due respect for co-equal and coordinate
branches of government, this Court must restrain itself from intruding into policy matters and must
allow the President and Congress maximum discretion in using the resources of our country and in
securing the assistance of foreign groups to eradicate the grinding poverty of our people and answer
their cry for viable employment opportunities in the country.
"The judiciary is loath to interfere with the due exercise by coequal branches of government of their
official functions."99 As aptly spelled out seven decades ago by Justice George Malcolm, "Just as the
Supreme Court, as the guardian of constitutional rights, should not sanction usurpations by any other
department of government, so should it as strictly confine its own sphere of influence to the powers
expressly or by implication conferred on it by the Organic Act."100 Let the development of the mining
industry be the responsibility of the political branches of government. And let not this Court interfere
inordinately and unnecessarily.
The Constitution of the Philippines is the supreme law of the land. It is the repository of all the
aspirations and hopes of all the people. We fully sympathize with the plight of Petitioner La Bugal
B'laan and other tribal groups, and commend their efforts to uplift their communities. However, we
cannot justify the invalidation of an otherwise constitutional statute along with its implementing
rules, or the nullification of an otherwise legal and binding FTAA contract.
We must never forget that it is not only our less privileged brethren in tribal and cultural communities
who deserve the attention of this Court; rather, all parties concerned -- including the State itself, the
contractor (whether Filipino or foreign), and the vast majority of our citizens -- equally deserve the
protection of the law and of this Court. To stress, the benefits to be derived by the State from mining
activities must ultimately serve the great majority of our fellow citizens. They have as much right and
interest in the proper and well-ordered development and utilization of the country's mineral
resources as the petitioners.
Whether we consider the near term or take the longer view, we cannot overemphasize the need for
an appropriate balancing of interests and needs -- the need to develop our stagnating mining
industry and extract what NEDA Secretary Romulo Neri estimates is some US$840 billion (approx.
PhP47.04 trillion) worth of mineral wealth lying hidden in the ground, in order to jumpstart our
floundering economy on the one hand, and on the other, the need to enhance our nationalistic
aspirations, protect our indigenous communities, and prevent irreversible ecological damage.
This Court cannot but be mindful that any decision rendered in this case will ultimately impact not
only the cultural communities which lodged the instant Petition, and not only the larger community of
the Filipino people now struggling to survive amidst a fiscal/budgetary deficit, ever increasing prices
of fuel, food, and essential commodities and services, the shrinking value of the local currency, and a
government hamstrung in its delivery of basic services by a severe lack of resources, but also
countless future generations of Filipinos.
For this latter group of Filipinos yet to be born, their eventual access to education, health care and
basic services, their overall level of well-being, the very shape of their lives are even now being
determined and affected partly by the policies and directions being adopted and implemented by
government today. And in part by the this Resolution rendered by this Court today.
Verily, the mineral wealth and natural resources of this country are meant to benefit not merely a
select group of people living in the areas locally affected by mining activities, but the entire Filipino
nation, present and future, to whom the mineral wealth really belong. This Court has therefore
weighed carefully the rights and interests of all concerned, and decided for the greater good of the
greatest number. JUSTICE FOR ALL, not just for some; JUSTICE FOR THE PRESENT AND THE FUTURE,
not just for the here and now.
WHEREFORE, the Court RESOLVES to GRANT the respondents' and the intervenors' Motions for
Reconsideration; to REVERSE and SET ASIDE this Court's January 27, 2004 Decision; to DISMISS the
Petition; and to issue this new judgment declaring CONSTITUTIONAL (1) Republic Act No. 7942 (the
Philippine Mining Law), (2) its Implementing Rules and Regulations contained in DENR Administrative
Order (DAO) No. 9640 -- insofar as they relate to financial and technical assistance agreements
referred to in paragraph 4 of Section 2 of Article XII of the Constitution; and (3) the Financial and
Technical Assistance Agreement (FTAA) dated March 30, 1995 executed by the government and
Western Mining Corporation Philippines Inc. (WMCP), except Sections 7.8 and 7.9 of the subject FTAA
which are hereby INVALIDATED for being contrary to public policy and for being grossly
disadvantageous to the government.
SO ORDERED.
[G.R. NO. 163101 : February 13, 2008]
BENGUET CORPORATION, Petitioner, v. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES
-MINES ADJUDICATION BOARD and J.G. REALTY AND MINING CORPORATION,Respondents.
DECISION
VELASCO, JR., J.:
The instant petition under Rule 65 of the Rules of Court seeks the annulment of the December 2,
2002 Decision1 and March 17, 2004 Resolution2 of the Department of Environment and Natural
Resources-Mining Adjudication Board (DENR-MAB) in MAB Case No. 0124-01 (Mines Administrative
Case No. R-M-2000-01) entitled Benguet Corporation (Benguet) v. J.G. Realty and Mining Corporation
(J.G. Realty).The December 2, 2002 Decision upheld the March 19, 2001 Decision 3 of the MAB Panel
of Arbitrators (POA) which canceled the Royalty Agreement with Option to Purchase (RAWOP) dated
June 1, 19874between Benguet and J.G. Realty, and excluded Benguet from the joint Mineral
Production Sharing Agreement (MPSA) application over four mining claims. The March 17, 2004
Resolution denied Benguet's Motion for Reconsideration.
The Facts
On June 1, 1987, Benguet and J.G. Realty entered into a RAWOP, wherein J.G. Realty was
acknowledged as the owner of four mining claims respectively named as Bonito-I, Bonito-II, Bonito-III,
and Bonito-IV, with a total area of 288.8656 hectares, situated in Barangay Luklukam, Sitio Bagong
Bayan, Municipality of Jose Panganiban, Camarines Norte. The parties also executed a Supplemental
Agreement5 dated June 1, 1987. The mining claims were covered by MPSA Application No. APSA-V-
0009 jointly filed by J.G. Realty as claimowner and Benguet as operator.
In the RAWOP, Benguet obligated itself to perfect the rights to the mining claims and/or otherwise
acquire the mining rights to the mineral claims. Within 24 months from the execution of the RAWOP,
Benguet should also cause the examination of the mining claims for the purpose of determining
whether or not they are worth developing with reasonable probability of profitable production.
Benguet undertook also to furnish J.G. Realty with a report on the examination, within a reasonable
time after the completion of the examination. Moreover, also within the examination period, Benguet
shall conduct all necessary exploration in accordance with a prepared exploration program. If it
chooses to do so and before the expiration of the examination period, Benguet may undertake to
develop the mining claims upon written notice to J.G. Realty. Benguet must then place the mining
claims into commercial productive stage within 24 months from the written notice. 6 It is also provided
in the RAWOP that if the mining claims were placed in commercial production by Benguet, J.G. Realty
should be entitled to a royalty of five percent (5%) of net realizable value, and to royalty for any
production done by Benguet whether during the examination or development periods.
Thus, on August 9, 1989, the Executive Vice-President of Benguet, Antonio N. Tachuling, issued a
letter informing J.G. Realty of its intention to develop the mining claims. However, on February 9,
1999, J.G. Realty, through its President, Johnny L. Tan, then sent a letter to the President of Benguet
informing the latter that it was terminating the RAWOP on the following grounds:
A. The fact that your company has failed to perform the obligations set forth in the RAWOP, i.e., to
undertake development works within 2 years from the execution of the Agreement;
b. Violation of the Contract by allowing high graders to operate on our claim.
c. No stipulation was provided with respect to the term limit of the RAWOP.
d. Non-payment of the royalties thereon as provided in the RAWOP. 7
In response, Benguet's Manager for Legal Services, Reynaldo P. Mendoza, wrote J.G. Realty a letter
dated March 8, 1999,8 therein alleging that Benguet complied with its obligations under the RAWOP
by investing PhP 42.4 million to rehabilitate the mines, and that the commercial operation was
hampered by the non-issuance of a Mines Temporary Permit by the Mines and Geosciences Bureau
(MGB) which must be considered as force majeure, entitling Benguet to an extension of time to
prosecute such permit. Benguet further claimed that the high graders mentioned by J.G. Realty were
already operating prior to Benguet's taking over of the premises, and that J.G. Realty had the
obligation of ejecting such small scale miners. Benguet also alleged that the nature of the mining
business made it difficult to specify a time limit for the RAWOP. Benguet then argued that the
royalties due to J.G. Realty were in fact in its office and ready to be picked up at any time. It appeared
that, previously, the practice by J.G. Realty was to pick-up checks from Benguet representing such
royalties. However, starting August 1994, J.G. Realty allegedly refused to collect such checks from
Benguet. Thus, Benguet posited that there was no valid ground for the termination of the RAWOP. It
also reminded J.G. Realty that it should submit the disagreement to arbitration rather than
unilaterally terminating the RAWOP.
On June 7, 2000, J.G. Realty filed a Petition for Declaration of Nullity/Cancellation of the RAWOP 9 with
the Legaspi City POA, Region V, docketed as DENR Case No. 2000-01 and entitled J.G. Realty v.
Benguet.
On March 19, 2001, the POA issued a Decision,10 dwelling upon the issues of (1) whether the
arbitrators had jurisdiction over the case; and (2) whether Benguet violated the RAWOP justifying the
unilateral cancellation of the RAWOP by J.G. Realty. The dispositive portion stated:
WHEREFORE, premises considered, the June 01, 1987 [RAWOP] and its Supplemental Agreement is
hereby declared cancelled and without effect. BENGUET is hereby excluded from the joint MPSA
Application over the mineral claims denominated as "BONITO-I", "BONITO-II", "BONITO-III" and
"BONITO-IV".
SO ORDERED.
Therefrom, Benguet filed a Notice of Appeal11 with the MAB on April 23, 2001, docketed as Mines
Administrative Case No. R-M-2000-01. Thereafter, the MAB issued the assailed December 2, 2002
Decision. Benguet then filed a Motion for Reconsideration of the assailed Decision which was denied
in the March 17, 2004 Resolution of the MAB. Hence, Benguet filed the instant petition.
The Issues
1. There was serious and palpable error when the Honorable Board failed to rule that the contractual
obligation of the parties to arbitrate under the Royalty Agreement is mandatory.
2. The Honorable Board exceeded its jurisdiction when it sustained the cancellation of the Royalty
Agreement for alleged breach of contract despite the absence of evidence.
3. The Questioned Decision of the Honorable Board in cancelling the RAWOP prejudice[d] the
substantial rights of Benguet under the contract to the unjust enrichment of JG Realty. 12
Restated, the issues are: (1) Should the controversy have first been submitted to arbitration before the
POA took cognizance of the case?; (2) Was the cancellation of the RAWOP supported by evidence?;
and (3) Did the cancellation of the RAWOP amount to unjust enrichment of J.G. Realty at the expense
of Benguet?
The Court's Ruling
Before we dwell on the substantive issues, we find that the instant petition can be denied outright as
Benguet resorted to an improper remedy.
The last paragraph of Section 79 of Republic Act No. (RA) 7942 or the "Philippine Mining Act of 1995"
states, "A Petition for Review by certiorari and question of law may be filed by the aggrieved party
with the Supreme Court within thirty (30) days from receipt of the order or decision of the [MAB]."
However, this Court has already invalidated such provision in Carpio v. Sulu Resources Development
Corp.,13 ruling that a decision of the MAB must first be appealed to the Court of Appeals (CA) under
Rule 43 of the Rules of Court, before recourse to this Court may be had. We held, thus:
To summarize, there are sufficient legal footings authorizing a review of the MAB Decision under Rule
43 of the Rules of Court. First, Section 30 of Article VI of the 1987 Constitution, mandates that "[n]o
law shall be passed increasing the appellate jurisdiction of the Supreme Court as provided in this
Constitution without its advice and consent." On the other hand, Section 79 of RA No. 7942 provides
that decisions of the MAB may be reviewed by this Court on a "petition for review by certiorari ." This
provision is obviously an expansion of the Court's appellate jurisdiction, an expansion to which this
Court has not consented. Indiscriminate enactment of legislation enlarging the appellate jurisdiction
of this Court would unnecessarily burden it.
Second, when the Supreme Court, in the exercise of its rule-making power, transfers to the CA
pending cases involving a review of a quasi-judicial body's decisions, such transfer relates only to
procedure; hence, it does not impair the substantive and vested rights of the parties. The aggrieved
party's right to appeal is preserved; what is changed is only the procedure by which the appeal is to
be made or decided. The parties still have a remedy and a competent tribunal to grant this remedy.
Third, the Revised Rules of Civil Procedure included Rule 43 to provide a uniform rule on appeals from
quasi-judicial agencies. Under the rule, appeals from their judgments and final orders are now
required to be brought to the CA on a verified Petition for Review . A quasi-judicial agency or body has
been defined as an organ of government, other than a court or legislature, which affects the rights of
private parties through either adjudication or rule-making. MAB falls under this definition; hence, it is
no different from the other quasi-judicial bodies enumerated under Rule 43. Besides, the introductory
words in Section 1 of Circular No. 1-91 "among these agencies are" indicate that the enumeration is
not exclusive or conclusive and acknowledge the existence of other quasi-judicial agencies which,
though not expressly listed, should be deemed included therein.
Fourth, the Court realizes that under Batas Pambansa (BP) Blg. 129 as amended by RA No. 7902,
factual controversies are usually involved in decisions of quasi-judicial bodies; and the CA, which is
likewise tasked to resolve questions of fact, has more elbow room to resolve them. By including
questions of fact among the issues that may be raised in an appeal from quasi-judicial agencies to the
CA, Section 3 of Revised Administrative Circular No. 1-95 and Section 3 of Rule 43 explicitly expanded
the list of such issues.
According to Section 3 of Rule 43, "[a]n appeal under this Rule may be taken to the Court of Appeals
within the period and in the manner herein provided whether the appeal involves questions of fact, of
law, or mixed questions of fact and law." Hence, appeals from quasi-judicial agencies even only on
questions of law may be brought to the CA.
Fifth, the judicial policy of observing the hierarchy of courts dictates that direct resort from
administrative agencies to this Court will not be entertained, unless the redress desired cannot be
obtained from the appropriate lower tribunals, or unless exceptional and compelling circumstances
justify availment of a remedy falling within and calling for the exercise of our primary jurisdiction. 14
The above principle was reiterated in Asaphil Construction and Development Corporation v. Tuason, Jr.
(Asaphil).15 However, the Carpio ruling was not applied to Asaphil as the petition in the latter case was
filed in 1999 or three years before the promulgation of Carpio in 2002. Here, the petition was filed on
April 28, 2004 when the Carpio decision was already applicable, thus Benguet should have filed the
appeal with the CA.
Petitioner having failed to properly appeal to the CA under Rule 43, the decision of the MAB has
become final and executory. On this ground alone, the instant petition must be denied.
Even if we entertain the petition although Benguet skirted the appeal to the CA via Rule 43, still, the
December 2, 2002 Decision and March 17, 2004 Resolution of the DENR-MAB in MAB Case No. 0124-
01 should be maintained.
First Issue: The case should have first been brought to
voluntary arbitration before the POA
Secs. 11.01 and 11.02 of the RAWOP pertinently provide:
11.01 Arbitration
Any disputes, differences or disagreements between BENGUET and the OWNER with reference to
anything whatsoever pertaining to this Agreement that cannot be amicably settled by them shall not
be cause of any action of any kind whatsoever in any court or administrative agency but shall, upon
notice of one party to the other, be referred to a Board of Arbitrators consisting of three (3) members,
one to be selected by BENGUET, another to be selected by the OWNER and the third to be selected by
the aforementioned two arbitrators so appointed.
xxx
11.02 Court Action
No action shall be instituted in court as to any matter in dispute as hereinabove stated, except to
enforce the decision of the majority of the Arbitrators.16
Thus, Benguet argues that the POA should have first referred the case to voluntary arbitration before
taking cognizance of the case, citing Sec. 2 of RA 876 on persons and matters subject to arbitration.
On the other hand, in denying such argument, the POA ruled that:
While the parties may establish such stipulations clauses, terms and conditions as they may deem
convenient, the same must not be contrary to law and public policy. At a glance, there is nothing
wrong with the terms and conditions of the agreement. But to state that an aggrieved party cannot
initiate an action without going to arbitration would be tying one's hand even if there is a law which
allows him to do so.17
The MAB, meanwhile, denied Benguet's contention on the ground of estoppel, stating:
Besides, by its own act, Benguet is already estopped in questioning the jurisdiction of the Panel of
Arbitrators to hear and decide the case. As pointed out in the appealed Decision, Benguet initiated
and filed an Adverse Claim docketed as MAC-R-M-2000-02 over the same mining claims without
undergoing contractual arbitration. In this particular case (MAC-R-M-2000-02) now subject of the
appeal, Benguet is likewise in estoppel from questioning the competence of the Panel of Arbitrators
to hear and decide in the summary proceedings J.G. Realty's petition, when Benguet itself did not
merely move for the dismissal of the case but also filed an Answer with counterclaim seeking
affirmative reliefs from the Panel of Arbitrators.18
Moreover, the MAB ruled that the contractual provision on arbitration merely provides for an
additional forum or venue and does not divest the POA of the jurisdiction to hear the case. 19
In its July 20, 2004 Comment,20 J.G. Realty reiterated the above rulings of the POA and MAB. It argued
that RA 7942 or the "Philippine Mining Act of 1995" is a special law which should prevail over the
stipulations of the parties and over a general law, such as RA 876. It also argued that the POA cannot
be considered as a "court" under the contemplation of RA 876 and that jurisprudence saying that
there must be prior resort to arbitration before filing a case with the courts is inapplicable to the
instant case as the POA is itself already engaged in arbitration.
On this issue, we rule for Benguet.
Sec. 2 of RA 876 elucidates the scope of arbitration:
Section 2. Persons and matters subject to arbitration. Two or more persons or parties may submit to
the arbitration of one or more arbitrators any controversy existing between them at the time of the
submission and which may be the subject of an action, or the parties to any contract may in such
contract agree to settle by arbitration a controversy thereafter arising between them. Such
submission or contract shall be valid, enforceable and irrevocable, save upon such grounds as exist
at law for the revocation of any contract.
Such submission or contract may include question[s] arising out of valuations, appraisals or other
controversies which may be collateral, incidental, precedent or subsequent to any issue between the
parties. (Emphasis supplied.)
In RA 9285 or the "Alternative Dispute Resolution Act of 2004," the Congress reiterated the efficacy of
arbitration as an alternative mode of dispute resolution by stating in Sec. 32 thereof that domestic
arbitration shall still be governed by RA 876. Clearly, a contractual stipulation that requires prior resort
to voluntary arbitration before the parties can go directly to court is not illegal and is in fact promoted
by the State. Thus, petitioner correctly cites several cases whereby arbitration clauses have been
upheld by this Court.21
Moreover, the contention that RA 7942 prevails over RA 876 presupposes a conflict between the two
laws. Such is not the case here. To reiterate, availment of voluntary arbitration before resort is made
to the courts or quasi-judicial agencies of the government is a valid contractual stipulation that must
be adhered to by the parties. As stated in Secs. 6 and 7 of RA 876:
Section 6. Hearing by court. A party aggrieved by the failure, neglect or refusal of another to
perform under an agreement in writing providing for arbitration may petition the court for an order
directing that such arbitration proceed in the manner provided for in such agreement. Five days
notice in writing of the hearing of such application shall be served either personally or by registered
mail upon the party in default. The court shall hear the parties, and upon being satisfied that the
making of the agreement or such failure to comply therewith is not in issue, shall make an order
directing the parties to proceed to arbitration in accordance with the terms of the agreement. If the
making of the agreement or default be in issue the court shall proceed to summarily hear such
issue. If the finding be that no agreement in writing providing for arbitration was made, or that
there is no default in the proceeding thereunder, the proceeding shall be dismissed. If the finding
be that a written provision for arbitration was made and there is a default in proceeding
thereunder, an order shall be made summarily directing the parties to proceed with the arbitration
in accordance with the terms thereof.
xxx
Section 7. Stay of civil action. If any suit or proceeding be brought upon an issue arising out of an
agreement providing for the arbitration thereof, the court in which such suit or proceeding is pending,
upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration, shall
stay the action or proceeding until an arbitration has been had in accordance with the terms of the
agreement: Provided, That the applicant, for the stay is not in default in proceeding with such
arbitration. (Emphasis supplied.)
In other words, in the event a case that should properly be the subject of voluntary arbitration is
erroneously filed with the courts or quasi-judicial agencies, on motion of the defendant, the court or
quasi-judicial agency shall determine whether such contractual provision for arbitration is sufficient
and effective. If in affirmative, the court or quasi-judicial agency shall then order the enforcement of
said provision. Besides, in BF Corporation v. Court of Appeals, we already ruled:
In this connection, it bears stressing that the lower court has not lost its jurisdiction over the case.
Section 7 of Republic Act No. 876 provides that proceedings therein have only been stayed. After the
special proceeding of arbitration has been pursued and completed, then the lower court may confirm
the award made by the arbitrator.22
J.G. Realty's contention, that prior resort to arbitration is unavailing in the instant case because the
POA's mandate is to arbitrate disputes involving mineral agreements, is misplaced. A distinction must
be made between voluntary and compulsory arbitration. In Ludo and Luym Corporation v. Saordino,
the Court had the occasion to distinguish between the two types of arbitrations:
Comparatively, in Reformist Union of R.B. Liner, Inc. v. NLRC, compulsory arbitration has been defined
both as "the process of settlement of labor disputes by a government agency which has the
authority to investigate and to make an award which is binding on all the parties, and as a mode of
arbitration where the parties are compelled to accept the resolution of their dispute through
arbitration by a third party." While a voluntary arbitrator is not part of the governmental unit or
labor department's personnel, said arbitrator renders arbitration services provided for under labor
laws.23(Emphasis supplied.)
There is a clear distinction between compulsory and voluntary arbitration. The arbitration provided by
the POA is compulsory, while the nature of the arbitration provision in the RAWOP is voluntary, not
involving any government agency. Thus, J.G. Realty's argument on this matter must fail.
As to J.G. Realty's contention that the provisions of RA 876 cannot apply to the instant case which
involves an administrative agency, it must be pointed out that Section 11.01 of the RAWOP states
that:
[Any controversy with regard to the contract] shall not be cause of any action of any kind whatsoever
in any court or administrative agency but shall, upon notice of one party to the other, be referred to a
Board of Arbitrators consisting of three (3) members, one to be selected by BENGUET, another to be
selected by the OWNER and the third to be selected by the aforementioned two arbiters so
appointed.24 (Emphasis supplied.)
There can be no quibbling that POA is a quasi-judicial body which forms part of the DENR, an
administrative agency. Hence, the provision on mandatory resort to arbitration, freely entered into by
the parties, must be held binding against them.25
In sum, on the issue of whether POA should have referred the case to voluntary arbitration, we find
that, indeed, POA has no jurisdiction over the dispute which is governed by RA 876, the arbitration
law.
However, we find that Benguet is already estopped from questioning the POA's jurisdiction. As it
were, when J.G. Realty filed DENR Case No. 2000-01, Benguet filed its answer and participated in the
proceedings before the POA, Region V. Secondly, when the adverse March 19, 2001 POA Decision was
rendered, it filed an appeal with the MAB in Mines Administrative Case No. R-M-2000-01 and again
participated in the MAB proceedings. When the adverse December 2, 2002 MAB Decision was
promulgated, it filed a motion for reconsideration with the MAB. When the adverse March 17, 2004
MAB Resolution was issued, Benguet filed a petition with this Court pursuant to Sec. 79 of RA 7942
impliedly recognizing MAB's jurisdiction. In this factual milieu, the Court rules that the jurisdiction of
POA and that of MAB can no longer be questioned by Benguet at this late hour. What Benguet should
have done was to immediately challenge the POA's jurisdiction by a special civil action
for certiorari when POA ruled that it has jurisdiction over the dispute. To redo the proceedings fully
participated in by the parties after the lapse of seven years from date of institution of the original
action with the POA would be anathema to the speedy and efficient administration of justice.
Second Issue: The cancellation of the RAWOP
was supported by evidence
The cancellation of the RAWOP by the POA was based on two grounds: (1) Benguet's failure to pay
J.G. Realty's royalties for the mining claims; and (2) Benguet's failure to seriously pursue MPSA
Application No. APSA-V-0009 over the mining claims.
As to the royalties, Benguet claims that the checks representing payments for the royalties of J.G.
Realty were available for pick-up in its office and it is the latter which refused to claim them. Benguet
then thus concludes that it did not violate the RAWOP for nonpayment of royalties. Further, Benguet
reasons that J.G. Realty has the burden of proving that the former did not pay such royalties following
the principle that the complainants must prove their affirmative allegations.
With regard to the failure to pursue the MPSA application, Benguet claims that the lengthy time of
approval of the application is due to the failure of the MGB to approve it. In other words, Benguet
argues that the approval of the application is solely in the hands of the MGB.
Benguet's arguments are bereft of merit.
Sec. 14.05 of the RAWOP provides:
14.05 Bank Account
OWNER shall maintain a bank account at ___________ or any other bank from time to time selected
by OWNER with notice in writing to BENGUET where BENGUET shall deposit to the OWNER's credit
any and all advances and payments which may become due the OWNER under this Agreement as well
as the purchase price herein agreed upon in the event that BENGUET shall exercise the option to
purchase provided for in the Agreement. Any and all deposits so made by BENGUET shall be a full
and complete acquittance and release to [sic] BENGUET from any further liability to the OWNER of
the amounts represented by such deposits. (Emphasis supplied.)
Evidently, the RAWOP itself provides for the mode of royalty payment by Benguet. The fact that there
was the previous practice whereby J.G. Realty picked-up the checks from Benguet is unavailing. The
mode of payment is embodied in a contract between the parties. As such, the contract must be
considered as the law between the parties and binding on both. 26 Thus, after J.G. Realty informed
Benguet of the bank account where deposits of its royalties may be made, Benguet had the obligation
to deposit the checks. J.G. Realty had no obligation to furnish Benguet with a Board Resolution
considering that the RAWOP itself provided for such payment scheme.
Notably, Benguet's claim that J.G. Realty must prove nonpayment of its royalties is both illogical and
unsupported by law and jurisprudence.
The allegation of nonpayment is not a positive allegation as claimed by Benguet. Rather, such is a
negative allegation that does not require proof and in fact transfers the burden of proof to Benguet.
Thus, this Court ruled in Jimenez v. National Labor Relations Commission:
As a general rule, one who pleads payment has the burden of proving it. Even where the plaintiff must
allege non-payment, the general rule is that the burden rests on the defendant to prove payment,
rather than on the plaintiff to prove non-payment. The debtor has the burden of showing with legal
certainty that the obligation has been discharged by payment.27 (Emphasis supplied.)
In the instant case, the obligation of Benguet to pay royalties to J.G. Realty has been admitted and
supported by the provisions of the RAWOP. Thus, the burden to prove such obligation rests on
Benguet.
It should also be borne in mind that MPSA Application No. APSA-V-0009 has been pending with the
MGB for a considerable length of time. Benguet, in the RAWOP, obligated itself to perfect the rights to
the mining claims and/or otherwise acquire the mining rights to the mineral claims but failed to
present any evidence showing that it exerted efforts to speed up and have the application approved.
In fact, Benguet never even alleged that it continuously followed-up the application with the MGB and
that it was in constant communication with the government agency for the expeditious resolution of
the application. Such allegations would show that, indeed, Benguet was remiss in prosecuting the
MPSA application and clearly failed to comply with its obligation in the RAWOP.
Third Issue: There is no unjust enrichment in the instant case
Based on the foregoing discussion, the cancellation of the RAWOP was based on valid grounds and is,
therefore, justified. The necessary implication of the cancellation is the cessation of Benguet's right to
prosecute MPSA Application No. APSA-V-0009 and to further develop such mining claims.
In Car Cool Philippines, Inc. v. Ushio Realty and Development Corporation, we defined unjust
enrichment, as follows:
We have held that "[t]here is unjust enrichment when a person unjustly retains a benefit to the loss
of another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience." Article 22 of the Civil Code provides that "[e]very
person who through an act of performance by another, or any other means, acquires or comes into
possession of something at the expense of the latter without just or legal ground, shall return the
same to him." The principle of unjust enrichment under Article 22 requires two conditions: (1) that a
person is benefited without a valid basis or justification, and (2) that such benefit is derived at
another's expense or damage.
There is no unjust enrichment when the person who will benefit has a valid claim to such
benefit.28 (Emphasis supplied.)
Clearly, there is no unjust enrichment in the instant case as the cancellation of the RAWOP, which left
Benguet without any legal right to participate in further developing the mining claims, was brought
about by its violation of the RAWOP. Hence, Benguet has no one to blame but itself for its
predicament.
WHEREFORE, we DISMISS the petition, and AFFIRM the December 2, 2002 Decision and March 17,
2004 Resolution of the DENR-MAB in MAB Case No. 0124-01 upholding the cancellation of the June 1,
1987 RAWOP. No costs.
SO ORDERED. opposition/adverse claim. This dispositive portion of said Resolution reads:chanrob1es virtual 1aw
library

‘. . . WHEREFORE, the opposition/adverse claims of ARMANDO C. CARPIO is hereby UPHELD.

[G.R. No. 148267. August 8, 2002.] Accordingly, the properties of CARPIO are ordered excluded from the area of PMPSA-IV-131 of SULU
RESOURCES DEVELOPMENT CORPORATION, and the area not covered by the adverse claim as subject
ARMANDO C. CARPIO, Petitioner, v. SULU RESOURCES DEVELOPMENT CORPORATION, Respondent. to mining locations in accordance with existing laws, rules and regulations.

DECISION ‘SO ORDERED.’

"Respondent appealed the foregoing Resolution to the Mines Adjudication Board. Meanwhile,
PANGANIBAN, J.: petitioner filed a motion to dismiss appeal on the ground of respondent’s failure to comply with the
requirements of the New Mining Act’s Implementing Rules and Regulations.

"On June 20, 1997, the Mines Adjudication Board rendered the assailed Order dismissing petitioner’s
Decisions and final orders of the Mines Adjudication Board (MAB) are appealable to the Court of
opposition/adverse claim. The dispositive portion of the assailed Order provides:chanrob1es virtual
Appeals under Rule 43 of the 1997 Rules of Court. Although not expressly included in the Rule, the
1aw library
MAB is unquestionably a quasi-judicial agency and stands in the same category as those enumerated
in its provisions.chanrob1es virtua1 1aw 1ibrary
‘WHEREFORE, in view of the foregoing premises, this Resolution of the Panel of Arbitrators of Region
IV dated September 26, 1996, is hereby SET ASIDE and the adverse claim/opposition of CARPIO
The Case
DISMISSED. Accordingly, the PMSPA of SULU should be given due process and evaluated subject to the
pertinent provisions of RA 7942 and DAO 96-40.
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, challenging the
‘SO ORDERED.’
August 31, 2000 Decision 1 and May 3, 2001 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP
No. 46830. The Assailed Decision disposed as follows:jgc:chanrobles.com.ph
"Petitioner filed a motion for reconsideration of said Order which was denied by the Board per Order
dated November 24, 1997, the decretal portion of which provides:chanrob1es virtual 1aw library
"WHEREFORE, premises considered, the petition for review is hereby DENIED." 3
‘WHEREFORE, the Motion for Reconsideration is hereby DENIED for lack of merit.’" 4
Reconsideration was denied in the assailed Resolution.
Ruling of the Court of Appeals
The Facts

Citing Section 79 of Chapter XIII of the Philippine Mining Act of 1995 (RA 7942), the CA ruled that it
In the challenged Decision, the CA summarized the facts of this case as follows:jgc:chanrobles.com.ph
did not have jurisdiction to review the Decision of the Mines Adjudication Board (MAB). The
adjudication of conflicting mining claims is completely administrative in nature, as held in Pearson v.
"This case originated from a petition filed by respondent [Sulu Resources Development Corporation]
Intermediate Appellate Court. 5 Under RA 7942, the "settlement of disputes involving rights to mining
for Mines Production Sharing Agreement (MPSA) No. MPSA-IV-131, covering certain areas in Antipolo,
areas, mineral agreements, and surface owners, occupants and claimholders/concessionaires shall
Rizal. Petitioner [Armando C. Carpio] filed an opposition/adverse claim thereto, alleging, inter alia,
pertain exclusively to a Panel of Arbitrators in the regional office of the Department of Environment
that his landholdings in Cupang and Antipolo, Rizal will be covered by respondent’s claim, thus he
and Natural Resources, whose decisions are appealable to the Mines Adjudication Board." Under
enjoys a preferential right to explore and extract the quarry resources on his properties.
Section 79 of RA 7942, "the findings of fact by the MAB as well as its decision or order shall be final
and executory."cralaw virtua1aw library
"After due proceedings were held, the Panel of Arbitrators of the Mines and Geo-Sciences Bureau of
the DENR rendered a Resolution dated September 26, 1996, upholding petitioner’s
Inasmuch as the issue raised by petitioner relates to whether an overlap or a conflict between his
properties and the area covered by the application of respondent has been proven, MAB’s finding
thereon was binding and conclusive, and the Board’s Decision was already final and
executory.chanrob1es virtua1 1aw 1ibrary
Hence, this Petition. 6
Issue
In his Memorandum, petitioner raises this sole issue for our consideration:jgc:chanrobles.com.ph
"Whether or not appeals from the Decision or Final Orders of the Mines Adjudication Board should be
made directly to the Supreme Court as contended by the respondent and the Court of Appeals, or
such appeals be first made to the Court of Appeals as contended by herein petitioner." 7
This Court’s Ruling
The Petition is meritorious.
Sole Issue:chanrob1es virtual 1aw library
Appellate Jurisdiction over MAB Decisions
Petitioner submits that appeals from the decisions of the MAB should be filed with the CA. First, the
Supreme Court has authority, under Section 5(5) of Article VIII of the Philippine Constitution, to
promulgate rules of procedure in all courts, including all quasi-judicial agencies such as the MAB.
Second, Section 3 of Rule 43 of the 1997 Rules of Civil Procedure authorizes appeals to the CA from
judgments or final orders of quasi-judicial tribunals by means of petitions for review. Third, the MAB
gravely abused its discretion in "deliberately, willfully and unlawfully" disregarding petitioner’s rights
to the land unduly included in the questioned application for a Mines Productive Sharing Agreement
(MPSA).
En contrario, the CA ruled and respondent agrees that the settlement of disputes involving rights to
mining areas and overlapping or conflicting claim is a purely administrative matter, over which the
MAB has appellate jurisdiction. The latter’s factual findings, decisions and final orders on such matters
are final and executory as provided in Section 79 of Chapter XIII of the Philippine Mining Act of 1995
and as held in Pearson v. IAC. Since the appeal of petitioner pertains to the factual matter of whether
he was able to prove the existence of the overlap or conflict between his claimed area and that
covered by respondent’s application, then the findings of the MAB should be deemed final and
executory.
The CA refused to take jurisdiction over the case because, under Section 79 of the Philippine Mining
Act of 1995, petitions for review of MAB decisions are to be brought directly to the Supreme Court.
The provision reads in part:jgc:chanrobles.com.ph
"x x x
"A petition for review by certiorari and question of law may be filed by the aggrieved party with the
Supreme Court within thirty (30) days from receipt of the order or decision of the Board."cralaw
virtua1aw library
We hold that respondent’s reliance on Pearson is misplaced. The claimant therein sued in the then
Court of First Instance (CFI) to prevent the execution of a Decision rendered by the panel of
investigators of the Bureau of Mines and the Office of the President. Despite a Motion to Dismiss filed
by the mining companies, the CFI ordered the creation of a committee to determine the correct tie-
point of their claims. So, the mining companies went to the then Intermediate Appellate Court (IAC)
via a Petition for Certiorari under Rule 65. The claimants averred that the appellate court had no
jurisdiction.
In the case at bar, petitioner went to the CA through a Petition for Review on Certiorari under Rule 43,
seeking a reversal of the MAB Decision. Given the difference in the reason for and the mode of
appeal, it is obvious that Pearson is not applicable here.chanrob1es virtua1 1aw 1ibrary
Still, we can draw one lesson. Far from dismissing the case on the ground of lack of jurisdiction,
Pearson expressly held that the CA had jurisdiction over the petition for certiorari, because "Section 9
of BP Blg. 129 (The Judiciary Reorganization Act of 1980), now incorporated in Section 4, Rule 65 of
the 1997 Rules of Civil Procedure, vested the then IAC with original jurisdiction to issue writs
of certiorari and prohibition, among other auxiliary writs . . ." However, even though the Supreme
Court has concurrent jurisdiction with the CA and the Regional Trial Courts to issue a writ of
mandamus, prohibition or certiorari, litigants are well advised against taking a direct recourse to this
Court without initially seeking proper relief from the lower courts, in accordance with the hierarchy of
courts. 8
In Pearson, what was under review was the ruling of the CFI to take cognizance of the case which had
been earlier decided by the MAB, not the MAB Decision itself which was promulgated by the CA
under Rule 43. The present petitioner seeks a review of the latter.
Pearson held that the nature of the primary powers granted by law to the then secretary of
agriculture and natural resources as well as to the director of mines were executive or administrative,
such as "granting of license, permits, lease and contracts[;] or approving, rejecting, reinstating or
canceling applications[;] or deciding conflicting applications." These powers should be distinguished
from litigants’ disagreements or controversies that are civil or contractual in nature, which may be
adjudicated only by the courts of justice. The findings of fact of the MAB, which exercises appellate
jurisdiction over decisions or orders of the panel of arbitrators, are conclusive and binding on the
parties; its decisions or orders on these are final and executory. But petitions for certiorari may be
filed with the appropriate courts. 9 In short, the Court held that the appellate jurisdiction of the IAC
(now the CA) in Pearson fell under Rule 65 — not 43 — because what was being impugned was grave
abuse of discretion on the part of the CFI.chanrob1es virtua1 1aw 1ibrary

Pearson, however, should be understood in the light of other equally relevant jurisprudence. In Fabian
v. Desierto, 10 the Court clarified that appeals from judgments and final orders of quasi-judicial
agencies are now required to be brought to the CA, under the requirements and conditions set forth
in Rule 43. This Rule was adopted precisely to provide a uniform rule of appellate procedure from
quasi-judicial agencies. 11
Section 27 of RA 6770 12 which is similarly worded as Section 79 of the Philippine Mining Act, was
struck down by Fabian as unconstitutional, because it had broadened the appellate jurisdiction of the
Supreme Court without its consent, in violation of Section 30 of Article VI of the Constitution. 13 In
short, Section 27 of RA 6770 which provides that all administrative decisions of the Office of the
Ombudsman may be appealed to the Supreme Court, was unconstitutional.
In another case, held invalid in the light of Rule 43 of the 1997 Rules of Court was Section 3(2) of
Executive Order No. 561, which had declared that decisions of the Commission on Settlement of Land
Problems (COSLAP) were appealable exclusively to the Supreme Court. 14 There is no convincing
reason why appeals from the COSLAP should be treated differently from those arising from other
quasi-judicial bodies, the decisions of which are directly appealable to the CA under Rule 43 of the
1997 Rules.
Finally, Metro Construction, Inc. v. Chatham Properties, Inc. 15 held that Section 19 of Executive Order
No. 1008 — which had deemed arbitral awards of the Construction Industry Arbitration Commission
(CIAC) to be appealable to the Supreme Court on questions of law — was modified by Circular No. 1-
91, Batas Pambansa Blg. 129 as amended by RA 7902, Revised Administrative Circular 1-95, and Rule
43 of the Rules of Court. Reiterating Fabian, the Court ruled that appeals were procedural and
remedial in nature; hence, constitutionally subject to this Court’s rule-making power.chanrob1es
virtua1 1aw 1ibrary
In the present case, it is claimed that a petition for review is improper because petitioner’s challenge
is purely factual, bearing only on the MAB ruling that there was no overlap or conflict between the
litigants’ claims.
We clarify. Factual controversies are usually involved in administrative actions; and the CA is prepared
to handle such issues because, unlike this Court, it is mandated to rule on questions of fact. 16 In
Metro Construction, we observed that not only did the CA have appellate jurisdiction over CIAC
decisions and orders, but the review of such decisions included questions of fact and law. 17 At the
very least when factual findings of the MAB are challenged or alleged to have been made in grave
abuse of discretion as in the present case, the CA may review them, consistent with the constitutional
duty 18 of the judiciary.
To summarize, there are sufficient legal footings authorizing a review of the MAB Decision under Rule
43 of the Rules of Court. First, Section 30 of Article VI of the 1987 Constitution, mandates that" [n]o
law shall be passed increasing the appellate jurisdiction of the Supreme Court as provided in this
Constitution without its advice and consent." On the other hand, Section 79 of RA No. 7942 provides
that decisions of the MAB may be reviewed by this Court on a "petition for review by certiorari." This
provision is obviously an expansion of the Court’s appellate jurisdiction, an expansion to which this
Court has not consented. Indiscriminate enactment of legislation enlarging the appellate jurisdiction
of this Court would unnecessarily burden it. 19
Second, when the Supreme Court, in the exercise of its rule-making power, transfers to the CA
pending cases involving a review of a quasi-judicial body’s decisions, such transfer relates only to
procedure; hence, it does not impair the substantive and vested rights of the parties. The aggrieved
party’s right to appeal is preserved; what is changed is only the procedure by which the appeal is to
be made or decided. 20 The parties still have a remedy and a competent tribunal to grant this remedy.
Third, the Revised Rules of Civil Procedure included Rule 43 to provide a uniform rule on appeals from
quasi-judicial agencies. 21 Under the rule, appeals from their judgments and final orders are now
required to be brought to the CA on a verified petition for review. 22 A quasi-judicial agency or body
has been defined as an organ of government, other than a court or legislature, which affects the rights
of private parties through either adjudication or rule-making. 23 MAB falls under this definition;
hence, it is no different from the other quasi-judicial bodies enumerated under Rule 43. Besides, the
introductory words in Section 1 of Circular No. 1-91 — "among these agencies are" — indicate that
the enumeration is not exclusive or conclusive and acknowledge the existence of other quasi-judicial
agencies which, though not expressly listed, should be deemed included therein. 24
Fourth, the Court realizes that under Batas Pambansa (BP) Blg. 129 25 as amended by RA No. 7902, 26
factual controversies are usually involved in decisions of quasi-judicial bodies; and the CA, which is
likewise tasked to resolve questions of fact, has more elbow room to resolve them. By including
questions of fact 27 among the issues that may be raised in an appeal from quasi-judicial agencies to
the CA, Section 3 of Revised Administrative Circular No. 1-95 and Section 3 of Rule 43 explicitly
expanded the list of such issues.
According to Section 3 of Rule 43," [a]n appeal under this Rule may be taken to the Court of Appeals
within the period and in the manner herein provided whether the appeal involves questions of fact, of
law, or mixed questions of fact and law." Hence, appeals from quasi-judicial agencies even only on
questions of law may be brought to the CA.
Fifth, the judicial policy of observing the hierarchy of courts dictates that direct resort from
administrative agencies to this Court will not be entertained, unless the redress desired cannot be
obtained from the appropriate lower tribunals, or unless exceptional and compelling circumstances
justify availment of a remedy falling within and calling for the exercise of our primary jurisdiction. 28
Consistent with these rulings and legal bases, we therefore hold that Section 79 of RA 7942 is likewise
to be understood as having been modified by Circular No. 1-91, BP Blg. 129 as amended by RA 7902,
Revised Administrative Circular 1-95, and Rule 43 of the Rules of Court. In brief, appeals from
decisions of the MAB shall be taken to the CA through petitions for review in accordance with the
provisions of Rule 43 of the 1997 Rules of Court.chanrob1es virtua1 1aw 1ibrary
WHEREFORE, the Petition is GRANTED, and the assailed Decision and Resolution REVERSED and SET vs.
ASIDE. The Petition in CA-G.R SP No. 46830 is REINSTATED, and the CA is ordered to RESOLVE it on the BLUE RIDGE MINERAL CORPORATION and CELESTIAL NICKEL MINING EXPLORATION
merits with deliberate dispatch. No costs. CORPORATION,Respondents.

SO ORDERED. DECISION

VELASCO, JR., J.:

G.R. No. 169080 December 19, 2007 The Case

CELESTIAL NICKEL MINING EXPLORATION CORPORATION, Petitioner,
vs.
MACROASIA CORPORATION (formerly INFANTA MINERAL AND INDUSTRIAL CORPORATION), BLUE
RIDGE MINERAL CORPORATION, and LEBACH MINING CORPORATION, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 172936
Before us are four (4) petitions. The first is a Petition for Review on Certiorari 1 under Rule 45 docketed
as G.R. No. 169080, wherein petitioner Celestial Nickel Mining Exploration Corporation (Celestial)
seeks to set aside the April 15, 2005 Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 87931.
The CA affirmed the November 26, 2004 Resolution of the Mines Adjudication Board (MAB) in MAB
Case Nos. 056-97 and 057-97 (DENR Case Nos. 97-01 and 97-02), upholding the authority of the
Department of Environment and Natural Resources (DENR) Secretary to grant and cancel mineral
agreements. Also assailed is the August 3, 2005 Resolution 3 of the CA denying the Motion for
Reconsideration of the assailed Decision.

BLUE RIDGE MINERAL CORPORATION, Petitioner, The second is a Petition for Certiorari4 under Rule 65 docketed as G.R. No. 172936, wherein petitioner
vs. Blue Ridge Mineral Corporation (Blue Ridge) seeks to annul and set aside the action of then Secretary
HON. ANGELO REYES in his capacity as SECRETARY of the DEPARTMENT OF ENVIRONMENT AND Michael T. Defensor, in his capacity as DENR Secretary, approving and signing two Mineral Production
NATURAL RESOURCES, HON. GUILLERMO ESTABILLO in his capacity as REGIONAL DIRECTOR of the Sharing Agreements (MPSAs) in favor of Macroasia Corporation (Macroasia) denominated as MPSA
MINES AND GEOSCIENCES BUREAU, REGION IV-B of the DEPARTMENT OF ENVIRONMENT AND Nos. 220-2005-IVB and 221-2005-IVB.
NATURAL RESOURCES, and MACROASIA CORPORATION (formerly INFANTA MINERAL AND
INDUSTRIAL CORPORATION), Respondents. And the third and fourth are petitions for review on certiorari 5 under Rule 45 docketed as G.R. No.
176226 and G.R. No. 176319, wherein petitioners Celestial and Macroasia, respectively, seek to set
x - - - - - - - - - - - - - - - - - - - - - - -x aside the May 18, 2006 Decision6 of the CA in CA-G.R. SP No. 90828. The CA reversed and set aside
the November 26, 2004 and July 12, 2005 Resolutions of the MAB, and reinstated the October 24,
G.R. No. 176226 2000 Decision in MAB Case Nos. 056-97 and 057-97, granting Blue Ridge the prior and preferential
right to file its application over the mining claims of Macroasia. These petitions likewise seek to set
aside the January 19, 2007 Resolution7 of the CA denying petitioners’ motions for reconsideration of
CELESTIAL NICKEL MINING EXPLORATION CORPORATION, Petitioner,
the assailed Decision.
vs.
BLUE RIDGE MINERAL CORPORATION and MACROASIA CORPORATION (formerly INFANTA MINERAL
AND INDUSTRIAL CORPORATION), Respondents. Through our July 5, 2006 Resolution,8 we consolidated the first two cases. While in our subsequent
April 23, 20079and July 11, 200710 Resolutions, we consolidated the four cases as they arose from the
same facts.
x - - - - - - - - - - - - - - - - - - - - - - -x

The undisputed facts as found by the CA in CA-G.R. SP No. 87931 are as follows:
G.R. No. 176319

On September 24, 1973, the then Secretary of Agriculture and Natural Resources and Infanta Mineral
MACROASIA CORPORATION (formerly INFANTA MINERAL AND INDUSTRIAL
and Industrial Corporation (Infanta) entered into a Mining Lease Contract (V-1050) for a term of 25
CORPORATION), Petitioner,
years up to September 23, 1998 for mining lode claims covering an area of 216 hectares at Sitio Linao, ability of Celestial to subject the mining areas to commercial production; and (7) the willingness of
Ipilan, Brooke’s Point, Palawan. The mining claims of Infanta covered by lode/lease contracts were as Celestial to pay fees and back taxes of Macroasia.
follows:
In the later part of the proceedings, Macroasia intervened in the case and submitted its position
Contract No. Area Date of Issuance paper refuting the grounds for cancellation invoked by Celestial. 11

LLC-V-941 18 hectares January 17, 1972 The Ruling of the Panel of Arbitrators in
LC-V-1050 216 hectares September 24, 1973 DENR Case Nos. 97-01 and 97-02

LLC-V-1060 16 hectares October 30, 1973
LLC-V-1061 144 hectares October 30, 1973
LLC-V-1073 144 hectares April 18, 1973
MLC-MRD-52 306 hectares April 26, 1978
MLC-MRC-53 72 hectares April 26, 1978
Infanta’s corporate name was changed to Cobertson Holdings Corporation on January 26, 1994 and
subsequently to its present name, Macroasia Corporation, on November 6, 1995.
Sometime in 1997, Celestial filed a Petition to Cancel the subject mining lease contracts and other
mining claims of Macroasia including those covered by Mining Lease Contract No. V-1050, before the
Panel of Arbitrators (POA) of the Mines and Geo-Sciences Bureau (MGB) of the DENR. The petition
was docketed as DENR Case No. 97-01.
Blue Ridge, in an earlier letter-petition, also wrote the Director of Mines to seek cancellation of mining
lease contracts and other mining rights of Macroasia and another entity, Lebach Mining Corporation
(Lebach), in mining areas in Brooke’s Point. The petition was eventually docketed as DENR Case No.
97-02.
Celestial is the assignee of 144 mining claims covering such areas contiguous to Infanta’s (now
Macroasia) mining lode claims. Said area was involved in protracted administrative disputes with
Infanta (now Macroasia), Lecar & Sons, Inc., and Palawan Nickel Mining Corporation. Celestial also
holds an MPSA with the government which covers 2,835 hectares located at Ipilan/Maasin, Brooke’s
Point, Palawan and two pending applications covering another 4,040 hectares in Barangay Mainit also
in Brooke’s Point.
Celestial sought the cancellation of Macroasia’s lease contracts on the following grounds: (1) the
nonpayment of Macroasia of required occupational fees and municipal taxes; (2) the non-filing of
Macroasia of Affidavits of Annual Work Obligations; (3) the failure of Macroasia to provide
improvements on subject mining claims; (4) the concentration of Macroasia on logging; (5) the
encroachment, mining, and extraction by Macroasia of nickel ore from Celestial’s property; (6) the
Based on the records of the Bureau of Mines and findings of the field investigations, the POA found
that Macroasia and Lebach not only automatically abandoned their areas/mining claims but likewise
had lost all their rights to the mining claims. The POA granted the petition of Celestial to cancel the
following Mining Lease Contracts of Macroasia: LLC-V-941, LLC-V-1050, LLC-V-1060, LLC-V-1061, LLC-V-
1073, MLC-MRD-52, and MLC-MRC-53; and found the claims of the others indubitably meritorious. It
gave Celestial the preferential right to Macroasia’s mining areas. 12 It upheld Blue Ridge’s petition
regarding DENR Case No. 97-02, but only as against the Mining Lease Contract areas of Lebach (LLC-V-
1153, LLC-V-1154, and LLC-V-1155), and the said leased areas were declared automatically
abandoned. It gave Blue Ridge priority right to the aforesaid Lebach’s areas/mining claims. 13
Blue Ridge and Macroasia appealed before the MAB, and the cases were docketed as MAB Case Nos.
056-97 and 057-97, respectively.
Lebach did not file any notice of appeal with the required memorandum of appeal; thus, with respect
to Lebach, the above resolution became final and executory.
The Rulings of the Mines Adjudication Board in
MAB Case Nos. 056-97 and 057-97 (DENR Case Nos. 97-01 and 97-02)
The MAB resolved the issues of timeliness and perfection of Macroasia’s appeal; Macroasia’s
abandonment of its mining claims; and the preferential right over the abandoned mining claims of
Macroasia.
Conformably with Section 51 of Consolidated Mines Administrative Order (CMAO) 14 implementing
Presidential Decree No. (PD) 46315 and our ruling in Medrana v. Office of the President (OP),16 the MAB
affirmed the POA findings that Macroasia abandoned its mining claims. The MAB found that
Macroasia did not comply with its work obligations from 1986 to 1991. It based its conclusion on the
field verifications conducted by the MGB, Region IV and validated by the Special Team tasked by the
MAB.17 However, contrary to the findings of the POA, the MAB found that it was Blue Ridge that had
prior and preferential rights over the mining claims of Macroasia, and not Celestial.
Thus, on October 24, 2000, the MAB promulgated its Decision upholding the Decision of the POA to
cancel the Mining Lode/Lease Contracts of Macroasia; declaring abandoned the subject mining
claims; and opening the mining area with prior and preferential rights to Blue Ridge for mining
applications, subject to strict compliance with the procedure and requirements provided by law. In
case Blue Ridge defaults, Celestial could exercise the secondary priority and preferential rights, and
subsequently, in case Celestial also defaults, other qualified applicants could file. 18
Both Celestial and Macroasia moved for reconsideration. 19 Celestial asserted that it had better rights
than Blue Ridge over the mining claims of Macroasia as it had correctly filed its petition, and filed its
MPSA application after Macroasia’s lease contract expired on January 17, 1997 and after the POA’s
resolution was issued on September 1, 1997. Moreover, it argued that priority was not an issue when
the contested area had not yet been declared abandoned. Thus, Blue Ridge’s MPSA application filed
on June 17, 1996 had no effect and should not be considered superior since Macroasia’s lease
contracts were still valid and subsisting and could not have been canceled by Macroasia’s mere failure
to perform annual work obligations and pay corresponding royalties/taxes to the government.
Macroasia, in its Motion for Reconsideration, reiterated that it did not abandon its mining claims, and
even if mining was not listed among its purposes in its amended Articles of Incorporation, its mining
activities were acts that were only ultra vires but were ratified as a secondary purpose by its
stockholders in subsequent amendments of its Articles of Incorporation.
Before the MAB could resolve the motions for reconsideration, on March 16, 2001, Macroasia filed its
Supplemental Motion for Reconsideration20 questioning the jurisdiction of the POA in canceling
mining lease contracts and mining claims. Macroasia averred that the power and authority to grant,
cancel, and revoke mineral agreements is exclusively lodged with the DENR Secretary. Macroasia
further pointed out that in arrogating upon itself such power, the POA whimsically and capriciously
discarded the procedure on conferment of mining rights laid down in Republic Act No. (RA) 7942, The
Philippine Mining Act of 1995, and DENR Administrative Order No. (AO) 96-40, 21 and perfunctorily and
improperly awarded its mining rights to Blue Ridge and Celestial.
Subsequently, on November 26, 2004, the MAB issued a Resolution 22 vacating its October 24, 2000
Decision, holding that neither the POA nor the MAB had the power to revoke a mineral agreement
duly entered into by the DENR Secretary, ratiocinating that there was no provision giving the POA and
MAB the concurrent power to manage or develop mineral resources. The MAB further held that the
power to cancel or revoke a mineral agreement was exclusively lodged with the DENR Secretary; that
a petition for cancellation is not a mining dispute under the exclusive jurisdiction of the POA pursuant
to Sec. 77 of RA 7942; and that the POA could only adjudicate claims or contests during the MPSA
application and not when the claims and leases were already granted and subsisting.
Moreover, the MAB held that there was no abandonment by Macroasia because the DENR Secretary
had not decided to release Macroasia from its obligations. The Secretary may choose not to release a
contractor from its obligations on grounds of public interest. Thus, through its said resolution, the
MAB rendered its disposition, as follows:
WHEREFORE, premises considered, the assailed Decision of October 24, 2000 is hereby VACATED. The
seven (7) mining lease contracts of Macroasia Corporation (formerly Infanta Mineral & Industrial
Corporation) are DECLARED SUBSISTING prior to their expirations without prejudice to any Decision or
Order that the Secretary may render on the same. NO PREFERENTIAL RIGHT over the same mining
claims is accorded to Blue Ridge Mineral Corporation or Celestial Nickel Mining Exploration
Corporation also without prejudice to the determination by the Secretary over the matter at the
proper time.23
After the issuance of the MAB Resolution, Celestial and Blue Ridge went through divergent paths in
their quest to protect their individual interests.
On January 10, 2005, Celestial assailed the November 26, 2004 MAB Resolution before the CA in a
petition for review24 under Rule 43 of the Rules of Court. The petition entitled Celestial Nickel Mining
Exploration Corporation v. Macroasia Corporation, et al. was docketed as CA-G.R. SP No. 87931.
On the other hand, Blue Ridge first filed a Motion for Reconsideration 25 which was denied.26 On
August 26, 2005, Blue Ridge questioned the MAB’s November 26, 2004 and July 12, 2005 Resolutions
before the CA in a petition for review27 entitled Blue Ridge Mineral Corporation v. Mines Adjudication
Board, et al. docketed as CA-G.R. SP No. 90828.
CA-G.R. SP No. 87931 filed by Celestial was heard by the 12th Division of the CA; while Blue Ridge’s
CA-G.R. SP No. 90828 was heard by the Special 10th Division. Ironically, the two divisions rendered
two (2) diametrically opposing decisions.
The Ruling of the Court of Appeals Twelfth Division
On April 15, 2005, in CA-G.R. SP No. 87931, the CA 12th Division affirmed the November 26, 2004
MAB Resolution which declared Macroasia’s seven mining lease contracts as subsisting; rejected Blue
Ridge’s claim for preferential right over said mining claims; and upheld the exclusive authority of the
DENR Secretary to approve, cancel, and revoke mineral agreements. The CA also denied Celestial’s
Motion for Reconsideration28 of the assailed August 3, 2005 Resolution. 29
Hence, Celestial filed its Petition for Review on Certiorari 30 docketed as G.R. No. 169080, before this
Court.
The Ruling of the Court of Appeals Special Tenth Division
On May 18, 2006, the CA Special 10th Division in CA-G.R. SP No. 90828 granted Blue Ridge’s petition;
reversed and set aside the November 26, 2004 and July 12, 2005 Resolutions of the MAB; and
reinstated the October 24, 2000 Decision in MAB Case Nos. 056-97 and 057-97. The Special Tenth
Division canceled Macroasia’s lease contracts; granted Blue Ridge prior and preferential rights; and
treated the cancellation of a mining lease agreement as a mining dispute within the exclusive
jurisdiction of the POA under Sec. 77 of RA 7942, explaining that the power to resolve mining
disputes, which is the greater power, necessarily includes the lesser power to cancel mining
agreements.
On February 20, 2006, Celestial filed a Most Urgent Motion for Issuance of a Temporary Restraining
Order/Preliminary Prohibitory Injunction/Mandatory Injunction 31 to defer and preclude the issuance
of MPSA to Macroasia by the MGB and the DENR Secretary. We denied this motion in our February
22, 2006 Resolution.32
Upon inquiry with the DENR, Blue Ridge discovered that sometime in December 2005 two MPSAs,
duly approved and signed by the DENR Secretary, had been issued in favor of Macroasia. Thus, we
have the instant Petition for Certiorari33 filed by Blue Ridge docketed as G.R. No. 172936 under Rule
65, seeking to invalidate the two MPSAs issued to Macroasia.
In the meantime, on June 7, 2006, Celestial filed its Motion for Partial Reconsideration 34 of the May
18, 2006 CA Decision in CA-G.R. SP No. 90828, while Macroasia filed its motion for reconsideration of
the same CA decision on July 7, 2006. The motions were denied in the assailed January 19, 2007 CA
Resolution. Hence, on March 8, 2007, Celestial filed the third petition 35 docketed as G.R. No.
176226, assailing the CA’s May 18, 2006 Decision and January 19, 2007 Resolution, insofar as these
granted Blue Ridge’s prior and preferential rights. While on March 9, 2007, Macroasia filed the fourth
petition36 docketed as G.R. No. 176319, also assailing the CA’s May 18, 2006 Decision and January 19,
2007 Resolution.
The Issues
In G.R. No. 169080, petitioner Celestial raises the following issues for our consideration:
(1) Whether or not Macroasia, for reasons of public policy is estopped from assailing the
alleged lack of jurisdiction of the Panel of Arbitrators and the Mines Adjudication Board only
after receiving an adverse judgment therefrom? [sic]
(2) Whether or not it is only the Secretary of the DENR who has the jurisdiction to cancel
mining contracts and privileges? [sic]
(3) Whether or not a petition for the cancellation of a mining lease contract or privilege is a
mining dispute within the meaning of the law? [sic]
(4) Whether or not Infanta’s (Macroasia) mining lease contract areas were deemed
abandoned warranting the cancellation of the lease contracts and the opening of the areas
to other qualified applicants? [sic]
(5) Whether or not Macroasia/Infanta had lost its right to participate in this case after it
failed to seasonably file its appeal and after its lease contracts had been declared abandoned
and expired without having been renewed by the government? [sic]
(6) Whether or not Celestial has the preferential right to apply for the 23 DE LARA claims
which were included in Infanta’s (Macroasia) expired lease contract (LLC-V-941) and the
other areas declared as lapsed or abandoned by MGB-Region 4 and the Panel of Arbitrators?
37
[sic]
In G.R. No. 172936, petitioner Blue Ridge raises the following grounds for the allowance of the
petition:
I
At the outset, the instant petition must be given due course and taken cognizance of by the Honorable
Court considering that exceptional and compelling circumstances justify the availment of the instant
petition and the call for the exercise of the Honorable Court’s primary jurisdiction.
A. The exploration, development and utilization of minerals, petroleum and other mineral
oils are imbued with public interest. The action of then Secretary Defensor, maintained and
continued by public respondent Secretary Reyes, was tainted with grave abuse of discretion,
has far-reaching consequences because of the magnitude of the effect created thereby.
B. The issues in the instant petition have already been put to fore by Celestial with the First
Division of the Honorable Court, and hence, this circumstance justifies the cognizance by the
Honorable Court of the instant petition.1âwphi1
II
It was grave abuse of discretion amounting to lack and/or excess of jurisdiction for then Secretary
Defensor to have issued the subject MPSAs in favor of private respondent Macroasia, considering
that:
A. Non-compliance of the mandatory requirements by private respondent Macroasia prior to
approval of the subject MPSAs should have precluded then Secretary Defensor from
approving subject MPSAs.
B. Petitioner Blue Ridge has the prior and preferential right to file its mining application over
the mining claims covered by the subject MPSAs, pursuant to the Decision dated 24 October
2000 of the Board and as affirmed by the Decision dated 18 May 2006 of the Court of
Appeals in CA-G.R. SP No. 90828.38
In G.R. No. 176226, petitioner Celestial ascribes the following errors to the CA for our consideration: The Court of Appeals (Special Tenth Division) should have dismissed the Petition of Blue
Ridge outright since the issues, facts and matters involved in the said Petition are identical to
(1) That in reinstating and adopting as its own the Decision of the Mine Adjudication Board those which had already been painstakingly passed upon, reviewed and resolved by the
affirming the abandonment and cancellation of the mining areas/claims of Macroasia Court of Appeal’s Twelfth Division in CA-G.R. SP No. 87931
(Infanta) but awarding the prior or preferential rights to Blue Ridge, the Hon. Court of
Appeals had decided a question of substance in a way not in accord with the Law (RA 7942) II.
or with the applicable decisions of the Supreme Court; in other words, errors of law had
been committed by the Hon. Court of Appeals in granting preferential rights to Blue Ridge; The Court of Appeals (Special Tenth Division) gravely erred in denying Macroasia’s Motion to
Inhibit Associate Justice Rosmari Carandang from hearing and deciding the Petition
(2) That the Hon. Court of Appeals has so far departed from the accepted and usual course of
judicial proceedings or so far sanctioned such departure by the Mines Adjudication Board in III.
its Decision of May 18, 2006 and Resolution of January 19, 2007 because:
There were no factual nor legal bases for the Court of Appeals to rule that Macroasia had
(A) The findings of fact of the Hon. Court of Appeals are contradictory or waived its right to question the jurisdiction of the Mines Adjudication Board
inconsistent with the findings of the Panel of Arbitrators;
IV.
(B) There is grave abuse of discretion on the part of the Hon. Court of Appeals in its
appreciation of the facts, the evidence and the law thereby leading it to make the Republic Act No. 7942 contains provisions which unequivocally indicate that only the
erroneous conclusion that Blue Ridge, not Celestial, is entitled to the Award of Secretary of the Department of Environment and Natural Resources has the power and
prior/preferential rights over the mining areas declared as abandoned by authority to cancel mining lease agreements
Macroasia;
V.
(C) There is likewise, a grave abuse of discretion on the part of the Hon. Court of
Appeals in that the said Court did not even consider some of the issues raised by
The Court of Appeals (Special Tenth Division) gravely erred in perfunctorily transferring
Celestial;
Macroasia’s mining lease agreements to Blue Ridge without observing the required
procedure nor providing any basis therefor40
(D) That the findings of the Hon. Court of Appeals are mere conclusions not
supported by substantial evidence and without citation of the specific evidence
The Court’s Ruling
upon which they are based; they were arrived at arbitrarily or in disregard of
contradiction of the evidence on record and findings of the Panel of Arbitrators in
The petitions under G.R. Nos. 169080, 172936, and 176226 are bereft of merit, while the petition
the Resolution of September 1, 1997;
under G.R. No. 176319 is meritorious.
(E) That the findings of the Hon. Court of Appeals are premised on the absence of
The pith of the controversy, upon which the other issues are hinged is, who has authority and
evidence but such findings are contradicted by the evidence on record and are
jurisdiction to cancel existing mineral agreements under RA 7942 in relation to PD 463 and pertinent
violative of the provisions of RA 7942 and its Implementing Rules and Regulations. 39
rules and regulations.
In G.R. No. 176319, petitioner Macroasia raises the following grounds for the allowance of the
G.R. Nos. 169080, 176226 and 176319
petition:

We will jointly tackle G.R. Nos. 169080, 176266, and 176319 as the issues and arguments of these
I.
three are inextricably intertwined.

Core Issue: Jurisdiction over Cancellation of Mineral Agreements

Petitioner Celestial maintains that while the jurisdiction to approve mining lease contracts or mineral
agreements is conferred on the DENR Secretary, Sec. 77(a) of RA 7942 by implication granted to the
POA and MAB the authority to cancel existing mining lease contracts or mineral agreements.
On the other hand, respondent Macroasia strongly asserts that it is the DENR Secretary who has the
exclusive and primary jurisdiction to grant and cancel existing mining lease contracts; thus, the POA
and MAB have no jurisdiction to cancel much less to grant any preferential rights to other mining
firms.
Before we resolve this core issue of jurisdiction over cancellation of mining lease contracts, we first
need to look back at previous mining laws pertinent to this issue.
Under PD 463, The Mineral Resources Development Decree of 1974, which took effect on May 17,
1974, applications for lease of mining claims were required to be filed with the Director of the Bureau
of Mines, within two (2) days from the date of their recording. 41 Sec. 40 of PD 463 provided that if no
adverse claim was filed within (15) days after the first date of publication, it was conclusively
presumed that no adverse claim existed and thereafter no objection from third parties to the grant of
the lease could be heard, except protests pending at the time of publication. The Secretary would
then approve and issue the corresponding mining lease contract. In case of any protest or adverse
claim relating to any mining claim and lease application, Secs. 48 and 50 of PD 463 prescribed the
procedure. Under Sec. 48, the protest should be filed with the Bureau of Mines. Under Sec. 50, any
party not satisfied with the decision or order of the Director could, within five (5) days from receipt of
the decision or order, appeal to the Secretary. The decisions of the Secretary were likewise appealable
within five (5) days from receipts by the affected party to the President of the Philippines whose
decision shall be final and executory. PD 463 was, however, silent as to who was authorized to cancel
the mineral agreements.
On July 10, 1987, President Corazon C. Aquino issued Executive Order No. (EO) 211. Under Sec. 2 of
EO 211, the processing, evaluation, and approval of all mining applications, declarations of locations,
operating agreements, and service contracts were governed by PD 463, as amended. EO 211 likewise
did not contain any provision on the authority to cancel operating agreements and service contracts.
On July 25, 1987, EO 279 was issued by President Aquino. It authorized the DENR Secretary to
negotiate and enter into, for and in behalf of the Government, joint venture, co-production, or
production-sharing agreements for the exploration, development, and utilization of mineral resources
with any Filipino citizen, corporation, or association, at least 60% of whose capital was owned by
Filipino citizens.42 The contract or agreement was subject to the approval of the President. 43 With
respect to contracts of foreign-owned corporations or foreign investors involving either technical or
financial assistance for large-scale exploration, development, and utilization of minerals, the DENR
Secretary could recommend approval of said contracts to the President. 44 EO 279 provided that PD
463 and its implementing rules and regulations, which were not inconsistent with EO 279, continued
in force and effect.45Again, EO 279 was silent on the authority to cancel mineral agreements.
RA 7942, The Philippine Mining Act of 1995 enacted on March 3, 1995, repealed the provisions of PD
463 inconsistent with RA 7942. Unlike PD 463, where the application was filed with the Bureau of
Mines Director, the applications for mineral agreements are now required to be filed with the
Regional Director as provided by Sec. 29 of RA 7942. The proper filing gave the proponent the prior
right to be approved by the Secretary and thereafter to be submitted to the President. The President
shall provide a list to Congress of every approved mineral agreement within 30 days from its approval
by the Secretary. Again, RA 7942 is silent on who has authority to cancel the agreement.
Compared to PD 463 where disputes were decided by the Bureau of Mines Director whose decisions
were appealable to the DENR Secretary and then to the President, RA 7942 now provides for the
creation of quasi-judicial bodies (POA and MAB) that would have jurisdiction over conflicts arising
from the applications and mineral agreements. Secs. 77, 78, and 79 lay down the procedure, thus:
SEC. 77. Panel of Arbitrators.––There shall be a panel of arbitrators in the regional office of the
Department composed of three (3) members, two (2) of whom must be members of the Philippine
Bar in good standing and one [1] licensed mining engineer or a professional in a related field, and duly
designated by the Secretary as recommended by the Mines and Geosciences Bureau Director. Those
designated as members of the panel shall serve as such in addition to their work in the Department
without receiving any additional compensation. As much as practicable, said members shall come
from the different bureaus of the Department in the region. The presiding officer thereof shall be
selected by the drawing of lots. His tenure as presiding officer shall be on a yearly basis. The members
of the panel shall perform their duties and obligations in hearing and deciding cases until their
designation is withdrawn or revoked by the Secretary. Within thirty (30) working days, after the
submission of the case by the parties for decision, the panel shall have exclusive and original
jurisdiction to hear and decide on the following:
(a) Disputes involving rights to mining areas;
(b) Disputes involving mineral agreements or permits;
(c) Disputes involving surface owners, occupants and claimholders/concessionaires; and
(d) Disputes pending before the Bureau and the Department at the date of the effectivity of
this Act.
SEC. 78. Appellate Jurisdiction.—The decision or order of the panel of arbitrators may be appealed by
the party not satisfied thereto to the Mines Adjudication Board within fifteen (15) days from receipt
thereof which must decide the case within thirty (30) days from submission thereof for decision.
SEC. 79. Mines Adjudication Board.—The Mines Adjudication Board shall be composed of three (3)
members. The Secretary shall be the chairman with the Director of the Mines and Geosciences
Bureau and the Undersecretary for Operations of the Department as members thereof.
xxxx
A petition for review by certiorari and question of law may be filed by the aggrieved party with the
Supreme Court within thirty (30) days from receipt of the order or decision of the Board.
RA 7942 is also silent as to who is empowered to cancel existing lease contracts and mineral
agreements.
Meanwhile, in Southeast Mindanao Gold Mining Corp. v. MAB, we explained that the decision of the
MAB can first be appealed, via a petition for review, to the CA before elevating the case to this Court. 46
After a scrutiny of the provisions of PD 463, EO 211, EO 279, RA 7942 and its implementing rules and
regulations, executive issuances, and case law, we rule that the DENR Secretary, not the POA, has the
jurisdiction to cancel existing mineral lease contracts or mineral agreements based on the following
reasons:
1. The power of the DENR Secretary to cancel mineral agreements emanates from his administrative
authority, supervision, management, and control over mineral resources under Chapter I, Title XIV of
Book IV of the Revised Administrative Code of 1987, viz:
Chapter 1—General Provisions
Section 1. Declaration of Policy.—(1) The State shall ensure, for the benefit of the Filipino people, the
full exploration and development as well as the judicious disposition, utilization, management,
renewal and conservation of the country’s forest, mineral, land, waters, fisheries, wildlife, off-shore
areas and other natural resources x x x
Sec. 2. Mandate.—(1) The Department of Environment and Natural Resources shall be primarily
responsible for the implementation of the foregoing policy. (2) It shall, subject to law and higher
authority, be in charge of carrying out the State’s constitutional mandate to control and supervise
the exploration, development, utilization, and conservation of the country’s natural resources.
xxxx
Sec. 4. Powers and Functions.—The Department shall:
xxxx
(2) Formulate, implement and supervise the implementation of the government’s policies, plans, and
programs pertaining to the management, conservation, development, use and replenishment of the
country’s natural resources;
xxxx
(4) Exercise supervision and control over forest lands, alienable and disposable public lands, mineral
resources x x x
xxxx
(12) Regulate the development, disposition, extraction, exploration and use of the country’s forest,
land, water and mineral resources;
(13) Assume responsibility for the assessment, development, protection, licensing and regulation as
provided for by law, where applicable, of all energy and natural resources; the regulation and
monitoring of service contractors, licensees, lessees, and permit for the extraction, exploration,
development and use of natural resources products; x x x
xxxx
(15) Exercise exclusive jurisdiction on the management and disposition of all lands of the public
domain x x x
Chapter 2—The Department Proper
xxxx
Sec. 8. The Secretary.—The Secretary shall:
xxxx
(3) Promulgate rules, regulations and other issuances necessary in carrying out the
Department’s mandate, objectives, policies, plans, programs and projects.
(4) Exercise supervision and control over all functions and activities of the Department;
(5) Delegate authority for the performance of any administrative or substantive function to
subordinate officials of the Department x x x (Emphasis supplied.)
It is the DENR, through the Secretary, that manages, supervises, and regulates the use and
development of all mineral resources of the country. It has exclusive jurisdiction over the
management of all lands of public domain, which covers mineral resources and deposits from said
lands. It has the power to oversee, supervise, and police our natural resources which include mineral
resources. Derived from the broad and explicit powers of the DENR and its Secretary under the
Administrative Code of 1987 is the power to approve mineral agreements and necessarily to cancel or
cause to cancel said agreements.
2. RA 7942 confers to the DENR Secretary specific authority over mineral resources.
Secs. 8 and 29 of RA 7942 pertinently provide:
SEC. 8. Authority of the Department.––The Department shall be the primary government agency
responsible for the conservation, management, development, and proper use of the States mineral
resources including those in reservations, watershed areas, and lands of the public domain. The
Secretary shall have the authority to enter into mineral agreements on behalf of the Government
upon the recommendation of the Director, promulgate such rules and regulations as may be
necessary to implement the intent and provisions of this Act.
SEC. 29. Filing and approval of Mineral Agreements.––x x x.
The filing of a proposal for a mineral agreement shall give the proponent the prior right to areas
covered by the same. The proposed mineral agreement will be approved by the Secretary and copies
thereof shall be submitted to the President. Thereafter, the President shall provide a list to Congress
of every approved mineral agreement within thirty (30) days from its approval by the Secretary.
(Emphasis supplied.)
Sec. 29 is a carry over of Sec. 40 of PD 463 which granted jurisdiction to the DENR Secretary to
approve mining lease contracts on behalf of the government, thus:
SEC. 40. Issuance of Mining Lease Contract.––If no adverse claim is filed within fifteen (15) days after
the first date of publication, it shall be conclusively presumed that no such adverse claim exists and
thereafter no objection from third parties to the grant of the lease shall be heard, except protest
pending at the time of publication, and the Secretary shall approve and issue the corresponding
mining lease x x x.
To enforce PD 463, the CMAO containing the rules and regulations implementing PD 463 was issued.
Sec. 44 of the CMAO provides:
SEC. 44. Procedure for Cancellation.––Before any mining lease contract is cancelled for any cause
enumerated in Section 43 above, the mining lessee shall first be notified in writing of such cause or
causes, and shall be given an opportunity to be heard, and to show cause why the lease shall not be
cancelled.
If, upon investigation, the Secretary shall find the lessee to be in default, the former may warn the
lessee, suspend his operations or cancel the lease contract (emphasis supplied).
Sec. 4 of EO 279 provided that the provisions of PD 463 and its implementing rules and regulations,
not inconsistent with the executive order, continue in force and effect.
When RA 7942 took effect on March 3, 1995, there was no provision on who could cancel mineral
agreements. However, since the aforequoted Sec. 44 of the CMAO implementing PD 463 was not
repealed by RA 7942 and DENR AO 96-40, not being contrary to any of the provisions in them, then it
follows that Sec. 44 serves as basis for the DENR Secretary’s authority to cancel mineral agreements.
Since the DENR Secretary had the power to approve and cancel mineral agreements under PD 463,
and the power to cancel them under the CMAO implementing PD 463, EO 211, and EO 279, then
there was no recall of the power of the DENR Secretary under RA 7942. Historically, the DENR
Secretary has the express power to approve mineral agreements or contracts and the implied power
to cancel said agreements.
It is a well-established principle that in the interpretation of an ambiguous provision of law, the
history of the enactment of the law may be used as an extrinsic aid to determine the import of the
legal provision or the law.47History of the enactment of the statute constitutes prior laws on the same
subject matter. Legislative history necessitates review of "the origin, antecedents and derivation" of
the law in question to discover the legislative purpose or intent. 48 It can be assumed "that the new
legislation has been enacted as continuation of the existing legislative policy or as a new effort to
perpetuate it or further advance it." 49
We rule, therefore, that based on the grant of implied power to terminate mining or mineral contracts
under previous laws or executive issuances like PD 463, EO 211, and EO 279, RA 7942 should be
construed as a continuation of the legislative intent to authorize the DENR Secretary to cancel mineral
agreements on account of violations of the terms and conditions thereof.
3. Under RA 7942, the power of control and supervision of the DENR Secretary over the MGB to
cancel or recommend cancellation of mineral rights clearly demonstrates the authority of the DENR
Secretary to cancel or approve the cancellation of mineral agreements.
Under Sec. 9 of RA 7942, the MGB was given the power of direct supervision of mineral lands and
resources, thus:
Sec. 9. Authority of the Bureau.—The Bureau shall have direct charge in the administration and
disposition of mineral lands and mineral resources and shall undertake geological, mining,
metallurgical, chemical, and other researches as well as geological and mineral exploration surveys.
The Director shall recommend to the Secretary the granting of mineral agreements to duly qualified
persons and shall monitor the compliance by the contractor of the terms and conditions of the
mineral agreements. The Bureau may confiscate surety, performance and guaranty bonds posted
through an order to be promulgated by the Director. The Director may deputize, when necessary, any
member or unit of the Philippine National Police, barangay, duly registered nongovernmental
organization (NGO) or any qualified person to police all mining activities. (Emphasis supplied.)
Corollary to the power of the MGB Director to recommend approval of mineral agreements is his
power to cancel or recommend cancellation of mining rights covered by said agreements under Sec. 7
of DENR AO 96-40, containing the revised Implementing Rules and Regulations of RA 7942. Sec. 7
reads:
Sec. 7. Organization and Authority of the Bureau.
xxxx
The Bureau shall have the following authority, among others:
a. To have direct charge in the administration and disposition of mineral land and mineral
resources;
xxxx
d. To recommend to the Secretary the granting of mineral agreements or to endorse to the
Secretary for action by the President the grant of FTAAs [Financial and Technical Assistance
Agreements], in favor of qualified persons and to monitor compliance by the Contractor with
the terms and conditions of the mineral agreements and FTAAs.
e. To cancel or to recommend cancellation after due process, mining rights, mining
applications and mining claims for non-compliance with pertinent laws, rules and
regulations.
It is explicit from the foregoing provision that the DENR Secretary has the authority to cancel mineral
agreements based on the recommendation of the MGB Director. As a matter of fact, the power to
cancel mining rights can even be delegated by the DENR Secretary to the MGB Director. Clearly, it is
the Secretary, not the POA, that has authority and jurisdiction over cancellation of existing mining
contracts or mineral agreements.
4. The DENR Secretary’s power to cancel mining rights or agreements through the MGB can be
inferred from Sec. 230, Chapter XXIV of DENR AO 96-40 on cancellation, revocation, and termination
of a permit/mineral agreement/FTAA. Sec. 230 provides:
Section 230. Grounds
The following grounds for cancellation revocation and termination of a Mining Permit Mineral
Agreement/FTAA.
a. Violation of any of the terms and conditions of the Permits or Agreements;
b. Nonpayment of taxes and fees due the government for two (2) consecutive years; and
c. Falsehood or omission of facts in the application for exploration [or Mining] Permit Mineral
Agreement/FTAA or other permits which may later, change or affect substantially the facts
set forth in said statements.
Though Sec. 230 is silent as to who can order the cancellation, revocation, and termination of a
permit/mineral agreement/FTAA, it has to be correlated with the power of the MGB under Sec. 7 of
AO 96-40 "to cancel or to recommend cancellation, after due process, mining rights, mining
applications and mining claims for noncompliance with pertinent laws, rules and regulations." As the
MGB is under the supervision of the DENR Secretary, then the logical conclusion is that it is the DENR
Secretary who can cancel the mineral agreements and not the POA nor the MAB.
5. Celestial and Blue Ridge are not unaware of the stipulations in the Mining Lease Contract Nos. V-
1050 and MRD-52,50 the cancellation of which they sought from the POA. It is clear from said lease
contracts that the parties are the Republic of the Philippines represented by the Secretary of
Agriculture and Natural Resources (now DENR Secretary) as lessor, and Infanta (Macroasia) as lessee.
Paragraph 18 of said lease contracts provides:
Whenever the LESSEE fails to comply with any provision of [PD 463, and] Commonwealth Acts Nos.
137, 466 and 470, [both as amended,] and/or the rules and regulations promulgated thereunder, or
any of the covenants therein, the LESSOR may declare this lease cancelled and, after having given
thirty (30) days’ notice in writing to the LESSEE, may enter and take possession of the said premises,
and said lessee shall be liable for all unpaid rentals, royalties and taxes due the Government on the
lease up to the time of the forfeiture or cancellation, in which event, the LESSEE hereby covenants
and agrees to give up the possession of the property leased. (Emphasis supplied.)
Thus, the government represented by the then Secretary of Agriculture and Natural Resources (now
the DENR Secretary) has the power to cancel the lease contracts for violations of existing laws, rules
and regulations and the terms and conditions of the contracts. Celestial and Blue Ridge are now
estopped from challenging the power and authority of the DENR Secretary to cancel mineral
agreements.
However, Celestial and Blue Ridge insist that the power to cancel mineral agreements is also lodged
with the POA under the explicit provisions of Sec. 77 of RA 7942.
This postulation is incorrect.
Sec. 77 of RA 7942 lays down the jurisdiction of POA, to wit:
Within thirty (30) days, after the submission of the case by the parties for the decision, the panel shall
have exclusive and original jurisdiction to hear and decide the following:
 (a) Disputes involving rights to mining areas
(b) Disputes involving mineral agreements or permits
The phrase "disputes involving rights to mining areas" refers to any adverse claim, protest, or
opposition to an application for mineral agreement. The POA therefore has the jurisdiction to resolve
any adverse claim, protest, or opposition to a pending application for a mineral agreement filed with
the concerned Regional Office of the MGB. This is clear from Secs. 38 and 41 of DENR AO 96-40, which
provide:
Sec. 38.
xxxx
Within thirty (30) calendar days from the last date of publication/posting/radio announcements, the
authorized officer(s) of the concerned office(s) shall issue a certification(s) that the
publication/posting/radio announcement have been complied with. Any adverse claim, protest or
opposition shall be filed directly, within thirty (30) calendar days from the last date of
publication/posting/radio announcement, with the concerned Regional Office or through any
concerned PENRO or CENRO for filing in the concerned Regional Office for purposes of its resolution
by the Panel of Arbitrators pursuant to the provisions of this Act and these implementing rules and
regulations. Upon final resolution of any adverse claim, protest or opposition, the Panel of Arbitrators
shall likewise issue a certification to that effect within five (5) working days from the date of finality of
resolution thereof. Where there is no adverse claim, protest or opposition, the Panel of Arbitrators
shall likewise issue a Certification to that effect within five working days therefrom.
xxxx
No Mineral Agreement shall be approved unless the requirements under this Section are fully
complied with and any adverse claim/protest/opposition is finally resolved by the Panel of Arbitrators.
Sec. 41.
xxxx
Within fifteen (15) working days from the receipt of the Certification issued by the Panel
of Arbitrators as provided in Section 38 hereof, the concerned Regional Director shall initially
evaluate the Mineral Agreement applications in areas outside Mineral reservations. He/She shall
thereafter endorse his/her findings to the Bureau for further evaluation by the Director within
fifteen (15) working days from receipt of forwarded documents. Thereafter, the Director shall
endorse the same to the secretary for consideration/approval within fifteen working days from
receipt of such endorsement.
In case of Mineral Agreement applications in areas with Mineral Reservations, within fifteen (15)
working days from receipt of the Certification issued by the Panel of Arbitrators as provided for in
Section 38 hereof, the same shall be evaluated and endorsed by the Director to the Secretary for
consideration/approval within fifteen days from receipt of such endorsement. (Emphasis supplied.)
It has been made clear from the aforecited provisions that the "disputes involving rights to mining
areas" under Sec. 77(a) specifically refer only to those disputes relative to the applications for a
mineral agreement or conferment of mining rights.
The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is
further elucidated by Secs. 219 and 43 of DENR AO 95-936, which read:
Sec. 219. Filing of Adverse Claims/Conflicts/Oppositions.—Notwithstanding the provisions of Sections
28, 43 and 57 above, any adverse claim, protest or opposition specified in said sections may also be
filed directly with the Panel of Arbitrators within the concerned periods for filing such claim, protest
or opposition as specified in said Sections.
Sec. 43. Publication/Posting of Mineral Agreement Application.—
xxxx
The Regional Director or concerned Regional Director shall also cause the posting of the application
on the bulletin boards of the Bureau, concerned Regional office(s) and in the concerned province(s)
and municipality(ies), copy furnished the barangays where the proposed contract area is located once
a week for two (2) consecutive weeks in a language generally understood in the locality. After forty-
five (45) days from the last date of publication/posting has been made and no adverse claim, protest
or opposition was filed within the said forty-five (45) days, the concerned offices shall issue a
certification that publication/posting has been made and that no adverse claim, protest or opposition
of whatever nature has been filed. On the other hand, if there be any adverse claim, protest or
opposition, the same shall be filed within forty-five (45) days from the last date of
publication/posting, with the Regional Offices concerned, or through the Department’s Community
Environment and Natural Resources Officers (CENRO) or Provincial Environment and Natural
Resources Officers (PENRO), to be filed at the Regional Office for resolution of the Panel of
Arbitrators. However previously published valid and subsisting mining claims are exempted from
posted/posting required under this Section.
No mineral agreement shall be approved unless the requirements under this section are fully
complied with and any opposition/adverse claim is dealt with in writing by the Director and
resolved by the Panel of Arbitrators. (Emphasis supplied.)
These provisions lead us to conclude that the power of the POA to resolve any adverse claim,
opposition, or protest relative to mining rights under Sec. 77(a) of RA 7942 is confined only to adverse
claims, conflicts and oppositions relating to applications for the grant of mineral rights. POA’s
jurisdiction is confined only to resolutions of such adverse claims, conflicts and oppositions and it has
no authority to approve or reject said applications. Such power is vested in the DENR Secretary upon
recommendation of the MGB Director. Clearly, POA’s jurisdiction over "disputes involving rights to
mining areas" has nothing to do with the cancellation of existing mineral agreements.
On the other hand, Celestial and Blue Ridge contend that POA has jurisdiction over their petitions for
the cancellation of Macroasia’s lease agreements banking on POA’s jurisdiction over "disputes
involving mineral agreements or permits" under Sec. 77 (b) of RA 7942.
Such position is bereft of merit.
As earlier discussed, the DENR Secretary, by virtue of his powers as administrative head of his
department in charge of the management and supervision of the natural resources of the country
under the 1987 Administrative Code, RA 7942, and other laws, rules, and regulations, can cancel a
mineral agreement for violation of its terms, even without a petition or request filed for its
cancellation, provided there is compliance with due process. Since the cancellation of the mineral
agreement is approved by the DENR Secretary, then the recourse of the contractor is to elevate the
matter to the OP pursuant to AO 18, Series of 1987 but not with the POA.
Matched with the legal provisions empowering the DENR Secretary to cancel a mineral agreement is
Sec. 77 (b) of RA 7942 which grants POA jurisdiction over disputes involving mineral agreements.
A dispute is defined as "a conflict or controversy; a conflict of claims or rights; an assertion of a right,
claim or demand on one side; met by contrary claims or allegations on the other." 51 It is synonymous
to a cause of action which is "an act or omission by which a party violates a right of another." 52
A petition or complaint originating from a dispute can be filed or initiated only by a real party-in-
interest. The rules of court define a real party-in-interest as "the party who stands to be benefited or
injured by the judgment in the suit or the party entitled to the avails of the suit." 53 Every action,
therefore, can only be prosecuted in the name of the real party-in-interest. 54 It has been explained
that "a real party-in-interest plaintiff is one who has a legal right, while a real party-in-interest-
defendant is one who has a correlative legal obligation whose act or omission violates the legal right
of the former."55
On the other hand, interest "means material interest, an interest in issue and to be affected by the
decree, as distinguished from mere interest in the question involved, or a mere incidental interest." It
is settled in this jurisdiction that "one having no right or interest to protect cannot invoke the
jurisdiction of the court as a party-plaintiff in an action." 56 Real interest is defined as "a present
substantial interest, as distinguished from a mere expectancy, or a future, contingent, subordinate or
consequential interest."57
From the foregoing, a petition for the cancellation of an existing mineral agreement covering an area
applied for by an applicant based on the alleged violation of any of the terms thereof, is not a
"dispute" involving a mineral agreement under Sec. 77 (b) of RA 7942. It does not pertain to a
violation by a party of the right of another. The applicant is not a real party-in-interest as he does not
have a material or substantial interest in the mineral agreement but only a prospective or expectant
right or interest in the mining area. He has no legal right to such mining claim and hence no dispute
can arise between the applicant and the parties to the mineral agreement. The court rules therefore
that a petition for cancellation of a mineral agreement anchored on the breach thereof even if filed by
an applicant to a mining claim, like Celestial and Blue Ridge, falls within the jurisdiction of the DENR
Secretary and not POA. Such petition is excluded from the coverage of the POA’s jurisdiction over
disputes involving mineral agreements under Sec. 77 (b) of RA 7942.
Macroasia not estopped from raising the issue of jurisdiction on appeal
On the related issue of estoppel, petitioner Celestial argues that Macroasia is estopped from raising
and questioning the issue of the jurisdiction of the POA and MAB over the petition for cancellation of
its mining lease contracts, when Macroasia raised it only in its Supplemental Motion for
Reconsideration.
We rule that the principle of estoppel does not apply.
Indeed, Macroasia was not the one that initiated the instant case before the POA, and thus was not
the one that invoked the jurisdiction of the POA. Hence, on appeal, Macroasia is not precluded from
raising the issue of jurisdiction as it may be invoked even on appeal. 58 As a matter of fact, a party can
raise the issue of jurisdiction at any stage of the proceedings.
Petitioner Celestial’s reliance on Villela v. Gozun59 to support the contention that the POA has
jurisdiction to hear and decide a petition to cancel existing mining lease contracts, is misplaced. In
said case, we dismissed the petition on the ground of non-exhaustion of administrative remedies and
disregarded judicial hierarchy as no compelling reason was shown to warrant otherwise. While we
pointed out the authority of the POA, there was no categorical pronouncement on the jurisdictional
issue.
No valid pronouncement of abandonment due to lack of jurisdiction over petition to cancel
As we are not a trier of facts, we need not make any finding on the various investigations done by the
MGB and MAB on the issue of Macroasia’s non-compliance with its work obligations and nonpayment
of taxes and fees. Verily, the law does not impose automatic cancellation of an existing mining lease
contract, as it is a question of fact which must be determined by the MGB which can recommend the
cancellation of the mineral or lease agreements to the DENR Secretary. Be that as it may, since the
POA and MAB have no jurisdiction over the petition for cancellation of existing mining lease contracts
of Macroasia, they could not have made any binding pronouncement that Macroasia had indeed
abandoned the subject mining claims. Besides, it is the DENR Secretary who has the authority to
cancel Macroasia’s existing mining lease contracts whether on grounds of abandonment or any valid
grounds for cancellation.
Decision in CA-G.R. SP No. 90828 not in accord with the law
With our resolution of the issue on the lack of jurisdiction of the POA and the MAB over petitions to
cancel existing mining lease contracts or mineral agreements, it is thus clear that the May 18, 2006
Decision in CA-G.R. SP No. 90828 must be nullified for being not in accord with the law and the April
15, 2005 Decision in CA-G.R. SP No. 87931 must be upheld.
Notwithstanding the nullification of the May 18, 2006 Decision of the Special Tenth Division in CA-G.R.
SP No. 90828, the rendition of two conflicting decisions of the two CA Divisions over the same
challenged resolutions of the MAB should be avoided in the future as this is anathema to stability of
judicial decisions and orderly administration of justice.
The chronology of events reveals the following:
1. January 10, 2005 – petitioner Celestial filed its petition docketed as CA-G.R. SP No. 87931
with the CA.
2. April 15, 2005 – the CA through its Twelfth Division rendered its Decision in CA-G.R. SP No.
87931 affirming the November 26, 2004 MAB Resolution.
3. July 12, 2005 – respondent Blue Ridge filed its petition docketed as CA-G.R. SP No. 90828
with the CA. It is clear that the Blue Ridge petition was filed with the CA three months after
the decision in CA-G.R. SP No. 87931 was promulgated.
4. May 18, 2006 – the CA through its Special Tenth Division rendered its Decision setting
aside the November 26, 2004 and July 12, 2005 Resolutions of the MAB and reinstating the
October 24, 2000 MAB Decision.
From these facts, the CA Special Tenth Division should have ordered the consolidation of the petition
in CA-G.R. SP No. 90828 by CA-G.R. SP No. 87931 pursuant to the Internal Rules of the CA, the latter
having the earlier docket number. Had it done so, then the occurrence of the conflicting decisions
could have been prevented. The CA Special Tenth Division should have abided by our ruling
in Nacuray v. NLRC, where we held, "Consequently, a division cannot and should not review a case
already passed upon by another Division of this Court. It is only proper, to allow the case to take its
rest after having attained finality."60
The CA should take the appropriate steps, including the adoption or amendment of the rules, to see
to it that cases or petitions arising from the same questioned decision, order, or resolution are
consolidated to steer clear of contrary or opposing decisions of the different CA Divisions and ensure
that incidents of similar nature will not be replicated.
G.R. No. 172936
No showing that the DENR Secretary gravely abused his discretion
Now, going to the substance of the petition in G.R. No. 172936. A scrutiny of the records shows that
the DENR Secretary did not gravely abuse his discretion in approving and signing MPSA Nos. 220-
2005-IVB and 221-2005-IVB in favor of Macroasia.
Petitioner Blue Ridge anchors its rights on the May 18, 2006 Decision in CA-G.R. SP No. 90828, which
we have unfortunately struck down. Blue Ridge’s argument in assailing the approval and issuance of
the subject MPSAs that it has been accorded preferential right by the CA has no leg to stand on.
The October 24, 2000 MAB Decision, nullified by the subsequent November 26, 2004 Resolution, is
unequivocal that Blue Ridge was granted only "prior and preferential rights to FILE its mining
application over the same mining claims." 61 What was accorded Blue Ridge was only the right to file
the mining application but with no assurance that the application will be recommended for approval
by the MGB and finally approved by the DENR Secretary.
Moreover, a preferential right would at most be an inchoate right to be given priority in the grant of a
mining agreement. It has not yet been transformed into a legal and vested right unless approved by
the MGB or DENR Secretary. Even if Blue Ridge has a preferential right over the subject mining claims,
it is still within the competence and discretion of the DENR Secretary to grant mineral agreements to
whomever he deems best to pursue the mining claims over and above the preferential status given to
Blue Ridge. Besides, being simply a preferential right, it is ineffective to dissolve the pre-existing or
subsisting mining lease contracts of Macroasia.
The DENR Secretary has full discretion in the grant of mineral agreements
Blue Ridge also argues that the Secretary gravely abused his discretion in approving the subject
MPSAs without Macroasia complying with the mandatory requirements for mineral agreement
applications under Sec. 35 of DENR AO 96-40. Petitioner specifically cited Sec. 36 of DENR AO 96-40 to
the effect that "no Mineral Agreement shall be approved unless the requirements under this section
are fully complied with and any adverse claim/protest/opposition thereto is finally resolved by the
Panel of Arbitrators." Moreover, Blue Ridge contends that the MPSAs were approved even prior to the
issuance of the Compliance Certificate62 by the National Commission on Indigenous Peoples under the
OP, which is a requisite pre-condition for the issuance of an MPSA.
We are not persuaded.
Blue Ridge cites Sec. 38 (not Sec. 36) of DENR AO 96-40 as basis for claiming that then DENR Secretary
Defensor committed grave abuse of discretion in granting MPSA Nos. 220-2005-IVB and 221-2005-IVB
to Macroasia. Petitioner’s postulation cannot be entertained for the reason that the issuance of the
mining agreements was not raised before the MGB Director and DENR Secretary, nor was it amply
presented before the CA. There is even a counter-charge that Blue Ridge has not complied with the
legal requirements for a mining application. The rule is established that questions raised for the first
time on appeal before this Court are not proper and have to be rejected. Furthermore, the resolution
of these factual issues would relegate the Court to a trier of facts. The Blue Ridge plea is hindered by
the factual issue bar rule where factual questions are proscribed under Rule 65. Lastly, there was no
exhaustion of administrative remedies before the MGB and DENR. Thus, Blue Ridge’s petition must
fail.
Primary jurisdiction of the DENR Secretary in determining whether to grant or not a mineral
agreement
Verily, RA 7942, similar to PD 463, confers exclusive and primary jurisdiction on the DENR Secretary to
approve mineral agreements, which is purely an administrative function within the scope of his
powers and authority. In exercising such exclusive primary jurisdiction, the DENR Secretary, through
the MGB, has the best competence to determine to whom mineral agreements are granted. Settled is
the rule that the courts will defer to the decisions of the administrative offices and agencies by reason
of their expertise and experience in the matters assigned to them pursuant to the doctrine of primary
jurisdiction. Administrative decisions on matter within the jurisdiction of administrative bodies are to
be respected and can only be set aside on proof of grave abuse of discretion, fraud, or error of
law.63 Unless it is shown that the then DENR Secretary has acted in a wanton, whimsical, or oppressive
manner, giving undue advantage to a party or for an illegal consideration and similar reasons, this
Court cannot look into or review the wisdom of the exercise of such discretion. Blue Ridge failed in
this regard.
Delineation of powers and functions is accorded the three branches of government for the smooth
functioning of the different governmental services. We will not disturb nor interfere in the exercise of
purely administrative functions of the executive branch absent a clear showing of grave abuse of
discretion.
Without a restraining order or injunction, litigation will not deter the DENR from exercising its
functions
While it is true that the subject mining claims are under litigation, this does not preclude the DENR
and its Secretary from carrying out their functions and duties without a restraining order or an
injunctive writ. Otherwise, public interest and public service would unduly suffer by mere litigation of
particular issues where government interests would be unduly affected. In the instant case, it must be
borne in mind that the government has a stake in the subject mining claims. Also, Macroasia had
various valid existing mining lease contracts over the subject mining lode claims issued by the DENR.
Thus, Macroasia has an advantage over Blue Ridge and Celestial insofar as the administrative aspect
of pursuing the mineral agreements is concerned.
WHEREFORE, the petitions under G.R. Nos. 169080, 172936, and 176229 are DISMISSED for lack of
merit, while the petition under G.R. No. 176319 is hereby GRANTED. The assailed April 15, 2005
Decision and August 3, 2005 Resolution of the CA in CA-G.R. SP No. 87931 are hereby AFFIRMED IN
TOTO. And the May 18, 2006 Decision and January 19, 2007 Resolution of the CA in CA-G.R. SP No.
90828 are hereby REVERSED and SET ASIDE. In view of the foregoing considerations, we find no grave
abuse of discretion on the part of the then DENR Secretary in the approval and issuance of MPSA Nos.
220-2005-IVB and 221-2005-IVB. Costs against Celestial Nickel Mining Exploration Corporation and
Blue Ridge Mineral Corporation.
SO ORDERED.
G.R. No. 157882 March 30, 2006
DIDIPIO EARTH-SAVERS’ MULTI-PURPOSE ASSOCIATION, INCORPORATED (DESAMA), MANUEL
BUTIC, CESAR MARIANO, LAURO ABANCE, BEN TAYABAN, ANTONIO DINGCOG, TEDDY B.
KIMAYONG, ALONZO ANANAYO, ANTONIO MALAN-UYA, JOSE BAHAG, ANDRES INLAB, RUFINO
LICYAYO, ALFREDO CULHI, CATALILNA INABYUHAN, GUAY DUMMANG, GINA PULIDO, EDWIN
ANSIBEY, CORAZON SICUAN, LOPEZ DUMULAG, FREDDIE AYDINON, VILMA JOSE, FLORENTINA
MADDAWAT, LINDA DINGCOG, ELMER SICUAN, GARY ANSIBEY, JIMMY MADDAWAT, JIMMY GUAY,
ALFREDO CUT-ING, ANGELINA UDAN, OSCAR INLAB, JUANITA CUT-ING, ALBERT PINKIHAN, CECILIA
TAYABAN, CRISTA BINWAK, PEDRO DUGAY, SR., EDUARDO ANANAYO, ROBIN INLAB, JR., LORENZO
PULIDO, TOMAS BINWAG, EVELYN BUYA, JAIME DINGCOG, DINAOAN CUT-ING, PEDRO DONATO,
MYRNA GUAY, FLORA ANSIBEY, GRACE DINAMLING, EDUARDO MENCIAS, ROSENDA JACOB, SIONITA
DINGCOG, GLORIA JACOB, MAXIMA GUAY, RODRIGO PAGGADUT, MARINA ANSIBEY, TOLENTINO
INLAB, RUBEN DULNUAN, GERONIMO LICYAYO, LEONCIO CUMTI, MARY DULNUAN, FELISA
BALANBAN, MYRNA DUYAN, MARY MALAN-UYA, PRUDENCIO ANSIBEY, GUILLERMO GUAY,
MARGARITA CULHI, ALADIN ANSIBEY, PABLO DUYAN, PEDRO PUGUON, JULIAN INLAB, JOSEPH
NACULON, ROGER BAJITA, DINAON GUAY, JAIME ANANAYO, MARY ANSIBEY, LINA ANANAYO,
MAURA DUYAPAT, ARTEMEO ANANAYO, MARY BABLING, NORA ANSIBEY, DAVID DULNUAN,
AVELINO PUGUON, LUCAS GUMAWI, LUISA ABBAC, CATHRIN GUWAY, CLARITA TAYABAN, FLORA
JAVERA, RANDY SICOAN, FELIZA PUTAKI, CORAZON P. DULNUAN, NENA D. BULLONG, ERMELYN
GUWAY, GILBERT BUTALE, JOSEPH B. BULLONG, FRANCISCO PATNAAN, JR., SHERWIN DUGAY, TIRSO
GULLINGAY, BENEDICT T. NABALLIN, RAMON PUN-ADWAN, ALFONSO DULNUAN, CARMEN D.
BUTALE, LOLITA ANSIBEY, ABRAHAM DULNUAN, ARLYNDA BUTALE, MODESTO A. ANSIBEY,
EDUARDO LUGAY, ANTONIO HUMIWAT, ALFREDO PUMIHIC, MIKE TINO, TONY CABARROGUIS,
BASILIO TAMLIWOK, JR., NESTOR TANGID, ALEJO TUGUINAY, BENITO LORENZO, RUDY BAHIWAG,
ANALIZA BUTALE, NALLEM LUBYOC, JOSEPH DUHAYON, RAFAEL CAMPOL, MANUEL PUMALO,
DELFIN AGALOOS, PABLO CAYANGA, PERFECTO SISON, ELIAS NATAMA, LITO PUMALO, SEVERINA
DUGAY, GABRIEL PAKAYAO, JEOFFREY SINDAP, FELIX TICUAN, MARIANO S. MADDELA, MENZI
TICAWA, DOMINGA DUGAY, JOE BOLINEY, JASON ASANG, TOMMY ATENYAYO, ALEJO AGMALIW,
DIZON AGMALIW, EDDIE ATOS, FELIMON BLANCO, DARRIL DIGOY, LUCAS BUAY, ARTEMIO BRAZIL,
NICANOR MODI, LUIS REDULFIN, NESTOR JUSTINO, JAIME CUMILA, BENEDICT GUINID, EDITHA
ANIN, INOH-YABAN BANDAO, LUIS BAYWONG, FELIPE DUHALNGON, PETER BENNEL, JOSEPH T.
BUNGGALAN, JIMMY B. KIMAYONG, HENRY PUGUON, PEDRO BUHONG, BUGAN NADIAHAN, SR.,
MARIA EDEN ORLINO, SPC, PERLA VISSORO, and BISHOP RAMON VILLENA, Petitioners,
vs.
ELISEA GOZUN, in her capacity as SECRETARY of the DEPARTMENT OF ENVIRONMENT and NATURAL
RESOURCES (DENR), HORACIO RAMOS, in his capacity as Director of the Mines and Geosciences
Bureau (MGB-DENR), ALBERTO ROMULO, in his capacity as the Executive Secretary of the Office of
the President, RICHARD N. FERRER, in his capacity as Acting Undersecretary of the Office of the
President, IAN HEATH SANDERCOCK, in his capacity as President of CLIMAX-ARIMCO Mining
Corporation. Respondents.
DECISION
CHICO-NAZARIO, J.:
This petition for prohibition and mandamus under Rule 65 of the Rules of Court assails the
constitutionality of Republic Act No. 7942 otherwise known as the Philippine Mining Act of 1995,
together with the Implementing Rules and Regulations issued pursuant thereto, Department of
Environment and Natural Resources (DENR) Administrative Order No. 96-40, s. 1996 (DAO 96-40) and
of the Financial and Technical Assistance Agreement (FTAA) entered into on 20 June 1994 by the
Republic of the Philippines and Arimco Mining Corporation (AMC), a corporation established under
the laws of Australia and owned by its nationals.
On 25 July 1987, then President Corazon C. Aquino promulgated Executive Order No. 279 which
authorized the DENR Secretary to accept, consider and evaluate proposals from foreign-owned
corporations or foreign investors for contracts of agreements involving either technical or financial
assistance for large-scale exploration, development, and utilization of minerals, which, upon
appropriate recommendation of the Secretary, the President may execute with the foreign proponent.
On 3 March 1995, then President Fidel V. Ramos signed into law Rep. Act No. 7942 entitled, "An Act
Instituting A New System of Mineral Resources Exploration, Development, Utilization and
Conservation," otherwise known as the Philippine Mining Act of 1995.
On 15 August 1995, then DENR Secretary Victor O. Ramos issued DENR Administrative Order (DAO)
No. 23, Series of 1995, containing the implementing guidelines of Rep. Act No. 7942. This was soon
superseded by DAO No. 96-40, s. 1996, which took effect on 23 January 1997 after due publication.
Previously, however, or specifically on 20 June 1994, President Ramos executed an FTAA with AMC
over a total land area of 37,000 hectares covering the provinces of Nueva Vizcaya and Quirino.
Included in this area is Barangay Dipidio, Kasibu, Nueva Vizcaya.
Subsequently, AMC consolidated with Climax Mining Limited to form a single company that now goes
under the new name of Climax-Arimco Mining Corporation (CAMC), the controlling 99% of
stockholders of which are Australian nationals.
On 7 September 2001, counsels for petitioners filed a demand letter addressed to then DENR
Secretary Heherson Alvarez, for the cancellation of the CAMC FTAA for the primary reason that Rep.
Act No. 7942 and its Implementing Rules and Regulations DAO 96-40 are unconstitutional. The Office
of the Executive Secretary was also furnished a copy of the said letter. There being no response to
both letters, another letter of the same content dated 17 June 2002 was sent to President Gloria
Macapagal Arroyo. This letter was indorsed to the DENR Secretary and eventually referred to the
Panel of Arbitrators of the Mines and Geosciences Bureau (MGB), Regional Office No. 02, Tuguegarao,
Cagayan, for further action.
On 12 November 2002, counsels for petitioners received a letter from the Panel of Arbitrators of the
MGB requiring the petitioners to comply with the Rules of the Panel of Arbitrators before the letter
may be acted upon.
Yet again, counsels for petitioners sent President Arroyo another demand letter dated 8 November
2002. Said letter was again forwarded to the DENR Secretary who referred the same to the MGB,
Quezon City.
In a letter dated 19 February 2003, the MGB rejected the demand of counsels for petitioners for the
cancellation of the CAMC FTAA.1avvphil.net
Petitioners thus filed the present petition for prohibition and mandamus, with a prayer for a
temporary restraining order. They pray that the Court issue an order:
1. enjoining public respondents from acting on any application for FTAA;
2. declaring unconstitutional the Philippine Mining Act of 1995 and its Implementing Rules
and Regulations;
3. canceling the FTAA issued to CAMC.
In their memorandum petitioners pose the following issues:
I
Whether or not Republic Act No. 7942 and the CAMC FTAA are void because they allow the unjust and
unlawful taking of property without payment of just compensation , in violation of Section 9, Article III
of the Constitution.
II
Whether or not the Mining Act and its Implementing Rules and Regulations are void and
unconstitutional for sanctioning an unconstitutional administrative process of determining just
compensation.
III
Whether or not the State, through Republic Act No. 7942 and the CAMC FTAA, abdicated its primary
responsibility to the full control and supervision over natural resources.
IV
Whether or not the respondents’ interpretation of the role of wholly foreign and foreign-owned
corporations in their involvement in mining enterprises, violates paragraph 4, section 2, Article XII of
the Constitution.
V In the instant case, there exists a live controversy involving a clash of legal rights as Rep. Act No. 7942
WHETHER OR NOT THE 1987 CONSTITUTION PROHIBITS SERVICE CONTRACTS. 1
Before going to the substantive issues, the procedural question raised by public respondents shall first
be dealt with. Public respondents are of the view that petitioners’ eminent domain claim is not ripe
for adjudication as they fail to allege that CAMC has actually taken their properties nor do they allege
that their property rights have been endangered or are in danger on account of CAMC’s FTAA. In
effect, public respondents insist that the issue of eminent domain is not a justiciable controversy
which this Court can take cognizance of.
A justiciable controversy is defined as a definite and concrete dispute touching on the legal relations
of parties having adverse legal interests which may be resolved by a court of law through the
application of a law.2 Thus, courts have no judicial power to review cases involving political questions
and as a rule, will desist from taking cognizance of speculative or hypothetical cases, advisory
opinions and cases that have become moot.3 The Constitution is quite explicit on this matter.4 It
provides that judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable. Pursuant to this constitutional
mandate, courts, through the power of judicial review, are to entertain only real disputes between
conflicting parties through the application of law. For the courts to exercise the power of judicial
review, the following must be extant (1) there must be an actual case calling for the exercise of judicial
power; (2) the question must be ripe for adjudication; and (3) the person challenging must have the
"standing."5
An actual case or controversy involves a conflict of legal rights, an assertion of opposite legal claims,
susceptible of judicial resolution as distinguished from a hypothetical or abstract difference or
dispute.6 There must be a contrariety of legal rights that can be interpreted and enforced on the basis
of existing law and jurisprudence.
Closely related to the second requisite is that the question must be ripe for adjudication. A question is
considered ripe for adjudication when the act being challenged has had a direct adverse effect on the
individual challenging it.7
The third requisite is legal standing or locus standi. It is defined as a personal or substantial interest in
the case such that the party has sustained or will sustain direct injury as a result of the governmental
act that is being challenged, alleging more than a generalized grievance. 8 The gist of the question of
standing is whether a party alleges "such personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the presentation of issues upon which the court
depends for illumination of difficult constitutional questions." 9 Unless a person is injuriously affected
in any of his constitutional rights by the operation of statute or ordinance, he has no standing. 10
has been enacted, DAO 96-40 has been approved and an FTAAs have been entered into. The FTAA
holders have already been operating in various provinces of the country. Among them is CAMC which
operates in the provinces of Nueva Vizcaya and Quirino where numerous individuals including the
petitioners are imperiled of being ousted from their landholdings in view of the CAMC FTAA. In light of
this, the court cannot await the adverse consequences of the law in order to consider the controversy
actual and ripe for judicial intervention.11 Actual eviction of the land owners and occupants need not
happen for this Court to intervene. As held in Pimentel, Jr. v. Hon. Aguirre 12:
By the mere enactment of the questioned law or the approval of the challenged act, the dispute is
said to have ripened into a judicial controversy even without any other overt act. Indeed, even a
singular violation of the Constitution and/or the law is enough to awaken judicial duty. 13
Petitioners embrace various segments of the society. These include Didipio Earth-Savers’ Multi-
Purpose Association, Inc., an organization of farmers and indigenous peoples organized under
Philippine laws, representing a community actually affected by the mining activities of CAMC, as well
as other residents of areas affected by the mining activities of CAMC. These petitioners have the
standing to raise the constitutionality of the questioned FTAA as they allege a personal and substantial
injury.14 They assert that they are affected by the mining activities of CAMC. Likewise, they are under
imminent threat of being displaced from their landholdings as a result of the implementation of the
questioned FTAA. They thus meet the appropriate case requirement as they assert an interest adverse
to that of respondents who, on the other hand, claim the validity of the assailed statute and the FTAA
of CAMC.
Besides, the transcendental importance of the issues raised and the magnitude of the public interest
involved will have a bearing on the country’s economy which is to a greater extent dependent upon
the mining industry. Also affected by the resolution of this case are the proprietary rights of numerous
residents in the mining contract areas as well as the social existence of indigenous peoples which are
threatened. Based on these considerations, this Court deems it proper to take cognizance of the
instant petition.
Having resolved the procedural question, the constitutionality of the law under attack must be
addressed squarely.
First Substantive Issue: Validity of Section 76 of Rep. Act No. 7942 and DAO 96-40
In seeking to nullify Rep. Act No. 7942 and its implementing rules DAO 96-40 as unconstitutional,
petitioners set their sight on Section 76 of Rep. Act No. 7942 and Section 107 of DAO 96-40 which
they claim allow the unlawful and unjust "taking" of private property for private purpose in
contradiction with Section 9, Article III of the 1987 Constitution mandating that private property shall
not be taken except for public use and the corresponding payment of just compensation. They assert
that public respondent DENR, through the Mining Act and its Implementing Rules and Regulations,
cannot, on its own, permit entry into a private property and allow taking of land without payment of
just compensation.
Interpreting Section 76 of Rep. Act No. 7942 and Section 107 of DAO 96-40, juxtaposed with the
concept of taking of property for purposes of eminent domain in the case of Republic v. Vda. de
Castellvi,15 petitioners assert that there is indeed a "taking" upon entry into private lands and
concession areas.
Republic v. Vda. de Castellvi defines "taking" under the concept of eminent domain as entering upon
private property for more than a momentary period, and, under the warrant or color of legal
authority, devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in
such a way as to substantially oust the owner and deprive him of all beneficial enjoyment thereof.
From the criteria set forth in the cited case, petitioners claim that the entry into a private property by
CAMC, pursuant to its FTAA, is for more than a momentary period, i.e., for 25 years, and renewable
for another 25 years; that the entry into the property is under the warrant or color of legal authority
pursuant to the FTAA executed between the government and CAMC; and that the entry substantially
ousts the owner or possessor and deprives him of all beneficial enjoyment of the property. These
facts, according to the petitioners, amount to taking. As such, petitioners question the exercise of the
power of eminent domain as unwarranted because respondents failed to prove that the entry into
private property is devoted for public use.
Petitioners also stress that even without the doctrine in the Castellvi case, the nature of the mining
activity, the extent of the land area covered by the CAMC FTAA and the various rights granted to the
proponent or the FTAA holder, such as (a) the right of possession of the Exploration Contract Area,
with full right of ingress and egress and the right to occupy the same; (b) the right not to be prevented
from entry into private lands by surface owners and/or occupants thereof when prospecting,
exploring and exploiting for minerals therein; (c) the right to enjoy easement rights, the use of timber,
water and other natural resources in the Exploration Contract Area; (d) the right of possession of the
Mining Area, with full right of ingress and egress and the right to occupy the same; and (e) the right to
enjoy easement rights, water and other natural resources in the Mining Area, result in a taking of
private property.
Petitioners quickly add that even assuming arguendo that there is no absolute, physical taking, at the
very least, Section 76 establishes a legal easement upon the surface owners, occupants and
concessionaires of a mining contract area sufficient to deprive them of enjoyment and use of the
property and that such burden imposed by the legal easement falls within the purview of eminent
domain.
To further bolster their claim that the legal easement established is equivalent to taking, petitioners
cite the case of National Power Corporation v. Gutierrez 16 holding that the easement of right-of-way
imposed against the use of the land for an indefinite period is a taking under the power of eminent
domain.
Traversing petitioners’ assertion, public respondents argue that Section 76 is not a taking provision
but a valid exercise of the police power and by virtue of which, the state may prescribe regulations to
promote the health, morals, peace, education, good order, safety and general welfare of the people.
This government regulation involves the adjustment of rights for the public good and that this
adjustment curtails some potential for the use or economic exploitation of private property. Public
respondents concluded that "to require compensation in all such circumstances would compel the
government to regulate by purchase."
Public respondents are inclined to believe that by entering private lands and concession areas, FTAA
holders do not oust the owners thereof nor deprive them of all beneficial enjoyment of their
properties as the said entry merely establishes a legal easement upon surface owners, occupants and
concessionaires of a mining contract area.
Taking in Eminent Domain Distinguished from Regulation in Police Power
The power of eminent domain is the inherent right of the state (and of those entities to which the
power has been lawfully delegated) to condemn private property to public use upon payment of just
compensation.17 On the other hand, police power is the power of the state to promote public welfare
by restraining and regulating the use of liberty and property. 18 Although both police power and the
power of eminent domain have the general welfare for their object, and recent trends show a
mingling19 of the two with the latter being used as an implement of the former, there are still
traditional distinctions between the two.
Property condemned under police power is usually noxious or intended for a noxious purpose; hence,
no compensation shall be paid.20 Likewise, in the exercise of police power, property rights of private
individuals are subjected to restraints and burdens in order to secure the general comfort, health, and
prosperity of the state. Thus, an ordinance prohibiting theaters from selling tickets in excess of their
seating capacity (which would result in the diminution of profits of the theater-owners) was upheld
valid as this would promote the comfort, convenience and safety of the customers. 21 In U.S. v.
Toribio,22 the court upheld the provisions of Act No. 1147, a statute regulating the slaughter of
carabao for the purpose of conserving an adequate supply of draft animals, as a valid exercise of
police power, notwithstanding the property rights impairment that the ordinance imposed on cattle
owners. A zoning ordinance prohibiting the operation of a lumber yard within certain areas was
assailed as unconstitutional in that it was an invasion of the property rights of the lumber yard owners
in People v. de Guzman.23 The Court nonetheless ruled that the regulation was a valid exercise of
police power. A similar ruling was arrived at in Seng Kee S Co. v. Earnshaw and Piatt 24 where an
ordinance divided the City of Manila into industrial and residential areas.
A thorough scrutiny of the extant jurisprudence leads to a cogent deduction that where a property
interest is merely restricted because the continued use thereof would be injurious to public welfare,
or where property is destroyed because its continued existence would be injurious to public interest,
there is no compensable taking.25 However, when a property interest is appropriated and applied to
some public purpose, there is compensable taking.26
According to noted constitutionalist, Fr. Joaquin Bernas, SJ, in the exercise of its police power
regulation, the state restricts the use of private property, but none of the property interests in the
bundle of rights which constitute ownership is appropriated for use by or for the benefit of the
public.27 Use of the property by the owner was limited, but no aspect of the property is used by or for
the public.28 The deprivation of use can in fact be total and it will not constitute compensable taking if
nobody else acquires use of the property or any interest therein. 29
If, however, in the regulation of the use of the property, somebody else acquires the use or interest
thereof, such restriction constitutes compensable taking. Thus, in City Government of Quezon City v.
Ericta,30 it was argued by the local government that an ordinance requiring private cemeteries to
reserve 6% of their total areas for the burial of paupers was a valid exercise of the police power under
the general welfare clause. This court did not agree in the contention, ruling that property taken
under the police power is sought to be destroyed and not, as in this case, to be devoted to a public
use. It further declared that the ordinance in question was actually a taking of private property
without just compensation of a certain area from a private cemetery to benefit paupers who are
charges of the local government. Being an exercise of eminent domain without provision for the
payment of just compensation, the same was rendered invalid as it violated the principles governing
eminent domain.
In People v. Fajardo,31 the municipal mayor refused Fajardo permission to build a house on his own
land on the ground that the proposed structure would destroy the view or beauty of the public plaza.
The ordinance relied upon by the mayor prohibited the construction of any building that would
destroy the view of the plaza from the highway. The court ruled that the municipal ordinance under
the guise of police power permanently divest owners of the beneficial use of their property for the
benefit of the public; hence, considered as a taking under the power of eminent domain that could
not be countenanced without payment of just compensation to the affected owners. In this case,
what the municipality wanted was to impose an easement on the property in order to preserve the
view or beauty of the public plaza, which was a form of utilization of Fajardo’s property for public
benefit.32
While the power of eminent domain often results in the appropriation of title to or possession of
property, it need not always be the case. Taking may include trespass without actual eviction of the
owner, material impairment of the value of the property or prevention of the ordinary uses for which
the property was intended such as the establishment of an easement. 33 In Ayala de Roxas v. City of
Manila,34 it was held that the imposition of burden over a private property through easement was
considered taking; hence, payment of just compensation is required. The Court declared:
And, considering that the easement intended to be established, whatever may be the object thereof,
is not merely a real right that will encumber the property, but is one tending to prevent the exclusive
use of one portion of the same, by expropriating it for public use which, be it what it may, can not be
accomplished unless the owner of the property condemned or seized be previously and duly
indemnified, it is proper to protect the appellant by means of the remedy employed in such cases, as
it is only adequate remedy when no other legal action can be resorted to, against an intent which is
nothing short of an arbitrary restriction imposed by the city by virtue of the coercive power with
which the same is invested.
And in the case of National Power Corporation v. Gutierrez, 35 despite the NPC’s protestation that the
owners were not totally deprived of the use of the land and could still plant the same crops as long as
they did not come into contact with the wires, the Court nevertheless held that the easement of right-
of-way was a taking under the power of eminent domain. The Court said:
In the case at bar, the easement of right-of-way is definitely a taking under the power of eminent
domain. Considering the nature and effect of the installation of 230 KV Mexico-Limay transmission
lines, the limitation imposed by NPC against the use of the land for an indefinite period deprives
private respondents of its ordinary use.
A case exemplifying an instance of compensable taking which does not entail transfer of title is
Republic v. Philippine Long Distance Telephone Co.36 Here, the Bureau of Telecommunications, a
government instrumentality, had contracted with the PLDT for the interconnection between the
Government Telephone System and that of the PLDT, so that the former could make use of the lines
and facilities of the PLDT. In its desire to expand services to government offices, the Bureau of
Telecommunications demanded to expand its use of the PLDT lines. Disagreement ensued on the
terms of the contract for the use of the PLDT facilities. The Court ruminated:
Normally, of course, the power of eminent domain results in the taking or appropriation of title to,
and possession of, the expropriated property; but no cogent reason appears why said power may not
be availed of to impose only a burden upon the owner of the condemned property, without loss of
title and possession. It is unquestionable that real property may, through expropriation, be subjected
to an easement right of way.37
In Republic v. Castellvi,38 this Court had the occasion to spell out the requisites of taking in eminent
domain, to wit:
(1) the expropriator must enter a private property;
(2) the entry must be for more than a momentary period.
(3) the entry must be under warrant or color of legal authority;
(4) the property must be devoted to public use or otherwise informally appropriated or
injuriously affected;
(5) the utilization of the property for public use must be in such a way as to oust the owner
and deprive him of beneficial enjoyment of the property.
As shown by the foregoing jurisprudence, a regulation which substantially deprives the owner of his
proprietary rights and restricts the beneficial use and enjoyment for public use amounts to
compensable taking. In the case under consideration, the entry referred to in Section 76 and the
easement rights under Section 75 of Rep. Act No. 7942 as well as the various rights to CAMC under its
FTAA are no different from the deprivation of proprietary rights in the cases discussed which this
Court considered as taking. Section 75 of the law in question reads:
Easement Rights. - When mining areas are so situated that for purposes of more convenient mining
operations it is necessary to build, construct or install on the mining areas or lands owned, occupied
or leased by other persons, such infrastructure as roads, railroads, mills, waste dump sites, tailing
ponds, warehouses, staging or storage areas and port facilities, tramways, runways, airports, electric
transmission, telephone or telegraph lines, dams and their normal flood and catchment areas, sites
for water wells, ditches, canals, new river beds, pipelines, flumes, cuts, shafts, tunnels, or mills, the
contractor, upon payment of just compensation, shall be entitled to enter and occupy said mining
areas or lands.
Section 76 provides:
Entry into private lands and concession areas – Subject to prior notification, holders of mining rights
shall not be prevented from entry into private lands and concession areas by surface owners,
occupants, or concessionaires when conducting mining operations therein.
The CAMC FTAA grants in favor of CAMC the right of possession of the Exploration Contract Area, the
full right of ingress and egress and the right to occupy the same. It also bestows CAMC the right not to
be prevented from entry into private lands by surface owners or occupants thereof when prospecting,
exploring and exploiting minerals therein.
The entry referred to in Section 76 is not just a simple right-of-way which is ordinarily allowed under
the provisions of the Civil Code. Here, the holders of mining rights enter private lands for purposes of
conducting mining activities such as exploration, extraction and processing of minerals. Mining right
holders build mine infrastructure, dig mine shafts and connecting tunnels, prepare tailing ponds,
storage areas and vehicle depots, install their machinery, equipment and sewer systems. On top of
this, under Section 75, easement rights are accorded to them where they may build warehouses, port
facilities, electric transmission, railroads and other infrastructures necessary for mining operations. All
these will definitely oust the owners or occupants of the affected areas the beneficial ownership of
their lands. Without a doubt, taking occurs once mining operations commence.
Section 76 of Rep. Act No. 7942 is a Taking Provision
Moreover, it would not be amiss to revisit the history of mining laws of this country which would help
us understand Section 76 of Rep. Act No. 7942.
This provision is first found in Section 27 of Commonwealth Act No. 137 which took effect on 7
November 1936, viz:
Before entering private lands the prospector shall first apply in writing for written permission of the
private owner, claimant, or holder thereof, and in case of refusal by such private owner, claimant, or
holder to grant such permission, or in case of disagreement as to the amount of compensation to be
paid for such privilege of prospecting therein, the amount of such compensation shall be fixed by
agreement among the prospector, the Director of the Bureau of Mines and the surface owner, and in
case of their failure to unanimously agree as to the amount of compensation, all questions at issue
shall be determined by the Court of First Instance.
Similarly, the pertinent provision of Presidential Decree No. 463, otherwise known as "The Mineral
Resources Development Decree of 1974," provides:
SECTION 12. Entry to Public and Private Lands. — A person who desires to conduct prospecting or
other mining operations within public lands covered by concessions or rights other than mining shall
first obtain the written permission of the government official concerned before entering such lands. In
the case of private lands, the written permission of the owner or possessor of the land must be
obtained before entering such lands. In either case, if said permission is denied, the Director, at the
request of the interested person may intercede with the owner or possessor of the land. If the
intercession fails, the interested person may bring suit in the Court of First Instance of the province
where the land is situated. If the court finds the request justified, it shall issue an order granting the
permission after fixing the amount of compensation and/or rental due the owner or possessor:
Provided, That pending final adjudication of such amount, the court shall upon recommendation of
the Director permit the interested person to enter, prospect and/or undertake other mining
operations on the disputed land upon posting by such interested person of a bond with the court
which the latter shall consider adequate to answer for any damage to the owner or possessor of the
land resulting from such entry, prospecting or any other mining operations.
Hampered by the difficulties and delays in securing surface rights for the entry into private lands for
purposes of mining operations, Presidential Decree No. 512 dated 19 July 1974 was passed into law in
order to achieve full and accelerated mineral resources development. Thus, Presidential Decree No.
512 provides for a new system of surface rights acquisition by mining prospectors and claimants.
Whereas in Commonwealth Act No. 137 and Presidential Decree No. 463 eminent domain may only
be exercised in order that the mining claimants can build, construct or install roads, railroads, mills,
warehouses and other facilities, this time, the power of eminent domain may now be invoked by
mining operators for the entry, acquisition and use of private lands, viz:
SECTION 1. Mineral prospecting, location, exploration, development and exploitation is hereby
declared of public use and benefit, and for which the power of eminent domain may be invoked and
exercised for the entry, acquisition and use of private lands. x x x.
The evolution of mining laws gives positive indication that mining operators who are qualified to own
lands were granted the authority to exercise eminent domain for the entry, acquisition, and use of
private lands in areas open for mining operations. This grant of authority extant in Section 1 of
Presidential Decree No. 512 is not expressly repealed by Section 76 of Rep. Act No. 7942; and neither
are the former statutes impliedly repealed by the former. These two provisions can stand together
even if Section 76 of Rep. Act No. 7942 does not spell out the grant of the privilege to exercise
eminent domain which was present in the old law.
It is an established rule in statutory construction that in order that one law may operate to repeal
another law, the two laws must be inconsistent. 39 The former must be so repugnant as to be
irreconciliable with the latter act. Simply because a latter enactment may relate to the same subject
matter as that of an earlier statute is not of itself sufficient to cause an implied repeal of the latter,
since the new law may be cumulative or a continuation of the old one. As has been the ruled, repeals
by implication are not favored, and will not be decreed unless it is manifest that the legislature so
intended.40 As laws are presumed to be passed with deliberation and with full knowledge of all
existing ones on the subject, it is but reasonable to conclude that in passing a statute it was not
intended to interfere with or abrogate any former law relating to the same matter, unless the
repugnancy between the two is not only irreconcilable, but also clear and convincing, and flowing
necessarily from the language used, unless the later act fully embraces the subject matter of the
earlier, or unless the reason for the earlier act is beyond peradventure removed. 41 Hence, every effort
must be used to make all acts stand and if, by any reasonable construction, they can be reconciled,
the latter act will not operate as a repeal of the earlier.
Considering that Section 1 of Presidential Decree No. 512 granted the qualified mining operators the
authority to exercise eminent domain and since this grant of authority is deemed incorporated in
Section 76 of Rep. Act No. 7942, the inescapable conclusion is that the latter provision is a taking
provision.
While this Court declares that the assailed provision is a taking provision, this does not mean that it is
unconstitutional on the ground that it allows taking of private property without the determination of
public use and the payment of just compensation.
The taking to be valid must be for public use.42 Public use as a requirement for the valid exercise of the
power of eminent domain is now synonymous with public interest, public benefit, public welfare and
public convenience.43 It includes the broader notion of indirect public benefit or advantage. Public use
as traditionally understood as "actual use by the public" has already been abandoned. 44
Mining industry plays a pivotal role in the economic development of the country and is a vital tool in
the government’s thrust of accelerated recovery. 45 The importance of the mining industry for national
development is expressed in Presidential Decree No. 463:
WHEREAS, mineral production is a major support of the national economy, and therefore the
intensified discovery, exploration, development and wise utilization of the country’s mineral resources
are urgently needed for national development.
Irrefragably, mining is an industry which is of public benefit.
That public use is negated by the fact that the state would be taking private properties for the benefit
of private mining firms or mining contractors is not at all true. In Heirs of Juancho Ardona v.
Reyes,46 petitioners therein contended that the promotion of tourism is not for public use because
private concessionaires would be allowed to maintain various facilities such as restaurants, hotels,
stores, etc., inside the tourist area. The Court thus contemplated:
The rule in Berman v. Parker [348 U.S. 25; 99 L. ed. 27] of deference to legislative policy even if such
policy might mean taking from one private person and conferring on another private person applies as
well in the Philippines.
". . . Once the object is within the authority of Congress, the means by which it will be attained is also
for Congress to determine. Here one of the means chosen is the use of private enterprise for
redevelopment of the area. Appellants argue that this makes the project a taking from one
businessman for the benefit of another businessman. But the means of executing the project are for
Congress and Congress alone to determine, once the public purpose has been established. x x x" 47
Petitioners further maintain that the state’s discretion to decide when to take private property is
reduced contractually by Section 13.5 of the CAMC FTAA, which reads:
If the CONTRACTOR so requests at its option, the GOVERNMENT shall use its offices and legal powers
to assist in the acquisition at reasonable cost of any surface areas or rights required by the
CONTRACTOR at the CONTRACTOR’s cost to carry out the Mineral Exploration and the Mining
Operations herein.
All obligations, payments and expenses arising from, or incident to, such agreements or acquisition of
right shall be for the account of the CONTRACTOR and shall be recoverable as Operating Expense.
According to petitioners, the government is reduced to a sub-contractor upon the request of the
private respondent, and on account of the foregoing provision, the contractor can compel the
government to exercise its power of eminent domain thereby derogating the latter’s power to
expropriate property.
The provision of the FTAA in question lays down the ways and means by which the foreign-owned
contractor, disqualified to own land, identifies to the government the specific surface areas within the
FTAA contract area to be acquired for the mine infrastructure. 48 The government then acquires
ownership of the surface land areas on behalf of the contractor, through a voluntary transaction in
order to enable the latter to proceed to fully implement the FTAA. Eminent domain is not yet called
for at this stage since there are still various avenues by which surface rights can be acquired other
than expropriation. The FTAA provision under attack merely facilitates the implementation of the
FTAA given to CAMC and shields it from violating the Anti-Dummy Law. Hence, when confronted with
the same question in La Bugal-B’Laan Tribal Association, Inc. v. Ramos, 49 the Court answered:
Clearly, petitioners have needlessly jumped to unwarranted conclusions, without being aware of the
rationale for the said provision. That provision does not call for the exercise of the power of eminent
domain -- and determination of just compensation is not an issue -- as much as it calls for a qualified
party to acquire the surface rights on behalf of a foreign-owned contractor.
Rather than having the foreign contractor act through a dummy corporation, having the State do the
purchasing is a better alternative. This will at least cause the government to be aware of such
transaction/s and foster transparency in the contractor’s dealings with the local property owners. The
government, then, will not act as a subcontractor of the contractor; rather, it will facilitate the
transaction and enable the parties to avoid a technical violation of the Anti-Dummy Law.
There is also no basis for the claim that the Mining Law and its implementing rules and regulations do
not provide for just compensation in expropriating private properties. Section 76 of Rep. Act No. 7942
and Section 107 of DAO 96-40 provide for the payment of just compensation:
Section 76. xxx Provided, that any damage to the property of the surface owner, occupant, or
concessionaire as a consequence of such operations shall be properly compensated as may be
provided for in the implementing rules and regulations.
Section 107. Compensation of the Surface Owner and Occupant- Any damage done to the property of
the surface owners, occupant, or concessionaire thereof as a consequence of the mining operations
or as a result of the construction or installation of the infrastructure mentioned in 104 above shall be
properly and justly compensated.
Such compensation shall be based on the agreement entered into between the holder of mining
rights and the surface owner, occupant or concessionaire thereof, where appropriate, in accordance
with P.D. No. 512. (Emphasis supplied.)
Second Substantive Issue: Power of Courts to Determine Just Compensation
Closely-knit to the issue of taking is the determination of just compensation. It is contended that Rep.
Act No. 7942 and Section 107 of DAO 96-40 encroach on the power of the trial courts to determine
just compensation in eminent domain cases inasmuch as the same determination of proper
compensation are cognizable only by the Panel of Arbitrators.
The question on the judicial determination of just compensation has been settled in the case of
Export Processing Zone Authority v. Dulay 50 wherein the court declared that the determination of just
compensation in eminent domain cases is a judicial function. Even as the executive department or the
legislature may make the initial determinations, the same cannot prevail over the court’s findings.
Implementing Section 76 of Rep. Act No. 7942, Section 105 of DAO 96-40 states that holder(s) of
mining right(s) shall not be prevented from entry into its/their contract/mining areas for the purpose
of exploration, development, and/or utilization. That in cases where surface owners of the lands,
occupants or concessionaires refuse to allow the permit holder or contractor entry, the latter shall
bring the matter before the Panel of Arbitrators for proper disposition. Section 106 states that
voluntary agreements between the two parties permitting the mining right holders to enter and use
the surface owners’ lands shall be registered with the Regional Office of the MGB. In connection with
Section 106, Section 107 provides that the compensation for the damage done to the surface owner,
occupant or concessionaire as a consequence of mining operations or as a result of the construction
or installation of the infrastructure shall be properly and justly compensated and that such
compensation shall be based on the agreement between the holder of mining rights and surface
owner, occupant or concessionaire, or where appropriate, in accordance with Presidential Decree No.
512. In cases where there is disagreement to the compensation or where there is no agreement, the
matter shall be brought before the Panel of Arbitrators. Section 206 of the implementing rules and
regulations provides an aggrieved party the remedy to appeal the decision of the Panel of Arbitrators
to the Mines Adjudication Board, and the latter’s decision may be reviewed by the Supreme Court by
filing a petition for review on certiorari.51
An examination of the foregoing provisions gives no indication that the courts are excluded from
taking cognizance of expropriation cases under the mining law. The disagreement referred to in
Section 107 does not involve the exercise of eminent domain, rather it contemplates of a situation
wherein the permit holders are allowed by the surface owners entry into the latters’ lands and
disagreement ensues as regarding the proper compensation for the allowed entry and use of the
private lands. Noticeably, the provision points to a voluntary sale or transaction, but not to an
involuntary sale.
The legislature, in enacting the mining act, is presumed to have deliberated with full knowledge of all 2. Sec. 9 which authorizes the Mines and Geosciences Bureau (MGB) under the DENR to
existing laws and jurisprudence on the subject. Thus, it is but reasonable to conclude that in passing exercise "direct charge in the administration and disposition of mineral resources", and
such statute it was in accord with the existing laws and jurisprudence on the jurisdiction of courts in empowers the MGB to "monitor the compliance by the contractor of the terms and
the determination of just compensation and that it was not intended to interfere with or abrogate any conditions of the mineral agreements", "confiscate surety and performance bonds", and
former law relating to the same matter. Indeed, there is nothing in the provisions of the assailed law deputize whenever necessary any member or unit of the Phil. National Police, barangay, duly
and its implementing rules and regulations that exclude the courts from their jurisdiction to registered non-governmental organization (NGO) or any qualified person to police mining
determine just compensation in expropriation proceedings involving mining operations. Although activities;
Section 105 confers upon the Panel of Arbitrators the authority to decide cases where surface owners,
occupants, concessionaires refuse permit holders entry, thus, necessitating involuntary taking, this 3. Sec. 66 which vests in the Regional Director "exclusive jurisdiction over safety inspections
does not mean that the determination of the just compensation by the Panel of Arbitrators or the of all installations, whether surface or underground", utilized in mining operations.
Mines Adjudication Board is final and conclusive. The determination is only preliminary unless
accepted by all parties concerned. There is nothing wrong with the grant of primary jurisdiction by the 4. Sec. 35, which incorporates into all FTAAs the following terms, conditions and warranties:
Panel of Arbitrators or the Mines Adjudication Board to determine in a preliminary matter the
reasonable compensation due the affected landowners or occupants. 52 The original and exclusive
"(g) Mining operations shall be conducted in accordance with the provisions of the Act and its IRR.
jurisdiction of the courts to decide determination of just compensation remains intact despite the
preliminary determination made by the administrative agency. As held in Philippine Veterans Bank v.
"(h) Work programs and minimum expenditures commitments.
Court of Appeals53:

xxxx
The jurisdiction of the Regional Trial Courts is not any less "original and exclusive" because the
question is first passed upon by the DAR, as the judicial proceedings are not a continuation of the
administrative determination. "(k) Requiring proponent to effectively use appropriate anti-pollution technology and facilities to
protect the environment and restore or rehabilitate mined-out areas.
Third Substantive Issue: Sufficient Control by the State Over Mining Operations
"(l) The contractors shall furnish the Government records of geologic, accounting and other relevant
data for its mining operation, and that books of accounts and records shall be open for inspection by
Anent the third issue, petitioners charge that Rep. Act No. 7942, as well as its Implementing Rules and
the government. x x x.
Regulations, makes it possible for FTAA contracts to cede over to a fully foreign-owned corporation
full control and management of mining enterprises, with the result that the State is allegedly reduced
to a passive regulator dependent on submitted plans and reports, with weak review and audit "(m) Requiring the proponent to dispose of the minerals at the highest price and more advantageous
powers. The State is not acting as the supposed owner of the natural resources for and on behalf of terms and conditions.
the Filipino people; it practically has little effective say in the decisions made by the enterprise. In
effect, petitioners asserted that the law, the implementing regulations, and the CAMC FTAA cede xxxx
beneficial ownership of the mineral resources to the foreign contractor.
"(o) Such other terms and conditions consistent with the Constitution and with this Act as the
It must be noted that this argument was already raised in La Bugal-B’Laan Tribal Association, Inc. v. Secretary may deem to be for the best interest of the State and the welfare of the Filipino people."
Ramos,54where the Court answered in the following manner:
The foregoing provisions of Section 35 of RA 7942 are also reflected and implemented in Section 56
RA 7942 provides for the state’s control and supervision over mining operations. The following (g), (h), (l), (m) and (n) of the Implementing Rules, DAO 96-40.
provisions thereof establish the mechanism of inspection and visitorial rights over mining operations
and institute reportorial requirements in this manner: Moreover, RA 7942 and DAO 96-40 also provide various stipulations confirming the government’s
control over mining enterprises:
1. Sec. 8 which provides for the DENR’s power of over-all supervision and periodic review for
"the conservation, management, development and proper use of the State’s mineral
resources";
o The contractor is to relinquish to the government those portions of the contract area not
needed for mining operations and not covered by any declaration of mining feasibility
(Section 35-e, RA 7942; Section 60, DAO 96-40).
o The contractor must comply with the provisions pertaining to mine safety, health and
environmental protection (Chapter XI, RA 7942; Chapters XV and XVI, DAO 96-40).
o For violation of any of its terms and conditions, government may cancel an FTAA. (Chapter
XVII, RA 7942; Chapter XXIV, DAO 96-40).
o An FTAA contractor is obliged to open its books of accounts and records for 0inspection by
the government (Section 56-m, DAO 96-40).
o An FTAA contractor has to dispose of the minerals and by-products at the highest market
price and register with the MGB a copy of the sales agreement (Section 56-n, DAO 96-40).
o MGB is mandated to monitor the contractor’s compliance with the terms and conditions of
the FTAA; and to deputize, when necessary, any member or unit of the Philippine National
Police, the barangay or a DENR-accredited nongovernmental organization to police mining
activities (Section 7-d and -f, DAO 96-40).
o An FTAA cannot be transferred or assigned without prior approval by the President (Section
40, RA 7942; Section 66, DAO 96-40).
o A mining project under an FTAA cannot proceed to the construction/development/utilization
stage, unless its Declaration of Mining Project Feasibility has been approved by government
(Section 24, RA 7942).
o The Declaration of Mining Project Feasibility filed by the contractor cannot be approved
without submission of the following documents:
1. Approved mining project feasibility study (Section 53-d, DAO 96-40)
2. Approved three-year work program (Section 53-a-4, DAO 96-40)
3. Environmental compliance certificate (Section 70, RA 7942)
4. Approved environmental protection and enhancement program (Section 69, RA
7942)
5. Approval by the Sangguniang Panlalawigan/Bayan/Barangay (Section 70, RA 7942;
Section 27, RA 7160)
6. Free and prior informed consent by the indigenous peoples concerned, including
payment of royalties through a Memorandum of Agreement (Section 16, RA 7942;
The foregoing gamut of requirements, regulations, restrictions and limitations imposed upon the FTAA
Section 59, RA 8371)
contractor by the statute and regulations easily overturns petitioners’ contention. The setup under RA
o The FTAA contractor is obliged to assist in the development of its mining community,
promotion of the general welfare of its inhabitants, and development of science and mining
technology (Section 57, RA 7942).
o The FTAA contractor is obliged to submit reports (on quarterly, semi-annual or annual basis
as the case may be; per Section 270, DAO 96-40), pertaining to the following:
1. Exploration
2. Drilling
3. Mineral resources and reserves
4. Energy consumption
5. Production
6. Sales and marketing
7. Employment
8. Payment of taxes, royalties, fees and other Government Shares
9. Mine safety, health and environment
10. Land use
11. Social development
12. Explosives consumption
o An FTAA pertaining to areas within government reservations cannot be granted without a
written clearance from the government agencies concerned (Section 19, RA 7942; Section
54, DAO 96-40).
o An FTAA contractor is required to post a financial guarantee bond in favor of the government
in an amount equivalent to its expenditures obligations for any particular year. This
requirement is apart from the representations and warranties of the contractor that it has
access to all the financing, managerial and technical expertise and technology necessary to
carry out the objectives of the FTAA (Section 35-b, -e, and -f, RA 7942).
o Other reports to be submitted by the contractor, as required under DAO 96-40, are as
follows: an environmental report on the rehabilitation of the mined-out area and/or mine
waste/tailing covered area, and anti-pollution measures undertaken (Section 35-a-2); annual
reports of the mining operations and records of geologic accounting (Section 56-m); annual
progress reports and final report of exploration activities (Section 56-2).
o Other programs required to be submitted by the contractor, pursuant to DAO 96-40, are the
following: a safety and health program (Section 144); an environmental work program
(Section 168); an annual environmental protection and enhancement program (Section 171).
7942 and DAO 96-40 hardly relegates the State to the role of a "passive regulator" dependent on
submitted plans and reports. On the contrary, the government agencies concerned are empowered to
approve or disapprove -- hence, to influence, direct and change -- the various work programs and the
corresponding minimum expenditure commitments for each of the exploration, development and
utilization phases of the mining enterprise.
Once these plans and reports are approved, the contractor is bound to comply with its commitments
therein. Figures for mineral production and sales are regularly monitored and subjected to
government review, in order to ensure that the products and by-products are disposed of at the best
prices possible; even copies of sales agreements have to be submitted to and registered with MGB.
And the contractor is mandated to open its books of accounts and records for scrutiny, so as to enable
the State to determine if the government share has been fully paid.
The State may likewise compel the contractor’s compliance with mandatory requirements on mine
safety, health and environmental protection, and the use of anti-pollution technology and facilities.
Moreover, the contractor is also obligated to assist in the development of the mining community and
to pay royalties to the indigenous peoples concerned.
Cancellation of the FTAA may be the penalty for violation of any of its terms and conditions and/or
noncompliance with statutes or regulations. This general, all-around, multipurpose sanction is no
trifling matter, especially to a contractor who may have yet to recover the tens or hundreds of millions
of dollars sunk into a mining project.
Overall, considering the provisions of the statute and the regulations just discussed, we believe that
the State definitely possesses the means by which it can have the ultimate word in the operation of
the enterprise, set directions and objectives, and detect deviations and noncompliance by the
contractor; likewise, it has the capability to enforce compliance and to impose sanctions, should the
occasion therefor arise.
In other words, the FTAA contractor is not free to do whatever it pleases and get away with it; on the
contrary, it will have to follow the government line if it wants to stay in the enterprise. Ineluctably
then, RA 7942 and DAO 96-40 vest in the government more than a sufficient degree of control and
supervision over the conduct of mining operations.
Fourth Substantive Issue: The Proper Interpretation of the Constitutional Phrase "Agreements
Involving Either Technical or Financial Assistance
In interpreting the first and fourth paragraphs of Section 2, Article XII of the Constitution, petitioners
set forth the argument that foreign corporations are barred from making decisions on the conduct of
operations and the management of the mining project. The first paragraph of Section 2, Article XII
reads:
x x x The exploration, development, and utilization of natural resources shall be under the full control
and supervision of the State. The State may directly undertake such activities, or it may enter into co-
production, joint venture, or production sharing agreements with Filipino citizens, or corporations or
associations at least sixty percentum of whose capital is owned by such citizens. Such agreements
may be for a period not exceeding twenty five years, renewable for not more than twenty five years,
and under such terms and conditions as may be provided by law x x x.
The fourth paragraph of Section 2, Article XII provides:
The President may enter into agreements with foreign-owned corporations involving either technical
or financial assistance for large scale exploration, development, and utilization of minerals, petroleum,
and other mineral oils according to the general terms and conditions provided by law, based on real
contributions to the economic growth and general welfare of the country x x x.
Petitioners maintain that the first paragraph bars aliens and foreign-owned corporations from
entering into any direct arrangement with the government including those which involve co-
production, joint venture or production sharing agreements. They likewise insist that the fourth
paragraph allows foreign-owned corporations to participate in the large-scale exploration,
development and utilization of natural resources, but such participation, however, is merely limited to
an agreement for either financial or technical assistance only.
Again, this issue has already been succinctly passed upon by this Court in La Bugal-B’Laan Tribal
Association, Inc. v. Ramos.55 In discrediting such argument, the Court ratiocinated:
Petitioners claim that the phrase "agreements x x x involving either technical or financial
assistance" simply means technical assistance or financial assistance agreements, nothing more and
nothing else. They insist that there is no ambiguity in the phrase, and that a plain reading of
paragraph 4 quoted above leads to the inescapable conclusion that what a foreign-owned corporation
may enter into with the government is merely an agreement for eitherfinancial or technical
assistance only, for the large-scale exploration, development and utilization of minerals, petroleum
and other mineral oils; such a limitation, they argue, excludes foreign management and operation of a
mining enterprise.
This restrictive interpretation, petitioners believe, is in line with the general policy enunciated by the
Constitution reserving to Filipino citizens and corporations the use and enjoyment of the country’s
natural resources. They maintain that this Court’s Decision of January 27, 2004 correctly declared the
WMCP FTAA, along with pertinent provisions of RA 7942, void for allowing a foreign contractor to
have direct and exclusive management of a mining enterprise. Allowing such a privilege not only runs
counter to the "full control and supervision" that the State is constitutionally mandated to exercise
over the exploration, development and utilization of the country’s natural resources; doing so also
vests in the foreign company "beneficial ownership" of our mineral resources. It will be recalled that
the Decision of January 27, 2004 zeroed in on "management or other forms of assistance" or other
activities associated with the "service contracts" of the martial law regime, since "the management or
operation of mining activities by foreign contractors, which is the primary feature of service contracts,
was precisely the evil that the drafters of the 1987 Constitution sought to eradicate."
xxxx
We do not see how applying a strictly literal or verba legis interpretation of paragraph 4 could
inexorably lead to the conclusions arrived at in the ponencia. First, the drafters’ choice of words --
their use of the phrase agreements x x x involving either technical or financial assistance -- does not
indicate the intent to exclude other modes of assistance. The drafters opted to use involving when
they could have simply said agreements for financial or technical assistance, if that was their intention
to begin with. In this case, the limitation would be very clear and no further debate would ensue.
In contrast, the use of the word "involving" signifies the possibility of the inclusion of other forms of
assistance or activities having to do with, otherwise related to or compatible with financial or
technical assistance. The word "involving" as used in this context has three connotations that can be
differentiated thus: one, the sense of "concerning," "having to do with," or "affecting"; two,
"entailing," "requiring," "implying" or "necessitating"; and three, "including," "containing" or
"comprising."
Plainly, none of the three connotations convey a sense of exclusivity. Moreover, the word "involving,"
when understood in the sense of "including," as in including technical or financial
assistance, necessarily implies that there are activities other than those that are being included. In
other words, if an agreement includes technical or financial assistance, there is apart from such
assistance -- something else already in, and covered or may be covered by, the said agreement.
In short, it allows for the possibility that matters, other than those explicitly mentioned, could be
made part of the agreement. Thus, we are now led to the conclusion that the use of the word
"involving" implies that these agreements with foreign corporations are not limited to mere financial
or technical assistance. The difference in sense becomes very apparent when we juxtapose
"agreements for technical or financial assistance" against "agreements including technical or financial
assistance." This much is unalterably clear in a verba legis approach.
Second, if the real intention of the drafters was to confine foreign corporations to financial or
technical assistance and nothing more, their language would have certainly been so unmistakably
restrictive and stringent as to leave no doubt in anyone’s mind about their true intent. For example,
they would have used the sentence foreign corporations are absolutely prohibited from involvement
in the management or operation of mining or similar ventures or words of similar import. A search for
such stringent wording yields negative results. Thus, we come to the inevitable conclusion that there
was a conscious and deliberate decision to avoid the use of restrictive wording that bespeaks an
intent not to use the expression "agreements x x x involving either technical or financial assistance"
in an exclusionary and limiting manner.
Fifth Substantive Issue: Service Contracts Not Deconstitutionalized
Lastly, petitioners stress that the service contract regime under the 1973 Constitution is expressly
prohibited under the 1987 Constitution as the term service contracts found in the former was deleted
in the latter to avoid the circumvention of constitutional prohibitions that were prevalent in the 1987
Constitution. According to them, the framers of the 1987 Constitution only intended for foreign-
owned corporations to provide either technical assistance or financial assistance. Upon perusal of the
CAMC FTAA, petitioners are of the opinion that the same is a replica of the service contract
agreements that the present constitution allegedly prohibit.
Again, this contention is not well-taken. The mere fact that the term service contracts found in the
1973 Constitution was not carried over to the present constitution, sans any categorical statement
banning service contracts in mining activities, does not mean that service contracts as understood in
the 1973 Constitution was eradicated in the 1987 Constitution. 56 The 1987 Constitution allows the
continued use of service contracts with foreign corporations as contractors who would invest in and
operate and manage extractive enterprises, subject to the full control and supervision of the State;
this time, however, safety measures were put in place to prevent abuses of the past regime. 57 We
ruled, thus:
To our mind, however, such intent cannot be definitively and conclusively established from the mere
failure to carry the same expression or term over to the new Constitution, absent a more specific,
explicit and unequivocal statement to that effect. What petitioners seek (a complete ban on foreign
participation in the management of mining operations, as previously allowed by the earlier
Constitutions) is nothing short of bringing about a momentous sea change in the economic and
developmental policies; and the fundamentally capitalist, free-enterprise philosophy of our
government. We cannot imagine such a radical shift being undertaken by our government, to the
great prejudice of the mining sector in particular and our economy in general, merely on the basis of
the omission of the terms service contract from or the failure to carry them over to the new
Constitution. There has to be a much more definite and even unarguable basis for such a drastic
reversal of policies.
xxxx
The foregoing are mere fragments of the framers’ lengthy discussions of the provision dealing
with agreements x x x involving either technical or financial assistance, which ultimately became
paragraph 4 of Section 2 of Article XII of the Constitution. Beyond any doubt, the members of the
ConCom were actually debating about the martial-law-era service contracts for which they were
crafting appropriate safeguards.
In the voting that led to the approval of Article XII by the ConCom, the explanations given by
Commissioners Gascon, Garcia and Tadeo indicated that they had voted to reject this provision on
account of their objections to the "constitutionalization" of the "service contract" concept.
Mr. Gascon said, "I felt that if we would constitutionalize any provision on service contracts, this
should always be with the concurrence of Congress and not guided only by a general law to be
promulgated by Congress." Mr. Garcia explained, "Service contracts are given constitutional
legitimization in Sec. 3, even when they have been proven to be inimical to the interests of the nation,
providing, as they do, the legal loophole for the exploitation of our natural resources for the benefit of
foreign interests." Likewise, Mr. Tadeo cited inter alia the fact that service contracts continued to
subsist, enabling foreign interests to benefit from our natural resources. It was hardly likely that Republic Act No. 8550 February 25, 1998
these gentlemen would have objected so strenuously, had the provision called for mere technical or
financial assistance and nothing more.
AN ACT PROVIDING FOR THE DEVELOPMENT, MANAGEMENT AND CONSERVATION OF THE
FISHERIES AND AQUATIC RESOURCES, INTEGRATING ALL LAWS PERTINENT THERETO, AND FOR
The deliberations of the ConCom and some commissioners’ explanation of their votes leave no room OTHER PURPOSES
for doubt that the service contract concept precisely underpinned the commissioners’ understanding
of the "agreements involving either technical or financial assistance."
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

xxxx
Section 1. Title. - This Act shall be known as "The Philippine Fisheries Code of 1998."

From the foregoing, we are impelled to conclude that the phrase agreements involving either
CHAPTER I
technical or financial assistance, referred to in paragraph 4, are in fact service contracts. But unlike
Declaration of Policy and Definitions
those of the 1973 variety, the new ones are between foreign corporations acting as contractors on the
one hand; and on the other, the government as principal or "owner" of the works. In the new service
Section 2. Declaration of Policy. - It is hereby declared the policy of the State:
contracts, the foreign contractors provide capital, technology and technical know-how, and
managerial expertise in the creation and operation of large-scale mining/extractive enterprises; and
the government, through its agencies (DENR, MGB), actively exercises control and supervision over (a) to achieve food security as the overriding consideration in the utilization, management,
the entire operation. development, conservation and protection of fishery resources in order to provide the food
needs of the population. A flexible policy towards the attainment of food security shall be
adopted in response to changes in demographic trends for fish, emerging trends in the trade
xxxx
of fish and other aquatic products in domestic and international markets, and the law of
supply and demand;lawphi1™
It is therefore reasonable and unavoidable to make the following conclusion, based on the above
arguments. As written by the framers and ratified and adopted by the people, the Constitution allows
(b) to limit access to the fishery and aquatic resources of the Philippines for the exclusive use
the continued use of service contracts with foreign corporations -- as contractors who would invest in
and enjoyment of Filipino citizens;
and operate and manage extractive enterprises, subject to the full control and supervision of the
State -- sans the abuses of the past regime. The purpose is clear: to develop and utilize our mineral,
petroleum and other resources on a large scale for the immediate and tangible benefit of the Filipino (c) to ensure the rational and sustainable development, management and conservation of
people.58 the fishery and aquatic resources in Philippine waters including the Exclusive Economic Zone
(EEZ) and in the adjacent high seas, consistent with the primordial objective of maintaining a
sound ecological balance, protecting and enhancing the quality of the environment;
WHEREFORE, the instant petition for prohibition and mandamus is hereby DISMISSED. Section 76 of
Republic Act No. 7942 and Section 107 of DAO 96-40; Republic Act No. 7942 and its Implementing
Rules and Regulations contained in DAO 96-40 – insofar as they relate to financial and technical (d) to protect the rights of fisherfolk, especially of the local communities with priority to
assistance agreements referred to in paragraph 4 of Section 2 of Article XII of the Constitution are municipal fisherfolk, in the preferential use of the municipal waters. Such preferential use,
NOT UNCONSTITUTIONAL. shall be based on, but not limited to, Maximum Sustainable Yield (MSY) or Total Allowable
Catch (TAC) on the basis of resources and ecological conditions, and shall be consistent with
our commitments under international treaties and agreements;
SO ORDERED.

(e) to provide support to the fishery sector, primarily to the municipal fisherfolk, including
women and youth sectors, through appropriate technology and research, adequate financial,
 production, construction of post-harvest facilities, marketing assistance, and other services.
The protection of municipal fisherfolk against foreign intrusion shall extend to offshore
fishing grounds. Fishworkers shall receive a just share for their labor in the utilization of
marine and fishery resources;
(f) to manage fishery and aquatic resources, in a manner consistent with the concept of an
integrated coastal area management in specific natural fishery management areas,
appropriately supported by research, technical services and guidance provided by the State;
and
(g) to grant the private sector the privilege to utilize fishery resources under the basic
concept that the grantee, licensee or permittee thereof shall not only be a privileged
beneficiary of the State but also active participant and partner of the Government in the
sustainable development, management, conservation and protection of the fishery and
aquatic resources of the country.
The state shall ensure the attainment of the following objectives of the fishery sector:
1. Conservation, protection and sustained management of the country's fishery and aquatic
resources;
2. Poverty alleviation and the provision of supplementary livelihood among municipal
fisherfolk;
3. Improvement of productivity of aquaculture within ecological limits;
4. Optimal utilization of offshore and deep-sea resources; and
5. Upgrading of post-harvest technology.
Section 3. Application of its Provisions. - The provisions of this Code shall be enforced in:
(a) all Philippine waters including other waters over which the Philippines has sovereignty
and jurisdiction, and the country's 200-nautical mile Exclusive Economic Zone (EEZ) and
continental shelf;
(b) all aquatic and fishery resources whether inland, coastal or offshore fishing areas,
including but not limited to fishponds, fishpens/cages; and
(c) all lands devoted to aquaculture, or businesses and activities relating to fishery, whether
private or public lands.lawphi1©
Section 4. Definition of Terms. - As used in this Code, the following terms and phrases shall mean as
follows:
1. Ancillary Industries - firms or companies related to the supply, construction and
maintenance of fishing vessels, gears, nets and other fishing paraphernalia; fishery machine
shops; and other facilities such as hatcheries, nurseries, feed plants, cold storage and
refrigeration, processing plants and other pre-harvest and post-harvest facilities.
2. Appropriate Fishing Technology - adaptable technology, both in fishing and ancillary
industries, that is ecologically sound, locally source-based and labor intensive.
3. Aquaculture - fishery operations involving all forms of raising and culturing fish and other
fishery species in fresh, brackish and marine water areas.
4. Aquatic Pollution - the introduction by human or machine, directly or indirectly, of
substances or energy to the aquatic environment which result or is likely to result in such
deleterious effects as to harm living and non-living aquatic resources, pose potential and/or
real hazard to human health, hindrance to aquatic activities such as fishing and navigation,
including dumping/disposal of waste and other marine litters, discharge of petroleum or
residual products of petroleum or carbonaceous materials/substances, and other,
radioactive, noxious or harmful liquid, gaseous or solid substances, from any water, land or
air transport or other human-made structure. Deforestation, unsound agricultural practices
such as the use of banned chemicals and excessive use of chemicals, intensive use of artificial
fish feed, and wetland conversion, which cause similar hazards and deleterious effects shall
also constitute aquatic pollution.
5. Aquatic Resources - includes fish, all other aquatic flora and fauna and other living
resources of the aquatic environment, including, but not limited to, salt and corals.
6. Artificial Reefs - any structure of natural or man-made materials placed on a body of water
to serve as shelter and habitat, source of food, breeding areas for fishery species and
shoreline protection.
7. Catch Ceilings - refer to the annual catch limits allowed to be taken, gathered or harvested
from any fishing area in consideration of the need to prevent overfishing and harmful
depletion of breeding stocks of aquatic organisms.
8. Closed Season - the period during which the taking of specified fishery species by a
specified fishing gear is prohibited in a specified area or areas in Philippine waters.
9. Coastal Area/Zone - is a band of dry land and adjacent ocean space (water and submerged
land. in which terrestrial processes and uses directly affect oceanic processes and uses, and
vice versa; its geographic extent may include areas within a landmark limit of one (1.
kilometer from the shoreline at high tide to include mangrove swamps, brackish water
ponds, nipa swamps, estuarine rivers, sandy beaches and other areas within a seaward limit
of 200 meters isobath to include coral reefs, algal flats, seagrass beds and other soft-bottom
areas.
10. Commercial Fishing - the taking of fishery species by passive or active gear for trade,
business & profit beyond subsistence or sports fishing, to be further classified as:
(1) Small scale commercial fishing - fishing with passive or active gear utilizing
fishing vessels of 3.1 gross tons (GT) up to twenty (20) GT;
(2) Medium scale commercial fishing - fishing utilizing active gears and vessels of
20.1 GT up to one hundred fifty (150) GT; and
(3) Large commercial fishing - fishing utilizing active gears and vessels of more than
one hundred fifty (150) GT.
11. Commercial Scale - a scheme of producing a minimum harvest per hectare per year of
milkfish or other species including those raised in pens, cages, and tanks to be determined by
the Department in consultation with the concerned sectors;
12. Coral - the hard calcareous substance made up of the skeleton of marine coelenterate
polyps which include reefs, shelves and atolls or any of the marine coelenterate animals
living in colonies where their skeletons form a stony mass. They include: (a. skeletons of
anthozoan coelenterates characterized as having a rigid axis of compact calcareous or horny
spicules, belonging to the genus corallium as represented by the red, pink, and white corals
which are considered precious corals; (b. skeletons of anthozoan coelenterates characterized
by thorny, horny axis such as the antipatharians represented by the black corals which are
considered semi-precious corals; and (c. ordinary corals which are any kind of corals that are
not precious nor semi-precious.
13. Coral Reef - a natural aggregation of coral skeleton, with or without living coral polyps,
occurring in intertidal and subtidal marine waters.
14. Demarcated Areas - boundaries defined by markers and assigned exclusively to specific
individuals or organizations for certain specified and limited uses such as:
(a) Aquaculture, sea ranching and sea farming;
(b) Fish aggregating devices;
(c) Fixed and passive fishing gears; and
(d) Fry and fingerlings gathering.
15. Department - shall mean the Department of Agriculture.
16. Electrofishing - the use of electricity generated by batteries, electric generators and other
source of electric power to kill, stupefy, disable or render unconscious fishery species,
whether or not the same are subsequently recovered.
17. Endangered Rare and/or Threatened Species - aquatic plants, animals, including some
varieties of corals and sea shells in danger of extinction as provided for in existing fishery
laws, rules and regulations or in the Protected Areas and Wildlife Bureau of the Department
of Environment and Natural Resources (DENR. and in the Convention on the International
Trade of Endangered Species of Flora and Fauna (CITES).
18. Exclusive Economic Zone (EEZ. - an area beyond and adjacent to the territorial sea which
shall not extend beyond 200 nautical miles from the baselines as defined under existing laws.
19. FARMCs - the Fisheries and Aquatic Resources Management Councils.
20. Farm-to-Market Roads - shall include roads linking the fisheries production sites, coastal
landing points and other post-harvest facilities to major market and arterial roads and
highways.
21. Fine Mesh Net - net with mesh size of less than three centimeters (3 cm.. measured
between two (2. opposite knots of a full mesh when stretched or as otherwise determined
by the appropriate government agency.
22. Fish and Fishery/Aquatic Products - include not only finfish but also mollusks,
crustaceans, echinoderms, marine mammals, and all other species of aquatic flora and fauna
and all other products of aquatic living resources in any form.
23. Fish Cage - refers to an enclosure which is either stationary or floating made up of nets or
screens sewn or fastened together and installed in the water with opening at the surface or
covered and held in a place by wooden/bamboo posts or various types of anchors and floats.
24. Fish Corral or "Baklad" - a stationary weir or trap devised to intercept and capture fish
consisting of rows of bamboo stakes, plastic nets and other materials fenced with split blood
mattings or wire mattings with one or more enclosures, usually with easy entrance but
difficult exit, and with or without leaders to direct the fish to the catching chambers, purse or
bags.
25. Fish fingerlings - a stage in the life cycle of the fish measuring to about 6-13 cm.
depending on the species.
26. Fish fry - a stage at which a fish has just been hatched usually with sizes from 1-2.5 cm.
27. Fish pen - an artificial enclosure constructed within a body of water for culturing fish and
fishery/aquatic resources made up of poles closely arranged in an enclosure with wooden
materials, screen or nylon netting to prevent escape of fish.
28. Fisherfolk - people directly or personally and physically engaged in taking and/or
culturing and processing fishery and/or aquatic resources.lawphi1™
29. Fisherfolk Cooperative - a duly registered association of fisherfolk with a common bond
of interest, who have voluntarily joined together to achieve a lawful common social or
economic end, making equitable contribution to the capital requirement and accepting a fair
share of the risks and benefits of the undertakings in accordance with universally accepted
cooperative principles.
30. Fisherfolk Organization - an organized group, association, federation, alliance or an
institution of fisherfolk which has at least fifteen (15. members, a set of officers, a
constitution and by-laws, an organizational structure and a program of action.
31. Fisheries - refers to all activities relating to the act or business of fishing, culturing,
preserving, processing, marketing, developing, conserving and managing aquatic resources
and the fishery areas, including the privilege to fish or take aquatic resource thereof.
32. Fish Pond - a land-based facility enclosed with earthen or stone material to impound
water for growing fish.
33. Fishing Boat/Gear License - a permit to operate specific types of fishing boat/gear for
specific duration in areas beyond municipal waters for demersal or pelagic fishery resources.
34. Fishery Management Areas - a bay, gulf, lake or any other fishery area which may be
delineated for fishery resource management purposes.
35. Fishery Operator - one who owns and provides the means including land, labor, capital,
fishing gears and vessels, but does not personally engage in fishery.
36. Fishery Refuge and Sanctuaries - a designated area where fishing or other forms of
activities which may damage the ecosystem of the area is prohibited and human access may
be restricted.
37. Fishery Reserve - a designated area where activities are regulated and set aside for
educational and research purposes.
38. Fishery Species - all aquatic flora and fauna including, but not restricted to, fish, algae,
coelenterates, mollusks, crustaceans, echinoderms and cetaceans.
39. Fishing - the taking of fishery species from their wild state of habitat, with or without the
use of fishing vessels.
40. Fishing gear - any instrument or device and its accessories utilized in taking fish and other
fishery species.
(a) Active fishing gear - is a fishing device characterized by gear movements, and/or
the pursuit of the target species by towing, lifting, and pushing the gears,
surrounding, covering, dredging, pumping and scaring the target species to
impoundments; such as, but not limited to, trawl, purse seines, Danish seines, bag
nets, paaling, drift gill net and tuna longline.
(b) Passive fishing gear - is characterized by the absence of gear movements and/or
the pursuit of the target species; such as, but not limited to, hook and line, fishpots,
traps and gill nets across the path of the fish.
41. Fishing vessel - any boat, ship or other watercraft equipped to be used for taking of
fishery species or aiding or assisting one (1. or more vessels in the performance of any
activity relating to fishing, including, but not limited to, preservation, supply, storage,
refrigeration, transportation and/or processing.
42. Fishing with Explosives - the use of the dynamite, other explosives or other chemical
compounds that contain combustible elements or ingredients which upon ignition by
friction, concussion, percussion or detonation of all or parts of the compound, will kill,
stupefy, disable or render unconscious any fishery species. It also refers to the use of any
other substance and/or device which causes an explosion that is capable of producing the
said harmful effects on any fishery species and aquatic resources and capable of damaging
and altering the natural habitat.
43. Fishing with Noxious or Poisonous Substances - the use of any substance, plant extracts
or juice thereof, sodium cyanide and/or cyanide compounds or other chemicals either in a
raw or processed form, harmful or harmless to human beings, which will kill, stupefy, disable
or render unconscious any fishery species and aquatic resources and capable of damaging
and altering the natural habitat.
44. Fishworker - a person regularly or not regularly employed in commercial fishing and
related industries, whose income is either in wage, profit-sharing or stratified sharing basis,
including those working in fish pens, fish cages, fish corrals/traps, fishponds, prawn farms,
sea farms, salt beds, fish ports, fishing boat or trawlers, or fish processing and/or packing
plants. Excluded from this category are administrators, security guards and overseers.
45. Food Security - refers to any plan, policy or strategy aimed at ensuring adequate supplies
of appropriate food at affordable prices. Food security may be achieved through self-
sufficiency (i.e. ensuring adequate food supplies from domestic production), through self-
reliance (i.e. ensuring adequate food supplies through a combination of domestic production
and importation), or through pure importation.
46. Foreshore Land - a string of land margining a body of water; the part of a seashore
between the low-water line usually at the seaward margin of a low tide terrace and the
upper limit of wave wash at high tide usually marked by a beach scarp or berm.
47. Fully-developed Fishpond Area - a clean leveled area enclosed by dikes, at least one foot
higher than the highest floodwater level in the locality and strong enough to resist pressure
at the highest flood tide; consists of at least a nursery pond, a transition pond, a rearing pond
or a combination of any or all said classes of ponds, and a functional water control system
and producing in a commercial scale.
48. Gross Tonnage - includes the underdeck tonnage, permanently enclosed spaces above
the tonnage deck, except for certain exemptions. In broad terms, all the vessel's 'closed-in'
spaces expressed in volume terms on the bases of one hundred cubic feet (that equals one
gross ton).
49. Inland Fishery - the freshwater fishery and brackishwater fishponds.
50. Lake - an inland body of water, an expanded part of a river, a reservoir formed by a dam,
or a lake basin intermittently or formerly covered by water.
51. Limited Access - a fishery policy by which a system of equitable resource and allocation is
established by law through fishery rights granting and licensing procedure as provided by this
Code.
52. Mangroves - a community of intertidal plants including all species of trees, shrubs, vines
and herbs found on coasts, swamps, or border of swamps.
53. Maximum Sustainable Yield (MSY. - is the largest average quantity of fish that can be
harvested from a fish stocks/resource within a period of time (e.g. one year. on a sustainable
basis under existing environmental conditions.
54. Migratory species - refers to any fishery species which in the course of their life could
travel from freshwater to marine water or vice versa, or any marine species which travel over
great distances in waters of the ocean as part of their behavioral adaptation for survival and
speciation:
(a) Anadromous species - marine fishes which migrate to freshwater areas to spawn;
(b) Catadromous species - freshwater fishes which migrate to marine areas to
spawn.
55. Monitoring, control and surveillance -
(a) Monitoring - the requirement of continuously observing: (1) fishing effort which
can be expressed by the number of days or hours of fishing, number of fishing gears
and number of fisherfolk; (2) characteristics of fishery resources; and (3) resource
yields (catch);
(b) Control - the regulatory conditions (legal framework) under which the
exploitation, utilization and disposition of the resources may be conducted; and
(c) Surveillance - the degree and types of observations required to maintain
compliance with regulations.lawphi1™ALF
56. Municipal fisherfolk - persons who are directly or indirectly engaged in municipal fishing
and other related fishing activities.
57. Municipal fishing - refers to fishing within municipal waters using fishing vessels of three
(3. gross tons or less, or fishing not requiring the use of fishing vessels.
58. Municipal waters - include not only streams, lakes, inland bodies of water and tidal
waters within the municipality which are not included within the protected areas as defined
under Republic Act No. 7586 (The NIPAS Law), public forest, timber lands, forest reserves or
fishery reserves, but also marine waters included between two (2. lines drawn perpendicular
to the general coastline from points where the boundary lines of the municipality touch the
sea at low tide and a third line parallel with the general coastline including offshore islands
and fifteen (15. kilometers from such coastline. Where two (2. municipalities are so situated
on opposite shores that there is less than thirty (30. kilometers of marine waters between
them, the third line shall be equally distant from opposite shore of the respective
municipalities.
59. Non-governmental organization (NGO. - an agency, institution, a foundation or a group of
persons whose purpose is to assist peoples organizations/associations in various ways
including, but not limited to, organizing, education, training, research and/or resource
accessing.
60. Payao - a fish aggregating device consisting of a loating raft anchored by a weighted line
with suspended materials such as palm fronds to attract pelagic and schooling species
common in deep waters.
61. Pearl Farm Lease - public waters leased for the purpose of producing cultured pearls.
62. People's Organization - a bona fide association of citizens with demonstrated capacity to
promote the public interest and with identifiable leadership, membership and structure. Its
members belong to a sector/s who voluntarily band themselves together to work for and by
themselves for their own upliftment, development and greater good.
63. Person - natural or juridical entities such as individuals, associations, partnership,
cooperatives or corporations.
64. Philippine waters - include all bodies of water within the Philippine territory such as
lakes, rivers, streams, creeks, brooks, ponds, swamps, lagoons, gulfs, bays and seas and other
bodies of water now existing or which may hereafter exist in the provinces, cities,
municipalities, and barangays and the waters around, between and connecting the islands of
the archipelago regardless of their breadth and dimensions, the territorial sea, the sea beds,
the insular shelves, and all other waters over which the Philippines has sovereignty and
jurisdiction including the 200-nautical miles Exclusive Economic Zone and the continental
shelf.
65. Post-harvest facilities - these facilities include, but are not limited to, fishport, fishlanding,
ice plants and cold storages, fish processing plants.
66. Purse Seine - a form of encircling net having a line at the bottom passing through rings
attached to the net, which can be drawn or pursed. In general, the net is set from a boat or
pair of boats around the school of fish. The bottom of the net is pulled closed with the purse
line. The net is then pulled aboard the fishing boat or boats until the fish are concentrated in
the bunt or fish bag.
67. Resource Rent - the difference between the value of the products produced from
harvesting a publicly owned resource less the cost of producing it, where cost includes the
normal return to capital and normal return to labor.
68. Sea farming - the stocking of natural or hatchery-produced marine plants or animals,
under controlled conditions, for purposes of rearing and harvesting, but not limited to
commercially-important fishes, mollusks (such as pearl and giant clam culture), including
seaweeds and seagrasses.
69. Sea ranching - the release of the young of fishery species reared in hatcheries and
nurseries into natural bodies of water for subsequent harvest at maturity or the
manipulation of fishery habitat, to encourage the growth of the wild stocks.
70. Secretary - the Secretary of the Department of Agriculture.
71. Superlight - also called magic light, is a type of light using halogen or metal halide bulb
which may be located above the sea surface or submerged in the water. It consists of a
ballast, regulator, electric cable and socket. The source of energy comes from a generator,
battery or dynamo coupled with the main engine.
72. Total Allowable Catch (TAC. - the maximum harvest allowed to be taken during a given
period of time from any fishery area, or from any fishery species or group of fishery species,
or a combination of area and species and normally would not exceed the MSY.
73. Trawl - an active fishing gear consisting of a bag shaped net with or without otter boards
to open its opening which is dragged or towed along the bottom or through the water
column to take fishery species by straining them from the water, including all variations and
modifications of trawls (bottom, mid-water, and baby trawls) and tow nets.
CHAPTER II
Utilization, Management, Development, Conservation and Allocation System of Fisheries and
Aquatic Resources
Section 5. Use of Philippine Waters. - The use and exploitation of the fishery and aquatic resources in
Philippine waters shall be reserved exclusively to Filipinos: Provided, however, That research and
survey activities may be allowed under strict regulations, for purely research, scientific, technological
and educational purposes that would also benefit Filipino citizens.
Section 6. Fees and Other Fishery Charges. - The rentals for fishpond areas covered by the Fishpond
Lease Agreement (FLA) and license fees for Commercial Fishing Boat Licenses (CFBL) shall be set at
levels that reflect resource rent accruing from the utilization of resources and shall be determined by
the Department: Provided, That the Department shall also prescribe fees and other fishery charges
and issue the corresponding license or permit for fishing gear, fishing accessories and other fishery
activities beyond the municipal waters: Provided, further, That the license fees of fishery activity in
municipal waters shall be determined by the Local Government Units (LGUs) in consultation with the
FARMCs. The FARMCs may also recommend the appropriate license fees that will be imposed.
Section 7. Access to Fishery Resources. - The Department shall issue such number of licenses and
permits for the conduct of fishery activities subject to the limits of the MSY of the resource as
determined by scientific studies or best available evidence. Preference shall be given to resource users
in the local communities adjacent or nearest to the municipal waters.
Section 8. Catch Ceiling Limitations. - The Secretary may prescribe limitations or quota on the total
quantity of fish captured, for a specified period of time and specified area based on the best available
evidence. Such a catch ceiling may be imposed per species of fish whenever necessary and
practicable: Provided, however, That in municipal waters and fishery management areas, and waters
under the jurisdiction of special agencies, catch ceilings may be established upon the concurrence and
approval or recommendation of such special agency and the concerned LGU in consultation with the
FARMC for conservation or ecological purposes.
Section 9. Establishment of Closed Season. - The Secretary may declare, through public notice in at
least two (2) newspapers of general circulation or in public service announcements, whichever is
applicable, at least five (5) days before the declaration, a closed season in any or all Philippine waters
outside the boundary of municipal waters and in bays, for conservation and ecological purposes. The
Secretary may include waters under the jurisdiction of special agencies, municipal waters and bays,
and/or other areas reserved for the use of the municipal fisherfolk in the area to be covered by the
closed season: Provided, however, That this shall be done only upon the concurrence and approval or
recommendation of such special agency and the concerned LGU and FARMC: Provided, further, That
in municipal waters, fishery management areas and other areas reserved for the use of the municipal
fisherfolk, closed season may be established by the concerned LGU in consultation with the FARMC
for conservation or ecological purposes. The FARMCs may also recommend the establishment of
closed seasons in municipal waters, fisheries management and other areas reserved for the use of the
municipal fisherfolk.
Section 10. Introduction of Foreign Aquatic Species. - No foreign finfish, mollusk, crustacean or
aquatic plants shall be introduced in Philippine waters without a sound ecological, biological and
environmental justification based on scientific studies subject to the bio-safety standard as provided
for by existing laws: Provided, however, That the Department may approve the introduction of foreign
aquatic species for scientific/research purposes.
part of the entire planning process pursuant to the provisions of Presidential Decree No. 1586 as well
as its implementing rules and regulations.
Section 13. Environmental Compliance Certificate (ECC). - All Environmental Impact Statements (EIS)
shall be submitted to the Department of Environment and Natural Resources (DENR) for review and
evaluation. No person, natural or juridical, shall undertake any development project without first
securing an Environmental Compliance Certificate (ECC) from the Secretary of the DENR.
Section 14. Monitoring, Control and Surveillance of Philippine Waters. - A monitoring, control and
surveillance system shall be established by the Department in coordination with LGUs, FARMCs, the
private sector and other agencies concerned to ensure that the fisheries and aquatic resources in
Philippine waters are judiciously and wisely utilized and managed on a sustainable basis and
conserved for the benefit and enjoyment exclusively of Filipino citizens.
Section 15. Auxiliary Invoices. - All fish and fishery products must have an auxiliary invoice to be
issued by the LGUs or their duly authorized representatives prior to their transport from their point of
origin to their point of destination in the Philippines and/or export purposes upon payment of a fee to
be determined by the LGUs to defray administrative costs therefor.
ARTICLE I
MUNICIPAL FISHERIES
Section 16. Jurisdiction of Municipal/City Government. - The municipal/city government shall have
jurisdiction over municipal waters as defined in this Code. The municipal/city government, in
consultation with the FARMC shall be responsible for the management, conservation, development,
protection, utilization, and disposition of all fish and fishery/aquatic resources within their respective
municipal waters.
The municipal/city government may, in consultation with the FARMC, enact appropriate ordinances
for this purpose and in accordance with the National Fisheries Policy. The ordinances enacted by the
municipality and component city shall be reviewed pursuant to Republic Act No. 7160 by the
sanggunian of the province which has jurisdiction over the same.

Section 11. Protection of Rare, Threatened and Endangered Species. - The Department shall declare
The LGUs shall also enforce all fishery laws, rules and regulations as well as valid fishery ordinances
closed seasons and take conservation and rehabilitation measures for rare, threatened and
enacted by the municipal/city council.
endangered species, as it may determine, and shall ban the fishing and/or taking of rare, threatened
and/or endangered species, including their eggs/offspring as identified by existing laws in concurrence
The management of contiguous fishery resources such as bays which straddle several municipalities,
with concerned government agencies.
cities or provinces, shall be done in an integrated manner, and shall not be based on political
subdivisions of municipal waters in order to facilitate their management as single resource systems.
Section 12. Environmental Impact Statement (EIS). - All government agencies as well as private
The LGUs which share or border such resources may group themselves and coordinate with each
corporations, firms and entities who intend to undertake activities or projects which will affect the
other to achieve the objectives of integrated fishery resource management. The Integrated Fisheries
quality of the environment shall be required to prepare a detailed Environmental Impact Statement
and Aquatic Resources Management Councils (FARMCs) established under Section 76 of this Code
(EIS) prior to undertaking such development activity. The preparation of the EIS shall form an integral
shall serve as the venues for close collaboration among LGUs in the management of contiguous
resources.
Section 17. Grant of Fishing Privileges in Municipal Waters. - The duly registered fisherfolk
organizations/cooperatives shall have preference in the grant of fishery rights by the Municipal/City
Council pursuant to Section 149 of the Local Government Code: Provided, That in areas where there
are special agencies or offices vested with jurisdiction over municipal waters by virtue of special laws
creating these agencies such as, but not limited to, the Laguna Lake Development Authority and the
Palawan Council for Sustainable Development, said offices and agencies shall continue to grant
permits for proper management and implementation of the aforementioned structures.
Section 18. Users of Municipal Waters. - All fishery related activities in municipal waters, as defined in
this Code, shall be utilized by municipal fisherfolk and their cooperatives/organizations who are listed
as such in the registry of municipal fisherfolk.
The municipal or city government, however, may, through its local chief executive and acting pursuant
to an appropriate ordinance, authorize or permit small and medium commercial fishing vessels to
operate within the ten point one (10.1) to fifteen (15) kilometer area from the shoreline in municipal
waters as defined herein, provided, that all the following are met:
(a) no commercial fishing in municipal waters with depth less than seven (7) fathoms as
certified by the appropriate agency;
(b) fishing activities utilizing methods and gears that are determined to be consistent with
national policies set by the Department;
(c) prior consultation, through public hearing, with the M/CFARMC has been conducted; and
(d) the applicant vessel as well as the shipowner, employer, captain and crew have been
certified by the appropriate agency as not having violated this Code, environmental laws and
related laws.
In no case shall the authorization or permit mentioned above be granted for fishing in bays as
determined by the Department to be in an environmentally critical condition and during closed
season as provided for in Section 9 of this Code.
Section 19. Registry of Municipal Fisherfolk. - The LGU shall maintain a registry of municipal
fisherfolk, who are fishing or may desire to fish in municipal waters for the purpose of determining
priorities among them, of limiting entry into the municipal waters, and of monitoring fishing activities
an/or other related purposes: Provided, That the FARMC shall submit to the LGU the list of priorities
for its consideration.
Such list or registry shall be updated annually or as may be necessary, and shall be posted in barangay
halls or other strategic locations where it shall be open to public inspection, for the purpose of
validating the correctness and completeness of the list. The LGU, in consultation with the FARMCs,
shall formulate the necessary mechanisms for inclusion or exclusion procedures that shall be most
beneficial to the resident municipal fisherfolk. The FARMCs may likewise recommend such
mechanisms.
The LGUs shall also maintain a registry of municipal fishing vessels by type of gear and other boat
particulars with the assistance of the FARMC.
Section 20. Fisherfolk Organizations and/or Cooperatives. - Fisherfolk organizations/cooperatives
whose members are listed in the registry of municipal fisherfolk, may be granted use of demarcated
fishery areas to engage in fish capture, mariculture and/or fish farming: Provided, however, That an
organization/cooperative member whose household is already in possession of a fishery right other
than for fish capture cannot enjoy the fishing rights granted to the organization or cooperative.
Section 21. Priority of Resident Municipal Fisherfolk. - Resident municipal fisherfolk of the
municipality concerned and their organizations/cooperatives shall have priority to exploit municipal
and demarcated fishery areas of the said municipality.
Section 22. Demarcated Fishery Right. - The LGU concerned shall grant demarcated fishery rights to
fishery organizations/cooperatives for mariculture operation in specific areas identified by the
Department.
Section 23. Limited Entry Into Overfished Areas. - Whenever it is determined by the LGUs and the
Department that a municipal water is overfished based on available data or information or in danger
of being overfished, and that there is a need to regenerate the fishery resources in that water, the
LGU shall prohibit or limit fishery activities in the said waters.
Section 24. Support to Municipal Fisherfolk. - The Department and the LGUs shall provide support to
municipal fisherfolk through appropriate technology and research, credit, production and marketing
assistance and other services such as, but not limited to training for additional/supplementary
livelihood.
Section 25. Rights and Privileges of Fishworkers. - The fishworkers shall be entitled to the privileges
accorded to other workers under the Labor Code, Social Security System and other benefits under
other laws or social legislation for workers: Provided, That fishworkers on board any fishing vessels
engaged in fishing operations are hereby covered by the Philippine Labor Code, as amended.
ARTICLE II
COMMERCIAL FISHERIES
Section 26. Commercial Fishing Vessel License and Other Licenses. - No person shall operate a Section 30. Renewal of Commercial Boat License. - The commercial fishing boat license shall be
commercial fishing vessel, pearl fishing vessel or fishing vessel for scientific, research or educational renewed every three (3) years.
purposes, or engage in any fishery activity, or seek employment as a fishworker or pearl diver without
first securing a license from the Department, the period of which shall be prescribed by the The owner/operator of a fishing vessel has a period of sixty (60) days prior to the expiration of the
Department: Provided, That no such license shall be required of a fishing vessel engaged in scientific, license within which to renew the same.
research or educational purposes within Philippine waters pursuant to an international agreement of
which the Philippines is a signatory and which agreement defines the status, privileges and obligations Section 31. Report of Transfer of Ownership. - The owner/operator of a registered fishing vessel shall
of said vessel and its crew and the non-Filipino officials of the international agency under which said notify the Department in writing of the transfer of the ownership of the vessel with a copy of such
vessel operates: Provided, further, That members of the crew of a fishing vessel used for commercial document within ten (10) days after its transfer to another person.
fishing except the duly licensed and/or authorized patrons, marine engineers, radio operators and
cooks shall be considered as fisherfolk: Provided, furthermore, That all skippers/master fishers shall
Section 32. Fishing by Philippine Commercial Fishing Fleet in International Waters. - Fishing vessels
be required to undertake an orientation training on detection of fish caught by illegal means before
of Philippine registry may operate in international waters or waters of other countries which allow
they can be issued their fishworker licenses: Provided, finally, That the large commercial fishing
such fishing operations: Provided, That they comply with the safety, manning and other requirements
vessels license herein authorized to be granted shall allow the licensee to operate only in Philippine
of the Philippine Coast Guard, Maritime Industry Authority and other agencies concerned: Provided,
waters seven (7) or more fathoms deep, the depth to be certified by the NAMRIA, and subject to the
however, That they secure an international fishing permit and certificate of clearance from the
conditions that may be stated therein and the rules and regulations that may be promulgated by the
Department: Provided, further, That the fish caught by such vessels shall be considered as caught in
Department.
Philippine waters and therefore not subject to all import duties and taxes only when the same is
landed in duly designated fish landings and fish ports in the Philippines: Provided, furthermore, That
Section 27. Persons Eligible for Commercial Fishing Vessel License. - No commercial fishing vessel landing ports established by canneries, seafood processors and all fish landing sites established prior
license shall be issued except to citizens of the Philippines, partnerships or to associations, to the effectivity of this Code shall be considered authorized landing sites: Provided, finally, That
cooperatives or corporations duly registered in the Philippines at least sixty percent (60%) of the fishworkers on board Philippine registered fishing vessels conducting fishing activities beyond the
capital stock of which is owned by Filipino citizens. No person to whom a license has been issued shall Philippine Exclusive Economic Zone are not considered as overseas Filipino workers.
sell, transfer or assign, directly or indirectly, his stock or interest therein to any person not qualified to
hold a license. Any such transfer, sale or assignment shall be null and void and shall not be registered
Section 33. Importation of Fishing Vessels or Construction of New Fishing Boats. - Prior to the
in the books of the association, cooperative or corporation.
importation of fishing vessels and the construction of new fishing vessels, the approval/clearance of
the Department must first be obtained.
For purposes of commercial fishing, fishing vessels owned by citizens of the Philippines, partnerships,
corporations, cooperatives or associations qualified under this section shall secure Certificates of
Section 34. Incentives for Municipal and Small-Scale Commercial Fisherfolk. - Municipal and small-
Philippine Registry and such other documents as are necessary for fishing operations from the
scale commercial fisherfolk shall be granted incentives which shall include, but are not limited to, the
concerned agencies: Provided, That the commercial fishing vessel license shall be valid for a period to
following:
be determined by the Department.
(a) at least ten percent (10%) of the credit and the guarantee funds of government financing
Section 28. Commercial Fishing Vessel Registration. - The registration, documentation, inspection
institutions shall be made available for post-harvest and marketing projects for the purpose
and manning of the operation of all types of fishing vessels plying Philippine waters shall be in
of enhancing our fisherfolk competitiveness by reducing post-harvest losses. Qualified
accordance with laws, rules and regulations.
projects shall include, but shall not be limited to, ice plants, cold storage, canning,
warehouse, transport and other related infrastructure projects and facilities; and
Section 29. Registration and Licensing of Fishing Gears Used in Commercial Fishing. - Before a
commercial fishing vessel holding a commercial fishing vessel license may begin fishing operations in
(b) the Department shall undertake the following programs:
Philippine waters, the fishing gear it will utilize in fishing shall be registered and a license granted
therefor. The Department shall promulgate guidelines to implement this provision within sixty (60)
1. a capability-building program for targeted parties shall be developed by the
days from approval of this Code.
Department to promote greater bankability and credit worthiness of municipal and
small-scale commercial fishers. Such program shall include organizing activities,
technology transfer, and skills training related to commercial fishing as well as credit
 management. Groups and cooperatives organized under the program shall have
priority access over credit and guarantee funds established under this Code; and
2. an information campaign shall be conducted to promote the capability building
and credit programs. The campaign shall ensure greater information dissemination
and accessibility to targeted fisherfolk.
Section 35. Incentives for Commercial Fishers to Fish Farther into the Exclusive Economic Zone. - In
order to encourage fishing vessel operators to fish farther in the EEZ and beyond, new incentives for
improvement of fishing vessels and acquisition of fishing equipment shall be granted in addition to
incentives already available from the Board of Investments (BOI). Such incentives shall be granted
subject to exhaustive evaluation of resource and exploitation conditions in the specified areas of
fishing operations. The incentive shall include, but not be limited to:
(a) long term loans supported by guarantee facilities to finance the building and acquisition
and/or improvement of fishing vessels and equipment;
(b) commercial fishing vessel operators of Philippine registry shall enjoy a limited period of
tax and duty exemptions on the importation of fishing vessels not more than five (5) years
old, equipment and paraphernalia, the period of exemption and guidelines shall be fixed by
the Department within ninety (90) days from the effectivity of this Code;
(c) commercial fishing operator of Philippine registry engaged in fisheries in the high seas
shall be entitled to duty and tax rebates on fuel consumption for commercial fisheries
operations. Guidelines shall be promulgated within ninety (90) days from the effectivity of
this Code by the Department; and
(d) all applicable incentives available under the Omnibus Investment Code of 1987: Provided,
That the fishing operation project is qualified for registration and is duly registered with the
BOI.
Section 36. Complement of Fishing Vessels. - Every commercial fishing vessel of Philippine registry
when actually operated, shall be manned in accordance with the requirements of the Philippine
Merchant Marine rules and regulations.
Section 37. Medical Supplies and Life-Saving Devices. - All fishing vessels shall be provided with
adequate medical supplies and life-saving devices to be determined by the Occupational Safety and
Health Center: Provided, That a fishing vessel of twenty (20) GT or more shall have as a member of its
crew a person qualified as a first aider duly certified by the Philippine National Red Cross.
Section 38. Reportorial Requirements. - Each commercial fishing vessel shall keep a daily record of
fish catch and spoilage, landing points, and quantity and value of fish caught, and off-loaded for
transshipment, sale and/or other disposal. Detailed information shall be duly certified by the vessel's
captain and transmitted monthly to the officer or representative of the Department, at the nearest
designated landing point.
Section 39. Report of Meteorological and Other Data. - All vessels and crafts passing navigational
lanes or engaged in fisheries activity shall be required to contribute to meteorological and other data,
and shall assist the Department in documentation or reporting of information vital to navigation and
the fishing industry.
Section 40. Color Code and Radio Frequency. - For administrative efficiency and enforcement of
regulations, registered fishing vessels shall bear a color code as may be determined by the
Department and may be assigned a radio frequency specific and distinct to its area of operation.
Section 41. Passage. - Commercial and other passage not in the regular conduct of fisheries activity
shall be made at designated navigational lanes.
Section 42. Transshipment. - Foreign fishing vessels wishing to avail of land, air and sea facilities
available in the Philippines to transport fishery products which are caught outside Philippine
territorial waters to its final destination shall call only at duly designated government-owned or
-controlled regional fishport complexes after securing clearance from the Department.
Section 43. Operation of Radio Communication Facilities on Board Fishing Vessels. - The Department
shall promulgate guidelines in the operation of radio communication facilities on board fishing vessels
and the assignment of radio frequencies specific and distinct to area of operation in coordination with
the National Telecommunications Commission.
Section 44. Use of Superlight. - The number and wattage of superlights used in commercial fishing
vessels shall be regulated by the Department: Provided, That the use of superlights is banned within
municipal waters and bays.
ARTICLE III
AQUACULTURE
Section 45. Disposition of Public Lands for Fishery Purposes. - Public lands such as tidal swamps,
mangroves, marshes, foreshore lands and ponds suitable for fishery operations shall not be disposed
or alienated. Upon effectivity of this Code, FLA may be issued for public lands that may be declared
available for fishpond development primarily to qualified fisherfolk cooperatives/associations:
Provided, however, That upon the expiration of existing FLAs the current lessees shall be given priority
and be entitled to an extension of twenty-five (25) years in the utilization of their respective leased
areas. Thereafter, such FLAs shall be granted to any Filipino citizen with preference, primarily to
qualified fisherfolk cooperatives/associations as well as small and medium enterprises as defined
under Republic Act No. 8289: Provided, further, That the Department shall declare as reservation,
portions of available public lands certified as suitable for fishpond purposes for fish sanctuary,
conservation, and ecological purposes: Provided, finally, That two (2) years after the approval of this
Act, no fish pens or fish cages or fish traps shall be allowed in lakes.
Section 46. Lease of Fishponds. - Fishpond leased to qualified persons and fisherfolk
organizations/cooperatives shall be subject to the following conditions:
(a) Areas leased for fishpond purposes shall be no more than 50 hectares for individuals and
250 hectares for corporations or fisherfolk organizations;
(b) The lease shall be for a period of twenty-five (25) years and renewable for another
twenty-five (25) years: Provided, That in case of the death of the lessee, his spouse and/or
children, as his heirs, shall have preemptive rights to the unexpired term of his Fishpond
Lease Agreement subject to the same terms and conditions provided herein provided that
the said heirs are qualified;
(c) Lease rates for fishpond areas shall be determined by the Department: Provided, That all
fees collected shall be remitted to the National Fisheries Research and Development Institute
and other qualified research institutions to be used for aquaculture research development;
(d) The area leased shall be developed and producing on a commercial scale within three (3)
years from the approval of the lease contract: Provided, however, That all areas not fully
producing within five (5) years from the date of approval of the lease contract shall
automatically revert to the public domain for reforestation;
(e) The fishpond shall not be subleased, in whole or in part, and failure to comply with this
provision shall mean cancellation of FLA;
(f) The transfer or assignment of rights to FLA shall be allowed only upon prior written
approval of the Department;
(g) The lessee shall undertake reforestation for river banks, bays, streams, and seashore
fronting the dike of his fishpond subject to the rules and regulations to be promulgated
thereon; and
(h) The lessee shall provide facilities that will minimize environmental pollution, i.e., settling
ponds, reservoirs, etc: Provided, That failure to comply with this provision shall mean
cancellation of FLA.
Section 47. Code of Practice for Aquaculture. - The Department shall establish a code of practice for
aquaculture that will outline general principles and guidelines for environmentally-sound design and
operation to promote the sustainable development of the industry. Such Code shall be developed
through a consultative process with the DENR, the fishworkers, FLA holders, fishpond owners,
fisherfolk cooperatives, small-scale operators, research institutions and the academe, and other
potential stakeholders. The Department may consult with specialized international organizations in
the formulation of the code of practice.
Section 48. Incentives and Disincentives for Sustainable Aquaculture Practices. - The Department
shall formulate incentives and disincentives, such as, but not limited to, effluent charges, user fees
and negotiable permits, to encourage compliance with the environmental standards and to promote
sustainable management practices.
Section 49. Reversion of All Abandoned, Undeveloped or Underutilized Fishponds. - The DENR, in
coordination with the Department, LGUs, other concerned agencies and FARMCs shall determine
which abandoned, underdeveloped or underutilized fishponds covered by FLAs can be reverted to
their original mangrove state and after having made such determination shall take all steps necessary
to restore such areas in their original mangrove state.
Section 50. Absentee Fishpond Lease Agreement Holders. - Holders of fishpond lease agreements
who have acquired citizenship in another country during the existence of the FLA shall have their
lease automatically cancelled and the improvements thereon to be forfeited in favor of the
government and disposed of in accordance with rules and regulations promulgated thereon.
Section 51. License to Operate Fish Pens, Fish Cages, Fish Traps and Other Structures for the Culture
of Fish and Other Fishery Products. - Fish pens, fish cages, fish traps and other structures for the
culture of fish and other fishery products shall be constructed and shall operate only within
established zones duly designated by LGUs in consultation with the FARMCs concerned consistent
with national fisheries policies after the corresponding licenses thereof have been secured. The area
to be utilized for this purpose for individual person shall be determined by the LGUs in consultation
with the concerned FARMC: Provided, however, That not over ten percent (10%) of the suitable water
surface area of all lakes and rivers shall be allotted for aquaculture purposes like fish pens, fish cages
and fish traps; and the stocking density and feeding requirement which shall be controlled and
determined by its carrying capacity: Provided, further, That fish pens and fish cages located outside
municipal waters shall be constructed and operated only within fish pen and fish cage belts
designated by the Department and after corresponding licenses therefor have been secured and the
fees thereof paid.
Section 52. Pearl Farm Leases. - The foregoing provisions notwithstanding, existing pearl farm leases
shall be respected and allowed to operate under the terms thereof. New leases may be granted to
qualified persons who possess the necessary capital and technology, by the LGUs having jurisdiction
over the area.
Section 53. Grant of Privileges for Operations of Fish Pens, Cages, Corrals/Traps and Similar
Structures. - No new concessions, licenses, permits, leases and similar privileges for the establishment
or operation of fish pens, fish cages, fish corrals/traps and other similar structures in municipal areas
shall be granted except to municipal fisherfolk and their organizations.
Section 54. Insurance for Fishponds, Fish Cages and Fish Pens. - Inland fishponds, fish cages and fish (d) development of domestic fishmeal industry;
pens shall be covered under the insurance program of the Philippine Crop Insurance Corporation for
losses caused by force majeure and fortuitous events. (e) development of fisheries ship-building and repair as a viable industry;

Section 55. Non-Obstruction to Navigation. - Nothing in the foregoing sections shall be construed as (f) development and strengthening of marketing facilities and activities, including the pricing
permitting the lessee, licensee, or permittee to undertake any construction which will obstruct the system, with emphasis on collective marketing and the elimination of middlemen;
free navigation in any stream, river, lakes, or bays flowing through or adjoining the fish pens, fish
cages, fish traps and fishponds, or impede the flow of the tide to and from the area. Any construction (g) increased participation of cooperatives and non-governmental organizations in post-
made in violation hereof shall be removed upon the order of the Department in coordination with the harvest operations and ancillary industries; and
other government agencies concerned at the expense of the lessee, licensee, or occupants thereof,
whenever applicable. The Department shall within thirty (30) days after the effectivity of this Code
(h) integration of fisheries post-harvest operations into the national fisheries plan.
formulate and implement rules and regulations for the immediate dismantling of existing obstruction
to navigation.
Section 59. Establishment of Post-Harvest Facilities for Fishing Communities. - The LGUs shall
coordinate with the private sector and other concerned agencies and FARMCs in the establishment of
Section 56. Non-Obstruction to Defined Migration Paths. - Nothing in the foregoing sections shall be
post-harvest facilities for fishing communities such as, but not limited to, municipal fish landing sites,
construed as permitting the lessee, permittee, or licensee to undertake any construction which will
fish ports, ice plants and cold storage and other fish processing establishments to serve primarily the
obstruct any defined migration path of migratory fish species such as river mouths and estuaries with
needs of municipal fisherfolk: Provided, That such post-harvest facilities shall be consistent with the
a distance determined by the concerned LGUs in consultation with and upon the recommendation of
Comprehensive Post-harvest and Ancillary Industries Plan.
the FARMCs.
Section 60. Registration and Licensing of all Post-Harvest Facilities. - All post-harvest facilities such as
Section 57. Registration of Fish Hatcheries and Private Fishponds, etc. - All fish hatcheries, fish
fish processing plants, ice plants, and cold storages, fish ports/landings and other fishery business
breeding facilities and private fishponds must be registered with the LGUs which shall prescribe
establishments must register with and be licensed by the LGUs which shall prescribe minimum
minimum standards for such facilities in consultation with the Department: Provided, That the
standards for such facilities in consultation with the Department.
Department shall conduct a yearly inventory of all fishponds, fish pens and fish cages whether in
public or private lands: Provided, further, That all fishpond, fish pens and fish cage operators shall
Section 61. Importation and Exportation of Fishery Products. -
annually report to the Department the type of species and volume of production in areas devoted to
aquaculture.
(a) Export of fishery products shall be regulated whenever such exportation affects domestic
food security and production: Provided, That exportation of live fish shall be prohibited
ARTICLE IV
except those which are hatched or propagated in accredited hatcheries and ponds;
POST-HARVEST FACILITIES, ACTIVITIES AND TRADES

(b) To protect and maintain the local biodiversity or ensure the sufficiency of domestic
Section 58. Comprehensive Post-harvest and Ancillary Industries Plan. - The Department shall
supply, spawners, breeders, eggs and fry of bangus, prawn and other endemic species, as
conduct a regular study of fisheries post-harvest operations and ancillary industries, in the
may be determined by the Department, shall not be exported or caused to be exported by
formulation of a comprehensive plan for post-harvest and ancillary industries. It shall take into
any person;
account among others, the following:

(c) Fishery products may be imported only when the importation has been certified as
(a) detailed and clear guidelines on the distribution, construction, maintenance and use of
necessary by the Department in consultation with the FARMC, and all the requirements of
post-harvest infrastructure facilities;
this Code, as well as all existing rules and regulations have been complied with: Provided,
That fish imports for canning/processing purposes only may be allowed without the
(b) extension of credit and incentives for post-harvest operations;
necessary certification, but within the provisions of Section 61(d) of this Code; and

(c) promotion and strengthening of semi-processing, processing and handling;

 (d) No person, shall import and/or export fishery products of whatever size, stage or form for
any purpose without securing a permit from the Department.
The Department in consultation with the FARMC shall promulgate rules and regulations on
importation and exportation of fish and fishery/aquatic resources with the Government's
export/import simplification procedures.
Section 62. Instruments of Weights and Measures, and Quality Grades/Standards. - Standards for
weights, volume and other measurements for all fishery transactions shall be set by the Department.
All fish and fishery products for export, import and domestic consumption shall meet the quality
grades/standards as determined by the Department.
The LGU concerned shall, by appropriate ordinance, penalize fraudulent practices and unlawful
possession or use of instruments of weights and measures.
CHAPTER III
Reconstitution of The Bureau of Fisheries and Aquatic Resources and Creation of Fisheries and
Aquatic Resources Management Councils
ARTICLE I
RECONSTITUTION OF THE BUREAU OF FISHERIES AND AQUATIC RESOURCES
Section 63. Creation of the Position of Undersecretary for Fisheries and Aquatic Resources. - There is
hereby created in the Department of Agriculture the position of Undersecretary for Fisheries and
Aquatic Resources, solely for the purpose of attending to the needs of the fishing industry, to be
appointed by the President. Such Undersecretary shall have the following functions:
(a) set policies and formulate standards for the effective, efficient and economical operations
of the fishing industry in accordance with the programs of the government;
(b) exercise overall supervision over all functions and activities of all offices and
instrumentalities and other offices related to fisheries including its officers;
(c) establish, with the assistance of the director, such regional, provincial and other fishery
officers as may be necessary and appropriate and organize the internal structure of BFAR in
such manner as is necessary for the efficient and effective attainment of its objectives and
purposes; and
(d) perform such other functions as may be necessary or proper to attain the objectives of
this Code.
Section 64. Reconstitution of the BFAR. - The Bureau of Fisheries and Aquatic Resources (BFAR) is
hereby reconstituted as a line bureau under the Department of Agriculture.
Section 65. Functions of the Bureau of Fisheries and Aquatic Resources. - As a line bureau, the BFAR
shall have the following functions:
(a) prepare and implement a Comprehensive National Fisheries Industry Development Plan;
(b) issue licenses for the operation of commercial fishing vessels;
(c) issue identification cards free of charge to fishworkers engaged in commercial fishing;
(d) monitor and review joint fishing agreements between Filipino citizens and foreigners who
conduct fishing activities in international waters, and ensure that such agreements are not
contrary to Philippine commitment under international treaties and convention on fishing in
the high seas;
(e) formulate and implement a Comprehensive Fishery Research and Development Program,
such as, but not limited to, sea farming, sea ranching, tropical/ornamental fish and seaweed
culture, aimed at increasing resource productivity, improving resource use efficiency, and
ensuring the long-term sustainability of the country's fishery and aquatic resources;
(f) establish and maintain a Comprehensive Fishery Information System;
(g) provide extensive development support services in all aspects of fisheries production,
processing and marketing;
(h) provide advisory services and technical assistance on the improvement of quality of fish
from the time it is caught (i.e. on board fishing vessel, at landing areas, fish markets, to the
processing plants and to the distribution and marketing chain);
(i) coordinate efforts relating to fishery production undertaken by the primary fishery
producers, LGUs, FARMCs, fishery and organizations/cooperatives;
(j) advise and coordinate with LGUs on the maintenance of proper sanitation and hygienic
practices in fish markets and fish landing areas;
(k) establish a corps of specialists in collaboration with the Department of National Defense,
Department of the Interior and Local Government, Department of Foreign Affairs for the
efficient monitoring, control and surveillance of fishing activities within Philippine territorial
waters and provide the necessary facilities, equipment and training therefor;
 (l) implement an inspection system for import and export of fishery/aquatic products and
fish processing establishments, consistent with international standards to ensure product
quality and safety;
(m) coordinate with LGUs and other concerned agencies for the establishment of
productivity enhancing and market development programs in fishing communities to enable
women to engage in other fisheries/economic activities and contribute significantly to
development efforts;
(n) enforce all laws, formulate and enforce all rules and regulations governing the
conservation and management of fishery resources, except in municipal waters, and to settle
conflicts of resource use and allocation in consultation with the NFARMC, LGUs and local
FARMCs;
(o) develop value-added fishery-products for domestic consumption and export;lawphi1™
(p) recommend measures for the protection/enhancement of the fishery industries;
(q) assist the LGUs in developing their technical capability in the development, management,
regulation, conservation, and protection of the fishery resources;
(r) formulate rules and regulations for the conservation and management of straddling fish
stocks and highly migratory fish stocks; and
(s) perform such other related functions which shall promote the development,
conservation, management, protection and utilization of fisheries and aquatic resources.
Section 66. Composition of BFAR. - As a line bureau, the BFAR shall be headed by a Director and
assisted by two (2) Assistant Directors who shall supervise the administrative and technical services of
the bureau respectively. It shall establish regional, provincial and municipal offices as may be
appropriate and necessary to carry out effectively and efficiently the provisions of this Code.
Section 67. Fisheries Inspection and Quarantine Service. - For purposes of monitoring and regulating
the importation and exportation of fish and fishery/aquatic resources, the Fisheries Inspection and
Quarantine Service in the BFAR is hereby strengthened and shall have the following functions:
(a) conduct fisheries quarantine and quality inspection of all fish and fishery/aquatic
products coming into and going out of the country by air or water transport, to detect the
presence of fish pest and diseases and if found to harbor fish pests or diseases shall be
confiscated and disposed of in accordance with environmental standards and practices;
(b) implement international agreements/commitments on bio-safety and bio-diversity as well
as prevent the movement or trade of endemic fishery and aquatic resources to ensure that
the same are not taken out of the country;
(c) quarantine such aquatic animals and other fishery products determined or suspected to
be with fishery pests and diseases and prevent the movement or trade from and/or into the
country of these products so prohibited or regulated under existing laws, rules and
regulations as well as international agreements of which the Philippines is a State Party;
(d) examine all fish and fishery products coming into or going out of the country which may
be a source or medium of fish pests or diseases and/or regulated by existing fishery
regulations and ensure that the quality of fish import and export meet international
standards; and
(e) document and authorize the movement or trade of fish and fishery products when found
free of fish pests or diseases and collect necessary fees prescribed by law and regulations.
ARTICLE II
THE FISHERIES AND AQUATIC RESOURCES MANAGEMENT COUNCILS (FARMCs)
Section 68. Development of Fisheries and Aquatic Resources in Municipal Waters and Bays. -
Fisherfolk and their organizations residing within the geographical jurisdiction of the barangays,
municipalities or cities with the concerned LGUs shall develop the fishery/aquatic resources in
municipal waters and bays.
Section 69. Creation of Fisheries and Aquatic Resources Management Councils (FARMCs). - FARMCs
shall be established in the national level and in all municipalities/cities abutting municipal waters as
defined by this Code. The FARMCs shall be formed by fisherfolk organizations/cooperatives and NGOs
in the locality and be assisted by the LGUs and other government entities. Before organizing FARMCs,
the LGUs, NGOs, fisherfolk, and other concerned POs shall undergo consultation and orientation on
the formation of FARMCs.
Section 70. Creation and Composition of the National Fisheries and Aquatic Resources Management
Council (NFARMC). - There is hereby created a National Fisheries and Aquatic Resources Management
Council hereinafter referred to as NFARMC as an advisory/recommendatory body to the Department.
The NFARMC shall be composed of fifteen (15) members consisting of:
(a) the Undersecretary of Agriculture, as Chairman;
(b) the Undersecretary of the Interior and Local Government;
(c) five (5) members representing the fisherfolk and fishworkers;
 (d) five (5) members representing commercial fishing and aquaculture operators and the
processing sectors;
(e) two (2) members from the academe; and
(f) one (1) representative of NGOs involved in fisheries.
The members of the NFARMC, except for the Undersecretary of Agriculture and the Undersecretary of
the Interior and Local Government, shall be appointed by the President upon the nomination of their
respective organizations.
Section 71. Terms of Office. - The members of NFARMC, except the Undersecretary of Agriculture and
the Undersecretary of the Interior and Local Government, shall serve for a term of three (3) years
without reappointment.
Section 72. Functions of the NFARMC. - The NFARMC shall have the following functions:
(a) assist in the formulation of national policies for the protection, sustainable development
and management of fishery and aquatic resources for the approval of the Secretary;
(b) assist the Department in the preparation of the National Fisheries and Industry
Development Plan; and
(c) perform such other functions as may be provided by law.
Section 73. The Municipal/City Fisheries and Aquatic Resources Management Councils
(M/CFARMCs). - The M/CFARMCs shall be created in each of the municipalities and cities abutting
municipal waters. However, the LGU may create the Barangay Fisheries and Aquatic Resources
Management Councils (BFARMCs) and the Lakewide Fisheries and Aquatic Resources Management
Councils (LFARMCs) whenever necessary. Such BFARMCs and LFARMCs shall serve in an advisory
capacity to the LGUs.
Section 74. Functions of the M/CFARMCs. - The M/CFARMCs shall exercise the following functions:
(a) assist in the preparation of the Municipal Fishery Development Plan and submit such plan
to the Municipal Development Council;
(b) recommend the enactment of municipal fishery ordinances to the sangguniang
bayan/sangguniang panlungsod through its Committee on Fisheries;
(c) assist in the enforcement of fishery laws, rules and regulations in municipal waters;
(d) advise the sangguniang bayan/panlungsod on fishery matters through its Committee on
Fisheries, if such has been organized; and
(e) perform such other functions which may be assigned by the sangguniang
bayan/panlungsod.
Section 75. Composition of the M/CFARMC . - The regular member of the M/CFARMCs shall be
composed of:
(a) Municipal/City Planning Development Officer;
(b) Chairperson, Agriculture/Fishery Committee of the Sangguniang Bayan/Panlungsod;
(c) representative of the Municipal/City Development Council;
(d) representative from the accredited non-government organization;
(e) representative from the private sector;
(f) representative from the Department of Agriculture; and
(g) at least eleven (11) fisherfolk representatives (seven (7) municipal fisherfolk, one (1)
fishworker and three (3) commercial fishers) in each municipality/city which include
representative from youth and women sector.
The Council shall adopt rules and regulations necessary to govern its proceedings and election.
Section 76. The Integrated Fisheries and Aquatic Resources Management Councils (IFARMCs). - The
IFARMCs shall be created in bays, gulfs, lakes and rivers and dams bounded by two (2) or more
municipalities/cities.
Section 77. Functions of the IFARMCs. - The IFARMC shall have the following functions:
(a) assist in the preparation of the Integrated Fishery Development Plan and submit such
plan to the concerned Municipal Development Councils;
(b) recommend the enactment of integrated fishery ordinances to the concerned
sangguniang bayan/panlungsod through its Committee on Fisheries, if such has been
organized;
(c) assist in the enforcement of fishery laws, rules and regulations in concerned municipal
waters;
 (d) advice the concerned sangguniang bayan/panlungsod on fishery matters through its
Committee on Fisheries, if such has been organized; and
(e) perform such other functions which may be assigned by the concerned sangguniang
bayan/panlungsod.
Section 78. Composition of the IFARMCs. - The regular members of the IFARMCs shall be composed
of the following:
(a) the chairperson of the Committee on Agriculture/Fisheries of the concerned sangguniang
bayan/panlungsod;
(b) the Municipal/City Fisheries Officers of the concerned municipalities/cities;
(c) the Municipal/City Development Officers of the concerned municipalities/cities;
(d) one (1) representative from NGO;
(e) one (1) representative from private sector; and
(f) at least nine (9) representatives from the fisherfolk sector which include representatives
from the youth and women sector.
The Council shall adopt rules and regulations necessary to govern its proceedings and election.
Section 79. Source of Funds of the FARMCs. - A separate fund for the NFARMC, IFARMCs and
M/CFARMCs shall be established and administered by the Department from the regular annual
budgetary appropriations.
CHAPTER IV
Fishery Reserves, Refuge and Sanctuaries
Section 80. Fishing Areas Reserves for Exclusive Use of Government. - The Department may
designate area or areas in Philippine waters beyond fifteen (15) kilometers from shoreline as fishery
reservation for the exclusive use of the government or any of its political subdivisions, agencies or
instrumentalities, for propagation, educational, research and scientific purposes: Provided, That in
municipalities or cities, the concerned LGUs in consultation with the FARMCs may recommend to the
Department that portion of the municipal waters be declared as fishery reserves for special or limited
use, for educational, research, and/or special management purposes. The FARMCs may recommend
to the Department portions of the municipal waters which can be declared as fisheries reserves for
special or limited use for educational, research and special management purposes.
Section 81. Fish Refuge and Sanctuaries. - The Department may establish fish refuge and sanctuaries
to be administered in the manner to be prescribed by the BFAR at least twenty-five percent (25%) but
not more than forty percent (40%) of bays, foreshore lands, continental shelf or any fishing ground
shall be set aside for the cultivation of mangroves to strengthen the habitat and the spawning
grounds of fish. Within these areas no commercial fishing shall be allowed. All marine fishery
reserves, fish sanctuaries and mangrove swamp reservations already declared or proclaimed by the
President or legislated by the Congress of the Philippines shall be continuously administered and
supervised by the concerned agency: Provided, however, That in municipal waters, the concerned LGU
in consultation with the FARMCs may establish fishery refuge and sanctuaries. The FARMCs may also
recommend fishery refuge and sanctuaries: Provided, further, That at least fifteen percent (15%)
where applicable of the total coastal areas in each municipality shall be identified, based on the best
available scientific data and in consultation with the Department, and automatically designated as fish
sanctuaries by the LGUs in consultation with the concerned FARMCs.
CHAPTER V
Fisheries Research and Development
Section 82. Creation of a National Fisheries Research and Development Institute (NFRDI). - In
recognition of the important role of fisheries research in the development, management,
conservation and protection of the country's fisheries and aquatic resources, there is hereby created a
National Fisheries Research and Development Institute (NFRDI).
The Institute shall form part of the National Research and Development Network of the Department
of Science and Technology (DOST).
The Institute, which shall be attached to the Department shall serve as the primary research arm of
the BFAR. The overall governance of the Institute shall be vested in the Governing Board which shall
formulate policy guidelines for its operation. The plans, programs and operational budget shall be
passed by the Board. The Board may create such committees as it may deem necessary for the proper
and effective performance of its functions. The composition of the Governing Board shall be as
follows:
(a) Undersecretary for Fisheries - Chairman
(b) BFAR Director - Vice Chairman
(c) NFRDI Executive Director - Member
(d) PCAMRD Executive Director - Member
(e) Representative from the academe - Member
 (f) four (4) representatives from the private sector who shall come from the following
subsectors: - Members
 Municipal Fisherfolk
 Commercial Fishing Operator
 Aquaculture Operator
 Post-Harvest/Processor
The NFRDI shall have a separate budget specific to its manpower requirements and operations to
ensure the independent and objective implementation of its research activities.
Section 83. Qualification Standard. - The Institute shall be headed by an Executive Director to be
appointed by the President of the Philippines upon the recommendation of the governing board. The
Executive Director shall hold a Doctorate degree in fisheries and/or other related disciplines. The
organizational structure and staffing pattern shall be approved by the Department: Provided,
however, That the staffing pattern and remunerations for scientific and technical staff shall be based
on the qualification standards for science and technology personnel.
Section 84. Research and Development Objectives. - Researches to be done by the NFRDI are
expected to result in the following:
(a) To raise the income of the fisherfolk and to elevate the Philippines among the top five (5)
in the world ranking in the fish productions;
(b) to make the country's fishing industry in the high seas competitive;
(c) to conduct social research on fisherfolk families for a better understanding of their
conditions and needs; and
(d) to coordinate with the fisheries schools, LGUs and private sectors regarding the maximum
utilization of available technology, including the transfer of such technology to the industry
particularly the fisherfolk.
Section 85. Functions of the NFRDI . - As a national institute, the NFRDI shall have the following
functions:
(a) establish a national infrastructure unit complete with technologically-advanced features
and modern scientific equipment, which shall facilitate, monitor, and implement various
research needs and activities of the fisheries sector;
(b) provide a venue for intensive training and development of human resources in the field of
fisheries, a repository of all fisheries researches and scientific information;
(c) provide intensive training and development of human resources in the field of fisheries
for the maximum utilization of available technology;
(d) hasten the realization of the economic potential of the fisheries sector by maximizing
developmental research efforts in accordance with the requirements of the national fisheries
conservations and development programs, also possibly through collaborative effort with
international institutions; and
(e) formally establish, strengthen and expand the network of fisheries-researching
communities through effective communication linkages nationwide.
CHAPTER VI
Prohibitions and Penalties
Section 86. Unauthorized Fishing or Engaging in Other Unauthorized Fisheries Activities. - No person
shall exploit, occupy, produce, breed, culture, capture or gather fish, fry or fingerlings of any fishery
species or fishery products, or engage in any fishery activity in Philippine waters without a license,
lease or permit.
Discovery of any person in an area where he has no permit or registration papers for a fishing vessel
shall constitute a prima facie presumption that the person and/or vessel is engaged in unauthorized
fishing: Provided, That fishing for daily food sustenance or for leisure which is not for commercial,
occupation or livelihood purposes may be allowed.
It shall be unlawful for any commercial fishing vessel to fish in bays and in such other fishery
management areas which may hereinafter be declared as over-exploited.
Any commercial fishing boat captain or the three (3) highest officers of the boat who commit any of
the above prohibited acts upon conviction shall be punished by a fine equivalent to the value of catch
or Ten thousand pesos (P10,000.00) whichever is higher, and imprisonment of six (6) months,
confiscation of catch and fishing gears, and automatic revocation of license.
It shall be unlawful for any person not listed in the registry of municipal fisherfolk to engage in any
commercial fishing activity in municipal waters. Any municipal fisherfolk who commits such violation
shall be punished by confiscation of catch and a fine of Five hundred pesos (500.00).
Section 87. Poaching in Philippine Waters. - It shall be unlawful for any foreign person, corporation or
entity to fish or operate any fishing vessel in Philippine waters.
The entry of any foreign fishing vessel in Philippine waters shall constitute a prima facie evidence that
the vessel is engaged in fishing in Philippine waters.
Violation of the above shall be punished by a fine of One hundred thousand U.S. Dollars
(US$100,000.00), in addition to the confiscation of its catch, fishing equipment and fishing vessel:
Provided, That the Department is empowered to impose an administrative fine of not less than Fifty
thousand U.S. Dollars (US$50,000.00) but not more than Two hundred thousand U.S. Dollars
(US$200,000.00) or its equivalent in the Philippine Currency.
Section 88. Fishing Through Explosives, Noxious or Poisonous Substance, and/or Electricity. -
(1) It shall be unlawful for any person to catch, take or gather or cause to be caught, taken or
gathered, fish or any fishery species in Philippine waters with the use of electricity,
explosives, noxious or poisonous substance such as sodium cyanide in the Philippine fishery
areas, which will kill, stupefy, disable or render unconscious fish or fishery species: Provided,
That the Department, subject to such safeguards and conditions deemed necessary and
endorsement from the concerned LGUs, may allow, for research, educational or scientific
purposes only, the use of electricity, poisonous or noxious substances to catch, take or gather
fish or fishery species: Provided, further, That the use of poisonous or noxious substances to
eradicate predators in fishponds in accordance with accepted scientific practices and without
causing adverse environmental impact in neighboring waters and grounds shall not be
construed as illegal fishing.
It will likewise be unlawful for any person, corporation or entity to possess, deal in, sell or in
any manner dispose of, any fish or fishery species which have been illegally caught, taken or
gathered.
The discovery of dynamite, other explosives and chemical compounds which contain
combustible elements, or noxious or poisonous substances, or equipment or device for
electro-fishing in any fishing vessel or in the possession of any fisherfolk, operator, fishing
boat official or fishworker shall constitute prima facie evidence, that the same was used for
fishing in violation of this Code. The discovery in any fishing vessel of fish caught or killed
with the use of explosive, noxious or poisonous substances or by electricity shall constitute
prima facie evidence that the fisherfolk, operator, boat official or fishworker is fishing with
the use thereof.
(2) Mere possession of explosive, noxious or poisonous substances or electrofishing devices
for illegal fishing shall be punishable by imprisonment ranging from six (6) months to two (2)
years.
(3) Actual use of explosives, noxious or poisonous substances or electrofishing devices for
illegal fishing shall be punishable by imprisonment ranging from five (5) years to ten (10)
years without prejudice to the filing of separate criminal cases when the use of the same
result to physical injury or loss of human life.
(4) Dealing in, selling, or in any manner disposing of, for profit, illegally caught/gathered
fisheries species shall be punished by imprisonment ranging from six (6) months to two (2)
years.
(5) In all cases enumerated above, the explosives, noxious or poisonous substances and/or
electrical devices, as well as the fishing vessels, fishing equipment and catch shall be
forfeited.
Section 89. Use of Fine Mesh Net. - It shall be unlawful to engage in fishing using nets with mesh
smaller than that which may be fixed by the Department: Provided, That the prohibition on the use of
fine mesh net shall not apply to the gathering of fry, glass eels, elvers, tabios, and alamang and such
species which by their nature are small but already mature to be identified in the implementing rules
and regulations by the Department.
Violation of the above shall subject the offender to a fine from Two thousand pesos (P2,000.00) to
Twenty thousand pesos (P20,000.00) or imprisonment from six (6) months to two (2) years or both
such fine and imprisonment at the discretion of the court: Provided, That if the offense is committed
by a commercial fishing vessel, the boat captain and the master fisherman shall also be subject to the
penalties provided herein: Provided, further, That the owner/operator of the commercial fishing
vessel who violates this provision shall be subjected to the same penalties provided herein: Provided,
finally, That the Department is hereby empowered to impose upon the offender an administrative fine
and/or cancel his permit or license or both.
Section 90. Use of Active Gear in the Municipal Waters and Bays and Other Fishery Management
Areas. - It shall be unlawful to engage in fishing in municipal waters and in all bays as well as other
fishery management areas using active fishing gears as defined in this Code.
Violators of the above prohibitions shall suffer the following penalties:
(1) The boat captain and master fisherman of the vessels who participated in the violation
shall suffer the penalty of imprisonment from two (2) years to six (6) years;
(2) The owner/operator of the vessel shall be fined from Two thousand pesos (P2,000.00) to
Twenty thousand pesos (20,000.00) upon the discretion of the court.
If the owner/operator is a corporation, the penalty shall be imposed on the chief executive
officer of the Corporation.
If the owner/operator is a partnership the penalty shall be imposed on the managing partner.
(3) The catch shall be confiscated and forfeited.
Section 91. Ban on Coral Exploitation and Exportation. - It shall be unlawful for any person or
corporation to gather, possess, sell or export ordinary precious and semi-precious corals, whether raw
or in processed form, except for scientific or research purposes.
Violations of this provision shall be punished by imprisonment from six (6) months to two (2) years
and a fine from Two thousand pesos (P2,000.00) to Twenty thousand pesos (20,000.00), or both such
fine and imprisonment, at the discretion of the court, and forfeiture of the subject corals, including
the vessel and its proper disposition.
The confiscated corals shall either be returned to the sea or donated to schools and museums for
educational or scientific purposes or disposed through other means.
Section 92. Ban on Muro-Ami Other Methods and Gear Destructive to Coral Reefs and Other Marine
Habitat.- It shall be unlawful for any person, natural or juridical, to fish with gear method that
destroys coral reefs, seagrass beds, and other fishery marine life habitat as may be determined by the
Department. "Muro-Ami" and any of its variation, and such similar gear and methods that require
diving, other physical or mechanical acts to pound the coral reefs and other habitat to entrap, gather
or catch fish and other fishery species are also prohibited.
The operator, boat captain, master fisherman, and recruiter or organizer of fishworkers who violate
this provision shall suffer a penalty of two (2) years to ten (10) years imprisonment and a fine of not
less than One hundred thousand pesos (P100,000.00) to Five hundred thousand pesos (P500,000.00)
or both such fine and imprisonment, at the discretion of the court. The catch and gear used shall be
confiscated.
It shall likewise be unlawful for any person or corporation to gather, sell or export white sand, silica,
pebbles and any other substances which make up any marine habitat.
The person or corporation who violates this provision shall suffer a penalty of two (2) years to ten (10)
years imprisonment and a fine of not less than One hundred thousand pesos (P100,000.00) to Five
hundred thousand pesos (P500,000.00) or both such fine and imprisonment, at the discretion of the
court. The substance taken from its marine habitat shall be confiscated.
Section 93. Illegal Use of Superlights. - It shall be unlawful to engage in fishing with the use of
superlights in municipal waters or in violation of the rules and regulations which may be promulgated
by the Department on the use of superlights outside municipal waters.
Violations of this provision shall be punished by imprisonment from six (6) months to two (2) years or
a fine of Five thousand pesos (P5,000.00) per superlight, or both such fine and imprisonment at the
discretion of the courts. The superlight, fishing gears and vessel shall be confiscated.
Section 94. Conversion of Mangroves. - It shall be unlawful for any person to convert mangroves into
fishponds or for any other purposes.
Violation of the provision of this section shall be punished by imprisonment of six (6) years and one
(1) day to twelve (12) years and/or a fine of Eighty thousand pesos (P80,000.00): Provided, That if the
area requires rehabilitation or restoration as determined by the court, the offender should also be
required to restore or compensate for the restoration of the damage.
Section 95. Fishing in Overfished Area and During Closed Season. - It shall be unlawful to fish in
overfished area and during closed season.
Violation of the provision of this section shall be punished by imprisonment of six (6) months and one
(1) day to six (6) years and/or fine of Six thousand pesos (P6,000.00) and by forfeiture of the catch and
cancellation of fishing permit or license.
Section 96. Fishing in Fishery Reserves, Refuge and Sanctuaries. - It shall be unlawful to fish in fishery
areas declared by the Department as fishery reserves, refuge and sanctuaries.
Violation of the provision of this section shall be punished by imprisonment of two (2) years to six (6)
years and/or fine of Two thousand pesos (P2,000.00) to Twenty thousand pesos (P20,000.00) and by
forfeiture of the catch and the cancellation of fishing permit or license.
Section 97. Fishing Or Taking of Rare, Threatened or Endangered Species. - It shall be unlawful to fish
or take rare, threatened or endangered species as listed in the CITES and as determined by the
Department.
Violation of the provision of this section shall be punished by imprisonment of twelve (12) years to
twenty (20) years and/or a fine of One hundred and twenty thousand pesos (P120,000.00) and
forfeiture of the catch, and the cancellation of fishing permit.
Section 98. Capture of Sabalo and Other Breeders/Spawners. - It shall be unlawful for any person to
catch, gather, capture or possess mature milkfish or "sabalo" and such other breeders or spawners of
other fishery species as may be determined by the Department: Provided, That catching of "sabalo"
and other breeders/spawners for local breeding purposes or scientific or research purposes may be
allowed subject to guidelines to be promulgated by the Department.
Violation of the provision of this section shall be punished by imprisonment of six (6) months and one
(1) day to eight (8) years and/or a fine of Eighty thousand pesos (P80,000.00) and forfeiture of the
catch, and fishing equipment used and revocation of license.
Section 99. Exportation of Breeders, Spawners, Eggs or Fry. - Exportation of breeders, spawners, eggs
or fry as prohibited in this Code shall be punished by imprisonment of eight (8) years, confiscation of
the same or a fine equivalent to double the value of the same, and revocation of the fishing and/or
export license/permit.
Section 100. Importation or Exportation of Fish or Fishery Species. - Any importation or exportation
of fish or fisheries species in violation of this Code shall be punished by eight (8) years of
imprisonment, a fine of Eighty thousand pesos (P80,000.00) and destruction of live fishery species or
forfeiture of non-live fishery species in favor of the department for its proper disposition: Provided,
That violator of this provision shall be banned from being members or stock holders of companies
currently engaged in fisheries or companies to be created in the future, the guidelines for which shall
be promulgated by the Department.
Section 101. Violation of Catch Ceilings. - It shall be unlawful for any person to fish in violation of
catch ceilings as determined by the Department. Violation of the provision of this section shall be
punished by imprisonment of six (6) months and one (1) day to six (6) years and/or a fine of Fifty
thousand pesos (P50,000.00) and forfeiture of the catch, and fishing equipment used and revocation
of license.
Section 102. Aquatic Pollution. - Aquatic pollution, as defined in this Code shall be unlawful.
Violation of the provision of this section shall be punished by imprisonment of six (6) years and one
(1) day to twelve (12) years and/or a fine of Eighty thousand pesos (P80,000.00) plus an additional
fine of Eight thousand pesos (P8,000.00) per day until such violation ceases and the fines paid.
Section 103. Other Violations. - The following fisheries activities shall also be considered as a
violation of this Code:
(a) Failure to Comply with Minimum Safety Standards. - The owner and captain of a
commercial fishing vessel engaged in fishing who, upon demand by proper authorities, fails
to exhibit or show proof of compliance with the safety standards provided in this Code, shall
be immediately prevented from continuing with his fishing activity and escorted to the
nearest port or landing point. The license to operate the commercial fishing vessel shall be
suspended until the safety standard has been complied with.
(b) Failure to Conduct a Yearly Report on all Fishponds, Fish Pens and Fish Cages. - The FLA of
the holder who fails to render a yearly report shall be immediately cancelled: Provided, That
if the offender be the owner of the fishpond, fish pen or fish cage, he shall be subjected to
the following penalties: (1) first offense, a fine of Five hundred pesos (P500.00) per
unreported hectare; (2) subsequent offenses, a fine of One thousand pesos (1,000.00) per
unreported hectare.
(c) Gathering and Marketing of Shell Fishes. - It shall be unlawful for any person to take, sell,
transfer, or have in possession for any purpose any shell fish which is sexually mature or
below the minimum size or above the maximum quantities prescribed for the particular
species.
(d) Obstruction to Navigation or Flow and Ebb of Tide in any Stream, River, Lake or Bay. - It
shall be unlawful for any person who causes obstruction to navigation or flow or ebb of tide.
(e) Construction and Operation of Fish Corrals/Traps, Fish Pens and Fish Cages. - It shall be
unlawful to construct and operate fish corrals/traps, fish pens and fish cages without a
license/permit.
Subject to the provision of subparagraph (b) of this section, violation of the above-enumerated
prohibited acts shall subject the offender to a fine ranging from Two thousand pesos (P2,000.00) to
Ten thousand pesos (P10,000.00) or imprisonment from one (1) month and one (1) day to six (6)
months, or both such fine and imprisonment, upon the discretion of the court: Provided, That the
Secretary is hereby empowered to impose upon the offender an administrative fine of not more than
Ten thousand pesos (P10,000.00) or to cancel his permit or license, or to impose such fine and to
cancel his permit or license, in the discretion of the Secretary: Provided, further, That the Secretary, or
his duly authorized representative, and law enforcement agents are hereby empowered to impound
with the assistance of the Philippine Coast Guard, PNP-Maritime Command: Provided, finally, That any
person who unlawfully obstructs or delays the inspection and/or movement of fish and
fishery/aquatic products when such inspection and/or movement is authorized under this Code, shall
be subject to a fine of not more than Ten thousand pesos (P10,000.00) or imprisonment of not more
than two (2) years, or both such fine and imprisonment, upon the discretion of the court.
Every penalty imposed for the commission of an offense shall carry with it the forfeiture of the
proceeds of such offense and the instruments or tools with which it was committed.
Such proceeds and instruments or tools shall be confiscated and forfeited in favor of the Government,
unless they be the property of a third person not liable for the offense, but those articles which are
not subject of lawful commerce shall be destroyed.
Section 104. Commercial Fishing Vessel Operators Employing Unlicensed Fisherfolk or Fishworker or
Crew.- The owner/operator of a commercial fishing vessel employing unlicensed fisherfolk or
fishworker shall be fined Five hundred pesos (P500.00) each for every month that the same has been
employed and/or One thousand pesos (P1,000.00) for every month for each unlicensed crew member
who has been employed.
Section 105. Obstruction of Defined Migration Paths. - Obstruction of any defined migration paths of
anadromous, catadromous and other migratory species, in areas including, but not limited to river
mouths and estuaries within a distance determined by the concerned FARMCs shall be punished by
imprisonment of seven (7) years to twelve (12) years or a fine from Fifty thousand pesos (P50,000.00)
to One hundred thousand pesos (P100,000.00)or both imprisonment and fine at the discretion of the
court, and cancellation of permit/license, if any, and dismantling of obstruction shall be at his own
expense and confiscation of same.
Section 106. Obstruction to Fishery Law Enforcement Officer. - The boat owner, master or operator or
any person acting on his behalf of any fishing vessel who evades, obstructs or hinders any fishery law
enforcement officer of the Department to perform his duty, shall be fined Ten thousand pesos
(P10,000.00). In addition, the registration, permit and/or license of the vessel including the license of
the master fisherman shall be canceled.
Section 107. Promulgation of Administrative Orders. - For purposes of fishery regulation or other
fishery adjustments, the Department in consultation with the LGUs and local FARMCs, shall issue
Fishery Administrative Orders or regulations for the conservation, preservation, management and
sustainable development of fishery and aquatic resources.
CHAPTER VII
General Provisions
Section 108. Fisherfolk Settlement Areas. - The Department shall establish and create fisherfolk
settlement areas in coordination with concerned agencies of the government, where certain areas of
the public domain, specifically near the fishing grounds, shall be reserved for the settlement of the
municipal fisherfolk. Nothing in this section shall be construed to vest ownership of any resettlement
area to a municipal fisherfolk for whom said areas may have been reserved for or had been actually
granted to.
Section 109. Municipal Fisheries Grant Fund. - For the development, management and conservation
of the municipal resources, there is hereby created a Fishery Grant Fund to finance fishery projects of
the LGUs primarily for the upliftment of the municipal fisherfolk. The amount of One hundred million
pesos (P100,000,000.00) is hereby appropriated out of the Department's allocation in the General
Appropriations Act (GAA) to support the Grant Fund.
For this purpose, the Department may seek financial assistance from any source and may receive any
donation therefore.
Section 110. Fishery Loan and Guarantee Fund. - Pursuant to Section 7, Article XIII of the
Constitution, there is hereby created a Fishery Loan and Guarantee Fund with an initial of One
hundred million pesos (P100,000,000.00), which shall be administered by the Land Bank of the
Philippines. The fund shall be made available for lending to qualified borrowers to finance the
development of the fishery industry under a program to be prescribed by the Department.
For the same purpose, the Department may seek financial assistance from any source and may
receive any donation therefrom.
Section 111. Fishing Vessels Development Fund. - There is hereby created a Fishing Vessels
Development Fund to enhance the building and/or acquisition of fishing vessels. This shall be a long-
term loan facility that shall be administered by the Development Bank of the Philippines. The amount
of Two hundred and fifty million pesos (P250,000,000.00) per year for five (5) years is hereby
appropriated out of the Department's allocation in the GAA to support this Development Fund.
Section 112. Special Fisheries Science and Approfishtech Fund. - The Department shall provide
subsidy for full technical and financial support to the development of appropriate technology, both in
fishery and ancillary industries, that are ecologically sound, locally source-based and labor intensive,
based on the requirement and needs of the FARMCs. An initial amount of One hundred million pesos
(100,000,000.00) shall be authorized for the purpose of a Special Fisheries Science and Approfishtech
Fund, and thereafter shall be included in the GAA.
Section 113. Aquaculture Investment Fund. - An Aquaculture Investment Fund in the minimum
amount of Fifty million pesos (P50,000,000.00) shall be established for soft loans which shall be
extended to municipal fisherfolk and their organization who will engage in aquaculture, and for the
development of underdeveloped or underutilized inland fishponds.
Section 114. Other Fisheries Financing Facilities. - In addition to fisheries credit guarantee, grant and
other similar facilities granted under this Code, qualified Filipino fisherfolk and fisheries enterprises
shall enjoy such other facilities granted them under existing and/or new laws, specially as to rural
credit, with preference being given to fisheries cooperatives.
Section 115. Professionalization of Fisheries Graduates. - There is hereby created a Fisheries Board of
Examiners in the Professional Regulation Commission to upgrade the Fisheries Profession: Provided,
however, That those who have passed the Civil Service Examination for Fisheries shall automatically
be granted eligibility by the Fisheries Board of Examiners: Provided, further, That they have served the
industry in either public or private capacity for not less than five (5) years: Provided, finally, That the
first Board Examination for B.S. Fisheries Graduates shall be conducted within one (1) year from the
approval of this Code.
Section 116. Upgrading of State Fisheries Schools/Colleges. - The Department, in coordination with
the Commission on Higher Education (CHED), Department of Education, Culture and Sports (DECS),
and Technical Education and Skills Development Authority (TESDA), shall upgrade State Fisheries
Schools/Colleges which provide both formal and non-formal education: Provided, however, That the
CHED shall incorporate Approfishtech in the curricula of fisheries schools/colleges.
The Department and the CHED shall jointly formulate standards to upgrade all fisheries
schools/colleges. Fisheries schools/colleges that do not meet minimum standards shall be closed.
Section 117. Inclusion of Fisheries Conservation Subjects in School Curriculum. - Fisheries
conservation subjects shall be incorporated in the curricula of elementary and secondary schools both
private and public.
Section 118. Educational campaign at all levels. - The Department, the CHED, the DECS and the
Philippine Information Agency shall launch and pursue a nationwide educational campaign to:
(a) help realize the policies and implement the provisions of this Code;
(b) promote the development, management, conservation and proper use of the
environment;
(c) promote the principle of sustainable development; and
(d) promote the development of truly Filipino-oriented fishing and ancillary industries.
Section 119. Infrastructure Support. - The Department in cooperation with concerned agencies shall:
(a) prepare and implement a nationwide plan for the development of municipal fishing ports
and markets;
(b) prioritize the construction of farm-to-market roads linking the fisheries production sites,
coastal landing points and other post-harvest facilities to major market and arterial
roads/highways;
(c) identity community infrastructure facilities such as fish landing ports, ice plant and cold
storage facilities in consultation with fishery cooperatives/associations and prepare plans and
designs for their construction that would be consistent with international environmental
impact;
(d) establish and maintain quality laboratories in major fish ports and prescribe the highest
standards for the operation and maintenance of such post-harvest facilities;
(e) arrange and make representations with appropriate funding institutions to finance such
facilities for the use of the fishery cooperatives/associations;
(f) develop and strengthen marketing facilities and promote cooperative marketing systems;
and
(g) promote and strengthen local fisheries ship-building and repair industry.
Section 120. Extension Services. - The Department shall develop cost-effective, practical and efficient
extension services on a sustained basis, in addition to those provided by state educational institutions,
especially to municipal fisherfolk in undeveloped areas, utilizing practicable and indigenous resources
and government agencies available, and based upon a system of self-reliance and self-help.
Section 121. Protection of Sensitive Technical Information. - The Department shall take such
measures as may be necessary in order to protect trade, industrial and policy information of Filipino
fisherfolk, fisheries owners/operators, entrepreneurs, manufacturers and researchers, when
disclosure of such information will injure the competitiveness or viability of domestic fisheries.
Section 122. Assistance in Collecting Information. - The Department, in coordination with other
government entities concerned, may require Filipino representatives abroad and foreign-based
personnel to assist in the collection of fisheries data and information.
Section 123. Charting of Navigational Lanes and Delineation of Municipal Waters. - The Department
shall authorize the National Mapping and Resource Information Authority (NAMRIA) for the
designation and charting of navigational lanes in fishery areas and delineation of municipal waters.
The Philippine Coast Guard shall exercise control and supervision over such designated navigational
lanes.
Section 124. Persons and Deputies Authorized to Enforce this Code and Other Fishery Laws, Rules
and Regulations. - The law enforcement officers of the Department, the Philippine Navy, Philippine
Coast Guard, Philippine National Police (PNP), PNP-Maritime Command, law enforcement officers of
the LGUs and other government enforcement agencies, are hereby authorized to enforce this Code
and other fishery laws, rules and regulations. Other competent government officials and employees,
punong barangays and officers and members of fisherfolk associations who have undergone training
on law enforcement may be designated in writing by the Department as deputy fish wardens in the
enforcement of this Code and other fishery laws, rules and regulations.
Section 125. Strengthening Prosecution and Conviction of Violators of Fishery Laws. - The
Department of Justice (DOJ) shall embark on a program to strengthen the prosecution and conviction
aspects of fishery law enforcement through augmentation of the current complement of state
prosecutors and through their continuous training and reorientation on fishery laws, rules and
regulations.
Section 126. Foreign Grants and Aids. - All foreign grants, aids, exchange programs, loans, researches
and the like shall be evaluated and regulated by the Department to ensure that such are consistent
with the Filipinization, democratization and industrialization of fishing industry and the development
of the entire country.
Section 127. Mandatory Review. - The Congress of the Philippines shall undertake a mandatory
review of this Code at least once every five (5) years and as often as it may deem necessary, to ensure
that fisheries policies and guidelines remain responsive to changing circumstances.
CHAPTER VIII
Transitory Provisions
Section 128. Moratoria. - The Department shall, upon the recommendation of the Bureau, have the
power to declare a moratorium on the issuance of licenses for commercial fishing vessels to operate
in specified area or areas in Philippine waters for a limited period of time if there are indications of
overfishing brought about by a decrease in the volume and sizes of fish caught therein or for
conservation or ecological purposes.
No new licenses and similar privileges on exploitation of specific fishery areas in Philippine waters and
aquaculture production areas shall be issued in accordance with this Code. Such moratoria shall not
exceed five (5) years from the effectivity of this Code.
Section 129. Formulation of Implementing Rules and Regulations. - An Inter-agency Committee is
hereby created to formulate rules and regulations for the full implementation of this Code within
ninety (90) days of its effectivity: Provided, however, That the formulated rules and regulations shall
be submitted to both Houses of Congress for information and guidance. Such rules and regulations
shall take effect upon publication in a newspaper of general circulation.
The Inter-agency Committee shall be composed of the following:
(a) Secretary of Agriculture as Chairman;
(b) Secretary of the Interior and Local Government;
(c) Secretary of Environment and Natural Resources;
(d) Secretary of Justice;
(e) Secretary of Finance;
(f) Secretary of Budget and Management;
(g) Secretary of Labor and Employment;
(h) Secretary of National Defense;
(i) Commissioner of Civil Service Commission;
(j) Director of BFAR;
(k) Executive Director of PCAMRD;
(l) General Manager of PFDA;
(m) One (1) representative from each of the following:
(a.1) The League of Provinces;
(a.2) The League of Cities;
(a.3) The League of Municipalities;
(a.4) The Liga ng mga Barangay;
(n) Representative of the municipal fisherfolk;lawphi1™
(o) Representative of the commercial fishers;
(p) Representative of the non-government organizations involved in fishing concerns; and
(q) A representative from the academe coming from the specialized fisheries institution.
CHAPTER IX
Final Provisions
Section 130. Appropriation. - The sum necessary to effectively carry out the provisions of this Act
during the first year of implementation shall be sourced from the budget of the DA/BFAR and other
agencies performing fisheries-related functions: Provided, however, That such amount as may be
necessary to carry out the provisions of Sections 79, 109, 110, 111, 112, 113 are hereby appropriated
out of the unappropriated funds of the National Treasury. The Congress of the Philippines shall
provide for the appropriations of the Department, the NFRDI and the Fisheries Scholarship Program
for the succeeding years to be included in the annual GAA.
Section 131. Repealing Clause. - Presidential Decree No. 704, as amended by Presidential Decree Nos.
1015 and 1058, Presidential Decree No. 977, as amended, Executive Order No. 967, Series of 1984,
Executive Order No. 116, Series of 1987, Executive Order No. 292, Series of 1987, Executive Order No.
473, Series of 1991 and other existing laws except Republic Act No. 7611, decrees, executive orders,
and rules and regulations or parts thereof, which are inconsistent with this Code, are hereby repealed
or modified accordingly.
Section 132. Separability Clause. - If any portion or provision of this Code is declared unconstitutional
or invalid, the other portions or provisions hereof, which are not affected thereby, shall continue in
full force and effect.
Section 133. Effectivity. - This Code shall take effect fifteen (15) days after its publication in the Official
Gazette or in two (2) newspapers of general publication.
G.R. No. L-69803 October 8, 1985
CYNTHIA D. NOLASCO, MILA AGUILAR-ROQUE and WILLIE C. TOLENTINO, petitioners,
vs.
HON. ERNANI CRUZ PAÑO, Executive Judge, Regional Trial Court of Quezon City; HON. ANTONIO P.
SANTOS, Presiding Judge, Branch XLII, Metropolitan Trial Court of Quezon City: HON. SERGIO F.
APOSTOL, City Fiscal, Quezon City; HON. JUAN PONCE ENRILE, LT. GEN. FIDEL RAMOS and COL.
JESUS ALTUNA, respondents.
Jose W .Diokno, Joker P. Arroyo, Rene A. V. Sarmiento, Dan Malabonga and Cesar Maravilla for
petitioners.
MELENCIO-HERRERA, J.:
The facts before the Court in these Certiorari, Prohibition, and mandamus proceedings will be briefly
stated. The three petitioners will be referred to through their surnames of NOLASCO, AGUILAR-
ROQUE and TOLENTINO.
1. Prior to August 6, 1984 (hereinafter to be referred to without the year), AGUILAR-ROQUE was one
of the accused of Rebellion in Criminal Case No.
MC-25-113 of Military Commission No. 25, both cases being entitled "People of the Philippines vs.
Jose Ma. Sison, et al." She was then still at large.
2. At 11:30 A.M. on August 6th, AGUILAR-ROQUE and NOLASCO were arrested by a Constabulary
Security Group (CSG) at the intersection of Mayon Street and P. Margall Street, Quezon City. The
stated time is an allegation of petitioners, not denied by respondents. The record does not disclose
that a warrant of arrest had previously beeen issued against NOLASCO.
3. At 12:00 N. on August 6th, elements of the CSG searched the premises at 239-B Mayon Street,
Quezon City. The stated time is an allegation of petitioners, not specifically denied by respondents. In
their COMMENT, however, respondents have alleged that the search was conducted "late on the same
day"; that is late on august 6th.
4. On August 6th, at around 9:00 A.M., Lt. Col. Virgilio G. Saldajeno of the CSG, applied for a Search
Warrant from respondent Hon. Ernani Cruz Paño, Executive Judge of the Regional Trial Court in
Quezon City, to be served at No. 239-B Mayon Street, Quezon City, determined tyo be the leased
residence of AGUILAR-ROQUE, after almost a month of "round the clock surveillance" of the premises
as a "suspected underground house of the CPP/NPA." AGUILAR-ROQUE has been long wanted by the
military for being a high ranking officer of the Communist Party of the Philippines, particularly
connected with the MV Karagatan/Doña Andrea cases.
In connection with the Search Warrant issued, the following may be stated:
(a) The Search Warrant was issued in proceedings entitled "People of the Philippines vs. Mila Aguilar-
Roque, Accused, Search Warrant No. 80- 84 for rebellion" (the SEARCH WARRANT CASE). Judge Panos
Court was Branch 88.
(b) It does not appear from the records before us that an application in writing was submitted by Lt.
Col. Saldajeno to Judge Paño.
(c) According to the record, Lt. Col. Saldajeno and his witness S/A Dionicio A. Lapus, were examined
under oath by Judge Paño but only the deposition of S/A Lapus has been submitted to us. The latter
deposed that to his personal knowledge, there were kept in the premises to be searched records,
documents and other papers of the CPP/NPA and the National Democratic Front, including support
money from foreign and local sources intended to be used for rebellion. 1
5. In connection with the search made at 12:00 N. of August 6th the following may be stated:
(a) TOLENTINO was a person then in charge of the premises. He was arrested by the searching party
presumably without a warrant of arrest.
(b) The searching party seized 428 documents and written materials, 2 and additionally a portable
typewriter, and 2 wooden boxes, making 431 items in all. 3
(c) According to the Return, submitted in the SEARCH WARRANT CASE on August 10th, 4 the search
was made in the presence of Dra. Marciana Galang, owner of the premises, and of two (2) Barangay
Tanods. No mention was made that TOLENTINO was present. The list of the 428 articles and
documents attached to the Return was signed by the two Barangay Tanods, but not by Dra. Galang.
6. (a) On August 10th, the three petitioners, AGUILAR-ROQUE, NOLASCO and TOLENTINO, were
charged before the Quezon City Fiscal's Office (the CITY FISCAL, for short) upon complaint filed by the
CSG against petitioners for "Subversion/Rebellion and/or Conspiracy to Commit
Rebellion/Subversion."
(b) On August 13th, the CITY FISCAL filed an Information for Violation of Presidential Decree No. 33
(Illegal Possession of Subversive Documents) against petitioners before Branch 42 of the Metropolitan
Trial Court of Quezon City (the SUBVERSIVE DOCUMENTS CASE), respondent Judge Antonio P. Santos,
presiding.
(c) On August 16th, CSG filed a Motion for Reconsideration with the CITY FISCAL, praying that
AGUILAR-ROQUE and NOLASCO be charged with Subversion. The Motion was denied on November
16th.
7. (a) On September 10th, the CSG submitted an Amended Return in the SEARCH WARRANT CASE
praying, inter alia, that the CSG be allowed to retain the seized 431 documents and articles, in
connection with cases that are presently pending against Mila Aguilar Roque before the Quezon City
Fiscal's Office and the court. 5
(b) On September 28th, petitioners were required by Judge Pano to comment on the Amended
Return, which AGUILAR-ROQUE did on October 18th, raising the issue of the inadmissibility of any
evidence obtained pursuant to the Search Warrant.
(c) On December 13, 1984, Judge Paño admitted the Amended Return and ruled that the seized
documents "shall be subject to disposition of the tribunal trying the case against respondent."
8. (a) On December 12th, petitioners filed a Motion to Suppress in the SUBVERSIVE DOCUMENTS
CASE, praying that such of the 431 items belonging to them be returned to them. It was claimed that
the proceedings under the Search Warrant were unlawful. Judge Santos denied the Motion on
January 7, 1985 on the ground that the validity of the Search Warrant has to be litigated in the
SEARCH WARRANT CASE. He was apparently not aware of the Order of Judge Paño of December 13th
issued in the SEARCH WARRANT CASE.
Hence, this Petition for Certiorari, Prohibition and mandamus to annul and set aside the (1) Search
Warrant issued by respondent RTC Judge Paño; (2) his Order admitting the Amended Return and
granting the Motion to Retain Seized Items; and (3) Order of respondent MTC Judge Santos denying
petitioners' Motion to Suppress.
This Court, on February 12, 1985, issued a Temporary Restraining Order enjoining the respondents or
their duly authorized representatives from introducing evidence obtained under the Search Warrant.
The PETITIONERS principally assert that the Search Warrant is void because it is a general warrant
since it does not sufficiently describe with particularity the things subject of the search and seizure,
and that probable cause has not been properly established for lack of searching questions
propounded to the applicant's witness. The respondents, represented by the Solicitor General,
contend otherwise, adding that the questions raised cannot be entertained in this present petition
without petitioners first moving for the quashal of the disputed Search Warrant with the issuing
Judge.
We find merit in the Petition.
Section 3, Article IV of the Constitution, guarantees the right of the people to be secure in their
persons, houses, papers and effects against unreasonable searches and seizures of whatever nature
and for any purpose. It also specifically provides that no Search Warrant shall issue except upon
probable cause to be determined by the Judge or such other responsible officer as may be authorized
by law, after examination under oath or affirmation of the complainant and the witnesses he may
produce, and particularly describing the place to be searched and the things to be seized.
The disputed Search Warrant (No. 80-84) describes the personalities to be seized as follows:
Documents, papers and other records of the Communist Party of the
Phihppines/New Peoples Army and/or the National Democratic Front, such as
Minutes of the Party Meetings, Plans of these groups, Programs, List of possible
supporters, subversive books and instructions, manuals not otherwise available to
the public, and support money from foreign or local sources.
It is at once evident that the foregoing Search Warrant authorizes the seizure of personal properties
vaguely described and not particularized. It is an all- embracing description which includes everything
conceivable regarding the Communist Party of the Philippines and the National Democratic Front. It
does not specify what the subversive books and instructions are; what the manuals not otherwise
available to the public contain to make them subversive or to enable them to be used for the crime of
rebellion. There is absent a definite guideline to the searching team as to what items might be
lawfully seized thus giving the officers of the law discretion regarding what articles they should seize
as, in fact, taken also were a portable typewriter and 2 wooden boxes. It is thus in the nature of a
general warrant and infringes on the constitutional mandate requiring particular description of the
things to be seized. In the recent rulings of this Court, search warrants of similar description were
considered null and void for being too general. Thus:
Subversive documents, pamphlets, leaflets, books, and other publications to
promote the objectives and purposes of the subversive organizations known as
Movement for Free Philippines. Light-a-Fire Movement and April 6 Movement. 6
The things to be seized under the warrant issued by respondent judge were
described as 'subversive documents, propaganda materials, FAs, printing
paraphernalia and all other subversive materials Such description hardly provided a
definite guideline to the search team as to what articles might be lawfully seized
thereunder. Said description is no different from if not worse than, the description
found in the search warrants in "Burgos, et al. v. the Chief of Staff"which this Court
declared null and void for being too general. 7
In the case at bar, the search warrant issued by respondent judge allowed the
seizure of printed copies of the Philippine Times, manuscripts/drafts of articles for
publication, newspaper dummies subversive documents, articles, etc., and even
typewriters, duplicating machines, mimeographing and tape recording machines.
Thus, the language used is so all embracing as to include all conceivable records and
equipment of petitioner regardless of whether they are legal or illegal. The search
warrant under consideration was in the nature of a general warrant which is
constitutionally objectionable. 8
The lack of particularization is also evident in the examination of the witness presented by the
applicant for Search Warrant.
Q Mr. Dionicio Lapus, there is an application for search warrant
filed by Lt. Col. Virgilio Saldajeno and the Court would like to know
if you affirm the truth of your answer in this deposition?
(The deposition instead)—
A Yes, sir,
Q How long did it take you for the surveillance?
A Almost a month, sir.
 Q Are you a lawyer, Mr. Lapus?
A No, Your Honor, but I was a student of law.
Q So, you are more or less familiar with the requisites of the
application for search warrant?
A Yes, Your Honor.
Q How did you come to know of the person of Mila Aguilar-
Roque?
A Because of our day and night surveillance, Your Honor, there
were so many suspicious persons with documents.
Q What kind of documents do you refer to?
A Documents related to the Communist Party of Philippines and
New People's Army.
Q What else?
A Conferences of the top ranking officials from the National
Democratic Front, Organization of the Communist Party of the
Philippines ...
Q And may include what else?
A Other papers and documents like Minutes of the Party
Meetings, Plans of these groups, Programs, List of possible
supporters, subversive books and instructions, manuals not
otherwise available to the public and support money from foreign
and local sources. 9
The foregoing questions propounded by respondent Executive Judge to the applicant's witness are
not sufficiently searching to establish probable cause. The "probable cause" required to justify the
issuance of a search warrant comprehends such facts and circumstances as will induce a cautious man
to rely upon them and act in pursuant thereof. 10 Of the 8 questions asked, the 1st, 2nd and 4th
pertain to Identity. The 3rd and 5th are leading not searching questions. The 6th, 7th and 8th refer to
the description of the personalities to be seized, which is Identical to that in the Search Warrant and
suffers from the same lack of particularity. The examination conducted was general in nature and
merely repetitious of the deposition of said witness. Mere generalization will not suffice and does not
satisfy the requirements of probable cause upon which a warrant may issue. 11
Respondents claim, however, that the proper forum for questioning the illegality of a Search Warrant
is with the Court that issued it instead of this original, independent action to quash. The records show,
however, that petitioners did raise that issue in the SEARCH WARRANT CASE in their Comment, dated
October 18, 1984. In fact, they already questioned the admissibility of the evidence obtained under
the Search Warrant, even during the inquest investigation on August 10, 1984. And in the SUBVERSIVE
DOCUMENTS CASE, they filed a Motion to Suppress on December 12, 1984 claiming that the
proceedings under the Search Warrant were unlawful. Substantially, therefore, while not
denominated as a motion to quash, petitioners had questioned the legality of the Search Warrant.
Parenthetically, it strikes the Court that the pendency of the SEARCH WARRANT CASE and of the
SUBVERSIVE DOCUMENTS CASE before two different Courts is not conducive to an orderly
administration of justice. It should be advisable that, whenever a Search Warrant has been issued by
one Court, or Branch, and a criminal prosecution is initiated in another Court, or Branch, as a result of
the service of the Search Warrant, the SEARCH WARRANT CASE should be consolidated with the
criminal case for orderly procedure. The later criminal case is more substantial than the Search
Warrant proceeding, and the Presiding Judge in the criminal case should have the right to act on
petitions to exclude evidence unlawfully obtained.
Notwithstanding the irregular issuance of the Search Warrant and although, ordinarily, the articles
seized under an invalid search warrant should be returned, they cannot be ordered returned in the
case at bar to AGUILAR-ROQUE. Some searches may be made without a warrant. Thus, Section 12,
Rule 126, Rules of Court, explicitly provides:
Section 12. Search without warrant of person arrested.—A person charged with an
offense may be searched for dangerous weapons or anything which may be used as
proof of the commission of the offense.
The provision is declaratory in the sense that it is confined to the search, without a search warrant, of
a person who had been arrested. It is also a general rule that, as an incident of an arrest, the place or
premises where the arrest was made can also be search without a search warrant. In this latter case,
"the extent and reasonableness of the search must be decided on its own facts and circumstances,
and it has been stated that, in the application of general rules, there is some confusion in the
decisions as to what constitutes the extent of the place or premises which may be searched. 12 "What
must be considered is the balancing of the individual's right to privacy and the public's interest in the
prevention of crime and the apprehension of criminals." 13
Considering that AGUILAR-ROQUE has been charged with Rebellion, which is a crime against public
order; that the warrant for her arrest has not been served for a considerable period of time; that she
was arrested within the general vicinity of her dwelling; and that the search of her dwelling was made
within a half hour of her arrest, we are of the opinion that in her respect, the search at No. 239-B
Mayon Street, Quezon City, did not need a search warrant; this, for possible effective results in the
interest of public order.
Such being the case, the personalities seized may be retained. by CSG, for possible introduction as
evidence in the Rebellion Case, leaving it to AGUILAR-ROQUE to object to their relevance and to ask
Special Military Commission No.1 to return to her any and all irrelevant documents and articles.
WHEREFORE, while Search Warrant No. 80-84 issued on August 6, 1984 by respondent Executive
Judge Ernani Cruz Paño is hereby annulled and set aside, and the Temporary Restraining Order
enjoining respondent from introducing evidence obtained pursuant to the Search Warrant in the
Subversive Documents case hereby made permanent, the, personalities seized may be retained by the
Constabulary Security Group for possible introduction as evidence in Criminal Case No. SMC-1-1,
pending before Special Military commission No. 1, without prejudice to petitioner Mila Aguilar-Roque
objecting to their relevance and asking said Commission to return to her any and all irrelevant
documents and articles.
SO ORDERED.
160 Phil. 343
MAKASIAR, J.:
A petition for certiorari and prohibition with preliminary injunction to restrain respondent Judge from
enforcing his order dated October 18, 1965, and the writ of preliminary mandatory injunction
thereunder issued.
On April 3, 1964, respondent company filed with the Court of First Instance of Manila a civil case
docketed as No. 56701 against petitioner Fisheries Commissioner Arsenio N. Roldan, Jr., for the
recovery of fishing vessel Tony Lex VI (one of two fishing boats in question) which had been seized and
impounded by petitioner Fisheries Commissioner through the Philippine Navy.
On April 10, 1964, respondent company prayed for a writ of preliminary mandatory injunction with
respondent court, but said prayer was, however, denied.
On April 28, 1964, the Court of First Instance of Manila set aside its order of April 10, 1964 and
granted respondent company's motion for reconsideration praying for preliminary mandatory
injunction. Thus, respondent company took possession of the vessel Tony Lex VI from herein
petitioners by virtue of the above-said writ.
On December 10, 1964, the Court of First Instance of Manila dismissed Civil Case No. 56701 for failure
of therein petitioner (respondent company herein) to prosecute as well as for failure of therein
defendants (petitioners herein) to appear on the scheduled date of hearing. The vessel, Tony Lex VI or
Srta. Winnie however, remained in the possession of respondent company.
On July 20, 1965, petitioner Fisheries Commissioner requested the Philippine Navy to apprehend
vessels Tony Lex VI and Tony Lex III, also respectively called Srta. Winnie and Srta. Agnes, for alleged
violations of some provisions of the Fisheries Act and the rules and regulations promulgated
thereunder.
On August 5 or 6, 1965, the two fishing boats were actually seized for illegal fishing with dynamite.
Fish caught with dynamite and sticks of dynamite were then found aboard the two vessels.
On August 18, 1965, the Fisheries Commissioner requested the Palawan Provincial Fiscal to file
criminal charges against the crew members of the fishing vessels.
On September 30, 1965, there were filed in the Court of First Instance of Palawan a couple of
informations, one against the crew members of Tony Lex III, and another against the crew members of
Tony Lex VI - both for violations of Act No. 4003, as amended by Commonwealth Acts Nos. 462, 659,
and 1088, i.e., for illegal fishing with the use of dynamite. On the same day, the Fiscal filed an ex
parte motion to hold the boats in custody as instruments and therefore evidence of the crime (p. 54,
rec.), and cabled the Fisheries Commissioner to detain the vessels (p. 56, rec.).
On October 2 and 4, likewise, the Court of First Instance of Palawan ordered the Philippine Navy to
take the boats in custody.
On October 2, 1965, respondent company filed a complaint with application for preliminary
mandatory injunction, docketed as, Civil Case No. 62799 with the Court of First instance of Manila
against herein petitioners. Among others, it was alleged that at the time of the seizure of the fishing
boats in issue, the same were engaged in legitimate fishing operations off the coast of Palawan; that
by virtue of the offer of compromise dated September 13, 1965 by respondent company to the
Secretary of Agriculture and Natural Resources, the numerous violations of the Fishery Laws, if any, by
the crew members of the vessels were settled.
On October 9, 1965, petitioners, represented by the Solicitor General, opposed the above-mentioned
complaint, alleging among others, that: (1) the issuance of the writ would disrupt the status quo of
the parties and would render nugatory any decision of the respondent court favorable to the
defendant; (2) that the vessels, being instruments of a crime in criminal cases Nos. 3416 and 3417
filed with the Court of First Instance of Palawan, the release of the vessels sans the corresponding
order from the above-mentioned court would deprive the same of its authority to dispose of the
vessels in the criminal cases and the Provincial Fiscal would not be able to utilize said vessles as
evidence in the prosecution of said cases; (3) that as petitioners herein were in possession of one of
the vessels in point, they cannot now be deprived of the legal custody thereof by reason of the
dismissal of Civil Case No. 56701; (4) that petitioner Fisheries Commissioner has the power to seize
and detain the vessels pursuant to Section 5 of Republic Act No. 3215 in relation to Sections 903 and
2210 of the Revised Tariff and Customs Code; (5) that respondents herein have not exhausted
administrative remedies before coming to court; (6) that the compromise agreement approved by the
Secretary of Agriculture and Natural Resources and indorsed to the Fisheries Commissioner is never a
bar to the prosecution of the crime perpetrated by the crew members of the vessels belonging to
respondent company.
And again, on October 15, 1965, herein petitioners filed their memorandum praying for the denial of
the application for preliminary mandatory injunction.
On the same day, October 15, 1965, herein petitioner filed an urgent motion to submit additional
documentary evidence.
On October 18, 1965, herein petitioners, as defendants in said Civil Case No. 62799, filed their answer
to the complaint with affirmative defenses, reiterating the grounds in their opposition to the issuance
of a writ of preliminary mandatory injunction and adding that herein private respondent admitted
committing the last violation when it offered in its letter dated September 21, 1965 to the Acting
Commissioner of Fisheries, to compromise said last violation (Exh. 12, pp. 60-61, rec.).
On said day, October 18, 1965, the respondent Judge issued the challenged order granting the
issuance of the writ of preliminary mandatory injunction and issued the preliminary writ upon the
filing by private respondent of a bond of P5,000.00 for the release of the two vessels (pp. 95-102,
rec.).
On October 19, 1965, herein petitioners filed a motion for reconsideration of the order issuing the
preliminary writ on October 18, 1965 on the ground, among others, that on October 18, 1965 the
Philippine Navy received from the Palawan Court of First Instance two orders dated October 2 and 4,
1965 requiring the Philippine Navy to hold the fishing boats in custody and directing that the said
vessels should not be released until further orders from the Court, and that the bond of P5,000.00 is
grossly insufficient to cover the Government's losses in case the two vessels, which are worth
P495,000.00, are placed beyond the reach of the Government, thus frustrating their forfeiture as
instruments of the crime (pp. 103-109, rec.).
On November 23, 1965, respondent Judge denied the said motion for reconsideration (p. 110, rec.).
WE rule that the respondent Judge of the Manila Court of First Instance acted without jurisdiction and
with grave abuse of discretion when he issued on October 18, 1965 the order directing the issuance of
a writ of preliminary mandatory injunction and when he refused to reconsider the same.
I change that possession (Hacbang vs. Leyte Bus Co., Inc., supra; NPC vs. Hon. Jesus de Vera, supra).
When the respondent Judge issued the challenged order on October 18, 1965 and the writ of
preliminary mandatory injunction pursuant thereto, the fishing vessels were already under the
jurisdiction of the Court of First Instance of Palawan by virtue of its orders of October 2 and 4,1965
upon motion of the Provincial Fiscal (pp. 54-55, rec.), directing the Philippine Navy to detain (pp. 108,
109, rec.) said vessels, which are subject to forfeiture as instruments of the crime, to be utilized as
evidence in Criminal Cases Nos. 3416 and 3417 for illegal fishing pending in said court (pp. 54-55,
rec.). The said vessels were seized while engaging in prohibited fishing within the territorial waters of
Palawan (pp. 45, 48-53, rec.) and hence within the jurisdiction of the Court of First Instance of
Palawan, in obedience to the rule that "the place where a criminal offense was committed not only
determines the venue of the action but is an essential element of jurisdiction" (Lopez vs. Paras, L-
25795, Oct. 29, 1966, 18 SCRA 616, 619). The jurisdiction over the vessels acquired by the Palawan
Court of First Instance cannot be interfered with by another Court of First Instance. The orders of
October 2 and 4, 1965 by the Palawan Court of First Instance expressly direct the Philippine Navy "to
hold in custody" the two vessels and that "same should not be released without prior order or
authority from this Court" (pp. 108, 109, rec.). Only the Palawan court can order the release of the
two vessels. Not even the Secretary of Agriculture and Natural Resources nor the Fisheries
Commissioner can direct that the fishing boats be turned over to private respondent without risking
contempt of court.
The grave abuse of discretion committed by the respondent Judge was heightened by the fact that he
did not reconsider his order of October 18, 1965 after he was informed by petitioners in their motion
for reconsideration filed on October 19, 1965 that the Palawan Court of First Instance had already
issued the two orders dated October 2 and 4, 1965 directing the Philippine Navy to hold in custody
the fishing boats until further orders.
It is basic that one court cannot interfere with the judgments, orders or decrees of another court of
concurrent or coordinate jurisdiction having equal power to grant the relief sought by injunction;
because if coordinate courts were allowed to interfere with each other's judgments, decrees or
injunctions, the same would obviously lead to confusion and might seriously hinder the
administration of justice (Ongsinco, etc. vs. Tan, et al., 97 Phil. 330; PNB vs. Javellana, 92 Phil
525; Montesa vs. Manila Cordage Company, 92 Phil. 25; Hubahib vs. Insular Drug Company, 64 Phil.
119; Hacbang, et al. vs. The Leyte Auto Bus Company, et al., G. R. No. L17907, May 30, 1963, 8 SCRA,
103, 107-109; NPC vs. Hon. Jesus de Vera, G. R. No. L-15763, Dec. 22, 1961, 3 SCRA, 646, 648; Cabigao
vs. del Rosario, 44 Phil. 182; Araneta & Uy vs. Commonwealth Insurance Company, 55 OG 431; Moran,
Comments on the Rules of Court, Vol. III, 1970 ed., p. 64).
As early as October 2 and 4, 1965, the two boats were already in custodia legis under the sole control
of the Palawan Court of First Instance. The Manila Court of First Instance cannot interfere with and
It is immaterial that the vessels were then in the Philippine Navy Basin in Manila; for the same in no
way impugns the jurisdiction already vested in the Palawan court, which has custody thereof through
the Philippine Navy. This is analogous to the situation in Colmenares versus Villar (L-27124, May 29,
1970, 33 SCRA 186, 188- 9), wherein WE ruled "where the illegal possession of firearms was
committed in the town where the Court sits, the fact that the firearms were confiscated from the
accused in another town does not affect the jurisdiction of the Court" (pp. 186, 189).
It is likewise of no moment that the herein respondents were not notified by the herein petitioners of
the seizure of the questioned vessels by the Philippine Navy, because such previous notice is not
required by law.
II
The dismissal on December 10, 1964 of the first Civil Case No. 56701 by the Court of First Instance of
Manila had the necessary effect of automatically dissolving the writ of preliminary mandatory
injunction issued therein on April 28, 1964, directing the return of fishing vessel Tony Lex VI (pp. 156-
157, rec.). Such a preliminary writ, like any other interlocutory order, cannot survive the main case of
which it was but an incident; because "an ancillary writ of preliminary injunction loses its force and
effect after the dismissal of the main petition" (National Sugar 'Worker's Union, etc., vs. La Carlota
Sugar Central, et al., L-23569, May 25, 1972, 45 SCRA 104, 109; Lazaro vs. Mariano, 59 Phil. 627,
631; Saavedra vs. Ibanez, 56 Phil. 33, 37; Hi Caiji vs. Phil. Sugar Estate and Development Company, 50
Phil. 592, 594).
Moreover, the writ of preliminary injunction issued on April 28, 1964 in Civil Case No. 56701 was
directed against the detention of the vessel Tony Lex VI for violations committed prior to August 5,
1965, and therefore cannot and does not extend to the seizure and detention of said vessel for
violations on August 5 or 6, 1965, which violations were not and could not possibly be the subject-
matter of said Civil Case No. 56701 which was filed on April 3, 1964 (p. 12, rec.).
III
Herein petitioners can validly direct and/or effect the seizure of the vessels of private respondent for
illegal fishing by the use of dynamite and without the requisite licenses.
Section 4 of Republic Act No. 3512 approved on March 20, 1963 empowers the Fisheries
Commissioner to carry out the provisions of the Fisheries Act, as amended, and all rules and
regulations promulgated thereunder, to make searches and seizures personally or through his duly
authorized representatives in accordance with the Rules of Court, of "explosives such as.... dynamites
and the like...; including fishery products, fishing equipment, tackle and other things that are subject
to seizure under existing fishery laws"; and "to effectively implement the enforcement of existing
fishery laws oh illegal fishing."
Paragraph 5 of Section 4 of the same Republic Act 3512 likewise transferred to and vested in the
Philippine Fisheries Commission "all the powers, functions and duties heretofore exercised by the
Bureau of Customs, Philippine Navy arid Philippine Constabulary over fishing vessels and fishery
matters x x x"
Section 12 of the Fisheries Act, otherwise known as Republic Act No. 4003, as amended, prohibits
fishing with dynamites or other explosives which is penalized by Section 76 thereof "by a fine of not
less than P1,500.00 nor more than P5,000.00, and by imprisonment for not less than one (1) year and
six (6) months nor more than five (5) years, aside from the confiscation and forfeiture of all explosives,
boats, tackles, apparel, furniture, and other apparatus used in fishing in violation of said Section 12 of
this Act." Section 78 of the same Fisheries Law provides that "in case of a second offense, the vessel,
together with its tackle, apparel, furniture and stores shall be forfeited to the Government."
The second paragraph of Section 12 also provides that "the possession and/or finding, of dynamite,
blasting caps and other explosives in any fishing boat shall constitute a presumption that the said
dynamite and/or blasting caps and explosives are being used for fishing purposes in violation of this
Section, and that the possession or discovery in any fishing boat of fish caught or killed by the use of
dynamite or other explosives, under expert testimony, shall constitute a presumption that the owner,
if present in the fishing boat, or the fishing crew have been fishing with dynamite or other
explosives." (Italics supplied.).
Under Section 78 of the Fisheries Act, as amended, any person, association or corporation fishing in
deep sea fishery without the corresponding license prescribed in Sections 17 to 22 of Article V of the
Fisheries Act or any other order or regulation deriving force from its provisions, "shall be punished for
each offense by a fine of not more than P5,000.00, or imprisonment, for not more than one year, or
both, in the discretion of the Court; Provided, That in case of an association or corporation, the
President or manager shall be directly responsible for the acts of his employees or laborers if it is
proven that the latter acted with his knowledge; otherwise the responsibility shall extend only as far
as fine is concerned: Provided, further, That in the absence of a known owner of the vessel, the
master, patron or person in charge of such vessel shall be responsible for any violation of this
Acts: and Provided, finally, That in case of a second offense, the vessel together with its tackle,
apparel, furniture and stores shall be forfeited to the Government" (Italics supplied).
Under Section 13 of Executive Order No. 389 of December 23, 1950, reorganizing the Armed Forces of
the Philippines, the Philippine Navy has the function, among others, "to assist the proper
governmental agencies in the enforcement of laws and regulations pertaining to x x x fishing x x x"
(46 OG 5905, 5911).

Section 2210 of the Tariff and Customs Code, as amended by PD No. 34 of October 27, 1972,
authorizes any official or person exercising police authority under the provisions of the Code, to
search and seize any vessel or air craft as well as any trunk, package, bag or envelope on board and to
search any person on board for any breach or violation of the customs and tariff laws.
When the Philippine Navy, upon request of the Fisheries Commissioner, apprehended on August 5 or
6, 1965 the fishing boats Tony Lex III and Tony Lex VI, otherwise known respectively as Srta. Agnes and
Srta. Winnie, these vessels were found to be without the necessary license in violation of Section 903
of the Tariff and Customs Code and therefore subject to seizure under Section 2210 of the same Code,
and illegally fishing with explosives and without fishing license required by Sections 17 and 18 of the
Fisheries Law (pp. 46-47, rec.)
The operation of the fishing boat Tony Lex III was suspended pursuant to the order dated January 28,
1964 issued by the Commissioner of Fisheries pending the final determination of the case against it
for illegal fishing with explosives on January 21, 1964 (p. 34, rec.) and remained suspended until its
apprehension on August 5 or 6, 1965 (p. 46, rec.).
For illegal fishing with explosives on March 23, 1963, the renewal of the fishing boat license of Tony
Lex VI was suspended for one year from the time said boat was moored at Pier 14 at North Harbor,
Manila, without prejudice to the institution of a criminal case against its owner and/or operator,
pursuant to the order dated May 19, 1964 issued by the Commissioner of Fisheries (pp. 35-36, rec.),
the motion for reconsideration of which order was denied by the Commissioner of Fisheries in an
order dated August 17, 1964 (pp. 41-42, rec.).
For illegal fishing with dynamite on March 28, 1963, the operation of Tony Lex VI was suspended by
the Commissioner of Fisheries in an order dated April 1, 1963 (p. 62, rec.).
For illegal fishing again with explosives on April 25, 1963, the fishing boat Tony Lex VI together with its
tackle, apparel, furniture and all other apparatus used in fishing was ordered confiscated and forfeited
in favor of the Government and a fine in the amount of P5,000.00 was imposed on its owners-
operators, without prejudice to the filing of the necessary criminal action, pursuant to the order of
June 2, 1964 of the Commissioner of Fisheries (pp. 37-38, rec.).
Again, for committing the same violation on June 19, 1963, a fine in the amount of P5,000.00 was
imposed on the owners-operators of fishing boat Tony Lex VI pursuant to the order of June 4, 1964
issued by the Commissioner of Fisheries (pp. 39-40, rec.).
It appears, therefore, that since January 28, 1964, the fishing boat Tony Lex III was suspended from
operating and was ordered moored at Pier 14, North Harbor, Manila (pp. 34, 46-47, rec.); and that the
fishing vessel Tony Lex VI was suspended for one year from May 24, 1964 and was actually ordered
forfeited to the Government pursuant to the order of June 2, 1964 for repeated violations of Section
12 of the Fisheries Act (pp. 37-38, rec.). As a matter of fact, when apprehended on August 5 or 6,
1965, both vessels were found to be without any license or permit for coastwise trade or for fishing
and unlawfully fishing with explosives, for which reason their owners and crew were accordingly
indicted by the Provincial Fiscal of Palawan for illegal fishing with dynamite and without the requisite
license (pp. 48-53, rec.).
As heretofore intimated, the two fishing boats were apprehended on numerous occasions for fishing
with dynamite from March 28, 1963 to March 11, 1964, which violations private respondent, as
owner-operator, sought to compromise by offering to pay a fine of P21,000.00 for all said prior
violations.
Such previous violations of Sections 12, 17 and 18 of the Fisheries Act committed by the two fishing
boats, Tony Lex III and Tony Lex VI, from March 28, 1963 until August 5 or 6, 1965, rendered the said
vessels subject to forfeiture under Sections 76 and 78 of the Fisheries Act, as amended.
Search and seizure without search warrant of vessels and air crafts for violations of customs laws have
been the traditional exception to the constitutional requirement of a search warrant, because the
vessel can be quickly moved out of the locality or jurisdiction in which the search warrant must be
sought before such warrant could be secured; hence it is not practicable to require a search warrant
before such search or seizure can be constitutionally effected (Papa vs. Mago, L-27360, Feb. 28, 1968,
22 SCRA 857, 871-74; Magoncia vs. Palacio, 80 Phil. 770, 774; Carroll vs. U. S. 267, pp. 132, 149, 158;
Justice Fernando, The Bill of Rights, 1972 ed., p. 225; Gonzales, Philippine Constitutional Law, 1966
ed., p. 300).
The same exception should apply to seizures of fishing vessels breaching our fishery laws. They are
usually equipped with powerful motors that enable them to elude pursuing ships of the Philippine
Navy or Coast Guard.
Another exception to the constitutional requirement of a search warrant for a valid search and
seizure, is a search or seizure as an incident to a lawful arrest (Alvero vs. Dizon, 76 Phil. 637; Justice
Fernando, The Bill of Rights, 1972 ed., p. 224). Under our Rules of Court, a police officer or a private
individual may, without a warrant, arrest a person (a) who has committed, is actually committing or is
about to commit an offense in his presence; (b) who is reasonably believed to have committed an
offense which has been actually committed; or (c) who is a prisoner who has escaped from
confinement while serving a final judgment or from temporary detention during the pendency of his
case or while being transferred from one confinement to another (Section 6, Rule 113, Revised Rules
of Court). In the case at bar, the members of the crew of the two vessels were caught in
flagrante illegally fishing with dynamite and without the requisite license. Thus their apprehension
without a warrant of arrest while committing a crime is lawful. Consequently, the seizure of the
vessel, its equipment and dynamites therein was equally valid as an incident to a lawful arrest.
The allege compromise approved by the Secretary of Agriculture and Natural Resources on September
13, 1965 (pp. 63-64, 158-159, rec.) cannot, be invoked by the respondents because the said
compromise referred to about thirty violations of the fisheries law committed by the private
respondent from March 28, 1963 to March 11, 1964. The violations by the two vessels of private
respondent by reason of which these vessels were apprehended and detained by the Philippine Navy
upon request of the Commissioner of Fisheries, were committed on August 5 or 6, 1965. "every description of water craft, large or small, used or capable of being used as a means of
transportation on water" (Cope versus Vallete, etc., 119 U. S. 625; U.S. vs. Holmes, 104 Fed.
Moreover, the power to compromise would exist only before a criminal prosecution is instituted; 884; Charles Barnes Co. vs. One Dredge Boat, 169 Fed. 895; and Yu Con vs. Ipil, 41 Phil. 780).
otherwise the Department Secretary or any of his sub-alterns can render criminal prosecutions for
violations of the fisheries law a mere mockery. It is not in the public interest nor is it good policy to The word boat in its ordinary sense, means any water craft (Monongahela River Construction, etc. vs.
sustain the viewpoint that the Department Secretary can compromise criminal cases involving public, Hardsaw, 77 NE 363, 365). The fishing boats Tony Lex III and Tony Lex VI are likewise vessels within
not private, offenses after the indictment had been instituted in court. The fishing vessels together the meaning of the term vessel used in Sections 903 and 2210 of the Tariff and Customs Code.
with all their equipment and the dynamites found therein are not only evidence of the crime of illegal
fishing but also subject to forfeiture in favor of the Government as instruments of the crime (Art. WHEREFORE, THE PETITION IS HEREBY GRANTED AND THE ORDER OF RESPONDENT JUDGE DATED
45, Revised Penal Code, Sec. 78, Act No. 4003, as amended). Section 80(j) of Act No. 4003, as OCTOBER 18, 1965, THE WRIT OF PRELIMINARY MANDATORY INJUNCTION ISSUED THEREUNDER AND
amended, precludes such a compromise the moment the Fisheries Commissioner decides to THE ORDER DATED NOVEMBER 23, 1965, ARE HEREBY SET ASIDE AS NULL AND VOID, WITH COSTS
prosecute the criminal action in accordance with Sections 76 and 78 of the other penal provisions of AGAINST PRIVATE RESPONDENT.
the fisheries law. Furthermore, any compromise shall be upon the recommendation of the Fisheries
Commission (Section 80[i], Act No. 4003), which did not recommend such a compromise for the
violation on August 5 or 6, 1965 of Section 12 in relation to Sections 76 and 78 of Act No. 4003, as
amended. On the contrary, the Fisheries Commissioner requested the Provincial Fiscal to institute the RICHARD HIZON, SILVERIO GARGAR, ERNESTO ANDAYA, NEMESIO GABO, RODRIGO ABRERA,
criminal cases (pp. 43-45, rec.) and the Provincial Fiscal filed the corresponding informations docketed CHEUNG TAI FOOK, SHEK CHOR LUK, EFREN DELA PENA, JONEL AURELIO, GODOFREDO VILLAVERDE,
as Criminal Cases Nos. 3416 and 3417 on September 30, 1965 against the owners and the members of ANGELITO DUMAYBAG, DEOMEDES ROSIL, AMADO VILLANUEVA, FRANCISCO ESTREMOS, ANGEL
the crew of the vessels (pp. 48-53, rec.). VILLAVERDE, NEMESIO CASAMPOL, RICHARD ESTREMOS, JORNIE DELA PENA, JESUS MACTAN,
MARLON CAMPORAZO, FERNANDO BIRING, MENDRITO CARPO, LUIS DUARTE, JOSEPH AURELIO,
It should be noted that in the first indorsement dated September 13, 1965 of the Secretary of RONNIE JUEZAN. BERNARDO VILLACARLOS, RICARDO SALES, MARLON ABELLA, TEODORO DELOS
Agriculture and Natural Resources approving the compromise fine of P21,000.00 for the various REYES, IGNACIO ABELLA, JOSEPH MAYONADO, JANAIRO LANGUYOD, DODONG DELOS REYES, JOLLY
violations committed previous to August 5 or 6, 1965 (pp. 34-42, 47, 58-64, 149-155, 158-159, rec.), CABALLERO and ROPLANDO ARCENAS, Petitioners, v. HONORABLE COURT OF APPEALS and THE
the Department Secretary "believes that the offer made by the company was an implied admission of PEOPLE OF THE PHILIPPINES, Respondents.
violations of said provisions of the Fisheries Law and Regulations, x x x" (pp. 63, 158, rec.). The said
approval was granted after the private respondent filed a motion for reconsideration of the
indorsement dated March 5, 1965 of the Secretary of Agriculture and Natural Resources disapproving DECISION
the offer by private respondent to pay the fine by way of compromise.
PUNO, J.:
There can be no dispute that the term fishing boat employed in the second paragraph of Section 12 of
the Fisheries Act applies to the vessels Tony Lex III and Tony Lex VI. Even private respondent refers to
said fishing boats as fishing vessels "engaged in fishing operations" or "in commercial fishing" in
This is a petition for review on certiorari of the decision of the Court of Appeals in CA-G.R. CR No.
paragraph IV of its complaint in Civil Case No. 62799 (p. 18, rec.), as well as in its various
15417 affirming the decision of the Regional Trial Court, Branch 52, Palawan in Criminal Case No.
communications to the Fisheries Commissioner (pp. 60-61, 65, 82, rec.). The two fishing vessels Tony
10429 convicting petitioners of the offense of illegal fishing with the use of obnoxious or poisonous
Lex III and Tony Lex VI likewise fall under the term vessel used in Sections 17, 76 and 78, as well as the
substance penalized under Presidential Decree (P.D.) No. 704, the Fisheries Decree of 1975.
term boats utilized in the second paragraph of Section 76 of the Fisheries Act. They can also fall under
the term fishing equipment employed in Section 4 of Republic Act No. 3512; because a fishing
In an Information dated October 15, 1992, petitioners were charged with a violation of P.D. 704
equipment is never complete and cannot be effectively used in off-shore or deep-sea fishing without
committed as follows:jgc:chanrobles.com.ph
the fishing boat or fishing vessel itself. And these two vessels of private respondent certainly come
under the term fishing vessels employed in paragraph 5 of Section 4 of the same Republic Act 3512
"That on or about the 30th day of September 1992, at Brgy. San Rafael, Puerto Princesa City,
creating the Fisheries Commission.
Philippines and within the jurisdiction of this Honorable Court, the above-named accused crew
members and fishermen of F/B Robinson owned by First Fishermen Fishing Industries, Inc.,
Hence, no useful purpose can be served in trying to distinguish between boat and vessel with
represented by Richard Hizon, a domestic corporation duly organized under the laws of the
reference to Tony Lex III and Tony Lex VI. As a matter of fact, the accepted definition of vessel includes
Philippines, being then the owner, crew members and fishermen of F/B Robinson and with the use of
said fishing boat, did then and there wilfully, unlawfully and feloniously the said accused conspiring
and confederating together and mutually helping one another catch, take or gather or cause to be
caught, taken or gathered fish or fishery aquatic products in the coastal waters of Puerto Princesa City,
Palawan, with the use of obnoxious or poisonous substance (sodium cyanide), of more or less one (1)
ton of assorted live fishes which were illegally caught thru the use of obnoxious/poisonous substance
(sodium cyanide)." 1
The following facts were established by the prosecution: In September 1992, the Philippine National
Police (PNP) Maritime Command of Puerto Princesa City, Palawan received reports of illegal fishing
operations in the coastal waters of the city. In response to these reports, the city mayor organized
Task Force Bantay Dagat to assist the police in the detection and apprehension of violators of the laws
on fishing.
On September 30, 1992 at about 2:00 in the afternoon, the Task Force Bantay Dagat reported to the
PNP Maritime Command that a boat and several small crafts were fishing by "muro ami" within the
shoreline of Barangay San Rafael of Puerto Princesa. The police, headed by SPO3 Romulo Enriquez,
and members of the Task Force Bantay Dagat, headed by Benito Marcelo, Jr., immediately proceeded
to the area and found several men fishing in motorized sampans and a big fishing boat identified as
F/B Robinson within the seven-kilometer shoreline of the city. They boarded the F/B Robinson and
inspected the boat with the acquiescence of the boat captain, Silverio Gargar. In the course of their
inspection, the police saw two foreigners in the captain’s deck. SPO3 Enriquez examined their
passports and found them to be mere photocopies. The police also discovered a large aquarium full of
live lapu-lapu and assorted fish weighing approximately one ton at the bottom of the boat. 2 They
checked the license of the boat and its fishermen and found them to be in order. Nonetheless, SPO3
Enriquez brought the boat captain, the crew and the fishermen to Puerto Princesa for further
investigation.
At the city harbor, members of the Maritime Command were ordered by SPO3 Enriquez to guard the
F/B Robinson. The boat captain and the two foreigners were again interrogated at the PNP Maritime
Command office. Thereafter, an Inspection/Apprehension Report was prepared and the boat, its crew
and fishermen were charged with the following violations:jgc:chanrobles.com.ph
"1. Conducting fishing operations within Puerto Princesa coastal waters without mayor’s permit;
2. Employing excess fishermen on board (Authorized — 26; On board — 36);
3. Two (2) Hongkong nationals on board without original passports." 3
The following day, October 1, 1992, SPO3 Enriquez directed the boat captain to get random samples
of fish from the fish cage of F/B Robinson for laboratory examination. As instructed, the boat
engineer, petitioner Ernesto Andaya, delivered to the Maritime Office four (4) live lapu-lapu fish inside
a plastic shopping bag filled with water. SPO3 Enriquez received the fish and in the presence of the
boat engineer and captain, placed them inside a large transparent plastic bag without water. He
sealed the plastic with heat from a lighter. 4
The specimens were brought to the National Bureau of Investigation (NBI) sub-office in the city for
examination "to determine the method of catching the same for record or evidentiary purposes." 5
They were received at the NBI office at 8:00 in the evening of the same day. The receiving clerk, Edna
Capicio, noted that the fish were dead and she placed the plastic bag with the fish inside the office
freezer to preserve them. Two days later, on October 3, 1992, the chief of the NBI sub-office, Onos
Mangotara, certified the specimens for laboratory examination at the NBI Head Office in Manila. The
fish samples were to be personally transported by Edna Capicio who was then scheduled to leave for
Manila for her board examination in Criminology. 6 On October 4, 1992, Ms. Capicio, in the presence
of her chief, took the plastic with the specimens from the freezer and placed them inside two
shopping bags and sealed them with masking tape. She proceeded to her ship where she placed the
specimens in the ship’s freezer.
Capicio arrived in Manila the following day, October 5, 1992 and immediately brought the specimens
to the NBI Head Office. On October 7, 1992, NBI Forensic Chemist Emilia Rosaldes conducted two
tests on the fish samples and found that they contained sodium cyanide, thus:jgc:chanrobles.com.ph
"FINDINGS:chanrob1es virtual 1aw library
Weight of Specimen.. . . . 1.870 kilograms Examinations made on the above-mentioned specimen gave
POSITIVE RESULTS to the test for the presence of SODIUM CYANIDE. . . ."cralaw virtua1aw library
REMARKS:chanrob1es virtual 1aw library
Sodium Cyanide is a violent poison." 7
In light of these findings, the PNP Maritime Command of Puerto Princesa City filed the complaint at
bar against the owner and operator of the F/B Robinson, the First Fishermen Fishing Industries, Inc.,
represented by herein petitioner Richard Hizon, the boat captain, Silverio Gargar, the boat engineer,
Ernesto Andaya, two other crew members, the two Hongkong nationals and 28 fishermen of the said
boat.
Petitioners were arraigned and they pled not guilty to the charge. As defense, they claimed that they
are legitimate fishermen of the First Fishermen Industries, Inc., a domestic corporation licensed to
engage in fishing. They alleged that they catch fish by the hook and line method and that they had
used this method for one month and a half in the waters of Cuyo Island. They related that on
September 30, 1992 at about 7:00 A.M., they anchored the F/B Robinson in the east of Podiado Island
in Puerto Princesa City. The boat captain and the fishermen took out and boarded their sampans to
fish for their food. They were still fishing in their sampans at 4:00 P.M. when a rubber boat containing
members of the PNP Maritime Command and the Task Force Bantay Dagat approached them and
boarded the F/B Robinson. The policemen were in uniform while the Bantay Dagat personnel were in
civilian clothes. They were all armed with guns. One of the Bantay Dagat personnel introduced himself
as Commander Jun Marcelo and he inspected the boat and the boat’s documents. Marcelo saw the
two foreigners and asked for their passports. As their passports were photocopies, Marcelo
demanded for their original. The captain explained that the original passports were with the
company’s head office in Manila. Marcelo angrily insisted for the originals and threatened to arrest
everybody. He then ordered the captain, his crew and the fishermen to follow him to Puerto Princesa.
He held the magazine of his gun and warned the captain "Sige, huwag kang tatakas, kung hindi
babarilin ko kayo!" 8 The captain herded all his men into the boat and followed Marcelo and the
police to Puerto Princesa.
They arrived at the city harbor at 7:45 in the evening and were met by members of the media. As
instructed by Marcelo, the members of the media interviewed and took pictures of the boat and the
fishermen. 9
The following day, October 1, 1992, at 8:00 in the morning, Amado Villanueva, one of the fishermen
at the F/B Robinson, was instructed by a policeman guarding the boat to get five (5) fish samples from
the fish cage and bring them to the pier. Villanueva inquired whether the captain knew about the
order but the guard replied he was taking responsibility for it. Villanueva scooped five pieces of lapu-
lapu, placed them inside a plastic bag filled with water and brought the bag to the pier. The boat
engineer, Ernesto Andaya, received the fish and delivered them to the PNP Maritime Office. Nobody
was in the office and Andaya waited for the apprehending officers and the boat captain. Later, one of
the policemen in the office instructed him to leave the bag and hang it on a nail in the -wall. Andaya
did as he was told and returned to the boat at 10:00 A.M. 10
In the afternoon of the same day, the boat captain arrived at the Maritime office. He brought along a
representative from their head office in Manila who showed the police and the Bantay Dagat
personnel the original passports of the Hongkong nationals and other pertinent documents of the F/B
Robinson and its crew. Finding the documents in order, Marcelo approached the captain and
whispered to him "Tandaan mo ito, kapitan, kung makakaalis ka dito, magkikita pa rin uli tayo sa
dagat, kung hindi kayo lulubog ay palulutangin ko kayo!" It was then that SPO3 Enriquez informed the
captain that some members of the Maritime Command, acting under his instructions, had just taken
five (5) pieces of lapu-lapu from the boat. SPO3 Enriquez showed the captain the fish samples.
Although the captain saw only four (4) pieces of lapu-lapu, he did not utter a word of protest. 11
Under Marcelo’s threat, he signed the "Certification" that he received only four (4) pieces of the fish.
12
Two weeks later, the information was filed against petitioners. The case was prosecuted against thirty-
one (31) of the thirty-five (35) accused. Richard Hizon remained at large while the whereabouts of
Richard Estremos, Marlon Camporazo and Joseph Aurelio were unknown.
On July 9, 1993, the trial court found the thirty one (31) petitioners guilty and sentenced them to
imprisonment for a minimum of eight (8) years and one (1) day to a maximum of nine (9) years and
four (4) months. The court also ordered the confiscation and forfeiture of the F/B Robinson, the 28
sampans and the ton of assorted live fishes as instruments and proceeds of the offense,
thus:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, judgment is hereby rendered finding the accused SILVERIO
GARGAR, ERNESTO ANDAYA, NEMESIO GABO, RODRIGO ABRERA, CHEUNG TAI FOOK, SHEK CHOR LUK,
EFREN DELA PENA, JONEL AURELIO, GODOFREDO VILLAVERDE, ANGELITO DUMAYBAG, DEOMEDES
ROSIL, AMADO VILLANUEVA, FRANCISCO ESTREMOS, ARNEL VILLAVERDE, NEMESIO CASAMPOL,
JORNIE DELACRUZ, JESUS MACTAN, FERNANDO BIRING, MENDRITO CARPO, LUIS DUARTE, RONNIE
JUEZAN, BERNARDO VILLACARLOS, RICHARD SALES, MARLON ABELLA, TEODORO DELOS REYES,
IGNACIO ABELLA, JOSEPH MAYONADO, JANAIRO LANGUYOD, DODONG DELOS REYES, ROLANDO
ARCENAS and JOLLY CABALLERO guilty beyond reasonable doubt of the crime of Illegal Fishing with
the use of obnoxious or poisonous substance commonly known as sodium cyanide, committed in
violation of section 33 and penalized in section 38 of Presidential Decree No. 704, as amended, and
there being neither mitigating nor aggravating circumstances appreciated and applying the provisions
of the Indeterminate Sentence Law, each of the aforenamed accused is sentenced to an
indeterminate penalty of imprisonment ranging from a minimum of EIGHT (8) YEARS and ONE (1) DAY
to a maximum of NINE (9) YEARS and FOUR (4) MONTHS and to pay the costs.
Pursuant to the provisions of Article 45, in relation to the second sentence of Article 10 of the Revised
Penal Code, as amended:chanrob1es virtual 1aw library
a) Fishing Boat (F/B) Robinson;
b) The 28 motorized fiberglass sampans; and
c) The live fishes in the fish cages installed in the F/B Robinson, all of which have been respectively
shown to be tools or instruments and proceeds of the offense, are hereby ordered confiscated and
declared forfeited in favor of the government.
SO ORDERED." 13
On appeal, the Court of Appeals affirmed the decision of the trial court. Hence, this petition.
Petitioners contend that:chanrob1es virtual 1aw library
"I
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE MERE "POSITIVE RESULTS TO THE
TEST FOR THE PRESENCE OF SODIUM CYANIDE" IN THE FISH SPECIMEN, ALBEIT ILLEGALLY SEIZED ON
THE OCCASION OF A WARRANTLESS SEARCH AND ARREST, IS ADMISSIBLE AND SUFFICIENT BASIS FOR
THE PETITIONERS’ CONVICTION OF THE CRIME OF ILLEGAL FISHING.
II
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE STATUTORY PRESUMPTION
OF GUILT UNDER SEC. 33 OF PRESIDENTIAL DECREE NO. 704 CANNOT PREVAIL AGAINST THE
CONSTITUTIONAL PRESUMPTION OF INNOCENCE, SUCH THAT THE GRAVAMEN OF THE OFFENSE OF
ILLEGAL FISHING MUST STILL BE PROVED BEYOND REASONABLE DOUBT.
III
THE HONORABLE COURT OF APPEALS ERRED IN NOT REVERSING THE JUDGMENT OF THE TRIAL
COURT AND ACQUITTING THE PETITIONERS." 14
The Solicitor General submitted a "Manifestation in Lieu of Comment" praying for petitioners’
acquittal. 15
The petitioners, with the concurrence of the Solicitor General, primarily question the admissibility of
the evidence against petitioners in view of the warrantless search of the fishing boat and the
subsequent arrest of petitioners. More concretely, they contend that the NBI finding of sodium
cyanide in the fish specimens should not have been admitted and considered by the trial court
because the fish samples were seized from the F/B Robinson without a search warrant.
Our Constitution proscribes search and seizure and the arrest of persons without a judicial warrant.
16 As a general rule, any evidence obtained without a judicial warrant is inadmissible for any purpose
in any proceeding. The rule is, however, subject to certain exceptions. Some of these are: 17 (1) a
search incident to a lawful arrest; 18 (2) seizure of evidence in plain view; (3) search of a moving
motor vehicle; 19 and (4) search in violation of customs laws. 20
Search and seizure without search warrant of vessels and aircrafts for violations of customs laws have
been the traditional exception to the constitutional requirement of a search warrant. It is rooted on
the recognition that a vessel and an aircraft, like motor vehicles, can be quickly moved out of the
locality or jurisdiction in which the search warrant must be sought and secured. Yielding to this reality,
judicial authorities have not required a search warrant of vessels and aircrafts before their search and
seizure can be constitutionally effected. 21
The same exception ought to apply to seizures of fishing vessels and boats breaching our fishery laws.
These vessels are normally powered by high-speed motors that enable them to elude arresting ships
of the Philippine Navy, the Coast Guard and other government authorities enforcing our fishery laws.
22
We thus hold as valid the warrantless search on the F/B Robinson, a fishing boat suspected of having
engaged in illegal fishing. The fish and other evidence seized in the course of the search were properly
admitted by the trial court. Moreover, petitioners failed to raise the issue during trial and hence,
waived their right to question any irregularity that may have attended the said search and seizure. 23
Given the evidence admitted by the trial court, the next question now is whether petitioners are
guilty of the offense of illegal fishing with the use of poisonous substances. Again, the petitioners,
joined by the Solicitor General, submit that the prosecution evidence cannot convict them.
We agree.
Petitioners were charged with illegal fishing penalized under sections 33 and 38 of P.D. 704 24 which
provide as follows:jgc:chanrobles.com.ph
"Sec. 33. Illegal fishing, illegal possession of explosives intended for illegal fishing; dealing in illegally
caught fish or fishery/aquatic products. — It shall be unlawful for any person to catch, take or gather
or cause to be caught, taken or gathered fish or fishery/aquatic products in Philippine waters with the
use of explosives, obnoxious or poisonous substance, or by the use of electricity as defined in
paragraphs (l), (m) and (d), respectively, of section 3 hereof: Provided, That mere possession of such
explosives with intent to use the same for illegal fishing as herein defined shall be punishable as
hereinafter provided: Provided, That the Secretary may, upon recommendation of the Director and
subject to such safeguards and conditions he deems necessary, allow for research, educational or
scientific purposes only, the use of explosives, obnoxious or poisonous substance or electricity to
catch, take or gather fish or fishery/aquatic products in the specified area: Provided, further, That the
use of chemicals to eradicate predators in fishponds in accordance with accepted scientific fishery
practices without causing deleterious effects in neighboring waters shall not be construed as the use
of obnoxious or poisonous substance within the meaning of this section: Provided, finally, That the
use of mechanical bombs for killing whales, crocodiles, sharks or other large dangerous fishes, may be
allowed, subject to the approval of the Secretary.
It shall, likewise, be unlawful for any person knowingly to possess, deal in, sell or in any manner
dispose of, for profit, any fish or fishery/aquatic products which have been illegally caught, taken or
gathered.
The discovery of dynamite, other explosives and chemical compounds containing combustible
elements, or obnoxious or poisonous substance, or equipment or device for electric fishing in any
fishing boat or in the possession of a fisherman shall constitute a presumption that the same were
used for fishing in violation of this Decree, and the discovery in any fishing boat of fish caught or killed
by the use of explosives, obnoxious or poisonous substance or by electricity shall constitute a
presumption that the owner, operator or fisherman were fishing with the use of explosives, obnoxious
or poisonous substance or electricity."cralaw virtua1aw library
x x x
Sec. 38. Penalties. — (a) For illegal fishing and dealing in illegally caught fish or fishery/aquatic
products. — Violation of Section 33 hereof shall be punished as follows:chanrob1es virtual 1aw library
x x x
(2) By imprisonment from eight (8) to ten (10) years, if obnoxious or poisonous substances are used:
Provided, That if the use of such substances results 1) in physical injury to any person, the penalty
shall be imprisonment from ten (10) to twelve (12) years, or 2) in the loss of human life, then the
penalty shall be imprisonment from twenty (20) years to life or death;"
x x x."25cralaw:red
The offense of illegal fishing is committed when a person catches, takes or gathers or causes to be
caught, taken or gathered fish, fishery or aquatic products in Philippine waters with the use of
explosives, electricity, obnoxious or poisonous substances. The law creates a presumption that illegal
fishing has been committed when: (a) explosives, obnoxious or poisonous substances or equipment or
device for electric fishing are found in a fishing boat or in the possession of a fisherman; or (b) when
fish caught or killed with the use of explosives, obnoxious or poisonous substances or by electricity
are found in a fishing boat. Under these instances, the boat owner, operator or fishermen are
presumed to have engaged in illegal fishing.
Petitioners contend that this presumption of guilt under the Fisheries Decree violates the
presumption of innocence guaranteed by the Constitution. 26 As early as 1916, this Court has
rejected this argument by holding that: 27
"In some States, as well as in England, there exist what are known as common law offenses. In the
Philippine Islands no act is a crime unless it is made so by statute. The state having the right to declare
what acts are criminal, within certain well-defined limitations, has the right to specify what act or acts
shall constitute a crime, as well as what proof shall constitute prima facie evidence of guilt, and then
to put upon the defendant the burden of showing that such act or acts are innocent and are not
committed with any criminal intent or intention." 28
The validity of laws establishing presumptions in criminal cases is a settled matter. It is generally
conceded that the legislature has the power to provide that proof of certain facts can constitute prima
facie evidence of the guilt of the accused and then shift the burden of proof to the accused provided
there is a rational connection between the facts proved and the ultimate fact presumed. 29 To avoid
any constitutional infirmity, the inference of one from proof of the other must not be arbitrary and
unreasonable. 30 In fine, the presumption must be based on facts and these facts must be part of the
crime when committed. 31
The third paragraph of section 33 of P.D. 704 creates a presumption of guilt based on facts proved and
hence is not constitutionally impermissible. It makes the discovery of obnoxious or poisonous
substances, explosives, or devices for electric fishing, or of fish caught or killed with the use of
obnoxious and poisonous substances, explosives or electricity in any fishing boat or in the possession
of a fisherman evidence that the owner and operator of the fishing boat or the fisherman had used
such substances in catching fish. The ultimate fact presumed is that the owner and operator of the
boat or the fisherman were engaged in illegal fishing and this presumption was made to arise from
the discovery of the substances and the contaminated fish in the possession of the fisherman in the
fishing boat. The fact presumed is a natural inference from the fact proved. 32
We stress, however, that the statutory presumption is merely prima facie. 33 It can not, under the
guise of regulating the presentation of evidence, operate to preclude the accused from presenting his
defense to rebut the main fact presumed. 34 At no instance can the accused be denied the right to
rebut the presumption, 35 thus:jgc:chanrobles.com.ph
"The inference of guilt is one of fact and rests upon the common experience of men. But the
experience of men has taught them that an apparently guilty possession may be explained so as to
rebut such an inference and an accused person may therefore put witnesses on the stand or go on the
witness stand himself to explain his possession, and any reasonable explanation of his possession,
inconsistent with his guilty connection with the commission of the crime, will rebut the inference as
to his guilt which the prosecution seeks to have drawn from his guilty possession of the stolen goods."
36
We now review the evidence to determine whether petitioners have successfully rebutted this
presumption. The facts show that on November 13, 1992, after the Information was filed in court and
petitioners granted bail, petitioners moved that the fish specimens taken from the F/B Robinson be
reexamined. 37 The trial court granted the motion. 38 As prayed for, a member of the PNP Maritime
Command of Puerto Princesa, in the presence of authorized representatives of the F/B Robinson, the
NBI and the local Fisheries Office, took at random five (5) live lapu-lapu from the fish cage of the boat.
The specimens were packed in the usual manner of transporting live fish, taken aboard a commercial
flight and delivered by the same representatives to the NBI Head Office in Manila for chemical
analysis.
On November 23, 1992, Salud Rosales, another forensic chemist of the NBI in Manila conducted three
(3) tests on the specimens and found the fish negative for the presence of sodium cyanide, 39
thus:jgc:chanrobles.com.ph
"Gross weight of specimen = 3.849 kg.
Examinations made on the above-mentioned specimens gave NEGATIVE RESULTS to the tests for the
presence of SODIUM CYANIDE." 40
The Information charged petitioners with illegal fishing "with the use of obnoxious or poisonous
substance (sodium cyanide), of more or less one (1) ton of assorted live fishes." There was more or
less one ton of fishes in the F/B Robinson’s fish cage. It was from this fish cage that the four dead
specimens examined on October 7, 1992 and the five live specimens examined on November 23, 1992
were taken. Though all the specimens came from the same source allegedly tainted with sodium
cyanide, the two tests resulted in conflicting findings. We note that after its apprehension, the F/B
Robinson never left the custody of the PNP Maritime Command. The fishing boat was anchored near
the city harbor and was guarded by members of the Maritime Command. 41 It was later turned over
to the custody of the Philippine Coast Guard Commander of Puerto Princesa City. 42
The prosecution failed to explain the contradictory findings on the fish samples and this omission
raises a reasonable doubt that the one ton of fishes in the cage were caught with the use of sodium only the following items were found on board the boat:jgc:chanrobles.com.ph
cyanide.
"ITEMS QUANTITY REMARKS
The absence of cyanide in the second set of fish specimens supports petitioners’ claim that they did
not use the poison in fishing. According to them, they caught the fishes by the ordinary and legal way, F/B Robinson (1) unit operating
i.e., by hook and line on board their sampans . This claim is buttressed by the prosecution evidence
itself. The apprehending officers saw petitioners fishing by hook and line when they came upon them engine (1) unit ICE-900-BHP
in the waters of Barangay San Rafael. One of the apprehending officers, SPO1 Demetrio Saballuca,
testified as follows:jgc:chanrobles.com.ph sampans 28 units fiberglass

"ATTY. TORREFRANCA ON CROSS-EXAMINATION:chanrob1es virtual 1aw library outboard motors 28 units operating

Q : I get your point therefore, that the illegal fishing supposedly conducted at San Rafael is a moro ami assorted fishes more or less 1 ton live
type of fishing [that] occurred into your mind and that was made to understand by the Bantay Dagat
personnel? hooks and lines assorted

A : Yes, sir. x x x" 44

Q : Upon reaching the place, you and the pumpboat, together with the two Bantay Dagat personnel We cannot overlook the fact that the apprehending officers assorted hooks and lines for catching fish.
were SPO3 Romulo Enriquez and Mr. Benito Marcelo and SPO1 Marzan, you did not witness that kind 45 For this obvious reason, the Inspection/Apprehension Report prepared by the apprehending
of moro ami fishing, correct? officers immediately after the search did not charge petitioners with illegal fishing, much less illegal
fishing with the use of poison or any obnoxious substance. 46
A : None, sir.
The only basis for the charge of fishing with poisonous substance is the result of the first NBI
Q : In other words, there was negative activity of moro ami type of fishing on September 30, 1992 at laboratory test on the four fish specimens. Under the circumstances of the case, however, this finding
4:00 in the afternoon at San Rafael? does not warrant the infallible conclusion that the fishes in the F/B Robinson, or even the same four
specimens, were caught with the use of sodium cyanide.
A : Yes, sir.
Prosecution witness SPO1 Bernardino Visto testified that for the first laboratory test, boat engineer
Q : And what you saw were 5 motorized sampans with fishermen each doing a hook and line fishing Ernesto Andaya did not only get four (4) samples of fish but actually got five (5) from the fish cage of
type? the F/B Robinson. 47 The Certification that four (4) fish samples were taken from the boat shows on
its face the number of pieces as originally "five (5)" but this was erased with correction fluid and "four
A : Yes, sir. More or less they were five. (4)" written over it. 48 The specimens were taken, sealed inside the plastic bag and brought to Manila
by the police authorities in the absence of petitioners or their representative. SPO2 Enriquez testified
Q : And despite the fact you had negative knowledge of this moro ami type of fishing, SPO3 Enriquez that the same plastic bag containing the four specimens was merely sealed with heat from a lighter.
together with Mr. Marcelo boarded the vessel just the same? 49 Emilia Rosaldes, the NBI forensic chemist who examined the samples, testified that when she
opened the package, she found the two ends of the same plastic bag knotted. 50 These circumstances
A : Yes, sir. as well as the time interval from the taking of the fish samples and their actual examination 51 fail to
assure the impartial mind that the integrity of the specimens had been properly safeguarded.
x x x" 43
Apparently, the members of the PNP Maritime Command and the Task Force Bantay Dagat were the
The apprehending officers who boarded and searched the boat did not find any sodium cyanide nor ones engaged in an illegal fishing expedition. As sharply observed by the Solicitor General, the report
any poisonous or obnoxious substance. Neither did they find any trace of the poison in the possession received by the Task Force Bantay Dagat was that a fishing boat was fishing illegally through "muro
of the fishermen or in the fish cage itself. An Inventory was prepared by the apprehending officers and ami" on the waters of San Rafael. "Muro ami" according to SPO1 Saballuca is made with net with
sinkers to make the net submerge in the water with the fishermen surround[ing] the net." 52 This
method of fishing needs approximately two hundred (200) fishermen to execute. 53 What the
apprehending officers instead discovered were twenty eight (28) fishermen in their sampans fishing
by hook and line. The authorities found nothing on the boat that would have indicated any form of
illegal fishing. All the documents of the boat and the fishermen were in order. It was only after the fish
specimens were tested, albeit under suspicious circumstances, that petitioners were charged with
illegal fishing with the use of poisonous substances.
IN VIEW WHEREOF, the petition is granted and the decision of the Court of Appeals in CA-G.R. CR No.
15417 is reversed and set aside. Petitioners are acquitted of the crime of illegal fishing with the use of
poisonous substances defined under Section 33 of Republic Act No. 704, the Fisheries Decree of 1975.
No costs.
SO ORDERED.
PRESIDENTIAL DECREE No. 1067 December 31, 1976
A DECREE INSTITUTING A WATER CODE, THEREBY REVISING AND CONSOLIDATING THE LAWS
GOVERNING THE OWNERSHIP, APPROPRIATION, UTILIZATION, EXPLOITATION, DEVELOPMENT,
CONSERVATION AND PROTECTION OF WATER RESOURCES
WHEREAS, Article XIV, Section 8 of the New Constitution of the Philippines provides, inter alia, that all
waters of the Philippines belong to the State;
WHEREAS, existing water legislations are piece-meal and inadequate to cope with increasing scarcity
of water and changing patterns of water use;
WHEREAS, there is a need for a Water Code based on rational concepts or integrated and
multipurpose management of water resources and sufficiently flexible to adequately meet future
developments;
WHEREAS, water is vital to national development and it has become increasingly necessary for
government to intervene actively in improving the management of water resources;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in
me vested by the Constitution, do hereby order and decree the enactment of the water Code of the
Philippines of 1976, as follows:
CHAPTER I
DECLARATION OF OBJECTIVES AND PRINCIPLES
Article 1. This Code shall be known as The Water Code of the Philippines.
Article 2. The objectives of this Code are:
(a) To establish the basic principles and framework relating to the appropriation, control and
conservation of water resources to achieve the optimum development and rational utilization of these
resources;
(b) To define the extent of the rights and obligations of water users and owners including the
protection and regulation of such rights;
(c) To adopt a basic law governing the ownership, appropriation, utilization, exploitation,
development, conservation and protection of water resources and rights to land related thereto; and
(d) To identify the administrative agencies which will enforce this Code.
Article 3. The underlying principles of this code are:
(a) All waters belong to the State.
(b) All waters that belong to the State can not be the subject to acquisitive prescription.
(c) The State may allow the use or development of waters by administrative concession.
(d) The utilization, exploitation, development, conservation and protection of water resources shall be
subject to the control and regulation of the government through the National Water Resources
Council, hereinafter referred to as the Council.
(e) Preference in the use and development of waters shall consider current usages and be responsive
to the changing needs of the country.
Article 4. Waters, as used in this Code, refers to water under the grounds, water above the ground,
water in the atmosphere and the waters of the sea within the territorial jurisdiction of the Philippines.
CHAPTER II Article 8. Water legally appropriated shall be subject to the control of the appropriator from the
OWNERSHIP OF WATERS moment it reaches the appropriator's canal or aqueduct leading to the place where the water will be
used or stored and, thereafter, so long as it is being beneficially used for the purposes for which it was
Article 5. The following belong to the State: appropriated.

(a) Rivers and their natural beds; CHAPTER III

APPROPRIATION OF WATERS
(b) Continuous or intermittent waters of springs and brooks running in their natural beds and the beds
themselves; Article 9. Waters may be appropriated and used in accordance with the provisions of this Code.

(c) Natural lakes and lagoons; Appropriation of water, as used in this Code, is the acquisition of rights over the use of waters or the
taking or diverting of waters from a natural source in the manner and for any purpose allowed by law.
(d) All other categories of surface waters such as water flowing over lands, water from rainfall
whether natural, or artificial, and water from agriculture runoff, seepage and drainage; Article 10. Water may be appropriated for the following purposes:

(e) Atmospheric water; (a) Domestic

(f) Subterranean or ground waters; and, (b) Municipal

(g) Seawater. (c) Irrigation

Article 6. The following waters found on private lands belong to the State: (d) Power generation

(a) Continuous or intermittent waters rising on such lands; (e) Fisheries

(b) Lakes and lagoons naturally occuring on such lands; (f) Livestock raising

(c) Rain water falling on such lands; (g) Industrial

(d) Subterranean or ground waters; and, (h) Recreational, and

(e) Water in swamps and marshes. (i) Other purposes

The owner of the land where the water is found may use the same for domestic purposes without
securing a permit, provided that such use shall be registered, when required by the Council. The
Council, however, may regulate such when there is wastage, or in times of emergency.
Article 7. Subject to the provisions of this Code, any person who captures or collects water by means
of cisterns, tanks, or pools shall have exclusive control over such water and the right to dispose of the
same.
Use of water for domestic purposes is the utilization of water for drinking, washing, bathing, cooking
or other household needs, home gardens, and watering of lawns or domestic animals.
Use of water for municipal purposes is the utilization of water for supplying the water requirements of
the community.
Use of water for irrigation is the utilization of water for producing agricultural crops.
Use of water for power generation is the utilization of water for producing electrical or mechanical
power.
Use of water for fisheries is the utilization of water for the propagation and culture of fish as a
commercial enterprise.
Use of water for livestock raising is the utilization of water for large herds or flocks of animals raised as
a commercial enterprise.
Use of water for industrial purposes is the utilization of water in factories, industrial plants and mines,
including the use of water as an ingredient of a finished product.
Use of water for recreational purposes is the utilization of water for swimming pools, bath houses,
boating, water skiing, golf courses and other similar facilities in resorts and other places of recreation.
Article 11. The State, for reasons of public policy, may declare waters not previously appropriated, in
whole or in part, exempt from appropriation for any or all purposes and, thereupon, such waters may
not be appropriated for those purposes.
Article 12. Waters appropriated for a particular purpose may be applied for another purpose only
upon prior approval of the Council and on condition that the new use does not unduly prejudice the
rights of other permittees, or require an increase in the volume of water.
Article 13. Except as otherwise herein provided, no person, including government instrumentalities or
government-owned or controlled corporations, shall appropriate water without a water right, which
shall be evidenced by a document known as a water permit.
Water right is the privilege granted by the government to appropriate and use water.
Article 14. Subject to the provisions of this Code concerning the control, protection, conservation, and
regulation of the appropriation and use of waters, any person may appropriate or use natural bodies
of water without securing a water permit for any of the following:
(a) Appropriation of water by means of handcarried receptacles; and
(b) Bathing or washing, watering or dipping of domestic or farm animals, and navigation of watercrafts
or transportation of logs and other objects by flotation.
Article 15. Only citizens of the Philippines, of legal age, as well as juridical persons, who are duly
qualified by law to exploit and develop water resources, may apply for water permits.
Article 16. Any person who desires to obtain a water permit shall file an application with the Council
who shall make known said application to the public for any protests.
In determining whether to grant or deny an application, the Council shall consider the following:
protests filed, if any; prior permits granted; the availability of water; the water supply needed for
beneficial use; possible adverse effects; land-use economics; and other relevant factors.
Upon approval of an application, a water permit shall be issued and recorded.
Article 17. The right to the use of water is deemed acquired as of the date of filing of the application
for a water permit in case of approved permits, or as of the date of actual use in a case where no
permit is required.
Article 18. All water permits granted shall be subject to conditions of beneficial use, adequate
standards of design and construction, and such other terms and conditions as may be imposed by the
Council.
Such permits shall specify the maximum amount of water which may be diverted or withdrawn, the
maximum rate of diversion or withdrawal, the time or times during the year when water may be
diverted or withdrawn, the points or points of diversion or location of wells, the place of use, the
purposes of which water may be used and such other requirements the Council deems desirable.
Article 19. Water rights may be leaded or transferred in whole or in part to another person with prior
approval of the Council, after due notice and hearing.
Article 20. The measure and limit of appropriation of water shall be beneficial use.
Beneficial use of water is the utilization of water in the right amount during the period that the water
is needed for producing the benefits for which the water is appropriated.
Article 21. Standards of beneficial use shall be prescribed by the council for the appropriator of water
for different purposes and conditions, and the use of waters which are appropriated shall be
measured and controlled in accordance therewith.
Excepting for domestic use, every appropriator of water shall maintain water control and measuring
devices, and keep records of water withdrawal. When required by the Council, all appropriators of
water shall furnish information on water use.
Article 22. Between two or more appropriators of water from the same sources of supply, priority in
time of appropriation shall give the better right, except that in times of emergency the use of water
for domestic and municipal purposes shall have a better right over all other uses; Provided, the where
water shortage is recurrent and the appropriator for municipal use has a lower priority in time of
appropriation, then it shall be his duty to find an alternative source of supply in accordance with
conditions prescribed by the Council.
Article 23. Priorities may be altered on grounds of greater beneficial use, multi-purpose use, and
other similar grounds after due notice and hearing, subject to payment of compensation is proper
cases.
Article 24. A water right shall be exercised in such a manner that the rights of third persons or of
other appropriators are not prejudiced thereby.
Article 25. A holder of water permit may demand the establishment of easements necessary for the
construction and maintenance of the works and facilities needed for the beneficial use of the waters
to be appropriated subject to the requirements of just compensation and to the following conditions:
(a) That he is the owner, lessee, mortgagee or one having real right over the land upon which he
proposes to use water; and
(b) That the proposed easement is the most convenient and the least onerous to the servient estate.
Easements relating to the appropriation and use of waters may be modified by agreement of the
contracting parties provided the same is not contrary to law or prejudicial to third persons.
Article 26. Where water shortage is recurrent, the use of the water pursuant to a permit may, in the
interest of equitable distribution of the benefits among legal appropriators, reduce after due notice
and hearing.
Article 27. Water users shall bear the diminution of any water supply due to natural causes or force
majeure.
Article 28. Water permits shall continue to be valid as long as water is beneficially used; however, it
maybe suspended on the grounds of non-compliance with approved plans and specifications or
schedules of water distribution; use of water for a purpose other than that for which it was granted;
non-payment of water charges; wastage; failure to keep records of water diversion, when required;
and violation of any term or condition of any permit or rules and regulations promulgated by the
Council.
Temporary permits may be issued for the appropriation and use of water for short periods under
special circumstances.
Article 29. Water permits may be revoked after due notice and hearing on grounds of non-use; gross
violation of the conditions imposed in the permit; unauthorized sale of water; willful failure or refusal
to comply with rules and regulations of any lawful order; pollution, public nuisance or acts
detrimental to public health and safety; when the appropriator is found to be disqualified under the
law to exploit and develop natural resources of the Philippines; when, in the case, of irrigation, the
land is converted to non-agricultural purposes; and other similar grounds.
Article 30. All water permits are subject to modification or cancellation by the council, after due
notice and hearing, in favor of a project of greater beneficial use or for multi-purpose development,
and a water permittee who suffers thereby shall be duly compensated by the entity or person in
whose favor the cancellation was made.
CHAPTER IV
UTILIZATION OF WATERS
Article 31. Preference in the development of water resources shall consider security of the State,
multiple use, beneficial effects, adverse effects and costs of development.
Article 32. The utilization of subterranean or ground water shall be coordinated with that of surface
waters such as rivers, streams, springs and lakes, so that a superior right in one not adversely affected
by an inferior right in the other.
For this purpose the Council shall promulgate rules and regulations and declare the existence of
control areas for the coordinated development, protection, and utilization of subterranean or ground
water and surface waters.
Control area is an area of land where subterranean or ground water and surface water are so
interrelated that withdrawal and use in one similarly affects the other. The boundary of a control area
may be altered from time to time, as circumstances warrant.
Article 33. Water contained in open canals, aqueducts or reservoirs of private persons may be used by
any person for domestic purpose or for watering plants as long as the water is withdrawn by manual
methods without checking the stream or damaging the canal, aqueduct or reservoir; Provided, That
this right may be restricted by the owner should it result in loss or injury to him.
Article 34. A water permittee or appropriator may use any watercourse to convey water to another
point in the watercourse for the purpose stated in a permit and such water may be diverted or
recaptured at that point by said permittee in the same amount less allowance for normal losses in
transit.
Article 35. Works for the storage, diversion, distribution and utilization of water resources shall
contain adequate provision for the prevention and control of diseases that may be induced or spread
by such works when required by the Council.
Article 36. When the reuse of waste water is feasible, it shall be limited as much as possible, to such
uses other than direct human consumption. No person or agency shall distribute such water for public
consumption until it is demonstrated that such consumption will not adversely affect the health and
safety of the public.
Article 37. In the construction and operation of hydraulic works, due consideration shall be given to
the preservation of scenic places and historical relics and, in addition to the provisions of existing
laws, no works that would required the destruction or removal of such places or relics shall be
undertaken without showing that the distribution or removal is necessary and unaviodable.
Article 38. Authority for the construction of dams, bridges and other structures across of which may
interfere with the flow of navigable or flotable waterways shall first be secured from the Department
of Public Works, Transportation and Communications.
Article 39. Except in cases of emergency to save life or property, the construction or repair of the
following works shall be undertaken only after the plans and specifications therefor, as may be
required by the Council, are approved by the proper government agency; dams for the diversion or
storage of water; structures for the use of water power, installations for the utilization of
subterranean or ground water and other structures for utilization of water resources.
Article 40. No excavation for the purpose of emission of a hot spring or for the enlargement of the
existing opening thereof shall be made without prior permit.
Any person or agency who intends to develop a hot spring for human consumption must first obtain a
permit from the Department of Health.
Article 41. No person shall develop a stream, lake, or spring for recreational purposes without first
securing a permit from the Council.
Article 42. Unless-otherwise ordered by the President of the Philippines and only in time of national
calamity or emergency, no person shall induce or restrain rainfall by any method such as cloud
seeding without a permit from the proper government emergency.
Article 43. No person shall raise or lower the water level of a river stream, lake, lagoon, or marsh nor
drain the same without a permit.
Article 44. Drainage systems shall be so constructed that their outlets are rivers, lakes, the sea,
natural bodies of water, or such other water course as may be approved by the proper government
agency.
Article 45. When a drainage channel is constructed by a number of persons for their common benefit,
the cost of construction and maintenance of the channel shall be borne by each in proportion to the
benefits drived.
Article 46. When artificial means are employed to drain water from higher to lower land, the owner of
the higher land shall select the routes and methods of drainage that will cause the minimum damage
to the lower lands, subject to the requirements of just compensation.
Article 47. When the use, conveyance or storage of waters results in damage to another, the person
responsible for the damage shall pay compensation.
Article 48. When a water resources project interferes with the access of landowner to a portion of his
property or with the conveyance of irrigation or drainage water, the person or agency constructing the
project shall bear the cost of construction and maintenance of the bridges, flumes and other
structures necessary for maintaining access, irrigation, or drainage, in addition to paying
compensation for land and incidental damages.
Article 49. Any person having an easement for an aqueduct may enter upon the servient land for the
purpose of cleaning, repairing or replacing the aqueduct or the removal of obstructions therefrom.
Article 50. Lower estates are obliged to receive the waters which naturally and without the
intervention of man flow from the higher estate, as well as the stone or earth which they carry with
them.
The owner of the lower estate can not construct works which will impede this natural flow, unless he
provides an alternative method of drainage; neither can the owner of the higher estate make works
which will increase this natural flow.
Article 51. The banks of rivers and streams and the shores of the seas and lakes throughout their
entire length and within a zone of three (3) meters in urban areas, twenty (20) meters in agricultural
areas and forty (40) meters in forest areas, along their margins are subject to the easement of public
use in the interest of recreation, navigation, floatage, fishing and salvage. No person shall be allowed
to stay in this zone longer than what is necessary for recreation, navigation, floatage, fishing or
salvage or to build structures of any kind.
Article 52. The establishment, extent, form, and conditions of easements of water not expressly
determined by the provisions of this Code shall be governed by the provisions of the Civil Code.
CHAPTER V
CONTROL OF WATERS
Article 53. To promote the best interest and the coordinated protection of flood plain lands, the
Secretary of Public Works, Transportation and Communications may declare flood control areas and
promulgate guidelines for governing flood plain management plans in these areas.
Article 54. In declared flood control areas, rules and regulations may be promulgated to prohibit or
control activities that may damage or cause deterioration or lakes and dikes, obstruct the flow of
water, change the natural flow of the river, increase flood losses or aggravate flood problems.
Article 55. The government may construct necessary flood control structures in declared flood control
areas, and for this purpose it shall have a legal easement as wide as may be needed along and
adjacent to the river bank and outside of the bed or channel of the river.
Article 56. River beds, sand bars and tidal flats may not be cultivated except upon prior permission
from the Secretary of the Department of Public Works, Transportation and Communication and such
permission shall not be granted where such cultivation obstructs the flow of water or increase flood
levels so as to cause damage to other areas.
Article 57. Any person may erect levees or revetments to protect his property from flood,
encroachment by the river or change in the course of the river, provided that such constructions does
not cause damage to the property of another.
Article 58. When a river or stream suddenly changes its course to traverse private lands, the owners
of the affected lands may not compel the government to restore the river to its former bed; nor can
they restrain the government from taking steps to revert the river or stream to its former course. The
owners of the land thus affected are not entitled to compensation for any damage sustained thereby.
However, the former owners of the new bed shall be the owners of the abandoned bed in proportion
to the area lost by each.
The owners of the affected lands may undertake to return the river or stream to its old bed at their
own expense; Provided, That a permit therefor is secured from the Secretary of Public Works,
Transportation and Communication and work pertaining thereto are commenced within two years
from the change in the course of the river or stream.
Article 59. Rivers, lakes and lagoons may, upon the recommendation of the Philippines Coast Guard,
be declared navigable either in whole or in part.
Article 60. The rafting of logs and other objects on rivers and lakes which are flotable may be
controlled or prohibited during designated season of the year with due regard to the needs of
irrigation and domestic water supply and other uses of water.
Article 61. The impounding of water in ponds or reservoirs may be prohibited by the Council upon
consultation with the Department of Health if it is dangerous to public health, or it may order that
such pond or reservoir be drained if such is necessary for the protection of public health.
Article 62. Waters of a stream may be stored in a reservoir by a permittee in such amount as will not
prejudice the right of any permittee downstream. Whoever operates the reservoir shall, when
required, release water for minimum stream flow.
All reservoir operations shall be subject to rules and regulations issued by the Council or any proper
government agency.
Article 63. The operator of a dam for the storage of water may be required to employ an engineer
possessing qualifications prescribed for the proper operations, maintenance and administration of the
dam.
Article 64. The Council shall approve the manner, location, depth, and spacing in which borings for
subterranean or ground water may be made, determine the requirements for the registration of every
boring or alteration to existing borings as well as other control measures for the exploitation of
subterranean or ground water resources, and in coordination with the Professional Regulation
Commission prescribe the qualifications of those who would drill such borings.
No person shall drill a well without prior permission from the Council.
Article 65. Water from one river basin may be transferred to another river basin only with approval of
the Council. In considering any request for such transfer, the Council shall take into account the full
costs of the transfer, the benefits that would accrue to the basin of origin without the transfer, the
benefits would accrue to the receiving basin on account of the transfer, alternative schemes for
supplying water to the receiving basin, and other relevant factors.
CHAPTER VI
CONSERVATION AND PROTECTION OF WATERS AND WATERSHEDS AND RELATED LAND RESOURCES
Article 66. After due notice and hearing when warranted by circumstances, minimum stream flows for
rivers and streams, and minimum water levels for lakes may be established by the Council under such
conditions as may be necessary for the protection of the environment, control of pollution,
navigation, prevention of salt damage, and general public use.
Article 67. Any watershed or any area of land adjacent to any surface water or overlying any ground
water may declared by the Department of Natural Resources as protected area Rules and regulations
may be promulgated by such Department to prohibit or control such activities by the owners or
occupants thereof within the protected area which may damage or cause the deterioration of the
surface water or ground water or interfere with the investigation, use, control, protection,
management or administration of such waters.
Article 68. It shall be the duty of any person in control of a well to prevent the water from flowing on
the surface of the land, or into any surface water, or any porous stratum under neath the surface
without being beneficially used.
Article 69. It shall be the duty of any person in control of a well containing water with minerals or
other substances injurious to man, animals, agriculture, and vegetation to prevent such waters from
flowing on the surface of the land or into any surface water or into any other aquifer or porous
stratum.
Article 70. No person shall utilize an existing well or pond or spread waters for recharging
substerranean or ground water supplies without prior permission of the Council.
Article 71. To promote better water conservation and usage for irrigation purposes, the merger of
irrigation associations and the appropriation of waters by associations instead of by individuals shall
be encouraged.
No water permit shall be granted to an individual when his water requirement can be supplied
through an irrigation association.
Article 72. In the consideration of a proposed water resource project, due regard shall be given to
ecological changes resulting from the construction of the project in order to balance the needs of
development and the protection of the environment.
Article 73. The conservation of fish and wildlife shall receive proper consideration and shall be
coordinated with other features of water resources development programs to insure that fish and
wildlife values receive equal attention with other project purposes.
Article 74. Swamps and marshes which are owned by the State and which primary value for waterfowl
propagation or other wildlife purposes may be reserved and protected from drainage operation and
development.
Article 75. No person shall, without prior permission from the National Pollution Control Commission,
build any works that may produce dangerous or noxious substances or perform any act which may
result in the introduction of sewage, industrial waste, or any pollutant into any source of water supply.
Water pollution is the impairment of the quality of water beyond a certain standard. This standard
may vary according to the use of the water and shall be set by the National Pollution Control
Commission.
Article 76. The establishment of cemeteries and waste disposal areas that may affect the source of a
water supply or a reservoir for domestic or municipal use shall be subject to the rules and regulations
promulgated by the Department of Health.
Article 77. Tailings from mining operations and sediments from placer mining shall not be dumped
into rivers and waterways without prior permission from the Council upon recommendation by the
National Pollution Control Commission.
Article 78. The application of agricultural fertilizers and pesticides may be prohibited or regulated by
the National Pollution Control Commission in the areas where such application may cause pollution of
a source of water supply.
CHAPTER VII
ADMINISTRATION OF WATERS AND ENFORCEMENT OF THE PROVISIONS OF THIS CODE
Article 79. The Administration and enforcement of the provisions of this Code, including the granting
of permits and the imposition of penalties for administrative violations hereof, are hereby vested in
the Council, and except in regard to those functions which under this Code are specifically conferred
upon other agencies of the government, the Council is hereby empowered to make all decisions and
determinations provided for in this Code.
Article 80. The Council may deputize any official or agency of the government to perform any of its
specific functions or activities.
Article 81. The Council shall provide a continuing program for data collection, research and manpower
development needed for the appropriation, utilization, exploitation, conservation, and protection of
the water resources of the country.
Article 82. In the implementation of the provisions of this code, the Council shall promulgate the
necessary rules and regulations which may provide for penalties consisting of a fine not exceeding
One Thousand Pesos (P1,000.00) and/or suspension or revocation of the water permit or other right
to the use of water. Violations of such rules and regulations may be administratively dealt with by the
Council.
Such rules and regulations prescribed by any government agency that pertain to the utilization,
exploitation, development, control, conservation, or protection of water resources shall, if the Council
so requires, be subject to its approval.
Article 83. The Council is hereby authorized to impose and collect reasonable fees or charges for
water resources development from water appropriators, except when it is for purely domestic
purposes.
Article 84. The Council and other agencies authorized to enforce this Code are empowered to enter All dispute shall be decided within sixty (60) days after the parties submit the same for decision or
upon private lands, with previous notice to the owner, for the purpose of conducting surveys and resolution.
hydrologic investigations, and to perform such other acts as are necessary in carrying out their
functions including the power to exercise the right of eminent domain. The Council shall have the power to issue writs of execution and enforce its decisions with the
assistance of local or national police agencies.
Article 85. No program or project involving the appropriation, utilization, exploitation, development,
control, conservation, or protection of water resources may be undertaken without prior approval of Article 89. The decisions of the Council on water rights controversies may be appealed to the Court of
the Council, except those which the Council may, in its discretion, exempt. First Instance of the province where the subject matter of the controversy is situated within fifteen
(15) days from the date the party appealing receives a copy of the decision, on any of the following
The Council may require consultation with the public prior to the implementation of certain water grounds; (1) grave abuse of discretion; (2) question of law; and (3) questions of fact and law.
resources development projects.
CHAPTER VIII
Article 86. When plans and specifications of a hydraulic structure are submitted for approval, the PENAL PROVISIONS
government agency whose functions embrace the type of project for which the structure is intended,
shall review the plans and specifications and recommended to the Council proper action thereon and Article 90. The following acts shall be penalized by suspension or revocation of the violator's water
the latter shall approve the same only when they are inconformity with the requirements of this Code permit or other right to the use of water and/or a fine of not exceeding One Thousand Pesos
and the rules and regulations promulgated by the Council. Notwithstanding such approval, neither the (P1,000.00), in the discretion of the Council:
engineer who drew up the plans and specifications of the hydraulic structure, nor the constructor
who built it, shall be relieved of his liability for damages in case of failure thereof by reason of defect (a)Appropriation of subterranean or ground water for domestic use by an overlying landowner
in plans and specifications, or failure due to defect in construction, within ten (10) years from the without registration required by the Council.
completion of the structure.
(b) Non-observance of any standard of beneficial use of water.
Any action recover such damages must be brought within five (5) years following such failure.
(c) Failure of the appropriator to keep a record of water withdrawal, when required.
Article 87. The Council or its duly authorized representatives, in the exercise of its power to
investigate and decide cases brought to its cognizance, shall have the power to administer oaths,
(d) Failure to comply with any of the terms or conditions in a water permit or a water rights grant.
compel the attendance of witnesses by subpoena and the production of relevant documents by
subpoena duces tecum.
(e) Unauthorized use of water for a purpose other than that for which a right or permit was granted.
Non-compliance of violation of such orders or subpoena and subpoena duces tecum shall be
(f) Construction or repair of any hydraulic work or structure without duly approved plans and
punished in the same manner as indirect contempt of an inferior court upon application by the
specifications, when required.
aggrieved party with the proper Court of First Instance in accordance with the provisions of Rules 71
of the Rules of the Court.
(g) Failure to install a regulating and measuring device for the control of the volume of water
appropriated, when required.
Article 88. The Council shall have original jurisdiction over all disputes to relating to appropriation,
utilization, exploitation, development, control, conservation and protection of waters within the
meaning and context of the provisions of this Code. (h) Unauthorized sale, lease, or transfer of water and/or water rights.

The decisions of the Council on water rights controversies shall be immediately executory and the (i) Failure to provide adequate facilities to prevent or control diseases when required by the Council in
enforcement thereof may be suspended only when a bond, in a amount fixed by the Council to the construction of any work for the storage, diversion, distribution and utilization of water.
answer for damages occasioned by the suspension or stay of execution, shall have been filed by the
appealing party, unless the suspension is virtue of an order of a competent court. (j) Drilling of a well without permission of the Council.
(k) Utilization of an existing well or ponding or spreading of water for recharging subterranean or
ground water supplies without permission of the Council.
(l) Violation of or non-compliance with any order, rules, or regulations of the Council.
(m) Illegal taking or diversion of water in an open canal, aqueduct or reservoir.
(n) Malicious destruction of hydraulic works or structure valued at not exceeding P5,000.00.
Article 91. A. A fine of not exceeding Three Thousand Pesos (P3,000.00) or imprisonment for not
more than three (3) years, or both such fine and imprisonment, in the discretion of the Court, shall be
imposed upon any person who commits any of the following acts:
1. Appropriation of water without a water permit, unless such person is expressly exempted from
securing a permit by the provisions of this Code.
2. Unauthorized obstruction of an irrigation canal.
3. Cultivation of a river bed, sand bar or tidal flat without permission.
4. Malicious destruction of hydraulic works or structure valued at not exceeding Twenty-Five
Thousand Pesos (P25,000.00).
B. A fine exceeding Three Thousand Pesos P3,000.00) but not more than Six Thousand Pesos
P6,000.00) or imprisonment exceeding three (3) years but not more than six (6) years, or both such
fine and imprisonment in the discretion of the Court, shall be imposed on any person who commits
any of the following acts:
1. Distribution for public consumption of water which adversely affects the health and safety of the
public.
2. Excavation or enlargement of the opening of a hot spring without permission.
3. Unauthorized obstruction of a river or waterway, or occupancy of a river bank or seashore without
permission.
4. Establishment of a cemetery or a waste disposal area near a source of water supply or reservoir for
domestic municipal use without permission.
5. Constructing, without prior permission of the government agency concerned, works that produce
dangerous or noxious substances, or performing acts that result in the introduction of sewage,
industrial waste, or any substance that pollutes a source of water supply.
6. Dumping mine tailings and sediments into rivers of waterways without permission.
7. Malicious destruction of hydraulic works or structure valued more than Twenty-Five Thousand
Pesos (P25,000.00) but at not exceeding One Hundred Thousand Peso (100,000.00).
C. A fine exceeding Six Thousand Pesos (P6,000.00) but not more than Ten Thousand Pesos
(P10,000.00) or imprisonment exceeding six (6) years but not more than twelve (12) years, or both
such fine and imprisonment, in the discretion of the Court, shall be imposed upon any person who
commits any of the following acts:
1. Misrepresentation of citizenship in order to qualify for water permit.
2. Malicious destruction of a hydraulic works or structure, valued at more than One Hundred
Thousand Pesos (P100,000.00).
Article 92. If the offense is committed by a corporation, trust, firm, partnership, association or any
other juridical person, the penalty shall be imposed upon the President, General Manager, and other
guilty officer or officers of such corporation, trust firm, partnership, association or entity, without
prejudice to the filing of a civil action against said juridical person. If the offender is an alien, he shall
be deported after serving his sentence, without further proceedings.
After final judgment of conviction, the Court upon petition of the prosecution attorney in the same
proceedings, and after due hearing, may, when the public interest so requires, order suspension of or
dissolution of such corporation, trust, firm, partnership, association or juridical person.
Article 93. All actions for offenses punishable under Article 91 of this Code shall be brought before the
proper court.
Article 94. Actions for offenses punishable under this Code by a fine of not more than Three Thousand
Pesos (P3,000.00) or by an imprisonment of not more than three (3) years, or both such fine and
imprisonment, shall prescribe in five (5) years; those punishable by a fine exceeding Three Thousand
Pesos (P3,000.00) but not more than Six Thousand Pesos (P6,000.00) or an imprisonment exceeding
three (3) years but not more than six (6) years, or both such fine and imprisonment, shall prescribe in
seven (7) years; and those punishable by a fine exceeding Six Thousand Pesos (P6,000.00) but not
more than Ten Thousand Pesos (P10,000.00) or an imprisonment exceeding six (6) years but not more
than twelve (12) years, or both such fine and imprisonment, shall prescribe in ten (10) years.
CHAPTER IX
TRANSITORY AND FINAL PROVISIONS
Article 95. Within two (2) years from the promulgation of this Code, all claims for a right to use water
existing on or before December 31, 1974 shall be registered with the Council which shall confirm said
rights in accordance with the provisions of this Code, and shall set their respective priorities.
When priority in time of appropriation from a certain source of supply cannot be determined, the
order of preference in the use of the waters shall be as follows:
(a) Domestic and municipal use
(a) The provisions of the Spanish Law on Waters of August 3, 1866, the Civil Code of Spain of 1889 and
the Civil Code of the Philippines (R.A. 386) on ownership of waters, easements relating to waters, use
of public waters and acquisitive prescription on the use of waters, which are inconsistent with the
provisions of this Code;
(b) The provisions of R.A. 6395, otherwise known as the Revised Charter of National Power
Corporation, particularly section 3, paragraph (f), and section 12, insofar as they relate to the
appropriation of waters and the grant thereof;

(b) Irrigation (c) The provisions of Act No. 2152, as amended, otherwise known as the Irrigation Act, section 3,
paragraphs (k) and (m) of P.D. No. 813, R.A. 2056; Section 90, C.A. 137; and,
(c) Power generation
(d) All Decree, Laws, Acts, parts of Acts, rules of Court, executive orders, and administrative
(d) Fisheries regulations which are contrary to or inconsistent with the provisions of this Code.

(e) Livestock raising

(f) Industrial use, and

(g) Other uses.

Any claim not registered within said period shall be considered waived and the use of the water
deemed abandoned, and the water shall thereupon be available for disposition as unappropriated
waters in accordance with the provisions of this Code.

Article 96. No vested or acquired right to the use of water can arise from acts or omissions which are
against the law or which infringe upon the rights of others.

Article 97. Acts and contract under the regime of old laws, if they are valid in accordance therewith,
shall be respected, subject to the limitations established in this Code. Any modification or extension
of these acts and contracts after the promulgation of this Code, shall be subject to the provisions
hereof.

Article 98. Interim rules and regulations promulgated by the Council shall continue to have binding
force and effect, when not in conflict with the provisions of this Code.

Article 99. If any provision or part of this Code, or the application thereof to any person or
circumstance, is declared unconstitutional or invalid for any reason, the other provisions or parts
therein shall not be affected.

Article 100. The following laws, parts and/or provisions of laws are hereby repealed:
[G.R. No. 68166. February 12, 1997]
HEIRS OF EMILIANO NAVARRO, Petitioner, v. INTERMEDIATE APPELLATE COURT AND HEIRS OF
SINFOROSO PASCUAL, Respondents.
DECISION
HERMOSISIMA, JR., J.:
Unique is the legal question visited upon the claim of an applicant in a Land Registration case by
oppositors thereto, the Government and a Government lessee, involving as it does ownership of land
formed by alluvium.
The applicant owns the property immediately adjoining the land sought to be registered. His
registered property is bounded on the east by the Talisay River, on the west by the Bulacan River, and
on the north by the Manila Bay. The Talisay River and the Bulacan River flow down towards the Manila
Bay and act as boundaries of the applicant's registered land on the east and on the west.
The land sought to be registered was formed at the northern tip of the applicant's land. Applicant's
registered property is bounded on the north by the Manila Bay.
The issue: May the land sought to be registered be deemed an accretion in the sense that it naturally
accrues in favor of the riparian owner or should the land be considered as foreshore land?
Before us is a petition for review of: (1) the decision 1 and (2) two subsequent resolutions2 of the
Intermediate Appellate Court3 (now the Court of Appeals) in Land Registration Case No. N-84, 4 the
application over which was filed by private respondents' predecessor-in-interest, Sinforoso Pascual,
now deceased, before the Court of First Instance 5 (now the Regional Trial Court) of Balanga, Bataan.
There is no dispute as to the following facts:
On October 3, 1946, Sinforoso Pascual, now deceased, filed an application for foreshore lease
covering a tract of foreshore land in Sibocon, Balanga, Bataan, having an area of approximately
seventeen (17) hectares. This application was denied on January 15, 1953. So was his motion for
reconsideration.
Subsequently, petitioners' predecessor-in-interest, also now deceased, Emiliano Navarro, filed a
fishpond application with the Bureau of Fisheries covering twenty five (25) hectares of foreshore land
also in Sibocon, Balanga, Bataan. Initially, such application was denied by the Director of Fisheries on
the ground that the property formed part of the public domain. Upon motion for reconsideration, the
Director of Fisheries, on May 27, 1988, gave due course to his application but only to the extent of
seven (7) hectares of the property as may be certified by the Bureau of Forestry as suitable for
fishpond purposes.
The Municipal Council of Balanga, Bataan, had opposed Emiliano Navarro's application. Aggrieved by
the decision of the Director of Fisheries, it appealed to the Secretary of Natural Resources who,
however, affirmed the grant. The then Executive Secretary, acting in behalf of the President of the
Philippines, similarly affirmed the grant.
On the other hand, sometime in the early part of 1960, Sinforoso Pascual filed an application to
register and confirm his title to a parcel of land, situated in Sibocon, Balanga, Bataan, described in
Plan Psu-175181 and said to have an area of 146,611 square meters. Pascual claimed that this land is
an accretion to his property, situated in Barrio Puerto Rivas, Balanga, Bataan, and covered by Original
Certificate of Title No. 6830. It is bounded on the eastern side by the Talisay River, on the western side
by the Bulacan River, and on the northern side by the Manila Bay. The Talisay River as well as the
Bulacan River flow downstream and meet at the Manila Bay thereby depositing sand and silt on
Pascual's property resulting in an accretion thereon. Sinforoso Pascual claimed the accretion as the
riparian owner.
On March 25, 1960, the Director of Lands, represented by the Assistant Solicitor General, filed an
opposition thereto stating that neither Pascual nor his predecessors-in-interest possessed sufficient
title to the subject property, the same being a portion of the public domain and, therefore, it belongs
to the Republic of the Philippines. The Director of Forestry, through the Provincial Fiscal, similarly
opposed Pascual's application for the same reason as that advanced by the Director of Lands. Later
on, however, the Director of Lands withdrew his opposition. The Director of Forestry become the sole
oppositor.
On June 2, 1960, the court a quo issued an order of general default excepting the Director of Lands
and the Director of Forestry.
Upon motion of Emiliano Navarro, however, the order of general default was lifted and, on February
13, 1961, Navarro thereupon filed an opposition to Pascual's application. Navarro claimed that the
land sought to be registered has always been part of the public domain, it being a part of the
foreshore of Manila Bay; that he was a lessee and in possession of a part of the subject property by
virtue of a fishpond permit issued by the Bureau of Fisheries and confirmed by the Office of the
President; and that he had already converted the area covered by the lease into a fishpond.
During the pendency of the land registration case, that is, on November 6, 1960, Sinforoso Pascual
filed a complaint for ejectment against Emiliano Navarro, one Marcelo Lopez and their privies, alleged
by Pascual to have unlawfully claimed and possessed, through stealth, force and strategy, a portion of
the subject property covered by Plan Psu-175181. The defendants in the case were alleged to have
built a provisional dike thereon: thus they have thereby deprived Pascual of the premises sought to be
registered. This, notwithstanding repeated demands for defendants to vacate the property.
The case was decided adversely against Pascual. Thus, Pascual appealed to the Court of First Instance
(now Regional Trial Court) of Balanga, Bataan, the appeal having been docketed as Civil Case No.
2873. Because of the similarity of the parties and the subject matter, the appealed case for ejectment
was consolidated with the land registration case and was jointly tried by the court a quo.
During the pendency of the trial of the consolidated cases, Emiliano Navarro died on November 1,
1961 and was substituted by his heirs, the herein petitioners.
Subsequently, on August 26, 1962, Pascual died and was substituted by his heirs, the herein private
respondents.
On November 10, 1975, the court a quo rendered judgment finding the subject property to be
foreshore land and, being a part of the public domain, it cannot be the subject of land registration
proceedings.
The decision's dispositive portion reads:
"WHEREFORE, judgment is rendered:
(1) Dismissing plaintiff [private respondent] Sinforoso Pascual's complaint for ejectment in Civil Case
No. 2873;
(2) Denying the application of Sinforoso Pascual for land registration over the land in question; and
(3) Directing said Sinforoso Pascual, through his heirs, as plaintiff in Civil Case No. 2873 and as
applicant in Land Registration Case No. N-84 to pay costs in both
instances."6chanroblesvirtuallawlibrary
The heirs of Pascual appealed and, before the respondent appellate court, assigned the following
errors:
"1. The lower court erred in not finding the land in question as an accretion by the action of the
Talisay and Bulacan Rivers to the land admittedly owned by applicants-appellants [private
respondents].
2. The lower court erred in holding that the land in question is foreshore land.
3. The lower court erred in not ordering the registration of the and is controversy in favor of
applicants-appellants [private respondents].
4. The lower court erred in not finding that the applicants-appellants [private respondents] are
entitled to eject the oppositor-appellee [petitioners]." 7chanroblesvirtuallawlibrary
On appeal, the respondent court reversed the findings of the court a quoand granted the petition for
registration of the subject property but excluding therefrom fifty (50) meters from corner 2 towards
corner 1; and fifty meters (50) meters from corner 5 towards corner 6 of the Psu-175181.
The respondent appellate court explained the reversal in this wise:
"The paramount issue to be resolved in this appeal as set forth by the parties in their respective briefs
is whether or not the land sought to be registered is accretion or foreshore land, or, whether or not
said land was formed by the action of the two rivers of Talisay and Bulacan or by the action of the
Manila Bay. If formed by the action of the Talisay and Bulacan rivers, the subject land is accretion but
if formed by the action of the Manila Bay then it is foreshore land.
xxx
It is undisputed that applicants-appellants [private respondents] owned the land immediately
adjoining the land sought to be registered. Their property which is covered by OCT No. 6830 is
bounded on the east by the Talisay River, on the west by the Bulacan River, and on the north by the
Manila Bay. The Talisay and Bulacan rivers come from inland flowing downstream towards the Manila
Bay. In other words, between the Talisay River and the Bulacan River is the property of applicants with
both rivers acting as the boundary to said land and the flow of both rivers meeting and emptying into
the Manila Bay. The subject land was formed at the tip or apex of appellants' [private respondents']
land adding thereto the land now sought to be registered.
This makes this case quite unique because while it is undisputed that the subject land is immediately
attached to appellants' [private respondents'] land and forms the tip thereof, at the same time, said
land immediately faces the Manila Bay which is part of the sea. We can understand therefore the
confusion this case might have caused the lower court, faced as it was with the uneasy problem of
deciding whether or not the subject land was formed by the action of the two rivers or by the action
of the sea. Since the subject land is found at the shore of the Manila Bay facing appellants' [private
respondents'] land, it would be quite easy to conclude that it is foreshore and therefore part of the
patrimonial property of the State as the lower court did in fact rule x x x.
xxx
It is however undisputed that appellants' [private respondents'] land lies between these two rivers
and it is precisely appellants' [private respondents'] land which acts as a barricade preventing these
two rivers to meet. Thus, since the flow of the two rivers is downwards to the Manila Bay the
sediments of sand and silt are deposited at their mouths.
It is, therefore, difficult to see how the Manila Bay could have been the cause of the deposit thereat
for in the natural course of things, the waves of the sea eat the land on the shore, as they suge [sic]
inland. It would not therefore add anything to the land but instead subtract from it due to the action
of the waves and the wind. It is then more logical to believe that the two rivers flowing towards the
bay emptied their cargo of sand, silt and clay at their mouths, thus causing appellants' [private
respondents'] land to accumulate therein.
However, our distinguished colleage [sic], Mr. Justice Serrano, do [sic] not seem to accept this theory
and stated that the subject land arose only when x x x Pascual planted 'palapat' and 'bakawan' trees
thereat to serve as a boundary or strainer. But we do not see how this act of planting trees by Pascual
would explain how the land mass came into being. Much less will it prove that the same came from
the sea. Following Mr. Justice Serrano's argument that it were the few trees that acted as strainers or
blocks, then the land that grew would have stopped at the place where the said trees were planted.
But this is not so because the land mass went far beyond the boundary, or where the trees were
planted.
On the other hand, the picture-exhibits of appellants' [private respondents'] clearly show that the
land that accumulated beyond the so-called boundary, as well as the entire area being applied for is
dry land, above sea level, and bearing innumerable trees x x x. The existence of vegetation on the land
could only confirm that the soil thereat came from inland rather than from the sea, for what could the
sea bring to the shore but sand, pebbles, stones, rocks and corrals? On the other hand, the two rivers
would be bringing soil on their downward flow which they brought along from the eroded mountains,
the lands along their path, and dumped them all on the northern portion of appellants' [private
respondents'] land.
In view of the foregoing, we have to deviate from the lower court's finding. While it is true that the
subject land is found at the shore of the Manila Bay fronting appellants' [private respondents'] land,
said land is not foreshore but an accretion from the action of the Talisay and Bulacan rivers. In fact,
this is exactly what the Bureau of Lands found out, as shown in the following report of the Acting
Provincial Officer, Jesus M. Orozco, to wit:
'Upon ocular inspection of the land subject of this registration made on June 11, 1960, it was found
out that the said land is x x x sandwitched [sic] by two big rivers x x x These two rivers bring down
considerable amount of soil and sediments during floods every year thus raising the soil of the land
adjoining the private property of the applicant [private respondents]. About four-fifth [sic] of the area
applied for is now dry land whereon are planted palapat trees thickly growing thereon. It is the
natural action of these two rivers that has caused the formation of said land x x x subject of this
registration case. It has been formed, therefore, by accretion. And having been formed by accretion,
the said land may be considered the private property of the riparian owner who is the applicant
herein [private respondents'] x x x.
In view of the above, the opposition hereto filed by the government should be withdrawn, except for
the portion recommended by the land investigator in his report dated May 2, 1960, to be excluded
and considered foreshore. x x x'
Because of this report, no less than the Solicitor General representing the Bureau of Lands withdrew
his opposition dated March 25, 1960, and limited 'the same to the northern portion of the land
applied for, compromising a strip 50 meters wide along the Manila Bay, which should be declared
public land as part of the foreshore' x x x. 8
Pursuant to the aforecited decision, the respondent appellate court ordered the issuance of the
corresponding decree of registration in the name of private respondents and the reversion to private
respondents of the possession of the portion of the subject property included in Navarro's fishpond
permit.
On December 20, 1978, petitioners filed a motion for reconsideration of the aforecited decision. The
Director of Forestry also moved for the reconsideration of the same decision. Both motions were
opposed by private respondents on January 27, 1979.
On November 21, 1980, respondent appellate court promulgated a resolution denying the motion for
reconsideration filed by the Director of Forestry. It, however, modified its decision, to read, viz:
"(3). Ordering private oppositors Heirs of Emiliano Navarro to vacate that portion included in their
fishpond permit covered by Plan Psu-175181 and hand over possession of said portion to applicants-
appellants, if the said portion is not within the strip of land fifty (50) meters wide along Manila Bay on
the northern portion of the land subject of the registration proceedings and which area is more
particularly referred to as fifty (50) meters from corner 2 towards corner 1; and fifty (50) meters from
corner 5 towards corner 6 of Plan Psu-175181. x x x9chanroblesvirtuallawlibrary
On December 15, 1980, we granted the Solicitor General, acting as counsel for the Director of
Forestry, an extension of time within which to file in this court, a petition for review of the decision
dated November 29, 1978 of the respondent appellate court and of the aforecited resolution dated
November 21, 1980.
Thereafter, the Solicitor General, in behalf of the Director of Forestry, filed a petition for review
entitled, "The Director of Forestry vs. the Court of Appeals." 10 We, however, denied the same in a
minute resolution dated July 20, 1981, such petition having been prematurely filed at a time when the
Court of Appeals was yet to resolve petitioners' pending motion to set aside the resolution dated
November 21, 1980.
On October 9, 1981, respondent appellate court denied petitioners' motion for reconsideration of the
decision dated November 29, 1978.
On October 17, 1981, respondent appellate court made an entry of judgment stating that the decision
dated November 29, 1978 had become final and executory as against herein petitioners as oppositors
in L.R.C. Case No. N-84 and Civil Case No. 2873 of the Court of First Instance (now the Regional Trial
Court) of Balanga, Bataan.
On October 26, 1981, a second motion for reconsideration of the decision dated November 29, 1978
was filed by petitioners' new counsel.
On March 26, 1982, respondent appellate court issued a resolution granting petitioners' request for
leave to file a second motion for reconsideration.
On July 13, 1984, after hearing, respondent appellate court denied petitioners' second motion for
reconsideration on the ground that the same was filed out of time, citing Rule 52, Section 1 of the
Rules of Court which provides that a motion for reconsideration shall be made ex-parteand filed
within fifteen (15) days from the notice of the final order or judgment.
Hence this petition where the respondent appellate court is imputed to have palpably erred in
appreciating the facts of the case and to have gravely misapplied statutory and case law relating to
accretion, specifically, Article 457 of the Civil Code.
We find merit in the petition.
The disputed property was brought forth by both the withdrawal of the waters of Manila Bay and the
accretion formed on the exposed foreshore land by the action of the sea which brought soil and sand
sediments in turn trapped by the palapat and bakawan trees planted thereon by petitioner Sulpicio
Pascual in 1948.
Anchoring their claim of ownership on Article 457 of the Civil Code, private respondents vigorously
argue that the disputed 14-hectare land is an accretion caused by the joint action of the Talisay and
Bulacan Rivers which run their course on the eastern and western boundaries, respectively, of private
respondents' own tract of land.
Accretion as a mode of acquiring property under said Article 457, requires the concurrence of the
following requisites: (1) that the accumulation of soil or sediment be gradual and imperceptible; (2)
that it be the result of the action of the waters of the river; and (3) that the land where the accretion
takes place is adjacent to the bank of the river.11 Accretion is the process whereby the soil is
deposited, while alluvium is the soil deposited on the estate fronting the river bank; 12 the owner of
such estate is called the riparian owner. Riparian owners are, strictly speaking, distinct from littoral
owners, the latter being owners of lands bordering the shore of the sea or lake or other tidal
waters.13 The alluvium, by mandate of Article 457 of the Civil Code, is automatically owned by the
riparian owner from the moment the soil deposit can be seen 14 but is not automatically registered
property, hence, subject to acquisition through prescription by third
persons.15chanroblesvirtuallawlibrary
Private respondents' claim of ownership over the disputed property under the principle of accretion,
is misplaced.
First, the title of private respondents' own tract of land reveals its northeastern boundary to be
Manila Bay. Private respondents' land, therefore, used to adjoin, border or front the Manila Bay and
not any of the two rivers whose torrential action, private respondents insist, is to account for the
accretion on their land. In fact, one of the private respondents, Sulpicio Pascual, testified in open
court that the waves of Manila Bay used to hit the disputed land being part of the bay's foreshore but,
after he had planted palapat and bakawan trees thereon in 1948, the land began to rise. 16
Moreover, there is no dispute as to the location of: (a) the disputed land; (b) private respondents' own
tract of land; (c) the Manila Bay; and, (d) the Talisay and Bulacan Rivers. Private respondents' own
land lies between the Talisay and Bulacan Rivers; in front of their land on the northern side lies now
the disputed land where before 1948, there lay the Manila Bay. If the accretion were to be attributed
to the action of either or both of the Talisay and Bulacan Rivers, the alluvium should have been
deposited on either or both of the eastern and western boundaries of private respondents' own tract
of land, not on the northern portion thereof which is adjacent to the Manila Bay. Clearly lacking, thus,
is the third requisite of accretion, which is, that the alluvium is deposited on the portion of claimant's
land which is adjacent to the river bank.
Second, there is no dispute as to the fact that private respondents' own tract of land adjoins the
Manila Bay. Manila Bay is obviously not a river, and jurisprudence is already settled as to what kind of
body of water the Manila Bay is. It is to be remembered that we held that:
"Appellant next contends that x x x Manila Bay cannot be considered as a sea. We find said contention
untenable. A bay is part of the sea, being a mere indentation of the same:
'Bay. An opening into the land where the water is shut in on all sides except at the entrance; an inlet
of the sea; an arm of the sea, distinct from a river, a bending or curbing of the shore of the sea or of a
lake.' 7 C.J. 1013-1014."17chanroblesvirtuallawlibrary
The disputed land, thus, is an accretion not on a river bank but on a sea bank, or on what used to be
the foreshore of Manila Bay which adjoined private respindents' own tract of land on the northern
side. As such, the applicable law is not Article 457 of the Civil Code but Article 4 of the Spanish Law of
Waters of 1866.
The process by which the disputed land was formed, is not difficult to discern from the facts of the
case. As the trial court correctly observed:
"A perusal of the survey plan x x x of the land subject matter of these cases shows that on the eastern
side, the property is bounded by Talisay River, on the western side by Bulacan River, on the southern
side by Lot 1436 and on the northern side by Manila Bay. It is not correct to state that the Talisay and
Bulacan Rivers meet a certain portion because the two rivers both flow towards Manila Bay. The
Talisay River is straight while the Bulacan River is a little bit meandering and there is no portion where
the two rivers meet before they end up at Manila Bay. The land which is adjacent to the property
belonging to Pascual cannot be considered an accretion [caused by the action of the two rivers].
Applicant Pascual x x x has not presented proofs to convince the Court that the land he has applied for
registration is the result of the settling down on his registered land of soil, earth or other deposits so
as to be rightfully be considered as an accretion [caused by the action of the two rivers]. Said Art. 457
finds no applicability where the accretion must have been caused by action of the
bay."18chanroblesvirtuallawlibrary
The conclusion formed by the trial court on the basis of the foregoing observation is that the disputed
land is part of the foreshore of Manila Bay and therefore, part of the public domain. The respondent
appellate court, however, perceived the fact that petitioners' own land lies between the Talisay and
Bulacan Rivers, to be basis to conclude that the disputed land must be an accretion formed by the
action of the two rivers because private respondents' own land acted as a barricade preventing the
two rivers to meet and that the current of the two rivers carried sediments of sand and silt
downwards to the Manila Bay which accumulated somehow to a 14-hectare land. These conclusions,
however, are fatally incongruous in the light of the one undisputed critical fact: the accretion was
deposited, not on either the eastern or western portion of private respondents' land where a river
each runs, but on the northern portion of petitioners' land which adjoins the Manila Bay. Worse, such
conclusions are further eroded of their practical logic and consonance with natural experience in the
light of Sulpicio Pascual's admission as to having planted palapat and bakawan trees on the northern
boundary of their own land. In amplification of this, plainly more reasonable and valid are Justice
Mariano Serrano's observations in his dissenting opinion when he stated that:
"As appellants' (titled) land x x x acts as a barricade that prevents the two rivers to meet, and
considering the wide expanse of the boundary between said land and the Manila Bay, measuring
some 593.00 meters x x x it is believed rather farfetched for the land in question to have been formed
through 'sediments of sand and salt [sic]... deposited at their [rivers'] mouths.' Moreover, if 'since the
flow of the two rivers is downwards to the Manila Bay the sediments of sand and silt are deposited at
their mouths,' why then would the alleged cargo of sand, silt and clay accumulate at the northern
portion of appellants' titled land facing Manila Bay instead of merely at the mouths and banks of
these two rivers? That being the case, the accretion formed at said portion of appellants' titled [land]
was not caused by the current of the two rivers but by the action of the sea (Manila Bay) into which
the rivers empty.
The conclusion x x x is not supported by any reference to the evidence which, on the contrary, shows
that the disputed land was formed by the action of the sea. Thus, no less than Sulpicio Pascual, one of
the heirs of the original applicant, testified on cross-examination that the land in dispute was part of
the shore and it was only in 1948 that he noticed that the land was beginning to get higher after he
had planted trees thereon in 1948. x x x
x x x it is established that before 1948 sea water from the Manila Bay at high tide could reach as far as
the dike of appellants' fishpond within their titled property, which dike now separates this titled
property from the land in question. Even in 1948 when appellants had already
planted palapat and bakawan trees in the land involved, inasmuch as these trees were yet small, the
waves of the sea could still reach the dike. This must be so because in x x x the survey plan of the
titled property approved in 1918, said titled land was bounded on the north by Manila Bay. So Manila
Bay was adjacent to it on the north. It was only after the planting of the aforesaid trees in 1948 that
the land in question began to rise or to get higher in elevation.
The trees planted by appellants in 1948 became a sort of strainer of the sea water and at the same
time a kind of block to the strained sediments from being carried back to the sea by the very waves
that brought them to the former shore at the end of the dike, which must have caused the shoreline
to recede and dry up eventually raising the former shore leading to the formation of the land in
question."19chanroblesvirtuallawlibrary
In other words, the combined and interactive effect of the planting of palapat and bakawan trees, the
withdrawal of the waters of Manila Bay eventually resulting in the drying up of its former foreshore,
and the regular torrential action of the waters of Manila Bay, is the formation of the disputed land on
the northern boundary of private respondents' own tract of land.
The disputed property is an accretion on a sea bank, Manila Bay being an inlet or an arm of the sea; as
such, the disputed property is, under Article 4 of the Spanish Law of Waters of 1866, part of the public
domain.
At the outset, there is a need to distinguish between Manila Bay and Laguna de Bay.
While we held in the case of Ignacio v. Director of Lands and Valeriano20that Manila Bay is considered
a sea for purposes of determining which law on accretion is to be applied in multifarious situations,
we have ruled differently insofar as accretions on lands adjoining the Laguna de Bay are concerned.
In the cases of Government of the P.I v. Colegio de San Jose,21 Republic v. Court of Appeals,22 Republic
v. Alagad23, and Meneses v. Court of Appeals,24 we categorically ruled that Laguna de Bay is a lake the
accretion on which, by the mandate of Article 84 of the Spanish Law of Waters of 1866, belongs to the
owner of the land contiguous thereto.
The instant controversy, however, brings a situation calling for the application of Article 4 of the
Spanish Law of Waters of 1866, the disputed land being an accretion on the foreshore of Manila Bay
which is, for all legal purposes, considered a sea.
Article 4 of the Spanish Law of Waters of August 3, 1866 provides as follows:
"Lands added to the shores by accretions and alluvial deposits caused by the action of the sea, form
part of the public domain. When they are no longer washed by the waters of the sea and are not
necessary for purposes of public utility, or for the establishment of special industries, or for the coast-
guard service, the Government shall declare them to be the property of the owners of the estates
adjacent thereto and as increment thereof."
In the light of the aforecited vintage but still valid law, unequivocal is the public nature of the disputed
land in this controversy, the same being an accretion on a sea bank which, for all legal purposes, the
foreshore of Manila Bay is. As part of the public domain, the herein disputed land is intended for
public uses, and "so long as the land in litigation belongs to the national domain and is reserved for
public uses, it is not capable of being appropriated by any private person, except through express
authorization granted in due form by a competent authority." 25 Only the executive and possibly the
legislative departments have the right and the power to make the declaration that the lands so gained
by action of the sea is no longer necessary for purposes of public utility or for the cause of
establishment of special industries or for coast guard services. 26Petitioners utterly fail to show that
either the executive or legislative department has already declared the disputed land as qualified,
under Article 4 of the Spanish Law of Waters of 1866, to be the property of private respondents as
owners of the estates adjacent thereto.

WHEREFORE, the instant Petition for Review is hereby GRANTED.

The decision of the Intermediate Appellate Court (now Court of Appeals) in CA G.R. No. 59044-R
dated November 29, 1978 is hereby REVERSED and SET ASIDE. The resolution dated November 21,
1980 and March 28, 1982, respectively, promulgated by the Intermediate Appellate Court are likewise
REVERSED and SET ASIDE.

The decision of the Court of First Instance (now the Regional Trial Court), Branch 1, Balanga, Bataan, is
hereby ORDERED REINSTATED.

Costs against private respondents.

Republic Act No. 8371 October 29, 1997
AN ACT TO RECOGNIZE, PROTECT AND PROMOTE THE RIGHTS OF INDIGENOUS CULTURAL
COMMUNITIES/INDIGENOUS PEOPLE, CREATING A NATIONAL COMMISSION OF INDIGENOUS
PEOPLE, ESTABLISHING IMPLEMENTING MECHANISMS, APPROPRIATING FUNDS THEREFOR, AND
FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
CHAPTER I
GENERAL PROVISIONS
Section 1. Short Title. - This Act shall be known as "The Indigenous Peoples Rights Act of 1997."
Section 2. Declaration of State Policies. - The State shall recognize and promote all the rights of
Indigenous Cultural Communities/Indigenous Peoples (ICCs/IPs) hereunder enumerated within the
framework of the Constitution:
a) The State shall recognize and promote the rights of ICCs/IPs within the framework of national unity
and development;
b)The State shall protect the rights of ICCs/IPs to their ancestral domains to ensure their economic,
social and cultural well being and shall recognize the applicability of customary laws governing
property rights or relations in determining the ownership and extent of ancestral domain;
c) The State shall recognize, respect and protect the rights of ICCs/IPs to preserve and develop their
cultures, traditions and institutions. It shall consider these rights in the formulation of national laws
and policies;
d) The State shall guarantee that members of the ICCs/IPs regardless of sex, shall equally enjoy the full
measure of human rights and freedoms without distinctions or discriminations;
e) The State shall take measures, with the participation of the ICCs/IPs concerned, to protect their
rights and guarantee respect for their cultural integrity, and to ensure that members of the ICCs/IPs
benefit on an equal footing from the rights and opportunities which national laws and regulations
grant to other members of the population and
f) The State recognizes its obligations to respond to the strong expression of the ICCs/IPs for cultural
integrity by assuring maximum ICC/IP participation in the direction of education, health, as well as
other services of ICCs/IPs, in order to render such services more responsive to the needs and desires
of these communities.
Towards these ends, the State shall institute and establish the necessary mechanisms to enforce and
guarantee the realization of these rights, taking into consideration their customs, traditions, values,
beliefs, their rights to their ancestral domains.
CHAPTER II
DEFINITION OF TERMS
Section 3. Definition of Terms. - For purposes of this Act, the following terms shall mean:
a) Ancestral Domains - Subject to Section 56 hereof, refer 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, 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
land, 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 their 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;
b) Ancestral Lands - Subject to Section 56 hereof, refers to land occupied, possessed and utilized by
individuals, families and clans who are members of the ICCs/IPs since time immemorial, by
themselves or through their predecessors-in-interest, under claims of individual or traditional group
ownership,continuously, to the present except when interrupted by war, force majeure or
displacement by force, deceit, stealth, or as a consequence of government projects and other
voluntary dealings entered into by government and private individuals/corporations, including, but
not limited to, residential lots, rice terraces or paddies, private forests, swidden farms and tree lots;
c) Certificate of Ancestral Domain Title - refers to a title formally recognizing the rights of possession
and ownership of ICCs/IPs over their ancestral domains identified and delineated in accordance with
this law;
d) Certificate of Ancestral Lands Title - refers to a title formally recognizing the rights of ICCs/IPs over
their ancestral lands;
e) Communal Claims - refer to claims on land, resources and rights thereon, belonging to the whole
community within a defined territory
f) Customary Laws - refer to a body of written and/or unwritten rules, usages, customs and practices
traditionally and continually recognized, accepted and observed by respective ICCs/IPs;
g) Free and Prior Informed Consent - as used in this Act shall mean the consensus of all members of
the ICCs/IPs to; be determined in accordance with their respective customary laws and practices, free
from any external manipulation, interference and coercion, and obtained after fully disclosing the
intent and scope of the activity, in a language an process understandable to the community;
h) Indigenous Cultural Communities/Indigenous Peoples - refer to a group of people or homogenous
societies identified by self-ascription and ascription by other, who have continuously lived as
organized community on communally bounded and defined territory, and who have, under claims of
ownership since time immemorial, occupied, possessed customs, tradition and other distinctive
cultural traits, or who have, through resistance to political, social and cultural inroads of colonization,
non-indigenous religions and culture, became historically differentiated from the majority of Filipinos.
ICCs/IPs shall likewise include peoples who are regarded as indigenous on account of their descent
from the populations which inhabited the country, at the time of conquest or colonization, or at the
time of inroads of non-indigenous religions and cultures, or the establishment of present state
boundaries, who retain some or all of their own social, economic, cultural and political institutions,
but who may have been displaced from their traditional domains or who may have resettled outside
their ancestral domains;
i) Indigenous Political Structure - refer to organizational and cultural leadership systems, institutions,
relationships, patterns and processed for decision-making and participation, identified by ICCs/IPs
such as, but not limited to, Council of Elders, Council of Timuays, Bodong Holder, or any other tribunal
or body of similar nature;
j) Individual Claims - refer to claims on land and rights thereon which have been devolved to
individuals, families and clans including, but not limited to, residential lots, rice terraces or paddies
and tree lots;
k) National Commission on Indigenous Peoples (NCIP) - refers to the office created under this Act,
which shall be under the Office of the President, and which shall be the primary government agency
responsible for the formulation and implementation of policies, plans and programs to recognize,
protect and promote the rights of ICCs/IPs;
l) Native Title - refers to pre-conquest rights to lands and domains which, as far back as memory
reaches, have been held under a claim of private ownership by ICCs/IPs, have never been public lands
and are thus indisputably presumed to have been held that way since before the Spanish Conquest;
m) Nongovernment Organization - refers to a private, nonprofit voluntary organization that has been
organized primarily for the delivery of various services to the ICCs/IPs and has an established track
record for effectiveness and acceptability in the community where it serves;
n) People's Organization - refers to a private, nonprofit voluntary organization of members of an
ICC/IP which is accepted as representative of such ICCs/IPs;
o) Sustainable Traditional Resource Rights - refer to the rights of ICCs/IPs to sustainably use,manage,
protect and conserve a) land, air, water, and minerals; b) plants, animals and other organisms; c)
collecting, fishing and hunting grounds; d) sacred sites; and e) other areas of economic, ceremonial
and aesthetic value in accordance with their indigenous knowledge, beliefs, systems and practices;
and
p) Time Immemorial - refers to a period of time when as far back as memory can go, certain ICCs/IPs
are known to have occupied, possessed in the concept of owner, and utilized a defined territory
devolved to them, by operation of customary law or inherited from their ancestors, in accordance
with their customs and traditions.
CHAPTER III
RIGHTS TO ANCESTRAL DOMAINS
Section 4. Concept of Ancestral Lands/Domains. - Ancestral lands/domains shall include such
concepts of territories which cover not only the physical environment but the total environment
including the spiritual and cultural bonds to the area which the ICCs/IPs possess, occupy and use and
to which they have claims of ownership.
Section 5. Indigenous Concept of Ownership. - Indigenous concept of ownership sustains the view
that ancestral domains and all resources found therein shall serve as the material bases of their
cultural integrity. The indigenous concept of ownership generally holds that ancestral domains are the
ICC's/IP's private but community property which belongs to all generations and therefore cannot be
sold, disposed or destroyed. It likewise covers sustainable traditional resource rights.
Section 6. Composition of Ancestral Lands/Domains. - Ancestral lands and domains shall consist of all
areas generally belonging to ICCs/IPs as referred under Sec. 3, items (a) and (b) of this Act.
Section 7. Rights to Ancestral Domains. - The rights of ownership and possession of ICCs/IPs t their
ancestral domains shall be recognized and protected. Such rights shall include:
a. Rights of Ownership.- The right to claim ownership over lands, bodies of water traditionally and
actually occupied by ICCs/IPs, sacred places, traditional hunting and fishing grounds, and all
improvements made by them at any time within the domains;
b. Right to Develop Lands and Natural Resources. - Subject to Section 56 hereof, right to develop,
control and use lands and territories traditionally occupied, owned, or used; to manage and conserve
natural resources within the territories and uphold the responsibilities for future generations; to
benefit and share the profits from allocation and utilization of the natural resources found therein;
the right to negotiate the terms and conditions for the exploration of natural resources in the areas
for the purpose of ensuring ecological, environmental protection and the conservation measures,
pursuant to national and customary laws; the right to an informed and intelligent participation in the
formulation and implementation of any project, government or private, that will affect or impact upon
the ancestral domains and to receive just and fair compensation for any damages which they sustain
as a result of the project; and the right to effective measures by the government to prevent any
interfere with, alienation and encroachment upon these rights;
c. Right to Stay in the Territories- The right to stay in the territory and not be removed therefrom. No
ICCs/IPs will be relocated without their free and prior informed consent, nor through any means other
than eminent domain. Where relocation is considered necessary as an exceptional measure, such
relocation shall take place only with the free and prior informed consent of the ICCs/IPs concerned
and whenever possible, they shall be guaranteed the right to return to their ancestral domains, as
soon as the grounds for relocation cease to exist. When such return is not possible, as determined by
agreement or through appropriate procedures, ICCs/IPs shall be provided in all possible cases with
lands of quality and legal status at least equal to that of the land previously occupied by them,
suitable to provide for their present needs and future development. Persons thus relocated shall
likewise be fully compensated for any resulting loss or injury;
Section 8. Rights to Ancestral Lands. - The right of ownership and possession of the ICCs/IPs, to their
ancestral lands shall be recognized and protected.
a. Right to transfer land/property. - Such right shall include the right to transfer land or property rights
to/among members of the same ICCs/IPs, subject to customary laws and traditions of the community
concerned.
b. Right to Redemption. - In cases where it is shown that the transfer of land/property rights by virtue
of any agreement or devise, to a non-member of the concerned ICCs/IPs is tainted by the vitiated
consent of the ICCs/IPs,or is transferred for an unconscionable consideration or price, the transferor
ICC/IP shall have the right to redeem the same within a period not exceeding fifteen (15) years from
the date of transfer.
Section 9. Responsibilities of ICCs/IPs to their Ancestral Domains. - ICCs/IPs occupying a duly
certified ancestral domain shall have the following responsibilities:
a. Maintain Ecological Balance- To preserve, restore, and maintain a balanced ecology in the ancestral
domain by protecting the flora and fauna, watershed areas, and other reserves;

d. Right in Case of Displacement. - In case displacement occurs as a result of natural catastrophes, the
b. Restore Denuded Areas- To actively initiate, undertake and participate in the reforestation of
State shall endeavor to resettle the displaced ICCs/IPs in suitable areas where they can have
denuded areas and other development programs and projects subject to just and reasonable
temporary life support system: Provided, That the displaced ICCs/IPs shall have the right to return to
remuneration; and
their abandoned lands until such time that the normalcy and safety of such lands shall be determined:
Provided, further, That should their ancestral domain cease to exist and normalcy and safety of the
c. Observe Laws- To observe and comply with the provisions of this Act and the rules and regulations
previous settlements are not possible, displaced ICCs/IPs shall enjoy security of tenure over lands to
for its effective implementation.
which they have been resettled: Provided, furthermore, That basic services and livelihood shall be
provided to them to ensure that their needs are adequately addressed:
Section 10. Unauthorized and Unlawful Intrusion. - Unauthorized and unlawful intrusion upon, or
use of any portion of the ancestral domain, or any violation of the rights herein before enumerated,
e. Right to Regulate Entry of Migrants. - Right to regulate the entry of migrant settlers and
shall be punishable under this law. Furthermore, the Government shall take measures to prevent non-
organizations into the domains;
ICCs/IPs from taking advantage of the ICCs/IPs customs or lack of understanding of laws to secure
ownership, possession of land belonging to said ICCs/IPs.
f. Right to Safe and Clean Air and Water. - For this purpose, the ICCs/IPs shall have access to
integrated systems for the management of their inland waters and air space;
Section 11. Recognition of Ancestral Domain Rights. - The rights of ICCs/IPs to their ancestral
domains by virtue of Native Title shall be recognized and respected. Formal recognition, when
g. Right to Claim Parts of Reservations. - The right to claim parts of the ancestral domains which have
solicited by ICCs/IPs concerned, shall be embodied in a Certificate of Ancestral Domain Title (CADT),
been reserved for various purposes, except those reserved and intended for common and public
which shall recognize the title of the concerned ICCs/IPs over the territories identified and delineated.
welfare and service; and
Section 12. Option to Secure Certificate of Title under Commonwealth Act 141, as amended, or the
h. Right to Resolve Conflict. - Right to resolve land conflicts in accordance with customary laws of the
Land Registration Act 496. - Individual members of cultural communities, with respect to individually-
area where the land is located, and only in default thereof shall the complaints be submitted to
owned ancestral lands who, by themselves or through their predecessors-in -interest, have been in
amicable settlement and to the Courts of Justice whenever necessary.
continuous possession and occupation of the same in the concept of owner since the immemorial or
for a period of not less than thirty (30) years immediately preceding the approval of this Act and
uncontested by the members of the same ICCs/IPs shall have the option to secure title to their
ancestral lands under the provisions of Commonwealth Act 141, as amended, or the Land Registration
Act 496.
For this purpose, said individually-owned ancestral lands, which are agricultural in character and
actually used for agricultural, residential, pasture, and tree farming purposes, including those with a
slope of eighteen percent (18%) or more, are hereby classified as alienable and disposable agricultural
lands.
The option granted under this Section shall be exercised within twenty (20) years from the approval of
this Act.
CHAPTER IV
RIGHT TO SELF-GOVERNANCE AND EMPOWERMENT
Section 13. Self-Governance. - The State recognizes the inherent right of ICCs/IPs to self-governance
and self-determination and respects the integrity of their values, practices and institutions.
Consequently, the State shall guarantee the right of ICCs/IPs to freely pursue their economic, social
and cultural development.
Section 14. Support for Autonomous Regions. - The State shall continue to strengthen and support
the autonomous regions created under the Constitution as they may require or need. The State shall
likewise encourage other ICCs/IPs not included or outside Muslim Mindanao and the Cordillera to use
the form and content of their ways of life as may be compatible with the fundamental rights defined
in the Constitution of the Republic of the Philippines and other internationally recognized human
rights.
Section 15. Justice System, Conflict Resolution Institutions and Peace Building Processes. - The
ICCs/IPs shall have the right to use their own commonly accepted justice systems, conflict resolution
institutions, peace building processes or mechanisms and other customary laws and practices within
their respective communities and as may be compatible with the national legal system and with
internationally recognized human rights.
Section 16. Right to Participate in Decision -Making. - ICCs/IPs have the right to participate fully, if
they so choose, at all levels of decision-making in matters which may affect their rights, lives and
destinies through procedures determined by them as well as to maintain and develop their own
indigenous political structures. Consequently, the State shall ensure that the ICCs/IPs shall be given
mandatory representation in policy-making bodies and other local legislative councils.
Section 17. Right to Determine and Decide Priorities for Development. - The ICCs/IPs shall have the
right to determine and decide their own priorities for development affecting their lives, beliefs,
institutions, spiritual well-being, and the lands they own, occupy or use. They shall participate in the
formulation,implementation and evaluation of policies, plans and programs for national, regional and
local development which may directly affect them.
Section 18. Tribal Barangays. - The ICCs/IPs living in contiguous areas or communities where they
form the predominant population but which are located in municipalities, provinces or cities where
they do not constitute the majority of the population, may form or constitute a separate barangay in
accordance with the Local Government Code on the creation of tribal barangays.
Section 19. Role of Peoples Organizations. - The State shall recognize and respect the role of
independent ICCs/IPs organizations to enable the ICCs/IPs to pursue and protect their legitimate and
collective interests and aspirations through peaceful and lawful means.
Section 20. Means for Development /Empowerment of ICCs/IPs. - The Government shall establish
the means for the full development/empowerment of the ICCs/IPs own institutions and initiatives
and, where necessary, provide the resources needed therefor.
CHAPTER V
SOCIAL JUSTICE AND HUMAN RIGHTS
Section 21. Equal Protection and Non-discrimination of ICCs/IPs. - Consistent with the equal
protection clause of the Constitution of the Republic of the Philippines, the Charter of the United
Nations, the Universal Declaration of Human Rights including the Convention on the Elimination of
Discrimination Against Women and International Human Rights Law, the State shall, with due
recognition of their distinct characteristics and identity, accord to the members of the ICCs/IPs the
rights, protections and privileges enjoyed by the rest of the citizenry. It shall extend to them the same
employment rights, opportunities, basic services, educational and other rights and privileges available
to every member of the society. Accordingly, the State shall likewise ensure that the employment of
any form of force of coersion against ICCs/IPs shall be dealt with by law.
The State shall ensure that the fundamental human rights and freedoms as enshrined in the
Constitution and relevant international instruments are guaranteed also to indigenous women.
Towards this end, no provision in this Act shall be interpreted so as to result in the diminution of rights
and privileges already recognized and accorded to women under existing laws of general application.
Section 22. Rights during Armed Conflict. - ICCs/IPs have the right to special protection and security
in periods of armed conflict. The State shall observe international standards, in particular, the Fourth
Geneva Convention of 1949, for the protection of civilian populations in circumstances of emergency
and armed conflict, and shall not recruit members of the ICCs/IPs against their will into armed forces,
and in particular, for the use against other ICCs/IPs; not recruit children of ICCs/IPs into the armed
forces under any circumstance; nor force indigenous individuals to abandon their lands, territories
and means of subsistence, or relocate them in special centers for military purposes under any
discriminatory condition.
Section 23. Freedom from Discrimination and Right to Equal Opportunity and Treatment. - It shall be
the right of the ICCs/IPs to be free from any form of discrimination, with respect to recruitment and
conditions of employment, such that they may enjoy equal opportunities as other occupationally-
related benefits, informed of their rights under existing labor legislation and of means available to
them for redress, not subject to any coercive recruitment systems, including bonded labor and other
forms of debt servitude; and equal treatment in employment for men and women, including the
protection from sexual harassment.
Towards this end, the State shall within the framework of national laws and regulations, and in
cooperation with the ICCs/IPs concerned, adopt special measures to ensure the effective protection
with regard to the recruitment and conditions of employment of persons belonging to these
communities, to the extent that they are not effectively protected by the laws applicable to workers in
general.
ICCs/IPs shall have the right to association and freedom for all trade union activities and the right to
conclude collective bargaining agreements with employers' conditions. They shall likewise have the
right not to be subject to working conditions hazardous to their health, particularly through exposure
to pesticides and other toxic substances.
Section 24. Unlawful Acts Pertaining to Employment. - It shall be unlawful for any person:
a. To discriminate against any ICC/IP with respect to the terms and conditions of employment on
account of their descent. Equal remuneration shall be paid to ICC/IP and non-ICC/IP for work of equal
value; and
b. To deny any ICC/IP employee any right or benefit herein provided for or to discharge them for the
purpose of preventing them from enjoying any of the rights or benefits provided under this Act.
Section 25. Basic Services. - The ICC/IP have the right to special measures for the immediate, effective
and continuing improvement of their economic and social conditions, including in the areas of
employment, vocational training and retraining, housing, sanitation, health and social security.
Particular attention shall be paid to the rights and special needs of indigenous women, elderly, youth,
children and differently-abled persons. Accordingly, the State shall guarantee the right of ICCs/IPs to
government 's basic services which shall include, but not limited to water and electrical facilities,
education, health and infrastructure.
Section 26. Women. - ICC/IP women shall enjoy equal rights and opportunities with men, as regards
the social, economic, political and cultural spheres of life. The participation of indigenous women in
the decision-making process in all levels, as well as in the development of society, shall be given due
respect and recognition.
The State shall provide full access to education, maternal and child care, health and nutrition, and
housing services to indigenous women. Vocational, technical, professional and other forms of training
shall be provided to enable these women to fully participate in all aspects of social life. As far as
possible, the State shall ensure that indigenous women have access to all services in their own
languages.
Section 27. Children and Youth. - The State shall recognize the vital role of the children and youth of
ICCs/IPs in nation-building and shall promote and protect their physical, moral, spiritual, moral,
spiritual, intellectual and social well-being. Towards this end, the State shall support all government
programs intended for the development and rearing of the children and youth of ICCs/IPs for civic
efficiency and establish such mechanisms as may be necessary for the protection of the rights of the
indigenous children and youth.
Section 28. Integrated System of Education. - The State shall, through the NCIP, provide a complete,
adequate and integrated system of education, relevant to the needs of the children and Young people
of ICCs/IPs.
CHAPTER VI
CULTURAL INTEGRITY
Section 29. Protection of Indigenous Culture, traditions and institutions. - The state shall respect,
recognize and protect the right of the ICCs/IPs to preserve and protect their culture, traditions and
institutions. It shall consider these rights in the formulation of national plans and policies.
Section 30. Educational Systems. - The State shall provide equal access to various cultural
opportunities to the ICCs/IPs through the educational system, public or cultural entities, scholarships,
grants and other incentives without prejudice to their right to establish and control their educational
systems and institutions by providing education in their own language, in a manner appropriate to
their cultural methods of teaching and learning. Indigenous children/youth shall have the right to all
levels and forms of education of the State.
Section 31. Recognition of Cultural Diversity. - The State shall endeavor to have the dignity and
diversity of the cultures, traditions, histories and aspirations of the ICCs/IPs appropriately reflected in
all forms of education, public information and cultural-educational exchange. Consequently, the State
shall take effective measures, in consultation with ICCs/IPs concerned, to eliminate prejudice and
discrimination and to promote tolerance, understanding and good relations among ICCs/IPs and all
segments of society. Furthermore, the Government shall take effective measures to ensure that State-
owned media duly reflect indigenous cultural diversity. The State shall likewise ensure the
participation of appropriate indigenous leaders in schools, communities and international cooperative
undertakings like festivals, conferences, seminars and workshops to promote and enhance their
distinctive heritage and values.
Section 32. Community Intellectual Rights. - ICCs/IPs have the right to practice and revitalize their
own cultural traditions and customs. The State shall preserve, protect and develop the past, present
and future manifestations of their cultures as well as the right to the restitution of cultural,
intellectual, religious, and spiritual property taken without their free and prior informed consent or in
violation of their laws, traditions and customs.
Section 33. Rights to Religious, Cultural Sites and Ceremonies. - ICCs/IPs shall have the right to
manifest, practice, develop teach their spiritual and religious traditions, customs and ceremonies; the
right to maintain, protect and have access to their religious and cultural sites; the right to use and
control of ceremonial object; and the right to the repatriation of human remains. Accordingly, the
State shall take effective measures, in cooperation with the burial sites, be preserved, respected and
protected. To achieve this purpose, it shall be unlawful to:
a. Explore, excavate or make diggings on archeological sites of the ICCs/IPs for the purpose of
obtaining materials of cultural values without the free and prior informed consent of the community
concerned; and
b. Deface, remove or otherwise destroy artifacts which are of great importance to the ICCs/IPs for the
preservation of their cultural heritage.
Section 34. Right to Indigenous Knowledge Systems and Practices and to Develop own Sciences and
Technologies. - ICCs/IPs are entitled to the recognition of the full ownership and control and
protection of their cultural and intellectual rights. They shall have the right to special measures to
control, develop and protect their sciences, technologies and cultural manifestations, including
human and other genetic resources, seeds, including derivatives of these resources, traditional
medicines and health practices, vital medicinal plants, animals and minerals, indigenous knowledge
systems and practices, knowledge of the properties of fauna and flora, oral traditions, literature,
designs, and visual and performing arts.
Section 35. Access to Biological and Genetic Resources. - Access to biological and genetic resources
and to indigenous knowledge related to the conservation, utilization and enhancement of these
resources, shall be allowed within ancestral lands and domains of the ICCs/IPs only with a free and
prior informed consent of such communities, obtained in accordance with customary laws of the
concerned community.
Section 36. Sustainable Agro-Technical Development. - The State shall recognize the right of ICCs/IPs
to a sustainable agro-technological development and shall formulate and implement programs of
action for its effective implementation. The State shall likewise promote the bio-genetic and resource
management systems among the ICCs/IPs and shall encourage cooperation among government
agencies to ensure the successful sustainable development of ICCs/IPs.
Section 37. Funds for Archeological and Historical Sites. - The ICCs/IPs shall have the right to receive
from the national government all funds especially earmarked or allocated for the management and
preservation of their archeological and historical sites and artifacts with the financial and technical
support of the national government agencies.
CHAPTER VII
NATIONAL COMMISSION ON INDIGENOUS PEOPLES (NCIP)
Section 38. National Commission on Indigenous Cultural Communities /Indigenous Peoples (NCCP). -
to carry out the policies herein set forth, there shall be created the National Commission on ICCs/IPs
(NCIP), which shall be the primary government agency responsible for the formulation and
implementation of policies, plans and programs to promote and protect the rights and well-being of
the ICCs/IPs and the recognition of their ancestral domains as well as their rights thereto.
Section 39. Mandate. - The NCIP shall protect and promote the interest and well-being of the ICCs/IPs
with due regard to their beliefs, customs, traditions and institutions.
Section 40. Composition. - The NCIP shall be an independent agency under the Office of the President
and shall be composed of seven (7) Commissioners belonging to ICCs/IPs, one (1) of whom shall be
the Chairperson. The Commissioners shall be appointed by the President of the Philippines from a list
of recommendees submitted by authentic ICCs/IPs: Provided, That the seven (7) Commissioners shall
be appointed specifically from each of the following ethnographic areas: Region I and the Cordilleras;
Region II; the rest of Luzon; Island Groups including Mindoro, Palawan, Romblon, Panay and the rest
of the Visayas; Northern and Western Mindanao; Southern and Eastern Mindanao; and Central
Mindanao: Provided, That at least two (2) of the seven (7) Commissioners shall be women.
Section 41. Qualifications, Tenure, Compensation. - The Chairperson and the six (6) Commissioners
must be natural born Filipino citizens, bonafide members of ICCs/IPs as certified by his/her tribe,
experienced in ethnic affairs and who have worked for at least ten (10) years with an ICC/IP
community and/or any government agency involved in ICC/IP, at least 35 years of age at the time of
appointment, and must be of proven honesty and integrity: Provided, That at least two (2) of the
seven (7) Commissioners shall be the members of the Philippine Bar: Provided, further, That the
members of the NCIP shall hold office for a period of three (3) years, and may be subject to re-
appointment for another term: Provided, furthermore, That no person shall serve for more than two
(2) terms. Appointment to any vacancy shall only be for the unexpired term of the predecessor and in
no case shall a member be appointed or designated in a temporary or acting capacity: Provided,
finally, That the Chairperson and the Commissioners shall be entitled to compensation in accordance
with the Salary Standardization Law.
Section 42. Removal from Office. - Any member of the NCIP may be removed from office by the
President, on his own initiative or upon recommendation by any indigenous community, before the
expiration of his term for cause and after complying with due process requirement of law.
Section 43. Appointment of Commissioners. - The President shall appoint the seven (7)
Commissioners of the NCIP within ninety (90) days from the effectivity of this Act.
Section 44. Powers and Functions. - To accomplish its mandate, the NCIP shall have the following
powers, jurisdiction and function:
a) To serve as the primary government agency through which ICCs/IPs can seek government
assistance and as the medium, thorough which such assistance may be extended;
b) To review and assess the conditions of ICCs/IPs including existing laws and policies pertinent
thereto and to propose relevant laws and policies to address their role in national development;
c) To formulate and implement policies, plans, programs and projects for the economic, social and
cultural development of the ICCs/IPs and to monitor the implementation thereof;
d) To request and engage the services and support of experts from other agencies of government or
employ private experts and consultants as may be required in the pursuit of its objectives;
e) To issue certificate of ancestral land/domain title;
f) Subject to existing laws, to enter into contracts, agreements, or arrangement, with government or
private agencies or entities as may be necessary to attain the objectives of this Act, and subject to the
approval of the President, to obtain loans from government lending institutions and other lending
institutions to finance its programs;
g) To negotiate for funds and to accept grants, donations, gifts and/or properties in whatever form
and from whatever source, local and international, subject to the approval of the President of the
Philippines, for the benefit of ICCs/IPs and administer the same in accordance with the terms thereof;
or in the absence of any condition, in such manner consistent with the interest of ICCs/IPs as well as
existing laws;
h) To coordinate development programs and projects for the advancement of the ICCs/IPs and to
oversee the proper implementation thereof;
i) To convene periodic conventions or assemblies of IPs to review, assess as well as propose policies or
plans;
j) To advise the President of the Philippines on all matters relating to the ICCs/IPs and to submit within
sixty (60) days after the close of each calendar year, a report of its operations and achievements;
k) To submit to Congress appropriate legislative proposals intended to carry out the policies under this
Act;
l) To prepare and submit the appropriate budget to the Office of the President;
m) To issue appropriate certification as a pre-condition to the grant of permit, lease, grant, or any
other similar authority for the disposition, utilization, management and appropriation by any private
individual, corporate entity or any government agency, corporation or subdivision thereof on any part
or portion of the ancestral domain taking into consideration the consensus approval of the ICCs/IPs
concerned;
n) To decide all appeals from the decisions and acts of all the various offices within the Commission:
o) To promulgate the necessary rules and regulations for the implementation of this Act;
p) To exercise such other powers and functions as may be directed by the President of the Republic of
the Philippines; and
q) To represent the Philippine ICCs/IPs in all international conferences and conventions dealing with
indigenous peoples and other related concerns.
Section 45. Accessibility and Transparency. - Subject to such limitations as may be provided by law or
by rules and regulations promulgated pursuant thereto, all official records, documents and papers
pertaining to official acts, transactions or decisions, as well as research data used as basis for policy
development of the Commission shall be made accessible to the public.
Section 46. Officers within the NCIP. - The NCIP shall have the following offices which shall be
responsible for the implementation of the policies herein after provided:
a. Ancestral Domains Office - The Ancestral Domain Office shall be responsible for the identification,
delineation and recognition of ancestral land/domains. It shall also be responsible for the
management of ancestral lands/domains in accordance with the master plans as well as the
implementation of the ancestral domain rights of the ICCs/IPs as provided in Chapter III of this Act. It
shall also issue, upon the free and prior informed consent of the ICCs/IPs concerned, certification
prior to the grant of any license, lease or permit for the exploitation of natural resources affecting the
interests of ICCs/IPs in protecting the territorial integrity of all ancestral domains. It shall likewise
perform such other functions as the Commission may deem appropriate and necessary;
b. Office on Policy, Planning and Research - The Office on Policy, Planning and Research shall be
responsible for the formulation of appropriate policies and programs for ICCs/IPs such as, but not
limited to, the development of a Five-Year Master Plan for the ICCs/IPs. Such plan shall undergo a
process such that every five years, the Commission shall endeavor to assess the plan and make
ramifications in accordance with the changing situations. The Office shall also undertake the
documentation of customary law and shall establish and maintain a Research Center that would serve
as a depository of ethnographic information for monitoring, evaluation and policy formulation. It shall
assist the legislative branch of the national government in the formulation of appropriate legislation
benefiting ICCs/IPs.
c. Office of Education, Culture and Health - The Office on Culture, Education and Health shall be
responsible for the effective implementation of the education, cultural and related rights as provided
in this Act. It shall assist, promote and support community schools, both formal and non-formal, for
the benefit of the local indigenous community, especially in areas where existing educational facilities
are not accessible to members of the indigenous group. It shall administer all scholarship programs
and other educational rights intended for ICC/IP beneficiaries in coordination with the Department of
Education, Culture and Sports and the Commission on Higher Education. It shall undertake, within the
limits of available appropriation, a special program which includes language and vocational training,
public health and family assistance program and related subjects.
It shall also identify ICCs/IPs with potential training in the health profession and encourage and assist
them to enroll in schools of medicine, nursing, physical therapy and other allied courses pertaining to
the health profession.
Towards this end, the NCIP shall deploy a representative in each of the said offices who shall
personally perform the foregoing task and who shall receive complaints from the ICCs/IPs and compel
action from appropriate agency. It shall also monitor the activities of the National Museum and other
similar government agencies generally intended to manage and preserve historical and archeological
artifacts of the ICCs /IPs and shall be responsible for the implementation of such other functions as
the NCIP may deem appropriate and necessary;
d. Office on Socio-Economic Services and Special Concerns - The Office on Socio-Economic Services and
Special Concerns shall serve as the Office through which the NCIP shall coordinate with pertinent
government agencies specially charged with the implementation of various basic socio-economic
services, policies, plans and programs affecting the ICCs/IPs to ensure that the same are properly and
directly enjoyed by them. It shall also be responsible for such other functions as the NCIP may deem
appropriate and necessary;
e. Office of Empowerment and Human Rights - The Office of Empowerment and Human Rights shall
ensure that indigenous socio- political, cultural and economic rights are respected and recognized. It
shall ensure that capacity building mechanisms are instituted and ICCs/IPs are afforded every
opportunity, if they so choose, to participate in all level decision-making. It shall likewise ensure that
the basic human rights, and such other rights as the NCIP may determine, subject to existing laws,
rules and regulations are protected and promoted;
f. Administrative Office - The Administrative Office shall provide the NCIP with economical, efficient
and effective services pertaining to personnel, finance, records, equipment, security, supplies, and
related services. It shall also administer the Ancestral Domains Fund; and
g. Legal Affairs Office - There shall be a Legal Affairs Office which shall advice the NCIP on all legal
matters concerning ICCs/IPs and which shall be responsible for providing ICCs/IPs with legal assistance
in litigation involving community interest. It shall conduct preliminary investigation on the basis of
complaints filed by the ICCs/IPs against a natural or juridical person believed to have violated ICCs/IPs
rights. On the basis of its findings, it shall initiate the filing of appropriate legal or administrative
action to the NCIP.
Section 47. Other Offices. - The NCIP shall have the power to create additional offices as it may deem
necessary subject to existing rules and regulations.
Section 48. Regional and Field Offices. - Existing regional and field offices shall remain to function
under the strengthened organizational structure of the NCIP. Other field office shall be created
wherever appropriate and the staffing pattern thereof shall be determined by the NCIP: Provided,
That in provinces where there are ICCs/IPs but without field offices, the NCIP shall establish field
offices in said provinces.
Section 49. Office of the Executive Director. - The NCIP shall create the Office of the Executive
Director which shall serve as its secretariat. The office shall be headed by an Executive Director who
shall be appointed by the President of the Republic of the Philippines upon the recommendation of
the NCIP on a permanent basis. The staffing pattern of the office shall be determined by the NCIP
subject to existing rules and regulations.
Section 50. Consultative Body. - A body consisting of the traditional leaders, elders and
representatives from the women and youth sectors of the different ICCs/IPs shall be constituted by
the NCIP from the time to time to advise it on matters relating to the problems, aspirations and
interests of the ICCs/IPs.
CHAPTER VIII
DELINEATION AND RECOGNITION OF ANCESTRAL DOMAINS
Section 51. Delineation and Recognition of Ancestral Domains. - Self-delineation shall be guiding
principle in the identification and delineation of ancestral domains. As such, the ICCs/IPs concerned
shall have a decisive role in all the activities pertinent thereto. The Sworn Statement of the Elders as
to the Scope of the territories and agreements/pacts made with neighboring ICCs/IPs, if any, will be
essential to the determination of these traditional territories. The Government shall take the
necessary steps to identify lands which the ICCs/IPs concerned traditionally occupy and guarantee
effective protection of their rights of ownership and possession thereto. Measures shall be taken in
appropriate cases to safeguard the rights of the ICCs/IPs concerned to land which may no longer be
exclusively occupied by them, but to which they have traditionally had access for their subsistence
and traditional activities, particularly of ICCs/IPs who are still nomadic and/or shifting cultivators.
Section 52. Delineation Process. - The identification and delineation of ancestral domains shall be
done in accordance with the following procedures:
a. Ancestral Domains Delineated Prior to this Act - The provisions hereunder shall not apply to
ancestral domains/lands already delineated according to DENR Administrative Order No. 2, series of
1993, nor to ancestral lands and domains delineated under any other community/ancestral domain
program prior to the enactment of his law. ICCs/IPs enactment of this law shall have the right to apply
for the issuance of a Certificate of Ancestral Domain Title (CADT) over the area without going through
the process outlined hereunder;
b. Petition for Delineation - The process of delineating a specific perimeter may be initiated by the
NCIP with the consent of the ICC/IP concerned, or through a Petition for Delineation filed with the
NCIP, by a majority of the members of the ICCs/IPs;
c. Delineation Paper - The official delineation of ancestral domain boundaries including census of all
community members therein, shall be immediately undertaken by the Ancestral Domains Office upon
filing of the application by the ICCs/IPs concerned. Delineation will be done in coordination with the
community concerned and shall at all times include genuine involvement and participation by the
members of the communities concerned;
d. Proof required - Proof of Ancestral Domain Claims shall include the testimony of elders or
community under oath, and other documents directly or indirectly attesting to the possession or
occupation of the area since time immemorial by such ICCs/IPs in the concept of owners which shall
be any one (1) of the following authentic documents:
1. Written accounts of the ICCs/IPs customs and traditions;
2. Written accounts of the ICCs/IPs political structure and institution;
3. Pictures showing long term occupation such as those of old improvements, burial grounds, sacred
places and old villages;
4. Historical accounts, including pacts and agreements concerning boundaries entered into by the
ICCs/IPs concerned with other ICCs/IPs;
5. Survey plans and sketch maps;
6. Anthropological data;
7. Genealogical surveys;
8. Pictures and descriptive histories of traditional communal forests and hunting grounds;
9. Pictures and descriptive histories of traditional landmarks such as mountains, rivers, creeks, ridges,
hills, terraces and the like; and
10. Write-ups of names and places derived from the native dialect of the community.
e. Preparation of Maps - On the basis of such investigation and the findings of fact based thereon, the
Ancestral Domains Office of the NCIP shall prepare a perimeter map, complete with technical
descriptions, and a description of the natural features and landmarks embraced therein;
f. Report of Investigation and Other Documents - A complete copy of the preliminary census and a
report of investigation, shall be prepared by the Ancestral Domains Office of the NCIP;
g. Notice and Publication - A copy of each document, including a translation in the native language of
the ICCs/IPs concerned shall be posted in a prominent place therein for at least fifteen (15) days. A
copy of the document shall also be posted at the local, provincial and regional offices of the NCIP, and
shall be published in a newspaper of general circulation once a week for two (2) consecutive weeks to
allow other claimants to file opposition thereto within fifteen (15) days from the date of such
publication: Provided, That in areas where no such newspaper exists, broadcasting in a radio station
will be a valid substitute: Provided, further, That mere posting shall be deemed sufficient if both
newspaper and radio station are not available;
h. Endorsement to NCIP - Within fifteen (15) days from publication, and of the inspection process, the
Ancestral Domains Office shall prepare a report to the NCIP endorsing a favorable action upon a claim
that is deemed to have sufficient proof. However, if the proof is deemed insufficient, the Ancestral
Domains Office shall require the submission of additional evidence: Provided, That the Ancestral
Domains Office shall reject any claim that is deemed patently false or fraudulent after inspection and
verification: Provided, further, That in case of rejection, the Ancestral Domains Office shall give the
applicant due notice, copy furnished all concerned, containing the grounds for denial. The denial shall
be appealable to the NCIP: Provided, furthermore, That in cases where there are conflicting claims,
the Ancestral Domains Office shall cause the contending parties to meet and assist them in coming up
with a preliminary resolution of the conflict, without prejudice to its full adjudication according to the
selection below.
i. Turnover of Areas Within Ancestral Domains Managed by Other Government Agencies - The
Chairperson of the NCIP shall certify that the area covered is an ancestral domain. The secretaries of
the Department of Agrarian Reform, Department of Environment and Natural Resources, Department
of the Interior and Local Government, and Department of Justice, the Commissioner of the National
Development Corporation, and any other government agency claiming jurisdiction over the area shall
be notified thereof. Such notification shall terminate any legal basis for the jurisdiction previously
claimed;
j. Issuance of CADT - ICCs/IPs whose ancestral domains have been officially delineated and
determined by the NCIP shall be issued a CADT in the name of the community concerned, containing
a list of all those identified in the census; and
k. Registration of CADTs - The NCIP shall register issued certificates of ancestral domain titles and
certificates of ancestral lands titles before the Register of Deeds in the place where the property is
situated.
Section 53. Identification, Delineation and Certification of Ancestral Lands. -
a. The allocation of lands within any ancestral domain to individual or indigenous corporate (family or
clan) claimants shall be left to the ICCs/IPs concerned to decide in accordance with customs and
traditions;
b. Individual and indigenous corporate claimants of ancestral lands which are not within ancestral
domains, may have their claims officially established by filing applications for the identification and
delineation of their claims with the Ancestral Domains Office. An individual or recognized head of a
family or clan may file such application in his behalf or in behalf of his family or clan, respectively;
c. Proofs of such claims shall accompany the application form which shall include the testimony under
oath of elders of the community and other documents directly or indirectly attesting to the
possession or occupation of the areas since time immemorial by the individual or corporate claimants
in the concept of owners which shall be any of the authentic documents enumerated under Sec. 52
(d) of this act, including tax declarations and proofs of payment of taxes;
d. The Ancestral Domains Office may require from each ancestral claimant the submission of such
other documents, Sworn Statements and the like, which in its opinion, may shed light on the veracity
of the contents of the application/claim;
e. Upon receipt of the applications for delineation and recognition of ancestral land claims, the
Ancestral Domains Office shall cause the publication of the application and a copy of each document
submitted including a translation in the native language of the ICCs/IPs concerned in a prominent
place therein for at least fifteen (15) days. A copy of the document shall also be posted at the local,
provincial, and regional offices of the NCIP and shall be published in a newspaper of general
circulation once a week for two (2) consecutive weeks to allow other claimants to file opposition
thereto within fifteen (15) days from the date of such publication: Provided, That in areas where no
such newspaper exists, broadcasting in a radio station will be a valid substitute: Provided, further, That
mere posting shall be deemed sufficient if both newspapers and radio station are not available
f. Fifteen (15) days after such publication, the Ancestral Domains Office shall investigate and inspect
each application, and if found to be meritorious, shall cause a parcellary survey of the area being
claimed. The Ancestral Domains office shall reject any claim that is deemed patently false or
fraudulent after inspection and verification. In case of rejection, the Ancestral Domains office shall
give the applicant due notice, copy furnished all concerned, containing the grounds for denial. The
denial shall be appealable to the NCIP. In case of conflicting claims among individual or indigenous
corporate claimants, the Ancestral domains Office shall cause the contending parties to meet and
assist them in coming up with a preliminary resolution of the conflict, without prejudice to its full
adjudication according to Sec. 62 of this Act. In all proceedings for the identification or delineation of
the ancestral domains as herein provided, the Director of Lands shall represent the interest of the
Republic of the Philippines; and
g. The Ancestral Domains Office shall prepare and submit a report on each and every application
surveyed and delineated to the NCIP, which shall, in turn, evaluate or corporate (family or clan)
claimant over ancestral lands.
Section 54. Fraudulent Claims. - The Ancestral Domains Office may, upon written request from the
ICCs/IPs, review existing claims which have been fraudulently acquired by any person or community.
Any claim found to be fraudulently acquired by, and issued to, any person or community may be
cancelled by the NCIP after due notice and hearing of all parties concerned.
Section 55. Communal Rights. - Subject to Section 56 hereof, areas within the ancestral domains,
whether delineated or not, shall be presumed to be communally held: Provide, That communal rights
under this Act shall not be construed as co-ownership as provided in Republic Act. No. 386, otherwise
known as the New Civil Code.
Section 56. Existing Property Rights Regimes. - Property rights within the ancestral domains already
existing and/or vested upon effectivity of this Act, shall be recognized and respected.
Section 57. Natural Resources within Ancestral Domains. - The ICCs/IPs shall have the priority rights
in the harvesting, extraction, development or exploitation of any natural resources within the
ancestral domains. A non-member of the ICCs/IPs concerned may be allowed to take part in the
development and utilization of the natural resources for a period of not exceeding twenty-five (25)
years renewable for not more than twenty-five (25) years: Provided, That a formal and written
agreement is entered into with the ICCs/IPs concerned or that the community, pursuant to its own
decision making process, has agreed to allow such operation: Provided, finally, That the all extractions
shall be used to facilitate the development and improvement of the ancestral domains.
Section 58. Environmental Consideration. - Ancestral domains or portion thereof, which are found
necessary for critical watersheds, mangroves wildlife sanctuaries, wilderness, protected areas, forest
cover, or reforestation as determined by the appropriate agencies with the full participation of the
ICCs/IPs concerned shall be maintained, managed and developed for such purposes. The ICCs/IPs
concerned shall be given the responsibility to maintain, develop, protect and conserve such areas
with the full and effective assistance of the government agencies. Should the ICCs/IPs decide to
transfer the responsibility over the areas, said decision must be made in writing. The consent of the
ICCs/IPs should be arrived at in accordance with its customary laws without prejudice to the basic
requirement of the existing laws on free and prior informed consent: Provided, That the transfer shall
be temporary and will ultimately revert to the ICCs/IPs in accordance with a program for technology
transfer: Provided, further, That no ICCs/IPs shall be displaced or relocated for the purpose
enumerated under this section without the written consent of the specific persons authorized to give
consent.
Section 59. Certification Precondition. - all department 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 certificate shall only be issued after a procedure shall ensure that the rights of possessors in good faith shall be respected: Provided,
field-based investigation is conducted by the Ancestral Domain Office of the area concerned: further, That the action for cancellation shall be initiated within two (2) years from the effectivity of
Provided, That no certificate shall be issued by the NCIP without the free and prior informed and this Act: Provided, finally, That the action for reconveyance shall be a period of ten (10) years in
written consent of the ICCs/IPs concerned: Provided, further, That no department, government accordance with existing laws.
agency or government-owned or -controlled corporation may issue new concession, license, lease, or
production sharing agreement while there is pending application CADT: Provided, finally, That the CHAPTER IX
ICCs/IPs shall have the right to stop or suspend, in accordance with this Act, any project that has not JURISDICTION AND PROCEDURES FOR ENFORCEMENT OF RIGHTS
satisfied the requirement of this consultation process.
Section 65. Primary of Customary Laws and Practices. - When disputes involve ICCs/IPs, customary
Section 60. Exemption from Taxes. - All lands certified to be ancestral domains shall be exempt from laws and practices shall be used to resolve the dispute.
real property taxes, specially levies, and other forms of exaction except such portion of the ancestral
domains as are actually used for large-scale agriculture, commercial forest plantation and residential Section 66. Jurisdiction of the NCIP. - The NCIP, through its regional offices, shall have jurisdiction
purposes and upon titling by other by private person: Provided, that all exactions shall be used to over all claims and disputes involving rights of ICCs/IPs; Provided, however, That no such dispute shall
facilitate the development and improvement of the ancestral domains. be brought to the NCIP unless the parties have exhausted all remedies provided under their
customary laws. For this purpose, a certification shall be issued by the Council of Elders/Leaders who
Section 61. Temporary Requisition Powers. - Prior to the establishment of an institutional surveying participated in the attempt to settle the dispute that the same has not been resolved, which
capacity whereby it can effectively fulfill its mandate, but in no case beyond three (3) years after its certification shall be a condition precedent to the filing of a petition with the NCIP.
creation, the NCIP is hereby authorized to request the Department of Environment and Natural
Resources (DENR) survey teams as well as other equally capable private survey teams, through a Section 67. Appeals to the Court of Appeals. - Decisions of the NCIP shall be appealable to the Court
Memorandum of Agreement (MOA), to delineate ancestral domain perimeters. The DENR Secretary of Appeals by way of a petition for review.
shall accommodate any such request within one (1) month of its issuance: Provided, That the
Memorandum of Agreement shall stipulate, among others, a provision for technology transfer to the
Section 68. Execution of Decisions, Awards, Orders. - Upon expiration of the period here provided
NCIP.
and no appeal is perfected by any of the contending parties, the Hearing Officer of the NCIP, on its
own initiative or upon motion by the prevailing party, shall issue a writ of execution requiring the
Section 62. Resolution of Conflicts. - In cases of conflicting interest, where there are adverse claims sheriff or the proper officer to execute final decisions, orders or awards of the Regional Hearing
within the ancestral domains as delineated in the survey plan, and which cannot be resolved, the Officer of the NCIP.
NCIP shall hear and decide, after notice to the proper parties, the disputes arising from the
delineation of such ancestral domains: Provided, That if the dispute is between and/or among
Section 69. Quasi-Judicial Powers of the NCIP. - The NCIP shall have the power and authority:
ICCs/IPs regarding the traditional boundaries of their respective ancestral domains, customary process
shall be followed. The NCIP shall promulgate the necessary rules and regulations to carry out its
a. To promulgate rules and regulations governing the hearing and disposition of cases filed before it as
adjudicatory functions: Provided, further, That in any decision, order, award or ruling of the NCIP on
well as those pertaining to its internal functions and such rules and regulations as may be necessary
any ancestral domain dispute or on any matter pertaining to the application, implementation,
to carry out the purposes of this Act;
enforcement and interpretation of this Act may be brought for Petition for Review to the Court of
Appeals within fifteen (15) days from receipt of a copy thereof.
b. To administer oaths, summon the parties to a controversy, issue subpoenas requiring the
attendance and testimony of witnesses or the production of such books, papers, contracts, records,
Section 63. Applicable Laws. - Customary laws, traditions and practices of the ICCs/IPs of the land
agreements and other document of similar nature as may be material to a just determination of the
where the conflict arises shall be applied first with respect to property rights, claims and ownerships,
matter under investigation or hearing conducted in pursuance of this Act;
hereditary succession and settlement of land disputes. Any doubt or ambiguity in the application of
laws shall be resolved in favor of the ICCs/IPs.
c. To hold any person in contempt, directly or indirectly, and impose appropriate penalties therefor;
and
Section 64. Remedial Measures. - Expropriation may be resorted to in the resolution of conflicts of
interest following the principle of the "common good". The NCIP shall take appropriate legal action for
the cancellation of officially documented titles which were acquired illegally: Provided, That such
d. To enjoin any or all acts involving or arising from any case pending therefore it which, if not
restrained forthwith, may cause grave or irreparable damage to any of the parties to the case or
seriously affect social or economic activity.
Section 70. No restraining Order or Preliminary Injunction. - No inferior court of the Philippines shall
have the jurisdiction to issue any restraining order or writ of preliminary injunction against the NCIP
or any of its duly authorized or designated offices in any case, dispute or controversy to, or
interpretation of this Act and other pertinent laws relating to ICCs/IPs and ancestral domains.
CHAPTER X
ANCESTRAL DOMAINS FUND
Section 71. Ancestral Domains Fund. - There is hereby created a special fund, to be known as the
Ancestral Domains Fund, an initial amount of the One Hundred thirty million pesos(P130,000,000) to
cover compensation for expropriated lands, delineation and development of ancestral domains. An
amount of Fifty million pesos (P50,000,000) shall be sourced from the gross income of the Philippine
Charity Sweepstakes Office (PCSO) from its lotto operation, Ten millions pesos (P10,000,000) from the
gross receipts of the travel tax of the preceding year, the fund of the Social Reform Council intended
for survey and delineation of ancestral lands/domains, and such other source as the government may
be deem appropriate. Thereafter such amount shall be included in the annual General Appropriations
Act. Foreign as well as local funds which are made available for the ICCs/IPs through the government
of the Philippines shall be coursed through the NCIP. The NCIP may also solicit and receive donations,
endowments shall be exempted from income or gift taxes and all other taxes, charges or fees imposed
by the government or any political subdivision or instrumentality thereof.
CHAPTER XI
PENALTIES
Section 72. Punishable Acts and Applicable Penalties. - Any person who commits violation of any of
the provisions of this Act, such as, but not limited to, authorized and/or unlawful intrusion upon any
ancestral lands or domains as stated in Sec. 10, Chapter III, or shall commit any of the prohibited acts
mentioned in Sections 21 and 24, Chapter V, Section 33, Chapter VI hereof, shall be punished in
accordance with the customary laws of the ICCs/IPs concerned: Provided, That no such penalty shall
be cruel, degrading or inhuman punishment: Provided, further, That neither shall the death penalty or
excessive fines be imposed. This provision shall be without prejudice to the right of any ICCs/IPs to
avail of the protection of existing laws. In which case, any person who violates any provision of this
Act shall, upon conviction, be punished by imprisonment of not less than nine (9) months but not
more than twelve (12) years or a fine not less than One hundred thousand pesos (P100,000) nor more
than Five hundred thousand pesos (P500,000) or both such fine and imprisonment upon the
discretion of the court. In addition, he shall be obliged to pay to the ICCs/IPs concerned whatever
damage may have been suffered by the latter as a consequence of the unlawful act.
Section 73. Persons Subject to Punishment. - If the offender is a juridical person, all officers such as,
but not limited to, its president, manager, or head of office responsible for their unlawful act shall be
criminally liable therefor, in addition to the cancellation of certificates of their registration and/or
license: Provided, That if the offender is a public official, the penalty shall include perpetual
disqualification to hold public office.
CHAPTER XII
MERGER OF THE OFFICE FOR NORTHERN CULTURAL COMMUNITIES (ONCC) AND THE OFFICE FOR
SOUTHERN CULTURAL COMMUNITIES (OSCC)
Section 74. Merger of ONCC/OSCC. - The Office for Northern Cultural Communities (ONCC) and the
Office of Southern Cultural Communities (OSCC), created under Executive Order Nos. 122-B and 122-C
respectively, are hereby merged as organic offices of the NCIP and shall continue to function under a
revitalized and strengthened structures to achieve the objectives of the NCIP: Provided, That the
positions of Regional Directors and below, are hereby phased-out upon the effectivity of this Act:
Provided, further, That officials and employees of the phased-out offices who may be qualified may
apply for reappointment with the NCIP and may be given prior rights in the filing up of the newly
created positions of NCIP, subject to the qualifications set by the Placement Committee: Provided,
furthermore, That in the case where an indigenous person and a non-indigenous person with similar
qualifications apply for the same position, priority shall be given to the former. Officers and
employees who are to be phased-out as a result of the merger of their offices shall be entitled to
gratuity a rate equivalent to one and a half (1 1/2) months salary for every year of continuous and
satisfactory service rendered or the equivalent nearest fraction thereof favorable to them on the basis
of the highest salary received. If they are already entitled to retirement benefits or the gratuity herein
provided. Officers and employees who may be reinstated shall refund such retirement benefits or
gratuity received: Provided, finally That absorbed personnel must still meet the qualifications and
standards set by the Civil Service and the Placement Committee herein created.
Section 75. Transition Period. - The ONCC/OSCC shall have a period of six (6) months from the
effectivity of this Act within which to wind up its affairs and to conduct audit of its finances.
Section 76. Transfer of Assets/Properties. - All real and personal properties which are vested in, or
belonging to, the merged offices as aforestated shall be transferred to the NCIP without further need
of conveyance, transfer or assignment and shall be held for the same purpose as they were held by
the former offices: Provided, That all contracts, records and documents shall be transferred to the
NCIP. All agreements and contracts entered into by the merged offices shall remain in full force and
effect unless otherwise terminated, modified or amended by the NCIP.
Section 77. Placement Committee. - Subject to rules on government reorganization, a Placement
Committee shall be created by the NCIP, in coordination with the Civil Service Commission, which shall
assist in the judicious selection and placement of personnel in order that the best qualified and most
deserving persons shall be appointed in the reorganized agency. The placement Committee shall be
composed of seven (7) commissioners and an ICCs/IPs representative from each of the first and
second level employees association in the Offices for Northern and Southern Cultural Communities
(ONCC/OSCC), nongovernment organizations (NGOs) who have served the community for at least five
(5) years and peoples organizations (POs) with at least five (5) years of existence. They shall be guided
by the criteria of retention and appointment to be prepared by the consultative body and by the
pertinent provisions of the civil service law.
CHAPTER XIII
FINAL PROVISIONS
Section 78. Special Provision. - The City of Baguio shall remain to be governed by its Chapter and all
lands proclaimed as part of its townsite reservation shall remain as such until otherwise reclassified
by appropriate legislation: Provided, That prior land rights and titles recognized and/or required
through any judicial, administrative or other processes before the effectivity of this Act shall remain
valid: Provided, further, That this provision shall not apply to any territory which becomes part of the
City of Baguio after the effectivity of this Act.
Section 79. Appropriations. - The amount necessary to finance the initial implementation of this Act
shall be charged against the current year's appropriation of the ONCC and the OSCC. Thereafter, such
sums as may be necessary for its continued implementation shall be included in the annual General
Appropriations Act.
Section 80. Implementing Rules and Regulations. - Within sixty (60) days immediately after
appointment, the NCIP shall issue the necessary rules and regulations, in consultation with the
Committees on National Cultural Communities of the House of Representatives and the Senate, for
the effective implementation of this Act.
Section 81. Saving Clause. - This Act will not in any manner adversely affect the rights and benefits of
the ICCs/IPs under other conventions, recommendations, international treaties, national laws, awards,
customs and agreements.
Section 82. Separability Clause. - In case any provision of this Act or any portion thereof is declared
unconstitutional by a competent court, other provisions shall not be affected thereby.
Section 83. Repealing Clause. - Presidential Decree NO. 410, Executive Order Nos. 122-B and 122-C,
and all other laws, decrees, orders, rules and regulations or parts thereof inconsistent with this Act
are hereby repealed or modified accordingly.
Section 84. Effectivity. - This Act shall take effect fifteen days (15) days upon its publication in the
Official Gazette or in any two (2) newspapers of general circulation.
G.R. No. 181284
LOLOY UNDURAN, BARANGAY CAPTAIN ROMEO PACANA, NESTOR MACAPAYAG, RUPERTO DOGIA,
JIMMY TALINO, ERMELITO ANGEL, PETOY BESTO, VICTORINO ANGEL, RUEL BOLING, JERMY ANGEL,
BERTING SULOD, RIO BESTO, BENDIJO SIMBALAN, and MARK BRAZIL, Petitioners
vs.
RAMON ABERASTURI, CRISTINA C. LOPEZ, CESAR LOPEZ JR., DIONISIO A. LOPEZ, MERCEDES L.
GASTON, AGNES H. LOPEZ, EUSEBIO S. LOPEZ, JOSE MARIA S. LOPEZ, ANTON B. ABERASTURI, MA.
RAISSA A. VELEZ, ZOILO ANTONIO A. VELEZ, CRISTINA ABERASTURI, EDUARDO LOPEZ JR., ROSARIO
S. LOPEZ, JUAN S. LOPEZ, CESAR ANTHONY R. LOPEZ, VENANCIO L. GASTON, ROSEMARIE S. LOPEZ,
JAY A. ASUNCION, NICOLO ABERASTURI, LISA A. ASUNCION, INEZ A. VERAY, HERNAN A. ASUNCION,
ASUNCION LOPEZ, THOMAS A. VELEZ, LUIS ENRIQUE VELEZ, ANTONIO H. LOPEZ, CHARLES H. LOPEZ,
ANA L. ZAYCO, PILAR L. QUIROS, CRISTINA L. PICAZO, RENATO SANTOS, GERALDINE AGUIRRE,
MARIA CARMENCITA T. LOPEZ, and as represented by attorney-in-fact RAMON ABERASTURI,
Respondents
DECISION
PERALTA, J.:
This is a petition for review on certiorari1 assailing the Decision2 dated August 17, 2006 of the Court of
Appeals (CA) in CA-G.R. SP No. 00204-MIN, and the Resolution 3 dated July 4, 2007, which denied
petitioners' motion for reconsideration.
Petitioners, except for Mark Brazil and Nestor Macapayag, are members of the Miarayon, Lapok,
Lirongan, Talaandig Tribal Association (MILALITTRA), or Talaandig tribe, who claimed to have been
living since birth on the land located at Barangay Miarayon, Talakag, Bukidnon, Mindanao, which they
inherited from their forefathers.
On the other hand, respondents, represented by attorney-in-fact Ramon Aberasturi, claimed to be the
lawful owners and possessor of an unregistered parcel of agricultural land (Lot No. 7367 Cad 630-D),
with an area of 105.7361 hectares, which appears to be located within the ancestral domain of the
Talaandig tribe.
On March 3, 2004, respondents filed a Petition for Accion Reivindicatoria, with Prayer for the Issuance
of a Temporary Restraining Order or Preliminary Prohibitory Injunction with Damages 4 (original
complaint for accion reivindicatoria) against petitioners before the Regional Trial Court of Manolo
Fortich, Bukidnon (RTC). Docketed as Civil Case No. 04-03-01, the petition was raffled off to Branch 11.
On March 20, 2004, petitioners Macapayag and Brazil filed their Answer, alleging that respondents
have no cause of action against them. On March 23, 2004, the rest of the petitioners filed their
Motion to Dismiss, alleging that the RTC had no jurisdiction over the case. Petitioners alleged that
with the advent of Republic Act No. (RA) 8371, otherwise known as the Indigenous Peoples' Rights Act
(IPRA), they, together with the rest of the tribe members, assisted the National Commission on
Indigenous Peoples (NCIP) in the processing, validation, and delineation of their Ancestral Domain
claim in May 2003. On July 25, 2003, Certificate of Ancestral Domain Title (CADT) No. R-10-TAL-0703-
0010 was issued by virtue of NCIP En Banc Resolution No. 08-02003 to the Talaandig tribe over its
ancestral domain in Talakag, Bukidnon, containing an area of 11,105.5657 hectares. On October 30,
2003, President Gloria Macapagal Arroyo awarded the said CADT to the Talaandig tribe. As awardees
of a CADT, petitioners argued that NCIP has exclusive and original jurisdiction over the case, as the
subject matter concerns a dispute and controversy over an ancestral land/domain of Indigenous
Cultural Communities (ICCs)/Indigenous Peoples (IPs).
On July 1, 2004, the NCIP through Atty. Melanie Pimentel, filed a Motion to Refer the Case to the
Regional Hearing Office-National Commission on Indigenous Peoples (RHO-NCIP), alleging that the
RTC had no jurisdiction over the subject matter.
On July 5, 2004, respondents filed a Motion to Amend and Supplement Complaint from Accion
Reivindicatoria to one for "Injunction, Damages, and Other Relief," with the attached Amended and
Supplemental Complaint5(amended complaint for injunction). On July 30, 2004, petitioners filed an
Opposition thereto.
On August 1, 2004, petitioners filed a Motion to Dismiss the Amended and Supplemental Complaint,
alleging that the RTC had no jurisdiction over the subject matter of the case and to issue a writ of
injunction therein.
On August 10, 2004, the RTC issued an Order granting the Motion to Amend and Supplement
Complaint, and declared petitioners’ Motion to Refer the Case to the RHO-NCIP and Motion to
Dismiss moot and academic as a consequence of the grant of the said motion to amend and
supplement complaint.
On August 17, 2004, petitioners filed a Manifestation praying for an ocular inspection of the disputed
land to determine the last, actual, peaceable, uncontested status of the area.
On August 25, 2004, petitioners filed another Motion to Refer the Case to the RHO-NCIP and Motion
to Dismiss the Amended Complaint.
On September 14, 2004, respondents filed their Opposition and Motion for Judgment by Default.
On February 14, 2005, the RTC issued an Order6 resolving all pending incidents before it, the
dispositive portion of which reads:
WHEREFORE, premises considered, defendant's [herein petitioners’] motion to refer the case to the
RHO-NCIP and its manifestation for an ocular inspection are hereby denied for being bereft of merit.
Further, defendants [petitioners], except Macapayag and Brazil, are hereby declared in default for
their failure to file their Answer to the Amended Complaint. Accordingly, let this case, as against
defendants Macapayag and Brazil, be called for pre-trial and ex-parte presentation of evidence as
against the rest of defendants [petitioners] on May 2, 2005 at 9:00 o'clock in the morning.
Furthermore, the injunctive writ prayed for by the plaintiffs is hereby GRANTED for being meritorious.
Accordingly, defendants [petitioners], their agents and privies, or any other or all persons acting for
and in their behalves, are hereby ordered to observe, maintain and preserve the status quo subject of
the action and/or the relation between the parties in order to protect the rights of the plaintiffs while
the case is pending in court and to cease and desist from performing any acts that in one way or
another contravene the tenor of this order, while awaiting final determination of the instant suit or
until further orders of this court. Furthermore, to answer for whatever damage that defendants
[petitioners] may sustain by reason of this injunction order if the court should finally decide that
plaintiffs [respondents] are not entitled to the relief it prayed for, plaintiffs [respondents] are hereby
directed to put up a bond in the amount of ONE HUNDRED THOUSAND PESOS (₱100,000.00) executed
in favor of the party enjoined.
SO ORDERED.7
On April 12, 2005, petitioners filed before the Court of Appeals a Petition for Certiorari and
Prohibition with Prayer for Preliminary Injunction and Issuance of a Temporary Restraining Order.
On August 17, 2006, the CA rendered a Decision affirming the RTC's February 14, 2005 Order, which in
turn denied the referral of the case to the NCIP, the dispositive portion of which states:
WHEREFORE, in view of the foregoing, the petition is hereby partly GRANTED. The assailed Order
dated February 14, 2005 is hereby AFFIRMED with MODIFICATION that the order of default against
petitioners, except Macapayag and Brazil, is hereby LIFTED.
SO ORDERED.8
The CA ruled that the RTC correctly granted the amendment of the complaint and properly refused to
refer the case to the RHO-NCIP. Based on the allegations of both original complaint [accion
reivindicatoria] and amended complaint [injunction], the CA found that the subject matter of both
complaints is well within the jurisdiction of the RTC. The CA noted that the only substantial
amendment made was with regard to the nature of the action which originally was one of accion
reivindicatoria and then changed to one for damages. And except for some amendments as to
petitioners' alleged violent acts and the prayer for declaration of their title to the subject property, the
rest of the amended complaint was basically the same as the original one, including the reliefs prayed
for by respondents. Anent the writ of preliminary injunction, the CA held that the RTC's assailed
February 14, 2005 Order is self-explanatory as to why the issuance of the same was proper
considering the circumstances of the case.
On July 4, 2007, the CA denied petitioners' motion for reconsideration of its August 17, 2006 Decision.
Hence, this appeal on certiorari raising the following issues:
I. THE COURT OF APPEALS ERRED IN AFFIRMING THE JURISDICTION OF THE COURT A QUO OVER A
COMPLAINT FOR INJUNCTION INVOLVING AN ANCESTRAL DOMAIN OF THE TALAANDIGS.
II. THE COURT OF APPEALS ERRED IN AFFIRMING THE RESOLUTION OF THE COURT A QUO ALLOWING
THE AMENDMENT OF THE COMPLAINT, THE SOLE PURPOSE OF WHICH IS TO CONFER JURISDICTION
ON THE LOWER COURT.
III. THE COURT OF APPEALS ERRED IN RESOLVING THAT EVIDENCE MUST BE PRESENTED BEFORE THE
REGIONAL TRIAL COURT WHEN IN THE ORIGINAL ACTION FOR SPECIAL CIVIL ACTION FOR CERTIORARI
BEFORE IT, THE COURT A QUO HAS ADMITTED THAT A CADT WAS ISSUED IN FAVOR OF PETITIONERS. 9
On the first issue, petitioners contend that the RTC has no jurisdiction over Civil Case No. 04-03-0 for
Injunction, Damages and other Relief, because the 105.7361-hectare land claimed by respondents is
undisputedly within the ancestral domain of the Talaandig tribe over which a CADT has already been
issued. Petitioners insist that, even granting that the case is purely a personal action, the NCIP has
exclusive and original jurisdiction over it as it concerns a claim and dispute involving rights of ICCs/IPs
over their ancestral domain.
On the second issue, petitioners argue that the amendment of the complaint from accion
reivindicatoria to injunction with damages was clearly meant to oust the NCIP of its jurisdiction over
the case and confer it on the RTC by concealing the real issue in the case, which is the parties'
conflicting claims over the 105.7361-hectare land in Miarayon, Talakag Bukidnon. According to
petitioners, the cause of action in the complaint for accion reivindicatoriais the claim of ownership
and recovery of possession of the said land which is undisputedly found within the Talaandig tribe's
ancestral domain covered by CADT No. R10-TAL-0703-0010; hence, a claim within the exclusive and
original jurisdiction of the NCIP. Petitioners contend that respondents amended the complaint to one
for injunction to downplay the real issue which is the dispute over a land that is within the Talaandig
tribe's ancestral domain, and mainly capitalized on the acts complained of, such as harassment,
threats, acts of terrorism, among others, supposedly committed against respondents.
On the third issue, petitioners fault the CA in ruling that whether the complaint is one for Injunction
or Accion Reivindicatoria, the RTC has jurisdiction because nowhere in respondents' original and
amended complaints is it stated that petitioners were members of the ICCs or IPs and that the
disputed property was part of their ancestral domain. Petitioners take exception to the rule that
jurisdiction over the subject matter is determined by the allegations of the complaint, as strict
adherence thereto would open the floodgates to the unscrupulous practice of litigants divesting the
NCIP of jurisdiction by crafting their complaints in such a way as would confer jurisdiction on their
court of choice. Petitioners contend that the literal averments of the complaint are not determinative
of the jurisdiction over the subject matter where the actual issues are evidenced by subsequent
pleadings; in certain cases, the real nature and character of the pleadings and issues are not merely
found in the complaint, but also in the subsequent pleadings submitted by both parties. Petitioners
stress that although the complaint banners the subject matter as one for injunction, the pleadings of
respondents show that the subject matter is the conflicting ownership claims over the land. In fact,
petitioners point out that the records of the case show that various pieces of evidence have been
presented to prove that the dispute involves conflicting claims over a land covered by a CADT.
For their part, respondents contend that petitioners do not have legal capacity or standing and locus
standi to file this petition, since they failed to make prima facie showing that they are members of
IPs/ICCs, or that they were authorized to represent the Talaandig tribe. Respondents insist that based
on the allegations in their amended complaint for injunction and damages, the RTC has jurisdiction
over the subject matter which is a purely personal action and incapable of pecuniary estimation.
Respondents assert that the real issue is whether or not petitioners are guilty of wrongful acts of
violence, terrorism, destruction, intimidation, harassment, etc., to justify a permanent injunction and
hold the latter liable for damages. Respondents also point out that petitioners cannot invoke
protection under the IPRA 8731, because the conflict does not involve an ancestral domain and they
(respondents) are not IPs so the condition precedent before bringing a dispute before the NCIP
cannot be satisfied, i.e., exhaustion of remedies under customary laws by the parties.
The petition has no merit.
On the procedural issue raised by respondents, the Court disagrees with their contention that
petitioners do not have legal capacity or standing and locus standi to file the petition, for failure to
show that they are members of IPs/ICCs, or that they are authorized to represent the Talaandig tribe.
Locus standi is defined as a right of appearance in a court of justice on a given question. In private
suits, standing is governed by the "real parties in interest" rule found in Section 2, 10 Rule 3 of the Rules
of Court. Such concept of real party-in-interest is adapted in Section 2, 11 Rule VI of the 2014 Revised
Rules of Procedure before the NCIP. That petitioners are the real parties in interest can be gleaned
from the Entry of Appearance with
Motion to Refer the Case to the Regional Hearing Office of the NCIP 12 filed by the NCIP Special
Transition Team-Quick Response Unit (STRAT-QRU). The STRAT-QRU counsels alleged therein that the
respondents' complaint for recovery of ownership (accion reinvidicatoria) sought to recover an
unregistered real property situated in Miarayon, Bukidnon, from petitioners, all of whom are, with the
exception of Nestor Macapayag and Mark Brazil, member-beneficiaries of CADT No. R10-TAL-0703-
0010 issued by the NCIP in the name of the Talaandig Indigenous Peoples, located at Talakag, Province
of Bukidnon. In support of their allegation, petitioners presented a certification 13 that the disputed
land is within the area covered by the same CADT, and the NCIP List of Beneficiaries of Talaandig
Ancestral Domain of Miarayon, Lirongan, Lapok, San Miguel, Talakag, Bukidnon. 14 In contrast,
respondents failed to submit any evidence to dispute petitioners' claim that they are members of the
Talaandig Tribe. Hence, respondents' contention that petitioners have no legal standing to file the
petition, is without merit.
In resolving the pivotal issue of which between the RTC and the NCIP has jurisdiction over the
respondents' amended complaint, foremost in the Court's mind is the principle in "that jurisdiction
over the subject matter of a case is conferred by law and determined by the allegations in the
complaint which comprise a concise statement of the ultimate facts constituting the plaintiff's cause
of action. The nature of an action, as well as which court or body has jurisdiction over it, is
determined based on the allegations contained in the complaint of the plaintiff, irrespective of
whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. The
averments in the complaint and the character of the relief sought are the ones to be consulted. Once
vested by the allegations in the complaint, jurisdiction also remains vested irrespective of whether or
not the plaintiff is entitled to recover upon all or some of the claims asserted therein." 15
Under Section 19 of B.P. 129, as amended (Judiciary Reorganization Act of 1980), the RTC shall
exercise exclusive original jurisdiction in all civil actions in which the subject of the litigation is
incapable of pecuniary estimation, and in all civil actions which involve title to, possession of, real
property or any interest therein where the assessed value of the property or interest therein exceeds
Twenty Thousand Pesos (₱20,000.00) or, in civil actions in Metro Manila, where such assessed value
exceeds Fifty Thousand Pesos (₱50,000.00).
On the other hand, the NCIP's jurisdiction is defined under Section 66 of the IPRA as follows:
Sec. 66. Jurisdiction of the NCIP. − The NCIP, through its regional offices, shall have jurisdiction over all
claims and disputes involving rights of ICCs/IPs; Provided, however, That no such dispute shall be
brought to the NCIP unless the parties have exhausted all remedies provided under their customary
laws. For this purpose, a certification shall be issued by the Council of Elders/Leaders who
participated in the attempt to settle the dispute that the same has not been resolved, which
certification shall be a condition precedent to the filing of a petition with the NCIP. 16
On the matter of NCIP's jurisdiction and of procedures for enforcement of rights, NCIP Administrative
Order No. 1, 1998, the Implementing Rules and Regulations (NCIP-IRR) of the IPRA, Rule IX, Section 1
states:
Section 1. Primacy of Customary Law. - All conflicts related to the ancestral domain and lands,
involving ICCs/IPs, such as but not limited to the conflicting claims and boundary disputes, shall be
resolved by the concerned parties through the application of customary laws in the area where the
disputed ancestral domain or land is located.
All conflicts related to the ancestral domain or lands where one of the parties is non-ICC/IP or
where the dispute could not be resolved through customary law shall be heard and adjudicated in
accordance with the Rules on Pleadings, Practice and Procedure before the NCIP to be adopted
hereafter.
All decisions of the NCIP may be brought on Appeal by Petition for Review to the Court of Appeals
within fifteen (15) days from receipt of the Order or Decision. 17
In line with Section 69 of the IPRA on the NCIP's quasi-judicial power to promulgate rules and
regulations governing the hearing and disposition of cases filed before it, the NCIP issued
Administrative Circular No. 1-03 dated April 9, 2003, known as the Rules on Pleadings, Practice and
Procedure (NCIP Rules), which reiterates its jurisdiction over claims and disputes involving rights of
ICCs/IPs and enumerates the actions that may be brought before it. Section 5, Rule III, of the NCIP
Rules provides for the jurisdiction of the NCIP-RHO:
Sec. 5. Jurisdiction of the NCIP. − The NCIP through its Regional Hearing Offices shall exercise
jurisdiction over all claims and disputes involving rights of ICCs/IPs and all cases pertaining to the
implementation, enforcement, and interpretation of the IPRA 8371, including but not limited to the
following:
(1) Original and Exclusive Jurisdiction of the Regional Hearing Officer (RHO):
a. Cases involving disputes, controversies over ancestral lands/domains of ICCs/IPs;
b. Cases involving violations of the requirement of free and prior and informed consent of ICC/IPs;
c. Actions for enforcement of decisions of ICCs/IPs involving violations of customary laws or
desecration of ceremonial sites, sacred places, or rituals;
d. Actions for redemption/reconveyance under Section 8(b) of R.A. 8371; and
e. Such other cases analogous to the foregoing.
(2) Original jurisdiction of the Regional Hearing Officer:
a. Cases affecting property rights, claims of ownership, hereditary succession, and settlement of land
disputes, between and among ICCs/IPs that have not been settled under customary laws; and
b. Actions for damages arising out of any violation of Republic Act No. 8371;
(3) Exclusive and Original Jurisdiction of the Commission:
a. Petition for cancellation of Certificate of Ancestral Domain Titles/Certificate of Ancestral Land
Titles (CADTs/CALTs) alleged to have been fraudulently acquired by, and issued to, any person or
community as provided for under Section 54 of R.A. 8371. Provided that such action is filed within
one (1) year from the date of registration.
Anent the condition precedent to the filing of a petition with the NCIP under Section 66 of the IPRA,
Sections 13 and 14, Rule IV of the NCIP Rules pertinently provide:
Section 13. Certification to File Action. - Upon the request of the proper party, members of the
indigenous dispute settlement group or council of elders shall likewise issue a certification to file
action before the NCIP. In giving due regard to customary laws, the certification may be in any form so
long as it states in substance the failure of settlement notwithstanding the efforts made under
customary law or traditional practices.
Section 14. Exceptions. - The certification shall not be required in the following cases:
a. Where one of the parties is a public or private corporation, partnership, association or juridical
person or a public officer or employee and the dispute is in connection with the performance of his
official functions;
b. Where one of the parties is non-IP/ICC or does not belong to the same IP/IC Community, except
when he voluntarily submits to the jurisdiction of the Council of Elders/Leaders;
c. Where the relief sought for in the complaint or petition seeks to prevent any grave, imminent and
irreparable damage or injury that may result if not acted upon immediately; and
d. Where the Council of Elders/Leaders refuse to issue the necessary certification without justifiable
reasons.18
Having spelled out the jurisdictions conferred by law to the RTC and the NCIP over the subject matters
of their respective cases, the Court now examines the allegations in the original and amended
complaints to find out which tribunal may properly exercise jurisdiction over this case.
In their original complaint for accion reivindicatoria, respondents traced the provenance of their title
over said land to one Mamerto Decano, a Chieftain of Talaandig tribe, by virtue of a Deed of Sale
executed on July 27, 1957. They averred that, together with their predecessor-in-interest, they have
religiously paid the real estate taxes thereon since 1957 and that they have been in physical, actual,
open, prior, notorious, continuous, public and adverse possession of said land in the concept of
owners for more than 50 years, even prior to June 12, 1945. They alleged that said land was declared
alienable and disposable since August 3, 1927 per certification of the Department of Environment and
Natural Resources. They claimed that by means of fraud, stealth and surreptitious means, petitioners
entered the said land, without permission and against the consent of the landowners, caused
damages therein and harassed respondents by indiscriminately firing upon their farm workers. They
added that petitioners continue such harassment by means of armed men frequenting the campsite
and firing M-16 rifles at them during nighttime, causing great fear and threat.
Respondents prayed before the RTC for the following reliefs, among others: (1) to cause the
preliminary injunction to be made permanent for the respondents to enjoy possession of their
property, free from threats of physical harm, harassment and undue obstruction caused by
petitioners; (2) to order petitioners to respect and not to harass, intimidate and cause trouble to the
prior possession of respondents as the owners by virtue of right of title; (3) to order petitioners to pay
moral and exemplary damages, attorney's fees, appearance fees and costs of suit; and (4) to declare
respondents' title as having become a vested right, and as such entitled to all right and incident of an
absolute owner.
In their amended complaint for injunction and damages, on the other hand, respondents further
alleged that sometime in November 2003, petitioners harassed, intimidated, threatened, and fired
high-powered rifles upon respondents' farm workers to drive them away from the land, without legal
or justifiable reason. They added that, despite having hired private security guards to secure and
protect their property, these violent incidents were followed by more acts of violence, lawlessness,
harassment, terrorism to drive away respondents from the land which they claim to lawfully own and
possess.
Respondents prayed before the RTC for the following reliefs: (1) to order petitioners and their
representatives, to stop and refrain from committing acts of violence, destruction, assault and other
forms of lawlessness and terrorism against respondents, and to maintain the peaceful possession and
enjoyment of the 105-hectare land by respondents as an attribute of ownership; (2) to declare
petitioners to have committed acts of violence, harassment, intimidation, destruction, assault and
other forms of lawlessness against respondents, and to permanently order petitioners to stop and
refrain from committing similar acts; and (3) to hold petitioners jointly and severally liable to pay
respondents actual damages, moral damages, exemplary damages, attorney's fees, litigation expenses
and treble costs.
After a perusal of the allegations and prayers in both original and amended complaints, the Court
notes that respondents neither alleged therein that the parties are members of ICCs/IPs nor that the
case involves a dispute or controversy over ancestral lands/domains of ICC/IPs. Rather, the allegations
in respondents' original complaint make up for an accion reivindicatoria, a civil action which involves
an interest in a real property with an assessed value of P683,760.00, while the allegations in their
amended complaint make out a case for injunction, a civil action which is incapable of pecuniary
estimation. The Court therefore finds that the CA correctly ruled that the subject matter of the
amended complaint based on allegations therein was within the jurisdiction of the RTC.
Meanwhile, contrary to petitioners' contention, the mere fact that this case involves members of
ICCs/IPs and their ancestral land is not enough to for it to fall under the jurisdiction of the NCIP under
Section 66 of the IPRA, to wit:
Sec. 66. Jurisdiction of the NCIP. − The NCIP, through its regional offices, shall have jurisdiction over all
claims and disputes involving rights of ICCs/IPs; Provided, however, That no such dispute shall be
brought to the NCIP unless the parties have exhausted all remedies provided under their customary
laws. For this purpose, a certification shall be issued by the Council of Elders/Leaders who
participated in the attempt to settle the dispute that the same has not been resolved, which
certification shall be a condition precedent to the filing of a petition with the NCIP.
A careful review of Section 66 shows that the NCIP shall have jurisdiction over claims and disputes
involving rights of ICCs/IPs only when they arise between or among parties belonging to the same
ICC/IP. This can be gathered from the qualifying provision that "no such dispute shall be brought to
the NCIP unless the parties have exhausted all remedies provided under their customary laws. For this
purpose, a certification shall be issued by the Council of Elders/Leaders who participated in the
attempt to settle the dispute that the same has not been resolved, which certification shall be a
condition precedent to the filing of a petition with the NCIP."
The qualifying provision requires two conditions before such disputes may be brought before the
NCIP, namely: (1) exhaustion of remedies under customary laws of the parties, and (2) compliance
with condition precedent through the said certification by the Council of Elders/Leaders. This is in
recognition of the rights of ICCs/IPs to use their own commonly accepted justice systems, conflict
resolution institutions, peace building processes or mechanisms and other customary laws and
practices within their respective communities, as may be compatible with the national legal system
and with internationally recognized human rights.19
Section 3 (f) of the IPRA defines customary laws as a body of written and/or unwritten rules, usages,
customs and practices traditionally and continually recognized, accepted and observed by respective
ICCs/IPs. From this restrictive definition, it can be gleaned that it is only when both parties to a case
belong to the same ICC/IP that the abovesaid two conditions can be complied with. If the parties to a
case belong to different ICCs/IPs which are recognized to have their own separate and distinct
customary laws and Council of Elders/Leaders, they will fail to meet the abovesaid two conditions.
The same holds true if one of such parties was a non-ICC/IP member who is neither bound by
customary laws as contemplated by the IPRA nor governed by such council. Indeed, it would be
violative of the principles of fair play and due process for those parties who do not belong to the
same ICC/IP to be subjected to its customary laws and Council of Elders/Leaders.
Therefore, pursuant to Section 66 of the IPRA, the NCIP shall have jurisdiction over claims and
disputes involving rights of ICCs/IPs only when they arise between or among parties belonging to the
same ICC/IP. When such claims and disputes arise between or among parties who do not belong to
the same ICC/IP, i.e., parties belonging to different ICC/IPs or where one of the parties is a non-ICC/IP,
the case shall fall under the jurisdiction of the proper Courts of Justice, instead of the NCIP. In this
case, while most of the petitioners belong to Talaandig Tribe, respondents do not belong to the same
ICC/IP. Thus, even if the real issue involves a dispute over land which appear to be located within the
ancestral domain of the Talaandig Tribe, it is not the NCIP but the RTC which shall have the power to
hear, try and decide this case.
There are, however, exceptional cases where the NCIP shall still have jurisdiction over such claims and
disputes even if the parties involved do not belong to the same ICC/IP, viz.:
1. Cases under Sections 52 and 62 of the IPRA which contemplate a situation where a dispute over an
ancestral domain involving parties who do not belong to the same, but to different ICCs/IPs, to wit:
SECTION 52. Delineation Process. — The identification and delineation of ancestral domains shall be
done in accordance with the following procedures:
xxxx
h) Endorsement to NCIP. — Within fifteen (15) days from publication, and of the inspection process,
the Ancestral Domains Office shall prepare a report to the NCIP endorsing a favorable action upon a
claim that is deemed to have sufficient proof. However, if the proof is deemed insufficient, the
Ancestral Domains Office shall require the submission of additional evidence: Provided, That the
Ancestral Domains Office shall reject any claim that is deemed patently false or fraudulent after
inspection and verification: Provided, further, That in case of rejection, the Ancestral Domains Office
shall give the applicant due notice, copy furnished all concerned, containing the grounds for denial.
The denial shall be appealable to the NCIP: Provided, furthermore, That in cases where there are
conflicting claims among ICCs/IPs on the boundaries of ancestral domain claims, the Ancestral
Domains Office shall cause the contending parties to meet and assist them in coming up with a
preliminary resolution of the conflict, without prejudice to its full adjudication according to the
section below.
xxxx
SECTION 62. Resolution of Conflicts. — In cases of conflicting interest, where there are adverse claims
within the ancestral domains as delineated in the survey plan, and which can not be resolved, the
NCIP shall hear and decide, after notice to the proper parties, the disputes arising from the
delineation of such ancestral domains: Provided, That if the dispute is between and/or among
ICCs/IPs regarding the traditional boundaries of their respective ancestral domains, customary
process shall be followed. The NCIP shall promulgate the necessary rules and regulations to carry out
its adjudicatory functions: Provided, further, That any decision, order, award or ruling of the NCIP on
any ancestral domain dispute or on any matter pertaining to the application, implementation,
enforcement and interpretation of this Act may be brought for Petition for Review to the Court of
Appeals within fifteen (15) days from receipt of a copy thereof. 20
2. Cases under Section 54 of the IPRA over fraudulent claims by parties who are not members of the
same ICC/IP, to wit:
SECTION 54. Fraudulent Claims. — The Ancestral Domains Office may, upon written request from the
ICCs/IPs, review existing claims which have been fraudulently acquired by any person or
community. Any claim found to be fraudulently acquired by, and issued to, any person or
community may be cancelled by the NCIP after due notice and hearing of all parties concerned.21
Considering the general rule that the jurisdiction of the NCIP under Section 66 of the IPRA covers only
disputes and claims between and among members of the same ICCs/IPs involving their rights under
the IPRA, as well as the basic administrative law principle that an administrative rule or regulation
must conform, not contradict the provisions of the enabling law, 22 the Court declares Rule IX, Section
1 of the IPRA-IRR23, Rule III, Section 524 and Rule IV, Sections 13 and 14 of the NCIP Rules25 as null and
void insofar as they expand the jurisdiction of the NCIP under Section 66 of the IPRA to include such
disputes where the parties do not belong to the same ICC/IP. As the Court held in Paduran v.
DARAB,26 "[j]urisdiction over a subject matter is conferred by the Constitution or the law and rules of
procedure yield to substantive law. Otherwise stated, jurisdiction must exist as a matter of law. 27 Only
a statute can confer jurisdiction on courts and administrative agencies; rules of procedure cannot. 28 In
the abovesaid exceptional cases where one of the parties is a non-ICC/IP or does not belong to the
same ICC/IP, however, Rule IV, Section 14 of the NCIP Rules validly dispenses with the requirement of
certification issued by the Council of Elders/Leaders who participated in the failed attempt to settle
the dispute according to the customary laws of the concerned ICC/IP.
WHEREFORE, the petition is DENIED and the Court of Appeals Decision dated August 17, 2006, and its
Resolution dated July 4, 2007, in CAG.R. SP No. 00204-MIN, are AFFIRMED.
SO ORDERED.
G.R. No. 173021 October 20, 2010
DELFIN LAMSIS, MAYNARD MONDIGUING, JOSE VALDEZ, JR. and Heirs of AGUSTIN KITMA,
represented by EUGENE KITMA, Petitioners,
vs.
MARGARITA SEMON DONG-E, Respondent.
DECISION
DEL CASTILLO, J.:
There is laches when a party is aware, even in the early stages of the proceedings, of a possible
jurisdictional objection, and has every opportunity to raise said objection, but fails to do so, even on
appeal.
This is a Petition for Review1 assailing the March 30, 2006 Decision2 of the Court of Appeals (CA) in CA-
G.R. CV No. 78987 as well as its May 26, 2006 Resolution 3 which denied petitioners’ motion for
reconsideration. The dispositive portion of the assailed Decision reads:
WHEREFORE, in view of the foregoing, the appeal is hereby DISMISSED for lack of merit and the
judgment dated January 8, 2003 of the Regional Trial Court of Baguio City in Civil Case No. 4140-R is
AFFIRMED in toto.
SO ORDERED.4
Factual antecedents
This case involves a conflict of ownership and possession over an untitled parcel of land, denominated
as Lot No. 1, with an area of 80,736 square meters. The property is located along Km. 5 Asin Road,
Baguio City and is part of a larger parcel of land with an area of 186,090 square meters. While
petitioners are the actual occupants of Lot No. 1, respondent is claiming ownership thereof and is
seeking to recover its possession from petitioners.
According to respondent Margarita Semon Dong-E (Margarita), her family’s ownership and occupation
of Lot No. 1 can be traced as far back as 1922 to her late grandfather, Ap-ap. 5 Upon Ap-ap’s death, the
property was inherited by his children, who obtained a survey plan in 1964 of the 186,090-square
meter property, which included Lot No. 1.6 On the same year, they declared the property for taxation
purposes in the name of "The Heirs of Ap-ap." 7 The 1964 tax declaration bears a notation that reads:
"Reconstructed from an old Tax Declaration No. 363 dated May 10, 1922 per true of same
presented."8
The heirs of Ap-ap then executed, for a ₱500.00 consideration, a Deed of Quitclaim 9 on February 26,
1964 in favor of their brother Gilbert Semon (Margarita’s father).
Sometime between 1976 and 1978,10 Gilbert Semon together with his wife Mary Lamsis, allowed his
in-laws Manolo Lamsis and Nancy Lamsis-Kitma, to stay on a portion of Lot No. 1 together with their
respective families.11 They were allowed to erect their houses, introduce improvements, and plant
trees thereon. When Manolo Lamsis and Nancy Lamsis-Kitma died sometime in the 1980s, their
children, petitioners Delfin Lamsis (Delfin) and Agustin Kitma (Agustin), took possession of certain
portions of Lot No. 1. Delfin possessed 4,000 square meters of Lot No. 1, while Agustin occupied
5,000 square meters thereof.12 Nevertheless, the heirs of Gilbert Semon tolerated the acts of their
first cousins.
When Gilbert Semon died in 1983,13 his children extrajudicially partitioned the property among
themselves and allotted Lot No. 1 thereof in favor of Margarita. 14 Since then, Margarita allegedly paid
the realty tax over Lot No. 115and occupied and improved the property together with her husband;
while at the same time, tolerating her first cousins’ occupation of portions of the same lot.
This state of affairs changed when petitioners Delfin and Agustin allegedly began expanding their
occupation on the subject property and selling portions thereof. 16 Delfin allegedly sold a 400-square
meter portion of Lot No. 1 to petitioner Maynard 17 Mondiguing (Maynard) while Agustin sold another
portion to petitioner Jose Valdez (Jose).18
With such developments, Margarita filed a complaint 19 for recovery of ownership, possession,
reconveyance and damages against all four occupants of Lot No. 1 before the Regional Trial Court
(RTC) of Baguio City. The case was docketed as Civil Case No. 4140-R and raffled to Branch 59. The
complaint prayed for the annulment of the sales to Maynard and Jose and for petitioners to vacate
the portions of the property which exceed the areas allowed to them by Margarita. 20 Margarita
claimed that, as they are her first cousins, she is willing to donate to Delfin and Agustin a portion of
Lot No. 1, provided that she retains the power to choose such portion. 21
Petitioners denied Margarita’s claims of ownership and possession over Lot No. 1. According to Delfin
and Agustin, Lot No. 1 is a public land claimed by the heirs of Joaquin Smith (not parties to the
case).22 The Smiths gave their permission for Delfin and Agustin’s parents to occupy the land
sometime in 1969 or 1970. They also presented their neighbors who testified that it was Delfin and
Agustin as well as their respective parents who occupied Lot No. 1, not Margarita and her parents.
Delfin and Agustin also assailed the muniments of ownership presented by Margarita as fabricated,
unauthenticated, and invalid. It was pointed out that the Deed of Quitclaim, allegedly executed by all
of Ap-ap’s children, failed to include two – Rita Bocahan and Stewart Sito. 23 Margarita admitted during
trial that Rita Bocahan and Stewart Sito were her uncle and aunt, but did not explain why they were
excluded from the quitclaim.
According to Maynard and Jose, Delfin and Agustin were the ones publicly and openly in possession of
the land and who introduced improvements thereon. They also corroborated Delfin and Agustin’s
allegation that the real owners of the property are the heirs of Joaquin Smith. 24
In order to debunk petitioners’ claim that the Smiths owned the subject property, Margarita
presented a certified copy of a Resolution from the Land Management Office denying the Smiths’
application for recognition of the subject property as part of their ancestral land. 25 The resolution
explains that the application had to be denied because the Smiths did not "possess, occupy or utilize
all or a portion of the property x x x. The actual occupants (who were not named in the resolution)
whose improvements are visible are not in any way related to the applicant or his co-heirs." 26
To bolster her claim of ownership and possession, Margarita introduced as evidence an unnumbered
resolution of the Community Special Task Force on Ancestral Lands (CSTFAL) of the Department of
Environment and Natural Resources (DENR), acting favorably on her and her siblings’ ancestral land
claim over a portion of the 186,090-square meter property. 27 The said resolution states:
The land subject of the instant application is the ancestral land of the herein applicants. Well-
established is the fact that the land treated herein was first declared for taxation purposes in 1922
under Tax Declaration No. 363 by the applicant’s grandfather Ap-Ap (one name). Said application was
reconstructed in 1965 after the original got lost during the war. These tax declarations were issued
and recorded in the Municipality of Tuba, Benguet, considering that the land was then within the
territorial jurisdiction of the said municipality. That upon the death of declarant Ap-Ap his heirs x x x
transferred the tax declaration in their name, [which tax declaration is] now with the City assessor’s
office of Baguio.
The land consisting of four (4) lots with a total area of ONE HUNDRED EIGHTY SIX THOUSAND NINETY
(186,090) SQUARE METERS, is covered by Psu-198317 duly approved by the Director of Lands on
October 4, 1963 in the name of Ap-Ap (one name). In 1964, the same land was the subject of a
petition filed by Gilbert Semon, as petitioner, before the Court of First Instance of the City of Baguio in
the reopening of Judicial Proceedings under Civil Case No. 1, GLRO Record No. 211 for the registration
and the issuance of Certificate of Title of said land. The land registration case was however overtaken
by the decision of the Supreme Court declaring such judicial proceedings null and void because the
courts of law have no jurisdiction.
It has been sufficiently substantiated by the applicants that prior to and at the time of the pendency
of the land registration case and henceforth up to and including the present, the herein applicants by
themselves and through their predecessor-in-interest have been in exclusive, continuous, and
material possession and occupation of the said parcel of land mentioned above under claim of
ownership, devoting the same for residential and agricultural purposes. Found are the residential
houses of the applicants as well as those of their close relatives, while the other areas planted to fruit
trees, coffee and banana, and seasonal crops. Also noticeable therein are permanent stone and
earthen fences, terraces, clearings, including irrigation gadgets.
On the matter of the applicant[s’] indiguinity [sic] and qualifications, there is no doubt that they are
members of the National Cultural Communities, particularly the Ibaloi tribe. They are the legitimate
grandchildren of Ap-Ap (one name) who lived along the Asin Road area. His legal heirs are: Orani Ap-
Ap, married to Calado Salda; Rita Ap-Ap, married to Jose Bacacan; Sucdad Ap-Ap, married to Oragon
Wakit; and Gilbert Semon, a former vice-mayor of Tuba, Benguet, [who] adopted the common name
of their father Semon, as it is the customary practice among the early Ibalois. x x x
On the matter regarding the inheritance of the heirs of Ap-Ap, it is important to state [that] Gilbert
Semon consolidated ownership thereof and became the sole heir in 1964, by way of a "Deed of
Quitclaim" executed by the heirs in his favor. As to the respective share of the applicants[’] co-heirs,
the same was properly adjudicated in 1989 with the execution of an "Extrajudicial Settlement/
Partition of Estate with Waiver of Rights."
With regard to the overlapping issue, it is pertinent to state that application No. Bg-L-066 of Thomas
Smith has already been denied by us in our Resolution dated November 1997. As to the other adverse
claims therein by reason of previous conveyances in favor of third parties, the same were likewise
excluded resulting in the reduction of the area originally applied from ONE HUNDRED EIGHTY SIX
THOUSAND NINETY (186,090) SQUARE METERS, more or less to ONE HUNDRED TEN THOUSAND
THREE HUNDRED FORTY TWO (110,342) SQUARE METERS, more or less. Considering the foregoing
developments, we find no legal and procedural obstacle in giving due course to the instant
application.
Now therefore, we hereby [resolve] that the application for Recognition of Ancestral Land Claim filed
by the Heirs of Gilbert Semon, represented by Juanito Semon, be granted [and] a Certificate of
Ancestral Land Claim (CALC) be issued to the herein applicants by the Secretary, Department of
Environment and Natural Resources, Visayas Avenue, Diliman, Quezon City, through the Regional
Executive Director, DENR-CAR, Diego Silang Street, Baguio City. The area of the claim stated herein
above is however subject to the outcome of the final survey to be forthwith executed.
Carried this 23rd day of June 1998.28
The resolution was not signed by two members of the CSTFAL on the ground that the signing of the
unnumbered resolution was overtaken by the enactment of the Republic Act (RA) No. 8371 or the
Indigenous People’s Rights Act of 1997 (IPRA). The IPRA removed the authority of the DENR to issue
ancestral land claim certificates and transferred the same to the National Commission on Indigenous
Peoples (NCIP).29 The Ancestral Land Application No. Bg-L-064 of the Heirs of Gilbert Semon was
transferred to the NCIP, Cordillera Administrative Region, La Trinidad, Benguet and re-docketed as
Case No. 05-RHO-CAR-03.30 The petitioners filed their protest in the said case before the NCIP. The
same has been submitted for resolution.
Ruling of the Regional Trial Court31
After summarizing the evidence presented by both parties, the trial court found that it preponderates
in favor of respondent’s long-time possession of and claim of ownership over the subject
property.32 The survey plan of the subject property in the name of the Heirs of Ap-ap executed way
back in 1962 and the tax declarations thereafter issued to the respondent and her siblings all support
her claim that her family and their predecessors-in-interest have all been in possession of the
property to the exclusion of others. The court likewise gave credence to the documentary evidence of
the transfer of the land from the Heirs of Ap-ap to respondent’s father and, eventually to respondent
herself. The series of transfers of the property were indications of the respondent’s and her
predecessors’ interest over the property. The court opined that while these pieces of documentary
evidence were not conclusive proof of actual possession, they lend credence to respondent’s claim
because, "in the ordinary course of things, persons will not execute legal documents dealing with real
property, unless they believe, and have the basis to believe, that they have an interest in the property
subject of the legal documents x x x."33
In contrast, the trial court found nothing on record to substantiate the allegations of the petititioners
that they and their parents were the long-time possessors of the subject property. Their own
statements belied their assertions. Petitioner Maynard and Jose both admitted that they could not
secure title for the property from the Bureau of Lands because there were pending ancestral land
claims over the property.34 Petitioner Agustin’s Townsite Sales Application over the property was held
in abeyance because of respondent’s own claim, which was eventually favorably considered by the
CSTFAL.35
The dispositive portion of the trial court’s Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the [respondent] and
against the [petitioners] –
(1) Declaring the transfer of a portion of Lot 1 of PSU 198317 made by the [petitioner] Delfin
Lamsis to Menard Mondiguing and Jose Valdez, Jr. null and void;
(2) Ordering the [petitioners] Delfin Lamsis, Agustin Kitma, Menard Mondiguing and Jose
Valdez, Jr., to vacate the area they are presently occupying that is within Lot 1 of PSU 198317
belonging to the [respondent] and to surrender possession thereof to the [respondent];
(3) To pay [respondent] attorney’s fees in the amount of ₱10,000.00; and
(4) To pay the costs of suit.
SO ORDERED.36
It appears that no motion for reconsideration was filed before the trial court. Nevetheless, the trial
court issued an Order37 allowing the petitioners’ Notice of Appeal.38
Ruling of the Court of Appeals39
The sole issue resolved by the appellate court was whether the trial court erred in ruling in favor of
respondent in light of the adduced evidence. Citing the rule on preponderance of evidence, the CA
held that the respondent was able to discharge her burden in proving her title and interest to the
subject property. Her documentary evidence were amply supported by the testimonial evidence of
her witnesses.
In contrast, petitioners only made bare allegations in their testimonies that are insufficient to
overcome respondent’s documentary evidence.
Petitioners moved for a reconsideration40 of the adverse decision but the same was denied.
Hence this petition, which was initially denied for failure to show that the CA committed any
reversible error.41 Upon petitioners’ motion for reconsideration,42 the petition was reinstated in the
Court’s January 15, 2007 Resolution. 43
Petitioners’ arguments
Petitioners assign as error the CA’s appreciation of the evidence already affirmed and considered by
the trial court. They maintain that the change in the presiding judges who heard and decided their
case resulted in the appreciation of what would otherwise be inadmissible evidence. 44 Petitioners ask
that the Court exempt their petition from the general rule that a trial judge’s assessment of the
credibility of witnesses is accorded great respect on appeal.
To support their claim that the trial and appellate courts erred in ruling in favor of respondent, they
assailed the various pieces of evidence offered by respondent. They maintain that the Deed of
Quitclaim executed by the Heirs of Ap-ap is spurious and lacks the parties’ and witnesses’ signatures.
Moreover, it is a mere photocopy, which was never authenticated by the notary public in court and no
reasons were proferred regarding the existence, loss, and contents of the original copy. 45 Under the
best evidence rule, the Deed of Quitclaim is inadmissible in evidence and should have been
disregarded by the court.
Respondent did not prove that she and her husband possessed the subject property since time
immemorial. Petitioners argue that respondent admitted possessing and cultivating only the land that
lies outside the subject property.46
Petitioners next assail the weight to be given to respondent’s muniments of ownership, such as the
tax declarations and the survey plan. They insist that these are not indubitable proofs of respondent’s
ownership over the subject property given that there are other claimants to the land (who are not
parties to this case) who also possess a survey plan over the subject property. 47
Petitioners then assert their superior right to the property as the present possessors thereof. They cite
pertinent provisions of the New Civil Code which presume good faith possession on the part of the
possessor and puts the burden on the plaintiff in an action to recover to prove her superior title. 48
Petitioners next assert that they have a right to the subject property by the operation of acquisitive
prescription. They posit that they have been in possession of a public land publicly, peacefully,
exclusively and in the concept of owners for more than 30 years. Respondent’s assertion that
petitioners are merely possessors by tolerance is unsubstantiated.49
Petitioners also maintain that the reivindicatory action should be dismissed for lack of jurisdiction in
light of the enactment of the IPRA, which gives original and exclusive jurisdiction over disputes
involving ancestral lands and domains to the NCIP. 50 They assert that the customary laws of the Ibaloi
tribe of the Benguet Province should be applied to their dispute as mandated by Section 65, Chapter
IX of RA 8371, which states: "When disputes involve ICCs/IPs, 51 customary laws and practices shall be
used to resolve the dispute."
In the alternative that jurisdiction over an accion reivindicatoria is held to be vested in the trial court,
the petitioners insist that the courts should dismiss the reivindicatory action on the ground of litis
pendentia.52 They likewise argue that NCIP has primary jurisdiction over ancestral lands, hence, the
courts should not interfere "when the dispute demands the exercise of sound administrative
discretion requiring special knowledge, experience and services of the administrative tribunal x x x In
cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot arrogate unto
itself the authority to resolve a controversy, the jurisdiction over which is initially lodged with an
administrative body of special competence."53 The courts should stand aside in order to prevent the
possibility of creating conflicting decisions.54
Respondent’s arguments
Respondent opines that the appellate court did not commit any reversible error in affirming the trial
court’s decision. The present petition is a mere dilatory tactic to frustrate the speedy administration
of justice.55
Respondent also asserts that questions of fact are prohibited in a Rule 45 petition. 56 Thus, the
appreciation and consideration of the factual issues are no longer reviewable. 57
The issue of lack of jurisdiction is raised for the first time in the petition before this Court. It was never
raised before the trial court or the CA. Thus, respondent insists that petitioners are now barred by
laches from attacking the trial court’s jurisdiction over the case. Citing Aragon v. Court of
Appeals,58 respondent argues that the jurisdictional issue should have been raised at the appellate
level at the very least so as to avail of the doctrine that the ground lack of jurisdiction over the subject
matter of the case may be raised at any stage of the proceedings even on appeal. 59
Respondent maintains that there is no room for the application of litis pendentia because the issues in
the application for ancestral land claim are different from the issue in a reivindicatory action. The
issue before the NCIP is whether the Government, as grantor, will recognize the ancestral land claim
of respondent over a public alienable land; while the issue in the reivindicatory case before the trial
court is ownership, possession, and right to recover the real property. 60
Given that the elements of lis pendens are absent in case at bar, the allegation of forum-shopping is
also bereft of merit. Any judgment to be rendered by the NCIP will not amount to res judicata in the
instant case.61
Issues
The petitioners present the following issues for our consideration:
1. Whether the appellate court disregarded material facts and circumstances in affirming the
trial court’s decision;
2. Whether petitioners have acquired the subject property by prescription;
3. Whether the trial court has jurisdiction to decide the case in light of the effectivity of RA
8371 or the Indigenous People’s Rights Act of 1997 at the time that the complaint was
instituted;
4. If the trial court retains jurisdiction, whether the ancestral land claim pending before the
NCIP should take precedence over the reivindicatory action.62
 Our Ruling
Whether the appellate court disregarded material facts and circumstances in affirming the trial court’s
decision
Both the trial and the appellate courts ruled that respondent has proven her claims of ownership and
possession with a preponderance of evidence. Petitioners now argue that the two courts erred in
their appreciation of the evidence. They ask the Court to review the evidence of both parties, despite
the CA’s finding that the trial court committed no error in appreciating the evidence presented during
trial. Hence, petitioners seek a review of questions of fact, which is beyond the province of a Rule 45
petition. A question of fact exists if the uncertainty centers on the truth or falsity of the alleged
facts.63 "Such questions as whether certain items of evidence should be accorded probative value or
weight, or rejected as feeble or spurious, or whether the proofs on one side or the other are clear and
convincing and adequate to establish a proposition in issue, are without doubt questions of fact." 64
Since it raises essentially questions of fact, this assignment of error must be dismissed for it is settled
that only questions of law may be reviewed in an appeal by certiorari. 65 There is a question of law
when there is doubt as to what the law is on a certain state of facts. Questions of law can be resolved
without having to re-examine the probative value of evidence presented, the truth or falsehood of
facts being admitted.66 The instant case does not present a compelling reason to deviate from the
foregoing rule, especially since both trial and appellate courts agree that respondent had proven her
claim of ownership as against petitioners’ claims. Their factual findings, supported as they are by the
evidence, should be accorded great respect.
In any case, even if petitioners’ arguments attacking the authenticity and admissibility of the Deed of
Quitclaim executed in favor of respondent’s father are well-taken, it will not suffice to defeat
respondent’s claim over the subject property. Even without the Deed of Quitclaim, respondent’s
claims of prior possession and ownership were adequately supported and corroborated by her other
documentary and testimonial evidence. We agree with the trial court’s observation that, in the
ordinary course of things, people will not go to great lengths to execute legal documents and pay
realty taxes over a real property, unless they have reason to believe that they have an interest over
the same.67
The fact that respondent’s documents traverse several decades, from the 1960s to the 1990s, is an
indication that she and her family never abandoned their right to the property and have continuously
exercised rights of ownership over the same.
Moreover, respondent’s version of how the petitioners came to occupy the property coincides with
the same timeline given by the petitioners themselves. The only difference is that petitioners maintain
they came into possession by tolerance of the Smith family, while respondent maintains that it was
her parents who gave permission to petitioners. Given the context under which the parties’ respective
statements were made, the Court is inclined to believe the respondent’s version, as both the trial and
appellate courts have concluded, since her version is corroborated by the documentary evidence.
Whether petitioners have acquired the subject property by prescription
Assuming that the subject land may be acquired by prescription, we cannot accept petitioners’ claim
of acquisition by prescription. Petitioners admitted that they had occupied the property by tolerance
of the owner thereof. Having made this admission, they cannot claim that they have acquired the
property by prescription unless they can prove acts of repudiation. It is settled that possession, in
order to ripen into ownership, must be in the concept of an owner, public, peaceful and
uninterrupted. Possession not in the concept of owner, such as the one claimed by petitioners, cannot
ripen into ownership by acquisitive prescription, unless the juridical relation is first expressly
repudiated and such repudiation has been communicated to the other party. Acts of possessory
character executed due to license or by mere tolerance of the owner are inadequate for purposes of
acquisitive prescription. Possession by tolerance is not adverse and such possessory acts, no matter
how long performed, do not start the running of the period of prescription. 68
In the instant case, petitioners made no effort to allege much less prove any act of repudiation
sufficient for the reckoning of the acquisitive prescription. At most, we can find on record the sale by
petitioners Delfin and Agustin of parts of the property to petitioners Maynard and Jose; but the same
was done only in 1998, shortly before respondent filed a case against them. Hence, the 30-year period
necessary for the operation of acquisitve prescription had yet to be attained.
Whether the ancestral land claim pending before the National Commission on Indigenous Peoples
(NCIP) should take precedence over the reivindicatory action
The application for issuance of a Certificate of Ancestral Land Title pending before the NCIP is akin to a
registration proceeding. It also seeks an official recognition of one’s claim to a particular land and is
also in rem. The titling of ancestral lands is for the purpose of "officially establishing" one’s land as an
ancestral land.69 Just like a registration proceeding, the titling of ancestral lands does not vest
ownership70 upon the applicant but only recognizes ownership 71 that has already vested in the
applicant by virtue of his and his predecessor-in-interest’s possession of the property since time
immemorial. As aptly explained in another case:
It bears stressing at this point that ownership should not be confused with a certificate of title.
Registering land under the Torrens system does not create or vest title because registration is not a
mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the
particular property described therein. Corollarily, any question involving the issue of ownership must
be threshed out in a separate suit x x x The trial court will then conduct a full-blown trial wherein the
parties will present their respective evidence on the issue of ownership of the subject properties to
enable the court to resolve the said issue. x x x72 (Emphasis supplied)
Likewise apropos is the following explanation:
The fact that the [respondents] were able to secure [TCTs over the property] did not operate to vest
upon them ownership of the property. The Torrens system does not create or vest title. It has never
been recognized as a mode of acquiring ownership x x x If the [respondents] wished to assert their
ownership, they should have filed a judicial action for recovery of possession and not merely to have
the land registered under their respective names. x x x Certificates of title do not establish
ownership.73 (Emphasis supplied)
A registration proceeding is not a conclusive adjudication of ownership. In fact, if it is later on found in
another case (where the issue of ownership is squarely adjudicated) that the registrant is not the
owner of the property, the real owner can file a reconveyance case and have the title transferred to
his name.74
Given that a registration proceeding (such as the certification of ancestral lands) is not a conclusive
adjudication of ownership, it will not constitute litis pendentia on a reivindicatory case where the
issue is ownership.75 "For litis pendentia to be a ground for the dismissal of an action, the following
requisites must concur: (a) identity of parties, or at least such parties who represent the same
interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded
on the same facts; and (c) the identity with respect to the two preceding particulars in the two cases
is such that any judgment that may be rendered in the pending case, regardless of which party is
successful, would amount to res judicata in the other case." 76 The third element is missing, for any
judgment in the certification case would not constitute res judicata or be conclusive on the ownership
issue involved in the reivindicatory case. Since there is no litis pendentia, there is no reason for the
reivindicatory case to be suspended or dismissed in favor of the certification case.
Moreover, since there is no litis pendentia, we cannot agree with petitioners’ contention that
respondent committed forum-shopping. Settled is the rule that "forum shopping exists where the
elements of litis pendentia are present or where a final judgment in one case will amount to res
judicata in the other."77
Whether the trial court has jurisdiction to decide the case in light of the effectivity of RA 8371 or the
Indigenous People’s Rights Act of 1997 at the time that the complaint was instituted
For the first time in the entire proceedings of this case, petitioners raise the trial court’s alleged lack of
jurisdiction over the subject-matter in light of the effectivity 78 of the IPRA at the time that the
complaint was filed in 1998. They maintain that, under the IPRA, it is the NCIP which has jurisdiction
over land disputes involving indigenous cultural communities and indigenous peoples.
As a rule, an objection over subject-matter jurisdiction may be raised at any time of the proceedings.
This is because jurisdiction cannot be waived by the parties or vested by the agreement of the parties.
Jurisdiction is vested by law, which prevails at the time of the filing of the complaint.
An exception to this rule has been carved by jurisprudence. In the seminal case of Tijam v.
Sibonghanoy,79 the Court ruled that the existence of laches will prevent a party from raising the
court’s lack of jurisdiction. Laches is defined as the "failure or neglect, for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence, could or should have been
done earlier; it is negligence or omission to assert a right within a reasonable time, warranting the
presumption that the party entitled to assert it either has abandoned or declined to assert
it."80 Wisely, some cases81 have cautioned against applying Tijam, except for the most exceptional
cases where the factual milieu is similar to Tijam.
In Tijam, the surety could have raised the issue of lack of jurisdiction in the trial court but failed to do
so. Instead, the surety participated in the proceedings and filed pleadings, other than a motion to
dismiss for lack of jurisdiction. When the case reached the appellate court, the surety again
participated in the case and filed their pleadings therein. It was only after receiving the appellate
court’s adverse decision that the surety awoke from its slumber and filed a motion to dismiss, in lieu
of a motion for reconsideration. The CA certified the matter to this Court, which then ruled that the
surety was already barred by laches from raising the jurisdiction issue.
In case at bar, the application of the Tijam doctrine is called for because the presence of laches cannot
be ignored. If the surety in Tijam was barred by laches for raising the issue of jurisdiction for the first
time in the CA, what more for petitioners in the instant case who raised the issue for the first time in
their petition before this Court.
At the time that the complaint was first filed in 1998, the IPRA was already in effect but the
petitioners never raised the same as a ground for dismissal; instead they filed a motion to dismiss on
the ground that the value of the property did not meet the jurisdictional value for the RTC. They
obviously neglected to take the IPRA into consideration.
When the amended complaint was filed in 1998, the petitioners no longer raised the issue of the trial
court’s lack of jurisdiction. Instead, they proceeded to trial, all the time aware of the existence of the
IPRA as evidenced by the cross-examination82 conducted by petitioners’ lawyer on the CSTFAL
Chairman Guillermo Fianza. In the cross-examination, it was revealed that the petitioners were aware
that the DENR, through the CSTFAL, had lost its jurisdiction over ancestral land claims by virtue of the
enactment of the IPRA. They assailed the validity of the CSTFAL resolution favoring respondent on the
ground that the CSTFAL had been rendered functus officio under the IPRA. Inexplicably, petitioners
still did not question the trial court’s jurisdiction.1avvphi1
When petitioners recoursed to the appellate court, they only raised as errors the trial court’s
appreciation of the evidence and the conclusions that it derived therefrom. In their brief, they once
again assailed the CSTFAL’s resolution as having been rendered functus officio by the enactment of
IPRA.83 But nowhere did petitioners assail the trial court’s ruling for having been rendered without
jurisdiction.
It is only before this Court, eight years after the filing of the complaint, after the trial court had
already conducted a full-blown trial and rendered a decision on the merits, after the appellate court
had made a thorough review of the records, and after petitioners have twice encountered adverse
decisions from the trial and the appellate courts — that petitioners now want to expunge all the
efforts that have gone into the litigation and resolution of their case and start all over again. This
practice cannot be allowed.
Thus, even assuming arguendo that petitioners’ theory about the effect of IPRA is correct (a matter
which need not be decided here), they are already barred by laches from raising their jurisdictional
objection under the circumstances.
WHEREFORE, premises considered, the petition is denied for lack of merit. The March 30, 2006
Decision of the Court of Appeals in CA-G.R. CV No. 78987 and its May 26, 2006 Resolution denying the
motion for reconsideration are AFFIRMED.
SO ORDERED.
REPUBLIC ACT 9003 January 26, 2001
AN ACT PROVIDING FOR AN ECOLOGICAL SOLID WASTE MANAGEMENT PROGRAM, CREATING THE
NECESSARY INSTITUTIONAL MECHANISMS AND INCENTIVES, DECLARING CERTAIN ACTS PROHIBITED
AND PROVIDING PENALTIES, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representative of the Philippines in Congress assembled:
CHAPTER I
BASIC POLICIES
Article 1
General Provisions
Section 1. Short Title - This Act shall be known as the "Ecological Solid Waste Management Act of
2000."
Section 2. Declaration of Policies - It is hereby declared the policy of the State to adopt a systematic,
comprehensive and ecological solid waste management program which shall:
(a) Ensure the protection of the public health and environment;
(b) Utilize environmentally-sound methods that maximize the utilization of valuable resources and
encourage resource conservation and recovery;
(c) Set guidelines and targets for solid waste avoidance and volume reduction through source
reduction and waste minimization measures, including composting, recycling, re-use, recovery, green
charcoal process, and others, before collection, treatment and disposal in appropriate and
environmentally sound solid waste management facilities in accordance with ecologically sustainable
development principles;
(d) Ensure the proper segregation, collection, transport, storage, treatment and disposal of solid
waste through the formulation and adoption of the best environmental practice in ecological waste
management excluding incineration;
(e) Promote national research and development programs for improved solid waste management and
resource conservation techniques, more effective institutional arrangement and indigenous and
improved methods of waste reduction, collection, separation and recovery;
(f) Encourage greater private sector participation in solid waste management;
(g) Retain primary enforcement and responsibility of solid waste management with local government
units while establishing a cooperative effort among the national government, other local government
units, non- government organizations, and the private sector;
(h) Encourage cooperation and self-regulation among waste generators through the application of
market-based instruments;
(i) Institutionalize public participation in the development and implementation of national and local
integrated, comprehensive, and ecological waste management programs; and
(j) Strength the integration of ecological solid waste management and resource conservation and
recovery topics into the academic curricula of formal and non-formal education in order to promote
environmental awareness and action among the citizenry.
Article 2
Definition of Terms
Section 3. Definition of Terms - For the purposes of this Act:
(a) Agricultural waste shall refer to waste generated from planting or harvesting of crops, trimming or
pruning of plants and wastes or run-off materials from farms or fields;
(b) Bulky wastes shall refer to waste materials which cannot be appropriately placed in separate
containers because of either its bulky size, shape or other physical attributes. These include large
worn-out or broken household, commercial, and industrial items such as furniture, lamps, bookcases,
filing cabinets, and other similar items;
(c) Bureau shall refer to the Environmental Management Bureau;
(d) Buy-back center shall refer to a recycling center that purchases of otherwise accepts recyclable
materials from the public for the purpose of recycling such materials;
(e) Collection shall refer to the act of removing solid waste from the source or from a communal
storage point;
(f) Composting shall refer to the controlled decomposition of organic matter by micro-organisms,
mainly bacteria and fungi, into a humus-like product;
(g) Consumer electronics shall refer to special waste that includes worn-out, broken, and other
discarded items such as radios, stereos, and TV sets;
(h) Controlled dump shall refer to a disposal site at which solid waste is deposited in accordance with
the minimum prescribed standards of site operation;
(i) Department shall refer to the Department of Environment and Natural Resources;
(j) Disposal shall refer to the discharge, deposit, dumping, spilling, leaking or placing of any solid
waste into or in an land;
(k) Disposal site shall refer to a site where solid waste is finally discharged and deposited;
(l) Ecological solid waste management shall refer to the systematic administration of activities which
provide for segregation at source, segregated transportation, storage, transfer, processing, treatment,
and disposal of solid waste and all other waste management activities which do not harm the
environment;
(m) Environmentally acceptable shall refer to the quality of being re-usable, biodegradable or
compostable, recyclable and not toxic or hazardous to the environment;
(n) Generation shall refer to the act or process of producing solid waste;
(o) Generator shall refer to a person, natural or juridical, who last uses a material and makes it
available for disposal or recycling;
(p) Hazardous waste shall refer to solid waste management or combination of solid waste which
because of its quantity, concentration or physical, chemical or infectious characteristics may:
(1) cause, or significantly contribute to an increase in mortality or an increase in serious irreversible,
or incapacitating reversible, illness; or
(2) pose a substantial present or potential hazard to human health or the environment when
improperly treated, stored, transported, or disposed of, or otherwise managed;
(q) Leachate shall refer to the liquid produced when waste undergo decomposition, and when water
percolate through solid waste undergoing decomposition. It is contaminated liquid that contains
dissolved and suspended materials;
(r) Materials recovery facility - includes a solid waste transfer station or sorting station, drop-off
center, a composting facility, and a recycling facility;
(s) Municipal waste shall refer to wastes produced from activities within local government units which
include a combination of domestic, commercial, institutional and industrial wastes and street litters;
(t) Open dump shall refer to a disposal area wherein the solid wastes are indiscriminately thrown or
disposed of without due planning and consideration for environmental and Health standards;
(u) Opportunity to recycle shall refer to the act of providing a place for collecting source-separated
recyclable material, located either at a disposal site or at another location more convenient to the
population being served, and collection at least once a month of source-separated recyclable material
from collection service customers and to providing a public education and promotion program that
gives notice to each person of the opportunity to recycle and encourage source separation of
recyclable material;
(v) Person(s) shall refer to any being, natural or judicial, susceptible of rights and obligations, or of
being the subject of legal relations;
(w) Post-consumer material shall refer only to those materials or products generated by a business or
consumer which have served their intended end use, and which have been separated or diverted
from solid waste for the purpose of being collected, processed and used as a raw material in the
manufacturing of recycled product, excluding materials and by-products generated from, and by-
products generated from, and commonly used within an original manufacturing process, such as mill
scrap;
(x) Receptacles shall refer to individual containers used for the source separation and the collection of
recyclable materials;
(y) Recovered material shall refer to material and by products that have been recovered or diverted
from solid waste for the purpose of being collected, processed and used as a raw material in the
manufacture of a recycled product;
(z) Recyclable material shall refer to any waste material retrieved from the waste stream and free
from contamination that can still be converted into suitable beneficial use or for other purposes,
including, but not limited to, newspaper, ferrous scrap metal, non-ferrous scrap metal, used oil,
corrugated cardboard, aluminum, glass, office paper, tin cans and other materials as may be
determined by the Commission;
(aa) Recycled material shall refer to post-consumer material that has been recycled and returned to
the economy;
(bb) Recycling shall refer to the treating of used or waste materials through a process of making them
suitable for beneficial use and for other purposes, and includes any process by which solid waste
materials are transformed into new products in such a manner that the original product may lose
their identity, and which maybe used as raw materials for the production of other goods or
services: Provided, That the collection, segregation and re-use of previously used packaging material
shall be deemed recycling under this Act;
(cc) Resource conversation shall refer to the reduction of the amount of solid waste that are
generated or the reduction of overall resource consumption, and utilization of recovered resources;
(dd) Resources recovery shall refer to the collection, extraction or recovery of recyclable materials
from the waste stream for the purpose of recycling, generating energy or producing a product suitable
for beneficial use: Provided, That such resource recovery facilities exclude incineration;
(ee) Re-use shall refer to the process of recovering materials intended for the same or different
purpose without the alteration of physical and chemical characteristics;
(ff) Sanitary landfill shall refer to a waste disposal site designed, constructed, operated and
maintained in a manner that exerts engineering control over significant potential environment
impacts arising from the development and operation of the facility;
(gg) Schedule of Compliance shall refer to an enforceable sequence of actions or operations to be
accomplished within a stipulated time frame leading to compliance with a limitation, prohibition or
standard set forth in this Act or any rule of regulation issued pursuant thereto;
(hh) Secretary landfill shall refer to the Secretary of the Department of Environment and Natural
Resources;
(ii) Segregation shall refer to a solid waste management practice of separating different materials
found in solid waste in order to promote recycling and re-use of resources and to reduce the volume
of waste for collection and disposal;
(jj) Segregation at source shall refer to a solid waste management practice of separating, at the point
of origin, different materials found in solid waste in order to promote recycling and re-use of
resources and to reduce the volume of waste for collection and disposal;
(kk) Solid waste shall refer to all discarded household, commercial waste, non-hazardous institutional
and industrial waste, street sweepings, construction debris, agricultural waste, and other non-
hazardous/non-toxic solid waste.
Unless specifically noted otherwise, the term "solid waste" as used in this Act shall not include:
(1) Waste identified or listed as hazardous waste of a solid, liquid, contained gaseous or semisolid
form which may cause or contribute to an increase in mortality or in serious or incapacitating
reversible illness, or acute/chronic effect on the health of persons and other organisms;
(2) Infectious waste from hospitals such as equipment, instruments, utensils, and fomites of a
disposable nature from patients who are suspected to have or have been diagnosed as having
communicable diseases and must therefore be isolated as required by public health agencies,
laboratory wastes such as pathological specimens (i.e. all tissues, specimens of blood elements,
excreta, and secretions obtained from patients or laboratory animals) and disposable fomites that
may harbor or transmit pathogenic organisms, and surgical operating room pathologic materials from
outpatient areas and emergency rooms; and
(3) Waste resulting from mining activities, including contaminated soil and debris.
(ll) Solid waste management shall refer to the discipline associated with the control of generation,
storage, collection, transfer and transport, processing, and disposal of solid wastes in a manner that is
in accord with the best principles of public health, economics, engineering, conservation, aesthetics,
and other environmental considerations, and that is also responsive to public attitudes;
(mm) Solid waste management facility shall refer to any resource recovery system or component
thereof; any system, program, or facility for resource conservation; any facility for the collection,
source separation, storage, transportation, transfer, processing, treatment, or disposal of solid waste;
(nn) Source reduction shall refer to the reduction of solid waste before it enters the solid waste
stream by methods such as product design, materials substitution, materials re-use and packaging
restrictions;
(oo) Source separation shall refer to the sorting of solid waste into some or all of its component parts
at the point of generation;
(pp) Special wastes shall refer to household hazardous wastes such as paints, thinners, household
batteries, lead-acid batteries, spray canisters and the like. These include wastes from residential and
commercial sources that comprise of bulky wastes, consumer electronics, white goods, yard wastes
that are collected separately, batteries, oil, and tires. These wastes are usually handled separately
from other residential and commercial wastes;
the President. The Commissioner shall be composed of fourteen (14) members from the government
sector and three members from the private sector. The government sector shall be represented by the
heads of the following agencies in their ex officio capacity:
(1) Department of Environment and Natural Resources (DENR);

(qq) Storage shall refer to the interim containment of solid wastes after generation and prior to (2) Department of the Interior and Local Government (DILG);
collection for ultimate recovery or disposal;
(3) Department of Science and Technology (DOST);
(rr) Transfer stations shall refer to those facilities utilized to receive solid wastes, temporarily store,
(4) Department of Public Works and Highways (DPWH);
separate, convert, or otherwise process the materials in the solid wastes, or to transfer the solid
wastes directly from smaller to larger vehicles for transport. This term does not include any of the (5) Department of Health (DOH);
following:
(6) Department of Trade and Industry (DTI);
(1) a facility whose principal function is to receive, store, separate, convert or otherwise process in
accordance with national minimum standards, manure; (7) Department of Agriculture (DA);

(2) a facility, whose principal function is to receive, store, convert, or otherwise process wastes which (8) Metro Manila Development Authority (MMDA);
have already been separated for re-use and are intended for disposals, and
(9) League of provincial governors;
(3) the operations premises of a duly licensed solid waste handling operator who is receives, stores,
(10) League of city mayors;
transfers, or otherwise processes wastes as an activity incidental to the conduct of a refuse collection
and disposal business. (11) League of municipal mayors;

(ss) Waste diversion shall refer to activities which reduce or eliminate the amount of solid waste from (12) Association of barangay councils;
waste disposal facilities;
(13) Technical Education and Skills Development Authority (TESDA); and
(tt) White goods shall refer to large worn-out or broken household, commercial, and industrial
appliances such as stoves, refrigerators, dishwashers, and clothes washers and dryers collected (14) Philippine Information Agency.
separately. White goods ate usually dismantled for the recovery of specific materials (e.g., copper,
aluminum, etc.); The private sector shall be represented by the following:

(uu) Yard waste shall refer to wood, small or chipped branches, leaves, grass clippings, garden debris, (a) A representative from nongovernment organizations (NGOs) whose principal purpose is to
vegetable residue that is recognized as part of a plant or vegetable and other materials identified by promote recycling and the protection of air and water quality;
the Commission.
(b) A representative from the recycling industry; and
CHAPTER II
(c) A representative from the manufacturing or packaging industry;
INSTITUTIONAL MECHANISM
The Commission may, from time to time, call on any other concerned agencies or sectors as it may
Section 4. National Solid Waste Management Commission - There is hereby established a National
deem necessary.
Solid Waste Management Commission, hereinafter referred to as the Commission, under the Office of
Provided, That representatives from the NGOs, recycling and manufacturing or packaging industries
shall be nominated through a process designed by themselves and shall be appointed by the
President for a term of three (3) years.
Provided, further, That the Secretaries of the member agencies of the Commission shall formulate
action plans for their respective agencies to complement the National Solid Waste Management
Framework.
The Department Secretary and a private sector representative of the Commission shall serve as
chairman and vice chairman, respectively. The private sector representatives of the Commission shall
be appointed on the basis of their integrity, high decree of professionalism and having distinguished
themselves in environmental and resource management. The members of the Commission shall serve
and continue to hold office until their successors shall have been appointed and qualified. Should a
member of the Commission fail to complete his/her term, the unexpired portion of the term. Finally,
the members shall be entitled to reasonable traveling expenses and honoraria.
The Department, through the Environmental Management Bureau, shall provide secretariat support
to the Commission. The Secretariat shall be headed by an executive director who shall be nominated
by the members of the Commission and appointed by the chairman.
Section 5. Powers and Functions of the Commission - The Commission shall oversee the
implementation of solid waste management plans and prescribe policies to achieve the objectives of
this Act. The Commission shall undertake the following activities.
(a) Prepare the national solid waste management framework;
(b) Approve local solid waste management plans in accordance with its rules and regulations;
(c) Review and monitor the implementation of local solid waste management plans;
(d) Coordinate the operation of local solid waste management boards in the provincial and
city/municipal levels;
(e) To the maximum extent feasible, utilizing existing resources, assist provincial, city and municipal
solid waste management plans;
(f) Develop a model provincial, city and municipal solid waste management plan that will establish
prototypes of the content and format which provinces, cities and municipalities may use in meeting
the requirements of the National Solid Waste Management Framework;
(g) Adopt a program to provide technical and other capability building assistance and support to local
government units in the development and implementation of source reduction programs;
(h) Develop and implement a program to assist local government units in the identification of markets
for materials that are diverted from disposal facilities through re-use, recycling, and composting, and
other environment-friendly methods;
(i) Develop a mechanism for the imposition of sanctions for the violations environmental rules and
regulations;
(j) Manage the Solid Waste Management Fund;
(k) Develop and prescribe procedures for the issuance of appropriate permits and clearances.
(l) Review the incentives scheme for effective solid waste management, for purpose of ensuring
relevance and efficiency in achieving the objectives of this Act;
(m) Formulate the necessary education promotion and information campaign strategies;
(n) Establish, after notice and hearing of the parties concerned, standards, criteria, guidelines, and
formula that are fair, equitable and reasonable, in establishing tipping charges and rates that the
proponent will charge in the operation and management of solid waste management facilities and
technologies.
(o) Develop safety nets and alternative livelihood programs for small recyclers and other sectors that
will be affected as a result of the construction and/or operation of solid waste management recycling
plant or facility.
(p) Formulate and update a list of non-environmentally acceptable materials in accordance with the
provisions of this Act. For this purpose, it shall be necessary that proper consultation be conducted by
the Commission with all concerned industries to ensure a list that is based on technological and
economic viability.
(q) Encourage private sector initiatives, community participation and investments resource recovery-
based livelihood programs for local communities.
(r) Encourage all local government agencies and all local government units to patronize products
manufactured using recycled and recyclable materials;
(s) Propose and adopt regulations requiring the source separation and post separation collection,
segregated collection, processing, marketing and sale of organic and designated recyclable material
generated in each local government unit; and
(t) Study and review of the following:
(i) Standards, criteria and guidelines for promulgation and implementation of an integrated national
solid waste management framework; and
(ii) Criteria and guidelines for siting, design, operation and maintenance of solid waste management
facilities.
Section 6. Meetings - The Commission shall meet at least once a month. The presence of at least a
majority of the members shall constitute a quorum. The chairman, or in his absence the vice-
chairman, shall be the presiding officer. In the absence of the heads of the agencies mentioned in Sec.
4 of this Act, they may designate permanent representatives to attend the meetings.
Section 7. The National Ecology Center - There shall be established a National Ecology Center under
the Commission which shall provide consulting, information, training, and networking services for the
implementation of the provisions of this Act.
In this regard, it shall perform the following functions:
(a) Facilitate training and education in integrated ecological solid waste management;
(b) Establish and manage a solid waste management information data base, in coordination with the
DTI and other concerned agencies:
(1) on solid waste generation and management techniques as well as the management, technical and
operational approaches to resource recovery; and
(2) of processors/recyclers, the list of materials being recycled or bought by them and their respective
prices;
(c) Promote the development of a recycling market through the establishment of a national recycling
network that will enhance the opportunity to recycle;
(d) Provide or facilitate expert assistance in pilot modeling of solid waste management facilities; and
(e) Develop, test, and disseminate model waste minimization and reduction auditing procedures for
evaluating options.
The National Ecology Center shall be headed by the director of the Bureau in his ex officio capacity. It
shall maintain a multi-sectoral, multi-disciplinary pool of experts including those from the academe,
inventors, practicing professionals, business and industry, youth , women and other concerned
sectors, who shall be screened according to qualifications set by the Commission.
Section 8. Role of the Departmen. - For the furtherance of the objectives of this Act, the Department
shall have the following functions:
(a) Chair the Commission created pursuant to this Act;
(b) Prepare an annual National Solid Waste Management Status Report;
(c) Prepare and distribute information, education and communication materials on solid waste
management;
(d) Establish methods and other parameters for the measurement of waste reduction, collection and
disposal;
(e) Provide technical and other capability building assistance and support to the LGUs in the
development and implementation of local solid waste management plans and programs;
(f) Recommend policies to eliminate barriers to waste reduction programs;
(g) Exercise visitorial and enforcement powers to ensure strict compliance with this Act;
(h) Perform such other powers and functions necessary to achieve the objectives of this Act; and
(i) Issue rules and regulations to effectively implement the provisions of this Act.
Section 9. Visitorial Powers of the Department. - The Department or its duly authorized representative
shall have access to, and the right to copy therefrom, the records required to be maintained pursuant
to the provisions of this Act. The Secretary or the duly authorized representative shall likewise have
the right to enter the premises of any generator, recycler or manufacturer, or other facilities any time
to question any employee or investigate any fact, condition or matter which may be necessary to
determine any violation, or which may aid in the effective enforcement of this Act and its
implementing rules and regulations. This Section shall not apply to private dwelling places unless the
visitorial power is otherwise judicially authorized.
Section 10. Role of LGUs in Solid Waste Management - Pursuant to the relevant provisions of R.A. No.
7160, otherwise known as the Local government code, the LGUs shall be primarily responsible for the
implementation and enforcement of the provisions of this Act within their respective jurisdictions.
Segregation and collection of solid waste shall be conducted at the barangay level specifically for
biodegradable, compostable and reusable wastes: Provided, That the collection of non-recyclable
materials and special wastes shall be the responsibility of the municipality or city.
Section 11. Provincial Solid Waste Management Board - A Provincial Solid Waste Management board
shall be established in every province, to be chaired by the governor. Its members shall include:
(a) All the mayors of its component cities and municipalities;
(b) One (1) representative from the Sangguniang Panlalawigan to be represented by the chairperson
of either the Committees on Environment or Health or their equivalent committees, to be nominated
by the presiding officer;
(c) The provincial health and/or general services officers, whichever may be recommended by the
governor;
(d) The provincial environment and natural resources officer;
(e) The provincial engineer;
(f) Congressional representatives from each congressional district within the province;
(g) A representative from the NGO sector whose principal purpose is to promote recycling and the
protection of air and water quality;
(h) A representative from the recycling industry;
(i) A representative from the manufacturing or packaging industry; and
(j) A representative of each concerned government agency possessing relevant technical and
marketing expertise as may be determined by the board.
The Provincial Solid Waste Management Board may, from time to time, call on any other concerned
agencies or sectors as it may deem necessary.
Provided, That representatives from the NGOs, recycling and manufacturing or packaging industries
shall be selected through a process designed by themselves and shall be endorsed by the government
agency of representatives of the Board: Provided, further, that in the Province of Palawan, the Board
shall be chaired by the chairman of the Palawan Council for Sustainable Development, pursuant to
Republic Act No. 7611.
In the case of Metro Manila, the Board shall be chaired by the chairperson of the MMDA and its
members shall include:
(i) all mayors of its component cities and municipalities;
(ii) a representative from the NGO sector whose principal purpose is to promote recycling and the
protection of air and water quality;
(iii) a representative from the recycling industry; and
(iv) a representative from the manufacturing or packaging industry.
The Board may, from time to time, call on any other concerned agencies or sectors as it may deem
necessary.
Provided, That representatives from the NGOs, recycling and manufacturing or packaging industries
shall be selected through a process designed by themselves and shall be endorsed by the government
agency representatives of the Board.
The Provincial Solid Waste Management Board shall have the following functions and responsibilities:
(1) Develop a provincial solid waste management plan from the submitted solid waste management
plans of the respective city and municipal solid waste management boards herein created. It shall
review and integrate the submitted plans of all its component cities and municipalities and ensure
that the various plan complement each other, and have the requisite components. The Provincial
Solid Waste Management Plan shall be submitted to the Commission for approval.
The Provincial Plans shall reflect the general program of action and initiatives of the provincial
government and implementing a solid waste management program that would support the various
initiatives of its component cities and municipalities.
(2) Provide the necessary logistical and operational support to its component cities and municipalities
in consonance with subsection (f) of Sec.17 of the Local Government Code;
(3) Recommend measures and safeguards against pollution and for the preservation of the natural
ecosystem;
(4) Recommend measures to generate resources, funding and implementation of project and
activities as specified in the duly approved solid waste management plans;
(5) Identify areas within its jurisdiction which have common solid waste management problems and
are appropriate units are planning local solid waste management services in accordance with Section
41 hereof;
(6) Coordinate the efforts of the component cities and municipalities in the implementation of the
Provincial Solid Waste Management Plan;
(7) Develop an appropriate incentive scheme as an integral component of the Provincial Solid Waste
Management Plan;
(8) Convene joint meetings of the provincial, city and municipal solid waste management boards at
least every quarter for purposes of integrating, synchronizing, monitoring and evaluating the
development and implementation of its provincial solid waste management plan;
(9) Represent any of its component city or municipality in coordinating its resource and operational
requirements with agencies of the national government;
(10) Oversee the implementation of the Provincial Solid Waste Management Plant;
(11) Review every two (2) years or as the need arises the Provincial Solid Waste Management Plan for
purposes of ensuring its sustainability, viability, effectiveness and relevance in relation to local and
international development in the field of solid waste management; and
(12) Allow for the clustering of LGUs for the solution of common solid waste management problems.
Section 12. City and Municipal Solid Waste Management Board - Each city or municipality shall form a
City or Municipal Waste Management Board that shall prepare, submit and implement a plan for the
safe and sanitary management of solid waste generated in areas under in geographic and political
coverage.
The City or Municipal Solid Waste Management Board shall be composed of the city or municipal
mayor as head with the following as members:
a) One (1) representative of Sangguniang Panlungsod or the Sangguniang Bayan, preferably
chairpersons of either the Committees on Environment or Health, who will be designated by the
presiding officer;
b) President of the Association of Barangay Councils in the municipality or city;
c) Chairperson of the Sangguniang Kabataan Federation;
d) A representative from NGOs whose principal purpose is to promote recycling and the protection of
air and water quality;
e) A representative from the recycling industry;
f) A representative from the manufacturing or packaging industry; and
g) A representative of each concerned government agency possessing relevant technical and
marketing expertise as may be determined by the Board.
The City or Municipal Solid Waste Management Board may, from time to time, call on any concerned
agencies or sectors as it may deem necessary.
Provided, That representatives from NGOs, recycling and manufacturing or packaging industries shall
be selected through a process designed by themselves and shall be endorsed by the government
agency representatives of the Board.
The City and Municipal Solid Waste Management Boards shall have the following duties and
responsibilities:
(1) Develop the City or Municipal Solid Waste Management Plan that shall ensure the long-term
management of solid waste, as well as integrate the various solid waste management plans and
strategies of the barangays in its area of jurisdiction. In the development of the Solid Waste
Management Plan, it shall conduct consultations with the various sectors of the community;
(2) Adopt measures to promote and ensure the viability and effective implementation of solid waste
management programs in its component barangays;
(3) Monitor the implementation of the City or Municipal Solid Waste Management Plan through its
various political subdivisions and in cooperation with the private sector and the NGOs;
(4) Adopt specific revenue-generating measures to promote the viability of its Solid Waste
Management Plan;
(5) Convene regular meetings for purposes of planning and coordinating the implementation of the
solid waste management plans of the respective component barangays;
(6) Oversee the implementation of the City or Municipal Solid Waste Management Plan;
(7) Review every two (2) years or as the need arises the City or Municipal Solid Waste Management
Plan for purposes of ensuring its sustainability, viability, effectiveness and relevance in relation to local
and international developments in the field of solid waste management;
(8) Develop the specific mechanics and guidelines for the implementation of the City or Municipal
Solid Waste Management Plan;
(9) Recommended to appropriate local government authorities specific measures or proposals for
franchise or build-operate-transfer agreements with duly recognized institutions, pursuant to
R.A.6957, to provide either exclusive or non-exclusive authority for the collection, transfer, storage,
processing, recycling or disposal of municipal solid waste. The proposals shall take into consideration
appropriate government rules and regulations on contracts, franchise and build-operate-transfer
agreements;
(10) Provide the necessary logistical and operational support to its component cities and
municipalities in consonance with subsection (f) of Sec. 17 of the Local Government Code;
(11) Recommended measures and safeguards against pollution and for the preservation of the natural
ecosystem; and
(12) Coordinates the efforts of its components barangays in the implementation of the city or
municipal Solid Waste Management Plan.
Section13. Establishment of Multi-Purpose Environment Cooperatives or Association in Every LGU -
Multi-purpose cooperatives and associations that shall undertake activities to promote the
implementation and/ or directly undertake projects in compliance with the provisions of this Act shall
be encouraged and promoted in every LGU.
CHAPTER III
COMPREHENSIVE SOLID WASTE MANAGEMENT
Article 1
General Provisions
Section 14. National Solid Waste Management Status Report - The Department, in coordination with
the DOH and other concerned agencies, shall within six (6) months after the effectivity of this Act,
prepare a National Solid Waste Management Status Report which shall be used as a basis in
formulating the National Solid Waste Management Framework provided in Sec. 15 of this Act. The
concerned agencies shall submit to the Department relevant data necessary for the completion of the
said report within three (3) months following the effectivity of this Act. The said report shall include,
but shall not be limited to, the following:
(a) Inventory of existing solid waste facilities;
(b) General waste characterization, taking into account the type, quantity of waste generated and
estimation of volume and type of waste for reduction and recycling;
(c) Projection of waste generation;
(d) The varying regional geologic, hydrologic, climatic, and other factors vital in the implementation of
solid waste practices to ensure the reasonable protection of:
(1) the quality of surface and groundwater from leachate contamination;
(2) the quality of surface waters from surface run-off contamination; and
(3) ambient air quality.
(e) Population density, distribution and projected growth;
(f) The political, economic, organizational, financial and management problems affecting
comprehensive solid waste management;
(g) Systems and techniques of waste reduction, re-use and recycling;
(h) Available markets for recyclable materials;
(i) Estimated cost of collecting, storing, transporting, marketing and disposal of wastes and recyclable
materials; and
(j) Pertinent qualitative and quantitative information concerning the extent of solid waste
management problems and solid waste management activities undertaken by local government units
and the waste generators.
Provided, That the Department, in consultation with concerned agencies, shall review, update and
publish a National Solid Waste Management Status Report every two (2) years or as the need arises.
Section 15. National Solid Waste Management Framework - Within six (6) months from the
completion of the national solid waste management status report under Sec. 14 of this Act, the
Commission created under Sec. 4 of this Act shall, with public participation, formulate and implement
a National Solid Waste Management Framework. Such framework shall consider and include:
(a) Analysis and evaluation of the current state, trends, projections of solid waste management on the
national, provincial and municipal levels;
(b) Identification of critical solid waste facilities and local government units which will need closer
monitoring and/or regulation;
(c) Characteristics and conditions of collection, storage, processing, disposal, operating methods,
techniques and practices, location of facilities where such operating methods, techniques and
practices are conducted, taking into account the nature of the waste;
(d) Waste diversion goal pursuant to Sec. 20 of this Act;
(e) Schedule for the closure and/or upgrading of open and controlled dumps pursuant to Sec. 37 of
this Act;
(f) Methods of closing or upgrading open dumps for purposes of eliminating potential health hazards;
(g) The profile of sources, including industrial, commercial, domestic, and other sources;
(h) Practical applications of environmentally sound techniques of water minimization such as, but not
limited to, resource conservation, segregation at source, recycling, resource recovery, including waste-
to-energy generation, re-use and composting;
(i) A technical and economic description of the level of performance that can be attained by various
available solid waste management practices which provide for the protection of public health and the
environment;
(j) Appropriate solid waste facilities and conservation systems;
(k) Recycling programs for the recyclable materials, such as but not limited to glass, paper, plastic and
metal;
(l) Venues for public participation from all sectors at all phases/stages of the waste management
program/project;
(m) Information and education campaign strategies;
(n) A description of levels of performance and appropriate methods and degrees of control that
provide, at the minimum, for protection of public health and welfare through:
(1) Protection of the quality of groundwater and surface waters from leachate and run-off
contamination;
(2) Disease and epidemic prevention and control;
(3) Prevention and control of offensive odor; and
(4) Safety and aesthetics.
(o) Minimum criteria to be used by the local government units to define ecological solid waste
management practices. As much as practicable, such guidelines shall also include minimum
information for use in deciding the adequate location, design and construction of facilities associated
with solid waste management practices, including the consideration of regional, geographic,
demographic and climatic factors; and
(p) The method and procedure for the phaseout and the eventual closure within eighteen (18)
months from the effectivity of this Act in case of existing open dumps and/or sanitary landfills located
within an aquifer, groundwater reservoir or watershed area.
Section 16. Local Government Solid Waste Management Plans - The province, city or municipality,
through its local solid waste management boards, shall prepare its respective 10-year solid waste
management plans consistent with the national solid waste management framework: Provided, That
the waste management plan shall be for the re-use, recycling and composting of wastes generated in
their respective jurisdictions: Provided, further, That the solid waste management plan of the LGU
shall ensure the efficient management of solid waste generated within its jurisdiction. The plan shall
place primary emphasis on implementation of all feasible re-use, recycling, and composting programs
while identifying the amount of landfill and transformation capacity that will be needed for solid
waste which cannot be re-used, recycled, or composted. The plan shall contain all the components
provided in Sec. 17 of this Act and a timetable for the implementation of the solid waste management
program in accordance with the National Framework and pursuant to the provisions of this
Act: Provided, finally, That it shall be reviewed and updated every year by the provincial, city or
municipal solid waste management board.
For LGUs which have considered solid waste management alternatives to comply with Sec. 37 of this
Act, but are unable to utilize such alternatives, a timetable or schedule of compliance specifying the
remedial measure and eventual compliance shall be included in the plan.
All local government solid waste management plans shall be subjected to the approval of the
Commission. The plan shall be consistent with the national framework and in accordance with the
provisions of this Act and of the policies set by the Commission; Provided, That in the province of
Palawan, the local government solid waste management plan shall be approved by the Palawan
Council for Sustainable Development, pursuant to R.A. No. 7611.
Section 17. The Components of the Local Government Solid Waste Management Plan - The solid waste
management plan shall include, but not limited to, the following components:
(a) City or Municipal Profile - The plan shall indicate the following background information on the city
or municipality and its component barangays, covering important highlights of the distinct geographic
and other conditions:
(1) Estimated population of each barangay within the city or municipality and population project for a
10-year period;
(2) Illustration or map of the city/municipality, indicating locations of residential, commercial, and
industrial centers, and agricultural area, as well as dump, landfills and other solid waste facilities. The
illustration shall indicate as well, the proposed sites for disposal and other solid waste facilities;
(3) Estimated solid waste generation and projection by source, such as residential, market,
commercial, industrial, construction/ demolition, street waste,agricultural, agro-industrial,
institutional, other waste; and
(4) Inventory of existing waste disposal and other solid waste facilities and capacities.
(b) Waste characterization - For the initial source reduction and recycling element of a local waste
management plan, the LGU waste characterization component shall identify the constituent materials
which comprise the solid waste generated within the jurisdiction of the LGU. The information shall be
representative of the solid waste generated and disposed of within the area. The constituent
materials shall be identified by volume, percentage in weight or its volumetric equivalent, material
type, and source of generation which includes residential, commercial, industrial, governmental, or
other materials. Future revisions of waste characterization studies shall identify the constituent
materials which comprise the solid waste disposed of at permitted disposal facilities.
(c) Collection and Transfer - The plan shall take into account the geographic subdivisions to define the
coverage of the solid waste collection area in every barangay. The barangay shall be responsible for
ensuring that a 100% collection efficiency from residential, commercial, industrial and agricultural
sources, where necessary within its area of coverage, is achieved. Toward this end, the plan shall
define and identify the specific strategies and activities to be undertaken by its component barangays,
taking into account the following concerns:
(1) Availability and provision of properly designed containers or receptacles in selected collection
points for the temporary storage of solid waste while awaiting collection and transfer to processing
sites or to final disposal sites;
(2) Segregation of different types of solid waste for re-use, recycling and composting;
(3) Hauling and transfer of solid waste from source or collection points to processing sites or final
disposal sites;
(4) Issuance and enforcement of ordinances to effectively implement a collection system in the
barangay; and
(5) Provision of properly trained officers and workers to handle solid waste disposal.
The plan shall define and specify the methods and systems for the transfer of solid waste from specific
collection points to solid waste management facilities.
(d) Processing - The Plan shall define the methods and the facilities required to process the solid
waste, including the use of intermediate treatment facilities for composting, recycling, conversion and
other waste processing systems. Other appropriate waste processing technologies may also be
considered provided that such technologies conform with internationally-acceptable and other
standards set in other standards set in other laws and regulations.
(e) Source reduction - The source reduction component shall include a program and implementation
schedule which shows the methods by which the LGU will, in combination with the recycling and
composting components, reduce a sufficient amount of solid waste disposed of in accordance with
the diversion requirements of Sec. 20.
The source reduction component shall describe the following:
(1) strategies in reducing the volume of solid waste generated at source;
(2) measures for implementing such strategies and the resources necessary to carry out such
activities;
(3) other appropriate waste reduction technologies that may also be considered, provided that such
technologies conform with the standards set pursuant to this Act;
(4) the types of wastes to be reduced pursuant to Sec. 15 of this Act;
(5) the methods that the LGU will use to determine the categories of solid wastes to be diverted from
disposal at a disposal facility through re-use, recycling and composting; and
(6) new facilities and expansion of existing facilities which will be needed to implement re-use,
recycling and composting.
The LGU source reduction component shall include the evaluation and identification of rate structures
and fees for the purpose of reducing the amount of waste generated, an other source reduction
strategies, including but not limited to, programs and economic incentives provided under Sec. 46 of
this Act to reduce the use of non-recyclable materials, replace disposable materials and products with
reusable materials and products, reduce packaging, and increase the efficiency of the use of paper,
cardboard, glass, metal, and other materials. The waste reduction activities of the community shall
also take into account, among others, local capability, economic viability, technical requirements,
social concerns' disposition of residual waste and environmental impact: Provided, That, projection of
future facilities needed and estimated cost shall be incorporated in the plan.
(f) Recycling - The recycling component shall include a program and implementation schedule which
shows the methods by which the LGU shall, in combination with source reduction and composting
components, reduce a sufficient amount of solid waste disposed of in accordance with the diversion
requirements set in Sec .20.
The LGU recycling component shall describe the following:
(1) The types of materials to be recycled under the programs;
(2) The methods for determining the categories of solid wastes to be diverted from disposal at a
disposal facility through recycling; and
(3) New facilities and expansion of existing facilities needed to implement the recycling component.
The LGU recycling component shall described methods for developing the markets for recycled
materials, including, but not limited to, an evaluation of the feasibility of procurement preferences for
the purchase of recycled products. Each LGU may determine and grant a price preference to
encourage the purchase of recycled products.
The five-year strategy for collecting, processing, marketing and selling the designated recyclable
materials shall take into account persons engaged in the business of recycling or persons otherwise
providing recycling services before the effectivity of this Act. Such strategy may be base upon the
results of the waste composition analysis performed pursuant to this Section or information obtained
in the course of past collection of solid waste by the local government unit, and may include
recommendations with respect to increasing the number of materials designated for recycling
pursuant to this Act.
The LGU recycling component shall evaluate industrial, commercial, residential, agricultural,
governmental and other curbside, mobile, drop-off and buy-back recycling programs, manual and
automated materials recovery facilities, zoning, building code changes and rate structures which
encourage recycling of materials. The Solid Waste Management Plan shall indicate the specific
measures to be undertaken to meet the waste diversion specified under Sec. 20 of this Act.
Recommended revisions to the building ordinances, requiring newly-constructed buildings and
buildings undergoing specified alterations to contain storage space, devices or mechanisms that
facilitate source separation and storage of designated recyclable materials to enable the local
government unit to efficiently collect, process, market and sell the designated materials. Such
recommendations shall include, but shall not be limited to separate chutes to facilitate source
separation in multi-family dwellings, storage areas that conform to fire and safety code regulations,
and specialized storage containers.
The Solid Waste Management Plan shall indicate the specific measures to be undertaken to meet the
recycling goals pursuant to the objectives of this Act.
(g) Composting - The composting component shall include a program and implementation schedule
which shows the methods by which the LGU shall, in combination with the source reduction and
recycling components, reduce a sufficient amount of solid waste disposed of within its jurisdiction to
comply with the diversion requirements of Sec. 20 hereof.
The LGU composting component shall describe the following:
(1) The types of materials which will be composted under the programs;
(2) The methods for determining the categories of solid wastes to be diverted from disposal at a
disposal facility through composting; and
(3) New facilities, and expansion of existing facilities needed to implement the composting
component.
The LGU composting component shall describe methods for developing the markets for composted
materials, including, but not limited to, an evaluation of the feasibility of procurement preferences for
the purchase of composted products. Each LGU may determine and grant a price preference to
encourage the purchase of composted products.
(h) Solid waste facility capacity and final disposal - The solid waste facility component shall include,
but shall not be limited to, a projection of the amount of disposal capacity needed to accommodate
the solid waste generated, reduced by the following:
(1) Implementation of source reduction, recycling and composting programs required in this Section
or through implementation of other waste diversion activities pursuant to Sec. 20 of this Act;
(2) Any permitted disposal facility which will be available during the 10-year planning period; and
(3) All disposal capacity which has been secured through an agreement with another LGU, or through
an agreement with a solid waste enterprise.
The plan shall identify existing and proposed disposal sites and waste management facilities in the city
or municipality or in other areas. The plan shall specify the strategies for the efficient disposal of
waste through existing disposal facilities and the identification of prospective sites for future use. The
selection and development of disposal sites shall be made on the basis of internationally accepted
standards and on the guidelines set in Sec. 41 and 42 of this Act.
Strategies shall be included to improve said existing sites to reduce adverse impact on health and the
environment, and to extent life span and capacity. The plan shall clearly define projections for future
disposal site requirements and the estimated cost for these efforts.
Open dump sites shall not be allowed as final disposal sites. If an open dump site is existing within the
city or municipality, the plan shall make provisions for its closure or eventual phase out within the
period specified under the framework and pursuant to the provisions under Sec. 37 of this Act. As an
alternative, sanitary landfill sites shall be developed and operated as a final disposal site for solid and,
eventually, residual wastes of a municipality or city or a cluster of municipality and/or cities. Sanitary
landfills shall be designed and operated in accordance with the guidelines set under Secs. 40 and 41
of this Act.
(i) Education and public information - The education and public information component shall describe
how the LGU will educate and inform its citizens about the source reduction, recycling and
composting programs.
The plan shall make provisions to ensure that information on waste collection services, solid waste
management and related health and environmental concerns are widely disseminated among the
public. This shall be undertaken through the print and broadcast media and other government
agencies in the municipality. The DECS and the Commission on Higher Education shall ensure that
waste management shall be incorporated in the curriculum of primary, secondary and college
students.
(j) Special Waste - The special waste component shall include existing waste handling and disposal
practices for special wastes or household hazardous wastes, and the identification of current and
proposed programs to ensure the proper handling, re-use, and long-term disposal of special wastes;
(k) Resource requirement and funding - The funding component includes identification and
description of project costs, revenues, and revenue sources the LGU will use to implement all
components of the LGU solid waste management plan;
The plan shall likewise indicate specific projects, activities, equipment and technological requirements
for which outside sourcing of funds or materials may be necessary to carry out the specific
components of the plan. It shall define the specific uses for its resource requirement s and indicate its
costs. The plan shall likewise indicate how the province, city or municipality intends to generate the
funds for the acquisition of its resource requirements. It shall also indicate if certain resource
requirements are being or will be sourced from fees, grants, donations, local funding and other
means. This will serve as basis for the determination and assessment of incentives which may be
extended to the province, city or municipality as provided for in Sec. 45 of this Act.
(l) Privatization of solid waste management projects - The plan shall likewise indicate specific
measures to promote the participation of the private sector in the management of solid wastes,
particularly in the generation and development of the essential technologies for solid waste
management. Specific projects or component activities of the plan which may be offered as private
sector investment activity shall be identified and promoted as such. Appropriate incentives for private
sector involvement in solid waste management shall likewise be established and provided for in the
plan, in consonance with Sec. 45 hereof and other existing laws, policies and regulations; and
(m) Incentive programs - A program providing for incentives, cash or otherwise, which shall encourage
the participation of concerned sectors shall likewise be included in the plan.
Section 18. Owner and Operator - Responsibility for compliance with the standards in this Act shall
rest with the owner and/or operator. If specifically designated, the operator is considered to have
primary responsibility for compliance; however, this does not relieve the owner of the duty to take all
reasonable steps to assure compliance with these standards and any assigned conditions. When the
title to a disposal is transferred to another person, the new owner shall be notified by the previous
owner of the existence of these standards and of the conditions assigned to assure compliance.
Section 19. Waste characterization - The Department in coordination with the LGUs, shall be
responsible for the establishment of the guidelines for the accurate characterization of wastes
including determination of whether or not wastes will be compatible with containment features and
other wastes, and whether or not wastes are required to be managed as hazardous wastes under R.A.
6969, otherwise known as the Toxic Substance and Hazardous and Nuclear Wastes Control Act.
Section 20. Establishing Mandatory Solid Waste Diversion - Each LGU plan shall include an
implementation schedule which shows that within five (5) years after the effectivity of this Act, the
LGU shall divert at least 25% of all solid waste from waste disposal facilities through re-use, recycling
and composting activities and other resource recovery activities; Provided, That the waste diversion
goals shall be increased every three (3) years thereafter; Provided, further, That nothing in this Section
prohibits a local government unit from implementing re-use, recycling, and composting activities
designed to exceed the goal.
Article 2
Segregation of Wastes
Section 21. Mandatory Segregation of Solid Wastes - The LGUs shall evaluate alternative roles for the
public and private sectors in providing collection services, type of collection system, or combination of
systems, that best meet their needs: Provided, That segregation of wastes shall primarily be
conducted at the source, to include household, institutional, industrial, commercial and agricultural
sources: Provided, further; That wastes shall be segregated into the categories provided in Sec. 22 of
this Act.
For premises containing six (6) or more residential units, the local government unit shall promulgate
regulations requiring the owner or person in charge of such premises to:
(a) provide for the residents a designated area and containers in which to accumulate source
separated recyclable materials to be collected by the municipality or private center; and
(b) notify the occupants of each buildings of the requirements of this Act and the regulations
promulgated pursuant thereto.
Section 22. Requirements for the Segregation and Storage of Solid Waste - The following shall be the
minimum standards and requirements for segregation and storage of solid waste pending collection:
(a) There shall be a separate container for each type of waste from all sources: Provided, That in the
case of bulky waste, it will suffice that the same be collected and placed in a separate designated
area; and
(b) The solid waste container depending on its use shall be properly marked or identified for on-site
collection as "compostable", "non-recyclable", "recyclable" or "special waste", or any other
classification as may be determined by the Commission.
Article 3
Collection and Transport of Solid Wastes
Section 23. Requirements for Collection of Solid Wastes - The following shall be the minimum
standards and requirements for the collection of solid waste:
(a) All collectors and other personnel directly dealing with collection of solid waste shall be equipped
with personal protective equipment to protect them from the hazards of handling wastes;
(b) Necessary training shall be given to the collectors and personnel to ensure that the solid wastes
are handled properly and in accordance with the guidelines pursuant to this Act; and
(c) Collection of solid waste shall be done in a manner which prevents damage to the container and
spillage or scattering of solid waste within the collection vicinity.
Section 24. Requirements for the Transport of Solid Waste - The use of separate collection schedules
and/or separate trucks or haulers shall be required for specific types of wastes. Otherwise, vehicles
used for the collection and transport of solid wastes shall have the appropriate compartments to
facilitate efficient storing of sorted wastes while in transit.
Vehicles shall be designed to consider road size, condition and capacity to ensure the sage and
efficient collection and transport of solid wastes.
The waste compartment shall have a cover to ensure the containment of solid wastes while in transit.
For the purpose of identification, vehicles shall bear the body number, the name, and the telephone
number of the contractor/agency collecting solid waste.
Section 25. Guidelines for Transfer Stations - Transfer stations shall be designed and operated for
efficient waste handling capacity and in compliance with environmental standards and guidelines set
pursuant to this Act and other regulations: Provided, That no waste shall be stored in such station
beyond twenty-four (24) hours.
The siting of the transfer station shall consider the land use plan, proximity to collection area, and
accessibility of haul routes to disposal facility. The design shall give primary consideration to size and
space sufficiency in order to accommodate the waste for storage and vehicles for loading and
unloading of wastes.
Article 4
Recycling Program
Section 26. Inventory of Existing Markets for Recyclable Materials - The DTI shall within six (6) months
from the effectivity of this Act and in cooperation with the Department, the DILG and other
concerned agencies and sectors, publish a study of existing markets for processing and purchasing
recyclable materials and the potential steps necessary to expand these markets. Such study shall
include, but not be limited to, an inventory of existing markets for recyclable materials, product
standards for recyclable and recycled materials, and a proposal, developed in conjunction with the
appropriate agencies, to stimulate the demand for the production of products containing post
consumer and recovered materials.
Section 27. Requirement for Eco-Labeling - The DTI shall formulate and implement a coding system for
packaging materials and products to facilitate waste and recycling and re-use.
Section 28. Reclamation Programs and Buy-back Centers for Recyclables and Toxics - The National
Ecology Center shall assist LGUs in establishing and implementing deposit or reclamation programs in
coordination with manufacturers, recyclers and generators to provide separate collection systems or
convenient drop-off locations for recyclable materials and particularly for separated toxic components
of the waste stream like dry cell batteries and tires to ensure that they are not incinerated or disposed
of in a landfill. Upon effectivity of this Act, toxic materials present in the waste stream should be
separated at source, collected separately and further screened and sent to appropriate hazardous
waste treatment and disposal plants, consistent with the provisions of R.A. No. 6969.
Section 29. Non-Environmentally Acceptable Products - Within one (1) year from the effectivity of this
Act, the Commission shall, after public notice and hearing, prepare a list of nonenvironmentally
acceptable products as defined in this Act that shall be prohibited according to a schedule that shall
be prepared by the Commission: Provided, however, That non-environmentally acceptable products
shall not be prohibited unless the Commission first finds that there are alternatives available which
are available to consumers at no more than ten percent (10%) greater cost than the disposable
product.
Notwithstanding any other provisions to the contrary, this section shall not apply to:
(a) Packaging used at hospitals, nursing homes or other medical facilities; and
(b) Any packaging which is not environmentally acceptable, but for which there is no commercially
available alternatives as determined by the Commission.
The Commission shall annually review and update the list of prohibited non-environmentally
acceptable products.
Section 30. Prohibition on the Use of Non-Environmentally Acceptable Packaging - No person owning,
operating or conducting a commercial establishment in the country shall sell or convey at retail or
possess with the intent to sell or convey at retail any products that are placed, wrapped or packaged
in or on packaging which is not environmentally acceptable packaging: Provided, That the Commission
shall determine a phaseout period after proper consultation and hearing with the stakeholders or
with the sectors concerned. The presence in the commercial establishment of non-environmentally
acceptable packaging shall constitute a rebuttable presumption of intent to sell or convey the same at
retail to customers.
Any person who is a manufacturer, broker or warehouse operator engaging in the distribution or
transportation of commercial products within the country shall file a report with the concerned local
government within one (1) year from the effectivity of this Act, and annually thereafter, a listing of any
products in packaging which is not environmentally acceptable. The Commission shall prescribe the
form of such report in its regulations.
A violation of this Section shall be sufficient grounds for the revocation, suspension, denial or non-
renewal of any license for the establishment in which the violation occurs.
Section 31. Recycling Market Development - The Commission together with the National Ecology
Center, the DTI and the Department of Finance shall establish procedures, standards and strategies to
market recyclable materials and develop the local market for recycle goods, including but not limited
to:
(a) measures providing economic incentives and assistance including loans and grants for the
establishment of privately-owned facilities to manufacture finished products from post-consumer
materials;
(b) guarantees by the national and local governments to purchase a percentage of the output of the
facility; and
(c) maintaining a list of prospective buyers, establishing contact with prospective buyers and
reviewing and making any necessary changes in collecting or processing the materials to improve
their marketability.
In order to encourage establishments of new facilities to produce goods from post-consumer and
recovered materials generated within local government units, and to conserve energy by reducing
materials transportation, whenever appropriate, each local government unit may arranged for long-
term contracts to purchase a substantial share of the product output of a proposed facility which will
be based in the jurisdiction of the local government unit if such facility will manufacture such finished
products form post-consumer and recovered materials.
Section 32. Establishment of LGU Materials Recovery Facility. - There shall be established a Materials
Recovery Facility (MRF) in every barangay or cluster of barangays. The facility shall be established in a
barangay-owned or -leased land or any suitable open space to be determined by the barangay
through its Sanggunian. For this purpose, the barangay or cluster of barangays shall allocate a certain
parcel of land for the MRF. The MRF shall receive mixed waste for final sorting, segregation,
composting, and recycling. The resulting residual wastes shall be transferred to a long term storage or
disposal facility or sanitary landfill.
Section 33. Guidelines for Establishment of Materials Recovery Facility - Materials recovery facilities
shall be designed to receive, sort, process and store compostable and recyclable material efficiently
and in an environmentally sound manner. The facility shall address the following considerations:
(a) The building and/or land layout and equipment must be designed to accommodate efficient and
safe materials processing, movement, and storage; and
(b) The building must be designed to allow efficient and safe external access and to accommodate
internal flow.
Article 5
Composting
Section 34. Inventory of Markets of Composts - Within six (6) months after the effectivity of this Act,
the DA shall publish an inventory of existing markets and demands for composts. Said inventory shall
thereafter be updated and published annually: Provided, That the composting of agricultural wastes
and other compostable materials, including but not limited to garden wastes, shall be encouraged.
Section 35. Guidelines for Compost Quality - Compost products intended to be distributed
commercially shall conform with the standards for organic fertilizers set by the DA. The DA shall assist
the compost producers to ensure that the compost products conform to such standards.
Article 6
Waste Management Facilities
Section 36. Inventory of Waste Disposal Facilities - Within six (6) months from the effectivity of this
Act, the Department, in cooperation with the DOH, DILG and other concerned agencies, shall publish
an inventory of all solid waste disposal facilities or sites in the country.
Section 37. Prohibition Against the Use of Open Dumps for Solid Waste - No open dumps shall be
established and operated, nor any practice or disposal of solid waste by any person, including LGUs,
which constitutes the use of open dumps for solid wastes, be allowed after the effectivity of this
Acts: Provided, That within three (3) years after the effectivity of this Act, every LGU shall convert its
open dumps into controlled dumps, in accordance with the guidelines set in Sec. 41 of this
Act: Provided, further, That no controlled dumps shall be allowed five (5) years following the
effectivity of this Act.
Section 38. Permit for Solid Waste Management Facility Construction and Expansion - No person shall
commence operation, including site preparation and construction of a new solid waste management
facility or the expansion of an existing facility until said person obtains an Environment Compliance
Certificate (ECC) from the Department pursuant to P.D. 1586 and other permits and clearances form
concerned agencies.
Section 39. Guidelines for Controlled Dumps - The following shall be the minimum considerations for
the establishments of controlled dumps:
(a) Regular inert cover;
(b) Surface water and peripheral site drainage control;
(c) Provision for aerobic and anaerobic decomposition;
(d) Restriction of waste deposition to small working areas;
(e) Fence, including provisions for litter control;
(f) Basic record-keeping;
(g) Provision of maintained access road;
(h) Controlled waste picking and trading;
(i) Post-closure site cover and vegetation; and
(j) Hydro geological siting.
Section 40. Criteria for Siting a Sanitary Landfill - The following shall be the minimum criteria for the
siting of sanitary landfills:
(a) The site selected must be consistent with the overall land use plan of the LGU;
(b) The site must be accessible from major roadways or thoroughfares;
(c) The site should have an adequate quantity of earth cover material that is easily handled and
compacted;
(d) The site must be chosen with regard for the sensitivities of the community's residents;
(e) The site must be located in an area where the landfill's operation will not detrimentally affect
environmentally sensitive resources such as aquifer, groundwater reservoir or watershed area;
(f) The site should be large enough to accommodate the community's wastes for a period of five (5)
years during which people must internalize the value of environmentally sound and sustainable solid
waste disposal;
(g) The site chosen should facilitate developing a landfill that will satisfy budgetary constraints,
including site development, operation for many years, closure, post-closure care and possible
remediation costs;
(h) Operating plans must include provisions for coordinating with recycling and resource recovery
projects; and
(i) Designation of a separate containment area for household hazardous wastes.
Section 41. Criteria for Establishment of Sanitary Landfill - The following shall be the minimum criteria
for the establishment of sanitary landfills:
(a) Liners - a system of clay layers and/or geosynthethic membranes used to contain leachate and
reduce or prevent contaminant flow to groundwater;
(b) Leachate collection and treatment system - installation of pipes at the low areas of the liner to
collect leachate for storage and eventual treatment and discharge;
(c) Gas control and recovery system - a series of vertical wells or horizontal trenches containing
permeable materials and perforated piping placed in the landfill to collect gas for treatment or
productive use as an energy source;
(d) Groundwater monitoring well system - wells placed at an appropriate location and depth for taking
water that are representative of ground water quality;
(e) Cover - two (2) forms of cover consisting of soil and geosynthetic materials to protect the waste
from long-term contact with the environment:
(i) a daily cover placed over the waste at the close of each day's operations, and;
(ii) a final cover, or cap, which is the material placed over the completed landfill to control infiltration
of water, gas emission to the atmosphere, and erosion.
(f) Closure procedure with the objectives of establishing low maintenance cover systems and final
cover that minimizes the infiltration of precipitation into the waste. Installation of the final cover must
be completed within six (6) months of the last receipt of waste;
(g) Post-closure care procedure - During this period, the landfill owner shall be responsible for
providing for the general upkeep of the landfill, maintaining all of the landfill's environmental
protection features, operating monitoring equipment, remediating groundwater should it become
contaminated and controlling landfill gas migration or emission.
Section 42. Operating Criteria for Sanitary Landfills - In the operation of a sanitary land fill, each site
operator shall maintain the following minimum operating equipments:
(a) Disposal site records of, but not limited to:
(1) Records of weights or volumes accepted in a form and manner approved by the Department. Such
records shall be submitted to the Department upon request, accurate to within ten percent (10%) and
adequate for overall planning purposes and forecasting the rate of site filling;
(2) Records of excavations which may affect the safe and proper operation of the site or cause damage
to adjoining properties;
(3) Daily log book or file of the following information: fires, landslides, earthquake damage, unusual
and sudden settlement, injury and property damage, accidents, explosions, receipts or rejection of
unpermitted wastes, flooding and other unusual occurrences;
(4) Record of personnel training; and
(5) Copy of written notification to the Department, local health agency, and fire authority of names,
addresses and telephone numbers of the operator or responsible party of the site;
(b) Water quality monitoring of surface and ground waters and effluent, and gas emissions;
(c) Documentation of approvals, determinations and other requirements by the Department;
(d) Signs:
(1) Each point of access from a public road shall be posted with an easily visible sigh indicating the
facility name and other pertinent information as required by the Department;
(2) If the site is open to the public, there shall be an easily visible sign at the primary entrance of the
site indicating the name of the site operator, the operator's telephone number, and hours of
operation; an easily visible sign at an appropriate point shall indicate the schedule of changes and the
general types of materials which will either be accepted or not;
(3) If the site is open to the public, there shall be an easily visible road sign and/or traffic control
measures which direct traffic to the active face and other areas where wastes or recyclable materials
will be deposited; and
(4) Additional signs and/or measures may be required at a disposal site by the Department to protect
personnel and public health and safety;
(e) Monitoring of quality of surface, ground and effluent waters, and gas emissions;
(f) The site shall be designed to discourage unauthorized access by persons and vehicles by using a
perimeter barrier or topographic constraints. Areas within the site where open storage, or pounding
of hazardous materials occurs shall be separately fenced or otherwise secured as determined by the
Department. The Department may also require that other areas of the site be fenced to create an
appropriate level of security;
(g) Roads within the permitted facility boundary shall be designed to minimize the generation of dust
and the tracking of material onto adjacent public roads. Such roads shall be kept in safe condition and
maintained such that vehicle access and unloading can be conducted during inclement weather;
(h) Sanitary facilities consisting of adequate number of toilets and handwashing facilities, shall be
available to personnel at or in the immediate vicinity of the site;
(i) Safe and adequate drinking water supply for the site personnel shall be available;
(j) The site shall have communication facilities available to site personnel to allow quick response to
emergencies;
(k) Where operations are conducted during hours of darkness, the site and/or equipment shall be
equipped with adequate lighting as approved by the Department to ensure safety and to monitor the
effectiveness of operations;
(l) Operating and maintenance personnel shall wear and use appropriate safety equipment as
required by the Department;
(m) Personnel assigned to operate the site shall be adequately trained in subject pertinent to the site
operation and maintenance, hazardous materials recognition and screening, and heavy equipment
operations, with emphasis on safety, health, environmental controls and emergency procedures. A
record of such training shall be placed in the operating record;
(n) The site operator shall provide adequate supervision of a sufficient number of qualified personnel
to ensure proper operation of the site in compliance with all applicable laws, regulations, permit
conditions and other requirements. The operator shall notify the Department and local health agency
in writing of the names, addresses, and telephone number of the operator or responsible party. A
copy of the written notification shall be placed in the operation record;
(o) Any disposal site open to the public shall have an attendant present during public operating hours
or the site shall be inspected by the operator on a regularly scheduled basis, as determined by the
Department;
(p) Unloading of solid wastes shall be confined to a small area as possible to accommodate the
number of vehicles using the area without resulting in traffic, personnel, or public safety hazards.
Waste materials shall normally be deposited at the toe of the fill, or as otherwise approved by the
Department;
(q) Solid waste shall be spread and compacted in layers with repeated passages of the landfill
equipment to minimize voids within the cell and maximize compaction. The loose layer shall not
exceed a depth approximately two feet before compaction. Spreading and compacting shall be
accomplished as rapidly as practicable, unless otherwise approved by the Department;
(r) Covered surfaces of the disposal area shall be graded to promote lateral runoff of precipitation and
to prevent pounding. Grades shall be established of sufficient slopes to account for future settlement
of the fill surface. Other effective maintenance methods may be allowed by the Department; and
(s) Cover material or native material unsuitable for cover, stockpiled on the site for use or removal,
shall be placed so as not to cause problems or interfere with unloading, spreading, compacting,
access, safety drainage, or other operations.
Article 7
Local Government Solid Waste Management
Section 43. Guidelines for Identification of Common Solid Waste Management Problems - For
purposes of encouraging and facilitating the development of local government plans for solid waste
management, the Commission shall, as soon as practicable but not later than six (6) months from the
effectivity of this Act, publish guidelines for the identification of those areas which have common solid
waste management problems and are appropriate units for clustered solid waste management
services. The guidelines shall be based on the following:
(a) the size and location of areas which should be included;
(b) the volume of solid waste which would be generated;
(c) the available means of coordinating local government planning between and among the LGUs and
for the integration of such with the national plan; and
(d) possible lifespan of the disposal facilities.
Section 44. Establishment of Common Waste Treatment and Disposal Facilities - Pursuant to Sec. 33 of
R.A.7160, otherwise known as the Local Government Code, all provinces, cities, municipalities and
barangays, through appropriate ordinances, are hereby mandated to consolidate, or coordinate their
efforts, services, and resources for purposes of jointly addressing common solid waste management
problems and/or establishing common waste disposal facilities.
The Department, the Commission and local solid waste management boards shall provide technical
and marketing assistance to the LGUs.
CHAPTER IV
INCENTIVES
Section 45. Incentives. -
(a) Rewards, monetary or otherwise, shall be provided to individuals, private organizations and
entitles, including non-government organizations, that have undertaken outstanding and innovative
projects, technologies, processes and techniques or activities in re-use, recycling and reduction. Said
rewards shall be sourced from the Fund herein created.
(b) An incentive scheme is hereby provided for the purpose of encouraging LGUs, enterprises, or
private entities, including NGOs, to develop or undertake an effective solid waste management, or
actively participate in any program geared towards the promotion thereof as provided for in this Act.
(1) Fiscal Incentives. - Consistent with the provisions of E.O. 226, otherwise known as the Omnibus
Investments Code, the following tax incentives shall be granted:
(a) Tax and Duty Exemption on Imported Capital Equipment and Vehicles - Within ten (10) years upon
effectively of this Act, LGUs, enterprises or private entities shall enjoy tax and duty free importation of
machinery, equipment, vehicles and spare parts used for collection, transportation, segregation,
recycling, re-use and composing of solid wastes: Provided, That the importation of such machinery,
equipment, vehicle and spare parts shall comply with the following conditions:
(i) They are not manufactured domestically in sufficient quantity, of comparable quality and at
reasonable prices;
(ii) They are reasonably needed and will be used actually, directly and exclusively for the above
mentioned activities;
(iii) The approval of the Board of Investment (BOI) of the DTI for the importation of such machinery,
equipment, vehicle and spare parts.
Provided, further, That the sale, transfer or disposition of such machinery, equipment, vehicle and
spare parts, without prior approval of the (BOI), within five (5) years from the date of acquisition shall
be prohibited, otherwise, the LGU concerned, enterprise or private entities and the vendee,
transferee, or assignee shall be solidarily liable to pay twice the amount of tax and duty exemption
given it.
(b) Tax Credit on Domestic Equipment - Within ten (10) years from the effectivity of this Act, a tax
credit equivalent to 50% of the value of the national internal revenue taxes and customs duties that
would have been waived on the machinery, equipment, vehicle and spare parts, had these items been
imported shall be given to enterprises, private entities, including NGOs, subject to the same
conditions and prohibition cited in the preceding paragraph.
(c) Tax and Duty Exemption of Donations, Legacies and Gift - All legacies, gifts and donations to LGUs,
enterprises or private entities, including NGOs, for the support and maintenance of the program for
effective solid waste management shall be exempt from all internal revenue taxes and customs duties,
and shall be deductible in full from the gross income of the donor for income tax purposes.
(2) Non-Fiscal Incentives. - LGUs, enterprises or private entities availing of tax incentives under this Act
shall also be entitled to applicable non-fiscal incentives provided for under E.O. 226, otherwise known
as the Omnibus Investments Code.
The Commission shall provide incentives to businesses and industries that are engaged in the
recycling of wastes and which are registered with the Commission and have been issued ECCs in
accordance with the guidelines established by the Commission. Such incentives shall include
simplified procedures for the importation of equipment, spare parts, new materials, and supplies, and
for the export of processed products.
(3) Financial Assistance Program. - Government financial institutions such as the Development Bank of
the Philippines (DBP), Landbank of the Philippines (LBP), Government Service Insurance System
(GSIS), and such other government institutions providing financial services shall, in accordance with
and to the extent allowed by the enabling provisions of their respective charters or applicable laws,
accord high priority to extend financial services to individuals, enterprises, or private entities engaged
in solid waste management.
(4) Extension of Grants to LGUs. - Provinces, cities and municipalities whose solid waste management
plans have been duly approved by the Commission or who have been commended by the Commission
for adopting innovative solid waste management programs may be entitled to receive grants for the
purpose of developing their technical capacities toward actively participating in the program for
effectively and sustainable solid waste management.
(5) Incentives to Host LGUs. - Local government units who host common waste management facilities
shall be entitled to incentives.
CHAPTER V
FINANCING SOLID WASTE MANAGEMENT
Section 46. Solid Waste Management Fund - There is hereby created, as a special account in the
National Treasury, a Solid Waste Management Fund to be administered by the Commission. Such fund
shall be sourced from the following:
(a) Fines and penalties imposed, proceeds of permits and licenses issued by the Department under
this Act, donations, endowments, grants and contributions from domestic and foreign sources; and
(b) Amounts specifically appropriated for the Fund under the annual General Appropriations Act;
The Fund shall be used to finance the following:
(1) products, facilities, technologies and processes to enhance proper solid waste management;
(2) awards and incentives;
(3) research programs;
(4) information, education, communication and monitoring activities;
(5) technical assistance; and
(6) capability building activities.
LGUs are entitled to avail of the Fund on the basis of their approved solid waste management plan.
Specific criteria for the availment of the Fund shall be prepared by the Commission.
The fines collected under Sec. 49 shall be allocated to the LGU where the fined prohibited acts are
committed in order to finance the solid waste management of said LGU. Such allocation shall be
based on a sharing scheme between the Fund and the LGU concerned.
In no case, however, shall the Fund be used for the creation of positions or payment of salaries and
wages.
Section 47. Authority to Collect Solid Waste Management Fees - The local government unit shall
impose fees in amounts sufficient to pay the costs of preparing, adopting, and implementing a solid
waste management plan prepared pursuant to this Act. The fees shall be based on the following
minimum factors:
(a) types of solid waste;
(b) amount/volume of waste; and
(c) distance of the transfer station to the waste management facility.
The fees shall be used to pay the actual costs incurred by the LGU in collecting the local fees. In
determining the amounts of the fees, an LGU shall include only those costs directly related to the
adoption and implementation of the plan and the setting and collection of the local fees.
CHAPTER VI
PENAL PROVISIONS
Section 48. Prohibited Acts - The following acts are prohibited:
(1) Littering, throwing, dumping of waste matters in public places, such as roads, sidewalks, canals,
esteros or parks, and establishment, or causing or permitting the same;
(2) Undertaking activities or operating, collecting or transporting equipment in violation of sanitation
operation and other requirements or permits set forth in established pursuant;
(3) The open burning of solid waste;
(4) Causing or permitting the collection of non-segregated or unsorted wastes;
(5) Squatting in open dumps and landfills;
(6) Open dumping, burying of biodegradable or non-biodegradable materials in flood prone areas;
(7) Unauthorized removal of recyclable material intended for collection by authorized persons;
(8) The mixing of source-separated recyclable material with other solid waste in any vehicle, box,
container or receptacle used in solid waste collection or disposal;
(9) Establishment or operation of open dumps as enjoined in this Act, or closure of said dumps in
violation of Sec. 37;
(10) The manufacture, distribution or use of non-environmentally acceptable packaging materials;
(11) Importation of consumer products packaged in non-environmentally acceptable materials;
(12) Importation of toxic wastes misrepresented as "recyclable" or "with recyclable content";
(13) Transport and dumplog in bulk of collected domestic, industrial, commercial, and institutional
wastes in areas other than centers or facilities prescribe under this Act;
(14) Site preparation, construction, expansion or operation of waste management facilities without an
Environmental Compliance Certificate required pursuant to Presidential Decree No. 1586 and this Act
and not conforming with the land use plan of the LGU;
(15) The construction of any establishment within two hundred (200) meters from open dumps or
controlled dumps, or sanitary landfill; and
(16) The construction or operation of landfills or any waste disposal facility on any aquifer,
groundwater reservoir, or watershed area and or any portions thereof.
Section 49. Fines and Penalties -
(a) Any person who violates Sec. 48 paragraph (1) shall, upon conviction, be punished with a fine of
not less than Three hundred pesos (P300.00) but not more than One thousand pesos (P1,000.00) or
render community service for not less than one (1) day to not more than fifteen (15) days to an LGU
where such prohibited acts are committed, or both;
(b) Any person who violates Sec. 48, pars. (2) and (3), shall, upon conviction be punished with a fine of
not less than Three hundred pesos (P300.00) but not more than One thousand pesos (P1,000.00) or
imprisonment of not less than one (1) day but to not more than fifteen (15) days, or both;
(c) Any person who violates Sec. 48, pars. (4), (5), (6) and (7) shall, upon conviction, be punished with
a fine of not less than One thousand pesos (P1,000.00) but not more than Three thousand pesos
(P3,000.00) or imprisonment of not less than fifteen (15) day but to not more than six (6) months, or
both;
(d) Any person who violates Sec. 48, pars (8), (9), (10) and (11) for the first time shall, upon conviction,
pay a fine of Five hundred thousand pesos (P500,000.00) plus and amount not less than five percent
(5%) but not more than ten percent (10%) of his net annual income during the previous year.
The additional penalty of imprisonment of a minimum period of one (1) year but not to exceed three
(3) years at the discretion of the court, shall be imposed for second or subsequent violations of Sec.
48, pars. (9) and (10).
(e) Any person who violates Sec. 48, pars. (12) and (13) shall, upon conviction, be punished with a fine
not less than Ten thousand pesos (P10,000.00) but not more than Two hundred thousand pesos
(P200,000.00) or imprisonment of not less than thirty (30) days but not more than three (3) years, or
both;
(f) Any person who violates Sec. 48, pars. (14), (15) and (16) shall, upon conviction, be punished with a
fine not less than One hundred thousand pesos (P100,000.00) but not more than One million pesos
(P1,000,000.00), or imprisonment not less than one (1) year but not more than six (6) years, or both.
If the offense is committed by a corporation, partnership, or other juridical identity duly recognized in
accordance with the law, the chief executive officer, president, general manager, managing partner or
such other officer-in-charge shall be liable for the commission of the offense penalized under this Act.
If the offender is an alien, he shall, after service of the sentence prescribed above, be deported
without further administrative proceedings.
The fines herein prescribed shall be increased by at lest ten (10%) percent every three (3) years to
compensate for inflation and to maintain the deterrent functions of such fines.
Section 50. Administrative Sanctions - Local government officials and officials of government agencies
concerned who fail to comply with and enforce rules and regulations promulgated relative to this Act
shall be charged administratively in accordance with R.A. 7160 and other existing laws, rules and
regulations
CHAPTER VII
MISCELLANEOUS PROVISIONS
Section 51. Mandatory Public Hearings - Mandatory public hearings for national framework and local
government solid waste management plans shall be undertaken by the Commission and the
respective Boards in accordance with process to be formulated in the implementing rules and
regulations.
Section 52. Citizens Suits - For the purposes of enforcing the provisions of this Act or its implementing
rules and regulations, any citizen may file an appropriate civil, criminal or administrative action in the
proper courts/bodies against:
(a) Any person who violates or fails to comply with the provisions of this Act its implementing rules
and regulations; or
(b) The Department or other implementing agencies with respect to orders, rules and regulations
issued inconsistent with this Act; and/or
(c) Any public officer who willfully or grossly neglects the performance of an act specifically enjoined
as a duty by this Act or its implementing rules and regulations; or abuses his authority in the
performance of his duty; or, in any many improperly performs his duties under this Act or its
implementing rules and regulations; Provided, however, That no suit can be filed until after thirty-day
(30) notice has been given to the public officer and the alleged violator concerned and no appropriate
action has been taken thereon.
The Court shall exempt such action from the payment of filing fees and statements likewise,
upon prima facieshowing of the non-enforcement or violation complained of, exempt the plaintiff
from the filing of an injunction bond for the issuance of preliminary injunction.
In the event that the citizen should prevail, the Court shall award reasonable attorney's fees, moral
damages and litigation costs as appropriate.
Section 53. Suits and Strategic Legal Action Against Public Participation (SLAPP) and the Enforcement
of this Act - Where a suit is brought against a person who filed an action as provided in Sec. 52 of this
Act, or against any person, institution or government agency that implements this Act, it shall be the
duty of the investigating prosecutor or the Court, as the case may be, to immediately make a
determination not exceeding thirty (30) days whether said legal action has been filed to harass, vex,
exert undue pressure or stifle such legal recourses of the person complaining of or enforcing the
provisions of this Act. Upon determination thereof, evidence warranting the same, the Court shall
dismiss the complaint and award the attorney's fees and double damages.
This provision shall also apply and benefit public officers who are sued for acts committed in their
official capacity, there being no grave abuse of authority, and done in the course of enforcing this Act.
Section 54. Research on Solid Waste Management - The Department after consultations with the
cooperating agencies, shall encourage, cooperate with, and render financial and other assistance to
appropriate government agencies and private agencies, institutions and individuals in the conduct and
promotion researches, experiments, and other studies on solid waste management, particularly those
relating to:
> minimization, specifically resource conservation and recovery, segregation at source, reduction,
(a) adverse health effects of the release into the environment of materials present in solid wastes, and
methods to eliminate said effects;
(b) the operation and financing of solid waste disposal programs;
(c) the planning, implementing and operation of resource recovery and resource conservation
systems;
(d) the production of usable forms of recovered resources, including fuel from solid waste;
(e) the development and application of new and improved methods of collecting and disposing of
solid waste and processing and recovering materials and energy from solid waste;
(f) improvements in land disposal practices for solid waste (including sludge); and
(g) development of new uses of recovered resources and identification of existing or potential markets
of recovered resources.
In carrying out solid waste researches and studies, the Secretary of the Department or the authorized
representative may make grants or enter into contracts with government agencies, nongovernment
organizations and private persons.
Section 55. Public Education and Information - The Commission shall, in coordination with DECS,
TESDA, CHED, DILG and PIA, conduct a continuing education and information campaign on solid waste
management, such education and information program shall:
(a) Aim to develop public awareness of the ill-effects of and the community based solutions to the
solid waste problem;
(b) Concentrate on activities which are feasible and which will have the greatest impact on the solid
waste problem of the country, like resource conservation and recovery, recycling, segregation at
source, re-use, reduction, and composing of solid waste; and
(c) Encourage the general public, accredited NGOs and people's organizations to publicity endorse and
patronize environmentally acceptable products and packaging materials.
Section 56. Environmental Education in the Formal and Nonformal Sectors - The national government,
through the DECS and in coordination with concerned government agencies, NGOs and private
institutions, shall strengthen the integration of environmental concerns in school curricula at all levels,
with particular emphasis on the theory and practice of waste management principles like waste
recycling, re-use,and composing, in order to promote environmental awareness and action among the
citizenry.
Section 57. Business and Industry Role - The Commission shall encourage commercial and industrial
establishments, through appropriate incentives other than tax incentives to initiate, participate and
invest in integrated ecological solid waste management projects to manufacture environment-friendly
products, to introduce develop and adopt innovative processes that shall recycle and re-use materials,
conserve raw materials and energy, reduce waste, and prevent pollution and to undertake community
activities to promote and propagate effective solid waste management practices.
Section 58. Appropriations - For the initial operating expenses of the Commission and the National
Ecology Center as well as the expensed of the local government units to carry out the mandate of this
Act, the amount of Twenty million pesos (P20,000,000.00) is hereby appropriated from the
Organizational Adjustment Fund on the year this Act is approved. Thereafter, it shall submit to the
Department of Budget and Management its proposed budget for inclusion in the General
Appropriations Act.
Section 59. Implementing Rules and Regulations (IRR) - The Department, in coordination with the
Committees on Environment and Ecology of the Senate and House of Representative, respectively, the
representatives of the Leagues of Provinces, Cities, Municipalities and Barangay Councils, the MMDA
and other concerned agencies, shall promulgate the implementing rules and regulations of this Act,
within one (1) year after its enactment: Provided, That rules and regulations issued by other
government agencies and instrumentalities for the prevention and/or abatement of the solid waste
management problem not inconsistent with this Act shall supplement the rules and regulations issued
by the Department, pursuant to the provisions of this Act.
The draft of the IRR shall be published and be the subject of public consultation with affected sectors.
It shall be submitted to the Committee on Environment Ecology of the Senate and House of
Representatives, respectively, for review before approved by the Secretary.
Section 60. Joint Congressional Oversight Committee - There is hereby created a Joint Congressional
Oversight Committee to monitor the implementation of the Act and to oversee the functions of the
Commission. The Committee shall be composed of five (5) Senators and five (5) Representatives to be
appointed by the Senate President and Speaker of the House of Representatives, respectively. The
Oversight Committee shall be co-chaired by a Senator and a Representative designated by the Senate
President and the Speaker of the House of Representatives, respectively.
Section 61. Abolition of the Presidential Task Force On Waste Management and the Project
Management Office on Solid Waste Management - The Presidential Task Force on Waste Management
which was created by virtue of Memorandum Circular No. 39 dated November 2, 1987, as amended
by Memorandum Circular No. 39A and 88 is hereby abolished.
Further, pursuant to Administrative Order No. 90 dated October 19, 1992, the Project Management
Office on Solid Waste Management is likewise hereby abolished. Consequently their powers and
functions shall be absorbed by the Commission pursuant to the provisions of this Act.
Section 62. Transitory Provision - Pending the establishment of the framework under Sec. 15 hereof,
plans under Sec. 16 and promulgation of the IRR under Sec. 59 of this Act, existing laws, regulations,
programs and projects on solid waste management shall
be enforced: Provided, That for specific undertaking, the same may be revised in the interim in
accordance with the intentions of this Act.
G.R. No. 164527 August 15, 2007
FRANCISCO I. CHAVEZ, Petitioner,
vs.
NATIONAL HOUSING AUTHORITY, R-II BUILDERS, INC., R-II HOLDINGS, INC., HARBOUR CENTRE PORT
TERMINAL, INC., and MR. REGHIS ROMERO II, Respondents.
DECISION
VELASCO, JR., J.:
In this Petition for Prohibition and Mandamus with Prayer for Temporary Restraining Order and/or
Writ of Preliminary Injunction under Rule 65, petitioner, in his capacity as taxpayer, seeks:
to declare NULL AND VOID the Joint Venture Agreement (JVA) dated March 9, 1993 between the
National Housing Authority and R-II Builders, Inc. and the Smokey Mountain Development and
Reclamation Project embodied therein; the subsequent amendments to the said JVA; and all other
agreements signed and executed in relation thereto – including, but not limited to the Smokey
Mountain Asset Pool Agreement dated 26 September 1994 and the separate agreements for Phase I
and Phase II of the Project––as well as all other transactions which emanated therefrom, for being
UNCONSTITUTIONAL and INVALID;
to enjoin respondents—particularly respondent NHA—from further implementing and/or enforcing
the said project and other agreements related thereto, and from further deriving and/or enjoying any
rights, privileges and interest therefrom x x x; and
to compel respondents to disclose all documents and information relating to the project––including,
but not limited to, any subsequent agreements with respect to the different phases of the project, the
revisions over the original plan, the additional works incurred thereon, the current financial condition
of respondent R-II Builders, Inc., and the transactions made respecting the project. 1
The Facts
On March 1, 1988, then President Corazon C. Aquino issued Memorandum Order No. (MO)
1612 approving and directing the implementation of the Comprehensive and Integrated Metropolitan
Manila Waste Management Plan (the Plan). The Metro Manila Commission, in coordination with
various government agencies, was tasked as the lead agency to implement the Plan as formulated by
the Presidential Task Force on Waste Management created by Memorandum Circular No. 39. A day
after, on March 2, 1988, MO 161-A3 was issued, containing the guidelines which prescribed the
functions and responsibilities of fifteen (15) various government departments and offices tasked to
implement the Plan, namely: Department of Public Works and Highway (DPWH), Department of
Health (DOH), Department of Environment and Natural Resources (DENR), Department of
Transportation and Communication, Department of Budget and Management, National Economic and
Development Authority (NEDA), Philippine Constabulary Integrated National Police, Philippine
Information Agency and the Local Government Unit (referring to the City of Manila), Department of
Social Welfare and Development, Presidential Commission for Urban Poor, National Housing Authority
(NHA), Department of Labor and Employment, Department of Education, Culture and Sports (now
Department of Education), and Presidential Management Staff.
Specifically, respondent NHA was ordered to "conduct feasibility studies and develop low-cost housing
projects at the dumpsite and absorb scavengers in NHA resettlement/low-cost housing projects." 4 On
the other hand, the DENR was tasked to "review and evaluate proposed projects under the Plan with
regard to their environmental impact, conduct regular monitoring of activities of the Plan to ensure
compliance with environmental standards and assist DOH in the conduct of the study on hospital
waste management."5
At the time MO 161-A was issued by President Aquino, Smokey Mountain was a wasteland in Balut,
Tondo, Manila, where numerous Filipinos resided in subhuman conditions, collecting items that may
have some monetary value from the garbage. The Smokey Mountain dumpsite is bounded on the
north by the Estero Marala, on the south by the property of the National Government, on the east by
the property of B and I Realty Co., and on the west by Radial Road 10 (R-10).
Pursuant to MO 161-A, NHA prepared the feasibility studies of the Smokey Mountain low-cost
housing project which resulted in the formulation of the "Smokey Mountain Development Plan and
Reclamation of the Area Across R-10" or the Smokey Mountain Development and Reclamation Project
(SMDRP; the Project). The Project aimed to convert the Smokey Mountain dumpsite into a habitable
housing project, inclusive of the reclamation of the area across R-10, adjacent to the Smokey
Mountain as the enabling component of the project. 6 Once finalized, the Plan was submitted to
President Aquino for her approval.
On July 9, 1990, the Build-Operate-and-Transfer (BOT) Law (Republic Act No. [RA] 6957) was
enacted.7 Its declared policy under Section 1 is "[t]o recognize the indispensable role of the private
sector as the main engine for national growth and development and provide the most appropriate
favorable incentives to mobilize private resources for the purpose." Sec. 3 authorized and empowered
"[a]ll government infrastructure agencies, including government-owned and controlled corporations
and local government units x x x to enter into contract with any duly pre-qualified private contractor
for the financing, construction, operation and maintenance of any financially viable infrastructure
facilities through the build-operate-transfer or build and transfer scheme."
RA 6957 defined "build-and-transfer" scheme as "[a] contractual arrangement whereby the contractor
undertakes the construction, including financing, of a given infrastructure facility, and its turnover
after the completion to the government agency or local government unit concerned which shall pay
the contractor its total investment expended on the project, plus reasonable rate of return thereon."
The last paragraph of Sec. 6 of the BOT Law provides that the repayment scheme in the case of "land
reclamation or the building of industrial estates" may consist of "[t]he grant of a portion or
percentage of the reclaimed land or industrial estate built, subject to the constitutional requirements
with respect to the ownership of lands."
On February 10, 1992, Joint Resolution No. 038 was passed by both houses of Congress. Sec. 1 of this
resolution provided, among other things, that:
Section 1. There is hereby approved the following national infrastructure projects for implementation
under the provisions of Republic Act No. 6957 and its implementing rules and regulations:
xxxx
(d) Port infrastructure like piers, wharves, quays, storage handling, ferry service and related facilities;
xxxx
(k) Land reclamation, dredging and other related development facilities;
(l) Industrial estates, regional industrial centers and export processing zones including steel mills, iron-
making and petrochemical complexes and related infrastructure and utilities;
xxxx
(p) Environmental and solid waste management-related facilities such as collection equipment,
composting plants, incinerators, landfill and tidal barriers, among others; and
(q) Development of new townsites and communities and related facilities.
This resolution complied with and conformed to Sec. 4 of the BOT Law requiring the approval of all
national infrastructure projects by the Congress.
On January 17, 1992, President Aquino proclaimed MO 415 9 approving and directing the
implementation of the SMDRP. Secs. 3 and 4 of the Memorandum Order stated:
Section 3. The National Housing Authority is hereby directed to implement the Smokey Mountain
Development Plan and Reclamation of the Area Across R-10 through a private sector joint venture
scheme at the least cost to the government.
Section 4. The land area covered by the Smokey Mountain dumpsite is hereby conveyed to the
National Housing Authority as well as the area to be reclaimed across R-10. (Emphasis supplied.)
In addition, the Public Estates Authority (PEA) was directed to assist in the evaluation of proposals
regarding the technical feasibility of reclamation, while the DENR was directed to (1) facilitate titling
of Smokey Mountain and of the area to be reclaimed and (2) assist in the technical evaluation of
proposals regarding environmental impact statements. 10
In the same MO 415, President Aquino created an Executive Committee (EXECOM) to oversee the
implementation of the Plan, chaired by the National Capital Region-Cabinet Officer for Regional
Development (NCR-CORD) with the heads of the NHA, City of Manila, DPWH, PEA, Philippine Ports
Authority (PPA), DENR, and Development Bank of the Philippines (DBP) as members. 11 The NEDA
subsequently became a member of the EXECOM. Notably, in a September 2, 1994 Letter, 12 PEA
General Manager Amado Lagdameo approved the plans for the reclamation project prepared by the
NHA.
In conformity with Sec. 5 of MO 415, an inter-agency technical committee (TECHCOM) was created
composed of the technical representatives of the EXECOM "[t]o assist the NHA in the evaluation of
the project proposals, assist in the resolution of all issues and problems in the project to ensure that
all aspects of the development from squatter relocation, waste management, reclamation,
environmental protection, land and house construction meet governing regulation of the region and
to facilitate the completion of the project."13
Subsequently, the TECHCOM put out the Public Notice and Notice to Pre-Qualify and Bid for the right
to become NHA’s joint venture partner in the implementation of the SMDRP. The notices were
published in newspapers of general circulation on January 23 and 26 and February 1, 14, 16, and 23,
1992, respectively. Out of the thirteen (13) contractors who responded, only five (5) contractors fully
complied with the required pre-qualification documents. Based on the evaluation of the pre-
qualification documents, the EXECOM declared the New San Jose Builders, Inc. and R-II Builders, Inc.
(RBI) as the top two contractors.14
Thereafter, the TECHCOM evaluated the bids (which include the Pre-feasibility Study and Financing
Plan) of the top two (2) contractors in this manner:
(1) The DBP, as financial advisor to the Project, evaluated their Financial Proposals;
(2) The DPWH, PPA, PEA and NHA evaluated the Technical Proposals for the Housing
Construction and Reclamation;
(3) The DENR evaluated Technical Proposals on Waste Management and Disposal by
conducting the Environmental Impact Analysis; and
(4) The NHA and the City of Manila evaluated the socio-economic benefits presented by the
proposals.
On June 30, 1992, Fidel V. Ramos assumed the Office of the President (OP) of the Philippines.
On August 31, 1992, the TECHCOM submitted its recommendation to the EXECOM to approve the R-II
Builders, Inc. (RBI) proposal which garnered the highest score of 88.475%.
Subsequently, the EXECOM made a Project briefing to President Ramos. As a result, President Ramos
issued Proclamation No. 3915 on September 9, 1992, which reads:
WHEREAS, the National Housing Authority has presented a viable conceptual plan to convert the
Smokey Mountain dumpsite into a habitable housing project, inclusive of the reclamation of the area
across Road Radial 10 (R-10) adjacent to the Smokey Mountain as the enabling component of the
project;
xxxx
These parcels of land of public domain are hereby placed under the administration and disposition of
the National Housing Authority to develop, subdivide and dispose to qualified beneficiaries, as well as
its development for mix land use (commercial/industrial) to provide employment opportunities to on-
site families and additional areas for port-related activities.
In order to facilitate the early development of the area for disposition, the Department of
Environment and Natural Resources, through the Lands and Management Bureau, is hereby directed
to approve the boundary and subdivision survey and to issue a special patent and title in the name of
the National Housing Authority, subject to final survey and private rights, if any there be. (Emphasis
supplied.)
On October 7, 1992, President Ramos authorized NHA to enter into a Joint Venture Agreement with
RBI "[s]ubject to final review and approval of the Joint Venture Agreement by the Office of the
President."16
On March 19, 1993, the NHA and RBI entered into a Joint Venture Agreement 17 (JVA) for the
development of the Smokey Mountain dumpsite and the reclamation of the area across R-10 based
on Presidential Decree No. (PD) 75718 which mandated NHA "[t]o undertake the physical and socio-
economic upgrading and development of lands of the public domain identified for housing," MO 161-
A which required NHA to conduct the feasibility studies and develop a low-cost housing project at the
Smokey Mountain, and MO 415 as amended by MO 415-A which approved the Conceptual Plan for
Smokey Mountain and creation of the EXECOM and TECHCOM. Under the JVA, the Project "involves
the clearing of Smokey Mountain for eventual development into a low cost medium rise housing
complex and industrial/commercial site with the reclamation of the area directly across [R-10] to act
as the enabling component of the Project." 19 The JVA covered a lot in Tondo, Manila with an area of
two hundred twelve thousand two hundred thirty-four (212,234) square meters and another lot to be
reclaimed also in Tondo with an area of four hundred thousand (400,000) square meters.
The Scope of Work of RBI under Article II of the JVA is as follows:
a) To fully finance all aspects of development of Smokey Mountain and reclamation of no
more than 40 hectares of Manila Bay area across Radial Road 10.
b) To immediately commence on the preparation of feasibility report and detailed
engineering with emphasis to the expedient acquisition of the Environmental Clearance
Certificate (ECC) from the DENR.
c) The construction activities will only commence after the acquisition of the ECC, and
d) Final details of the contract, including construction, duration and delivery timetables, shall
be based on the approved feasibility report and detailed engineering.
Other obligations of RBI are as follows:
 2.02 The [RBI] shall develop the PROJECT based on the Final Report and Detailed Engineering
as approved by the Office of the President. All costs and expenses for hiring technical
personnel, date gathering, permits, licenses, appraisals, clearances, testing and similar
undertaking shall be for the account of the [RBI].
2.03 The [RBI] shall undertake the construction of 3,500 temporary housing units complete
with basic amenities such as plumbing, electrical and sewerage facilities within the
temporary housing project as staging area to temporarily house the squatter families from
the Smokey Mountain while development is being undertaken. These temporary housing
units shall be turned over to the [NHA] for disposition.
2.04 The [RBI] shall construct 3,500 medium rise low cost permanent housing units on the
leveled Smokey Mountain complete with basic utilities and amenities, in accordance with the
plans and specifications set forth in the Final Report approved by the [NHA]. Completed units
ready for mortgage take out shall be turned over by the [RBI] to NHA on agreed schedule.
2.05 The [RBI] shall reclaim forty (40) hectares of Manila Bay area directly across [R-10] as
contained in Proclamation No. 39 as the enabling component of the project and payment to
the [RBI] as its asset share.
2.06 The [RBI] shall likewise furnish all labor materials and equipment necessary to complete
all herein development works to be undertaken on a phase to phase basis in accordance with
the work program stipulated therein.
The profit sharing shall be based on the approved pre-feasibility report submitted to the EXECOM, viz:
For the developer (RBI):
1. To own the forty (40) hectares of reclaimed land.
2. To own the commercial area at the Smokey Mountain area composed of 1.3 hectares, and
3. To own all the constructed units of medium rise low cost permanent housing units beyond
the 3,500 units share of the [NHA].
For the NHA:
1. To own the temporary housing consisting of 3,500 units.
2. To own the cleared and fenced incinerator site consisting of 5 hectares situated at the
Smokey Mountain area.
3. To own the 3,500 units of permanent housing to be constructed by [RBI] at the Smokey
Mountain area to be awarded to qualified on site residents.
4. To own the Industrial Area site consisting of 3.2 hectares, and
5. To own the open spaces, roads and facilities within the Smokey Mountain area.
In the event of "extraordinary increase in labor, materials, fuel and non-recoverability of total project
expenses,"20the OP, upon recommendation of the NHA, may approve a corresponding adjustment in
the enabling component.
The functions and responsibilities of RBI and NHA are as follows:
For RBI:
4.01 Immediately commence on the preparation of the FINAL REPORT with emphasis to the expedient
acquisition, with the assistance of the [NHA] of Environmental Compliance Certificate (ECC) from the
Environmental Management Bureau (EMB) of the [DENR]. Construction shall only commence after the
acquisition of the ECC. The Environment Compliance Certificate (ECC) shall form part of the FINAL
REPORT.
The FINAL REPORT shall provide the necessary subdivision and housing plans, detailed engineering
and architectural drawings, technical specifications and other related and required documents relative
to the Smokey Mountain area.
With respect to the 40-hectare reclamation area, the [RBI] shall have the discretion to develop the
same in a manner that it deems necessary to recover the [RBI’s] investment, subject to environmental
and zoning rules.
4.02 Finance the total project cost for land development, housing construction and reclamation of the
PROJECT.
4.03 Warrant that all developments shall be in compliance with the requirements of the FINAL
REPORT.
4.04 Provide all administrative resources for the submission of project accomplishment reports to the
[NHA] for proper evaluation and supervision on the actual implementation.
4.05 Negotiate and secure, with the assistance of the [NHA] the grant of rights of way to the PROJECT,
from the owners of the adjacent lots for access road, water, electrical power connections and
drainage facilities.
4.06 Provide temporary field office and transportation vehicles (2 units), one (1) complete set of
computer and one (1) unit electric typewriter for the [NHA’s] field personnel to be charged to the
PROJECT.
For the NHA:
4.07 The [NHA] shall be responsible for the removal and relocation of all squatters within Smokey
Mountain to the Temporary Housing Complex or to other areas prepared as relocation areas with the
assistance of the [RBI]. The [RBI] shall be responsible in releasing the funds allocated and committed
for relocation as detailed in the FINAL REPORT.
4.08 Assist the [RBI] and shall endorse granting of exemption fees in the acquisition of all necessary
permits, licenses, appraisals, clearances and accreditations for the PROJECT subject to existing laws,
rules and regulations.
4.09 The [NHA] shall inspect, evaluate and monitor all works at the Smokey Mountain and
Reclamation Area while the land development and construction of housing units are in progress to
determine whether the development and construction works are undertaken in accordance with the
FINAL REPORT. If in its judgment, the PROJECT is not pursued in accordance with the FINAL REPORT,
the [NHA] shall require the [RBI] to undertake necessary remedial works. All expenses, charges and
penalties incurred for such remedial, if any, shall be for the account of the [RBI].
4.10 The [NHA] shall assist the [RBI] in the complete electrification of the PROJECT. x x x
4.11 Handle the processing and documentation of all sales transactions related to its assets shares
from the venture such as the 3,500 units of permanent housing and the allotted industrial area of 3.2
hectares.
4.12 All advances outside of project costs made by the [RBI] to the [NHA] shall be deducted from the
proceeds due to the [NHA].
4.13 The [NHA] shall be responsible for the acquisition of the Mother Title for the Smokey Mountain
and Reclamation Area within 90 days upon submission of Survey returns to the Land Management
Sector. The land titles to the 40-hectare reclaimed land, the 1.3 hectare commercial area at the
Smokey Mountain area and the constructed units of medium-rise permanent housing units beyond
the 3,500 units share of the [NHA] shall be issued in the name of the [RBI] upon completion of the
project. However, the [RBI] shall have the authority to pre-sell its share as indicated in this agreement.
The final details of the JVA, which will include the construction duration, costs, extent of reclamation,
and delivery timetables, shall be based on the FINAL REPORT which will be contained in a
Supplemental Agreement to be executed later by the parties.
The JVA may be modified or revised by written agreement between the NHA and RBI specifying the
clauses to be revised or modified and the corresponding amendments.
If the Project is revoked or terminated by the Government through no fault of RBI or by mutual
agreement, the Government shall compensate RBI for its actual expenses incurred in the Project plus
a reasonable rate of return not exceeding that stated in the feasibility study and in the contract as of
the date of such revocation, cancellation, or termination on a schedule to be agreed upon by both
parties.
As a preliminary step in the project implementation, consultations and dialogues were conducted
with the settlers of the Smokey Mountain Dumpsite Area. At the same time, DENR started processing
the application for the Environmental Clearance Certificate (ECC) of the SMDRP. As a result however of
the consultative dialogues, public hearings, the report on the on-site field conditions, the
Environmental Impact Statement (EIS) published on April 29 and May 12, 1993 as required by the
Environmental Management Bureau of DENR, the evaluation of the DENR, and the recommendations
from other government agencies, it was discovered that design changes and additional work have to
be undertaken to successfully implement the Project.21
Thus, on February 21, 1994, the parties entered into another agreement denominated as the
Amended and Restated Joint Venture Agreement 22 (ARJVA) which delineated the different phases of
the Project. Phase I of the Project involves the construction of temporary housing units for the current
residents of the Smokey Mountain dumpsite, the clearing and leveling-off of the dumpsite, and the
construction of medium-rise low-cost housing units at the cleared and leveled dumpsite. 23 Phase II of
the Project involves the construction of an incineration area for the on-site disposal of the garbage at
the dumpsite.24 The enabling component or consideration for Phase I of the Project was increased
from 40 hectares of reclaimed lands across R-10 to 79 hectares. 25 The revision also provided for the
enabling component for Phase II of 119 hectares of reclaimed lands contiguous to the 79 hectares of
reclaimed lands for Phase I.26 Furthermore, the amended contract delineated the scope of works and
the terms and conditions of Phases I and II, thus:
The PROJECT shall consist of Phase I and Phase II.
Phase I shall involve the following:
a. the construction of 2,992 units of temporary housing for the affected residents while
clearing and development of Smokey Mountain [are] being undertaken
b. the clearing of Smokey Mountain and the subsequent construction of 3,520 units of
medium rise housing and the development of the industrial/commercial site within the
Smokey Mountain area
c. the reclamation and development of a 79 hectare area directly across Radial Road 10 to
serve as the enabling component of Phase I
Phase II shall involve the following:
a. the construction and operation of an incinerator plant that will conform to the emission
standards of the DENR
b. the reclamation and development of 119-hectare area contiguous to that to be reclaimed
under Phase I to serve as the enabling component of Phase II.
Under the ARJVA, RBI shall construct 2,992 temporary housing units, a reduction from 3,500 units
under the JVA.27However, it was required to construct 3,520 medium-rise low-cost permanent housing
units instead of 3,500 units under the JVA. There was a substantial change in the design of the
permanent housing units such that a "loft shall be incorporated in each unit so as to increase the
living space from 20 to 32 square meters. The additions and changes in the Original Project
Component are as follows:
ORIGINAL CHANGES/REVISIONS
1. TEMPORARY HOUSING
Wood/Plywood, ga. 31 G.I. Concrete/Steel Frame Structure Sheet usable life of 3
years, gauge 26 G.I. roofing sheets future 12 SM floor area. use as permanent
structures for factory and warehouses mixed 17 sm & 12 sm floor area.
2. MEDIUM RISE MASS
HOUSING
Box type precast Shelter Conventional and precast component 20 square meter
concrete structures, 32 square floor area with 2.4 meter meter floor area with loft
floor height; bare type, 160 units/ (sleeping quarter) 3.6 m. floor building. height,
painted and improved
architectural façade, 80 units/building.
3. MITIGATING MEASURES
3.1 For reclamation work Use of clean dredgefill material below the MLLW and SM
material mixed with dredgefill above MLLW.
a. 100% use of Smokey Mountain material as dredgefill Use of Steel Sheet
Piles needed for longer depth of embedment.
b. Concrete Sheet Piles short depth of embedment
c. Silt removal approximately Need to remove more than 3.0
1.0 meter only meters of silt after sub-soil investigation.28
These material and substantial modifications served as justifications for the increase in the
share of RBI from 40 hectares to 79 hectares of reclaimed land.
Under the JVA, the specific costs of the Project were not stipulated but under the ARJVA, the
stipulated cost for Phase I was pegged at six billion six hundred ninety-three million three
hundred eighty-seven thousand three hundred sixty-four pesos (PhP 6,693,387,364).
In his February 10, 1994 Memorandum, the Chairperson of the SMDRP EXECOM submitted
the ARJVA for approval by the OP. After review of said agreement, the OP directed that
certain terms and conditions of the ARJVA be further clarified or amended preparatory to its
approval. Pursuant to the President’s directive, the parties reached an agreement on the
clarifications and amendments required to be made on the ARJVA.
On August 11, 1994, the NHA and RBI executed an Amendment To the Amended and
Restated Joint Venture Agreement (AARJVA)29 clarifying certain terms and condition of the
ARJVA, which was submitted to President Ramos for approval, to wit:
Phase II shall involve the following:
a. the construction and operation of an incinerator plant that will conform to the
emission standards of the DENR
b. the reclamation and development of 119-hectare area contiguous to that to be
reclaimed under Phase I to serve as the enabling component of Phase II, the exact
size and configuration of which shall be approved by the SMDRP Committee 30
Other substantial amendments are the following:
4. Paragraph 2.05 of Article II of the ARJVA is hereby amended to read as follows:
2.05. The DEVELOPER shall reclaim seventy nine (79) hectares of the Manila Bay area directly
across Radial Road 10 (R-10) to serve as payment to the DEVELOPER as its asset share for
Phase I and to develop such land into commercial area with port facilities; provided, that the
port plan shall be integrated with the Philippine Port Authority’s North Harbor plan for the
Manila Bay area and provided further, that the final reclamation and port plan for said
reclaimed area shall be submitted for approval by the Public Estates Authority and the
 Philippine Ports Authority, respectively: provided finally, that subject to par. 2.02 above,
actual reclamation work may commence upon approval of the final reclamation plan by the
Public Estates Authority.
xxxx
9. A new paragraph to be numbered 5.05 shall be added to Article V of the ARJVA, and shall
read as follows:
5.05. In the event this Agreement is revoked, cancelled or terminated by the AUTHORITY through no
fault of the DEVELOPER, the AUTHORITY shall compensate the DEVELOPER for the value of the
completed portions of, and actual expenditures on the PROJECT plus a reasonable rate of return
thereon, not exceeding that stated in the Cost Estimates of Items of Work previously approved by the
SMDRP Executive Committee and the AUTHORITY and stated in this Agreement, as of the date of such
revocation, cancellation, or termination, on a schedule to be agreed upon by the parties, provided
that said completed portions of Phase I are in accordance with the approved FINAL REPORT.
Afterwards, President Ramos issued Proclamation No. 465 dated August 31, 1994 31 increasing the
proposed area for reclamation across R-10 from 40 hectares to 79 hectares, 32 to wit:
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the Philippines, by virtue of the
powers vested in me by the law, and as recommended by the SMDRP Executive Committee, do hereby
authorize the increase of the area of foreshore or submerged lands of Manila Bay to be reclaimed, as
previously authorized under Proclamation No. 39 (s. 1992) and Memorandum Order No. 415 (s.
1992), from Four Hundred Thousand (400,000) square meters, more or less, to Seven Hundred Ninety
Thousand (790,000) square meters, more or less.
On September 1, 1994, pursuant to Proclamation No. 39, the DENR issued Special Patent No. 3591
conveying in favor of NHA an area of 211,975 square meters covering the Smokey Mountain
Dumpsite.
In its September 7, 1994 letter to the EXECOM, the OP through then Executive Secretary Teofisto T.
Guingona, Jr., approved the ARJVA as amended by the AARJVA.
On September 8, 1994, the DENR issued Special Patent 3592 pursuant to Proclamation No. 39,
conveying in favor of NHA a 401,485-square meter area.
On September 26, 1994, the NHA, RBI, Home Insurance and Guaranty Corporation (HIGC), now known
as the Home Guaranty Corporation, and the Philippine National Bank (PNB) 33 executed the Smokey
Mountain Asset Pool Formation Trust Agreement (Asset Pool Agreement). 34 Thereafter, a Guaranty
Contract was entered into by NHA, RBI, and HIGC.
On June 23, 1994, the Legislature passed the Clean Air Act. 35 The Act made the establishment of an
incinerator illegal and effectively barred the implementation of the planned incinerator project under
Phase II. Thus, the off-site disposal of the garbage at the Smokey Mountain became necessary. 36
The land reclamation was completed in August 1996. 37
Sometime later in 1996, pursuant likewise to Proclamation No. 39, the DENR issued Special Patent No.
3598 conveying in favor of NHA an additional 390,000 square meter area.
During the actual construction and implementation of Phase I of the SMDRP, the Inter-Agency
Technical Committee found and recommended to the EXECOM on December 17, 1997 that additional
works were necessary for the completion and viability of the Project. The EXECOM approved the
recommendation and so, NHA instructed RBI to implement the change orders or necessary works. 38
Such necessary works comprised more than 25% of the original contract price and as a result, the
Asset Pool incurred direct and indirect costs. Based on C1 12 A of the Implementing Rules and
Regulations of PD 1594, a supplemental agreement is required for "all change orders and extra work
orders, the total aggregate cost of which being more than twenty-five (25%) of the escalated original
contract price."
The EXECOM requested an opinion from the Department of Justice (DOJ) to determine whether a
bidding was required for the change orders and/or necessary works. The DOJ, through DOJ Opinion
Nos. 119 and 155 dated August 26, 1993 and November 12, 1993, opined that "a rebidding, pursuant
to the aforequoted provisions of the implementing rules (referring to PD 1594) would not be
necessary where the change orders inseparable from the original scope of the project, in which case,
a negotiation with the incumbent contractor may be allowed."
Thus, on February 19, 1998, the EXECOM issued a resolution directing NHA to enter into a
supplemental agreement covering said necessary works.
On March 20, 1998, the NHA and RBI entered into a Supplemental Agreement covering the
aforementioned necessary works and submitted it to the President on March 24, 1998 for approval.
Outgoing President Ramos decided to endorse the consideration of the Supplemental Agreement to
incoming President Joseph E. Estrada. On June 30, 1998, Estrada became the 13th Philippine
President.
However, the approval of the Supplemental Agreement was unacted upon for five months. As a result,
the utilities and the road networks were constructed to cover only the 79-hectare original enabling
component granted under the ARJVA. The 220-hectare extension of the 79-hectare area was no
longer technically feasible. Moreover, the financial crises and unreliable real estate situation made it
difficult to sell the remaining reclaimed lots. The devaluation of the peso and the increase in interest
cost led to the substantial increase in the cost of reclamation.
On August 1, 1998, the NHA granted RBI’s request to suspend work on the SMDRP due to "the delay
in the approval of the Supplemental Agreement, the consequent absence of an enabling component
to cover the cost of the necessary works for the project, and the resulting inability to replenish the
Asset Pool funds partially used for the completion of the necessary works." 39
As of August 1, 1998 when the project was suspended, RBI had "already accomplished a portion of
the necessary works and change orders which resulted in [RBI] and the Asset Pool incurring advances
for direct and indirect cost which amount can no longer be covered by the 79-hectare enabling
component under the ARJVA."40
Repeated demands were made by RBI in its own capacity and on behalf of the asset pool on NHA for
payment for the advances for direct and indirect costs subject to NHA validation.
In November 1998, President Estrada issued Memorandum Order No. 33 reconstituting the SMDRP
EXECOM and further directed it to review the Supplemental Agreement and submit its
recommendation on the completion of the SMDRP.
The reconstituted EXECOM conducted a review of the project and recommended the amendment of
the March 20, 1998 Supplemental Agreement "to make it more feasible and to identify and provide
new sources of funds for the project and provide for a new enabling component to cover the payment
for the necessary works that cannot be covered by the 79-hectare enabling component under the
ARJVA."41
The EXECOM passed Resolution Nos. 99-16-01 and 99-16-02 42 which approved the modification of the
Supplemental Agreement, to wit:
a) Approval of 150 hectares additional reclamation in order to make the reclamation feasible
as part of the enabling component.
b) The conveyance of the 15-hectare NHA Vitas property (actually 17 hectares based on
surveys) to the SMDRP Asset Pool.
c) The inclusion in the total development cost of other additional, necessary and
indispensable infrastructure works and the revision of the original cost stated in the
Supplemental Agreement dated March 20, 1998 from PhP 2,953,984,941.40 to PhP
2,969,134,053.13.
d) Revision in the sharing agreement between the parties.
In the March 23, 2000 OP Memorandum, the EXECOM was authorized to proceed and complete the
SMDRP subject to certain guidelines and directives.
After the parties in the case at bar had complied with the March 23, 2000 Memorandum, the NHA
November 9, 2000 Resolution No. 4323 approved "the conveyance of the 17-hectare Vitas property in
favor of the existing or a newly created Asset Pool of the project to be developed into a mixed
commercial-industrial area, subject to certain conditions."
On January 20, 2001, then President Estrada was considered resigned. On the same day, President
Gloria M. Arroyo took her oath as the 14th President of the Philippines.
As of February 28, 2001, "the estimated total project cost of the SMDRP has reached P8.65 billion
comprising of P4.78 billion in direct cost and P3.87 billion in indirect cost," 43 subject to validation by
the NHA.
On August 28, 2001, NHA issued Resolution No. 4436 to pay for "the various necessary works/change
orders to SMDRP, to effect the corresponding enabling component consisting of the conveyance of the
NHA’s Vitas Property and an additional 150-hectare reclamation area" and to authorize the release by
NHA of PhP 480 million "as advance to the project to make the Permanent Housing habitable, subject
to reimbursement from the proceeds of the expanded enabling component." 44
On November 19, 2001, the Amended Supplemental Agreement (ASA) was signed by the parties, and
on February 28, 2002, the Housing and Urban Development Coordinating Council (HUDCC) submitted
the agreement to the OP for approval.
In the July 20, 2002 Cabinet Meeting, HUDCC was directed "to submit the works covered by the PhP
480 million [advance to the Project] and the ASA to public bidding." 45 On August 28, 2002, the HUDCC
informed RBI of the decision of the Cabinet.
In its September 2, 2002 letter to the HUDCC Chairman, RBI lamented the decision of the government
"to bid out the remaining works under the ASA thereby unilaterally terminating the Project with RBI
and all the agreements related thereto." RBI demanded the payment of just compensation "for all
accomplishments and costs incurred in developing the SMDRP plus a reasonable rate of return
thereon pursuant to Section 5.05 of the ARJVA and Section 6.2 of the ASA." 46
Consequently, the parties negotiated the terms of the termination of the JVA and other subsequent
agreements.
On August 27, 2003, the NHA and RBI executed a Memorandum of Agreement (MOA) whereby both
parties agreed to terminate the JVA and other subsequent agreements, thus:
1. TERMINATION
 1.1 In compliance with the Cabinet directive dated 30 July 2002 to submit the works
covered by the P480 Million and the ASA to public bidding, the following
agreements executed by and between the NHA and the DEVELOPER are hereby
terminated, to wit:
a. Joint Venture Agreement (JVA) dated 19 March 1993
b. Amended and Restated Joint Venture Agreement (ARJVA) dated 21
February 1994
c. Amendment and Restated Joint Venture Agreement dated 11 August
1994
d. Supplemental Agreement dated 24 March 1998
e. Amended Supplemental Agreement (ASA) dated 19 November 2001.
xxxx
5. SETTLEMENT OF CLAIMS
5.1 Subject to the validation of the DEVELOPER’s claims, the NHA hereby agrees to initially
compensate the Developer for the abovementioned costs as follows:
a. Direct payment to DEVELOPER of the amounts herein listed in the following
manner:
a.1 P250 Million in cash from the escrow account in accordance with
Section 2 herewith;
a.2 Conveyance of a 3 hectare portion of the Vitas Industrial area
immediately after joint determination of the appraised value of the said
property in accordance with the procedure herein set forth in the last
paragraph of Section 5.3. For purposes of all payments to be made through
conveyance of real properties, the parties shall secure from the NHA Board
of Directors all documents necessary and sufficient to effect the transfer of
title over the properties to be conveyed to RBI, which documents shall be
issued within a reasonable period.
5.2 Any unpaid balance of the DEVELOPERS claims determined after the validation process
referred to in Section 4 hereof, may be paid in cash, bonds or through the conveyance of
properties or any combination thereof. The manner, terms and conditions of payment of the
balance shall be specified and agreed upon later within a period of three months from the
time a substantial amount representing the unpaid balance has been validated pursuant
hereto including, but not limited to the programming of quarterly cash payments to be
sourced by the NHA from its budget for debt servicing, from its income or from any other
sources.
5.3 In any case the unpaid balance is agreed to be paid, either partially or totally through
conveyance of properties, the parties shall agree on which properties shall be subject to
conveyance. The NHA and DEVELOPER hereby agree to determine the valuation of the
properties to be conveyed by getting the average of the appraisals to be made by two (2)
mutually acceptable independent appraisers.
Meanwhile, respondent Harbour Centre Port Terminal, Inc. (HCPTI) entered into an agreement with
the asset pool for the development and operations of a port in the Smokey Mountain Area which is a
major component of SMDRP to provide a source of livelihood and employment for Smokey Mountain
residents and spur economic growth. A Subscription Agreement was executed between the Asset Pool
and HCPTI whereby the asset pool subscribed to 607 million common shares and 1,143 million
preferred shares of HCPTI. The HCPTI preferred shares had a premium and penalty interest of 7.5%
per annum and a mandatory redemption feature. The asset pool paid the subscription by conveying
to HCPTI a 10-hectare land which it acquired from the NHA being a portion of the reclaimed land of
the SMDRP. Corresponding certificates of titles were issued to HCPTI, namely: TCT Nos. 251355,
251356, 251357, and 251358.
Due to HCPTI’s failure to obtain a license to handle foreign containerized cargo from PPA, it suffered a
net income loss of PhP 132,621,548 in 2002 and a net loss of PhP 15,540,063 in 2003. The Project
Governing Board of the Asset Pool later conveyed by way of dacion en pago a number of HCPTI shares
to RBI in lieu of cash payment for the latter’s work in SMDRP.
On August 5, 2004, former Solicitor General Francisco I. Chavez, filed the instant petition which
impleaded as respondents the NHA, RBI, R-II Holdings, Inc. (RHI), HCPTI, and Mr. Reghis Romero II,
raising constitutional issues.
The NHA reported that thirty-four (34) temporary housing structures and twenty-one (21) permanent
housing structures had been turned over by respondent RBI. It claimed that 2,510 beneficiary-families
belonging to the poorest of the poor had been transferred to their permanent homes and benefited
from the Project.
The Issues
The grounds presented in the instant petition are:
I
Neither respondent NHA nor respondent R-II builders may validly reclaim foreshore and submerged
land because:
1. Respondent NHA and R-II builders were never granted any power and authority to reclaim
lands of the public domain as this power is vested exclusively with the PEA.
2. Even assuming that respondents NHA and R-II builders were given the power and
authority to reclaim foreshore and submerged land, they were never given the authority by
the denr to do so.
II
Respondent R-II builders cannot acquire the reclaimed foreshore and submerged land areas because:
1. The reclaimed foreshore and submerged parcels of land are inalienable public lands which
are beyond the commerce of man.
2. Assuming arguendo that the subject reclaimed foreshore and submerged parcels of land
were already declared alienable lands of the public domain, respondent R-II builders still
could not acquire the same because there was never any declaration that the said lands were
no longer needed for public use.
3. Even assuming that the subject reclaimed lands are alienable and no longer needed for
public use, respondent R-II builders still cannot acquire the same because there was never
any law authorizing the sale thereof.
4. There was never any public bidding awarding ownership of the subject land to respondent
R-II builders.
5. Assuming that all the requirements for a valid transfer of alienable public had been
performed, respondent R-II Builders, being private corporation is nonetheless
expresslyprohibited by the Philippine Constitution to acquire lands of the public domain.
III
Respondent harbour, being a private corporation whose majority stocks are owned and controlled by
respondent Romero’s Corporations – R-II builders and R-II Holdings – is disqualified from being a
transferee of public land.
IV
Respondents must be compelled to disclose all information related to the smokey mountain
development and reclamation project.
The Court’s Ruling
Before we delve into the substantive issues raised in this petition, we will first deal with several
procedural matters raised by respondents.
Whether petitioner has the requisite locus standi to file this case
Respondents argue that petitioner Chavez has no legal standing to file the petition.
Only a person who stands to be benefited or injured by the judgment in the suit or entitled to the
avails of the suit can file a complaint or petition.47 Respondents claim that petitioner is not a proper
party-in-interest as he was unable to show that "he has sustained or is in immediate or imminent
danger of sustaining some direct and personal injury as a result of the execution and enforcement of
the assailed contracts or agreements." 48 Moreover, they assert that not all government contracts can
justify a taxpayer’s suit especially when no public funds were utilized in contravention of the
Constitution or a law.
We explicated in Chavez v. PCGG49 that in cases where issues of transcendental public importance are
presented, there is no necessity to show that petitioner has experienced or is in actual danger of
suffering direct and personal injury as the requisite injury is assumed. We find our ruling in Chavez v.
PEA50 as conclusive authority on locus standi in the case at bar since the issues raised in this petition
are averred to be in breach of the fair diffusion of the country’s natural resources and the
constitutional right of a citizen to information which have been declared to be matters of
transcendental public importance. Moreover, the pleadings especially those of respondents readily
reveal that public funds have been indirectly utilized in the Project by means of Smokey Mountain
Project Participation Certificates (SMPPCs) bought by some government agencies.
Hence, petitioner, as a taxpayer, is a proper party to the instant petition before the court.
Whether petitioner’s direct recourse to this Court was proper
Respondents are one in asserting that petitioner circumvents the principle of hierarchy of courts in his
petition. Judicial hierarchy was made clear in the case of People v. Cuaresma, thus:
There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and
should also serve as a general determinant of the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed
with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the petition.
This is established policy. It is a policy that is necessary to prevent inordinate demands upon the
Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction,
and to prevent further over-crowding of the Court’s docket.51 x x x
The OSG claims that the jurisdiction over petitions for prohibition and mandamus is concurrent with
other lower courts like the Regional Trial Courts and the Court of Appeals. Respondent NHA argues
that the instant petition is misfiled because it does not introduce special and important reasons or
exceptional and compelling circumstances to warrant direct recourse to this Court and that the lower
courts are more equipped for factual issues since this Court is not a trier of facts. Respondents RBI
and RHI question the filing of the petition as this Court should not be unduly burdened with
"repetitions, invocation of jurisdiction over constitutional questions it had previously resolved and
settled."
In the light of existing jurisprudence, we find paucity of merit in respondents’ postulation.
While direct recourse to this Court is generally frowned upon and discouraged, we have however
ruled in Santiago v. Vasquez that such resort to us may be allowed in certain situations, wherein this
Court ruled that petitions for certiorari, prohibition, or mandamus, though cognizable by other courts,
may directly be filed with us if "the redress desired cannot be obtained in the appropriate courts or
where exceptional compelling circumstances justify availment of a remedy within and calling for the
exercise of [this Court’s] primary jurisdiction." 521avvphi1
For one, we already gave due course to the instant petition in our January 18, 2005 Resolution. 54 In
said issuance, the parties were required to make clear and concise statements of established facts
upon which our decision will be based.
Secondly, we agree with petitioner that there is no necessity for us to make any factual findings since
the facts needed to decide the instant petition are well established from the admissions of the parties
in their pleadings55 and those derived from the documents appended to said submissions. Indeed, the
core facts which are the subject matter of the numerous issues raised in this petition are undisputed.
Now we will tackle the issues that prop up the instant petition.
Since petitioner has cited our decision in PEA as basis for his postulations in a number of issues, we
first resolve the query—is PEA applicable to the case at bar?
A juxtaposition of the facts in the two cases constrains the Court to rule in the negative.
The Court finds that PEA is not a binding precedent to the instant petition because the facts in said
case are substantially different from the facts and circumstances in the case at bar, thus:
(1) The reclamation project in PEA was undertaken through a JVA entered into between PEA
and AMARI. The reclamation project in the instant NHA case was undertaken by the NHA, a
national government agency in consultation with PEA and with the approval of two
Philippine Presidents;

The instant petition challenges the constitutionality and legality of the SMDRP involving several
(2) In PEA, AMARI and PEA executed a JVA to develop the Freedom Islands and reclaim
hectares of government land and hundreds of millions of funds of several government agencies.
submerged areas without public bidding on April 25, 1995. In the instant NHA case, the NHA
Moreover, serious constitutional challenges are made on the different aspects of the Project which
and RBI executed a JVA after RBI was declared the winning bidder on August 31, 1992 as the
allegedly affect the right of Filipinos to the distribution of natural resources in the country and the
JVA partner of the NHA in the SMDRP after compliance with the requisite public bidding.
right to information of a citizen—matters which have been considered to be of extraordinary
significance and grave consequence to the public in general. These concerns in the instant action
(3) In PEA, there was no law or presidential proclamation classifying the lands to be
compel us to turn a blind eye to the judicial structure meant to provide an orderly dispensation of
reclaimed as alienable and disposal lands of public domain. In this RBI case, MO 415 of
justice and consider the instant petition as a justified deviation from an established precept.
former President Aquino and Proclamation No. 39 of then President Ramos, coupled with
Special Patents Nos. 3591, 3592, and 3598, classified the reclaimed lands as alienable and
Core factual matters undisputed
disposable;

Respondents next challenge the projected review by this Court of the alleged factual issues
(4) In PEA, the Chavez petition was filed before the amended JVA was executed by PEA and
intertwined in the issues propounded by petitioner. They listed a copious number of questions
AMARI.1avvphi1 In this NHA case, the JVA and subsequent amendments were already
seemingly factual in nature which would make this Court a trier of facts. 53
substantially implemented. Subsequently, the Project was terminated through a MOA signed
on August 27, 2003. Almost one year later on August 5, 2004, the Chavez petition was filed;
We find the position of respondents bereft of merit.
(5) In PEA, AMARI was considered to be in bad faith as it signed the amended JVA after the
Chavez petition was filed with the Court and after Senate Committee Report No. 560 was
 issued finding that the subject lands are inalienable lands of public domain. In the instant promoting public welfare and interests." Since large portions of these reclaimed lands would
petition, RBI and other respondents are considered to have signed the agreements in good obviously be needed for public service, there must be a formal declaration segregating reclaimed
faith as the Project was terminated even before the Chavez petition was filed; lands no longer needed for public service from those still needed for public service. 60

(6) The PEA-AMARI JVA was executed as a result of direct negotiation between the parties In the Smokey Mountain Project, petitioner clarifies that the reclamation was not done by PEA or
and not in accordance with the BOT Law. The NHA-RBI JVA and subsequent amendments through a contract executed by PEA with another person or entity but by the NHA through an
constitute a BOT contract governed by the BOT Law; and agreement with respondent RBI. Therefore, he concludes that the reclamation is null and void.

(7) In PEA, the lands to be reclaimed or already reclaimed were transferred to PEA, a Petitioner’s contention has no merit.
government entity tasked to dispose of public lands under Executive Order No. (EO) 525. 56 In
the NHA case, the reclaimed lands were transferred to NHA, a government entity NOT tasked EO 525 reads:
to dispose of public land and therefore said alienable lands were converted to patrimonial
lands upon their transfer to NHA.57 Section 1. The Public Estates Authority (PEA) shall be primarily responsible for integrating, directing,
and coordinating all reclamation projects for and on behalf of the National Government. All
Thus the PEA Decision58 cannot be considered an authority or precedent to the instant case. The reclamation projects shall be approved by the President upon recommendation of the PEA, and shall
principle of stare decisis59 has no application to the different factual setting of the instant case. be undertaken by the PEA or through a proper contract executed by it with any person or entity;
Provided, that, reclamation projects of any national government agency or entity authorized under its
We will now dwell on the substantive issues raised by petitioner. After a perusal of the grounds raised charter shall be undertaken in consultation with the PEA upon approval of the President. (Emphasis
in this petition, we find that most of these issues are moored on our PEA Decision which, as earlier supplied.)
discussed, has no application to the instant petition. For this reason alone, the petition can already be
rejected. Nevertheless, on the premise of the applicability of said decision to the case at bar, we will The aforequoted provision points to three (3) requisites for a legal and valid reclamation project, viz:
proceed to resolve said issues.
(1) approval by the President;
First Issue: Whether respondents NHA and RBI have been granted
the power and authority to reclaim lands of the public domain as (2) favorable recommendation of PEA; and
this power is vested exclusively in PEA as claimed by petitioner
(3) undertaken by any of the following:
Petitioner contends that neither respondent NHA nor respondent RBI may validly reclaim foreshore
and submerged land because they were not given any power and authority to reclaim lands of the
a. by PEA
public domain as this power was delegated by law to PEA.
b. by any person or entity pursuant to a contract it executed with PEA
Asserting that existing laws did not empower the NHA and RBI to reclaim lands of public domain, the
Public Estates Authority (PEA), petitioner claims, is "the primary authority for the reclamation of all
c. by the National Government agency or entity authorized under its charter to
foreshore and submerged lands of public domain," and relies on PEA where this Court held:
reclaim lands subject to consultation with PEA
Moreover, Section 1 of Executive Order No. 525 provides that PEA "shall be primarily responsible for
Without doubt, PEA under EO 525 was designated as the agency primarily responsible for integrating,
integrating, directing, and coordinating all reclamation projects for and on behalf of the National
directing, and coordinating all reclamation projects. Primarily means "mainly, principally, mostly,
Government." The same section also states that "[A]ll reclamation projects shall be approved by the
generally." Thus, not all reclamation projects fall under PEA’s authority of supervision, integration, and
President upon recommendation of the PEA, and shall be undertaken by the PEA or through a proper
coordination. The very charter of PEA, PD 1084,61 does not mention that PEA has the exclusive and
contract executed by it with any person or entity; x x x." Thus, under EO No. 525, in relation to PD No.
sole power and authority to reclaim lands of public domain. EO 525 even reveals the exception—
3-A and PD No. 1084, PEA became the primary implementing agency of the National Government to
reclamation projects by a national government agency or entity authorized by its charter to reclaim
reclaim foreshore and submerged lands of the public domain. EO No. 525 recognized PEA as the
land. One example is EO 405 which authorized the Philippine Ports Authority (PPA) to reclaim and
government entity "to undertake the reclamation of lands and ensure their maximum utilization in
develop submerged areas for port related purposes. Under its charter, PD 857, PPA has the power "to
reclaim, excavate, enclose or raise any of the lands" vested in it.
Thus, while PEA under PD 1084 has the power to reclaim land and under EO 525 is primarily
responsible for integrating, directing and coordinating reclamation projects, such authority is NOT
exclusive and such power to reclaim may be granted or delegated to another government agency or
entity or may even be undertaken by the National Government itself, PEA being only an agency and a
part of the National Government.
Let us apply the legal parameters of Sec. 1, EO 525 to the reclamation phase of SMDRP. After a
scrutiny of the facts culled from the records, we find that the project met all the three (3)
requirements, thus:
1. There was ample approval by the President of the Philippines; as a matter of fact, two Philippine
Presidents approved the same, namely: Presidents Aquino and Ramos. President Aquino sanctioned
the reclamation of both the SMDRP housing and commercial-industrial sites through MO 415 (s.
1992) which approved the SMDRP under Sec. 1 and directed NHA "x x x to implement the Smokey
Mountain Development Plan and Reclamation of the Area across R-10 through a private sector joint
venture scheme at the least cost to government" under Section 3.
For his part, then President Ramos issued Proclamation No. 39 (s. 1992) which expressly reserved the
Smokey Mountain Area and the Reclamation Area for a housing project and related
commercial/industrial development.
Moreover, President Ramos issued Proclamation No. 465 (s. 1994) which authorized the increase of
the Reclamation Area from 40 hectares of foreshore and submerged land of the Manila Bay to 79
hectares. It speaks of the reclamation of 400,000 square meters, more or less, of the foreshore and
submerged lands of Manila Bay adjoining R-10 as an enabling component of the SMDRP.
As a result of Proclamations Nos. 39 and 465, Special Patent No. 3591 covering 211,975 square meters
of Smokey Mountain, Special Patent No. 3592 covering 401,485 square meters of reclaimed land, and
Special Patent No. 3598 covering another 390,000 square meters of reclaimed land were issued by
the DENR.
Thus, the first requirement of presidential imprimatur on the SMDRP has been satisfied.
2. The requisite favorable endorsement of the reclamation phase was impliedly granted by PEA.
President Aquino saw to it that there was coordination of the project with PEA by designating its
general manager as member of the EXECOM tasked to supervise the project implementation. The
assignment was made in Sec. 2 of MO 415 which provides:
Section 2. An Executive Committee is hereby created to oversee the implementation of the Plan,
chaired by the NCR-CORD, with the heads of the following agencies as members: The National
Housing Authority, the City of Manila, the Department of Public Works and Highways, the Public
Estates Authority, the Philippine Ports Authority, the Department of Environment and Natural
Resources and the Development Bank of the Philippines. (Emphasis supplied.)
The favorable recommendation by PEA of the JVA and subsequent amendments were incorporated as
part of the recommendations of the EXECOM created under MO 415. While there was no specific
recommendation on the SMDRP emanating solely from PEA, we find that the approbation of the
Project and the land reclamation as an essential component by the EXECOM of which PEA is a
member, and its submission of the SMDRP and the agreements on the Project to the President for
approval amply met the second requirement of EO 525.
3. The third element was also present—the reclamation was undertaken either by PEA or any person
or entity under contract with PEA or by the National Government agency or entity authorized under
its charter to reclaim lands subject to consultation with PEA. It cannot be disputed that the
reclamation phase was not done by PEA or any person or entity under contract with PEA. However,
the reclamation was implemented by the NHA, a national government agency whose authority to
reclaim lands under consultation with PEA is derived from its charter—PD 727 and other pertinent
laws—RA 727962 and RA 6957 as amended by RA 7718.
While the authority of NHA to reclaim lands is challenged by petitioner, we find that the NHA had
more than enough authority to do so under existing laws. While PD 757, the charter of NHA, does not
explicitly mention "reclamation" in any of the listed powers of the agency, we rule that the NHA has
an implied power to reclaim land as this is vital or incidental to effectively, logically, and successfully
implement an urban land reform and housing program enunciated in Sec. 9 of Article XIII of the 1987
Constitution.
Basic in administrative law is the doctrine that a government agency or office has express and implied
powers based on its charter and other pertinent statutes. Express powers are those powers granted,
allocated, and delegated to a government agency or office by express provisions of law. On the other
hand, implied powers are those that can be inferred or are implicit in the wordings of the law 63 or
conferred by necessary or fair implication in the enabling act. 64 In Angara v. Electoral Commission, the
Court clarified and stressed that when a general grant of power is conferred or duty enjoined, every
particular power necessary for the exercise of the one or the performance of the other is also
conferred by necessary implication.65 It was also explicated that when the statute does not specify the
particular method to be followed or used by a government agency in the exercise of the power vested
in it by law, said agency has the authority to adopt any reasonable method to carry out its functions. 66
The power to reclaim on the part of the NHA is implicit from PD 757, RA 7279, MO 415, RA 6957, and
PD 3-A,67viz:
1. NHA’s power to reclaim derived from PD 757 provisions:
a. Sec. 3 of PD 757 implies that reclamation may be resorted to in order to attain the goals of NHA:
Section 3. Progress and Objectives. The Authority shall have the following purposes and objectives:
xxxx
b) To undertake housing, development, resettlement or other activities as would enhance
the provision of housing to every Filipino;
c) To harness and promote private participation in housing ventures in terms of capital
expenditures, land, expertise, financing and other facilities for the sustained growth of the
housing industry. (Emphasis supplied.)
Land reclamation is an integral part of the development of resources for some of the housing
requirements of the NHA. Private participation in housing projects may also take the form of land
reclamation.
b. Sec. 5 of PD 757 serves as proof that the NHA, as successor of the Tondo Foreshore Development
Authority (TFDA), has the power to reclaim, thus:
Section 5. Dissolution of Existing Housing Agencies. The People's Homesite and Housing Corporation
(PHHC), the Presidential Assistant on Housing Resettlement Agency (PAHRA), the Tondo Foreshore
Development Authority (TFDA), the Central Institute for the Training and Relocation of Urban
Squatters (CITRUS), the Presidential Committee for Housing and Urban Resettlement (PRECHUR),
Sapang Palay Development Committee, Inter-Agency Task Force to Undertake the Relocation of
Families in Barrio Nabacaan, Villanueva, Misamis Oriental and all other existing government housing
and resettlement agencies, task forces and ad-hoc committees, are hereby dissolved. Their powers
and functions, balance of appropriations, records, assets, rights, and choses in action, are transferred
to, vested in, and assumed by the Authority. x x x (Emphasis supplied.)
PD 570 dated October 30, 1974 created the TFDA, which defined its objectives, powers, and functions.
Sec. 2 provides:
Section 2. Objectives and Purposes. The Authority shall have the following purposes and objectives:
a) To undertake all manner of activity, business or development projects for the
establishment of harmonious, comprehensive, integrated and healthy living community in
the Tondo Foreshoreland and its resettlement site;
b) To undertake and promote the physical and socio-economic amelioration of the Tondo
Foreshore residents in particular and the nation in general (Emphasis supplied.)
The powers and functions are contained in Sec. 3, to wit:
a) To develop and implement comprehensive and integrated urban renewal programs for the
Tondo Foreshore and Dagat-dagatan lagoon and/or any other additional/alternative
resettlement site and to formulate and enforce general and specific policies for its
development which shall ensure reasonable degree of compliance with environmental
standards.
b) To prescribe guidelines and standards for the reservation, conservation and utilization of
public lands covering the Tondo Foreshore land and its resettlement sites;
c) To construct, acquire, own, lease, operate and maintain infrastructure facilities, housing
complex, sites and services;
d) To determine, regulate and supervise the establishment and operation of housing, sites,
services and commercial and industrial complexes and any other enterprises to be
constructed or established within the Tondo Foreshore and its resettlement sites;
e) To undertake and develop, by itself or through joint ventures with other public or private
entities, all or any of the different phases of development of the Tondo Foreshore land and
its resettlement sites;
f) To acquire and own property, property-rights and interests, and encumber or otherwise
dispose of the same as it may deem appropriate (Emphasis supplied.)
From the foregoing provisions, it is readily apparent that the TFDA has the explicit power to develop
public lands covering the Tondo foreshore land and any other additional and alternative resettlement
sites under letter b, Sec. 3 of PD 570. Since the additional and/or alternative sites adjacent to Tondo
foreshore land cover foreshore and submerged areas, the reclamation of said areas is necessary in
order to convert them into a comprehensive and integrated resettlement housing project for the slum
dwellers and squatters of Tondo. Since the powers of TFDA were assumed by the NHA, then the NHA
has the power to reclaim lands in the Tondo foreshore area which covers the 79-hectare land subject
of Proclamations Nos. 39 and 465 and Special Patents Nos. 3592 and 3598.
c. Sec. 6 of PD 757 delineates the functions and powers of the NHA which embrace the authority to
reclaim land, thus:
Sec. 6. Powers and functions of the Authority.—The Authority shall have the following powers and
functions to be exercised by the Board in accordance with its established national human settlements
plan prepared by the Human Settlements Commission:
(a) Develop and implement the comprehensive and integrated housing program provided for in The power of the NHA to undertake reclamation of land can be inferred from Secs. 12 and 29 of RA
Section hereof; 7279, which provide:

xxxx Section 12. Disposition of Lands for Socialized Housing.—The National Housing Authority, with respect
to lands belonging to the National Government, and the local government units with respect to other
(c) Prescribe guidelines and standards for the reservation, conservation and utilization of public lands lands within their respective localities, shall coordinate with each other to formulate and make
identified for housing and resettlement; available various alternative schemes for the disposition of lands to the beneficiaries of the Program.
These schemes shall not be limited to those involving transfer of ownership in fee simple but shall
xxxx include lease, with option to purchase, usufruct or such other variations as the local government units
or the National Housing Authority may deem most expedient in carrying out the purposes of this Act.
(e) Develop and undertake housing development and/or resettlement projects through joint ventures
or other arrangements with public and private entities; xxxx

xxxx Section 29. Resettlement.—With two (2) years from the effectivity of this Act, the local government
units, in coordination with the National Housing Authority, shall implement the relocation and
resettlement of persons living in danger areas such as esteros, railroad tracks, garbage dumps,
(k) Enter into contracts whenever necessary under such terms and conditions as it may deem proper
riverbanks, shorelines, waterways, and in other public places as sidewalks, roads, parks, and
and reasonable;
playgrounds. The local government unit, in coordination with the National Housing Authority, shall
provide relocation or resettlement sites with basic services and facilities and access to employment
(l) Acquire property rights and interests and encumber or otherwise dispose the same as it may deem and livelihood opportunities sufficient to meet the basic needs of the affected families. (Emphasis
appropriate; supplied.)

xxxx Lands belonging to the National Government include foreshore and submerged lands which can be
reclaimed to undertake housing development and resettlement projects.
(s) Perform such other acts not inconsistent with this Decree, as may be necessary to effect the
policies and objectives herein declared. (Emphasis supplied.) 3. MO 415 explains the undertaking of the NHA in SMDRP:

The NHA’s authority to reclaim land can be inferred from the aforequoted provisions. It can make use WHEREAS, Memorandum Order No. 161-A mandated the National Housing Authority to conduct
of public lands under letter (c) of Sec. 6 which includes reclaimed land as site for its comprehensive feasibility studies and develop low-cost housing projects at the dumpsites of Metro Manila;
and integrated housing projects under letter (a) which can be undertaken through joint ventures with
private entities under letter (e). Taken together with letter (s) which authorizes NHA to perform such
WHEREAS, the National Housing Authority has presented a viable Conceptual Plan to convert the
other activities "necessary to effect the policies and objectives" of PD 757, it is safe to conclude that
Smokey Mountain dumpsite into a habitable housing project inclusive of the reclamation area across
the NHA’s power to reclaim lands is a power that is implied from the exercise of its explicit powers
R-10 as enabling component of the Project;
under Sec. 6 in order to effectively accomplish its policies and objectives under Sec. 3 of its charter.
Thus, the reclamation of land is an indispensable component for the development and construction of
the SMDRP housing facilities. WHEREAS, the said Plan requires the coordinated and synchronized efforts of the City of Manila and
other government agencies and instrumentalities to ensure effective and efficient implementation;
2. NHA’s implied power to reclaim land is enhanced by RA 7279.
WHEREAS, the government encourages private sector initiative in the implementation of its projects.
(Emphasis supplied.)
PD 757 identifies NHA’s mandate to "[d]evelop and undertake housing development and/or
resettlement projects through joint ventures or other arrangements with public and private entities."
Proceeding from these "whereas" clauses, it is unequivocal that reclamation of land in the Smokey
Mountain area is an essential and vital power of the NHA to effectively implement its avowed goal of
developing low-cost housing units at the Smokey Mountain dumpsites. The interpretation made by no
less than the President of the Philippines as Chief of the Executive Branch, of which the NHA is a part,
must necessarily command respect and much weight and credit.
4. RA 6957 as amended by RA 7718—the BOT Law—serves as an exception to PD 1084 and EO 525.
Based on the provisions of the BOT Law and Implementing Rules and Regulations, it is unequivocal
that all government infrastructure agencies like the NHA can undertake infrastructure or development
projects using the contractual arrangements prescribed by the law, and land reclamation is one of the
projects that can be resorted to in the BOT project implementation under the February 10, 1992 Joint
Resolution No. 3 of the 8th Congress.
From the foregoing considerations, we find that the NHA has ample implied authority to undertake
reclamation projects.
Even without an implied power to reclaim lands under NHA’s charter, we rule that the authority
granted to NHA, a national government agency, by the President under PD 3-A reinforced by EO 525 is
more than sufficient statutory basis for the reclamation of lands under the SMDRP.
PD 3-A is a law issued by then President Ferdinand E. Marcos under his martial law powers on
September 23, 1972. It provided that "[t]he provisions of any law to the contrary notwithstanding, the
reclamation of areas, underwater, whether foreshore or inland, shall be limited to the National
Government or any person authorized by it under the proper contract." It repealed, in effect, RA 1899
which previously delegated the right to reclaim lands to municipalities and chartered cities and
revested it to the National Government.68 Under PD 3-A, "national government" can only mean the
Executive Branch headed by the President. It cannot refer to Congress as it was dissolved and
abolished at the time of the issuance of PD 3-A on September 23, 1972. Moreover, the Executive
Branch is the only implementing arm in the government with the equipment, manpower, expertise,
and capability by the very nature of its assigned powers and functions to undertake reclamation
projects. Thus, under PD 3-A, the Executive Branch through the President can implement reclamation
of lands through any of its departments, agencies, or offices.
Subsequently, on February 4, 1977, President Marcos issued PD 1084 creating the PEA, which was
granted, among others, the power "to reclaim land, including foreshore and submerged areas by
dredging, filling or other means or to acquire reclaimed lands." The PEA’s power to reclaim is not
however exclusive as can be gleaned from its charter, as the President retained his power under PD 3-
A to designate another agency to reclaim lands.
On February 14, 1979, EO 525 was issued. It granted PEA primary responsibility for integrating,
directing, and coordinating reclamation projects for and on behalf of the National Government
although other national government agencies can be designated by the President to reclaim lands in
coordination with the PEA. Despite the issuance of EO 525, PD 3-A remained valid and subsisting.
Thus, the National Government through the President still retained the power and control over all
reclamation projects in the country.
The power of the National Government through the President over reclamation of areas, that is,
underwater whether foreshore or inland, was made clear in EO 543 69 which took effect on June 24,
2006. Under EO 543, PEA was renamed the Philippine Reclamation Authority (PRA) and was granted
the authority to approve reclamation projects, a power previously reposed in the President under EO
525. EO 543 reads:
Section 1. The power of the President to approve reclamation projects is hereby delegated to the
Philippine Reclamation Authority [formerly PEA], through its governing board, subject to compliance
with existing laws and rules and subject to the condition that reclamation contracts to be executed
with any person or entity go through public bidding.
Section 2. Nothing in the Order shall be construed as diminishing the President’s authority to modify,
amend or nullify PRA’s action.
Section 3. All executive issuances inconsistent with this Executive Order are hereby repealed or
amended accordingly. (Emphasis supplied.)
Sec. 2 of EO 543 strengthened the power of control and supervision of the President over reclamation
of lands as s/he can modify, amend, or nullify the action of PEA (now PRA).
From the foregoing issuances, we conclude that the President’s delegation to NHA, a national
government agency, to reclaim lands under the SMDRP, is legal and valid, firmly anchored on PD 3-A
buttressed by EO 525 notwithstanding the absence of any specific grant of power under its charter, PD
757.
Second Issue: Whether respondents NHA and RBI were given the
power and authority by DENR to reclaim foreshore and submerged
lands
Petitioner Chavez puts forth the view that even if the NHA and RBI were granted the authority to
reclaim, they were not authorized to do so by the DENR.
Again, reliance is made on our ruling in PEA where it was held that the DENR’s authority is necessary
in order for the government to validly reclaim foreshore and submerged lands. In PEA, we expounded
in this manner:
As manager, conservator and overseer of the natural resources of the State, DENR exercises
"supervision and control over alienable and disposable public lands." DENR also exercises "exclusive
jurisdiction on the management and disposition of all lands of the public domain." Thus, DENR
decides whether areas under water, like foreshore or submerged areas of Manila Bay, should be
reclaimed or not. This means that PEA needs authorization from DENR before PEA can undertake
reclamation projects in Manila Bay, or in any part of the country.
DENR also exercises exclusive jurisdiction over the disposition of all lands of the public domain.
Hence, DENR decides whether reclaimed lands of PEA should be classified as alienable under Sections
6 and 7 of CA No. 141. Once DENR decides that the reclaimed lands should be so classified, it then
recommends to the President the issuance of a proclamation classifying the lands as alienable or
disposable lands of the public domain open to disposition. We note that then DENR Secretary
Fulgencio S. Factoran, Jr. countersigned Special Patent No. 3517 in compliance with the Revised
Administrative Code and Sections 6 and 7 of CA No. 141.
In short, DENR is vested with the power to authorize the reclamation of areas under water, while PEA
is vested with the power to undertake the physical reclamation of areas under water, whether directly
or through private contractors. DENR is also empowered to classify lands of the public domain into
alienable or disposable lands subject to the approval of the President. On the other hand, PEA is
tasked to develop, sell or lease the reclaimed alienable lands of the public domain. 70
Despite our finding that PEA is not a precedent to the case at bar, we find after all that under existing
laws, the NHA is still required to procure DENR’s authorization before a reclamation project in Manila
Bay or in any part of the Philippines can be undertaken. The requirement applies to PEA, NHA, or any
other government agency or office granted with such power under the law.
Notwithstanding the need for DENR permission, we nevertheless find petitioner’s position bereft of
merit.
The DENR is deemed to have granted the authority to reclaim in the Smokey Mountain Project for the
following reasons:
1. Sec. 17, Art. VII of the Constitution provides that "the President shall have control of all executive
departments, bureaus and offices." The President is assigned the task of seeing to it that all laws are
faithfully executed. "Control," in administrative law, means "the power of an officer to alter, modify,
nullify or set aside what a subordinate officer has done in the performance of his duties and to
substitute the judgment of the former for that of the latter." 71
As such, the President can exercise executive power motu proprio and can supplant the act or
decision of a subordinate with the President’s own. The DENR is a department in the executive branch
under the President, and it is only an alter ego of the latter. Ordinarily the proposed action and the
staff work are initially done by a department like the DENR and then submitted to the President for
approval. However, there is nothing infirm or unconstitutional if the President decides on the
implementation of a certain project or activity and requires said department to implement it. Such is a
presidential prerogative as long as it involves the department or office authorized by law to supervise
or execute the Project. Thus, as in this case, when the President approved and ordered the
development of a housing project with the corresponding reclamation work, making DENR a member
of the committee tasked to implement the project, the required authorization from the DENR to
reclaim land can be deemed satisfied. It cannot be disputed that the ultimate power over alienable
and disposable public lands is reposed in the President of the Philippines and not the DENR Secretary.
To still require a DENR authorization on the Smokey Mountain when the President has already
authorized and ordered the implementation of the Project would be a derogation of the powers of
the President as the head of the executive branch. Otherwise, any department head can defy or
oppose the implementation of a project approved by the head of the executive branch, which is
patently illegal and unconstitutional.
In Chavez v. Romulo, we stated that when a statute imposes a specific duty on the executive
department, the President may act directly or order the said department to undertake an activity,
thus:
[A]t the apex of the entire executive officialdom is the President. Section 17, Article VII of the
Constitution specifies [her] power as Chief executive departments, bureaus and offices. [She] shall
ensure that the laws be faithfully executed. As Chief Executive, President Arroyo holds the steering
wheel that controls the course of her government. She lays down policies in the execution of her
plans and programs. Whatever policy she chooses, she has her subordinates to implement them. In
short, she has the power of control. Whenever a specific function is entrusted by law or regulation to
her subordinate, she may act directly or merely direct the performance of a duty x x x. Such act is well
within the prerogative of her office (emphasis supplied).72
Moreover, the power to order the reclamation of lands of public domain is reposed first in the
Philippine President. The Revised Administrative Code of 1987 grants authority to the President to
reserve lands of public domain for settlement for any specific purpose, thus:
Section 14. Power to Reserve Lands of the Public and Private Domain of the Government.—(1) The
President shall have the power to reserve for settlement or public use, and for specific public
purposes, any of the lands of the public domain, the use of which is not otherwise directed by law.
The reserved land shall thereafter remain subject to the specific public purpose indicated until
otherwise provided by law or proclamation. (Emphasis supplied.)
President Aquino reserved the area of the Smokey Mountain dumpsite for settlement and issued MO
415 authorizing the implementation of the Smokey Mountain Development Project plus the
reclamation of the area across R-10. Then President Ramos issued Proclamation No. 39 covering the
21-hectare dumpsite and the 40-hectare commercial/industrial area, and Proclamation No. 465 and
MO 415 increasing the area of foreshore and submerged lands of Manila Bay to be reclaimed from 40
to 79 hectares. Having supervision and control over the DENR, both Presidents directly assumed and
exercised the power granted by the Revised Administrative Code to the DENR Secretary to authorize
the NHA to reclaim said lands. What can be done indirectly by the DENR can be done directly by the (1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or
President. It would be absurd if the power of the President cannot be exercised simply because the public policy;
head of a department in the executive branch has not acted favorably on a project already approved
by the President. If such arrangement is allowed then the department head will become more xxxx
powerful than the President.
(7) Those expressly prohibited or declared void by law.
2. Under Sec. 2 of MO 415, the DENR is one of the members of the EXECOM chaired by the NCR-CORD
to oversee the implementation of the Project. The EXECOM was the one which recommended These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.
approval of the project plan and the joint venture agreements. Clearly, the DENR retained its power of
supervision and control over the laws affected by the Project since it was tasked to "facilitate the
Secs. 2 and 3, Art. XII of the Constitution declare that all natural resources are owned by the State and
titling of the Smokey Mountain and of the area to be reclaimed," which shows that it had tacitly given
they cannot be alienated except for alienable agricultural lands of the public domain. One of the
its authority to the NHA to undertake the reclamation.
State’s natural resources are lands of public domain which include reclaimed lands.

3. Former DENR Secretary Angel C. Alcala issued Special Patents Nos. 3591 and 3592 while then
Petitioner contends that for these reclaimed lands to be alienable, there must be a law or presidential
Secretary Victor O. Ramos issued Special Patent No. 3598 that embraced the areas covered by the
proclamation officially classifying these reclaimed lands as alienable and disposable and open to
reclamation. These patents conveyed the lands to be reclaimed to the NHA and granted to said
disposition or concession. Absent such law or proclamation, the reclaimed lands cannot be the
agency the administration and disposition of said lands for subdivision and disposition to qualified
enabling component or consideration to be paid to RBI as these are beyond the commerce of man.
beneficiaries and for development for mix land use (commercial/industrial) "to provide employment
opportunities to on-site families and additional areas for port related activities." Such grant of
We are not convinced of petitioner’s postulation.
authority to administer and dispose of lands of public domain under the SMDRP is of course subject
to the powers of the EXECOM of SMDRP, of which the DENR is a member.
The reclaimed lands across R-10 were classified alienable and disposable lands of public domain of
the State for the following reasons, viz:
4. The issuance of ECCs by the DENR for SMDRP is but an exercise of its power of supervision and
control over the lands of public domain covered by the Project.
First, there were three (3) presidential proclamations classifying the reclaimed lands across R-10 as
alienable or disposable hence open to disposition or concession, to wit:
Based on these reasons, it is clear that the DENR, through its acts and issuances, has ratified and
confirmed the reclamation of the subject lands for the purposes laid down in Proclamations Nos. 39
and 465. (1) MO 415 issued by President Aquino, of which Sec. 4 states that "[t]he land covered by the
Smokey Mountain Dumpsite is hereby conveyed to the National Housing Authority as well as
the area to be reclaimed across R-10."
Third Issue: Whether respondent RBI can acquire reclaimed

foreshore and submerged lands considered as inalienable and
outside the commerce of man
Petitioner postulates that respondent RBI cannot acquire the reclaimed foreshore and submerged
areas as these are inalienable public lands beyond the commerce of man based on Art. 1409 of the
Civil Code which provides:
Article 1409. The following contracts are inexistent and void from the beginning:
The directive to transfer the lands once reclaimed to the NHA implicitly carries with it the
declaration that said lands are alienable and disposable. Otherwise, the NHA cannot
effectively use them in its housing and resettlement project.
(2) Proclamation No. 39 issued by then President Ramos by which the reclaimed lands were
conveyed to NHA for subdivision and disposition to qualified beneficiaries and for
development into a mixed land use (commercial/industrial) to provide employment
opportunities to on-site families and additional areas for port-related activities. Said directive
carries with it the pronouncement that said lands have been transformed to alienable and
disposable lands. Otherwise, there is no legal way to convey it to the beneficiaries.
 (3) Proclamation No. 465 likewise issued by President Ramos enlarged the reclaimed area to
79 hectares to be developed and disposed of in the implementation of the SMDRP. The
authority put into the hands of the NHA to dispose of the reclaimed lands tacitly sustains the
conversion to alienable and disposable lands.
Secondly, Special Patents Nos. 3591, 3592, and 3598 issued by the DENR anchored on Proclamations
Nos. 39 and 465 issued by President Ramos, without doubt, classified the reclaimed areas as alienable
and disposable.
Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are explicit declarations
that the lands to be reclaimed are classified as alienable and disposable. We find however that such
conclusion is derived and implicit from the authority given to the NHA to transfer the reclaimed lands
to qualified beneficiaries.
The query is, when did the declaration take effect? It did so only after the special patents covering the
reclaimed areas were issued. It is only on such date that the reclaimed lands became alienable and
disposable lands of the public domain. This is in line with the ruling in PEA where said issue was
clarified and stressed:
PD No. 1085, coupled with President Aquino’s actual issuance of a special patent covering the
Freedom Islands, is equivalent to an official proclamation classifying the Freedom Islands as alienable
or disposable lands of the public domain. PD No. 1085 and President Aquino’s issuance of a land
patent also constitute a declaration that the Freedom Islands are no longer needed for public service.
The Freedom Islands are thus alienable or disposable lands of the public domain, open to disposition
or concession to qualified parties.73 (Emphasis supplied.)
Thus, MO 415 and Proclamations Nos. 39 and 465 cumulatively and jointly taken together with Special
Patent Nos. 3591, 3592, and 3598 more than satisfy the requirement in PEA that "[t]here must be a
law or presidential proclamation officially classifying these reclaimed lands as alienable or disposable
and open to disposition or concession (emphasis supplied)." 74
Apropos the requisite law categorizing reclaimed land as alienable or disposable, we find that RA 6957
as amended by RA 7718 provides ample authority for the classification of reclaimed land in the
SMDRP for the repayment scheme of the BOT project as alienable and disposable lands of public
domain. Sec. 6 of RA 6957 as amended by RA 7718 provides:
For the financing, construction, operation and maintenance of any infrastructure projects undertaken
through the build-operate-and transfer arrangement or any of its variations pursuant to the provisions
of this Act, the project proponent x x x may likewise be repaid in the form of a share in the revenue of
the project or other non-monetary payments, such as, but not limited to, the grant of a portion or
percentage of the reclaimed land, subject to the constitutional requirements with respect to the
ownership of the land. (Emphasis supplied.)
While RA 6957 as modified by RA 7718 does not expressly declare that the reclaimed lands that shall
serve as payment to the project proponent have become alienable and disposable lands and opened
for disposition; nonetheless, this conclusion is necessarily implied, for how else can the land be used
as the enabling component for the Project if such classification is not deemed made?
It may be argued that the grant of authority to sell public lands, pursuant to PEA, does not convert
alienable lands of public domain into private or patrimonial lands. We ruled in PEA that "alienable
lands of public domain must be transferred to qualified private parties, or to government entities not
tasked to dispose of public lands, before these lands can become private or patrimonial lands
(emphasis supplied)."75 To lands reclaimed by PEA or through a contract with a private person or
entity, such reclaimed lands still remain alienable lands of public domain which can be transferred
only to Filipino citizens but not to a private corporation. This is because PEA under PD 1084 and EO
525 is tasked to hold and dispose of alienable lands of public domain and it is only when it is
transferred to Filipino citizens that it becomes patrimonial property. On the other hand, the NHA is a
government agency not tasked to dispose of public lands under its charter—The Revised
Administrative Code of 1987. The NHA is an "end-user agency" authorized by law to administer and
dispose of reclaimed lands. The moment titles over reclaimed lands based on the special patents are
transferred to the NHA by the Register of Deeds, they are automatically converted to patrimonial
properties of the State which can be sold to Filipino citizens and private corporations, 60% of which
are owned by Filipinos. The reason is obvious: if the reclaimed land is not converted to patrimonial
land once transferred to NHA, then it would be useless to transfer it to the NHA since it cannot legally
transfer or alienate lands of public domain. More importantly, it cannot attain its avowed purposes
and goals since it can only transfer patrimonial lands to qualified beneficiaries and prospective buyers
to raise funds for the SMDRP.
From the foregoing considerations, we find that the 79-hectare reclaimed land has been declared
alienable and disposable land of the public domain; and in the hands of NHA, it has been reclassified
as patrimonial property.
Petitioner, however, contends that the reclaimed lands were inexistent prior to the three (3)
Presidential Acts (MO 415 and Proclamations Nos. 39 and 465) and hence, the declaration that such
areas are alienable and disposable land of the public domain, citing PEA, has no legal basis.
Petitioner’s contention is not well-taken.
Petitioner’s sole reliance on Proclamations Nos. 39 and 465 without taking into consideration the
special patents issued by the DENR demonstrates the inherent weakness of his proposition. As was
ruled in PEA cited by petitioner himself, "PD No. 1085, coupled with President Aquino’s actual
issuance of a special patent covering the Freedom Islands is equivalent to an official proclamation
classifying the Freedom islands as alienable or disposable lands of public domain." In a similar vein,
the combined and collective effect of Proclamations Nos. 39 and 465 with Special Patents Nos. 3592
and 3598 is tantamount to and can be considered to be an official declaration that the reclaimed lots
are alienable or disposable lands of the public domain.
The reclaimed lands covered by Special Patents Nos. 3591, 3592, and 3598, which evidence transfer of
ownership of reclaimed lands to the NHA, are official acts of the DENR Secretary in the exercise of his
power of supervision and control over alienable and disposable public lands and his exclusive
jurisdiction over the management and disposition of all lands of public domain under the Revised
Administrative Code of 1987. Special Patent No. 3592 speaks of the transfer of Lots 1 and 2, and RI-
003901-000012-D with an area of 401,485 square meters based on the survey and technical
description approved by the Bureau of Lands. Lastly, Special Patent No. 3598 was issued in favor of
the NHA transferring to said agency a tract of land described in Plan RL-00-000013 with an area of
390,000 square meters based on the survey and technical descriptions approved by the Bureau of
Lands.
The conduct of the survey, the preparation of the survey plan, the computation of the technical
description, and the processing and preparation of the special patent are matters within the technical
area of expertise of administrative agencies like the DENR and the Land Management Bureau and are
generally accorded not only respect but at times even finality. 76 Preparation of special patents calls for
technical examination and a specialized review of calculations and specific details which the courts are
ill-equipped to undertake; hence, the latter defer to the administrative agency which is trained and
knowledgeable on such matters.77
Subsequently, the special patents in the name of the NHA were submitted to the Register of Deeds of
the City of Manila for registration, and corresponding certificates of titles over the reclaimed lots were
issued based on said special patents. The issuance of certificates of titles in NHA’s name automatically
converts the reclaimed lands to patrimonial properties of the NHA. Otherwise, the lots would not be
of use to the NHA’s housing projects or as payment to the BOT contractor as the enabling component
of the BOT contract. The laws of the land have to be applied and interpreted depending on the
changing conditions and times. Tempora mutantur et legis mutantur in illis (time changes and laws
change with it). One such law that should be treated differently is the BOT Law (RA 6957) which
brought about a novel way of implementing government contracts by allowing reclaimed land as part
or full payment to the contractor of a government project to satisfy the huge financial requirements
of the undertaking. The NHA holds the lands covered by Special Patents Nos. 3592 and 3598 solely for
the purpose of the SMDRP undertaken by authority of the BOT Law and for disposition in accordance
with said special law. The lands become alienable and disposable lands of public domain upon
issuance of the special patents and become patrimonial properties of the Government from the time
the titles are issued to the NHA.
As early as 1999, this Court in Baguio v. Republic laid down the jurisprudence that:
It is true that, once a patent is registered and the corresponding certificate of title is issued, the land
covered by them ceases to be part of the public domain and becomes private property, and the
Torrens Title issued pursuant to the patent becomes indefeasible upon the expiration of one year
from the date of issuance of such patent.78
The doctrine was reiterated in Republic v. Heirs of Felipe Alijaga, Sr., 79 Heirs of Carlos Alcaraz v.
Republic,80 and the more recent case of Doris Chiongbian-Oliva v. Republic of the Philippines. 81 Thus,
the 79-hectare reclaimed land became patrimonial property after the issuance of certificates of titles
to the NHA based on Special Patents Nos. 3592 and 3598.
One last point. The ruling in PEA cannot even be applied retroactively to the lots covered by Special
Patents Nos. 3592 (40 hectare reclaimed land) and 3598 (39-hectare reclaimed land). The reclamation
of the land under SMDRP was completed in August 1996 while the PEA decision was rendered on July
9, 2002. In the meantime, subdivided lots forming parts of the reclaimed land were already sold to
private corporations for value and separate titles issued to the buyers. The Project was terminated
through a Memorandum of Agreement signed on August 27, 2003. The PEA decision became final
through the November 11, 2003 Resolution. It is a settled precept that decisions of the Supreme
Court can only be applied prospectively as they may prejudice vested rights if applied retroactively.
In Benzonan v. Court of Appeals, the Court trenchantly elucidated the prospective application of its
decisions based on considerations of equity and fair play, thus:
At that time, the prevailing jurisprudence interpreting section 119 of R.A. 141 as amended was that
enunciated in Monge and Tupas cited above. The petitioners Benzonan and respondent Pe and the
DBP are bound by these decisions for pursuant to Article 8 of the Civil Code "judicial decisions
applying or interpreting the laws of the Constitution shall form a part of the legal system of the
Philippines." But while our decisions form part of the law of the land, they are also subject to Article 4
of the Civil Code which provides that "laws shall have no retroactive effect unless the contrary is
provided." This is expressed in the familiar legal maxim lex prospicit, non respicit, the law looks
forward not backward. The rationale against retroactivity is easy to perceive. The retroactive
application of a law usually divests rights that have already become vested or impairs the obligations
of contract and hence, is unconstitutional.
The same consideration underlies our rulings giving only prospective effect to decisions enunciating
new doctrines. Thus, we emphasized in People v. Jabinal, 55 SCRA 607 [1974] "x x x when a doctrine
of this Court is overruled and a different view is adopted, the new doctrine should be applied
prospectively and should not apply to parties who had relied on the old doctrine and acted on the
faith thereof.82
Fourth Issue: Whether respondent RBI can acquire reclaimed
lands when there was no declaration that said lands are no
longer needed for public use
Petitioner Chavez avers that despite the declaration that the reclaimed areas are alienable lands of
the public domain, still, the reclamation is flawed for there was never any declaration that said lands
are no longer needed for public use.
We are not moved by petitioner’s submission.
Even if it is conceded that there was no explicit declaration that the lands are no longer needed for
public use or public service, there was however an implicit executive declaration that the reclaimed
areas R-10 are not necessary anymore for public use or public service when President Aquino through
MO 415 conveyed the same to the NHA partly for housing project and related commercial/industrial
development intended for disposition to and enjoyment of certain beneficiaries and not the public in
general and partly as enabling component to finance the project.
President Ramos, in issuing Proclamation No. 39, declared, though indirectly, that the reclaimed lands
of the Smokey Mountain project are no longer required for public use or service, thus:
These parcels of land of public domain are hereby placed under the administration and disposition of
the National Housing Authority to develop, subdivide and dispose to qualified beneficiaries, as well as
its development for mix land use (commercial/industrial) to provide employment opportunities to on-
site families and additional areas for port related activities. (Emphasis supplied.)
While numerical count of the persons to be benefited is not the determinant whether the property is
to be devoted to public use, the declaration in Proclamation No. 39 undeniably identifies only
particular individuals as beneficiaries to whom the reclaimed lands can be sold, namely—the Smokey
Mountain dwellers. The rest of the Filipinos are not qualified; hence, said lands are no longer essential
for the use of the public in general.
In addition, President Ramos issued on August 31, 1994 Proclamation No. 465 increasing the area to
be reclaimed from forty (40) hectares to seventy-nine (79) hectares, elucidating that said lands are
undoubtedly set aside for the beneficiaries of SMDRP and not the public—declaring the power of
NHA to dispose of land to be reclaimed, thus: "The authority to administer, develop, or dispose lands
identified and reserved by this Proclamation and Proclamation No. 39 (s.1992), in accordance with the
SMDRP, as enhance, is vested with the NHA, subject to the provisions of existing laws." (Emphasis
supplied.)
MO 415 and Proclamations Nos. 39 and 465 are declarations that proclaimed the non-use of the
reclaimed areas for public use or service as the Project cannot be successfully implemented without
the withdrawal of said lands from public use or service. Certainly, the devotion of the reclaimed land
to public use or service conflicts with the intended use of the Smokey Mountain areas for housing and
employment of the Smokey Mountain scavengers and for financing the Project because the latter
cannot be accomplished without abandoning the public use of the subject land. Without doubt, the
presidential proclamations on SMDRP together with the issuance of the special patents had effectively
removed the reclaimed lands from public use.
More decisive and not in so many words is the ruling in PEA which we earlier cited, that "PD No. 1085
and President Aquino’s issuance of a land patent also constitute a declaration that the Freedom
Islands are no longer needed for public service." Consequently, we ruled in that case that the
reclaimed lands are "open to disposition or concession to qualified parties." 83
In a similar vein, presidential Proclamations Nos. 39 and 465 jointly with the special patents have
classified the reclaimed lands as alienable and disposable and open to disposition or concession as
they would be devoted to units for Smokey Mountain beneficiaries. Hence, said lands are no longer
intended for public use or service and shall form part of the patrimonial properties of the State under
Art. 422 of the Civil Code.84 As discussed a priori, the lands were classified as patrimonial properties of
the NHA ready for disposition when the titles were registered in its name by the Register of Deeds.
Moreover, reclaimed lands that are made the enabling components of a BOT infrastructure project
are necessarily reclassified as alienable and disposable lands under the BOT Law; otherwise, absurd
and illogical consequences would naturally result. Undoubtedly, the BOT contract will not be accepted
by the BOT contractor since there will be no consideration for its contractual obligations. Since
reclaimed land will be conveyed to the contractor pursuant to the BOT Law, then there is an implied
declaration that such land is no longer intended for public use or public service and, hence,
considered patrimonial property of the State.
Fifth Issue: Whether there is a law authorizing sale of
reclaimed lands
Petitioner next claims that RBI cannot acquire the reclaimed lands because there was no law
authorizing their sale. He argues that unlike PEA, no legislative authority was granted to the NHA to
sell reclaimed land.
This position is misplaced.
Petitioner relies on Sec. 60 of Commonwealth Act (CA) 141 to support his view that the NHA is not
empowered by any law to sell reclaimed land, thus:
Section 60. Any tract of land comprised under this title may be leased or sold, as the case may be, to
any person, corporation or association authorized to purchase or lease public lands for agricultural
purposes. The area of the land so leased or sold shall be such as shall, in the judgment of the
Secretary of Agriculture and Natural Resources, be reasonably necessary for the purposes for which
such sale or lease if requested and shall in no case exceed one hundred and forty-four hectares:
Provided, however, That this limitation shall not apply to grants, donations, transfers, made to a
province, municipality or branch or subdivision of the Government for the purposes deemed by said
entities conducive to the public interest; but the land so granted donated or transferred to a province,
municipality, or branch or subdivision of the Government shall not be alienated, encumbered, or
otherwise disposed of in a manner affecting its title, except when authorized by Congress; Provided,
further, That any person, corporation, association or partnership disqualified from purchasing public
land for agricultural purposes under the provisions of this Act, may lease land included under this title
suitable for industrial or residential purposes, but the lease granted shall only be valid while such land
is used for the purposes referred to. (Emphasis supplied.)
Reliance on said provision is incorrect as the same applies only to "a province, municipality or branch
or subdivision of the Government." The NHA is not a government unit but a government corporation
performing governmental and proprietary functions.
In addition, PD 757 is clear that the NHA is empowered by law to transfer properties acquired by it
under the law to other parties, thus:
Section 6. Powers and functions of the Authority. The Authority shall have the following powers and
functions to be exercised by the Boards in accordance with the established national human
settlements plan prepared by the Human Settlements Commission:
xxxx
(k) Enter into contracts whenever necessary under such terms and conditions as it may deem proper
and reasonable;
(l) Acquire property rights and interests, and encumber or otherwise dispose the same as it may deem
appropriate (Emphasis supplied.)
Letter (l) is emphatic that the NHA can acquire property rights and interests and encumber or
otherwise dispose of them as it may deem appropriate. The transfer of the reclaimed lands by the
National Government to the NHA for housing, commercial, and industrial purposes transformed them
into patrimonial lands which are of course owned by the State in its private or proprietary capacity.
Perforce, the NHA can sell the reclaimed lands to any Filipino citizen or qualified corporation.
Sixth Issue: Whether the transfer of reclaimed lands to RBI
was done by public bidding
Petitioner also contends that there was no public bidding but an awarding of ownership of said
reclaimed lands to RBI. Public bidding, he says, is required under Secs. 63 and 67 of CA 141 which
read:
Section 63. Whenever it is decided that lands covered by this chapter are not needed for public
purposes, the Director of Lands shall ask the Secretary of Agriculture and Commerce for authority to
dispose of the same. Upon receipt of such authority, the Director of Lands shall give notice by public
advertisement in the same manner as in the case of leases or sales of agricultural public land, that the
Government will lease or sell, as the case may be, the lots or blocks specified in the advertisement,
for the purpose stated in the notice and subject to the conditions specified in this chapter.
xxxx
Section 67. The lease or sale shall be made through oral bidding; and adjudication shall be made to
the highest bidder. However, where an applicant has made improvements on the land by virtue of a
permit issued to him by competent authority, the sale or lease shall be made by sealed bidding as
prescribed in section twenty-six of this Act, the provisions of which shall be applied whenever
applicable. If all or part of the lots remain unleased or unsold, the Director of Lands shall from time to
time announce in the Official Gazette or in any other newspapers of general circulation, the lease of
sale of those lots, if necessary.
He finds that the NHA and RBI violated Secs. 63 and 67 of CA 141, as the reclaimed lands were
conveyed to RBI by negotiated contract and not by public bidding as required by law.
This stand is devoid of merit.
There is no doubt that respondent NHA conducted a public bidding of the right to become its joint
venture partner in the Smokey Mountain Project. Notices or Invitations to Bid were published in the
national dailies on January 23 and 26, 1992 and February 1, 14, 16, and 23, 1992. The bidding proper
was done by the Bids and Awards Committee (BAC) on May 18, 1992. On August 31, 1992, the Inter-
Agency Techcom made up of the NHA, PEA, DPWH, PPA, DBP, and DENR opened the bids and
evaluated them, resulting in the award of the contract to respondent RBI on October 7, 1992.
On March 19, 1993, respondents NHA and RBI signed the JVA. On February 23, 1994, said JVA was
amended and restated into the ARJVA. On August 11, 1994, the ARJVA was again amended. On
September 7, 1994, the OP approved the ARJVA and the amendments to the ARJVA. From these
factual settings, it cannot be gainsaid that there was full compliance with the laws and regulations
governing public biddings involving a right, concession, or property of the government.
Petitioner concedes that he does not question the public bidding on the right to be a joint venture
partner of the NHA, but the absence of bidding in the sale of alienable and disposable lands of public
domain pursuant to CA 141 as amended.
Petitioner’s theory is incorrect.
Secs. 63 and 67 of CA 141, as amended, are in point as they refer to government sale by the Director
of Lands of alienable and disposable lands of public domain. This is not present in the case at bar. The
lands reclaimed by and conveyed to the NHA are no longer lands of public domain. These lands
became proprietary lands or patrimonial properties of the State upon transfer of the titles over the
reclaimed lands to the NHA and hence outside the ambit of CA 141. The NHA can therefore legally
transfer patrimonial land to RBI or to any other interested qualified buyer without any bidding
conducted by the Director of Lands because the NHA, unlike PEA, is a government agency not tasked
to sell lands of public domain. Hence, it can only hold patrimonial lands and can dispose of such lands
by sale without need of public bidding.
Petitioner likewise relies on Sec. 79 of PD 1445 which requires public bidding "when government
property has become unserviceable for any cause or is no longer needed." It appears from the
Handbook on Property and Supply Management System, Chapter 6, that reclaimed lands which have
become patrimonial properties of the State, whose titles are conveyed to government agencies like
the NHA, which it will use for its projects or programs, are not within the ambit of Sec. 79. We quote
the determining factors in the Disposal of Unserviceable Property, thus:
Determining Factors in the Disposal of Unserviceable Property
 Property, which can no longer be repaired or reconditioned;
 Property whose maintenance costs of repair more than outweigh the benefits and services
that will be derived from its continued use;
 Property that has become obsolete or outmoded because of changes in technology;
 Serviceable property that has been rendered unnecessary due to change in the agency’s
function or mandate;
 Unused supplies, materials and spare parts that were procured in excess of requirements;
and
 Unused supplies and materials that [have] become dangerous to use because of long storage
or use of which is determined to be hazardous.85
Reclaimed lands cannot be considered unserviceable properties. The reclaimed lands in question are
very much needed by the NHA for the Smokey Mountain Project because without it, then the projects
will not be successfully implemented. Since the reclaimed lands are not unserviceable properties and
are very much needed by NHA, then Sec. 79 of PD 1445 does not apply.
More importantly, Sec. 79 of PD 1445 cannot be applied to patrimonial properties like reclaimed lands
transferred to a government agency like the NHA which has entered into a BOT contract with a private
firm. The reason is obvious. If the patrimonial property will be subject to public bidding as the only
way of disposing of said property, then Sec. 6 of RA 6957 on the repayment scheme is almost
impossible or extremely difficult to implement considering the uncertainty of a winning bid during
public auction. Moreover, the repayment scheme of a BOT contract may be in the form of non-
monetary payment like the grant of a portion or percentage of reclaimed land. Even if the BOT partner
participates in the public bidding, there is no assurance that he will win the bid and therefore the
payment in kind as agreed to by the parties cannot be performed or the winning bid prize might be
below the estimated valuation of the land. The only way to harmonize Sec. 79 of PD 1445 with Sec. 6
of RA 6957 is to consider Sec. 79 of PD 1445 as inapplicable to BOT contracts involving patrimonial
lands. The law does not intend anything impossible (lex non intendit aliquid impossibile).
Seventh Issue: Whether RBI, being a private corporation,
is barred by the Constitution to acquire lands of public domain
Petitioner maintains that RBI, being a private corporation, is expressly prohibited by the 1987
Constitution from acquiring lands of public domain.
Petitioner’s proposition has no legal mooring for the following reasons:
1. RA 6957 as amended by RA 7718 explicitly states that a contractor can be paid "a portion
as percentage of the reclaimed land" subject to the constitutional requirement that only
Filipino citizens or corporations with at least 60% Filipino equity can acquire the same. It
cannot be denied that RBI is a private corporation, where Filipino citizens own at least 60% of
the stocks. Thus, the transfer to RBI is valid and constitutional.
2. When Proclamations Nos. 39 and 465 were issued, inalienable lands covered by said
proclamations were converted to alienable and disposable lands of public domain. When the
titles to the reclaimed lands were transferred to the NHA, said alienable and disposable lands
of public domain were automatically classified as lands of the private domain or patrimonial
properties of the State because the NHA is an agency NOT tasked to dispose of alienable or
disposable lands of public domain. The only way it can transfer the reclaimed land in
conjunction with its projects and to attain its goals is when it is automatically converted to
patrimonial properties of the State. Being patrimonial or private properties of the State, then
it has the power to sell the same to any qualified person—under the Constitution, Filipino
citizens as private corporations, 60% of which is owned by Filipino citizens like RBI.
3. The NHA is an end-user entity such that when alienable lands of public domain are
transferred to said agency, they are automatically classified as patrimonial properties. The
NHA is similarly situated as BCDA which was granted the authority to dispose of patrimonial
lands of the government under RA 7227. The nature of the property holdings conveyed to
BCDA is elucidated and stressed in the May 6, 2003 Resolution in Chavez v. PEA, thus:
BCDA is an entirely different government entity. BCDA is authorized by law to sell specific government
lands that have long been declared by presidential proclamations as military reservations for use by
the different services of the armed forces under the Department of National Defense. BCDA’s
mandate is specific and limited in area, while PEA’s mandate is general and national. BCDA holds
government lands that have been granted to end-user government entities––the military services of
the armed forces. In contrast, under Executive Order No. 525, PEA holds the reclaimed public lands,
not as an end-user entity, but as the government agency "primarily responsible for integrating,
directing, and coordinating all reclamation projects for and on behalf of the National Government."
x x x Well-settled is the doctrine that public land granted to an end-user government agency for a
specific public use may subsequently be withdrawn by Congress from public use and declared
patrimonial property to be sold to private parties. R.A. No. 7227 creating the BCDA is a law that
declares specific military reservations no longer needed for defense or military purposes and
reclassifies such lands as patrimonial property for sale to private parties.
Government owned lands, as long as they are patrimonial property, can be sold to private parties,
whether Filipino citizens or qualified private corporations. Thus, the so-called Friar Lands acquired by
the government under Act No. 1120 are patrimonial property which even private corporations can
acquire by purchase. Likewise, reclaimed alienable lands of the public domain if sold or transferred to
a public or municipal corporation for a monetary consideration become patrimonial property in the
hands of the public or municipal corporation. Once converted to patrimonial property, the land may
be sold by the public or municipal corporation to private parties, whether Filipino citizens or qualified
private corporations.86 (Emphasis supplied.)
The foregoing Resolution makes it clear that the SMDRP was a program adopted by the Government
under Republic Act No. 6957 (An Act Authorizing the Financing, Construction, Operation and
Maintenance of Infrastructure Projects by the Private Sector, and For Other Purposes), as amended by
RA 7718, which is a special law similar to RA 7227. Moreover, since the implementation was assigned
to the NHA, an end-user agency under PD 757 and RA 7279, the reclaimed lands registered under the
NHA are automatically classified as patrimonial lands ready for disposition to qualified beneficiaries.
The foregoing reasons likewise apply to the contention of petitioner that HCPTI, being a private
corporation, is disqualified from being a transferee of public land. What was transferred to HCPTI is a
10-hectare lot which is already classified as patrimonial property in the hands of the NHA. HCPTI,
being a qualified corporation under the 1987 Constitution, the transfer of the subject lot to it is valid
and constitutional.
Eighth Issue: Whether respondents can be compelled to disclose
all information related to the SMDRP
Petitioner asserts his right to information on all documents such as contracts, reports, memoranda,
and the like relative to SMDRP.
Petitioner asserts that matters relative to the SMDRP have not been disclosed to the public like the
current stage of the Project, the present financial capacity of RBI, the complete list of investors in the
asset pool, the exact amount of investments in the asset pool and other similar important information
regarding the Project.
He prays that respondents be compelled to disclose all information regarding the SMDRP and furnish
him with originals or at least certified true copies of all relevant documents relating to the said project
including, but not limited to, the original JVA, ARJVA, AARJVA, and the Asset Pool Agreement.
This relief must be granted.
The right of the Filipino people to information on matters of public concern is enshrined in the 1987
Constitution, thus:
ARTICLE II
xxxx
SEC. 28. Subject to reasonable conditions prescribed by law, the State adopts and implements a policy
of full public disclosure of all its transactions involving public interest.
ARTICLE III
SEC. 7. The right of the people to information on matters of public concern shall be recognized. Access
to official records, and to documents, and papers pertaining to official acts, transactions, or decisions,
as well as to government research data used as basis for policy development, shall be afforded the
citizen, subject to such limitations as may be provided by law.
In Valmonte v. Belmonte, Jr., this Court explicated this way:
[A]n essential element of these freedoms is to keep open a continuing dialogue or process of
communication between the government and the people. It is in the interest of the State that the
channels for free political discussion be maintained to the end that the government may perceive and
be responsive to the people’s will. Yet, this open dialogue can be effective only to the extent that the
citizenry is informed and thus able to formulate its will intelligently. Only when the participants in the
discussion are aware of the issues and have access to information relating thereto can such bear
fruit.87
In PEA, this Court elucidated the rationale behind the right to information:
These twin provisions of the Constitution seek to promote transparency in policy-making and in the
operations of the government, as well as provide the people sufficient information to exercise
effectively other constitutional rights. These twin provisions are essential to the exercise of freedom
of expression. If the government does not disclose its official acts, transactions and decisions to
citizens, whatever citizens say, even if expressed without any restraint, will be speculative and amount
to nothing. These twin provisions are also essential to hold public officials "at all times x x x
accountable to the people," for unless citizens have the proper information, they cannot hold public
officials accountable for anything. Armed with the right information, citizens can participate in public
discussions leading to the formulation of government policies and their effective implementation. An
informed citizenry is essential to the existence and proper functioning of any democracy. 88
Sec. 28, Art. II compels the State and its agencies to fully disclose "all of its transactions involving
public interest." Thus, the government agencies, without need of demand from anyone, must bring
into public view all the steps and negotiations leading to the consummation of the transaction and Ninth Issue: Whether the operative fact doctrine applies to the instant petition
the contents of the perfected contract.89 Such information must pertain to "definite propositions of
the government," meaning official recommendations or final positions reached on the different Petitioner postulates that the "operative fact" doctrine is inapplicable to the present case because it is
matters subject of negotiation. The government agency, however, need not disclose "intra-agency or an equitable doctrine which could not be used to countenance an inequitable result that is contrary to
inter-agency recommendations or communications during the stage when common assertions are still its proper office.
in the process of being formulated or are in the exploratory stage." The limitation also covers
privileged communication like information on military and diplomatic secrets; information affecting On the other hand, the petitioner Solicitor General argues that the existence of the various
national security; information on investigations of crimes by law enforcement agencies before the agreements implementing the SMDRP is an operative fact that can no longer be disturbed or simply
prosecution of the accused; information on foreign relations, intelligence, and other classified ignored, citing Rieta v. People of the Philippines.90
information.
The argument of the Solicitor General is meritorious.
It is unfortunate, however, that after almost twenty (20) years from birth of the 1987 Constitution,
there is still no enabling law that provides the mechanics for the compulsory duty of government
The "operative fact" doctrine is embodied in De Agbayani v. Court of Appeals, wherein it is stated that
agencies to disclose information on government transactions. Hopefully, the desired enabling law will
a legislative or executive act, prior to its being declared as unconstitutional by the courts, is valid and
finally see the light of day if and when Congress decides to approve the proposed "Freedom of Access
must be complied with, thus:
to Information Act." In the meantime, it would suffice that government agencies post on their bulletin
boards the documents incorporating the information on the steps and negotiations that produced the
As the new Civil Code puts it: "When the courts declare a law to be inconsistent with the Constitution,
agreements and the agreements themselves, and if finances permit, to upload said information on
the former shall be void and the latter shall govern. Administrative or executive acts, orders and
their respective websites for easy access by interested parties. Without any law or regulation
regulations shall be valid only when they are not contrary to the laws of the Constitution." It is
governing the right to disclose information, the NHA or any of the respondents cannot be faulted if
understandable why it should be so, the Constitution being supreme and paramount. Any legislative
they were not able to disclose information relative to the SMDRP to the public in general.
or executive act contrary to its terms cannot survive.
The other aspect of the people’s right to know apart from the duty to disclose is the duty to allow
Such a view has support in logic and possesses the merit of simplicity. It may not however be
access to information on matters of public concern under Sec. 7, Art. III of the Constitution. The
sufficiently realistic. It does not admit of doubt that prior to the declaration of nullity such challenged
gateway to information opens to the public the following: (1) official records; (2) documents and
legislative or executive act must have been in force and had to be complied with. This is so as until
papers pertaining to official acts, transactions, or decisions; and (3) government research data used as
after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and
a basis for policy development.
respect. Parties may have acted under it and may have changed their positions. What could be more
fitting than that in a subsequent litigation regard be had to what has been done while such legislative
Thus, the duty to disclose information should be differentiated from the duty to permit access to
or executive act was in operation and presumed to be valid in all respects. It is now accepted as a
information. There is no need to demand from the government agency disclosure of information as
doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to
this is mandatory under the Constitution; failing that, legal remedies are available. On the other hand,
reflect awareness that precisely because the judiciary is the governmental organ which has the final
the interested party must first request or even demand that he be allowed access to documents and
say on whether or not a legislative or executive measure is valid, a period of time may have elapsed
papers in the particular agency. A request or demand is required; otherwise, the government office or
before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be
agency will not know of the desire of the interested party to gain access to such papers and what
to deprive the law of its quality of fairness and justice then, if there be no recognition of what had
papers are needed. The duty to disclose covers only transactions involving public interest, while the
transpired prior to such adjudication.
duty to allow access has a broader scope of information which embraces not only transactions
involving public interest, but any matter contained in official communications and public documents
In the language of an American Supreme Court decision: "The actual existence of a statute, prior to
of the government agency.
such a determination [of unconstitutionality], is an operative fact and may have consequences which
cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of
We find that although petitioner did not make any demand on the NHA to allow access to
the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to
information, we treat the petition as a written request or demand. We order the NHA to allow
particular relations, individual and corporate, and particular conduct, private and official." This
petitioner access to its official records, documents, and papers relating to official acts, transactions,
language has been quoted with approval in a resolution in Araneta v. Hill and the decision in Manila
and decisions that are relevant to the said JVA and subsequent agreements relative to the SMDRP.
Motor Co., Inc. v. Flores. An even more recent instance is the opinion of Justice Zaldivar speaking for
the Court in Fernandez v. Cuerva and Co.91 (Emphasis supplied.)
This doctrine was reiterated in the more recent case of City of Makati v. Civil Service Commission,
wherein we ruled that:
Moreover, we certainly cannot nullify the City Government’s order of suspension, as we have no
reason to do so, much less retroactively apply such nullification to deprive private respondent of a
compelling and valid reason for not filing the leave application. For as we have held, a void act though
in law a mere scrap of paper nonetheless confers legitimacy upon past acts or omissions done in
reliance thereof. Consequently, the existence of a statute or executive order prior to its being
adjudged void is an operative fact to which legal consequences are attached. It would indeed be
ghastly unfair to prevent private respondent from relying upon the order of suspension in lieu of a
formal leave application.92 (Emphasis supplied.)
The principle was further explicated in the case of Rieta v. People of the Philippines, thus:
In similar situations in the past this Court had taken the pragmatic and realistic course set forth in
Chicot County Drainage District vs. Baxter Bank to wit:
The courts below have proceeded on the theory that the Act of Congress, having been found to be
unconstitutional, was not a law; that it was inoperative, conferring no rights and imposing no duties,
and hence affording no basis for the challenged decree. x x x It is quite clear, however, that such broad
statements as to the effect of a determination of unconstitutionality must be taken with
qualifications. The actual existence of a statute, prior to [the determination of its invalidity], is an
operative fact and may have consequences which cannot justly be ignored. The past cannot always be
erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to
be considered in various aspects –with respect to particular conduct, private and official. Questions of
rights claimed to have become vested, of status, of prior determinations deemed to have finality and
acted upon accordingly, of public policy in the light of the nature both of the statute and of its
previous application, demand examination. These questions are among the most difficult of those
which have engaged the attention of courts, state and federal, and it is manifest from numerous
decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be
justified.
In the May 6, 2003 Resolution in Chavez v. PEA,93 we ruled that De Agbayani94 is not applicable to the
case considering that the prevailing law did not authorize private corporations from owning land. The
prevailing law at the time was the 1935 Constitution as no statute dealt with the same issue.
In the instant case, RA 6957 was the prevailing law at the time that the joint venture agreement was
signed. RA 6957, entitled "An Act Authorizing The Financing, Construction, Operation And
Maintenance Of Infrastructure Projects By The Private Sector And For Other Purposes," which was
passed by Congress on July 24, 1989, allows repayment to the private contractor of reclaimed
lands.95 Such law was relied upon by respondents, along with the above-mentioned executive
issuances in pushing through with the Project. The existence of such law and issuances is an
"operative fact" to which legal consequences have attached. This Court is constrained to give legal
effect to the acts done in consonance with such executive and legislative acts; to do otherwise would
work patent injustice on respondents.
Further, in the May 6, 2003 Resolution in Chavez v. PEA, we ruled that in certain cases, the transfer of
land, although illegal or unconstitutional, will not be invalidated on considerations of equity and social
justice. However, in that case, we did not apply the same considering that PEA, respondent in said
case, was not entitled to equity principles there being bad faith on its part, thus:
There are, moreover, special circumstances that disqualify Amari from invoking equity principles.
Amari cannot claim good faith because even before Amari signed the Amended JVA on March 30,
1999, petitioner had already filed the instant case on April 27, 1998 questioning precisely the
qualification of Amari to acquire the Freedom Islands. Even before the filing of this petition, two
Senate Committees had already approved on September 16, 1997 Senate Committee Report No. 560.
This Report concluded, after a well-publicized investigation into PEA’s sale of the Freedom Islands to
Amari, that the Freedom Islands are inalienable lands of the public domain. Thus, Amari signed the
Amended JVA knowing and assuming all the attendant risks, including the annulment of the Amended
JVA.96
Such indicia of bad faith are not present in the instant case. When the ruling in PEA was rendered by
this Court on July 9, 2002, the JVAs were all executed. Furthermore, when petitioner filed the instant
case against respondents on August 5, 2004, the JVAs were already terminated by virtue of the MOA
between the NHA and RBI. The respondents had no reason to think that their agreements were
unconstitutional or even questionable, as in fact, the concurrent acts of the executive department
lent validity to the implementation of the Project. The SMDRP agreements have produced vested
rights in favor of the slum dwellers, the buyers of reclaimed land who were issued titles over said
land, and the agencies and investors who made investments in the project or who bought SMPPCs.
These properties and rights cannot be disturbed or questioned after the passage of around ten (10)
years from the start of the SMDRP implementation. Evidently, the "operative fact" principle has set in.
The titles to the lands in the hands of the buyers can no longer be invalidated.
The Court’s Dispositions
Based on the issues raised in this petition, we find that the March 19, 1993 JVA between NHA and RBI
and the SMDRP embodied in the JVA, the subsequent amendments to the JVA and all other
agreements signed and executed in relation to it, including, but not limited to, the September 26,
1994 Smokey Mountain Asset Pool Agreement and the agreement on Phase I of the Project as well as
all other transactions which emanated from the Project, have been shown to be valid, legal, and
constitutional. Phase II has been struck down by the Clean Air Act.
With regard to the prayer for prohibition, enjoining respondents particularly respondent NHA from
further implementing and/or enforcing the said Project and other agreements related to it, and from
further deriving and/or enjoying any rights, privileges and interest from the Project, we find the same
prayer meritless.
Sec. 2 of Rule 65 of the 1997 Rules of Civil Procedure provides:
Sec. 2. Petition for prohibition.—When the proceedings of any tribunal, corporation, board, officer or
person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of
its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and
there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a
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 to desist from further
proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as
law and justice may require.
agreements with respect to the different phases of the Project, the revisions of the original plan, the
additional works incurred on the Project, the current financial condition of respondent RBI, and the
transactions made with respect to the project. We earlier ruled that petitioner will be allowed access
to official records relative to the SMDRP. That would be adequate relief to satisfy petitioner’s right to
the information gateway.
WHEREFORE, the petition is partially granted.
The prayer for a writ of prohibition is DENIED for lack of merit.
The prayer for a writ of mandamus is GRANTED. Respondent NHA is ordered to allow access to
petitioner to all public documents and official records relative to the SMDRP—including, but not
limited to, the March 19, 1993 JVA between the NHA and RBI and subsequent agreements related to
the JVA, the revisions over the original plan, and the additional works incurred on and the
transactions made with respect to the Project.

It has not been shown that the NHA exercised judicial or quasi-judicial functions in relation to the No costs.
SMDRP and the agreements relative to it. Likewise, it has not been shown what ministerial functions
the NHA has with regard to the SMDRP. SO ORDERED.

A ministerial duty is one which is so clear and specific as to leave no room for the exercise of
discretion in its performance. It is a duty which an officer performs in a given state of facts in a
prescribed manner in obedience to the mandate of legal authority, without regard to the exercise of
his/her own judgment upon the propriety of the act done. 97

Whatever is left to be done in relation to the August 27, 2003 MOA, terminating the JVA and other
related agreements, certainly does not involve ministerial functions of the NHA but instead requires
exercise of judgment. In fact, Item No. 4 of the MOA terminating the JVAs provides for validation of
the developer’s (RBI’s) claims arising from the termination of the SMDRP through the various REPUBLIC ACT No. 3931
government agencies.98 Such validation requires the exercise of discretion.
AN ACT CREATING THE NATIONAL WATER AND AIR POLLUTION CONTROL COMMISSION.
In addition, prohibition does not lie against the NHA in view of petitioner’s failure to avail and exhaust
all administrative remedies. Clear is the rule that prohibition is only available when there is no Section 1. Statement of Policy. It is hereby declared a national policy to maintain reasonable standards
adequate remedy in the ordinary course of law. of purity for the waters and air of this country with their utilization for domestic, agricultural,
industrial and other legitimate purposes.
More importantly, prohibition does not lie to restrain an act which is already a fait accompli. The
"operative fact" doctrine protecting vested rights bars the grant of the writ of prohibition to the case Section 2. Definitions. As used in this Act:
at bar. It should be remembered that petitioner was the Solicitor General at the time SMDRP was
formulated and implemented. He had the opportunity to question the SMDRP and the agreements on
(a) "Pollution" means such alteration of the physical, chemical and/or biological properties of
it, but he did not. The moment to challenge the Project had passed.
any water and/or atmospheric air of the Philippines, or any such discharge of any liquid,
gaseous or solid substance into any of the waters and/or atmospheric air of the country as
On the prayer for a writ of mandamus, petitioner asks the Court to compel respondents to disclose all will or is likely to create or render such waters and/or atmospheric air harmful or detrimental
documents and information relating to the project, including, but not limited to, any subsequent
or injurious to public health, safety or welfare, or to domestic, commercial, industrial,
agricultural, recreational or other legitimate uses, or to livestock, wild animals, birds, fish or
other aquatic life.
(b) "Sewage" means the water-carried human or animal wastes from residences, buildings,
industrial establishments, or other places, together with such water infiltration and surface
water as may be present. The admixture of sewage as above defined and industrial wastes or
other wastes as hereafter defined, shall be considered "sewage".
(c) "Industrial waste" means any liquid, gaseous or solid matter, or other waste substance or
a combination thereof resulting from any process of industry, manufacturing trade or
business or from the development, processing or recovery of any natural resources.
(d) "Other waste" means garbage, refuse, wood residues, sand, lime, cinders, ashes, offal,
night-oil, tar, dye stuffs, acids, chemicals, and other substances not sewage or industrial
waste which may cause or tend to cause pollution, or contribute to the pollution of the
waters and/or atmospheric air of the Philippines.
(e) "Sewage system or sewerage system" means pipe lines or conduits, pumping stations,
force mains, constructed drainage ditches, and all other construction, devices, and
appurtenances used for collecting or conducting sewage, and industrial waste or other
wastes to a point of ultimate disposal or discharge.
(f) "Treatment works" means any methods, construction, device or appliances appurtenant
thereto, installed for the purpose of treating neutralizing, stabilizing, disinfecting, or
disposing of sewage, industrial waste or other wastes, or for the recovery of by-product from
such sewage, industrial waste or other wastes.
(g) "Sewage works" means individually or collectively those constructions or devices used for
collecting pumping, treating, and disposing of sewage, industrial waste or other wastes, or
for the recovery of by-products from such sewage, industrial waste or other wastes.
(h) "Outlet" means the terminus of a sewage works or point of emergence into the waters
and/or atmospheric air of the Philippines of any sewage, industrial waste or other wastes.
(i) "Waters of the Philippines" means all accumulations of water, surface and underground
water, natural or artificial, public or private or parts thereof, which are within the Philippines
or within its jurisdiction.
(j) "Atmospheric air of the Philippines" means the air within the Philippines or within its
jurisdiction.
(k) "Person" or "Persons" means any individual public or private corporation, political
subdivision, government agency, municipality, public or private institution, industry, co-
partnership, association, firms, trust, or any other entity whatsoever.
(l) "Stream standard" or stream standards" means such measure of purity or quality for any
waters in the Philippines in relation to their reasonable and necessary use.
(m) "Commission" means the National Water and Air Pollution Control Commission.
Section 3. Creation of the National Water and Air Pollution Control Commission; members;
compensation; advisory council. There is hereby created and established in the Office of the President
of the Philippines, the National Water and Air Pollution Control Commission, with permanent office in
the City of Manila. The Commission shall be composed of the Chairman of the National Science
Development Board, as chairman, and, as members, four part-time commissioners, one of whom shall
be an officer of the Department of Health who shall be designated by the Secretary of Health; another
shall be an officer of the Department of Agriculture and National Resources, who shall be designated
by the Secretary of Agriculture and Natural Resources; and the remaining two shall be representatives
of the private sector who shall be appointed by the President of the Philippines with the consent of
the Commission on Appointments, one upon recommendation of the Philippine Council of Science
and Technology, and the other upon the recommendation of the Chamber of Industries of the
Philippines; and two full-time commissioners who shall likewise be appointed by the President of the
Philippines, with the consent of the Commission on Appointments. One of the full-time
commissioners shall be a sanitary engineer; and the other a lawyer. Both shall beat least thirty five-
years of age and shall each have had at least ten years experience in the practice of his profession.
The two part-time commissioners representing the private sector and the two full-time
commissioners shall serve for four years and until their successors shall have been appointed and
qualified. They may not be removed except for cause. Upon the death, resignation or removal of any
of them, the President shall appoint a qualified person to fill the vacancy for his unexpired term.
The chairman and members of the Commission, except the full-time commissioners, shall receive no
compensation for their services, but they shall receive per diems of fifty pesos each per meeting plus
the necessary traveling expenses incurred in the discharged of their duties as members of the
Commission. The two full-time members shall each receive a yearly compensation of eighteen
thousand pesos. They shall also receive traveling expenses incurred in the discharge of their duties as
commissioners.
Section 4. Organization of the Commission; its offices; cooperation with other agencies; acceptance of
donations. The President of the Philippines shall organize the Commission within thirty days after the
approval of this Act.
The Technical Secretary of the Commission shall be appointed by the Commission. He shall be a
sanitary engineer with at least five years experience in the technical and administrative fields of
engineering. He shall be the active administrator of all water and air pollution control activities of the
Commission. The Technical Secretary shall, during the interim between meetings of the Commission,
handle such correspondence, make or arrange for such inspections and investigations, and obtain,
assemble or prepare such reports and data as the Commission may direct or authorize. His
compensation shall be determined by the Commission.
The Commission shall provide such technical scientific or other services, including the necessary
laboratory and other facilities as may be required for the purpose of carrying out the provisions of this
Act. The basic personnel necessary to carry out the provisions of this Act shall be engineers, chemists,
bio-chemists, physicists, and other technicians: Provided, That the Commission may, by agreement,
secure such services as it may deem necessary from other agencies of the National Government, and
may make arrangements for the compensation of such services. The Commission may also employ
and compensate, within appropriations available therefor, such consultants, experts, advisors, or
assistants on a full or part-time basis as may be necessary, coming from government or private
business entities, associations, or from local or foreign organizations, to carry out the provision of this
Act and may prescribe their powers, duties, and responsibilities.
The Commission may conduct scientific experiments, investigations and research to discover
economical and practical methods of preventing water and air pollutions. To this end, the Commission
may corporate with any public or private agency in the conduct of such experiments, investigations
and research and may accept, and receipt for such money for and in behalf of the National
Government, given by any international, national or other public or private agency for water and air
pollution control activities, surveys or programmes: Provided, That sums of money shall be used only
for the purpose for which they are contributed and any balance remaining after the conclusion of
experiments, investigations and research shall be returned to the contributors. The Commission is
authorized to promulgate such rules and regulations or enter into contracts as it may deem necessary
for carrying out the provisions of this Act.
Section 5. Meeting of the Commission, quorum. The Commission shall meet as often as necessary to
carry into effect the provisions of this Act and at times and places to be designated by the Chairman
of the Commission, and shall keep a complete record of the meetings which shall be kept on file in the
office of the Technical Secretary, and shall determine the rules of its own proceedings. Meetings may
be called by the chairman upon his own initiative or upon the written request of two or more
members of the Commission. Written notice of the time and place of such meetings shall be delivered
to the office of each member of the Commission and the Technical Secretary. Four members of the
Commission shall constitute a quorum to transact the business of the Commission: Provided,
however, That the concurrence of the majority of all the members of the Commission shall be
necessary to exercise the powers and duties enumerated in Section six of this Act and to render any
order, judgment or decision in the proceedings referred to in section seven and eight hereof.
Section 6. Powers and duties. (a) The commission is hereby authorized to:
1. Determine if pollution exists in any of the waters and/or atmospheric air of the Philippines.
Findings of the Commission regarding the existence of pollution shall be filed on record in
the office of the Commission.
2. Adopt, prescribe, and promulgate rules and regulations governing the procedures of the
Commission with respect to hearings; the methods and manner under which plans,
specifications, designs, or other data relative thereto shall be submitted for sewage works
and industrial wastes disposal systems or for addition or change to or extensions of such
work; the filing of reports; the issuance of permits; and such other reasonable rules and
regulations as may be necessary from time to time in the proper implementation and
enforcement of this Act.
3. Hold public hearings, receive pertinent and relevant proofs from any party in interest who
appear before the Commission, make findings of facts and determinations, all with respect to
the violations of this Act or orders issued by the Commission.
4. Make, alter or modify orders requiring the discontinuance of pollution of the waters
and/or atmospheric air of the Philippines due to the discharge of sewage, industrial wastes
or other wastes and specifying the conditions and the time within which such discontinuance
must be accomplished.
5. Institute or cause to be instituted in a court of competent jurisdiction legal proceedings to
compel compliance with the provisions of this Act.
6. Issue, renew, or deny permits, under such conditions as it may determine to be
reasonable, for the prevention and abatement of pollution, for the discharge of sewage,
industrial wastes or other wastes, or for the installation or operation of sewage works and
industrial disposal systems, or parts thereof, except that no permits shall be required of any
new sewage, works or changes to or extensions of existing works that discharge only
domestic or sanitary wastes from a single residential building housing or occupied by twenty
pesos or less: Provided, however, That applications for the issuance or renewal of permits
required under this Act shall be filed with and decided by the city engineer or district
engineer of the city or province from which the discharge of industrial or other wastes shall
originate, in accordance with rules, regulations and standards to be issued by the
Commission. In case of doubt, the city or district engineer shall consult with the Commission
before issuing, renewing, or denying the permit applied for; and any decision of the city or
district engineer may be appealed by the applicant or by any resident of the place who may
be affected by the discharge of waste to the Commission, under such rules and regulations as
the Commission shall issue for such appeals.
7. After due notice and hearing, revoke suspend or modify any permit issued under this Act,
whenever modifications are necessary to prevent or abate pollution of any water and/or
atmospheric air of the Philippines.
8. Cause such investigation to be made as it may deem advisable and necessary for the
discharge of its duties under this Act.
9. Settle or compromise any dispute arising out of the implementation and enforcement of
the second paragraph of Section ten of this Act as it may seem advantageous to the public
interest.
10. Perform such other duties as may be necessary to carry out effectively the duties and
responsibilities prescribed in this Act.
 (b) The Commission shall have the following duties and responsibilities:
1. To encourage voluntary cooperation by the people, municipalities, industries, associations,
agriculture and representatives of other pursuits in the proper utilization and conservation of
the waters and/or atmospheric air of the Philippines.
2. To encourage the formation and organization of cooperative groups or associations in
municipalities, industries, enterprises and other users of the waters who severally and jointly
are or may be the source of pollution of the same waters, the purpose of which shall be to
provide a medium to discuss and formulate plans for the prevention and abatement of
pollution.
3. To serve as arbitrator for the determination of reparations involved in the damages and
losses resulting from the pollution of the waters and/or air in the Philippines.
4. To devise, consult, participate, cooperate and enter into agreements with other agencies
of the government, and with affected political groups, political subdivisions, and enterprises
in the furtherance of the purpose of this Act. This particularly refers to such cooperative
agreements with the various provincial and municipal governments in securing their
assistance in carrying out the provisions of this Act.
5. To prepare and develop a comprehensive plan for the abatement of existing pollution and
prevention of new and/or imminent pollution of the waters and/or atmospheric air of the
Philippines.
6. To issue standards, rules and regulations to govern city and district engineers in the
approval of plans and specifications for sewage works and industrial wastes disposal systems
and in the issuance of permits in accordance with the provisions of this Act, and to inspect
the construction and maintenance of sewage works and industrial wastes disposal system for
compliance of the approved plans.
7. To collect and disseminate information relating to water and atmosphere pollution and the
prevention, abatement and control thereof.
8. To authorize its representatives to enter at all reasonable times in or upon any property of
the public dominion and private property devoted to industrial, manufacturing, processing or
commercial use without doing damages, for the purpose of inspecting and investigating
conditions relating to pollution or the possible or imminent pollution of any waters or
atmospheric air of the Philippines.
Section 7. Public Hearings. Public hearings shall be conducted by the Commission in connection with
and prior to action by the said Commission on the following cases:
(a) Any order or findings of the Commission requiring the discontinuance of discharge of
sewage, industrial wastes or other wastes into the waters or atmospheric air of the
Philippines as provided for in this Act.
(b) Any order denying, revoking or modifying a permit as provided by this Act.
The hearing herein provided may be conducted by the Commission itself at a meeting of the
Commission, or the Commission may delegate to any member, or to the Technical Secretary the
power and authority to conduct such hearings in the name of the Commission at any time and place.
In such hearings, any member of the Commission, or the Technical Secretary may issue in the name of
the Commission, notices of hearings requesting the attendance and testimony of witnesses and the
production of evidence relevant to any matter involved in any such hearing, and may examine such
witnesses. All stenographic transcript of the proceedings of said hearings shall be taken and filed with
the Commission.
Section 8. Proceedings before the Commission. The Commission may, on its own motion, or upon the
request of any person, investigate or may inquire, in a manner to be determined by it, as to any
alleged act of pollution or the omission or failure to comply with any provisions of this Act or any
order of this Commission.
Whenever it appears to the Commission, after investigation, that there has been a violation of any of
the provisions of this Act or any order of the Commission, it may order whoever causes such violation
to show cause before said Commission why such discharge of industrial wastes or any waste should
not be discounted. A notice shall be served on the offending party directing him or it to show cause
before the Commission, on a date specified in such notice, why an order should not be made directing
the discontinuance of such violation. Such notice shall specify the time and the place where a public
hearing will be held by the Commission or its authorized representatives, and notice of such hearing
shall be served personally or by registered mail, at least ten days before said hearing; and in the case
of a municipality or corporation such notice shall be served upon the mayor or president thereof. The
Commission shall take evidence with reference to said matter and may issue an order to the party
responsible for such violation, directing that within a specified period of time thereafter, such
violation be discontinued unless adequate sewage works or industrial wastes disposal system be
properly operated to prevent further damage or pollution.
No investigation being conducted or ruling made by the Commission shall prejudice any action which
may be filed in court by any person in accordance with the provisions of the New Civil Code on
nuisance. On matters, however, not related to nuisance, no court action shall be initiated until the
Commission shall have finally ruled thereon and no order of the Commission discontinuing the
discharge of waste shall be stayed by the filing of said court action, unless the court issues an
injunction as provided for in this Rules of Court.
Section 9. Prohibitions. No person shall throw, run, drain, or otherwise dispose into any of the water
and/or atmospheric air of the Philippines, or cause, permit, suffer to be thrown, run, drain, allow to
see or otherwise dispose into such waters or atmospheric air, any organic or inorganic matter or any
substance in gaseous or liquid form that shall cause pollution of such waters or atmospheric air.
No person shall perform any of the following activities without first securing a permit from the city or
district engineer for the discharge of all industrial wastes and other wastes which are or may be
discharged into the waters or atmospheric air of the Philippines, which could cause pollution thereof:
(1) the construction, installation, modification or operation of any sewage works or any
extension or addition thereto;
 (2) the increase in volume or strength of any wastes in excess of the permissive discharge
specified under any existing permit;
(3) the construction, installation, or operation of any industrial or commercial establishments
or any extension or modification thereof or addition thereto, the operation of which would
cause an increase in the discharge of wastes directly into the waters or atmospheric air of the
Philippines or would otherwise alter the physical, chemical or biological properties of any
waters or atmospheric air of the Philippines in any manner not already lawfully authorized;
(4) the construction or use of any new outlet for the discharge of any waste, gaseous or
liquid, directly into the waters or atmospheric air of the Philippines.
Section 10. Penalties. Any person who shall violate any of the provisions of Section nine of this Act or
who violates any order of the Commission, shall be liable to a penalty of not to exceed fifty pesos for
each day during which the violation continues, or by imprisonment of from two years to six years, or
by both fine and imprisonment and in addition such person may be required or enjoined from
continuing such violation as hereinafter provided.
Any person who violates any of the provisions of, or fails to perform any duty imposed by this Act, or
who violates and order or other determination of the Commission promulgated pursuant to this Act,
thereby causing the death of fish or other aquatic life, or damages or destroys the natural habitat
necessary for the propagation of fish or other aquatic life, shall in addition to the penalty above
prescribed, be liable to pay the government for damages for fish or other aquatic life destroyed. The
Commission after consultation with fishery officials of the Department of Agriculture and Natural
Resources shall, through a court of competent jurisdiction, bring an action against such person and
recover the reasonable value of the fish or other aquatic life and/or habitat destroyed by such
pollution. Any amount so recovered shall be placed in the funds made available to the Fisheries
Commission.
Section 11. Jurisdiction. The Commission shall have no jurisdiction over waterworks or sewage
systems operated by the NAWASA but rules and regulations issued by the Commission for the
protection and prevention of pollution of the atmospheric air and water of the Philippines under the
authority herein granted shall supersede and prevail over any rules or regulations as may heretofore
have been issued by the NAWASA or by the Department of Health on the same subject matter.
Section 12. Appropriation. The sum of one million five hundred thousand pesos or so much thereof as
may be necessary is hereby authorized to be appropriated yearly for the operating expenses of the
Commission as additional appropriation to the yearly budget of the Office of the President of the
Philippines.
Section 13. Repealing clause. Any Act or parts of Acts inconsistent with the provisions of this Act are
hereby repealed, without prejudice to the provisions of Republic Act Numbered Thirteen hundred
seventy-eight.
Section 14. Effectivity. This Act shall take effect upon its approval.
G.R. No. 158290 October 23, 2006
HILARION M. HENARES, JR., VICTOR C. AGUSTIN, ALFREDO L. HENARES, DANIEL L. HENARES,
ENRIQUE BELO HENARES, and CRISTINA BELO HENARES, petitioners,
vs.
LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD and DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, respondents.
RESOLUTION
QUISUMBING, J.:
Petitioners challenge this Court to issue a writ of mandamus commanding respondents Land
Transportation Franchising and Regulatory Board (LTFRB) and the Department of Transportation and
Communications (DOTC) to require public utility vehicles (PUVs) to use compressed natural gas (CNG)
as alternative fuel.
Citing statistics from the Metro Manila Transportation and Traffic Situation Study of 1996, 1 the
Environmental Management Bureau (EMB) of the National Capital Region, 2 a study of the Asian
Development Bank,3 the Manila Observatory4 and the Department of Environment and Natural
Resources5 (DENR) on the high growth and low turnover in vehicle ownership in the Philippines,
including diesel-powered vehicles, two-stroke engine powered motorcycles and their concomitant
emission of air pollutants, petitioners attempt to present a compelling case for judicial action against
the bane of air pollution and related environmental hazards.
Petitioners allege that the particulate matters (PM) – complex mixtures of dust, dirt, smoke, and liquid
droplets, varying in sizes and compositions emitted into the air from various engine combustions –
have caused detrimental effects on health, productivity, infrastructure and the overall quality of life.
Petitioners particularly cite the effects of certain fuel emissions from engine combustion when these
react to other pollutants. For instance, petitioners aver, with hydrocarbons, oxide of nitrogen (NO x)
creates smog; with sulfur dioxide, it creates acid rain; and with ammonia, moisture and other
compounds, it reacts to form nitric acid and harmful nitrates. Fuel emissions also cause retardation
and leaf bleaching in plants. According to petitioner, another emission, carbon monoxide (CO), when
not completely burned but emitted into the atmosphere and then inhaled can disrupt the necessary
oxygen in blood. With prolonged exposure, CO affects the nervous system and can be lethal to people
with weak hearts.6
Petitioners add that although much of the new power generated in the country will use natural gas
while a number of oil and coal-fired fuel stations are being phased-out, still with the projected
doubling of power generation over the next 10 years, and with the continuing high demand for motor
vehicles, the energy and transport sectors are likely to remain the major sources of harmful
emissions. Petitioners refer us to the study of the Philippine Environment Monitor 2002 7, stating that
in four of the country's major cities, Metro Manila, Davao, Cebu and Baguio, the exposure to PM 10, a
finer PM which can penetrate deep into the lungs causing serious health problems, is estimated at
over US$430 million.8 The study also reports that the emissions of PMs have caused the following:
· Over 2,000 people die prematurely. This loss is valued at about US$140 million.
· Over 9,000 people suffer from chronic bronchitis, which is valued at about US$120 million.
· Nearly 51 million cases of respiratory symptom days in Metro Manila (averaging twice a
year in Davao and Cebu, and five to six times in Metro Manila and Baguio), costs about
US$170 million. This is a 70 percent increase, over a decade, when compared with the
findings of a similar study done in 1992 for Metro Manila, which reported 33 million cases. 9
Petitioners likewise cite the University of the Philippines' studies in 1990-91 and 1994 showing that
vehicular emissions in Metro Manila have resulted to the prevalence of chronic obstructive pulmonary
diseases (COPD); that pulmonary tuberculosis is highest among jeepney drivers; and there is a 4.8 to
27.5 percent prevalence of respiratory symptoms among school children and 15.8 to 40.6 percent
among child vendors. The studies also revealed that the children in Metro Manila showed more
compromised pulmonary function than their rural counterparts. Petitioners infer that these are
mostly due to the emissions of PUVs.
To counter the aforementioned detrimental effects of emissions from PUVs, petitioners propose the
use of CNG. According to petitioners, CNG is a natural gas comprised mostly of methane which
although containing small amounts of propane and butane, 10 is colorless and odorless and considered
the cleanest fossil fuel because it produces much less pollutants than coal and petroleum; produces
up to 90 percent less CO compared to gasoline and diesel fuel; reduces NO x emissions by 50 percent
and cuts hydrocarbon emissions by half; emits 60 percent less PMs; and releases virtually no sulfur
dioxide. Although, according to petitioners, the only drawback of CNG is that it produces more
methane, one of the gases blamed for global warming. 11
Asserting their right to clean air, petitioners contend that the bases for their petition for a writ of
mandamus to order the LTFRB to require PUVs to use CNG as an alternative fuel, lie in Section
16,12 Article II of the 1987 Constitution, our ruling in Oposa v. Factoran, Jr.,13 and Section 414 of
Republic Act No. 8749 otherwise known as the "Philippine Clean Air Act of 1999."
Meantime, following a subsequent motion, the Court granted petitioners' motion to implead the
Department of Transportation and Communications (DOTC) as additional respondent.
In his Comment for respondents LTFRB and DOTC, the Solicitor General, cites Section 3, Rule 65 of the
Revised Rules of Court and explains that the writ of mandamus is not the correct remedy since the
writ may be issued only to command a tribunal, corporation, board or person to do an act that is
required to be done, when he or it 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, there being no other
plain, speedy and adequate remedy in the ordinary course of law. 15 Further citing existing
jurisprudence, the Solicitor General explains that in contrast to a discretionary act, a ministerial act,
which a mandamus is, is one in which an officer or tribunal performs in a given state of facts, in a
prescribed manner, in obedience to a mandate of legal authority, without regard to or the exercise of
his own judgment upon the propriety or impropriety of an act done.
The Solicitor General also notes that nothing in Rep. Act No. 8749 that petitioners invoke, prohibits
the use of gasoline and diesel by owners of motor vehicles. Sadly too, according to the Solicitor
General, Rep. Act No. 8749 does not even mention the existence of CNG as alternative fuel and avers
that unless this law is amended to provide CNG as alternative fuel for PUVs, the respondents cannot
propose that PUVs use CNG as alternative fuel.
The Solicitor General also adds that it is the DENR that is tasked to implement Rep. Act No. 8749 and
not the LTFRB nor the DOTC. Moreover, he says, it is the Department of Energy (DOE), under Section
2616 of Rep. Act No. 8749, that is required to set the specifications for all types of fuel and fuel-related
products to improve fuel compositions for improved efficiency and reduced emissions. He adds that
under Section 2117 of the cited Republic Act, the DOTC is limited to implementing the emission
standards for motor vehicles, and the herein respondents cannot alter, change or modify the emission
standards. The Solicitor General opines that the Court should declare the instant petition for
mandamus without merit.
Petitioners, in their Reply, insist that the respondents possess the administrative and regulatory
powers to implement measures in accordance with the policies and principles mandated by Rep. Act
No. 8749, specifically Section 218 and Section 21.19 Petitioners state that under these laws and with all
the available information provided by the DOE on the benefits of CNG, respondents cannot ignore the
existence of CNG, and their failure to recognize CNG and compel its use by PUVs as alternative fuel
while air pollution brought about by the emissions of gasoline and diesel endanger the environment
and the people, is tantamount to neglect in the performance of a duty which the law enjoins.
Lastly, petitioners aver that other than the writ applied for, they have no other plain, speedy and
adequate remedy in the ordinary course of law. Petitioners insist that the writ in fact should be issued
pursuant to the very same Section 3, Rule 65 of the Revised Rules of Court that the Solicitor General
invokes.
In their Memorandum, petitioners phrase the issues before us as follows:
 I. WHETHER OR NOT THE PETITIONERS HAVE THE PERSONALITY TO BRING THE PRESENT
ACTION
II. WHETHER OR NOT THE PRESENT ACTION IS SUPPORTED BY LAW
III. WHETHER OR NOT THE RESPONDENT IS THE AGENCY RESPONSIBLE TO IMPLEMENT THE
SUGGESTED ALTERNATIVE OF REQUIRING PUBLIC UTILITY VEHICLES TO USE COMPRESSED
NATURAL GAS (CNG)
IV. WHETHER OR NOT THE RESPONDENT CAN BE COMPELLED TO REQUIRE PUBLIC UTILITY
VEHICLES TO USE COMPRESSED NATURAL GAS THROUGH A WRIT OF MANDAMUS 20
Briefly put, the issues are two-fold. First, Do petitioners have legal personality to bring this petition
before us? Second, Should mandamus issue against respondents to compel PUVs to use CNG as
alternative fuel?
According to petitioners, Section 16,21 Article II of the 1987 Constitution is the policy statement that
bestows on the people the right to breathe clean air in a healthy environment. This policy is
enunciated in Oposa.22 The implementation of this policy is articulated in Rep. Act No. 8749. These,
according to petitioners, are the bases for their standing to file the instant petition. They aver that
when there is an omission by the government to safeguard a right, in this case their right to clean air,
then, the citizens can resort to and exhaust all remedies to challenge this omission by the
government. This, they say, is embodied in Section 4 23 of Rep. Act No. 8749.
Petitioners insist that since it is the LTFRB and the DOTC that are the government agencies clothed
with power to regulate and control motor vehicles, particularly PUVs, and with the same agencies'
awareness and knowledge that the PUVs emit dangerous levels of air pollutants, then, the
responsibility to see that these are curbed falls under respondents' functions and a writ of mandamus
should issue against them.
The Solicitor General, for his part, reiterates his position that the respondent government agencies,
the DOTC and the LTFRB, are not in a position to compel the PUVs to use CNG as alternative fuel. The
Solicitor General explains that the function of the DOTC is limited to implementing the emission
standards set forth in Rep. Act No. 8749 and the said law only goes as far as setting the maximum
limit for the emission of vehicles, but it does not recognize CNG as alternative engine fuel. The
Solicitor General avers that the petition should be addressed to Congress for it to come up with a
policy that would compel the use of CNG as alternative fuel.
Patently, this Court is being asked to resolve issues that are not only procedural. Petitioners challenge
this Court to decide if what petitioners propose could be done through a less circuitous, speedy and
unchartered course in an issue that Chief Justice Hilario G. Davide, Jr. in his ponencia in
the Oposa case,24 describes as "inter-generational responsibility" and "inter-generational justice."
Now, as to petitioners' standing. There is no dispute that petitioners have standing to bring their case
before this Court. Even respondents do not question their standing. This petition focuses on one
fundamental legal right of petitioners, their right to clean air. Moreover, as held previously, a party's
standing before this Court is a procedural technicality which may, in the exercise of the Court's
discretion, be set aside in view of the importance of the issue raised. We brush aside this issue of
technicality under the principle of the transcendental importance to the public, especially so if these
cases demand that they be settled promptly.
Undeniably, the right to clean air not only is an issue of paramount importance to petitioners for it
concerns the air they breathe, but it is also impressed with public interest. The consequences of the
counter-productive and retrogressive effects of a neglected environment due to emissions of motor
vehicles immeasurably affect the well-being of petitioners. On these considerations, the legal standing
of the petitioners deserves recognition.
Our next concern is whether the writ of mandamus is the proper remedy, and if the writ could issue
against respondents.
Under Section 3, Rule 65 of the Rules of Court, mandamus lies under any of the following cases: (1)
against any tribunal which unlawfully neglects the performance of an act which the law specifically
enjoins as a duty; (2) in case any corporation, board or person unlawfully neglects the performance of
an act which the law enjoins as a duty resulting from an office, trust, or station; and (3) in case any
tribunal, corporation, board or person unlawfully excludes another from the use and enjoyment of a
right or office to which such other is legally entitled; and there is no other plain, speedy, and adequate
remedy in the ordinary course of law.
In University of San Agustin, Inc. v. Court of Appeals,25 we said,
…It is settled that mandamus is employed to compel the performance, when
refused, of a ministerial duty, this being its main objective. It does not lie to require
anyone to fulfill contractual obligations or to compel a course of conduct, nor to
control or review the exercise of discretion. On the part of the petitioner, it is
essential to the issuance of a writ of mandamus that he should have a clear legal
right to the thing demanded and it must be the imperative duty of the respondent
to perform the act required. It never issues in doubtful cases. While it may not be
necessary that the duty be absolutely expressed, it must however, be clear. The writ
will not issue to compel an official to do anything which is not his duty to do or
which is his duty not to do, or give to the applicant anything to which he is not
entitled by law. The writ neither confers powers nor imposes duties. It is simply a
command to exercise a power already possessed and to perform a duty already
imposed. (Emphasis supplied.)
In this petition the legal right which is sought to be recognized and enforced hinges on a constitutional
and a statutory policy already articulated in operational terms, e.g. in Rep. Act No. 8749, the
Philippine Clean Air Act of 1999. Paragraph (a), Section 21 of the Act specifically provides that when
PUVs are concerned, the responsibility of implementing the policy falls on respondent DOTC. It
provides as follows:
SEC 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the emission standards
for motor vehicles set pursuant to and as provided in this Act. To further improve the
emission standards, the Department [DENR] shall review, revise and publish the standards
every two (2) years, or as the need arises. It shall consider the maximum limits for all major
pollutants to ensure substantial improvement in air quality for the health, safety and welfare
of the general public.
Paragraph (b) states:
b) The Department [DENR] in collaboration with the DOTC, DTI and LGUs, shall develop an
action plan for the control and management of air pollution from motor vehicles consistent
with the Integrated Air Quality Framework . . . . (Emphasis supplied.)
There is no dispute that under the Clean Air Act it is the DENR that is tasked to set the emission
standards for fuel use and the task of developing an action plan. As far as motor vehicles are
concerned, it devolves upon the DOTC and the line agency whose mandate is to oversee that motor
vehicles prepare an action plan and implement the emission standards for motor vehicles, namely the
LTFRB.
In Oposa26 we said, the right to a balanced and healthful ecology carries with it the correlative duty to
refrain from impairing the environment. We also said, it is clearly the duty of the responsible
government agencies to advance the said right.
Petitioners invoke the provisions of the Constitution and the Clean Air Act in their prayer for issuance
of a writ of mandamus commanding the respondents to require PUVs to use CNG as an alternative
fuel. Although both are general mandates that do not specifically enjoin the use of any kind of fuel,
particularly the use of CNG, there is an executive order implementing a program on the use of CNG by
public vehicles. Executive Order No. 290, entitled Implementing the Natural Gas Vehicle Program for
Public Transport (NGVPPT), took effect on February 24, 2004. The program recognized, among others,
natural gas as a clean burning alternative fuel for vehicle which has the potential to produce
substantially lower pollutants; and the Malampaya Gas-to-Power Project as representing the
beginning of the natural gas industry of the Philippines. Paragraph 1.2, Section 1 of E.O. No. 290 cites
as one of its objectives, the use of CNG as a clean alternative fuel for transport. Furthermore, one of
the components of the program is the development of CNG refueling stations and all related facilities
in strategic locations in the country to serve the needs of CNG-powered PUVs. Section 3 of E.O. No.
290, consistent with E.O. No. 66, series of 2002, designated the DOE as the lead agency (a) in
developing the natural gas industry of the country with the DENR, through the EMB and (b) in
formulating emission standards for CNG. Most significantly, par. 4.5, Section 4 tasks the DOTC, working
with the DOE, to develop an implementation plan for "a gradual shift to CNG fuel utilization in PUVs
and promote NGVs [natural gas vehicles] in Metro Manila and Luzon through the issuance of
directives/orders providing preferential franchises in present day major routes and exclusive
franchises to NGVs in newly opened routes…" A thorough reading of the executive order assures us
that implementation for a cleaner environment is being addressed. To a certain extent, the instant
petition had been mooted by the issuance of E.O. No. 290.
Regrettably, however, the plain, speedy and adequate remedy herein sought by petitioners, i.e., a writ
of mandamus commanding the respondents to require PUVs to use CNG, is unavailing. Mandamus is
available only to compel the doing of an act specifically enjoined by law as a duty. Here, there is no
law that mandates the respondents LTFRB and the DOTC to order owners of motor vehicles to use
CNG. At most the LTFRB has been tasked by E.O. No. 290 in par. 4.5 (ii), Section 4 "to grant preferential
and exclusive Certificates of Public Convenience (CPC) or franchises to operators of NGVs based on the
results of the DOTC surveys."
Further, mandamus will not generally lie from one branch of government to a coordinate branch, for
the obvious reason that neither is inferior to the other.27 The need for future changes in both
legislation and its implementation cannot be preempted by orders from this Court, especially when
what is prayed for is procedurally infirm. Besides, comity with and courtesy to a coequal branch
dictate that we give sufficient time and leeway for the coequal branches to address by themselves the
environmental problems raised in this petition.
In the same manner that we have associated the fundamental right to a balanced and healthful
ecology with the twin concepts of "inter-generational responsibility" and "inter-generational justice"
in Oposa,28 where we upheld the right of future Filipinos to prevent the destruction of the rainforests,
so do we recognize, in this petition, the right of petitioners and the future generation to clean air.
In Oposa we said that if the right to a balanced and healthful ecology is now explicitly found in the
Constitution even if the right is "assumed to exist from the inception of humankind,… it is because of
the well-founded fear of its framers [of the Constitution] that unless the rights to a balanced and
healthful ecology and to health are mandated as state policies by the Constitution itself, thereby
highlighting their continuing importance and imposing upon the state a solemn obligation to preserve
the first and protect and advance the second, the day would not be too far when all else would be lost
not only for the present generation, but also for those to come. . ." 29
It is the firm belief of this Court that in this case, it is timely to reaffirm the premium we have placed
on the protection of the environment in the landmark case of Oposa. Yet, as serious as the statistics
are on air pollution, with the present fuels deemed toxic as they are to the environment, as fatal as
these pollutants are to the health of the citizens, and urgently requiring resort to drastic measures to
reduce air pollutants emitted by motor vehicles, we must admit in particular that petitioners are
unable to pinpoint the law that imposes an indubitable legal duty on respondents that will justify a
grant of the writ of mandamus compelling the use of CNG for public utility vehicles. It appears to us
that more properly, the legislature should provide first the specific statutory remedy to the complex
environmental problems bared by herein petitioners before any judicial recourse by mandamus is
taken.
WHEREFORE, the petition for the issuance of a writ of mandamus is DISMISSED for lack of merit.
SO ORDERED.
G.R. No. 156052 March 7, 2007
SOCIAL JUSTICE SOCIETY (SJS), VLADIMIR ALARIQUE T. CABIGAO, and BONIFACIO S.
TUMBOKON, Petitioners,
vs.
HON. JOSE L. ATIENZA, JR., in his capacity as Mayor of the City of Manila, Respondent.
DECISION
CORONA, J.:
1
In this original petition for mandamus, petitioners Social Justice Society (SJS), Vladimir Alarique T.
Cabigao and Bonifacio S. Tumbokon seek to compel respondent Hon. Jose L. Atienza, Jr., mayor of the
City of Manila, to enforce Ordinance No. 8027.
The antecedents are as follows.
On November 20, 2001, the Sangguniang Panlungsod of Manila enacted Ordinance No.
8027.2 Respondent mayor approved the ordinance on November 28, 2001. 3 It became effective on
December 28, 2001, after its publication.4
Ordinance No. 8027 was enacted pursuant to the police power delegated to local government units, a
principle described as the power inherent in a government to enact laws, within constitutional limits,
to promote the order, safety, health, morals and general welfare of the society. 5 This is evident from
Sections 1 and 3 thereof which state:
SECTION 1. For the purpose of promoting sound urban planning and ensuring health, public safety,
and general welfare of the residents of Pandacan and Sta. Ana as well as its adjoining areas, the land
use of [those] portions of land bounded by the Pasig River in the north, PNR Railroad Track in the east,
Beata St. in the south, Palumpong St. in the southwest, and Estero de Pancacan in the west[,] PNR
Railroad in the northwest area, Estero de Pandacan in the [n]ortheast, Pasig River in the southeast
and Dr. M.L. Carreon in the southwest. The area of Punta, Sta. Ana bounded by the Pasig River,
Marcelino Obrero St., Mayo 28 St., and F. Manalo Street, are hereby reclassified from Industrial II to
Commercial I.
xxx xxx xxx
SEC. 3. Owners or operators of industries and other businesses, the operation of which are no longer
permitted under Section 1 hereof, are hereby given a period of six (6) months from the date of
effectivity of this Ordinance within which to cease and desist from the operation of businesses which
are hereby in consequence, disallowed.
Ordinance No. 8027 reclassified the area described therein from industrial to commercial and
directed the owners and operators of businesses disallowed under Section 1 to cease and desist from
operating their businesses within six months from the date of effectivity of the ordinance. Among the
businesses situated in the area are the so-called "Pandacan Terminals" of the oil companies Caltex
(Philippines), Inc., Petron Corporation and Pilipinas Shell Petroleum Corporation.
However, on June 26, 2002, the City of Manila and the Department of Energy (DOE) entered into a
memorandum of understanding (MOU)6 with the oil companies in which they agreed that "the scaling
down of the Pandacan Terminals [was] the most viable and practicable option." Under the MOU, the
oil companies agreed to perform the following:
Section 1. - Consistent with the objectives stated above, the OIL COMPANIES shall, upon signing of
this MOU, undertake a program to scale down the Pandacan Terminals which shall include, among
others, the immediate removal/decommissioning process of TWENTY EIGHT (28) tanks starting with
the LPG spheres and the commencing of works for the creation of safety buffer and green zones
surrounding the Pandacan Terminals. xxx
Section 2. – Consistent with the scale-down program mentioned above, the OIL COMPANIES shall
establish joint operations and management, including the operation of common, integrated and/or
shared facilities, consistent with international and domestic technical, safety, environmental and
economic considerations and standards. Consequently, the joint operations of the OIL COMPANIES in
the Pandacan Terminals shall be limited to the common and integrated areas/facilities. A separate
agreement covering the commercial and operational terms and conditions of the joint operations,
shall be entered into by the OIL COMPANIES.
Section 3. - The development and maintenance of the safety and green buffer zones mentioned
therein, which shall be taken from the properties of the OIL COMPANIES and not from the
surrounding communities, shall be the sole responsibility of the OIL COMPANIES.
The City of Manila and the DOE, on the other hand, committed to do the following:
Section 1. - The City Mayor shall endorse to the City Council this MOU for its appropriate action with
the view of implementing the spirit and intent thereof.
Section 2. - The City Mayor and the DOE shall, consistent with the spirit and intent of this MOU,
enable the OIL COMPANIES to continuously operate in compliance with legal requirements, within the
limited area resulting from the joint operations and the scale down program.
Section 3. - The DOE and the City Mayor shall monitor the OIL COMPANIES’ compliance with the
provisions of this MOU.
Section 4. - The CITY OF MANILA and the national government shall protect the safety buffer and
green zones and shall exert all efforts at preventing future occupation or encroachment into these
areas by illegal settlers and other unauthorized parties.
The Sangguniang Panlungsod ratified the MOU in Resolution No. 97.7 In the same resolution,
the Sangguniandeclared that the MOU was effective only for a period of six months starting July 25,
2002.8 Thereafter, on January 30, 2003, the Sanggunian adopted Resolution No. 139 extending the
validity of Resolution No. 97 to April 30, 2003 and authorizing Mayor Atienza to issue special business
permits to the oil companies. Resolution No. 13, s. 2003 also called for a reassessment of the
ordinance.10
Meanwhile, petitioners filed this original action for mandamus on December 4, 2002 praying that
Mayor Atienza be compelled to enforce Ordinance No. 8027 and order the immediate removal of the
terminals of the oil companies.11
The issues raised by petitioners are as follows:
1. whether respondent has the mandatory legal duty to enforce Ordinance No. 8027 and
order the removal of the Pandacan Terminals, and
2. whether the June 26, 2002 MOU and the resolutions ratifying it can amend or repeal
Ordinance No. 8027.12
Petitioners contend that respondent has the mandatory legal duty, under Section 455 (b) (2) of the
Local Government Code (RA 7160),13 to enforce Ordinance No. 8027 and order the removal of the
Pandacan Terminals of the oil companies. Instead, he has allowed them to stay.
Respondent’s defense is that Ordinance No. 8027 has been superseded by the MOU and the
resolutions.14However, he also confusingly argues that the ordinance and MOU are not inconsistent
with each other and that the latter has not amended the former. He insists that the ordinance
remains valid and in full force and effect and that the MOU did not in any way prevent him from
enforcing and implementing it. He maintains that the MOU should be considered as a mere guideline
for its full implementation.15
Under Rule 65, Section 316 of the Rules of Court, a petition for mandamus may be filed 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. Mandamus is an
extraordinary writ that is employed to compel the performance, when refused, of a ministerial duty
that is already imposed on the respondent and there is no other plain, speedy and adequate remedy
in the ordinary course of law. The petitioner should have a well-defined, clear and certain legal right
to the performance of the act and it must be the clear and imperative duty of respondent to do the
act required to be done.17
Mandamus will not issue to enforce a right, or to compel compliance with a duty, which is
questionable or over which a substantial doubt exists. The principal function of the writ
of mandamus is to command and to expedite, not to inquire and to adjudicate; thus, it is neither the
office nor the aim of the writ to secure a legal right but to implement that which is already
established. Unless the right to the relief sought is unclouded, mandamus will not issue.18
To support the assertion that petitioners have a clear legal right to the enforcement of the ordinance,
petitioner SJS states that it is a political party registered with the Commission on Elections and has its
offices in Manila. It claims to have many members who are residents of Manila. The other petitioners,
Cabigao and Tumbokon, are allegedly residents of Manila.
We need not belabor this point. We have ruled in previous cases that when a mandamus proceeding
concerns a public right and its object is to compel a public duty, the people who are interested in the
execution of the laws are regarded as the real parties in interest and they need not show any specific
interest.19 Besides, as residents of Manila, petitioners have a direct interest in the enforcement of the
city’s ordinances. Respondent never questioned the right of petitioners to institute this proceeding.
On the other hand, the Local Government Code imposes upon respondent the duty, as city mayor, to
"enforce all laws and ordinances relative to the governance of the city.">20 One of these is Ordinance
No. 8027. As the chief executive of the city, he has the duty to enforce Ordinance No. 8027 as long as
it has not been repealed by the Sanggunian or annulled by the courts.21
He has no other choice. It is his ministerial duty to do so. In Dimaporo v. Mitra, Jr.,22 we stated the
reason for this:
These officers cannot refuse to perform their duty on the ground of an alleged invalidity of the statute
imposing the duty. The reason for this is obvious. It might seriously hinder the transaction of public
business if these officers were to be permitted in all cases to question the constitutionality of statutes
and ordinances imposing duties upon them and which have not judicially been declared
unconstitutional. Officers of the government from the highest to the lowest are creatures of the law
and are bound to obey it.23
The question now is whether the MOU entered into by respondent with the oil companies and the
subsequent resolutions passed by the Sanggunian have made the respondent’s duty to enforce
Ordinance No. 8027 doubtful, unclear or uncertain. This is also connected to the second issue raised
by petitioners, that is, whether the MOU and Resolution Nos. 97, s. 2002 and 13, s. 2003 of
the Sanggunian can amend or repeal Ordinance No. 8027.
We need not resolve this issue. Assuming that the terms of the MOU were inconsistent with
Ordinance No. 8027, the resolutions which ratified it and made it binding on the City of Manila
expressly gave it full force and effect only until April 30, 2003. Thus, at present, there is nothing that
legally hinders respondent from enforcing Ordinance No. 8027.24
Ordinance No. 8027 was enacted right after the Philippines, along with the rest of the world,
witnessed the horror of the September 11, 2001 attack on the Twin Towers of the World Trade Center
in New York City. The objective of the ordinance is to protect the residents of Manila from the
catastrophic devastation that will surely occur in case of a terrorist attack25 on the Pandacan
Terminals. No reason exists why such a protective measure should be delayed.
WHEREFORE, the petition is hereby GRANTED. Respondent Hon. Jose L. Atienza, Jr., as mayor of the
City of Manila, is directed to immediately enforce Ordinance No. 8027.
SO ORDERED.
[ GR No. 189185, Aug 16, 2016 ]
WILFREDO MOSQUEDA v. PILIPINO BANANA GROWERS & EXPORTERS ASSOCIATION +
RESOLUTION
BERSAMIN, J.:
This appeal through the consolidated petitions for review on certiorari assails the decision
promulgated on January 9, 2009[1] whereby the Court of Appeals (CA) reversed and set aside the
judgment rendered on September 22, 2007 by the Regional Trial Court (RTC), Branch 17, in Davao City
upholding the validity and constitutionality of Davao City Ordinance No. 0309-07, to wit:
WHEREFORE, premises considered, the appeal is GRANTED. The assailed September 22, 2007
Decision of the Regional Trial Court (RTC), 11 th Judicial Region, Branch 17, Davao City, upholding the
validity and constitutionality of Davao City Ordinance No. 0309-07, is hereby REVERSED and SET
ASIDE.
FURTHER, the Writ of Preliminary Injunction dated 28 January 2008 enjoining the City Government of
Davao, and any other person or entity acting in its behalf, from enforcing and implementing City
Ordinance No. 0309-07, is hereby made permanent.
SO ORDERED.
Antecedents
After several committee hearings and consultations with various stakeholders, the Sangguniang
Panlungsod of Davao City enacted Ordinance No. 0309, Series of 2007, to impose a ban against aerial
spraying as an agricultural practice by all agricultural entities within Davao City, viz.:
ORDINANCE NO. 0309-07
Series of 2007
AN ORDINANCE BANNING AERIAL SPRAYING AS AN AGRICULTURAL PRACTICE IN ALL AGRICULTURAL
ACTIVITIES BY ALL AGRICULTURAL ENTITIES IN DAVAO CITY
Be it enacted by the Sangguniang Panlungsod of Davao City in session assembled that:
SECTION 1. TITLE. This Ordinance shall be known as "An Ordinance Banning Aerial Spraying as an
Agricultural Practice in all Agricultural Activities by all Agricultural Entities in Davao City";
SECTION 2. POLICY OF THE CITY. It shall be the policy of the City of Davao to eliminate the method of
aerial spraying as an agricultural practice in all agricultural activities by all entities within Davao City;
SECTION 3. DEFINITION OF TERMS:
a. Aerial Spraying - refers to application of substances through the use of aircraft of any form which
dispenses the substances in the air.
b. Agricultural Practices - refer to the practices conducted by agricultural entities in relation to their
agricultural activities;
c. Agricultural Activities - refer to activities that include, but not limited to, land preparation, seeding,
planting, cultivation, harvesting and bagging;
d. Agricultural Entities - refer to persons, natural or juridical, involved in agricultural activities
e. Buffer Zone - is an identified 30-meter zone within and around the boundaries of agricultural
farms/plantations that need special monitoring to avoid or minimize harm to the environment and
inhabitants pursuant to policies and guidelines set forth in this Ordinance and other government
regulations. It is an area of land that must lie within the property which does not include public lands,
public thoroughfares or adjacent private properties. It must be planted with diversified trees that
grow taller than what are usually planted and grown in the plantation to protect those within the
adjacent fields, neighboring farms, residential area, schools and workplaces.
SECTION 4. SCOPE AND APPLICABILITY - The provisions of this Ordinance shall apply to all agricultural
entities within the territorial jurisdiction of Davao City;
SECTION 5. BAN OF AERIAL SPRAYING - A ban on aerial spraying shall be strictly enforced in the
territorial jurisdiction of Davao City three (3) months after the effectivity of this Ordinance.
SECTION 6. BUFFER ZONE - Consistent with national legislation and government regulations, all
agricultural entities must provide for a thirty (30) meter buffer zone within the boundaries of their
agricultural farms/plantations. This buffer zone must be properly identified through Global Positioning
System (GPS) survey. A survey plan showing the metes and bounds of each agricultural
farm/plantation must be submitted to the City Mayor's Office, with the buffer zone clearly identified
therein;
SECTION 7. PENAL PROVISION - Violation of any provision of this Ordinance shall be punished as
follows:
a. First Offense: Fine of P5,000.00 and imprisonment of not less than one (1) month but not more
than three (3) months;
b. Second Offense: Fine of P5,000.00 and imprisonment of not less than three (3) months but not
more than six (6) months and suspension of City-issued permits and licenses for one (1) year;
c. Third Offense: Fine of P5,000.00 and imprisonment of not less than six (6) months but not more
than one (1) year and perpetual cancellation of City issued permits and licenses;
Provided, that in case the violation has been committed by a juridical person, the person in charge of
the management thereof shall be held liable;
SECTION 8. REPEALING CLAUSE - Any Ordinance that is contrary to or inconsistent with any of the
provisions of this Ordinance shall be deemed amended or repealed accordingly.
SECTION 9. EFFECTIVITY - This Ordinance shall take effect thirty (30) days from its publication in a
newspaper of general circulation in Davao City;
ENACTED, January 23, 2007 by a majority vote of all the Members of the Sangguniang Panlungsod. [2]
City Mayor Rodrigo Duterte approved the ordinance on February 9, 2007. [3] The ordinance took effect
on March 23, 2007 after its publication in the newspaper Mindanao Pioneer.[4] Pursuant to Section 5
of the ordinance, the ban against aerial spraying would be strictly enforced three months thereafter.
The Pilipino Banana Growers and Exporters Association, Inc. (PBGEA) and two of its members,
namely: Davao Fruits Corporation and Lapanday Agricultural and Development Corporation
(PBGEA, et al.), filed their petition in the RTC to challenge the constitutionality of the ordinance, and
to seek the issuance of provisional reliefs through a temporary restraining order (TRO) and/or writ of
preliminary injunction.[5] They alleged that the ordinance exemplified the unreasonable exercise of
police power; violated the equal protection clause; amounted to the confiscation of property without
due process of law; and lacked publication pursuant] to Section 511 [6] of Republic Act No. 7160 (Local
Government Code).
On May 8, 2007, the residents living within and adjacent to banana plantations in Davao City led by
Wilfredo Mosqueda,[7] joined by other residents of Davao City, [8] (Mosqueda, et al.) submitted
their Motion for Leave to Intervene and Opposition to the Issuance of a Preliminary Injunction.[9] The
RTC granted their motion on June 4, 2007.[10]
On June 20, 2007, the RTC granted the prayer for issuance of the writ of preliminary injunction, and
subsequently issued the writ.[11]
Judgment of the RTC
On September 22, 2007, after trial, the RTC rendered judgment declaring Ordinance No. 0309-07 valid
and constitutional, decreeing thusly:
WHEREFORE, finding the subject [O]rdinance No. 0309-07 valid and constitutional in all aspect of the
grounds assailed by the petitioner, said [C]ity [O]rdinance No. 0309-07, is sustained of its validity and
constitutionality.
Accordingly, the order of this court dated June 20, 2007, granting the writ of preliminary injunction as
prayed for by petitioner is ordered cancelled and set aside as a result of this decision.
SO ORDERED.[12]
The RTC opined that the City of Davao had validly exercised police power [13] under the General
Welfare Clause of the Local Government Code;[14] that the ordinance, being based on a valid
classification, was consistent with the Equal Protection Clause; that aerial spraying was distinct from
other methods of pesticides application because it exposed the residents to a higher degree of health
risk caused by aerial drift;[15] and that the ordinance enjoyed the presumption of constitutionality, and
could be invalidated only upon a clear showing that it had violated the Constitution. [16]
However, the RTC, recognizing the impracticability of the 3-month transition period under Section 5 of
Ordinance No. 0309-07, recommended the parties to agree on an extended transition period. [17]
ban against aerial spraying of all forms of substances, on the other. It ruled that the maintenance of
the 30-meter buffer zone within and around the agricultural plantations under Section 6 of Ordinance
No. 0309-07 constituted taking of property without due process because the landowners were
thereby compelled to cede portions of their property without just compensation; that the exercise of
police power to require the buffer zone was invalid because there was no finding that the 30-meter
surrounding belt was obnoxious to the public welfare; and that, accordingly, Ordinance No. 0309-07
was unconstitutional because of the absence of a separability clause.
The City of Davao and the intervenors filed their respective motions for reconsideration, but the CA
denied the motions on August 7, 2009.[23]
Hence, the separate, but now consolidated, appeals by petition for review on certiorari.
Issues
In G.R. No. 189185, petitioners Mosqueda, et al. rely on the following grounds, namely:

Decision of the CA I

THE COURT OF APPEALS IGNORED FUNDAMENTAL PRECEPTS AND CONCEPTS OF LAW WHICH,
[18] [19]
PBGEA, et al. appealed, and applied for injunctive relief from the CA, which granted the PROPERLY CONSIDERED, NECESSARILY LEAD TO THE CONCLUSION THAT THE DAVAO ORDINANCE IS
CONSTITUTIONAL AND VALID
application[20] and consequently issued a TRO to meanwhile enjoin the effectivity of the ordinance. [21]

On January 9, 2009, the CA promulgated its assailed decision reversing the judgment of the RTC. [22] It II
declared Section 5 of Ordinance No. 0309-07 as void and unconstitutional for being unreasonable and
oppressive; found the three-month transition period impractical and oppressive in view of the THE DAVAO ORDINANCE IS CONSISTENT WITH THE EQUAL PROTECTION CLAUSE
engineering and technical requirements of switching from aerial spraying to truck-mounted boom
spraying; and opined that the ban ran afoul with the Equal Protection Clause inasmuch as Section 3(a)
of the ordinance - which defined the term aerial spraying - did not make reasonable distinction III
between the hazards, safety and beneficial effects of liquid substances that were being applied
THE MEANS EMPLOYED BY THE DAVAO ORDINANCE IS MORE THAN REASONABLY RELATED TO THE
aerially; the different classes of pesticides or fungicides; and the levels of concentration of these
PURPOSE IT SEEKS TO ACHIEVE
substances that could be beneficial and could enhance agricultural production.

The CA did not see any established relation between the purpose of protecting the public and the IV
environment against the harmful effects of aerial spraying, on one hand, and the imposition of the
THE DAVAO ORDINANCE IS VALID, BEING DEMONSTRABLY REASONABLE AND FAIR
V WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT ORDINANCE NO.
THE REQUIREMENT RELATING TO THE 30-METER BUFFER ZONE ARE [SIC] CONSISTENT WITH DUE
PROCESS OF LAW, BEING A VALID EXERCISE OF POLICE POWER
Mosqueda, et al. state that the CA ignored well-established precepts like the primacy of human rights
over property rights and the presumption of validity in favor of the ordinance; that the CA preferred
the preservation of the profits of respondents PBGEA, et al. to the residents' right to life, health and
ecology,[24] thereby disregarding the benevolent purpose of the ordinance; that the CA assumed the
functions of the lawmaker when it set aside the wisdom behind the enactment of the ordinance; that
the CA failed to apply the precautionary principle, by which the State was allowed to take positive
actions to prevent harm to the environment and to human health despite the lack of scientific
certainty; that the CA erred in applying the "strict scrutiny method" in holding that the ordinance
violated the Equal Protection Clause because it only thereby applied in reviewing classifications that
affected fundamental rights; that there was nothing wrong with prohibiting aerial spraying per
se considering that even the aerial spraying of water produced drift that could affect unwilling
neighbors whose, constitutional right to a clean and healthy environment might be impinged; [25] that
as far as the three-month period was concerned, the CA should have considered that manual spraying
could be conducted while the PBGEA, et al. laid down the preparations for the conduct of boom
spraying;[26] that "reasonableness" could be more appropriately weighed by balancing the interests of
the parties against the protection of basic rights, like the right to life, to health, and to a balanced and
healthful ecology;[27] that PBGEA, et al. did not substantiate their claim of potential profit losses that
would result from the shift; that business profits should remain inferior and subordinate to their
fundamental rights as residents of Davao City, which were the rights that the assailed ordinance has
sought to protect;[28] that PBGEA, et al. did not explore other modes of pesticide treatment either as a
stop-gap or as a temporary measure while shifting to truck mounted boom spraying; [29] that the
imposition of the 30-meter buffer zone was a valid exercise of police power that necessarily flowed
from the protection afforded by the ordinance from the unwanted effects of ground spraying; that the
imposition of the buffer zone did not constitute compensable taking under police power, pursuant to
the pronouncements in Seng Kee & Co. v. Earnshaw and Piatt[30] Patalinghug v. Court of Appeals,
[31]
and Social Justice Society (SJS) v. Atienza, Jr.;[32] and that the 30-meter buffer zone conformed with
the ISO 14000[33] and the DENR Environmental Compliance Certificate (ECC) requirement. [34]
In G.R. No. 189305, petitioner City of Davao submits the following as the issues to be considered and
resolved, to wit:
I
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT SECTION 5 OF
ORDINANCE NO. 0309-07, SERIES OF 2007 IS OPPRESSIVE AND AN UNREASONABLE EXERCISE OF
DELEGATED POLICE POWER
II
0309-07 IS VIOLATIVE OF THE EQUAL PROTECTION CLAUSE OF THE CONSTITUTION;
III
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT ORDINANCE NO.
0309-07 CONSTITUTES TAKING OF PROPERTY WITHOUT COMPENSATION, THUS, VIOLATIVE OF THE
DUE PROCESS CLAUSE OF THE CONSTITUTION
IV
WHETHER OR NOT AERIAL SPRAYING OF FUNGICIDES IS SAFE TO THE PEOPLE AND THE
ENVIRONMENT
The City of Davao explains that it had the authority to enact the assailed ordinance because it would
thereby protect the environment and regulate property and business in the interest of the general
welfare pursuant to Section 458 of the Local Government Code;[35] that the ordinance was enacted to
carry out its mandate of promoting the public welfare under the General Welfare Clause (Section 16
of the Local Government Code); that the ordinance did not violate the Equal Protection Clause
because the distinction lies in aerial spray as a method of application being more deleterious than
other modes; that aerial spraying produces more drift that causes discomfort, and an extremely
offensive and obnoxious experience the part of the residents; that spray drift cannot be controlled
even with use by the respondents of highly advanced apparatus, such as the Differential Global
Positioning System, Micronair Rotary Drift Control Atomizers, Intellimap, Intelliflow Spray Valve
System, Control and Display Unit and the Target Flow Spray Valve Switch System; [36] that because of
the inherent toxicity of Mancozeb (the fungicide aerially applied by the respondents), there is no need
to provide for a substantial distinction based on the level of concentration; [37] that as soon as
fungicides are released in the air, they become air pollutants pursuant to Section 5 of Republic Act No.
8749 (Philippine Clean Air Act of 1999),[38] and the activity thus falls under the authority of the local
government units to ban; and that the ordinance does not only seek to protect and promote human
health but also serves as a measure against air pollution.
The City of Davao insists that it validly exercised police power because it does not thereby oblige the
shift from aerial to truck-mounted boom spraying; that the respondents only choose boom spraying
to justify the alleged impracticability of the transition period by erroneously adding the months
required for each of the stages without considering other steps that may be simultaneously
undertaken;[39] that the Court should apply its ruling in Social Justice Society v. Atienza, Jr.,[40] by which
the six-month period for the folding-up of business operations was declared a legitimate exercise of
police power; that the respondents did not present any documentary evidence on the feasibility of
adopting other methods;[41] that only 1,800 hectares out of 5,200 hectares of plantations owned and
operated by PBGEA's members use aerial spraying, hence, the perceived ominous consequence of
imposing a ban on aerial spray to the banana industry is entirely misleading; [42] that the urgency of
prohibiting aerial spray justifies the three-month transition period; that the complaints of the
community residents - ranging from skin itchiness, contraction and/or tightening in the chest, nausea,
appetite loss and difficulty in breathing after exposure to spray mist - only prove that aerial spraying
brings discomfort and harm to the residents; that considering that the testimony of Dr. Lynn Crisanta
R. Panganiban, a pharmacologist and toxicologist, established that fungicides could cause debilitating
effects on the human body once inhaled or digested, the CA erred in holding that there was no
correlation between aerial application and the complaints of the residents; that given that aerial spray
produces more drift and is uncontrollable compared to the other methods of applying fungicides, the
ordinance becomes reasonable;[43] and that the medical-related complaints of the residents need not
be proven by medical records considering that these were based on personal knowledge. [44]
The City of Davao contends that the imposition of the 30-meter buffer zone is a valid exercise of police
power, rendering the claim for just compensation untenable; that the maintenance of the buffer zone
does not require the respondents to cede a portion of their landholdings; that the planting of
diversified trees within the buffer zone will serve to insulate the residents from spray drift; that such
buffer zone does not deprive the landowners of the lawful and beneficial use of their property; [45] and
that the buffer zone is consistent with the Constitution, which reminds property owners that the use
of property bears a social function.[46]
In their comment, the respondents posit that the petition of the City; of Davao should be dismissed
for failure to attach material portions of the records, and for raising factual errors that are not within
the realm of this appeal by petition for review on certiorari; [47] that the CA correctly declared the
ordinance as unreasonable due to the impossibility of complying with the three-month transition
period; that shifting from aerial to truck-mounted boom spraying will take at least three years and
entails careful planning, equipment and machineries, civil works, and capital funding of at least
P400,000,000.00;[48] that the Court could rely on its ruling in City of Manila v. Laguio, Jr.,[49] where an
ordinance directing an existing establishment to wind up or to transfer its business was declared as
confiscatory in nature, and, therefore, unconstitutional;[50] that the total ban against aerial sprayig,
coupled with the inadequate time to shift to truck-mounted boom spraying, effectively deprives the
respondents with an efficient means to control the spread of the Black Sigatoka disease that threatens
the banana plantations; that the ordinance will only expose the plantations to the virulent disease
that is capable of infecting 60% of the plantations on a single cycle [51] missed;[52] that compared with
other modes of application, aerial spraying is more cost-efficient, safe and accurate; that truck-
mounted boom spraying, for instance, requires 80-200 liters of solution per hectare, [53] while manual
spraying uses 200-300 liters of solution per hectare; that aerial spraying oily requires 30 liters per
hectare; that in terms of safety and accuracy, manual spraying is the least safe and accurate, [54] and
produces more drift than aerial spraying;[55] that due to the 300-liter solution required, the workers
will be more exposed to the solution during manual application and such application will thus be
more in conflict with the purpose of the ordinance to prevent human exposure; [56] that the
respondents also find the irrigation sprinklers suggested by the City of Davao as wasteful, unsafe and
impractical because it cannot provide the needed coverage for application of the solution to
effectively control. the Black Sigatoka disease; that in contrast, aerial application, coupled with the
latest state of the art technology and equipment, ensures accuracy, effectiveness, efficiency and
safety compared to the other methods of application; that the respondents vouch for the safety of
the fungicides they use by virtue of such fungicides having been registered with the Fertilizer and
Pesticide Authority (FPA) and classified as Category IV, [57] and found to be mild; and that oral ingestion
in large doses is required before any adverse effects to humans may result. [58]
The respondents lament that the ban was imposed without any scientific basis; that the
report[59] prepared by a fact-finding team (composed of the Vice Mayor, the City Health Officer, The
City Planning and Development Coordinator and the Assistance City Planning and Development
Coordinator) organized by the City of Davao revealed that there was no scientific evidence to support
the clamor for the ban against aerial spraying; that furthermore, national government agencies like
the Department of Agriculture (DA), Department of Health (DOR) and the Department of Trade and
Industry (DTI) similarly concluded that there was no scientific evidence to support the ban; [60] that for
four decades since the adoption of aerial spraying, there has been no reported outbreak or any
predisposition to ailment connected with the pesticides applied; that the testimonies of the residents
during the trial were mere "emotional anecdotal evidence" that did not establish any scientific or
medical bases of any causal connection between the alleged health conditions complained of and the
fungicides applied during aerial spraying;[61] that the allegations of health and environmental harm
brought by the pesticides used to treat the banana plantations were unfounded; that the 2001 study
of the International Agency for Research on Cancer showed that, contrary to the claim of Dra.
Panganiban, the by-product of Mancozeb (Ethylenethiourea or ETU) was "non-genotoxic" and not
expected to produce thyroid cancer;[62] that Carlos Mendoza, a geo-hydrologist and geophysicist,
testified that underground water contamination through aerial spraying would be impossible because
of the presence of latex, thick layers of clay and underlying rock formations; [63] that even the study
conducted by the Philippine Coconut Authority (PCA) showed that the rhinoceros beetle infestation in
coconut plantations adjacent to the banana plantations was due to the farmer's failure to observe
phyto-sanitary measures, not to aerial spraying; [64] that furthermore, aerial spraying is internationally
accepted as a "Good Agricultural Practice" (GAP)[65] under the International Code of Conduct on the
Distribution and Use of Pesticides by the United Nations-Food and Agricultural Organization (UN-FAO);
that as such, they observe the standards laid down by the UN-FAO, and utilize aerial spraying
equipment that will ensure accuracy, safety and efficiency in applying the substances, and which more
than complies with the requirement under the Guidelines on Good Practice for Aerial Application of
Pesticides (Rome 2001);[66] that in addition, they strictly observe standard operating procedures prior
to take-off,[67] in-flight[68] and post-flight;[69] that they substantially invested in state-of-the-art
technology and equipment designed to ensure safety, accuracy, and effectiveness of aerial spraying
operations, to avoid aerial drift;[70] that their equipment include: wind meters (to measure the wind
velocity in a specific area), wind cones (to determine the wind direction, and whether the wind is a
headwind, tailwind or a crosswind); central weather station (to measure wind speed, the temperature
and relative humidity), Differential Global Positioning System (DGPS), [71] Intellimap,[72] Control and
Display Unit,[73] Micronair Rotary Drift Control Atomizers (AU 5000 Low-Drift model), [74] Intelliflow
Spray Valve System,[75] and Target Flow Spray Valve Switch System; [76] and that they want to minimize,
if not, eliminate the occurrence of spray drift in order to minimize wastage of resources and reduced
efficiency of spraying programs implemented to control the Black Sigatoka disease. [77]
The respondents maintain that Ordinance No. 0309-07 will regulate aerial spraying as a method of
application, instead of the substances being used therein; that the prohibition is overbroad in light of
other available reasonable measures that may be resorted to by the local government; that the
ordinance is unreasonable, unfair, oppressive, and tantamount to a restriction or prohibition of trade;
[78]
that the ordinance will effectively impose a prohibition against all pesticides, including fungicides
that fall under the mildest type of substance; that as such, the petitioner has disregarded existing
valid and substantive classifications established and recognized by the World Health Organization
(WHO) that are adopted by the FPA; that the FPA is the national agency armed with the professional
competence, technical expertise, and legal mandate to deal with the issue of use and application of
pesticides in our country; that the fungicides they administer are duly registered with the FPA, and
with other more developed countries that have observed a stricter environmental and public health
regulation such as the United States Environmental Protection Agency (EPA) and the European Union
(EU); that as such, the City of Davao has disregarded valid, substantial and significant distinctions
between levels of concentration of the fungicides in the water solution aerially sprayed; that it is the
FPA that regulates the level of concentration of agricultural chemicals prior to commercial distribution
and use in the country; that the members of PBGEA only spray a water solution (water cocktail)
containing 0.1 liter to 1.5 liters of the active ingredient of fungicide in a 30-liter water solution per
hectare that has undergone rigorous testing and .evaluation prior to registration by the FPA; that the
active ingredients of the fungicide are so diluted that no harm may be posed to public health or to the
environment through aerial application;[79] that the ordinance was so broad that it prohibits aerial
application of any substance, including water;[80]and that aside from fungicides, the respondents also
aerially apply vitamins, minerals and organic fertilizers. [81]
The respondents submit that the maintenance of the 30-meter buffer zone under Section 5 of the
ordinance constitutes an improper exercise of police power; that the ordinance will require all
landholdings to maintain the buffer zone, thereby diminishing to a mere 1,600 square meters of
usable and productive land for every hectare of the plantation bounding residential areas, with the
zone being reserved for planting "diversified trees;" that this requirement amounts to taking without
just compensation or due process; and that the imposition of the buffer zone unduly deprives all
landowners within the City of Davao the beneficial use of their property; [82] that the precautionary
principle cannot be applied blindly, because its application still requires some scientific basis; that the
principle is also based on a mere declaration that has not even reached the level of customary
international law, not on a treaty binding on the Government. [83]
The respondents argue that the illegality of the transition period results in the invalidity of the
ordinance as it does not carry a separability clause; and that the absence of such clause signifies the
intention of the Sangguniang Panlungsod of City of Davao to make the ordinance effective as a whole.
[84]
The main issue is whether or not Ordinance No. 0309-07 is unconstitutional on due process and equal
protection grounds for being unreasonable and oppressive, and an invalid exercise of police power:
(a) in imposing a ban on aerial spraying as an agricultural practice in Davao City under Section 5; (b) in
decreeing a 3-month transition-period to shift to other modes of pesticide application under Section
5; and (c) in requiring the maintenance of the 30-meter buffer zone under Section 6 thereof in all
agricultural lands in Davao City.
Ruling of the Court
We deny the petitions for review for their lack of merit.
I
Preliminary considerations:
The significant role of the banana industry
in ensuring economic stability and food security
 Cavendish banana being operated by the respondents in Davao City, [97] around 1,800 hectares receive
There is no question that the implementation of Ordinance No. 0309-07, although the ordinance treatment through aerial application. These plantations are situated in Barangays Sirib, Manuel
concerns the imposition of the ban against aerial spraying in all agricultural lands within Davao City, Guianga, Tamayong, Subasta Dacudao, Lasang, Mandug, Waan, Tigatto and Callawa, [98] and are
will inevitably have a considerable impact on the country's banana industry, particularly on export affected by the ban imposed by Ordinance No. 0309-07. The DTI has issued a statement to the effect
trading. that the ban against aerial spraying in banana plantations "is expected to kill the banana industry,"
affects the socio-economic development of the barangays hosting the affected plantations, and has a
Banana exportation plays a significant role in the maintenance of the country's economic, stability and disastrous impact on export trading. The DTI has forecasted that the ban would discourage the entry
food security. Banana is a consistent dollar earner and the fourth largest produced commodity in the of new players in the locality, which would have a potential drawback in employment generation. [99]
Philippines.[85] In 2010, the Philippines figured among the top three banana producing countries in the
world.[86] In 2014, fresh bananas accounted for 17% of the country's top agricultural export
commodities, gaining a close second to coconut oil with 18%. [87] The Davao Region (Region XI)[88] was
the top banana producing region in 2013, with a production growth rate of 16.4%, and 33.76% share II
in the total agricultural output of the Region.[89] The Sangguniang Bayan of Davao City
enacted Ordinance No. 0309-07
Despite these optimistic statistics, the banana industry players struggle to keep up with the demands under its corporate powers
of the trade by combatting the main threat to production posed by two major fungal diseases: the
Panama Disease Tropical Race 4 (Fusarium oxysprum f.sp. cubense) and the Black Sigatoka leaf spot
The petitioners assert that Ordinance No. 0309-07 is a valid act of the Sangguniang Bayan of Davao
disease (Mycosphaerella ffiensis morelet). Pesticides have proven to be effective only against the
City- pursuant to its delegated authority to exercise police power in the furtherance of public welfare
Black Sigatoka disease. There is yet no known cure for the Panama disease. [90]
and in ensuring a sound and balanced environment for its constituents. The respondents negate this
assertion, describing the ordinance as unreasonable, discriminatory and oppressive.
The menace of the Black Sigatoka disease cannot be taken lightly. The disease causes destruction of
the plant by significantly reducing the leaf area, leading to premature ripening of the produce and
The petitioners' assertion of its authority to enact Ordinance No. 0309-07 is upheld.
resulting in yield losses of at least 50%. [91] Due to its effects on banana export trading, the disease has
emerged as a global concern that has correspondingly forced banana producers to increase the use of
To be considered as a valid police power measure, an ordinance must pass a two-pronged test:
chemical pesticides.[92] Protectant fungicides such as Mancozeb, chlorothalonil and Propiconazole are
the formal (i.e., whether the ordinance is enacted within the corporate powers of the local
applied to combat the disease.[93] These agricultural chemicals are aerially applied by the respondents
government unit, and whether it is passed in accordance with the procedure prescribed by law); and
in the banana plantations within the jurisdiction of Davao City to arrest the proliferation of the
the substantive (i.e., involving inherent merit, like the conformity of the ordinance with the limitations
disease.
under the Constitution and the statutes, as well as with the requirements of fairness and reason, and
its consistency with public policy).[100]
Considering that banana export plantations exist in vast monocultures, effective treatment of the
Black Sigatoka disease is done by frequent aerial application of fungicides. This is an expensive
The formalities in enacting an ordinance are laid down in Section 53 [101] and Section 54[102] of The Local
practice because it requires permanent landing strips, facilities for the mixing and loading of
Government Code. These provisions require the ordinance to be passed by the majority of the
fungicides, and high recurring expense of spray materials. [94] The cost of aerial spraying accounts to
members of the sanggunian concerned, and to be presented to the mayor for approval. With no
15-20% of the final retail price of the crop, making the technology essentially unavailable to small
issues regarding quorum during its deliberation having been raised, and with its approval of by City
landholdings that are more vulnerable to the disease.[95]
Mayor Duterte not being disputed, we see no reason to strike down Ordinance No. 0309-07 for non-
compliance with the formal requisites under the Local Government Code.
Aerial spraying has become an agricultural practice in Davao City since the establishment of the
banana plantations in 1960.[96] Out of the 5,205 hectares of commercial plantations devoted to
We next ascertain whether the City of Davao acted within the limits of its corporate powers in
enacting Ordinance No. 0309-07.
The corporate powers of the local government unit confer the basic authority to enact legislation that
may interfere with personal liberty, property, lawful businesses and occupations in order to promote
the general welfare.[103] Such legislative powers spring from the delegation thereof by Congress
through either the Local Government Code or a special law. The General Welfare Clause in Section 16
of the Local Government Code embodies the legislative grant that enables the local government unit
to effectively accomplish and carry out the declared objects of its creation, and to promote and
maintain local autonomy.[104] Section 16 reads:
Sec. 16. General Welfare. — Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its
efficient and effective governance, and those which are essential to the promotion of the general
welfare. Within their respective territorial jurisdictions, local government units shall ensure and
support among other things, the preservation and enrichment of culture, promote health and safety,
enhance the right of the people to a balanced ecology, encourage and support the development of
appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance
economic prosperity and social justice, promote full employment among their residents, maintain
peace and order, and preserve the comfort and convenience of their inhabitants.
Section 16 comprehends two branches of delegated powers, namely: the general legislative
power and the police power proper. General legislative power refers to the power delegated by
Congress to the local legislative body, or the Sangguniang Panlungsod in the case of Dayao City,[105] to
enable the local legislative body to enact ordinances and make regulations. This power is limited in
that the enacted ordinances must not be repugnant to law, and the power must be exercised to
effectuate and discharge the powers and duties legally conferred to the local legislative body. The
police power proper, on the other hand, authorizes the local government unit to enact ordinances
necessary and proper for the health and safety, prosperity, morals, peace, good order, comfort, and
convenience of the local government unit and its constituents, and for the protection of their
property.[106]
Section 458 of the Local Government Code explicitly vests the local government unit with the
authority to enact legislation .aimed at promoting the general welfare, viz.:
Section 458. Powers, Duties, Functions and Compensation. — (a) The sangguniang panlungsod, as the
legislative body of the city, shall enact ordinances, approve resolutions and appropriate funds for the
general welfare of the city and its inhabitants pursuant to Section 16 of this Code and in the proper
exercise of the corporate powers of the city as provided for under Section 22 of this Code. x x x
In terms of the right of the citizens to health and to a balanced and healthful ecology, the local
government unit takes its cue from Section 15 and Section 16, Article II of the 1987 Constitution.
Following the provisions of the Local Government Code and the Constitution, the acts of the local
government unit designed to ensure the health and lives of its constituents and to promote a
balanced and healthful ecology are well within the corporate powers vested in the local government
unit. Accordingly, the Sangguniang Bayan of Davao City is vested with the requisite authority to enact
an ordinance that seeks to protect the health and well-being of its constituents.
The respondents pose a challenge against Ordinance No. 0309-07 on the ground that the Sangguniang
Bayan of Davao City has disregarded the health of the plantation workers, contending that by
imposing the ban against aerial spraying the ordinance would place the plantation workers at a higher
health risk because the alternatives of either manual or truck-boom spraying method would be
adopted; and that exposing the workers to the same risk sought to be prevented by the ordinance
would defeat its purported purpose.
We disagree with the respondents.
With or without the ban against aerial spraying, the health and safety of plantation workers are
secured by existing state policies, rules and regulations implemented by the FPA, among others, which
the respondents are lawfully bound to comply with. The respondents even manifested their strict
compliance with these rules, including those in the UN-FAO Guidelines on Good Practice for Aerial
Application of Pesticides (Rome 2001). We should note that the Rome 2001 guidelines require the
pesticide applicators to observe the standards provided therein to ensure the health and safety of
plantation workers. As such, there cannot be any imbalance between the right to health of the
residents vis-a-vis the workers even if a ban will be imposed against aerial spraying and the
consequent adoption of other modes of pesticide treatment.
Furthermore, the constitutional right to health and maintaining environmental integrity are privileges
that do not only advance the interests of a group of individuals. The benefits of protecting human
health and the environment transcend geographical locations and even generations. This is the
essence of Sections 15 and 16, Article II of the Constitution. In Oposa v. Factoran, Jr.[107] we declared
that the right to a balanced and healthful ecology under Section 16 is an issue of transcendental
importance with intergenerational implications. It is under this milieu that the questioned ordinance
should be appreciated.
Advancing the interests of the residents who are vulnerable to the alleged health risks due to their
exposure to pesticide drift justifies the motivation behind the enactment of the ordinance. The City of
Davao has the authority to enact pieces of legislation that will promote the general welfare,
specifically the health of its constituents. Such authority should not be construed, however, as a valid
license for the City of Davao to enact any ordinance it deems fit to discharge its mandate. A thin but
well-defined line separates authority to enact legislations from the method of accomplishing the
same.
By distinguishing authority from method we face this question: Is a prohibition against aerial spraying
a lawfully permissible method that the local government unit of Davao City may adopt to prevent the
purported effects of aerial drift? To resolve this question, the Court must dig deeper into the intricate
issues arising from these petitions.
II
Ordinance No. 0309-07 violates the Due Process Clause
A valid ordinance must not only be enacted within the corporate powers of the local government and
passed according to the procedure prescribed by law. [108] In order to declare it as a valid piece of local
legislation, it must also comply with the following substantive requirements, namely: (1) it must not
contravene the Constitution or any statute; (2) it must be fair, not oppressive; (3) it must not be partial
or discriminatory; (4) it must not prohibit but may regulate trade; (5) it must be general and
consistent with public policy; and (6) it must not be unreasonable. [109]
In the State's exercise of police power, the property rights of individuals may be subjected to
restraints and burdens in order to fulfill the objectives of the Government. [110] A local government unit
is considered to have properly exercised its police powers only if it satisfies the following requisites, to
wit: (1) the interests of the public generally, as distinguished from those of a particular class, require
the interference of the State; and (2) the means employed are reasonably necessary for the
attainment of the object sought to be accomplished and not unduly oppressive. [111] The first
requirement refers to the Equal Protection Clause of the Constitution; the second, to the Due Process
Clause of the Constitution.[112]
Substantive due process requires that a valid ordinance must have a sufficient justification for the
Government's action.[113] This means that in exercising police power the local government unit must
not arbitrarily, whimsically or despotically enact the ordinance regardless of its salutary purpose. So
long as the ordinance realistically serves a legitimate public purpose, and it employs means that are
reasonably necessary to achieve that purpose without unduly oppressing the individuals regulated,
the ordinance must survive a due process challenge.[114]
The respondents challenge Section 5 of Ordinance No. 0309-07 for being unreasonable and
oppressive in that it sets the effectivity of the ban at three months after publication of the ordinance.
They allege that three months will be inadequate time to shift from aerial to truck-mounted boom
spraying, and effectively deprives them of efficient means to combat the Black Sigatoka disease.
The petitioners counter that the period is justified considering the urgency of protecting the health of
the residents.
We find for the respondents.
The impossibility of carrying out a shift to another mode of pesticide application within three months
can readily be appreciated given the vast area of the affected plantations and the corresponding
resources required therefor. To recall, even the RTC recognized the impracticality of attaining a full-
shift to other modes of spraying within three months in view of the costly financial and civil works
required for the conversion.[115] In the assailed decision, the CA appropriately observed:
There appears to be three (3) forms of ground spraying, as distinguished from aerial spraying, which
are: 1. "Truck-mounted boom spraying;" 2. "manual or backpack spraying." and 3. "sprinkler
spraying." Petitioners-appellants claim that it was physically impossible for them to shift to "truck-
mounted boom spraying" within three (3) months before the aerial spraying ban is actually enforced.
They cited the testimony of Dr. Maria Emilia Rita G. Fabregar, Ph.D, PBGEA Chairperson, to the effect
that since banana plantations in Davao City were configured for aerial spraying, the same lack the
road network to make "truck-mounted boom spraying" possible. According to Dr. Fabregar, it was
impossible to construct such road networks in a span of three (3) months. Engr. Magno P. Porticos, Jr.,
confirmed that the shift demands the construction of three hundred sixty (360) linear kilometers of
road which cannot be completed in three (3) months.
In their separate testimonies, Dr. Fabregar and Engr. Porticos explained that a shift to "truck-mounted
boom spraying" requires the following steps which may be completed in three (3) years:
1. six (6) months for planning the reconfiguration of banana plantations to ensure effective truck-
mounted boom spraying for the adequate protections of the plantations from the Black Sigatoka
fungus and other diseases, while maximizing land use;
2. two (2) months to secure government permits for infrastructure works to be undertaken thereon;
3. clearing banana plants and dismantling or reconstructing fixed infrastructures, such as roads,
drains, cable ways, and irrigation facilities, which phase may be completed in eighteen (18) months;
4. importation and purchase of trucks mounted with boom spraying, nurse trucks and protective
gears. The placing of orders and delivery of these equipments, including the training [of] the
personnel who would man the same, would take six (6) months; and
5. securing the needed capitalization to finance these undertakings would take six (6) months to a
year.
Ms. Maria Victoria E. Sembrano, CPA, Chairperson of the PBGEA Finance Committee, testified that her
committee and the Technical Committee and Engineering Group of PBGEA conducted a feasibility
study to determine the cost in undertaking the shift to ground spraying. Their findings fixed the
estimated cost for the purpose at Php 400 Million.
xxxx
Both appellees failed to rebut the foregoing testimonies with empirical findings to the contrary.
xxxx
Thus, in view of the infrastructural requirements as methodically explained, We are convinced that it
was physically impossible for petitioners-appellants to carry out a carefully planned configuration of
vast hectares of banana plantations and be able to actually adopt "truck-mounted boom spraying"
within three (3) months. To compel petitioners-appellants to abandon aerial spraying in favor of
"manual or backpack spraying" or "sprinkler spraying" within 3 months puts petitioners-appellants in
a vicious dilemma between protecting its investments and the health of its workers, on the one hand,
and the threat of prosecution if they refuse to comply with the imposition. We even find the 3-
months transition period insufficient, not only in acquiring and gearing-up the plantation workers of
safety appurtenances, but more importantly in reviewing safety procedures for "manual or backpack
spraying" and in training such workers for the purpose. Additionally, the engineering works for a
sprinkler system in vast hectares of banana plantations could not possibly be completed within such
period, considering that safety and efficiency factors need to be considered in its structural re-
designing.
xxxx
Respondent-appellee argues that the Ordinance merely banned an agricultural practice and did not
actually prohibit the operation of banana plantations; hence, it is not oppressive. While We agree that
the measure did not impose a closure of a lawful enterprise, the proviso in Section 5, however,
compels petitioners-appellants to abandon aerial spraying without affording them enough time to
convert and adopt other spraying practices. This would preclude petitioners-appellants from being
able to fertilize their plantations with essential vitamins and minerals substances, aside from applying
thereon the needed fungicides or pesticides to control, if not eliminate the threat of, plant diseases.
Such an apparent eventuality would prejudice the operation of the plantations, and the economic
repercussions thereof would just be akin to shutting down the venture.
This Court, therefore, finds Section 5 of Ordinance No. 0309-07 an invalid provision because the
compulsion thereunder to abandon aerial spraying within an impracticable period of "three (3)
months after the effectivity of this Ordinance" is "unreasonable, oppressive and impossible to comply
with."[116]
The required civil works for the conversion to truck-mounted boom spraying alone will consume
considerable time and financial resources given the topography and geographical features of the
plantations.[117] As such, the conversion could not be completed within the short timeframe of three
months. Requiring the respondents and other affected individuals to comply with the consequences
of the ban within the three-month period under pain of penalty like fine, imprisonment and even
cancellation of business permits would definitely be oppressive as to constitute abuse of police
power.
The respondents posit that the requirement of maintaining a buffer zone under Section 6 of the
ordinance violates due process for being confiscatory; and that the imposition unduly deprives all
agricultural landowners within Davao City of the beneficial use of their property that amounts to
taking without just compensation.
The position of the respondents is untenable.
In City of Manila v. Laguio, Jr.,[118] we have thoroughly explained that taking only becomes confiscatory
if it substantially divests the owner of the beneficial use of its property, viz.:
An ordinance which permanently restricts the use of property that it cannot be used for any
reasonable purpose goes beyond regulation and must be recognized as a taking of the property
without just compensation. It is intrusive and violative of the private property rights of individuals.
The Constitution expressly provides in Article III, Section 9, that "private property shall not be taken
for public use without just compensation." The provision is the most important protection of property
rights in the Constitution. This is a restriction on the general power of the government to take
property. The constitutional provision is about ensuring that the government does not confiscate the
property of some to give it to others. In part too, it is about loss spreading. If the government takes
away a person's property to benefit society, then society should pay. The principal purpose of the
guarantee is "to bar the Government from forcing some people alone to bear public burdens which, in
all fairness and justice, should be borne by the public as a whole.
There are two different types of taking that can be identified. A "possessory" taking occurs when the
government confiscates or physically occupies property. A "regulatory" taking occurs when the
government's regulation leaves no reasonable economically viable use of the property.
In the landmark case of Pennsylvania Coal v. Mahon, it was held that a taking also could be found if
government regulation of the use of property went "too far." When regulation reaches a certain
magnitude, in most if not in all cases there must be an exercise of eminent domain and compensation
to support the act. While property may be regulated to a certain extent, if regulation goes too far it
will be recognized as a taking.
No formula or rule can be devised to answer the questions of what is too far and when regulation
becomes a taking. In Mahon, Justice Holmes recognized that it was "a question of degree and
therefore cannot be disposed of by general propositions." On many other occasions as well, the U.S.
Supreme Court has said that the issue of when regulation constitutes a taking is a matter of
considering the facts in each case. The Court asks whether justice and fairness require that the
economic loss caused by public action must be compensated by the government and thus borne by
the public as a whole, or whether the loss should remain concentrated on those few persons subject
to the public action.
What is crucial in judicial consideration of regulatory takings is that government regulation is a taking
if it leaves no reasonable economically viable use of property in a manner that interferes with
reasonable expectations for use. A regulation that permanently denies all economically beneficial or
productive use of land is, from the owner's point of view, equivalent to a "taking" unless principles of
nuisance or property law that existed when the owner acquired the land make the use prohibitable.
When the owner of real property has been called upon to sacrifice all economically beneficial uses in
the name of the common good, that is, to leave his property economically idle, he has suffered a
taking.
A regulation which denies all economically beneficial or productive use of land will require
compensation under the takings clause. Where a regulation places limitations on land that fall short
of eliminating all economically beneficial use, a taking nonetheless may have occurred, depending on
a complex of factors including the regulation's economic effect on the landowner, the extent to which
the regulation interferes with reasonable investment-backed expectations and the character of
government action. These inquiries are informed by the purpose of the takings clause which is to
prevent the government from forcing some people alone to bear public burdens which, in all fairness
and justice, should be borne by the public as a whole.
A restriction on use of property may also constitute a "taking" if not reasonably necessary to the
effectuation of a substantial public purpose or if it has an unduly harsh impact on the distinct
investment-backed expectations of the owner. (bold emphasis supplied)
The establishment of the buffer zone is required for the purpose of minimizing the effects of aerial
spraying within and near the plantations. Although Section 3(e) of the ordinance requires the planting
of diversified trees within the identified buffer zone, the requirement cannot be construed and
deemed as confiscatory requiring payment of just compensation. A landowner may only be entitled to
compensation if the taking amounts to a permanent denial of all economically beneficial or
productive uses of the land. The respondents cannot be said to be permanently and completely
deprived of their landholdings because they can still cultivate or make other productive uses of the
areas to be identified as the buffer zones.
III
Ordinance No. 0309-07 violates the Equal Protection Clause
A serious challenge being posed against Ordinance No. 0309-07 rests on its supposed collision with
the Equal Protection Clause. The respondents submit that the ordinance transgresses this
constitutional guaranty on two counts, to wit: (1) by prohibiting aerial spraying per se, regardless of
the substance or the level of concentration of the chemicals to be applied; and (2) by imposing the
30-meter buffer zone in all agricultural lands in Davao City regardless of the sizes of the landholding.
The constitutional right to equal protection requires that all persons or things similarly situated should
be treated alike, both as to rights conferred and responsibilities imposed. It requires public bodies and
institutions to treat similarly situated individuals in a similar manner. The guaranty equal protection
secures every person within the State's jurisdiction against intentional and arbitrary discrimination,
whether occasioned by the express terms of a statue or by its improper execution through the State's
duly constituted authorities. The concept of equal justice under the law demands that the State
governs impartially, and not to draw distinctions between individuals solely on differences that are
irrelevant to the legitimate governmental objective. [119]
Equal treatment neither requires universal application of laws to all persons or things without
distinction,[120] nor intends to prohibit legislation by limiting the object to which it is directed or by the
territory in which it is to operate.[121] The guaranty of equal protection envisions equality among
equals determined according to a valid classification.[122] If the groupings are characterized by
substantial distinctions that make real differences, one class may be treated and regulated differently
from another.[123] In other word, a valid classification must be: (1) based on substantial distinctions; (2)
germane to the purposes of the law; (3) not limited to existing conditions only; and (4) equally
applicable to all members of the class. [124]
Based on these parameters, we find for the respondents.
The reasonability of a distinction and sufficiency of the justification given by the Government for its
conduct is gauged by using the means-end test.[125] This test requires analysis of: (1) the interests of
the public that generally require its exercise, as distinguished from those of a particular class; and (2)
the means employed that are reasonably necessary for the accomplishment of the purpose and are
not unduly oppressive upon individuals.[126] To determine the propriety of the classification, courts
resort to three levels of scrutiny, viz: the rational scrutiny, intermediate scrutiny and strict scrutiny.
The rational basis scrutiny (also known as the rational relation test or rational basis test) demands that
the classification reasonably relate to the legislative purpose. [127] The rational basis test often applies
in cases involving economics or social welfare,[128] or to any other case not involving a suspect class.[129]
When the classification puts a quasi-suspect class at a disadvantage, it will be treated under
intermediate or heightened review. Classifications based on gender or illegitimacy receives
intermediate scrutiny.[130] To survive intermediate scrutiny, the law must not only further an important
governmental interest and be substantially related to that interest, but the justification for the
classification must be genuine and must not depend on broad generalizations. [131]
The strict scrutiny review applies when a legislative classification impermissibly interferes with the
exercise of a fundamental right or operates to the peculiar class disadvantage of a suspect class. The
Government carries the burden to prove that the classification is necessary to achieve a compelling
state interest, and that it is the least restrictive means to protect such interest. [132]
The petitioners advocate the rational basis test. In particular, the petitioning residents of Davao City
argue that the CA erroneously applied the strict scrutiny approach when it declared that the
ordinance violated the Equal Protection Clause because the ban included all substances including
water and vitamins. The respondents agree with the CA, however, and add that the ordinance does
not rest on a valid distinction because it has lacked scientific basis and has ignored the classifications
of pesticides observed by the FPA.
We partly agree with both parties.
In our view, the petitioners correctly argue that the rational basis approach appropriately applies
herein. Under the rational basis test, we shall: (1) discern the reasonable relationship between the
means and the purpose of the ordinance; and (2) examine whether the means or the prohibition
against aerial spraying is based on a substantial or reasonable distinction. A reasonable classification
includes all persons or things similarly situated with respect to the purpose of the law. [133]
Applying the test, the established classification under Ordinance No. 0309-07 is to be viewed in
relation to the group of individuals similarly situated with respect to the avowed purpose. This gives
rise to two classes, namely: (1) the classification under Ordinance No. 0309-07 (legislative
classification); and (2) the classification based on purpose (elimination of the mischief). The legislative
classification found in Section 4 of the ordinance refers to "all agricultural entities" within Davao City.
Meanwhile, the classification based on the purpose of the ordinance cannot be easily discerned
because the ordinance does not make any express or implied reference to it. We have to search the
voluminous records of this case to divine the animus behind the action of the Sangguniang
Panglungsod in prohibiting aerial spraying as an agricultural activity. The effort has led uS to the
following proposed resolution of the Sangguniang Panglungsod, [134] viz.:
RESOLUTION NO. ____
Series of 2007
A RESOLUTION TO ENACT AN ORDINANCE BANNING AERIAL SPRAYING AS AN AGRICULTURAL
PRACTICE IN ALL AGRICULTURAL ENTITIES IN DAVAO CITY
WHEREAS, the City of Davao, with fertile lands and ideal climactic condition, hosts various large farms
planted with different crops;
WHEREAS, these farms, lay adjacent to other agricultural businesses and that residential areas abuts
these farm boundaries;
WHEREAS, aerial spraying as a mode of applying chemical substances such as fungicides and
pesticides is being used by investors/companies over large agricultural plantations in Davao City;
WHEREAS, the Davao City watersheds and ground water sources, located within and adjacent to
Mount Apo may be affected by the aerial spraying of chemical substances on the agricultural farms
and plantations therein;
WHEREAS, the effects of aerial spraying are found to be detrimental to the health of the residents of
Davao City most especially the inhabitants nearby agricultural plantations practicing aerials spraying;
WHEREAS, the unstable wind direction during the conduct of aerial spray application of these
chemical substances pose health hazards to people, animals, other crops and ground water sources;
WHEREAS, in order to achieve sustainable development, politics must be based on the Precautionary
Principle. Environment measures must anticipate, prevent, and attack the causes of environmental
degradation. Where there are threats of serious, irreversible damage, lack of scientific certainty
should not be used as a reason for postponing measures to prevent environmental degradation;
WHEREAS, it is the policy of the City of Davao to ensure the safety of its inhabitants from all forms of
hazards, especially if such hazards come from development activities that are supposed to be
beneficial to everybody;
WHEREAS, pesticides are by its nature poisonous, it is all the more dangerous when dispensed aerially
through aircraft because of unstable wind conditions which in turn makes aerial spray drifting to
unintended targets a commonplace.
WHEREAS, aerial spraying of pesticides is undeniably a nuisance.
WHEREAS, looking at the plight of the complainants and other stakeholders opposed to aerial
spraying, the issue of aerial spraying of pesticides is in all fours a nuisance. Given the vastness of the
reach of aerial spraying, the said form of dispensation falls into the category of a public nuisance.
Public nuisance is defined by the New Civil Code as one which affects a community or neighborhood
or any considerable number of persons, although the extent of the annoyance, danger or damage
upon individuals may be unequal.
WHEREAS, the General Welfare Clause of the Local Government Code empowers Local Government
Units to enact ordinances that provide for the health and safety, promote the comfort and
convenience of the City and the inhabitants thereof.
NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that for the health, safety and peace
of mind of all the inhabitants of Davao City, let an ordinance be enacted banning aerial spraying as an
agricultural practice in all agricultural entities in Davao City.
xxxx
The proposed resolution identified aerial spraying of pesticides as a nuisance because of the unstable
wind direction during the aerial application, which (1) could potentially contaminate the Davao City
watersheds and ground water sources; (2) was detrimental to the health of Davao City residents, most
especially those living in the. nearby plantations; and (3) posed a hazard to animals and other crops.
Plainly, the mischief that the prohibition sought to address was the fungicide drift resulting from the
aerial application; hence, the classification based on the intent of the proposed ordinance covered all
agricultural entities conducting aerial spraying of fungicides that caused drift.
The assailed ordinance thus becomes riddled with several distinction issues.
A brief discussion on the occurrence of the drift that the ordinance seeks to address is necessary.
Pesticide treatment is based on the use of different methods of application and equipment, [135] the
choice of which methods depend largely on the objective of distributing the correct dose to a defined
target with the minimum of wastage due to "drift."[136] The term "drift" refers to the movement of
airborne spray droplets, vapors, or dust particles away from the target area during pesticide
application.[137] Inevitably, any method of application causes drift, which may either be primary or
secondary. As fittingly described by scholars:[138]
Primary drift is the off-site movement of spray droplets at, or very close to, the time of application.
For example, a field application using a boom in a gusty wind situation could easily lead to a primary
drift. Primary spray drift is not product specific, and the active ingredients do not differ in their
potential to drift. However, the type of formulation, surfactant, or other adjuvant may affect spray
drift potential.
Secondary drift is associated with pesticide vapor. Pesticide vapor drift is the movement of the gas
that forms when an active ingredient evaporates from plants, soil, or other surfaces. And while vapor
drift is an important issue, it only pertains to certain volatile products. Vapor drift and other forms
of secondary drift are product specific. Water-based sprays will volatize more quickly than oil-based
sprays. However, oil-based sprays can drift farther, especially above 95°F, because they are lighter.
Understandably, aerial drift occurs using any method of application, be it through airplanes, ground seeks to eliminate.[143] A classification that is drastically underinclusive with respect to the purpose or
sprayers, airblast sprayers or irrigation systems.[139] Several factors contribute to the occurrence of drift end appears as an irrational means to the legislative end because it poorly serves the intended
depending on the method of application, viz.: purpose of the law.[144]

The claim that aerial spraying produces more aerial drift cannot likewise be sustained in view of the
AERIAL AIRBLAST GROUND CHEMIGATION petitioners' failure to substantiate the same. The respondents have refuted this claim, and have
maintained that on the contrary, manual spraying produces more drift than aerial treatment [145] As
Droplet size Crop canopy Droplet size Application height
such, the decision of prohibiting only aerial spraying is tainted with arbitrariness.
Application height Droplet size Boom height Wind speed
Aside from its being underinclusive, the assailed ordinance also tends to be "overinclusive" because
Wind speed Wind speed Wind speed
its .impending implementation will affect groups that have no relation to the accomplishment of the
Swath adjustment legislative purpose. Its implementation will unnecessarily impose a burden on a wider range of
individuals than those included in the intended class based on the purpose of the law. [146]
Canopy

Boom length It can be noted that the imposition of the ban is too broad because the ordinance applies irrespective
of the substance to be aerially applied and irrespective of the agricultural activity to be conducted.
Tank mix physical The respondents admit that they aerially treat their plantations not only with pesticides but also
properties vitamins and other substances. The imposition of the ban against aerial spraying of substances other
than fungicides and regardless of the agricultural activity being performed becomes unreasonable
Source: F.M. Fishel and J.A. Ferrell, "Managing Pesticide Drift," available at http://edis.ifas.edu/pi232.
inasmuch as it patently bears no relation to the purported inconvenience, discomfort, health risk and
citing Pesticide Notes, MSU Extension.
environmental danger which the ordinance, seeks to address. The burden now will become more
onerous to various entities including the respondents and even others with no connection whatsoever
The four most common pesticide treatment methods adopted in Davao City are aerial, truck-mounted
to the intended purpose of the ordinance.
boom, truck-mounted mechanical, and manual spraying. [140] However, Ordinance No. 0309-07 imposes
the prohibition only against aerial spraying.
In this respect, the CA correctly observed:

Davao City justifies the prohibition against aerial spraying by insisting that the occurrence of drift
causes inconvenience and harm to the residents and degrades the environment. Given this
justification, does the ordinance satisfy the requirement that the classification must rest on
substantial distinction?
We answer in the negative.
Ordinance No. 0309-07 defines "aerial spraying" as the "application of substances through the use of
aircraft of any form which dispenses the substances in the air." Inevitably, the ban imposed therein
encompasses aerial application of practically all substances, not only pesticides or fungicides but
including water and all forms of chemicals, regardless of its elements, composition, or degree of
safety.

The occurrence of pesticide drift is not limited to aerial spraying but results from the conduct of any
mode of pesticide application. Even manual spraying or truck-mounted boom spraying produces drift
that may bring about the same inconvenience, discomfort and alleged health risks to the community
and to the environment.[141] A ban against aerial spraying does not weed out the harm that the
ordinance seeks to achieve.[142] In the process, the ordinance suffers from being "underinclusive"
because the classification does not include all individuals tainted with the same mischief that the law
Going along with respondent-appellee's ratiocination that the prohibition in the Ordinance refers to
aerial spraying as a method of spraying pesticides or fungicides, there appears to be a need to single
out pesticides or fungicides in imposing such a ban because there is a striking distinction between
such chemicals and other substances (including water), particularly with respect to its safety
implications to the public welfare and ecology.

xxxx
We are, therefore, convinced that the total ban on aerial spraying runs afoul with the equal protection
clause because it does not classify which substances are prohibited from being applied aerially even
as reasonable distinctions should be made in terms of the hazards, safety or beneficial effects of liquid
substances to the public health, livelihood and the environment. [147]
We clarify that the CA did not thereby apply the strict scrutiny approach but only evaluated the
classification established by the ordinance in relation to the purpose. This is the essence of the
rational basis approach.
The petitioners should be made aware that the rational basis scrutiny is not based on a simple means-
purpose correlation; nor does the rational basis scrutiny automatically result in a presumption of
validity of the ordinance or deference to the wisdom of the local legislature. [148] To reiterate, aside
from ascertaining that the means and purpose of the ordinance are reasonably related, the
classification should be based on a substantial distinction.
However, we do not subscribe to the respondents' position that there must be a distinction based on
the level of concentration or the classification imposed by the FPA on pesticides. This strenuous
requirement cannot be expected from a local government unit that should only be concerned with
general policies in local administration and should not be restricted by technical concerns that are
best left to agencies vested with the appropriate special competencies. The disregard of the pesticide
classification is not an equal protection issue but is more relevant in another aspect of delegated
police power that we consider to be more appropriate in a later discussion.
The overinclusiveness of Ordinance No. 0309-07 may also be traced to its Section 6 by virtue of its
requirement for the maintenance of the 30- meter buffer zone. This requirement applies regardless of
the area of the agricultural landholding, geographical location, topography, crops grown and other
distinguishing characteristics that ideally should bear a reasonable relation to the evil sought to be
avoided. As earlier discussed, only large banana plantations could rely on aerial technology because of
the financial capital required therefor.
The establishment and maintenance of the buffer zone will become more burdensome to the small
agricultural landholders because: (1) they have to reserve the 30-meter belt surrounding their
property; (2) that will have to be identified through GPS; (3) the metes and bounds of the buffer zone
will have to be plotted in a survey plan for submission to the local government unit; and (4) will be
limited as to the crops that may be cultivated therein based on the mandate that the zone shall be
devoted to "diversified trees" taller than what are being grown therein. [149] The arbitrariness of
Section 6 all the more becomes evident when the land is presently devoted to the cultivation of root
crops and vegetables, and trees or plants slightly taller than the root crops and vegetables are then to
be planted. It is seriously to be doubted whether such circumstance will prevent the occurrence of the
drift to the nearby residential areas.
Section 6 also subjects to the 30-meter buffer zone requirement agricultural entities engaging in
organic farming, and' do not contribute to the occurrence of pesticide drift. The classification
indisputably becomes arbitrary and whimsical.
A substantially overinclusive or underinclusive classification tends to undercut the governmental claim
that the classification serves legitimate political ends. [150] Where overinclusiveness is the problem, the
vice is that the law has a greater discriminatory or burdensome effect than necessary. [151] In this light,
we strike down Section 5 and Section 6 of Ordinance No. 0309-07 for carrying an invidious
classification, and for thereby violating the Equal Protection Clause.
The discriminatory nature of the ordinance can be seen from its policy as stated in its Section 2, to
wit:
Section 2. POLICY OF THE CITY. It shall be the policy of the City of Davao to eliminate the method of
aerial spraying as an agricultural practice in all agricultural activities by all entities within Davao City.
Evidently, the ordinance discriminates against large farmholdings that are the only ideal venues for
the investment of machineries and equipment capable of aerial spraying. It effectively denies the
affected individuals the technology aimed at efficient and cost-effective operations and cultivation not
only of banana but of other crops as well. The prohibition against aerial spraying will seriously hamper
the operations of the banana plantations that depend on aerial technology to arrest the spread of the
Black Sigatoka disease and other menaces that threaten their production and harvest. As earlier
shown, the effect of the ban will not be limited to Davao City in view of the significant contribution of
banana export trading to the country's economy.
The discriminatory character of the ordinance makes it oppressive and unreasonable in light of the
existence and availability of more permissible and practical alternatives that will not overburden the
respondents and those dependent on their operations as well as those who stand to be affected by
the ordinance. In the view of Regional Director Roger C. Chio of DA Regional Field Unit XI, the alleged
harm caused by aerial spraying may be addressed by following the GAP that the DA has been
promoting among plantation operators. He explained his view thusly:
The allegation that aerial spraying is hazardous to animal and human being remains an allegation and
assumptions until otherwise scientifically proven by concerned authorities and agencies. This issue
can be addressed by following Good Agricultural Practices, which DA is promoting among fruit and
vegetable growers/plantations. Any method of agri-chemical application whether aerial or non-aerial
if not properly done in accordance with established procedures and code of good agricultural
practices and if the chemical applicators and or handlers lack of necessary competency, certainly it
could be hazardous. For the assurance that commercial applicators/aerial applicators possessed the
competency and responsibility of handling agri-chemical, such applicators are required under Article
III, Paragraph 2 of FPA Rules and Regulation No. 1 to secure license from FPA.
Furthermore users and applicators of agri-chemicals are also guided by Section 6 Paragraph 2 and 3
under column of Pesticides and Other agricultural Chemicals of PD 11445 which stated: "FPA shall
establish and enforce tolerance levels and good agricultural practices in raw agricultural commodities;
to restrict or ban the use of any chemical or the formulation of certain pesticides in specific areas or
during certain period upon evidence that the pesticide is eminent [sic] hazards has caused, or is
causing widespread serious damage to crops, fish, livestock or to public health and environment."
Besides the aforecited policy, rules and regulation enforced by DA, there are other laws and
regulations protecting and preserving the environment. If the implementation and monitoring of all
these laws and regulation are closely coordinated with concerned LGUs, Gas and NGAs and other
private sectors, perhaps we can maintain a sound and health environment x x x. [152]
Indeed, based on the Summary Report on the Assessment and Factfinding Activities on the Issue of
Aerial Spraying in Banana Plantations,[153] submitted by the fact-finding team organized by Davao City,
only three out of the 13 barangays consulted by the fact-finding team opposed the conduct of aerial
spraying; and of the three barangays, aerial spraying was conducted only in Barangay Subasta. In fact,
the fact-finding team found that the residents in those barangays were generally in favor of the
operations of the banana plantations, and did not oppose the conduct of aerial spraying.
IV
The Precautionary Principle still requires scientific basis
The petitioners finally plead that the Court should look at the merits of the ordinance based on the
precautionary principle. They argue that under the precautionary principle, the City of Davao is
justified in enacting Ordinance No. 0309-07 in order to prevent harm to the environment and human
health despite the lack of scientific certainty.
The petitioners' plea and argument cannot be sustained.
The principle of precaution originated as a social planning principle in Germany. In the 1980s, the
Federal Republic of Germany used the Vorsogeprinzip ("foresight principle") to justify the
implementation of vigorous policies to tackle acid rain, global warming and pollution of the North Sea.
[154]
It has since emerged from a need to protect humans and the environment from increasingly
unpredictable, uncertain, and unquantifiable but possibly catastrophic risks such as those associated
with Genetically Modified Organisms and climate change, [155] among others. The oft-cited Principle 15
of the 1992 Rio Declaration on Environment and Development (1992 Rio Agenda), first embodied this
principle, as follows:
Principle 15
In order to protect the environment, the precautionary approach shall be widely applied by States
according to their capabilities. Where there are threats of serious or irreversible damage, lack of full
scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent
environmental degradation.
In this jurisdiction, the principle of precaution appearing in the Rules of Procedure for Environmental
Cases (A.M. No. 09-6-8-SC) involves matters of evidence in cases where there is lack of full scientific
certainty in establishing a causal link between human activity and environmental effect. [156] In such an
event, the courts may construe a set of facts as warranting either judicial action or inaction with the
goal of preserving and protecting the environment.[157]
It is notable, therefore, that the precautionary principle shall only be relevant if there is concurrence
of three elements, namely: uncertainty, threat of environmental damage and serious or irreversible
harm. In situations where the threat is relatively certain, or that the causal link between an action and
environmental damage can be established, or the probability of occurrence can be calculated, only
preventive, not precautionary measures, may be taken. Neither will the precautionary principle apply
if there is no indication of a threat of environmental harm; or if the threatened harm is trivial or easily
reversible.[158]
We cannot see the presence of all the elements. To begin with, there has been no scientific study.
Although the precautionary principle allows lack of full scientific certainty in establishing a connection
between the serious or irreversible harm and the human activity, its application is still premised on
empirical studies. Scientific analysis is still a necessary basis for effective policy choices under the
precautionary principle.[159]
Precaution is a risk management principle invoked after scientific inquiry takes place. This scientific
stage is often considered synonympus with risk assessment.[160] As such, resort to the principle shall
not be based on anxiety or emotion, but from a rational decision rule, based in ethics. [161] As much as
possible, a complete and objective scientific evaluation of the risk to the environment or health
should be conducted and made available to decision-makers for them to choose the most appropriate
course of action.[162] Furthermore, the positive and negative effects of an activity is also important in
the application of the principle. The potential harm resulting from certain activities should always be
judged in view of the potential benefits they offer, while the positive and negative effects of potential
precautionary measures should be considered. [163]
The only study conducted to validate the effects of aerial spraying appears to be the Summary Report
on the Assessment and Fact-Finding Activities on the Issue of Aerial Spraying in Banana Plantations.
[164]
Yet, the fact-finding team that generated the report was not a scientific study that could justify the
resort to the .precautionary principle. In fact, the Sangguniang Bayan ignored the findings and
conclusions of the fact-finding team that recommended only a regulation, not a ban, against aerial
spraying. The recommendation was in line with the advocacy of judicious handling and application of
chemical pesticides by the DOH-Center for Health Development in the Davao Region in view of the
scarcity of scientific studies to support the ban against aerial spraying. [165]
We should not apply the precautionary approach in sustaining the ban against aerial spraying if little
or nothing is known of the exact or potential dangers that aerial spraying may bring to the health of
the residents within and near the plantations and to the integrity and balance of the environment. It
is dangerous to quickly presume that the effects of aerial spraying would be adverse even in the
absence of evidence. Accordingly, for lack of scientific data supporting a ban on aerial spraying,
Ordinance No. 0309-07 should be struck down for being unreasonable.
V morals, peace, good order, comfort and convenience, as well as the promotion of their prosperity.
Ordinance No. 0309-07 is an ultra vires act
The Court further holds that in addition to its unconstitutionality for carrying an unwarranted
classification that contravenes the Equal Protection Clause, Ordinance No. 0309-07 suffers from
another legal infirmity.
The petitioners represent that Ordinance No. 0309-07 is a valid exercise of legislative and police
powers by the Sangguniang Bayan of Davao City pursuant to Section 458 in relation to Section 16 both
of the Local Government Code. The respondents counter that Davao City thereby disregarded the
regulations implemented by the Fertilizer and Pesticide Authority (FPA), including its identification and
classification of safe pesticides and other agricultural chemicals.
We uphold the respondents.
An ordinance enjoys the presumption of validity on the basis that:
The action of the elected representatives of the people cannot be lightly set aside. The councilors
must, in the very nature of things, be familiar with the necessities of their particular municipality and
with all the facts and circumstances which surround the subject, and necessities of their particular
municipality and with all the facts and circumstances which surround the subject, and necessitate
action. The local legislative body, by enacting the ordinance, has in effect given notice that the
regulations are essential to the well-being of the people. [166]
Section 5(c) of the Local Government Code accords a liberal interpretation to its general welfare
provisions. The policy of liberal construction is consistent with the spirit of local autonomy that
endows local government units with sufficient power and discretion to accelerate their economic
development and uplift the quality of life for their constituents.
Verily, the Court has championed the cause of public welfare on several occasions. In so doing, it has
accorded liberality to the general welfare provisions of the Local Government Code by upholding the
validity of local ordinances enacted for the common good. For instance, in Social Justice Society (SJS)
v. Atienza, Jr.,[167] the Court validated a zoning ordinance that reclassified areas covered by a large oil
depot from industrial to commercial in order to ensure the life, health and property of the inhabitants
residing within the periphery of the oil depot. Another instance is Gancayco v. City Government of
Quezon City,[168] where the Court declared as valid a city ordinance ordering the construction of
arcades that would ensure the health and safety of the city and its inhabitants, improvement of their
Even in its early years, the Court already extended liberality towards the exercise by the local
government units; of their legislative powers in order to promote the general welfare of their
communities. This was exemplified in United States v. Salaveria,[169] wherein gambling was
characterized as "an act beyond the pale of good morals" that the local legislative council could validly
suppress to protect the well-being of its constituents; and in United States v. Abendan,[170] whereby
the right of the then Municipality of Cebu to enact an ordinance relating to sanitation and public
health was upheld.
The power to legislate under the General Welfare Clause is not meant to be an invincible authority. In
fact, Salaveria and Abendanemphasized the reasonableness and consistency of the exercise by the
local government units with the laws or policies of the State. [171]More importantly, because the police
power of the local government units flows from the express delegation of the power by Congress, its
exercise is to be construed in strictissimi juris. Any doubt or ambiguity arising out of the terms used in
granting the power should be construed against the local legislative units. [172] Judicial scrutiny comes
into play whenever the exercise of police power affects life, liberty or property. [173] The presumption of
validity and the policy of liberality are not restraints on the power of judicial review in the face of
questions about whether an ordinance conforms with the Constitution, the laws or public policy, or if
it is unreasonable, oppressive, partial, discriminating or in derogation of a common right. The
ordinance must pass the test of constitutionality and the test of consistency with the prevailing laws.
[174]
Although the Local Government Code vests the municipal corporations with sufficient power to
govern themselves and manage their affairs and activities, they definitely have no right to enact
ordinances dissonant with the State's laws and policy. The Local Government Code has been fashioned
to delineate the specific parameters and limitations to guide each local government unit in exercising
its delegated powers with the view of making the local government unit a fully functioning subdivision
of the State within the constitutional and statutory restraints.[175] The Local Government Code is not
intended to vest in the local government unit the blanket authority to legislate upon any subject that
it finds proper to legislate upon in the guise of serving the common good.
The function of pesticides control, regulation and development is within the jurisdiction of the FPA
under Presidential Decree No. 1144.[176] The FPA was established in recognition of the need for a
technically oriented government entity[177] that will protect the public from the risks inherent in the
use of pesticides.[178] To perform its mandate, it was given under Section 6 of Presidential Decree No.
1144 the following powers and functions with respect to pesticides and other agricultural
chemicals, viz.:
Section 6. Powers and functions. The FPA shall have jurisdiction, on over all existing handlers of
pesticides, fertilizers and other agricultural chemical inputs. The FPA shall have the following powers
and functions:
xxxx
III. Pesticides and Other Agricultural Chemicals
1. To determine specific uses or manners of use for each pesticide or pesticide formulation;
2. To establish and enforce levels and good agricultural practices for use of pesticides in raw
agricultural commodities;
3. To restrict or ban the use of any pesticide or the formulation of certain pesticides in specific areas
or during certain periods upon evidence that the pesticide is an imminent hazard, has caused, or is
causing widespread serious damage to crops, fish or livestock, or to public health and environment;
xxxx
5. To inspect the establishment and premises of pesticide handlers to insure that industrial health and
safety rules and anti-pollution regulations are followed;
6. To enter and inspect farmers' fields to ensure that only the recommended pesticides are used in
specific crops in accordance with good agricultural practice;
x x x x (Emphasis supplied).
Evidently, the FPA was responsible for ensuring the compatibility between the usage and the
application of pesticides in agricultural activities and the demands for human health and
environmental safety. This responsibility includes not only the identification of safe and unsafe
pesticides, but also the prescription of the safe modes of application in keeping with the standard of
good agricultural practices.
On the other hand, the enumerated devolved functions to the local government units do not include
the regulation and control of pesticides and other agricultural chemicals. [179] The non-inclusion should
preclude the Sangguniang Bayan of Davao City from enacting Ordinance No. 0309-07, for otherwise it
would be arrogating unto itself the authority to prohibit the aerial application of pesticides in
derogation of the authority expressly vested in the FPA by Presidential Decree No. 1144.
In enacting Ordinance No. 0309-07 without the inherent and explicit authority to do so, the City of
Davao performed an ultra vires act. As a local government unit, the City of Davao could act only as an
agent of Congress, and its every act should always conform to and reflect the will of its principal.
[180]
As clarified in Batangas CATV, Inc. v. Court of Appeals:[181]
[W]here the state legislature has made provision for the regulation of conduct, it has manifested its
intention that the subject matter shall be fully covered by the statute, and that a municipality, under
its general powers, cannot regulate the same conduct. In Keller vs. State, it was held that: "Where
there is no express power in the charter of a municipality authorizing it to adopt ordinances regulating
certain matters which are specifically covered by a general statute, a municipal ordinance, insofar as it
attempts to regulate the subject which is completely covered by a general statute of the legislature,
may be rendered invalid. x x x Where the subject is of statewide concern, and the legislature has
appropriated the field and declared the rule, its declaration is binding throughout the State." A reason
advanced for this view is that such ordinances are in excess of the powers granted to the municipal
corporation.
Since E.O. No. 205, a general law, mandates that the regulation of CATV operations shall be exercised
by the NTC, an LGU cannot enact an ordinance or approve a resolution in violation of the said law.
It is a fundamental principle that municipal ordinances are inferior in status and subordinate to the
laws of the state. An ordinance in conflict with a state law of general character and statewide
application is universally held to be invalid. The principle is frequently expressed in the declaration
that municipal authorities, under a general grant of power, cannot adopt ordinances which infringe
the spirit of a state law or repugnant to the general policy of the state. In every power to pass
ordinances given to a municipality, there is an implied restriction that the ordinances shall be
consistent with the general law.[182] (Emphasis ours)
For sure, every local government unit only derives its legislative authority from Congress. In no
instance can the local government unit rise above its source of authority. As such, its ordinance
cannot run against or contravene existing laws, precisely because its authority is only by virtue of the
valid delegation from Congress. As emphasized in City of Manila v. Laguio, Jr.:[183]
The requirement that the enactment must not violate existing law gives stress to the precept that
local government units are able to legislate only by virtue of their derivative legislative power, a
delegation of legislative power from the national legislature. The delegate cannot be superior to the
principal or exercise powers higher than those of the latter.
This relationship between the national legislature and the local government units has not been
enfeebled by the new provisions in the Constitution strengthening the policy of local autonomy. The
national legislature is still the principal of the local government units, which cannot defy its will or
modify or violate it.[184]
Moreover, Ordinance No. 0309-07 proposes to prohibit an activity already covered by the jurisdiction
of the FPA, which has issued its own regulations under its Memorandum Circular No. 02, Series of
2009, entitled Good Agricultural Practices for Aerial Spraying of Fungicide in Banana Plantations.
[185]
While Ordinance No. 0309-07 prohibits aerial spraying in banana plantations within the City of
Davao, Memorandum Circular No. 02 seeks to regulate the conduct of aerial spraying in banana
plantations[186] pursuant to Section 6, Presidential Decree No. 1144, and in conformity with the
standard of Good Agricultural Practices (GAP). Memorandum Circular No. 02 covers safety
procedures,[187] handling[188] and post-application,[189] including the qualifications of applicators,
[190]
storing of fungicides,[191] safety and equipment of plantation personnel,[192] all of which are
incompatible with the prohibition against aerial spraying under Ordinance No. 0309-07.
Although Memorandum Circular No. 02 and Ordinance No. 0309-07 both require the maintenance of
the buffer zone, they differ as to their treatment and maintenance of the buffer zone. Under
Memorandum Circular No. 02, a 50-meter "no-spray boundary" buffer zone should be observed by
the spray pilots,[193] and the observance of the zone should be recorded in the Aerial Spray Final
Report (ASFR) as a post-application safety measure.[194] On the other hand, Ordinance No. 0309-07
requires the maintenance of the 30-meter buffer zone to be planted with diversified trees. [195]
Devoid of the specific delegation to its local legislative body, the City of Davao exceeded its delegated
authority to enact Ordinance No. 0309-07. Hence, Ordinance No. 0309-07 must be struck down also
for being an ultra vires act on the part of the Sangguniang Bayan of Davao City.
We must emphasize that our ruling herein does not seek to deprive the LGUs their right to regulate
activities within their jurisdiction. They are empowered under Section 16 of the Local Government
Code to promote the general welfare of the people through regulatory, not prohibitive, ordinances
that conform with the policy directions of the National Government. Ordinance No. 0309-07 failed to
pass this test as it contravenes the specific regulatory policy on aerial spraying in banana plantations
on a nationwide scale of the National Government, through the FPA.
Finally, the unconstitutionality of the ban renders nugatory Ordinance No. 0309-07 in its entirety.
Consequently, any discussion on the lack of the separability clause becomes entirely irrelevant.
WHEREFORE, the Court DENIES the consolidated petitions for review on certiorari for their lack of
merit; AFFIRMS the decision promulgated on January 9, 2009 in C.A.-G.R. CV No. 01389-MIN.
declaring Ordinance No. 0309-07 UNCONSTITUTIONAL; PERMANENTLY ENJOINS respondent City of
Davao, and all persons or entities acting in its behalf or under its authority, from enforcing and
implementing Ordinance No. 0309-07; and ORDERS the petitioners to pay the costs of suit.
SO ORDERED.
 Republic Act No. 9275 March 22, 2004
AN ACT PROVIDING FOR A COMPREHENSIVE WATER QUALITY MANAGEMENT AND FOR OTHER
PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:
CHAPTER 1
GENERAL PROVISIONS
ARTICLE 1
DECLARATION OF PRINCIPLES AND POLICIES
SECTION 1. Short Title. - This Act shall be known as the "Philippine Clean Water Act of 2004."
SECTION 2. Declaration of Policy. - The State shall pursue a policy of economic growth in a manner
consistent with the protection, preservation and revival of the quality of our fresh, brackish and
marine waters. To achieve this end, the framework for sustainable development shall be pursued. As
such, it shall be the policy of the State:
a) To streamline processes and procedures in the prevention, control and abatement of
pollution of the country's water resources;
b) To promote environmental strategies, use of appropriate economic instruments and of
control mechanisms for the protection of water resources;
c) To formulate a holistic national program of water quality management that recognizes that
water quality management issues cannot be separated from concerns about water sources
and ecological protection, water supply, public health and quality of life;
d) To formulate an integrated water quality management framework through proper
delegation and effective coordination of functions and activities;
e) promote commercial and industrial processes and products that are environment friendly
and energy efficient;
f) To encourage cooperation and self-regulation among citizens and industries through the
application of incentives and market-based instruments and to promote the role of private
industrial enterprises in shaping its regulatory profile within the acceptable boundaries of
public health and environment;
g) To provide for a comprehensive management program for water pollution focusing on
pollution prevention;
h) To promote public information and education and to encourage the participation of an
informed and active public in water quality management and monitoring;
i) To formulate and enforce a system of accountability for short and long-term adverse
environmental impact of a project, program or activity; and
j) To encourage civil society and other sectors, particularly labor, the academe and business
undertaking environment-related activities in their efforts to organize, educate and motivate
the people in addressing pertinent environmental issues and problems at the local and
national levels.
SECTION 3. Coverage of the Act. - This Act shall apply to water quality management in all water
bodies: Provided, That it shall primarily apply to the abatement and control of pollution from land
based sources: Provided, further, That the water quality standards and regulations and the civil
liability and penal provisions under this Act shall be enforced irrespective of sources of pollution.
ARTICLE 2
DEFINITION OF TERMS
SECTION 4. Definition of Terms. - As used in this Act:
a) Aquifer - means a layer of water-bearing rock located underground that transmits water in
sufficient quantity to supply pumping wells or natural springs.
b) Aquatic life - means all organisms living in freshwater, brackish and marine environment.
c) Beneficial use - means the use of the environment or any element or segment thereof
conducive to public or private welfare, safety and health; and shall include, but not be
limited to, the use of water for domestic, municipal, irrigation, power generation, fisheries,
livestock raising, industrial, recreational and other purposes.
1. Use of water for domestic purposes - means the utilization of water for drinking,
washing, bathing, cooking or other household needs, home gardens and watering of
lawns or domestic animals;
2. Use of water for municipal purposes - means the utilization of water for supplying
water requirements of the community;
 3. Use of water for irrigation - means the utilization of water for producing
agricultural crops;
4. Use of water for power generation - means the utilization of water for producing
electrical or mechanical power;
5. Use of water for fisheries - means the utilization of water for the propagation of
culture of fish as a commercial enterprise;
6. Use of water for livestock raising - means the utilization of water for large herds
or flocks of animals raised as a commercial enterprise;
7. Use of water for industrial purposes - means the utilization of water in factories,
industrial plants and mines, including the use of water as an ingredient of a finished
product; and
8. Use of water for recreational purposes - means the utilization of water for
swimming pools, bath houses, boating, water skiing, golf courses and other similar
facilities in resorts and other places of recreation.
d) Classification/Reclassification of Philippine Waters - means the categorization of all water
bodies taking into account, among others, the following: (1) existing quality of the body of
water; (2) size, depth, surface area covered, volume, direction, rate of flow and gradient of
stream; (3) most beneficial existing and future use of said bodies of water and lands
bordering them, such as for residential, agricultural, aquacultural, commercial, industrial,
navigational, recreational, wildlife conservation and aesthetic purposes; and (4) vulnerability
of surface and groundwater to contamination from pollutive and hazardous wastes,
agricultural chemicals and underground storage tanks of petroleum products.
e) Civil Society - means non-government organizations (NGOs) and people's organizations
(POs).
f) Cleaner Production - means the application of an integrated, preventive environmental
strategy to processes, products, services to increase efficiency and reduce risk to humans and
the environment;
g) Clean-up operations - means activities involving the removal of pollutants discharged or
spilled into a water body and its surrounding areas, and the restoration of the affected areas
to their former physical, chemical and biological state or conditions.
h) Contamination - means the production of substances not found in the natural composition
of water that make the water less desirable or unfit desirable or unfit for intended use.
i) Department - means the Department of Environment and Natural Resources.
j) Discharge includes, but is not limited to, the act of spilling, leaking, pumping, pouring,
emitting, emptying, releasing or dumping of any material into a water body or onto land
from which it might flow or drain into said water.
k) Drinking water- means water intended for human consumption or for use in food
preparation.
l) Dumping - means any unauthorized or illegal disposal into any body of water or land of
wastes or toxic or hazardous material: Provided, That it does not mean a release of effluent
coming from commercial, industrial, and domestic sources which are within the effluent
standards.
m) Effluent - means discharge from known sources which is passed into a body of water or
land, or wastewater flowing out of a manufacturing plant, industrial plant including
domestic, commercial and recreational facilities.
n) Effluent standard - means any legal restriction or limitation on quantities, rates, and/or
concentrations or any combination thereof, of physical, chemical or biological parameters of
effluent which a person or point source is allowed to discharge into a body of water or land.
o) Environmental management - means the entire system which includes, but is not limited
to, conservation, regulation and minimization of pollution, clean production, waste
management, environmental law and policy, environmental education and information,
study and mitigation of the environmental impacts of human activity, and environmental
research.
p) Environmental management system - means the part of the overall management system
that includes organizational structure, planning activities, responsibilities, practices,
procedures, processes and resources for developing, implementing, achieving, reviewing and
maintaining the environment policy.
q) Freshwater - means water containing less than 500 ppm dissolved common salt, sodium
chloride, such as that in groundwater, rivers, ponds and lakes.
r) Groundwater - means a subsurface water that occurs beneath a water table in soils and
rocks, or in geological formations.
s) Groundwater vulnerability - means relative ease with which a contaminant located at or
near the land surface can migrate to the aquifer or deep well.
t) Groundwater vulnerability map - means the identified areas of the land surface where
groundwater quality is most at risk from human activities and shall reflect the different
degrees of groundwater vulnerability based on a range of soil properties and hydro
geological criteria to serve as guide in the protection of the groundwater from
contamination.
u) Hazardous waste - means any waste or combination of wastes of solid liquid, contained
gaseous, or semi-solid form which cause, of contribute to, an increase in mortality or an
increase in serious irreversible, or incapacitating reversible illness, taking into account toxicity
of such waste, its persistence and degradability in nature, its potential for accumulation or
concentration in tissue, and other factors that may otherwise cause or contribute to adverse
acute or chronic effects on the health of persons or organism.
v) Industrial waste - means any solid, semi-solid or liquid waste material with no commercial
value released by a manufacturing or processing plant other than excluded material.
w) Integrated Water Quality Management Framework - means the policy guideline
integrating all the existing frameworks prepared by all government agencies contain the
following; water quality goals and targets; (b) period of compliance; (c) water pollution
control strategies and techniques; (d) water quality information and education program; (e)
human resources development program.
x) Margin - means a landward and outer limiting edge adjacent to the border of any water
bodies or a limit beyond where beyond where saturation zone ceases to exist.
y) National Water Quality Status Report - means a report to be prepared by the Department
indicating: a) the location of water bodies, their quality, taking into account seasonal, tidal
and others variations, existing and potential uses and sources of pollution per specific
pollutant and pollution load assessment; b) water quality management areas pursuant to
Section 5 of this Act; c) and water classification.
z) Non-point source - means any source of pollution not identifiable as point source to
include, but not be limited to, runoff from irrigation or rainwater, which picks up pollutants
from farms and urban areas.
aa) Point source - means any identifiable source of pollution with specific point of discharge
into a particular water body.
bb) Pollutant- shall refer to any substance, whether solid, liquid, gaseous or radioactive,
which directly or indirectly:
(i) alters the quality of any segment of the receiving water body to affect or tend to
affect adversely any beneficial use thereof;
(ii) is hazardous or potential hazardous to health;
(iii) imparts objectionable odor, temperature change, or physical, chemical or
biological change to any segment of the water body; or
(iv) is in excess of the allowable limits, concentrations, or quality standards
specified, or in contravention of the condition, limitation or restriction prescribed in
this Act.
cc) Pollution control technology- means pollution control devices or apparatus, processes, or
other means that effectively prevent control or reduce pollution of water caused by effluents
and other discharges, from any point source at levels within the water pollution standards.
dd) Potentially infectious medical waste- include isolation wastes, infectious agents, human
blood and blood products, pathological wastes, sharps, body parts, contaminated bedding,
surgical wastes, and other disposable medical equipment and material that may pose a risk
to the public health, welfare or the marine environment.
ee) Secretary - means the Secretary of the Department of Environmental and Natural
Resources (DENR).
ff) Septage - means the sludge produced on individual onsite wastewater disposal systems,
principally septic tanks and cesspools.
gg) Sewage - means water-borne human or animal wastes, excluding oil or oil wastes,
removed from residences, building, institutions, industrial and commercial establishments
together with such groundwater, surface water and storm water as maybe present including
such waste from vessels, offshore structures, other receptacles intended to receive or retain
waste or other places or the combination thereof.
hh) Sewerage - includes, but is not limited to, any system or network of pipelines, ditches,
channels, or conduits including pumping stations, lift stations and force mains, service
connections including other constructions, devices, and appliances appurtenant thereto,
which includes the collection, transport, pumping and treatment of sewage to a point of
disposal.
ii) Sludge - means any solid, semi-solid or liquid waste or residue generated from a
wastewater treatment plant, water supply treatment plant, or water control pollution facility,
or any other such waste having similar characteristics and effects.
jj) Surface water - means all water, which is open to the atmosphere and subject to surface
runoff.
kk) Treatment - means any method, technique, or process designed to alter the physical,
chemical or biological and radiological character or composition of any waste or wastewater
to reduce or prevent pollution.
ll) Toxic amount - means the lowest amount of concentration of toxic pollutants, which may
cause chronic or long-term acute or lethal conditions or effects to the aquatic life, or health
of persons or which may adversely affect designated water uses.
mm) Waste - means any material either solid, liquid, semisolid, contained gas or other forms
resulting industrial, commercial, mining or agricultural operations, or from community and
household activities that is devoid of usage and discarded.
nn) Wastewater - means waste in liquid state containing pollutants.
oo) Water body - means both natural and man-made bodies of fresh, brackish, and saline
waters, and includes, but is not limited to, aquifers, groundwater, springs, creeks, streams,
rivers, ponds, lagoons, water reservoirs, lakes, bays, estuarine, coastal and marine waters.
Water bodies do not refer to those constructed, developed and used purposely as water
treatment facilities and / or water storage for recycling and re-use which are integral to
process industry or manufacturing.
pp) Water Pollution - means any alteration of the physical, chemical, biological, or
radiological properties of a water body resulting in the impairment of its purity or quality.
qq) Water Quality - means the characteristics of water, which define its use in characteristics
by terms of physical, chemical, biological, bacteriological or radiological characteristics by
which the acceptability of water is evaluated.
rr) Water quality guidelines - means the level for a water constituent or numerical values of
physical, chemical, biological and bacteriological or radiological parameters which are used
to classify water resources and their use, which does not result in significant health risk and
which are not intended for direct enforcement but only for water quality management
purposes, such as determining time trends, evaluating stages of deterioration or
enhancement of the water quality, and as basis for taking positive action in preventing,
controlling or abating water pollution.
ss) Water Quality Management Area Action Plan - includes, but not be limited to, the
following: (a) goals and targets including sewerage or septage program, (b) schedule of
compliance to meet the applicable requirements of this Act; (c) water pollution control
strategies or techniques; (d) water quality information and education program; e) resource
requirement and possible sources; f) enforcement procedures of the plan and (g) rewards
and incentives under Chapter 4 of this Act.
CHAPTER 2
WATER QUALITY MANAGEMENT SYSTEM
ARTICLE 1
GENERAL PROVISIONS
SECTION 5. Water Quality Management Area. - The Department, in coordination with National
Water Resources Board (NWRB), shall designate certain areas as water quality management areas
using appropriate physiographic units such as watershed, river basins or water resources regions. Said
management areas shall have similar hydrological, hydrogeological, meteorological or geographic
conditions which affect the physicochemical, biological and bacteriological reactions and diffusions of
pollutants in the water bodies, or otherwise share common interest or face similar development
programs, prospects or problems.
Said management area shall be governed by a governing board composed of representatives of
mayors and governors of member local government units (LGUs), and representatives of relevant
national government agencies, duly registered non-governmental organization, water utility sector,
and business sector. The Department representative shall chair the governing board. In the case of the
LGUs with memberships on more than one (1) management board, the LGU shall designate only one
(1) single representative for all the management areas wherein is a member.
The governing board shall formulate strategies to coordinate policies necessary for the effective
implementation of this Act in accordance with those established in the framework and monitor the
compliance with the action plan.
Each management area shall create a multi-sectoral group to establish and affect water quality
surveillance and monitoring network including sampling schedules and other similar activities. The
group shall submit its report and recommendation to the chairman of the governing board.
A technical secretariat for each management area is hereby created which shall be part of the
department and shall provide technical support to the governing board. They shall be composed of at
least four (4) members who shall have the following minimum qualifications:
a) One (1) member shall be a member of the Philippines Bar;
b) One (1) member shall be a Chemical Engineer, Chemist, Sanitary Engineer, Environmental
Engineer or Ecologist or significant training and experience in chemistry;
 c) One (1) member shall be a Civil Engineer or Hydrologist or Significant training and
experience in closely related fields and experience on ground water, respectively; and
d) One (1) member shall be a Geologist, Biologist, or significant training and experience in
closely related fields.
The areas within the jurisdiction of the Laguna Lake Development Authority (LLDA) shall be
designated as one management area under the administration of LLDA in accordance with R.A. No.
4850, as amended: Provided, However, That the standards promulgated pursuant to this Act and
wastewater charge system established pursuant hereof shall be enforced in said area.
SECTION 6. Management of Non-attainment Areas. - The Department shall designate water bodies,
or portions thereof, where specific pollutants from either natural or man-made source have already
exceeded water quality guidelines as non-attainment areas for the exceeded pollutants. It shall
prepare and implement a program that will not allow new sources of exceeded water pollutant in
non-attainment areas without a corresponding reduction in discharges from existing sources;
Provided, That if the pollutant is naturally occurring, e.g. naturally high boron and other elements in
geothermal areas, discharge of such pollutant may be allowed: Provided, further, That the effluent
concentration of discharge shall not exceed the naturally occurring level of such pollutant in the area:
Provided, Finally, That the effluent concentration and volume of discharge shall not adversely affect
water supply, public health and ecological protection.
The Department shall, in coordination with NWRB, Department of Health (DOH), Department of
Agriculture (DA), governing board and other concerned government agencies and private sectors shall
take such measures as may be necessary to upgrade the quality of such water in non-attainment areas
to meet the standards under which it has been classified.
Upgrading of water quality shall likewise include undertakings, which shall improve the water quality
of a water body to a classification that will meet its projected or potential use.
The LGUs shall prepare and implement contingency plans and other measures including relocation,
whenever necessary, for the protection of health and welfare of the residents within potentially
affected areas.
SECTION 7. National Sewerage and Septage Management Program. - The Department of Public
Works and Highways (DPWH), through its relevant attached agencies, in coordination with the
Department, local government units (LGUs) and other concerned agencies, shall, as soon as possible,
but in no case exceeding a period of twelve (12) months from the affectivity of this Act, prepare a
national program on sewerage and septage management in connection with Section 8 hereof.
Such program shall include a priority listing of sewerage, septage and combined sewerage-septage
projects for LGUs based on population density and growth, degradation of water resources,
topography, geology, vegetation, program/projects for the rehabilitation of existing facilities and such
other factors that the Secretary may deem relevant to the protection of water quality. On the basis of
such national listing, the national government may allot, on an annual basis, funds for the
construction and rehabilitation of required facilities.
Each LGU shall appropriate the necessary land, including the required rights-of-way/road access to
the land for the construction of the sewage and/or septage treatment facilities.
Each LGU may raise funds to subsidize necessary expenses for the operation and maintenance of
sewerage treatment or septage facility servicing their area of jurisdiction through local property taxes
and enforcement of a service fee system.
SECTION 8. Domestic Sewage Collection, Treatment and Disposal. - Within five (5) years following
the effectivity of this Act, the Agency vested to provide water supply and sewerage facilities and/or
concessionaires in Metro Manila and other highly urbanized cities (HUCs) as defined in Republic Act
No. 7160, in coordination with LGUs, shall be required to connect the existing sewage line found in all
subdivisions, condominiums, commercial centers, hotels, sports and recreational facilities, hospitals,
market places, public buildings, industrial complex and other similar establishments including
households to available sewerage system. Provided, That the said connection shall be subject to
sewerage services charge/fees in accordance with existing laws, rules or regulations unless the
sources had already utilized their own sewerage system: Provided, further, That all sources of sewage
and septage shall comply with the requirements herein.
In areas not considered as HUCs, the DPWH in coordination with the Department, DOH and other
concerned agencies, shall employ septage or combined sewerage-septage management system.
For the purpose of this section, the DOH, coordination with other government agencies, shall
formulate guidelines and standards for the collection, treatment and disposal of sewage including
guidelines for the establishment and operation of centralized sewage treatment system.
SECTION 9. National Water Quality Management Fund. - A water quality management fund, to be
administered by the Department, in coordination with other concerned agencies, as a special account
in the National Treasury is hereby established. The fund shall be used to finance the following:
a) Finance containment and clean-up operations of the government in water pollution cases;
b) Guarantee restoration of ecosystems and rehabilitation of affected areas;
c) Support research, enforcement and monitoring activities;
d) Provide technical assistance to the implementing agencies;
e) Grant rewards and incentives;
 f) Support information and educational campaign; and
g) Such other disbursements made solely for the prevention, control or abatement of water
pollution and management and administration of the management areas in the amounts
authorized by the Department.
The fines imposed and damages awarded to the government by the Pollution Adjudication Board
(PAB), proceeds of permits issued by the Department under this Act, donations, endowments and
grants in the form of contributions to the national government under this Act shall form part of the
fund. Such donations, endowments and grants shall be exempt from donor's taxes and all other taxes,
charges or fees imposed by the government and shall be deductible from the gross income of the
donor for income tax purposes.
Disbursements from the fund shall be subject to the usual accounting and budgeting rules and
regulations.
SECTION 10. The Area Water Quality Management Fund. - The area water quality management fund
is hereby established for the maintenance and upkeep of the water bodies in a water quality
management area. The fund shall be utilized for the grant of rewards and incentives for entities
whose effluent discharges are better than the water quality criteria of the target classification of the
receiving body of water, loans for acquisitions and repairs of facilities to reduce quantity and improve
quality of wastewater discharges, and regular maintenance of the water bodies within the
management area.
An amount of not more than ten percent (10%) of the total amount accruing to the funds annually
shall be allocated for the operational expenses of the governing board, its secretariat and multi-
sectoral water quality surveillance and monitoring network.
This fund shall initially be sourced from the fines incurred by the establishments located in rural areas
before the effectivity of this Act. Thereafter, the fees collected under the wastewater charge system
established under Section 13 of this Act, donations, endowments and grants for water quality
management of the area shall accrue to the fund.
Disbursements from the fund shall be subject to the usual accounting and budgeting rules and
regulations. This fund shall be managed by the Board of the corresponding management area.
SECTION 11. Water Quality Variance for Geothermal and Oil and Gas Exploration. - The Department
may provide variance in water quality criteria and standards for geothermal exploration that
encounters re-injection constraints: Provided, That there shall be provision for adequate protection of
beneficial use of water bodies, downstream of the geothermal project: Provided, further, That this
provision may be applied to oil and gas exploration as determined by the Department.
SECTION 12. Categories of Industry Sector. - Within twenty-four (24) months from the effectivity of
this Act, and every two (2) years thereafter, the Department shall, through due public consultation,
revise and publish a list of categories of industry sector for which effluent standards will be provided
for each significant wastewater parameter per industry sector.
The Department shall provide additional classification based on other parameters specifically
associated to discharge of a particular industry which shall be included in the listing of categories
prescribed in the preceding paragraph.
ARTICLE 2
WATER POLLUTION PERMITS AND CHARGES
SECTION 13. Wastewater Charge System. - The Department shall implement a wastewater charge
system in all management areas including the Laguna Lake Region and Regional Industrial Centers
through the collection of wastewater charges/fees. The system shall be established on the basis of
payment to the government for discharging wastewater into the water bodies. Wastewater charges
shall be established taking into consideration the following:
a) To provide strong economic inducement for polluters to modify their production or
management processes or to invest in pollution control technology in order to reduce the
amount of water pollutants generated;
b) To cover the cost of administering water quality management or improvement programs;
c) Reflect damages caused by water pollution on the surrounding environment, including the
cost of rehabilitation;
d) Type of pollutant;
e) Classification of the receiving water body; and
f) Other special attributes of the water body.
The fee shall be based on the net waste load depending on the wastewater, charge formula which
shall be established with due public consultation within six (6) months from the effectivity of this Act:
Provided, That net waste load shall refer to the difference of the initial waste load of the abstracted
water and the waste load of the final effluent discharge of an industry: Provided, further, That no net
waste load shall be lower than the initial waste load: Provided, finally, That wastewater charge system
shall not apply to wastewater from geothermal exploration.
Industries whose water effluent are within standards promulgated pursuant to this Act, shall only be
charged with minimal reasonable amount which shall be determined by the Department after due
public consultation, giving account to volumetric rate of discharge and effluent concentration.
SECTION 14. Discharge Pemits. - The Department shall require owners or operators of facilities that
discharge regulated effluents pursuant to this Act to secure a permit to discharge. The discharge
permit shall be the legal authorization granted by the Department to discharge wastewater: Provided,
That the discharge permit shall specify among others, the quantity and quality of effluent that said
facilities are allowed to discharge into a particular water body, compliance schedule and monitoring
requirement.
As part of the permitting procedure, the Department shall encourage the adoption of waste
minimization and waste treatment technologies when such technologies are deemed cost effective.
The Department shall also develop procedures to relate the current water quality guideline or the
projected water quality guideline of the receiving water body/ies with total pollution loadings from
various sources, so that effluent quotas can be properly allocated in the discharge permits. For
industries without any discharge permit, they may be given a period of twelve {12) months after the
effectivity of the implementing rules and regulations promulgated pursuant to this Act, to secure a
discharge permit.
Effluent trading may be allowed per management area.
ARTICLE 3
FINANCIAL LIABILITY MECHANISM
SECTION 15. Financial Liability for Environmental Rehabilitation. - The Department shall require
program and project proponents to put up environmental guarantee fund {EGF) as part of the
environmental management plan attached to the environmental compliance certificate pursuant to
Presidential Decree No.1586 and its implementing rules and regulations. The EGF shall finance the
maintenance of the health of the ecosystems and specially the conservation of watersheds and
aquifers affected by the development, and the needs of emergency response, clean-up or
rehabilitation of areas that may be damaged during the program's or project's actual implementation.
Liability for damages shall continue even after the termination of a program or project and, until the
lapse of a given period indicated in the environmental compliance certificate, as determined by the
Department. The EGF may be in the form of a trust fund, environmental insurance, surety bonds,
letters of credit, self-insurance and any other instruments which may be identified by the
Department. The choice of the guarantee instrument or combinations thereof shall depend, among
others, on the assessment of the risks involved and financial test mechanisms devised by the
Department. Proponents required to put up guarantee instruments shall furnish the Department with
evidence of availment of such instruments from accredited financial instrument providers.
SECTION 16. Clean-Up Operations. - Notwithstanding the provisions of Sections 15 and 26 hereof, any
person who causes pollution in or pollutes water bodies in excess of the applicable and prevailing
standards shall be responsible to contain, remove and clean-up any pollution incident at his own
expense to the extent that the same water bodies have been rendered unfit for utilization and
beneficial use: Provided, That in the event emergency clean-up operations are necessary and the
polluter fails to immediately undertake the same, the Department, in coordination with other
government agencies concerned, shall conduct containment, removal and clean-up operations.
Expenses incurred in said operations shall be reimbursed by the persons found to have caused such
pollution upon proper administrative determination in accordance with this Act. Reimbursements of
the cost incurred shall be made to the Water Quality Management Fund or to such other funds where
said disbursements were sourced.
SECTION 17. Programmatic Environmental Impact Assessment. - The Department shall implement
programmatic compliance with the environmental impact assessment system, as in the following
types of development:
a) development consisting of a series of similar projects, or a project subdivided into several
phases and/or stages whether situated in a contiguous area or geographically dispersed; and
b) development consisting of several components or a cluster of projects co-located in an
area such as an industrial estate, an export processing zone, or a development zone
identified in a local land use plan.
Programmatic compliance with the environmental impact assessment system shall be guided by
carrying capacity assessments determined from ecological profiles. Ecological profiles shall Identify
environmental constraints and opportunities in programmatic areas. Programmatic assessment shall
also take into account cumulative impacts and risks.
Consistent with the provisions of the Local Government Code, the Department may enter into
agreement with LGUs to incorporate programmatic environmental impact assessment into the
preparation, updating or revision of local land use plans and area development plans.
SECTION 18. Environmental Impact Assessment System Programmatic Compliance with Water
Quality Standards. - The. Department may allow each regional industrial center established pursuant
to Republic Act No.7916 (PEZA law) to allocate effluent quotas to pollution sources within its
jurisdiction that qualify under an environmental impact assessment system programmatic compliance
program in accordance with Presidential Decree No. 15867 and its implementing rules and
regulations.
CHAPTER 3
INSTITUTIONAL MECHANISM
SECTION 19. Lead Agency. - The Department shall be the primary government agency responsible for
the implementation and enforcement of this Act unless otherwise provided herein. As such, it shall
have the following functions, powers and responsibilities:
a) Prepare a National Water Quality Status Report within twenty-four (24) months from the
effectivity of this Act: Provided, That the Department shall thereafter review or revise and
publish annually, or as the need arises, said report;
b) Prepare an Integrated Water Quality Management Framework within twelve (12) months
following the completion of the status report;
c) Prepare a ten (10) year Water Quality Management Area Action Plan within twelve (12)
months following the completion of the framework for each designated water management
area. Such action plan shall be reviewed by the water quality management area governing
board every five (5) years or as need arises;
d) Prepare and publish a national a national groundwater vulnerability map incorporating the
prevailing standards and methodologies, within twenty four (24) months after the effectivity
of this Act;
e) Enforce, review and revise within twelve (12) months from the effectivity of this Act water
quality guidelines after due consultation with the concerned stakeholder sectors: Provided,
That the Department, in coordination with appropriate agencies shall review said guidelines
every five (5) years or as need arises;
f) Review and set effluent standards every five (5) years from the effectivity of this Act or
sooner as determined by the Department: Provided, That in the interim, the provisions of
DENR Administrative Order No. 35 of the Department shall apply: Provided, further, That
when new and more stringent standards are set in accordance with this section, the
Department may establish a grace period with a maximum of five (5) years: Provided, finally,
That such grace period shall be limited to the moratorium on the issuance of cease and
desist and/or closure order against the industry's operations except in the event such
operation poses serious and grave threat to the environment, or the industry fails to institute
retooling, upgrading or establishing an environmental management system (EMS).
g) Establish within twelve (12) months from the effectivity of this Act, internationally-
accepted procedures for sampling and analysis of pollutants and in coordination with other
concerned agencies, formulate testing procedures and establish an accreditation system for
laboratories;
h) Within eighteen (18) months from the effectivity of this Act and every two (2) years
thereafter, categorize point and non-point sources of water pollution;
i) Classify groundwater sources within twelve (12) months from the effectivity of this Act;
j) Classify or reclassify all water bodies according to their beneficial usages: Provided, that in
the interim, the provisions of DENR Administrative Order No.34 shall apply: Provided, further,
that such classification or reclassification shall take into consideration the operation of
businesses or facilities that are existing prior to the effectivity of the Act: Provided,
furthermore, that the Department may authorize the use of the water for other purposes
that are more restrictive in classification: Provided, finally, That discharges resulting from
such use shall meet the effluent standards set by the Department;
k) Exercise jurisdiction over all aspects of water pollution, determine its location, magnitude,
extent, severity, causes, effects and other pertinent information on pollution, and to take
measures, using available methods and technologies to prevent and abate such pollution;
l) Exercise supervision and control over all aspects of water quality management;
m) Establish a cooperative effort in partnership with the government, LGUs, academic
institutions, civil society and the private sector to attain the objectives of this Act;
n) Disseminate information and conduct educational awareness and value formation
programs and campaigns on the effects of water pollution on health and environment, water
quality management, and resource conservation and recovery to encourage an
environmentally action-oriented society in coordination with government agencies identified
in Section 22 (f);
o) Promote. and encourage private and business sectors especially manufacturing and
processing plants the use of water quality management systems equipment, including but
not limited to, industrial wastewater treatment collection and treatment facilities;
p) Report, on an annual basis, to Congress the, quality status of water bodies and other
pertinent information and recommend possible legislation, policies and programs for
environmental management and water pollution control;
q) Issue rules and regulations for the effective implementation of the provisions of this Act;
r) Issue orders against any person or entity and impose fines, penalties and other
administrative sanctions to compel compliance with water quality the provisions of this Act;
s) Undertake appropriate protocol with other concerned agencies for immediate coordinated
responses to water related emergency incidents;
t) Issue permits, clearances and similar instruments pursuant to this Act; and
 u) Exercise such powers and perform such other functions as may be necessary to carry out
the objectives of this Act
The Department shall gradually devolve to the LGUs, and to the governing boards the authority to
administer some aspects of water quality management and regulation, including, but not to be
limited to, permit issuance, monitoring and imposition of administrative penalties, when, upon the
Department's determination, the LGU or the governing board has demonstrated readiness and
technical capability to undertake such functions.
SECTION 20. Role of Local Government Units. - Local government units shall share the responsibility
in the management and improvement of water quality within their territorial jurisdictions.
Each local government unit shall within six (6) months after the establishment of the water quality
management area action plan prepare a compliance scheme in, accordance thereof, subject to review
and approval of the governing board.
Each local government unit shall, through its Environment and Natural Resources Office (ENRO)
established in Republic Act No.7160, have the following powers and functions:
a) Monitoring of water quality;
b) Emergency response;
c) Compliance with the framework of the Water Quality Management Action Plan;
d) To take active participation in all efforts concerning water quality protection and
rehabilitation; and
e) To coordinate with other government agencies and civil society and the concerned sectors
in the implementation of measures to prevent and control water pollution: Provided,
however, That in provinces/cities/municipalities where there are no environment and natural
resources officers, the local executive concerned may, with the approval of the Secretary of
the DENR designate any of his official and/or chief of office preferably the provincial, city or
municipal agriculturist, or any of his employee: Provided, finally, That in case an employee is
designated as such, he must have sufficient experience in environmental and natural
resources management, conservation and utilization.
SECTION 21. Business and Industry Role in Environmental Management. - The Department and the
LGUs, in coordination with the appropriate government agencies. and in consultation with the
business and industrial sectors including commerce, shall formulate appropriate incentives for the
adoption procedures that will preserve and protect our water bodies through the introduction of
innovative equipment and processes that reduce if totally eliminate discharge of pollutants into our
water bodies.
SECTION 22. Linkage Mechanism. - The Department and its concerned attached agencies including
LLDA shall coordinate and enter into agreement with other government agencies, industrial sector
and other concerned sectors in the furtherance of the objectives of this Act- The following agencies
shall perform tile functions specified hereunder:
a) Philippine Coast Guard in coordination with DA and the Department shall enforce for the
enforcement of water quality standards in marine waters, set pursuant to this Act,
specifically from offshore sources;
b) DPWH through its attached agencies, such as the MWSS, LWUA, and including other urban
water utilities for the provision or sewerage and sanitation facilities and the efficient and safe
collection, treatment and disposal of sewage within their area of jurisdiction;
c) DA, shall coordinate with the Department, in the formulation of guidelines for the re-use
of wastewater for irrigation and other agricultural uses and for the prevention, control and
abatement of pollution from agricultural and aquaculture activities: Provided, That
discharges coming from non-point sources be categorized and further defined pursuant to
this Act: Provided, further, That the Bureau of Fisheries and Aquatic Resources (BFAR) of the
DA shall be primarily responsible for the prevention and control of water pollution for the
development, management and conservation of the fisheries and aquatic resources;
d) DOH shall be primarily responsible for the promulgation, revision and enforcement of
drinking water quality standards;
e) DOST, in coordination with the Department and other concerned agencies, shall prepare a
program for the evaluation, verification, development and public dissemination of pollution
prevention and cleaner production technologies; and
f) Department of Education (DepEd), Commission Higher Education (CHED), Department of
the Interior and Local Government (DILG) and Philippine Information Agency (PIA) shall assist
and coordinate with the Department in, the preparation and implementation of a
comprehensive program pursuant to the objectives of this Act.
SECTION 23. Requirement of Record-keeping, Authority for Entry to Premises and Access to
Documents. - The Department or its duly authorized representative shall, after proper consultation
and notice, require any person who owns or operates any pollution source or who is subject to. any
requirement of this Act to submit reports and other written information as may be required by the
department.
Any record, report or information obtained under this section shall be made available to the public,
except upon a satisfactory showing to the Department by the, entity concerned that the record,
report, or information or parts thereof, if made public, would divulge secret methods or processes
entitled to protection as intellectual property. Such record, report or information shall likewise be
incorporated in the Department's industrial rating system. Pursuant to this Act, the Department,
through it's authorized representatives, shall have the right to: (a) enter any premises or to have
access to documents and relevant materials as referred to in the herein preceding paragraph; (b)
inspect any pollution or waste source, control device, monitoring equipment or method required; and
(c) test any discharge.
In cases of fish kill incidence, the Bureau of Fisheries of the DA, in the course of its investigation, may
enter the premises of an establishment reported to have caused said incident.
SECTION 24. Pollution Research and Development Programs. - The Department, in coordination with
the Department of Science and Technology (DOST), other concerned agencies and academic research
institutions, shall establish a national research and development program for the prevention and
control of water pollution. As part of said program, the DOST shall conduct and promote the
coordination and acceleration of research, investigation, experiments, training, survey and studies
relating to the causes, extent, prevention and control of pollution among concerned government
agencies and research institutions.
CHAPTER 4
INCENTIVES AND REWARDS
SECTION 25. Rewards. - Rewards, monetary or otherwise, shall be provided to individuals, private
organization and entities, including civil society, that have undertaken outstanding and innovative
projects, technologies, processes and techniques or activities in water quality management. Said
rewards shall be sourced from the Water Quality Management Fund herein created.
SECTION 26. Incentives Scheme. - An incentive scheme is hereby provided for the purpose of
encouraging LGUs, water districts (WDs), enterprises, or private entities, and individuals, to develop or
undertake an effective water quality management, or actively participate in any program geared
towards the promotion thereof as provided in this Act.
A. Non-fiscal incentive
1. Inclusion in the Investments Priority Plan (IPP). - Subject to the rules and regulations of the
Board of Investments (BOI), industrial wastewater treatment and/or adoption of water
pollution control technology, cleaner production and waste minimization technology shall be
classified as preferred areas of investment under its annual priority plan and shall enjoy the
applicable fiscal and non-fiscal incentives as may be provided for under the Omnibus
Investment Code, as amended.
Fiscal Incentives
1. Tax and Duty Exemption on Imported Capital Equipment. - Within ten 10) years upon the
effectivity of this Act, LGUs, WDs, enterprises or private entities shall enjoy tax-and-duty-free
importation of machinery, equipment and spare parts used for industrial wastewater
treatment/collection and treatment facilities: Provided, That the importation of such
machinery, equipment and spare parts shall comply with the following conditions:
a) They are not manufactured domestically in sufficient quantity, of comparable
quality and at reasonable prices;
b) They are reasonably needed and will be used actually, directly and exclusively for
the above mentioned activities; and
c) Written endorsement by the Department that the importation of such machinery,
equipment and spare parts would be beneficial to environmental protection and
management: Provided, further, That the sale, transfer or disposition of such
machinery, equipment and spare parts without prior approval of the BOI within five
(5) years from the date of acquisition shall be prohibited, otherwise the LGU
concerned, WD, enterprise or private entity and the concerned vendee, transferee
or assignee shall be solidarity liable to pay twice the amount of tax and duty
exemption given it.
2. Tax Credit on Domestic Capital Equipment. - Within ten (10) years from the effectivity of
this Act, a tax credit equivalent to one hundred percent (100%) of the value of the national
internal revenue taxes and customs duties that would have been waived on the machinery,
equipment, and spare parts, had these items been imported shall be given to enterprises or
private entities and individuals, subject to the same conditions and prohibition cited in the
preceding paragraph.
3. Tax and Duty Exemption of Donations, Legacies and Gifts. - All legacies, gifts and donations
to LGUs, WDs, enterprises, or private entities and individuals, for the support and
maintenance of the program for effective water quality management shall be exempt from
donor's tax and shall be deductible from the gross income of the donor for income tax
purposes.
Imported articles donated to, or for the account of any LGUs, WDs, local water utilities,
enterprises, or private entities and individuals to be exclusively used for water quality
management programs shall be exempted from the payment of customs duties and
applicable internal revenue taxes.
Industrial wastewater treatment and/or installation of water pollution control devices shall
be classified as pioneer and preferred areas of investment under the BOI's annual priority
 plan and shall enjoy- the applicable fiscal and non-fiscal incentives as may be provided for
under the Omnibus Investment Code, as amended.
B. Financial Assistance Program
Government financial institutions such as the Development Bank of the Philippines, Land
Bank of the Philippines, Government Service Insurance System, and such other government
institutions providing financial services shall, in accordance with and to the extent allowed by
the enabling provisions of their respective charters or applicable laws, accord high priority to
extend financial services to LGUs, WDs, enterprises, or private entities engaged in sewage
collection and treatment facilities.
C. Extension or Grants to LGUs
Cities and municipalities which shall establish or operate sewerage facilities may be entitled to receive
grants for the purpose of developing technical capabilities.
CHAPTER 5
CIVIL LIABILITY/PENAL PROVISIONS
SECTION 27. Prohibited Acts. - The following acts are hereby prohibited:
a) Discharging, depositing or causing to be deposited material of any kind directly or
indirectly into the water bodies or along the margins of any surface water, where, the same
shall be liable to be washed into such surface water, either by tide action or by storm, floods
or otherwise, which could cause water pollution or impede natural flow in the water body;
b) Discharging, injecting or allowing to seep into the soil or sub-soil any substance in any
form that would pollute groundwater. In the case of geothermal projects, and subject to the
approval of the Department, regulated discharge for short- term activities (e.g. well testing,
flushing, commissioning, venting) and deep re-injection of geothermal liquids may be
allowed: Provided, That safety measures are adopted to prevent the contamination of the
groundwater;
c) Operating facilities that discharge regulated water pollutants without the valid required
permits or after the permit was revoked for any violation of any condition therein;
d) Disposal of potentially infectious medical waste into sea water by vessels unless the health
or safety of individuals on board the vessel is threatened by a great and imminent peril;
e) Unauthorized transport or dumping into sea waters of sewage sludge or solid waste as
defined under Republic Act No.9003;
f) Transport, dumping or discharge of prohibited chemicals, substances or pollutants listed
under Republic Act No.6969;
g) Operate facilities that discharge or allow to seep, willfully or through gross negligence,
prohibited chemicals, substances or pollutants listed under R. A. No. 6969 into water bodies
or wherein the same shall be liable to be washed into such surface, ground, coastal, and
marine water;
h) Undertaking activities or development and expansion of projects, or operating
wastewater/sewerage facilities in violation of Presidential Decree. No.1586 and its
implementing rules, and regulations;
i) Discharging regulated water pollutants without the valid required discharge permit
pursuant to this Act or after the permit was revoked for any violation of condition therein;
j) Non-compliance of the LGU with the Water Quality Framework and Management Area
Action Plan. In such a case, sanctions shall be imposed on the local government officials
concerned;
k) Refusal to allow entry, inspection and monitoring by the Department in accordance with
this Act;
l) Refusal to allow access by the Department to relevant reports and records in accordance
with this Act;
m) Refusal or failure to submit reports whenever required by the Department in accordance
with this Act;
n) Refusal or failure to designate pollution control officers whenever required by, the
Department in accordance with this Act; and
o) Directly using booster pumps in the distribution system or tampering with the water
supply in such a way as to alter or impair the water quality.
SECTION 28. Fines, Damages and Penalties. - Unless otherwise provided herein, any person who
commits any of the prohibited acts provided in the immediately preceding section or violates any of
the provision of this Act or its implementing rules and regulations, shall be fined by the Secretary,
upon the recommendation of the PAB in the amount of not less than Ten thousand pesos
(P10,000.00) nor more than Two hundred thousand pesos (P200,000.00) for every day of violation.
The fines herein prescribed shall be increased by ten percent (10%) every two (2) years to
compensate for inflation and to maintain the deterrent function of such fines: Provided, That the
Secretary, upon recommendation of the PAB may order the closure, suspension of development or
construction, or cessation of operations or, where appropriate disconnection of water supply, until
such time that proper environmental safeguards are put in place and/or compliance with this Act or
its rules and regulations are undertaken. This paragraph shall be without prejudice to the issuance of
an ex parte order for such closure, suspension of development or construction, or cessation of
operations during the pendency of the case.
Failure to undertake clean-up operations, willfully, or through gross negligence, shall be punished by
imprisonment of not less than two (2) years and not more than four (4) years and a fine not less than
Fifty thousand pesos (P50,000.00) and not more than One hundred thousand pesos (P100,000.00) per
day for each day of violation. Such failure or refusal which results in serious injury or loss of life and/or
irreversible water contamination of surface, ground, coastal and marine water shall be punished with
imprisonment of not less than six (6) years and one day and not more than twelve (12) years, and a
fine of Five Hundred Thousand Pesos (P500,000.00) per day for each day during which the omission
and/or contamination continues.
In case of gross violation of this Act, the PAB shall issue a resolution recommending that the proper
government agencies file criminal charges against the violators. Gross violation shall mean any of the
following:
a) deliberate discharge of toxic pollutants identified pursuant to Republic Act No.6969 in
toxic amounts;
b) five {5) or more violations within a period of two (2) years; or
c) blatant disregard of the orders of the PAB, such as the non-payment of fines, breaking of
seals or operating despite the existence of an order for closure, discontinuance or cessation
of operation.
In which case, offenders shall be punished with a fine of not less than Five hundred thousand pesos
(P500,000.00) but not more than Three million pesos (P3,000,000.00} per day for each day of
violation or imprisonment of not less than six {6) years but not more than ten {10) years, or both, at
the discretion of the court. If the offender is a juridical person, the president, manager and the
pollution control officer or the official in charge of the operation shall suffer the penalty herein
provided.
For violations falling under Section 4 of Presidential Decree No.979 or any regulations prescribed in
pursuance thereof, such person shall be liable for a fine of no1 less than Fifty thousand pesos
{P50,000.00) nor more than One million pesos (P1,000,000.00) or by imprisonment of not less than
one {1) year nor more than six (6) years or both, for each offense, without prejudice to the civil
liability of the offender in accordance with existing laws. If the offender is a juridical entity, then its
officers, directors, agents or any person primarily responsible shall be held liable: Provided, That any
vessel from which oil or other harmful substances are discharged in violation of Section 4 of
Presidential Decree No.979 shall be liable for penalty of fine specified in the immediately preceding
paragraph and clearance of such vessel from the port of the Philippines may be withheld until the fine
is paid and such penalty shall constitute a lien on such vessel which may be recovered in proceedings
by libel in rem in the proper court which the vessel may be. The owner or operator of a vessel or
facility which discharged the oil or other harmful substances will be liable to pay for any clean-up
costs.
Provided, finally, That water pollution cases involving acts or omissions --- committed within the
Laguna Lake Region shall be dealt with in accordance with the procedure under R. A. No.4850 as
amended.
SECTION 29. Administrative Sanctions Against Non-compliance with the Water Quality
Management Area Action Plan. - Local government officials concerned shall be subject to
Administrative sanctions incase of failure to comply with their action plan accordance with the
relevant provisions of R.A. No. 7160.
CHAPTER 6
ACTIONS
SECTION 30. Administrative Action. - Without prejudice to the right of any affected person to file an
administrative action, the Department shall, on its own instance or upon verified complaint by any
person, institute administrative proceedings in the proper forum against any person who violates:
a) Standards or limitations provided by this Act; or
b) By any such order, rule or regulation issued by the Department with respect to such
standard or limitation.
CHAPTER 7
FINAL PROVISIONS
SECTION 31. Appropriations.- An amount of One hundred million pesos (P100,000,000.00) shall be
appropriated from the savings of the National Government to the Department for the initial
implementation of this Act. Thereafter, the amount necessary to effectively carry out the provision of
this Act shall be included in the General Appropriations Act of the year following its enactment into
law and thereafter.
SECTION 32. Implementing Rules and Regulations. - The Department, in coordination with the
Committees on Environment and Ecology of the Senate and the House of Representatives,
respectively and other concerned agencies shall promulgate the implementing rules and regulations
for this Act, within one (1) year after the enactment of this Act: Provided. That rules and regulations
issued by other government agencies and instrumentalities for the prevention and/or abatement of
water pollution not inconsistent with this Act shall supplement the rules and regulations issued by the
Department, pursuant to the provisions of this Act.
The draft of the implementing rules and regulations shall be published and be the subject of public
consultations with affected sectors.
There shall be a mandatory review of the implementing rules and regulations and standards set
pursuant to the provisions of this Act.
SECTION 33. Joint Congressional Oversight Committee. - There is hereby created a Joint
Congressional Oversight Committee to monitor the implementation of this Act and to review the
implementing rules and regulations promulgated by the Department. The Committee shall be
composed of five (5) Senators and five; (5) Representatives to be appointed by the Senate President
and the Speaker of the House of Representatives, respectively. The Oversight Committee shall be co-
chaired by the Chairpersons of the Committee on Environment of the Senate and the Committee on
Ecology of the House of Representatives.
SECTION 34. Repealing Clause. - Presidential Decree No.984 is hereby repealed. Republic Act Nos.
6969 and 4850 as amended, Presidential Decree Nos. 1586, 1152, 979 and 856 are hereby amended
and modified accordingly. All other laws, orders, issuance, rules and regulations inconsistent herewith
are hereby repealed or modified accordingly.
SECTION 35. Separability Clause. - If any provision of this Act or the application such provision to any
person or circumstances is declared unconstitutional, the remainder of the Act or the application of
such provision to other person or circumstances shall not be affected by such declaration.
SECTION 36. Effectivity. - This Act shall take effect fifteen (15) days from the date of its publication in
the Official Gazette or in at least two (2) newspapers of general circulation.
REPUBLIC ACT NO. 9729
AN ACT MAINSTREAMING CLIMATE CHANGE INTO GOVERNMENT POLICY FORMULATIONS,
ESTABLISHING THE FRAMEWORK STRATEGY AND PROGRAM ON CLIMATE CHANGE, CREATING FOR
THIS PURPOSE THE CLIMATE CHANGE COMMISSION, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Title. – This Act shall be known as the “Climate Change Act of 2009”.
Section 2. Declaration of Policy. – It is the policy of the State to afford full protection and the
advancement of the right of the people to a healthful ecology in accord with the rhythm and harmony
of nature. In this light, the State has adopted the Philippine Agenda 21 framework which espouses
sustainable development, to fulfill human needs while maintaining the quality of the natural
environment for current and future generations.
Towards this end, the State adopts the principle of protecting the climate system for the benefit of
humankind, on the basis of climate justice or common but differentiated responsibilities and the
Precautionary Principle to guide decision-making in climate risk management. As a party to the United
Nations Framework Convention on Climate Change, the State adopts the ultimate objective of the
Convention which is the stabilization of greenhouse gas concentrations in the atmosphere at a level
that would prevent dangerous anthropogenic interference with the climate system which should be
achieved within a time frame sufficient to allow ecosystems to adapt naturally to climate change, to
ensure that food production is not threatened and to enable economic development to proceed in a
sustainable manner.1awphil As a party to the Hyogo Framework for Action, the State likewise adopts
the strategic goals in order to build national and local resilience to climate change-related disasters.
Recognizing the vulnerability of the Philippine archipelago and its local communities, particularly the
poor, women, and children, to potential dangerous consequences of climate change such as rising
seas, changing landscapes, increasing frequency and/or severity of droughts, fires, floods and storms,
climate-related illnesses and diseases, damage to ecosystems, biodiversity loss that affect the
country’s environment, culture, and economy, the State shall cooperate with the global community in
the resolution of climate change issues, including disaster risk reduction. It shall be the policy of the
State to enjoin the participation of national and local governments, businesses, nongovernment
organizations, local communities and the public to prevent and reduce the adverse impacts of climate
change and, at the same time, maximize the benefits of climate change. It shall also be the policy of
the State to incorporate a gender-sensitive, pro-children and pro-poor perspective in all climate
change and renewable energy efforts, plans and programs. In view thereof, the State shall strengthen,
integrate, consolidate and institutionalize government initiatives to achieve coordination in the
implementation of plans and programs to address climate change in the context of sustainable
development.
Further recognizing that climate change and disaster risk reduction are closely interrelated and
effective disaster risk reduction will enhance climate change adaptive capacity, the State shall
integrate disaster risk reduction into climate change programs and initiatives.
Cognizant of the need to ensure that national and subnational government policies, plans, programs
and projects are founded upon sound environmental considerations and the principle of sustainable
development, it is hereby declared the policy of the State to systematically integrate the concept of
climate change in various phases of policy formulation, development plans, poverty reduction
strategies and other development tools and techniques by all agencies and instrumentalities of the
government.
Section 3. Definition of Terms. – For purposes of this Act, the following shall have the corresponding
meanings:
(a) “Adaptation” refers to the adjustment in natural or human systems in response to actual
or expected climatic stimuli or their effects, which moderates harm or exploits beneficial
opportunities.
(b) “Adaptive capacity” refers to the ability of ecological, social or economic systems to
adjust to climate change including climate variability and extremes, to moderate or offset
potential damages and to take advantage of associated opportunities with changes in climate
or to cope with the consequences thereof.
(c) “Anthropogenic causes” refer to causes resulting from human activities or produced by
human beings.
(d) “Climate Change” refers to a change in climate that can be identified by changes in the
mean and/or variability of its properties and that persists for an extended period typically
decades or longer, whether due to natural variability or as a result of human activity.
(e) “Climate Variability” refers to the variations in the average state and in other statistics of
the climate on all temporal and spatial scales beyond that of individual weather events.
(f) “Climate Risk” refers to the product of climate and related hazards working over the
vulnerability of human and natural ecosystems.
(g) “Disaster” refers to a serious disruption of the functioning of a community or a society
involving widespread human, material, economic or environmental losses and impacts which
exceed the ability of the affected community or society to cope using its own resources.
(h) “Disaster risk reduction” refers to the concept and practice of reducing disaster risks
through systematic efforts to analyze and manage the causal factors of disasters, including
through reduced exposure to hazards, lessened vulnerability of people and property, wise
management of land and the environment, and improved preparedness for adverse events.
(i) “Gender mainstreaming” refers to the strategy for making women’s as well as men’s
concerns and experiences an integral dimension of the design, implementation, monitoring,
and evaluation of policies and programs in all political, economic, and societal spheres so
that women and men benefit equally and inequality is not perpetuated. It is the process of
assessing the implications for women and men of any planned action, including legislation,
policies, or programs in all areas and at all levels.
(j) “Global Warming” refers to the increase in the average temperature of the Earth’s near-
surface air and oceans that is associated with the increased concentration of greenhouse
gases in the atmosphere.
(k) “Greenhouse effect” refers to the process by which the absorption of infrared radiation
by the atmosphere warms the Earth.
(l) “Greenhouse gases (GHG)” refers to constituents of the atmosphere that contribute to
the greenhouse effect including, but not limited to, carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride.
(m) “Mainstreaming” refers to the integration of policies and measures that address climate
change into development planning and sectoral decision-making.
(n) “Mitigation” in the context of climate change, refers to human intervention to address
anthropogenic emissions by sources and removals by sinks of all GHG, including ozone-
depleting substances and their substitutes.
(o) “Mitigation potential” shall refer to the scale of GHG reductions that could be made,
relative to emission baselines, for a given level of carbon price (expressed in cost per unit of
carbon dioxide equivalent emissions avoided or reduced).
(p) “Sea level rise” refers to an increase in sea level which may be influenced by factors like
global warming through expansion of sea water as the oceans warm and melting of ice over
land and local factors such as land subsidence.
(q) “Vulnerability” refers to the degree to which a system is susceptible to, or unable to cope
with, adverse effects of climate change, including climate variability and extremes.
Vulnerability is a function of the character, magnitude, and rate of climate change and
variation to which a system is exposed, its sensitivity, and its adaptive capacity.
Section 4. Creation of the Climate Change Commission. – There is hereby established a Climate
Change Commission, hereinafter referred to as the Commission.
The Commission shall be an independent and autonomous body and shall have the same status as
that of a national government agency. It shall be attached to the Office of the President.
The Commission shall be the sole policy-making body of the government which shall be tasked to
coordinate, monitor and evaluate the programs and action plans of the government relating to
climate change pursuant to the provisions of this Act.
The Commission shall be organized within sixty (60) days from the effectivity of this Act.
Section 5. Composition of the Commission. – The Commission shall be composed of the President of
the Republic of the Philippines who shall serve as the Chairperson, and three (3) Commissioners to be
appointed by the President, one of whom shall serve as the Vice Chairperson of the Commission.
The Commission shall have an advisory board composed of the following:
(a) Secretary of the Department of Agriculture;
(b) Secretary of the Department of Energy;
(c) Secretary of the Department of Environment and Natural Resources;
(d) Secretary of the Department of Education;
(e) Secretary of the Department of Foreign Affairs;
(f) Secretary of the Department of Health;
(g) Secretary of the Department of the Interior and Local Government;
(h) Secretary of the Department of National Defense, in his capacity as Chair of the National
Disaster Coordinating Council;
(i) Secretary of the Department of Public Works and Highways;
(j) Secretary of the Department of Science and Technology;
(k) Secretary of the Department of Social Welfare and Development;
(l) Secretary of the Department of Trade and Industry;
(m) Secretary of the Department of Transportation and Communications;
(n) Director-General of the National Economic and Development Authority, in his capacity as
Chair of the Philippine Council for Sustainable Development;
(o) Director-General of the National Security Council;
(p) Chairperson of the National Commission on the Role of Filipino Women;
(q) President of the League of Provinces;
(r) President of the League of Cities;
(s) President of the League of Municipalities;
(t) President of the Liga ng mga Barangay;
(u) Representative from the academe;
(v) Representative from the business sector; and
(w) Representative from nongovernmental organizations.
At least one (1) of the sectoral representatives shall come from the disaster risk reduction community.
The representatives shall be appointed by the President from a list of nominees submitted by their
respective groups. They shall serve for a term of six (6) years without reappointment unless their
representation is withdrawn by the sector they represent. Appointment to any vacancy shall be only
for the unexpired term of the predecessor.
Only the ex officio members of the advisory board shall appoint a qualified representative who shall
hold a rank of no less than an Undersecretary.
Section 6. Meetings of the Commission. – The Commission shall meet once every three (3) months, or
as often as may be deemed necessary by the Chairperson. The Chairperson may likewise call upon
other government agencies for the proper implementation of this Act.
Section 7. Qualifications, Tenure, Compensation of Commissioners. – The Commissioners must be
Filipino citizens, residents of the Philippines, at least thirty (30) years of age at the time of
appointment, with at least ten (10) years of experience on climate change and of proven honesty and
ntegrity. The Commissioners shall be experts in climate change by virtue of their educational
background, training and experience: Provided, That at least one (1) Commissioner shall be female:
Provided, further, That in no case shall the Commissioners come from the same sector: Provided,
finally, That in no case shall any of the Commissioners appoint representatives to act on their behalf.
The Commissioners shall hold office for a period of six (6) years, and may be subjected to
reappointment: Provided, That no person shall serve for more than two (2) consecutive terms:
Provided, further, That in case of a vacancy, the new appointee shall fully meet the qualifications of a
Commissioner and shall hold office for the unexpired portion of the term only: Provided, finally, That
in no case shall a Commissioner be designated in a temporary or acting capacity.
The Vice Chairperson and the Commissioners shall have the rank and privileges of a Department
Secretary and Undersecretary, respectively. They shall be entitled to corresponding compensation and
other emoluments and shall be subject to the same disqualifications.
Section 8. Climate Change Office. – There is hereby created a Climate Change Office that shall assist
the Commission. It shall be headed by a Vice Chairperson of the Commission who shall act as the
Executive Director of the Office. The Commission shall have the authority to determine the number of
staff and create corresponding positions necessary to facilitate the proper implementation of this Act,
subject to civil service laws, rules and regulations. The officers and employees of the Commission shall
be appointed by the Executive Director.
Section 9. Powers and Functions of the Commission. – The Commission shall have the following
powers and functions:
(a) Ensure the mainstreaming of climate change, in synergy with disaster risk reduction, into
the national, sectoral and local development plans and programs;
(b) Coordinate and synchronize climate change programs of national government agencies;
(c) Formulate a Framework Strategy on Climate Change to serve as the basis for a program
for climate change planning, research and development, extension, and monitoring of
activities on climate change;
(d) Exercise policy coordination to ensure the attainment of goals set in the framework
strategy and program on climate change;
(e) Recommend legislation, policies, strategies, programs on and appropriations for climate
change adaptation and mitigation and other related activities;
(f) Recommend key development investments in climate- sensitive sectors such as water
resources, agriculture, forestry, coastal and marine resources, health, and infrastructure to
ensure the achievement of national sustainable development goals;
(g) Create an enabling environment for the design of relevant and appropriate risk-sharing
and risk-transfer instruments;
(h) Create an enabling environment that shall promote broader multi-stakeholder
participation and integrate climate change mitigation and adaptation;
(i) Formulate strategies on mitigating GHG and other anthropogenic causes of climate
change;
(j) Coordinate and establish a close partnership with the National Disaster Coordinating
Council in order to increase efficiency and effectiveness in reducing the people’s vulnerability
to climate-related disasters;
(k) In coordination with the Department of Foreign Affairs, represent the Philippines in the
climate change negotiations;
(l) Formulate and update guidelines for determining vulnerability to climate change impacts
and adaptation assessments and facilitate the provision of technical assistance for their
implementation and monitoring;
(m) Coordinate with local government units (LGUs) and private entities to address
vulnerability to climate change impacts of regions, provinces, cities and municipalities;
(n) Facilitate capacity building for local adaptation planning, implementation and monitoring
of climate change initiatives in vulnerable communities and areas;
(o) Promote and provide technical and financial support to local research and development
programs and projects in vulnerable communities and areas; and
(p) Oversee the dissemination of information on climate change, local vulnerabilities and
risks, relevant laws and protocols and adaptation and mitigation measures.
Section 10. Panel of Technical Experts. – The Commission shall constitute a national panel of technical
experts consisting of practitioners in disciplines that are related to climate change, including disaster
risk reduction.
The Panel shall provide technical advice to the Commission in climate science, technologies, and best
practices for risk assessment and enhancement of adaptive capacity of vulnerable human settlements
to potential impacts of climate change.
The Commission shall set the qualifications and compensation for the technical experts. It shall
provide resources for the operations and activities of the Panel.
Section 11. Framework Strategy and Program on Climate Change. – The Commission shall, within six
(6) months from the effectivity of this Act, formulate a Framework Strategy on Climate Change. The
Framework shall serve as the basis for a program for climate change planning, research and
development, extension, and monitoring of activities to protect vulnerable communities from the
adverse effects of climate change.
The Framework shall be formulated based on climate change vulnerabilities, specific adaptation
needs, and mitigation potential, and in accordance with the international agreements.
The Framework shall be reviewed every three (3) years, or as may be deemed necessary.
Section 12. Components of the Framework Strategy and Program on Climate Change. – The
Framework shall include, but not limited to, the following components:
(a) National priorities;
(b) Impact, vulnerability and adaptation assessments;
(c) Policy formulation;
(d) Compliance with international commitments;
(e) Research and development;
(f) Database development and management;
(g) Academic programs, capability building and mainstreaming;
(h) Advocacy and information dissemination;
(i) Monitoring and evaluation; and
(j) Gender mainstreaming.
Section 13. National Climate Change Action Plan. – The Commission shall formulate a National
Climate Change Action Plan in accordance with the Framework within one (1) year after the
formulation of the latter.
The National Climate Change Action Plan shall include, but not limited to, the following components:
(a) Assessment of the national impact of climate change;
(b) The identification of the most vulnerable communities/areas, including ecosystems to the
impacts of climate change, variability and extremes;
(c) The identification of differential impacts of climate change on men, women and children;
(d) The assessment and management of risk and vulnerability;
(e) The identification of GHG mitigation potentials; and
(f) The identification of options, prioritization of appropriate adaptation measures for joint
projects of national and local governments.
Section 14. Local Climate Change Action Plan. – The LGUs shall be the frontline agencies in the
formulation, planning and implementation of climate change action plans in their respective areas,
consistent with the provisions of the Local Government Code, the Framework, and the National
Climate Change Action Plan.
Barangays shall be directly involved with municipal and city governments in prioritizing climate
change issues and in identifying and implementing best practices and other solutions. Municipal and
city governments shall consider climate change adaptation, as one of their regular functions.
Provincial governments shall provide technical assistance, enforcement and information management
in support of municipal and city climate change action plans. Inter-local government unit
collaboration shall be maximized in the conduct of climate- related activities.
LGUs shall regularly update their respective action plans to reflect changing social, economic, and
environmental conditions and emerging issues. The LGUs shall furnish the Commission with copies of
their action plans and all subsequent amendments, modifications and revisions thereof, within one (1)
month from their adoption. The LGUs shall mobilize and allocate necessary personnel, resources and
logistics to effectively implement their respective action plans.
The local chief executive shall appoint the person responsible for the formulation and implementation
of the local action plan.
It shall be the responsibility of the national government to extend technical and financial assistance to
LGUs for the accomplishment of their Local Climate Change Action Plans.
The LGU is hereby expressly authorized to appropriate and use the amount from its Internal Revenue
Allotment necessary to implement said local plan effectively, any provision in the Local Government
Code to the contrary notwithstanding.
Section 15. Role of Government Agencies. – To ensure the effective implementation of the framework
strategy and program on climate change, concerned agencies shall perform the following functions:
(a) The Department of Education (DepED) shall integrate climate change into the primary and
secondary education curricula and/or subjects, such as, but not limited to, science, biology,
sibika, history, including textbooks, primers and other educational materials, basic climate
change principles and concepts;
(b) The Department of the Interior and Local Government (DILG) and Local Government
Academy shall facilitate the development and provision of a training program for LGUs in
climate change. The training program shall include socioeconomic, geophysical, policy, and
 other content necessary to address the prevailing and forecasted conditions and risks of
particular LGUs. It shall likewise focus on women and children, especially in the rural areas,
since they are the most vulnerable;
(c) The Department of Environment and Natural Resources (DENR) shall oversee the
establishment and maintenance of a climate change information management system and
network, including on climate change risks, activities and investments, in collaboration with
other concerned national government agencies, institutions and LGUs;
(d) The Department of Foreign Affairs (DFA) shall review international agreements related to
climate change and make the necessary recommendation for ratification and compliance by
the government on matters pertaining thereto;
(e) The Philippine Information Agency (PIA) shall disseminate information on climate change,
local vulnerabilities and risk, relevant laws and protocols and adaptation and mitigation
measures; and
(f) Government financial institutions, shall, any provision in their respective charters to the
contrary notwithstanding, provide preferential financial packages for climate change- related
projects. In consultation with the Bangko Sentral ng Pilipinas (BSP), they shall, within thirty
(30) days from the effectivity of this Act, issue and promulgate the implementing guidelines
therefor.
The Commission shall evaluate, recommend the approval of loans and monitor the use of said funds
of LGUs.
Section 16. Coordination with Various Sectors. – In the development and implementation of the
National Climate Change Action Plan, and the local action plans, the Commission shall coordinate with
the nongovernment organizations (NGOs), civic organizations, academe, people’s organizations, the
private and corporate sectors and other concerned stakeholder groups.
Section 17. Authority to Receive Donations and/or Grants. – The Commission is hereby authorized to
accept grants, contributions, donations, endowments, bequests, or gifts in cash, or in kind from local
and foreign sources in support of the development and implementation of climate change programs
and plans: Provided, That in case of donations from foreign governments, acceptance thereof shall be
subject to prior clearance and approval of the President of the Philippines upon recommendation of
the Secretary of Foreign Affairs: Provided, further, That such donations shall not be used to fund
personal services expenditures and other operating expenses of the Commission.
The proceeds shall be used to finance:
(a) Research, development, demonstration and promotion of technologies;
(b) Conduct of assessment of vulnerabilities to climate change impacts, resource inventory,
and adaptation capability building;
(c) Advocacy, networking and communication activities in the conduct of information
campaign; and
(d) Conduct of such other activities reasonably necessary to carry out the objectives of this
Act, as may be defined by the Commission.
Section 18. Funding Allocation for Climate Change. – All relevant government agencies and LGUs shall
allocate from their annual appropriations adequate funds for the formulation, development and
implementation, including training, capacity building and direct intervention, of their respective
climate change programs and plans. It shall also include public awareness campaigns on the effects of
climate change and energy-saving solutions to mitigate these effects, and initiatives, through
educational and training programs and micro-credit schemes, especially for women in rural areas. In
subsequent budget proposals, the concerned offices and units shall appropriate funds for
program/project development and implementation including continuing training and education in
climate change.1avvphi1
Section 19. Joint Congressional Oversight Committee. – There is hereby created a Joint Congressional
Oversight Committee to monitor the implementation of this Act. The Oversight Committee shall be
composed of five (5) Senators and five (5) Representatives to be appointed by the Senate President
and the Speaker of the House of Representatives, respectively. The Oversight Committee shall be co-
chaired by a Senator and a Representative to be designated by the Senate President and the Speaker
of the House of Representatives, respectively. Its funding requirement shall be charged against the
appropriations of Congress.
Section 20. Annual Report. – The Commission shall submit to the President and to both Houses of
Congress, not later than March 30 of every year following the effectivity of this Act, or upon the
request of the Congressional Oversight Committee, a report giving a detailed account of the status of
the implementation of this Act, a progress report on the implementation of the National Climate
Change Action Plan and recommend legislation, where applicable and necessary. LGUs shall submit
annual progress reports on the implementation of their respective local action plan to the
Commission within the first quarter of the following year.
Section 21. Appropriations. – The sum of Fifty million pesos (Php50,000,000.00) is hereby
appropriated as initial operating fund in addition to the unutilized fund of the Presidential Task Force
on Climate Change and the Office of the Presidential Adviser on Global Warming and Climate Change.
The sum shall be sourced from the President’s contingent fund.
Thereafter, the amount necessary to effectively carry out the provisions of this Act shall be included in
the annual General Appropriations Act.
Section 22. Implementing Rules and Regulations. – Within ninety (90) days after the approval of this
Act, the Commission shall, upon consultation with government agencies, LGUs, private sector, NGOs
and civil society, promulgate the implementing rules and regulations of this Act: Provided, That failure
to issue rules and regulations shall not in any manner affect the executory nature of the provisions of
this Act.
Section 23. Transitory Provisions. – Upon the organization of the Commission, the Presidential Task
Force on Climate Change created under Administrative Order No. 171 and the Inter-Agency
Committee on Climate Change created by virtue of Administrative Order No. 220, shall be abolished:
Provided, That their powers and functions shall be absorbed by the Commission: Provided, further,
That the officers and employees thereof shall continue in a holdover capacity until such time as the
new officers and employees of the Commission shall have been duly appointed pursuant to the
provisions of this Act. All qualified regular or permanent employees who may be transferred to the
Commission shall not suffer any loss in seniority or rank or decrease in emoluments. Any employee
who cannot be absorbed by the Commission shall be entitled to a separation pay under existing
retirement laws.
Section 24. Separability Clause. – If for any reason any section or provision of this Act is declared as
unconstitutional or invalid, the other sections or provisions hereof shall not be affected thereby.
Section 25. Repealing Clause. – All laws, ordinances, rules and regulations, and other issuances or
parts thereof which are inconsistent with this Act are hereby repealed or modified accordingly.
Section 26. Effectivity. – This Act shall take effect fifteen (15) days after the completion of its
publication in the Official Gazette or in at least two (2) national newspapers of general circulation.
REPUBLIC ACT No. 10121
AN ACT STRENGTHENING THE PHILIPPINE DISASTER RISK REDUCTION AND MANAGEMENT SYSTEM,
PROVIDING FOR THE NATIONAL DISASTER RISK REDUCTION AND MANAGEMENT FRAMEWORK AND
INSTITUTIONALIZING THE NATIONAL DISASTER RISK REDUCTION AND MANAGEMENT PLAN,
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES.
it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Title. - This Act shall be known as the "Philippine Disaster Risk Reduction and
Management Act of 2010".
Section 2. Declaration of Policy. - It shall be the policy of the State to:
(a) Uphold the people's constitutional rights to life and property by addressing the root causes of
vulnerabilities to disasters, strengthening the country's institutional capacity for disaster risk
reduction and management and building the resilience of local communities to disasters including
climate change impacts;
(b) Adhere to and adopt the universal norms, principles and standards of humanitarian assistance and
the global effort on risk reduction as concrete expression of the country's commitment to overcome
human sufferings due to recurring disasters;
(c) Incorporate internationally accepted principles of disaster risk management in the creation and
implementation of national, regional and local sustainable development and poverty reduction
strategies, policies, plans and budgets;
(d) Adopt a disaster risk reduction and management approach that is holistic, comprehensive,
integrated, and proactive in lessening the socioeconomic and environmental impacts of disasters
including climate change, and promote the involvement and participation of all sectors and all
stakeholders concerned, at all levels, especially the local community;
(e) Develop, promote, and implement a comprehensive National Disaster Risk Reduction and
Management Plan (NDRRMP) that aims to strengthen the capacity of the national government and
the local government units (LGUs), together with partner stakeholders, to build the disaster resilience
of communities, and' to institutionalize arrangements and measures for reducing disaster risks,
including projected climate risks, and enhancing disaster preparedness and response capabilities at all
levels;
(f) Adopt and implement a coherent, comprehensive, integrated, efficient and responsive disaster risk
reduction program incorporated in the development plan at various levels of government adhering to
the principles of good governance such as transparency and accountability within the context of
poverty alleviation and environmental protection;
(g) Mainstream disaster risk reduction and climate change in development processes such as policy
formulation, socioeconomic development planning, budgeting, and governance, particularly in the
areas of environment, agriculture, water, energy, health, education, poverty reduction, land-use and
urban planning, and public infrastructure and housing, among others;
(h) Institutionalize the policies, structures, coordination mechanisms and programs with continuing
budget appropriation on disaster risk reduction from national down to local levels towards building a
disaster-resilient nation and communities;
(i) Mainstream disaster risk reduction into the peace process and conflict resolution approaches in
order to minimize loss of lives and damage to property, and ensure that communities in conflict zones
can immediately go back to their normal lives during periods of intermittent conflicts;
(j) Ensure that disaster risk reduction and climate change measures are gender responsive, sensitive
to indigenous know ledge systems, and respectful of human rights;
(k) Recognize the local risk patterns across the country and strengthen the capacity of LGUs for
disaster risk reduction and management through decentralized powers, responsibilities, and resources
at the regional and local levels;
(l) Recognize and strengthen the capacities of LGUs and communities in mitigating and preparing for,
responding to, and recovering from the impact of disasters;
(m) Engage the participation of civil society organizations (CSOs), the private sector and volunteers in
the government's disaster risk reduction programs towards complementation of resources and
effective delivery of services to the Citizenry;
(n) Develop and strengthen the capacities of vulnerable and marginalized groups to mitigate, prepare
for, respond to, and recover from the effects of disasters;
(o) Enhance and implement a program where humanitarian aid workers, communities, health
professionals, government aid agencies, donors, and the media are educated and trained on how they
can actively support breastfeeding before and during a disaster and/or an emergency; and
(p) Provide maximum care, assistance and services to individuals and families affected by disaster,
implement emergency rehabilitation projects to lessen the impact of disaster, and facilitate
resumption of normal social and economic activities.
Section 3. Definition of Terms. - For purposes of this Act, the following shall refer to:
(a) "Adaptation" - the adjustment in natural or human systems in response to actual or expected
climatic stimuli or their effects, which moderates harm or exploits beneficial opportunities.
(b) "Capacity" - a combination of all strengths and resources available within a community, society or
organization that can reduce the level of risk, or effects of a disaster. Capacity may include
infrastructure and physical means, institutions, societal coping abilities, as well as human knowledge,
skills and collective attributes such as social relationships, leadership and management. Capacity may
also be described as capability.
(c) "Civil Society Organizations" Or "CSOs" - non-state actors whose aims are neither to generate
profits nor to seek governing power. CSOs unite people to advance shared goals and interests. They
have a presence in public life, expressing the interests and values of their members or others, and are
based on ethical, cultural, scientific, religious or philanthropic considerations. CSOs include
nongovernment organizations (NGOs), professional associations, foundations, independent research
institutes, community-based organizations (CBOs), faith-based organizations, people's organizations,
social movements, and labor unions.
(d) "Climate Change" - a change in climate that can' be identified by changes in the mean and/or
variability of its properties and that persists for an extended period typically decades or longer,
whether due to natural variability or as a result of human activity.
(e) "Community-Based Disaster Risk Reduction and Management" or "CBDRRM" - a process of disaster
risk reduction and management in which at risk communities are actively engaged in the
identification, analysis, treatment, monitoring and evaluation of disaster risks in order to reduce their
vulnerabilities and enhance their capacities, and where the people are at the heart of decision-making
and implementation of disaster risk reduction and management activities.
(f) "Complex Emergency" - a form of human-induced emergency in which the cause of the emergency
as well as the assistance to the afflicted IS complicated by intense level of political considerations.
(g) "Contingency Planning" - a management process that analyzes specific potential events or
emerging situations that might threaten society or the environment and establishes arrangements in
advance to enable timely, effective and appropriate responses to such events and situations.
(h) "Disaster" - a serious disruption of the functioning of a community or a society involving
widespread human, material, economic or environmental losses and impacts, which exceeds the
ability of the affected community or society to cope using its own resources. Disasters are often
described as a result of the combination of: the exposure to a hazard; the conditions of vulnerability
that are present; and insufficient capacity or measures to reduce or cope with the potential negative
consequences, Disaster impacts may include loss of life, injury, disease and other negative effects on
human, physical, mental and social well-being, together with damage to property, destruction of
assets, loss of services, Social and economic disruption and environmental degradation.1avvphi1
(i) "Disaster Mitigation" - the lessening or limitation of the adverse impacts of hazards and related
disasters. Mitigation measures encompass engineering techniques and hazard-resistant construction
as well as improved environmental policies and public awareness.
(j) "Disaster Preparedness" - the knowledge and capacities developed by governments, professional
response and recovery organizations, communities and individuals to effectively anticipate, respond
to, and recover from, the Impacts of likely, imminent or current hazard events or conditions.
Preparedness action is carried out within the context of disaster risk reduction and management and
aims to build the capacities needed to efficiently manage all types of emergencies and achieve orderly
transitions from response to sustained recovery. Preparedness is based on a sound analysis of disaster
risk and good linkages with early warning systems, and includes such activities as contingency
planning, stockpiling of equipment and supplies, the development of arrangements for coordination,
evacuation and public information, and associated training and field exercises. These must be
supported by formal institutional, legal and budgetary capacities.
(k) "Disaster Prevention" - the outright avoidance of adverse impacts of hazards and related disasters.
It expresses the concept and intention to completely avoid potential adverse impacts through action
taken in advance such as construction of dams or embankments that eliminate flood risks, land-use
regulations that do not permit any settlement in high-risk zones, and seismic engineering designs that
ensure the survival and function of a critical building in any likely earthquake.
(l) "Disaster Response" - the provision of emergency services and public assistance during or
immediately after a disaster in order to save lives, reduce health impacts, ensure public safety and
meet the basic subsistence needs of the people affected. Disaster response is predominantly focused
on immediate and short-term needs and is sometimes called "disaster relief".
(m) "Disaster Risk" - the potential disaster losses in lives, health status, livelihood, assets and services,
which could occur to a particular community or a Society over some specified future time period.
(n) "Disaster Risk Reduction" - the concept and practice of reducing disaster risks through systematic
efforts to analyze and manage the causal factors of disasters, including through reduced exposures to
hazards, lessened vulnerability of people and property, wise management of land and the
environment, and improved preparedness for adverse events.
(o) "Disaster Risk Reduction and Management" - the systematic process of using administrative
directives, organizations, and operational skills and capacities to implement strategies, policies and
improved coping capacities in order to lessen the adverse impacts of hazards and the possibility of
disaster. Prospective disaster risk reduction and management refers to risk reduction and
management activities that address and seek to avoid the development of new or increased disaster
risks, especially if risk reduction policies are not put m place.
(p) "Disaster Risk Reduction and Management Information System" - a specialized database which
contains, among others, information on disasters and their human material, economic and
environmental impact, risk assessment and mapping and vulnerable groups.
(q) "Early Warning System" - the set of capacities needed to generate and disseminate timely and
meaningful warning information to enable individuals, communities and organizations threatened by
a hazard to prepare and to act appropriately and in sufficient time to reduce the possibility of harm or
loss. A people-centered early warning system necessarily comprises four (4) key elements: knowledge
of the risks; monitoring, analysis and forecasting of the hazards; communication or dissemination of
alerts and warnings; and local capabilities to respond to the warnings received. The expression "end-
to-end warning system" is also used to emphasize that warning systems need to span all steps from
hazard detection to community response.
(r) "Emergency" - unforeseen or sudden occurrence, especially danger, demanding immediate action.
(s) "Emergency Management" - the organization and management of resources and responsibilities
for addressing all aspects of emergencies, in particular preparedness, response and initial recovery
steps.
(t) "Exposure" - the degree to which the elements at risk are likely to experience hazard events of
different magnitudes.
(u) "Geographic Information System" - a database which contains, among others, geo-hazard
assessments, information on climate change, and climate risk reduction and management.
(v) "Hazard" - a dangerous phenomenon, substance, human activity or condition that may cause loss
of life, injury or other health impacts, property damage, loss of livelihood and services, social and
economic disruption, or environmental damage.
(w) "Land-Use Planning" - the process undertaken by public authorities to identify, evaluate and
decide on different options for the use of land, including consideration of long-term economic, social
and environmental objectives and the implications for different communities and interest groups, and
the subsequent formulation and promulgation of plans that describe the permitted or acceptable
uses.
(x) "Mitigation" - structural and non-structural measures undertaken to limit the adverse impact of
natural hazards, environmental degradation, and technological hazards and to ensure the ability of at-
risk communities to address vulnerabilities aimed at minimizing the impact of disasters. Such
measures include, but are not limited to, hazard-resistant construction and engineering works, the
formulation and implementation of plans, programs, projects and activities, awareness raising,
knowledge management, policies on land-use and resource management, as well as the enforcement
of comprehensive land-use planning, building and safety standards, and legislation.
(y) "National Disaster Risk Reduction and Management Framework" or "NDRRMF" - provides for
comprehensive, all hazards, multi-sectoral, inter-agency and community-based approach to disaster
risk reduction and management.
(z) "National Disaster Risk Reduction and Management Plan" or "NDRRMP" - the document to be
formulated and implemented by the Office of Civil Defense (OCD) that sets out goals and specific
objectives for reducing disaster risks together with related actions to accomplish these objectives.
The NDRRMP shall provide for the identification of hazards, vulnerabilities and risks to 'be managed at
the national level; disaster risk reduction and management approaches and strategies to be applied m
managing said hazards and risks; agency roles, responsibilities and lines of authority at all government
levels; and vertical and horizontal coordination of disaster risk reduction and management in the pre-
disaster and post-disaster phases. It shall be in conformity with the NDRRMF.
(aa) "Post-Disaster Recovery" - the restoration and improvement where appropriate, of facilities,
livelihood and living conditions. of disaster-affected communities, including efforts to reduce disaster
risk factors, in accordance with the principles of "build back better".
(bb) "Preparedness" - pre-disaster actions and measures being undertaken within the context of
disaster risk reduction and management and are based on sound risk analysis as well as pre-disaster
activities to avert or minimize loss of life and property such as, but not limited to, community
organizing, training, planning, equipping, stockpiling, hazard mapping, insuring of assets, and public
information and education initiatives. This also includes the development/enhancement of an overall
preparedness strategy, policy, institutional structure, warning and forecasting capabilities, and plans
that define measures geared to help at-risk communities safeguard their lives and assets by being
alert to hazards and taking appropriate action in the face of an Imminent threat or an actual disaster.
(cc) "Private Sector" - the key actor in the realm of the economy where the central social concern and
process are the mutually beneficial production and distribution of goods and services to meet the
physical needs of human beings. The private sector comprises private corporations, households and
nonprofit institutions serving households.
(dd) "Public Sector Employees" - all persons in the civil service.
(ee) "Rehabilitation" - measures that ensure the ability of affected communities/areas to restore their
normal level of functioning by rebuilding livelihood and damaged infrastructures and increasing the
communities' organizational capacity.
(ff) "Resilience" - the ability of a system, community or society exposed to hazards to resist, absorb,
accommodate and recover from the effects of a hazard in a timely and efficient manner, including
through the preservation and restoration of its essential basic structures and functions.
(gg) "Response" - any concerted effort by two (2) or more agencies, public or private, to provide
assistance or intervention during or immediately after a disaster to meet the life preservation and
basic subsistence needs of those people affected and in the restoration of essential public activities
and facilities.
(hh) "Risk" - the combination of the probability of an event and its negative consequences.
(ii) "Risk Assessment" - a methodology to determine the nature and extent of risk by analyzing
potential hazards and evaluating existing conditions of vulnerability that together could potentially
harm exposed people, property, services, livelihood and the environment on which they depend. Risk
assessments with associated risk mapping include: a review of the technical characteristics of hazards
such as their location, intensity, frequency and probability; the analysis of exposure and vulnerability
including the physical, social, health, economic and environmental dimensions; and the evaluation of
the effectiveness of prevailing and alternative coping capacities in respect to likely risk scenarios.
(jj) "Risk Management" - the systematic approach and practice of managing uncertainty to minimize
potential harm and loss. It comprises risk assessment and analysis, and the implementation of
strategies and specific actions to control, reduce and transfer risks. It is widely practiced by
organizations to minimize risk in investment decisions and to address operational risks such as those
of business disruption, production failure, environmental damage, social impacts and damage from
fire and natural hazards.
(kk) "Risk Transfer" - the process of formally or informally shifting the financial consequences of
particular risks from one party to another whereby a household, community, enterprise or state
authority will obtain resources from the other party after a disaster occurs, in exchange for ongoing or
compensatory social or financial benefits provided to that other party.
(ll) "State of Calamity" - a condition involving mass casualty and/or major damages to property,
disruption of means of livelihoods, roads and normal way of life of people in the affected areas as a
result of the occurrence of natural or human-induced hazard.
(mm) "Sustainable Development" - development that meets the needs of the present without
compromising the ability of future generations to meet their own needs. It contains within it two (2)
key concepts: (1) the concept of "needs", in particular, the essential needs of the world's poor, to
which overriding priority should be given; and (2) the idea of limitations imposed by the state of
technology and social organizations on the environment's ability to meet present and future needs. It
is the harmonious integration of a sound and viable economy, responsible governance, social (d) Secretary of the Department of Education (DepED);
cohesion and harmony, and ecological integrity to ensure that human development now and through
future generations is a life-enhancing process. (e) Secretary of the Department of Energy (DOE);

(nn) "Vulnerability" - the characteristics and circumstances of a community, system or asset that make (f) Secretary of the Department of Finance (DOF);
it susceptible to the damaging effects of a hazard. Vulnerability may arise from various physical, social,
(g) Secretary of the Department of Trade and Industry (DT!);
economic, and environmental factors such as poor design and construction of buildings, inadequate
protection of assets, lack of public information and awareness, limited official recognition of risks and (h) Secretary of the Department of Transportation and Communications (DOTC);
preparedness measures, and disregard for wise environmental management.
(i) Secretary of the Department of Budget and Management (DBM);
(oo) "Vulnerable and Marginalized Groups" - those that face higher exposure to disaster risk and
poverty including, but not limited to, women, children, elderly, differently-abled people, and ethnic (j) Secretary of the Department of Public Works and Highways (DPWH);
minorities.
(k) Secretary of the Department of Foreign Affairs (DFA);
Section 4. Scope. - This Act provides for the development of policies and plans and the
(l) Secretary of the Department of Justice (DOJ);
implementation of actions and measures pertaining to all aspects of disaster risk reduction and
management, including good governance, risk assessment and early warning, knowledge building and (m) Secretary of the Department of Labor and Employment (DOLE);
awareness raising, reducing underlying risk factors, and preparedness for effective response and early
recovery. (n) Secretary of the Department of Tourism (DOT);

Section 5. National Disaster Risk Reduction and Management Council. - The present National Disaster (o) The Executive Secretary;
Coordinating Council or NDCC shall henceforth be known as the National Disaster Risk Reduction and
Management Council, hereinafter referred to as the NDRRMC or the National Council. (p)Secretary of the Office of the Presidential Adviser on the Peace Process (OPAPP);

The National Council shall be headed by the Secretary of the Department of National Defense (DND) (q) Chairman, Commission on Higher Education (CHED);
as Chairperson with the Secretary of the Department of the Interior and Local Government (DILG) as
(r) Chief of Staff, Armed Forces of the Philippines (AFP);
Vice Chairperson for Disaster Preparedness, the Secretary of the Department of Social
(s) Chief, Philippine National Police (PNP);
Welfare and Development (DSWD) as Vice Chairperson for Disaster Response, the Secretary of the
Department of Science and Technology (DOST) as Vice Chairperson for Disaster Prevention and (t) The Press Secretary;
Mitigation, and the Director-General of the National Economic and Development Authority (NEDA) as
Vice Chairperson for Disaster Rehabilitation and Recovery. (u) Secretary General of the Philippine National Red Cross (PNRC);

The National Council's members shall be the following: (v) Commissioner of the National Anti-Poverty Commission-Victims of Disasters and Calamities Sector
(NAPCVDC);
(a) Secretary of the Department of Health (DOH);
(w) Chairperson, National Commission on the Role of Filipino Women;
(b) Secretary of the Department of Environment and Natural Resources (DENR);
(x) Chairperson, Housing and Urban Development Coordinating Council (HUDCC);
(c) Secretary of the Department of Agriculture (DA);
(y) Executive Director of the Climate Change Office of the Climate Change Commission;
(z) President, Government Service Insurance System (GSIS);
(aa) President, Social Security System (SSS);
(bb) President, Philippine Health Insurance Corporation (PhilHealth);
(cc) President of the Union of Local Authorities of the Philippines (ULAP);
(dd) President of the League of Provinces of the Philippines (LPP);
(ee) President of the League of Cities of the Philippines (LCP);
(ff) President of the League of Municipalities of the Philippines (LMP);
(gg) President of the Liga ng Mga Barangay (LMB);
(hh) Four (4) representatives from the CSOs;
(ii) One (1) representative from the private sector; and
(jj) Administrator of the OCD.
The representatives from the CSOs and the private sector shall be selected from among their
respective ranks based on the criteria and mechanisms to be set for this purpose by the National
Council.
Section 6. Powers and Functions of the NDRRMC. - The National Council, being empowered with
policy-making, coordination, integration, supervision, monitoring and evaluation functions, shall have
the following responsibilities:
(a) Develop a NDRRMF which shall provide for a comprehensive, all-hazards, multi-sectoral, inter-
agency and community-based approach to disaster risk reduction and management. The Framework
shall serve as the principal guide to disaster risk reduction and management efforts in the country and
shall be reviewed on a five(5)-year interval, or as may be deemed necessary, in order to ensure its
relevance to the times;
(b) Ensure that the NDRRMP is consistent with the NDRRMF;
(c) Advise the President on the status of disaster preparedness, prevention, mitigation, response and
rehabilitation operations being undertaken by the government, CSOs, private sector, and volunteers;
recommend to the President the declaration of a state of calamity in areas extensively damaged; and
submit proposals to restore normalcy in the affected areas, to include calamity fund allocation;
(d) Ensure a multi-stakeholder participation in the development, updating, and sharing of a Disaster
Risk Reduction and Management Information System and Geographic Information System-based
national risk map as policy, planning and decision-making tools;
(e) Establish a national early warning and emergency alert system to provide accurate and timely
advice to national or local emergency response organizations and to the general public through
diverse mass media to include digital and analog broadcast, cable, satellite television and radio,
wireless communications, and landline communications;
(f) Develop appropriate risk transfer mechanisms that shall guarantee social and economic protection
and increase resiliency in the face of disaster;
(g) Monitor the development and enforcement by agencies and organizations of the various laws,
guidelines, codes or technical standards required by this Act;
(h) Manage and mobilize resources for disaster risk reduction and management including the National
Disaster Risk Reduction and Management Fund;
(i) Monitor and provide the necessary guidelines and procedures. on the Local Disaster Risk Reduction
and Management Fund (LDRRMF) releases as well as utilization, accounting and auditing thereof;
(j) Develop assessment tools on the existing and potential hazards and risks brought about by climate
change to vulnerable areas and ecosystems in coordination with the Climate Change Commission;
(k) Develop vertical and horizontal coordination mechanisms for a more coherent implementation of
disaster risk reduction and management policies and programs by sectoral agencies and LGUs;
(l) Formulate a national institutional capability building program for disaster risk reduction and
management to address the specific' weaknesses of various government agencies and LGUs, based on
the results of a biennial baseline assessment and studies;
(m) Formulate, harmonize, and translate into policies a national agenda for research and technology
development on disaster risk reduction and management;
(n) In coordination with the Climate Change Commission, formulate and implement a framework for
climate change adaptation and disaster risk reduction and management from which all policies,
programs, and projects shall be based;
(o) Constitute a technical management group composed of representatives of the abovementioned
departments, offices, and organizations, that shall coordinate and meet as often as necessary to
effectively manage and sustain national efforts on disaster risk reduction and management;
(p) Task the OCD to conduct periodic assessment and performance monitoring of the member-
agencies of the NDRRMC, and the Regional Disaster Risk Reduction and Management Councils
(RDRRMCs), as defined in the NDRRMP; and
(q) Coordinate or oversee the Implementation of the country's obligations with disaster management
treaties to which it IS a party and see to It that the country's disaster management treaty obligations
be incorporated in its disaster risk reduction and management frameworks, policies, plans, programs
and projects.
Section 7. Authority of the NDRRMC Chairperson. - The Chairperson of the NDRRMC may call upon
other instrumentalities or entities of the government and nongovernment and civic organizations for
assistance In terms of the use of their facilities and resources for the protection and preservation of
life and properties in the whole range of disaster risk reduction and management. This authority
includes the power to call on the reserve force as defined in Republic Act No. 7077 to assist in relief
and rescue during disasters or calamities.
Section 8. The Office of Civil Defense. - The Office of Civil Defense (OCD) shall have the primary
mission of administering a comprehensive national civil defense and disaster risk reduction and
management program by providing leadership in the continuous development of strategic and
systematic approaches as well as measures to reduce the vulnerabilities and risks to hazards and
manage the consequences of disasters.
The Administrator of the OCD shall also serve as Executive Director of the National Council and, as
such, shall have the same duties and privileges of a department undersecretary. All appointees shall
be universally acknowledged experts in the field of disaster preparedness and management and of
proven honesty and integrity. The National Council shall utilize the services and facilities of the OCD as
the secretariat of the National Council.
Section 9. Powers and Functions of the OCD. - The OCD shall have the following powers and functions:
(a) Advise the National Council on matters relating to disaster risk reduction and management
consistent with the policies and scope as defined in this Act;
(b) Formulate and implement the NDRRMP and ensure that the physical framework, social, economic
and environmental plans of communities, cities, municipalities and provinces are consistent with such
plan. The National Council shall approve the NDRRMP;
(c) Identify, assess and prioritize hazards and risks in consultation with key stakeholders;
(d) Develop and ensure the implementation of national standards in carrying out disaster risk
reduction programs including preparedness, mitigation, prevention, response and rehabilitation
works, from data collection and analysis, planning, implementation, monitoring and evaluation;
(e) Review and evaluate the Local Disaster risk Reduction and Management Plans (LDRRMPs) to
facilitate the integration of disaster risk reduction measures into the local Comprehensive
Development Plan (CDP) and Comprehensive Land-Use Plan (CL UP);
(f) Ensure that the LG U s, through the Local Disaster Risk Reduction and Management Offices
(LDRRMOs) are properly informed and adhere to the national standards and programs;
(g) Formulate standard operating procedures for the deployment of rapid assessment teams,
information sharing among different government agencies, and coordination before and after
disasters at all levels;
(h) Establish standard operating procedures on the communication system among provincial, city,
municipal, and barangay disaster risk reduction and management councils, for purposes of warning
and alerting them and for gathering information on disaster areas before, during and after disasters;
(i) Establish Disaster Risk Reduction and Management Training Institutes in such suitable location as
may be deemed appropriate to train public and private individuals, both local and national, in such
subject as disaster risk reduction and management among others. The Institute shall consolidate and
prepare training materials and publications of disaster risk reduction and management books and
manuals to assist disaster risk reduction and management workers in the planning and
implementation of this program and projects. The Institute shall conduct research programs to
upgrade know ledge and skills and document best practices on disaster risk reduction and
management. The Institute is also mandated to conduct periodic awareness and education programs
to accommodate new elective officials and members of the LDRRMCs;
(j) Ensure that all disaster risk reduction programs, projects and activities requiring regional and
international support shall be in accordance with duly established national policies and aligned with
international agreements;
(k) Ensure that government agencies and LGUs give toppriority and take adequate and appropriate
measures in disaster risk reduction and management;
(l) Create an enabling environment for substantial and sustainable participation of CSOs, private
groups, volunteers and communities, and recognize their contributions in the government's disaster
risk reduction efforts;
(m) Conduct early recovery and post-disaster needs assessment institutionalizing gender analysis as (a) Composition: The LDRRMC shall be composed of, but not limited to, the following:
part of it;
(1) The Local Chief Executives, Chairperson;
(n) Establish an operating facility to be known as the National Disaster Risk Reduction and
Management Operations Center (NDRRMOC) that shall be operated and staffed on a twenty-four (24) (2) The Local Planning and Development Officer, member;
hour basis;
(3) The Head of the LDRRMO, member;
(o) Prepare the criteria and procedure for the enlistment of accredited community disaster volunteers
(4) The Head of the Local Social Welfare and Development Office, member;
(ACDVs). It shall include a manual of operations for the volunteers which shall be developed by the
OCD in consultation with various stakeholders; (5) The Head of the Local Health Office, member;

(p) Provide advice and technical assistance and assist in mobilizing necessary resources to increase (6) The Head of the Local Agriculture Office, member;
the overall capacity of LGUs, specifically the low income and in high-risk areas;
(7) The Head of the Gender and Development Office, member;
(q) Create the necessary offices to perform its mandate as provided under this Act; and
(8) The Head of the Local Engineering Office, member;
(r) Perform such other functions as may be necessary for effective operations and implementation of
this Act. (9) The Head of the Local Veterinary Office, member;

Section 10. Disaster Risk Reduction and Management Organization at the Regional Level. - The (10) The Head of the Local Budget Office, member;
current Regional Disaster Coordinating Councils shall henceforth be known as the Regional Disaster
(11) The Division Head/Superintendent of Schools of the DepED, member;
Risk Reduction and Management Councils (RDRRMCs) which shall coordinate, integrate, supervise,
and evaluate the activities of the LDRRMCs. The RDRRMC shall be responsible in ensuring disaster (12) The highest-ranking officer of the Armed Forces of the Philippines (AFP) assigned in the area,
sensitive regional development plans, and in case of emergencies shall convene the different regional member;
line agencies and concerned institutions and authorities.
(13) The Provincial Director/City/Municipal Chief of the Philippine National Police (PNP), member;
The RDRRMCs shall establish an operating facility to be known as the Regional Disaster Risk Reduction
and Management Operations Center (RDRRMOC) whenever necessary. (14) The Provincial Director/City/ Municipal Fire Marshall of the Bureau of Fire Protection (BFP),
member;
The civil defense officers of the OCD who are or may be designated as Regional Directors of the OCD
shall serve as chairpersons of the RDRRMCs. Its Vice Chairpersons shall be the Regional Directors of (15) The President of the Association of Barangay Captains (ABC), member;
the DSWD, the DILG, the DOST, and the NEDA. In the case of the Autonomous Region in Muslim
Mindanao (ARMM), the Regional Governor shall be the RDRRMC Chairperson. The existing regional (16) The Philippine National Red Cross (PNRC), member;
offices of the OCD shall serve as secretariat of the RDRRMCs. The RDRRMCs shall be composed of the
(17) Four (4) accredited CSOs, members; and
executives of regional offices and field stations at the regional level of the government agencies.
(18) One (1) private sector representative, member.
Section 11. Organization at the Local Government Level. - The existing Provincial, City, and Municipal
Disaster Coordinating Councils shall henceforth be known as the Provincial, City, and Municipal (b) The LDRRMCs shall have the following functions:
Disaster Risk Reduction and Management Councils. The Barangay Disaster Coordinating Councils shall
cease to exist and its powers and functions shall henceforth be assumed by the existing Barangay (1) Approve, monitor and evaluate the implementation of the LDRRMPs and regularly review and test
Development Councils (BDCs) which shall serve as the LDRRMCs in every barangay. the plan consistent with other national and local planning programs;
(2) Ensure the integration of disaster risk reduction and climate change adaptation into local
development plans, programs and budgets as a strategy in sustainable development and poverty
reduction;
(3) Recommend the implementation of forced or preemptive evacuation of local residents, if
necessary; and
(4) Convene the local council once every three (3) months or as necessary.
Section 12. Local Disaster Risk Reduction and Management Office (LDRRMO). - (a) There shall be
established an LDRRMO in every province, city and municipality, and a Barangay Disaster Risk
Reduction and Management Committee (BDRRMC) in every · barangay which shall be responsible for
setting the direction, development, implementation and coordination of disaster risk management
programs within their territorial jurisdiction.
(b) The LDRRMO shall be under the office of the governor, city or municipal mayor, and the punong
barangay in case of the BDRRMC. The LDRRMOs shall be initially organized and composed of a
DRRMO to be assisted by three (3) staff responsible for: (1) administration and training; (2) research
and planning; and (3) operations and warning. The LDRRMOs and the BDRRMCs shall organize, train
and directly supervise the local emergency response teams and the ACDVs.
(c) The provincial, city and municipal DRRMOs or BDRRMCs shall perform the following functions with
impartiality given the emerging challenges brought by disasters of our times:
(1) Design, program, and coordinate disaster risk reduction and management activities consistent with
the National Council's standards and guidelines;
(2) Facilitate and support risk assessments and contingency planning activities at the local level;
(3) Consolidate local disaster risk information which includes natural hazards, vulnerabilities, and
climate change risks, and maintain a local risk map;
(4) Organize and conduct training, orientation, and knowledge management activities on disaster risk
reduction and management at the local level;
(5) Operate a multi-hazard early warning system, linked to disaster risk reduction to provide accurate
and timely advice to national or local emergency response organizations and to the general public,
through diverse mass media, particularly radio, landline communications, and technologies for
communication within rural communities;
(6) Formulate and implement a comprehensive and - integrated LDRRMP in accordance with the
national, regional and provincial framework, and policies on disaster risk reduction in close
coordination with the local development councils (LDCs);
(7) Prepare and submit to the local sanggunian through the LDRRMC and the LDC the annual LDRRMO
Plan and budget, the proposed programming of the LDRRMF, other dedicated disaster risk reduction
and management resources, and other regular funding source/s and budgetary support of the
LDRRMO/BDRRMC;
(8) Conduct continuous disaster monitoring and mobilize instrumentalities and entities of the LGUs,
CSOs, private groups and organized volunteers, to utilize their facilities and resources for the
protection and preservation of life and properties during emergencies in accordance with existing
policies and procedures;
(9) Identify, assess and manage the hazards vulnerabilities and risks that may occur in their locality;
(10) Disseminate information and raise public awareness about those hazards. vulnerabilities and
risks, their nature, effects, early warning signs and counter-measures;
(11) Identify and implement cost-effective risk reduction measures/strategies;
(12) Maintain a database of human resource, equipment, directories, and location of critical
infrastructures and their capacities such as hospitals and evacuation centers;
(13) Develop, strengthen and operationalize mechanisms for partnership or networking with the
private sector, CSOs, and volunteer groups;
(14) Take all necessary steps on a continuing basis to maintain, provide, or arrange the provision of, or
to otherwise make available, suitably-trained and competent personnel for effective civil defense and
disaster risk reduction and management in its area;
(15) Organize, train, equip and supervise the local emergency response teams and the ACDV s,
ensuring that humanitarian aid workers are equipped with basic skills to assist mothers to breastfeed;
(16) Respond to and manage the adverse effects of emergencies and carry out recovery activities in
the affected area, ensuring that there is an efficient mechanism for immediate delivery of food,
shelter and medical supplies for women and children, endeavor to create a special place where
internally-displaced mothers can find help with breastfeeding, feed and care for their babies and give
support to each other;
(17) Within its area, promote and raise public awareness of and compliance with this Act and
legislative provisions relevant to the purpose of this Act;
(18) Serve as the secretariat and executive arm of the LDRRMC;
(19) Coordinate other disaster risk reduction and management activities;
(20) Establish linkage/network with other LGUs for disaster risk reduction and emergency response
purposes;
(21) Recommend through the LDRRMC the enactment of local ordinances consistent with the
requirements of this Act;
(22) Implement policies, approved plans and programs of the LDRRMC consistent with the policies
and guidelines laid down in this Act;
(23) Establish a Provincial/City/Municipal/Barangay Disaster Risk Reduction and Management
Operations Center;
(24) Prepare and submit, through the LDRRMC and the LDC, the report on the utilization of the
LDRRMF and other dedicated disaster risk reduction and management resources to the local
Commission on Audit (COA), copy furnished the regional director of the OCD and the Local
Government Operations Officer of the DILG; and
(25) Act on other matters that may be authorized by the LDRRMC.
(d) The BDRRMC shall be a regular committee of the existing BDC and shall be subject thereto. The
punong barangay shall facilitate and ensure the participation of at least two (2) CSO representatives
from existing and active community-based people's organizations representing the most vulnerable
and marginalized groups in the barangay.
Section 13. Accreditation, Mobilization, and Protection of Disaster Volunteers and National Service
Reserve Corps, CSOs and the Private Sector. - The government agencies, CSOs, private sector and LGUs
may mobilize individuals or organized volunteers to augment their respective personnel complement
and logistical requirements in the delivery of disaster risk reduction programs and activities. The
agencies, CSOs, private sector, and LGUs concerned shall take full responsibility for the enhancement,
welfare and protection of volunteers, and shall submit the list of volunteers to the OCD, through the
LDRRMOs, for accreditation and inclusion in the database of community disaster volunteers.
A national roster of ACDVs, National Service Reserve Corps, CSOs and the private sector shall be
maintained by the OCD through the LDRRMOs. Accreditation shall be done at the municipal or city
level.
Mobilization of volunteers shall be in accordance with the guidelines to be formulated by the
NDRRMC consistent with the provisions of this Act. Any volunteer who incurs death or injury while
engaged in any of the activities defined under this Act shall be entitled to compensatory benefits and
individual personnel accident insurance as may be defined under the guidelines.
Section 14. Integration of Disaster Risk Reduction Education into the School Curricula and
Sangguniang Kabataan (SK) Program and Mandatory Training for the Public Sector Employees. - The
DepED, the CHED, the Technical Education and Skills Development Authority (TESDA), in coordination
with the OCD, the National Youth Commission (NYC), the DOST, the DENR, the DILG-BFP, the DOH, the
DSWD and other relevant agencies, shall integrate disaster risk reduction and management education
in the school curricula of secondary and tertiary level of education, including the National Service
Training Program (NSTP), whether private or public, including formal and nonformal, technical-
vocational, indigenous learning, and out-of-school youth courses and programs.
The NDRRMC, the RDRRMCs, the LDRRMCs, the LDRRMOs, the BDRRMCs and the SK councils shall
encourage community, specifically the youth, participation in disaster risk reduction and management
activities, such as organizing quick response groups, particularly in identified disaster-prone areas, as
well as the inclusion of disaster risk reduction and management programs as part of the SK programs
and projects.
The public sector employees shall be trained in emergency response and preparedness. The training is
mandatory for such employees to comply with the provisions of this Act.
Section 15. Coordination During Emergencies. - The LDRRMCs shall take the lead in preparing for,
responding to, and recovering from the effects of any disaster based on the following criteria:
(a) The BDC, if a barangay is affected;
(b) The city/municipal DRRMCs, If two (2) or more barangays are affected;
(c) The provincial DRRMC, if two (2) or more cities/municipalities are affected;
(d) The regional DRRMC, if two (2) or more provinces are affected; and
(e) The NDRRMC, if two (2) or more regions are affected.
The NDRRMC and intermediary LDRRMCs shall always act as support to LGUs which have the primary
responsibility as first disaster responders. Private sector and civil society groups shall work in
accordance with the coordination mechanism and policies set by the NDRRMC and concerned
LDRRMCs.
Section 16. Declaration of State of Calamity. - The National Council shall recommend to the President
of the Philippines the declaration of a cluster of barangays, municipalities, cities, provinces, and
regions under a state of calamity, and the lifting thereof, based on the criteria set by the National
Council. The President's declaration may warrant international humanitarian assistance as deemed
necessary.
The declaration and lifting of the state of calamity may also be issued by the local sanggunian, upon
the recommendation of the LDRRMC, based on the results of the damage assessment and needs
analysis.
Section 17. Remedial Measures. - The declaration of a state of calamity shall make mandatory the
Immediate undertaking of the following remedial measures by the member-agencies concerned as
defined in this Act:
(a) Imposition of price ceiling on basic necessities and prime commodities by the President upon the
recommendation of the implementing agency as provided for under Republic Act No. 7581, otherwise
known as the "Price Act", or the National Price Coordinating Council;
(b) Monitoring, prevention and control by the Local Price Coordination Council of
overpricing/profiteering and hoarding of prime commodities, medicines and petroleum products;
(c) Programming/reprogramming of funds for the repair and safety upgrading of public infrastructures
and facilities; and
(d) Granting of no-interest loans by government financing or lending institutions to the most affected
section of the population through their cooperatives or people's organizations.
Section 18. Mechanism for International Humanitarian Assistance. - (a) The importation and donation
of food, clothing, medicine and equipment for relief and recovery and other disaster management
and recovery-related supplies is hereby authorized in accordance with Section 105 of the Tariff and
Customs Code of the Philippines, as amended, and the prevailing provisions of the General
Appropriations Act covering national internal revenue taxes and import duties of national and local
government agencies; and
(b) Importations and donations under this section shall be considered as importation by and/or
donation to the NDRRMC, subject to the approval of the Office of the President.
Section 19. Prohibited Acts. - Any person, group or corporation who commits any of the following
prohibited acts shall be held liable and be subjected to the penalties as prescribed in Section 20 of
this Act:
(a) Dereliction of duties which leads to destruction, loss of lives, critical damage of facilities and
misuse of funds;
(b) Preventing the entry and distribution of relief goods in disaster-stricken areas, including
appropriate technology, tools, equipment, accessories, disaster teams/experts;
(c) Buying, for consumption or resale, from disaster relief agencies any relief goods, equipment or
other and commodities which are intended for distribution to disaster affected communities;
(d) Buying, for consumption or resale, from the recipient disaster affected persons any relief goods,
equipment or other aid commodities received by them;
(e) Selling of relief goods, equipment or other aid commodities which are intended for distribution to
disaster victims;
(f) Forcibly seizing relief goods, equipment or other aid commodities intended for or consigned to a
specific group of victims or relief agency;
(g) Diverting or misdelivery of relief goods, equipment or other aid commodities to persons other
than the rightful recipient or consignee;
(h) Accepting, possessing, using or disposing relief goods, equipment or other aid commodities not
intended for nor consigned to him/her;
(i) Misrepresenting the source of relief goods, equipment or other aid commodities by:
(1) Either covering, replacing or defacing the labels of the containers to make it appear that the
goods, equipment or other aid commodities came from another agency or persons;
(2) Repacking the! goods, equipment or other aid commodities into containers with different
markings to make it appear that the goods came from another agency or persons or was released
upon the instance of a particular agency or persons;
(3) Making false verbal claim that the goods, equipment or other and commodity m its untampered
original containers actually came from another agency or persons or was released upon the instance
of a particular agency or persons;
(j) Substituting or replacing relief goods, equipment or other aid commodities with the same items or
inferior/cheaper quality;
(k) Illegal solicitations by persons or organizations representing others as defined in the standards and
guidelines set by the NDRRMC;
(l) Deliberate use of false at inflated data in support of the request for funding, relief goods,
equipment or other aid commodities for emergency assistance or livelihood projects; and
(m) Tampering with or stealing hazard monitoring and disaster preparedness equipment and
paraphernalia.
Section 20. Penal Clause. - Any individual, corporation, partnership, association, or other juridical
entity that commits any of the prohibited acts provided for in Section 19 of this Act shall be
prosecuted and upon conviction shall suffer a fine of not less than Fifty thousand pesos
(Php50,000.00) or any amount not to exceed Five hundred thousand pesos (php500,000.00) or
imprisonment of not less than six (6) years and one (1) day or more than twelve (12) years, or both, at
the discretion of the court, including perpetual disqualification from public office if the offender IS a
public officer, and confiscation or forfeiture in favor of the government of the objects and the
instrumentalities used in committing any of herein prohibited acts.
If the offender is a corporation, partnership or association, or other juridical entity, the penalty shall
be imposed upon the officer or officers of the corporation, partnership, association or entity
responsible for the violation without prejudice to the cancellation or revocation of these entities
license or accreditation issued to them by any licensing or accredited body of the government. If such
offender is an alien, he or she shall, in addition to the penalties prescribed in this Act, be deported
without further proceedings after service of the sentence.
However, the prosecution for offenses set forth in Section 19 of this Act shall be without prejudice to
any liability for violation of Republic Act No. 3185, as amended, otherwise known as the Revised Penal
Code, and other civil liabilities.
Section 21. Local Disaster Risk" Reduction and Management Fund (LDRRMF). - The present Local
Calamity Fund shall henceforth be known as the Local Disaster Risk Reduction and Management Fund
(LDRRMF). Not less than five percent (5%) of the estimated revenue from regular sources shall be set
aside as the LDRRMF to support disaster risk management activities such as, but not limited to, pre-
disaster preparedness programs including training, purchasing life-saving rescue equipment, supplies
and medicines, for post-disaster activities, and for the payment of premiums on calamity insurance.
The LDRRMC shall monitor and evaluate the use and disbursement of the LDRRMF based on the.
LDRRMP as incorporated in the local development plans and annual work and financial plan. Upon the
recommendation of the LDRRMO and approval of the sanggunian concerned, the LDRRMC may
transfer the said fund to support disaster risk reduction work of other LDRRMCs which are declared
under state of calamity.
Of the amount appropriated for LDRRMF, thirty percent (30%) shall be allocated as Quick Response
Fund (QRF) or stand-by fund for relief and recovery programs in order that situation and living
conditions of people In communities or areas stricken by disasters, calamities, epidemics, or complex
emergencies, may be normalized as quickly as possible.
Unexpended LDRRMF shall accrue to a special trust fund solely for the purpose of supporting disaster
risk reduction and management activities of the LDRRMCs within the next five (5) years. Any such
amount still not fully utilized after five (5) years shall revert back to the general fund and will be
available for other social services to be identified by the local sanggunian.
Section 22. National Disaster Risk" Reduction and Management Fund. - (a) The present Calamity Fund
appropriated under the annual General Appropriations Act shall henceforth be known as the National
Disaster Risk Reduction and Management Fund (NDRRM Fund) and it shall be used for disaster risk
reduction or mitigation, prevention and preparedness activities such as but not limited to training of
personnel, procurement of equipment, and capital expenditures. It can also be utilized for relief,
recovery, reconstruction and other work or services in connection with natural or human induced
calamities which may occur during the budget year or those that occurred in the past two (2) years
from the budget year.
(b) The specific amount of the NDRRM Fund and the appropriate recipient agencies and/or LGUs shall
be determined upon approval of the President of the Philippines in accordance with the favorable
recommendation of the NDRRMC.
(c) Of the amount appropriated for the NDRRM Fund, thirty percent (30%) shall be allocated as Quick
Response Fund (QRF) or stand-by fund for relief and recovery programs in order that situation and
living conditions of people in communities or areas stricken by disasters, calamities, epidemics, or
complex emergencies, may be normalized as quickly as possible.
(d) All departments/agencies and LGUs that are allocated with DRRM fund shall submit to the
NDRRMC their monthly statements on the utilization of DRRM funds and make an accounting thereof
in accordance with existing accounting and auditing rules.
(e) All departments, bureaus, offices and agencies of the government are hereby authorized to use a
portion of their appropriations to implement projects designed to address DRRM activities in
accordance with the guidelines to be issued by the NDRRMC in coordination with the DBM.
Section 23. Funding of the OCD. - As lead agency to carry out the provisions of this Act, the OCD shall
be allocated a budget of One billion pesos (Php1,000,000,000.00) revolving fund starting from the
effectivity of this Act.

Section 24. Annual Report. - The National Council, through the OCD, shall submit to the Office of the
President, the Senate and the House of Representatives, within the first quarter of the succeeding
year, an annual report relating to the progress of the implementation of the NDRRMP.

Section 25. Implementing Rules and Regulations. - The NDRRMC. through its Chairperson. shall issue
the necessary rules and regulations for the effective implementation of this Act within ninety (90)
days after approval of this Act. The OCD. in consultation with key stakeholders. shall take the lead in
the preparation of the implementing rules and regulations with the active involvement of the
technical management group of the NDRRMC.

Section 26. Congressional Oversight Committee. - There is hereby created a Congressional Oversight
Committee to monitor and oversee the implementation of the provisions of this Act. The Committee
shall be composed of six (6) members from the Senate and six (6) members from the House of
Representatives with the Chairpersons of the Committees on National Defense and Security of both
the Senate and the House of Representatives as joint Chairpersons of this Committee. The five (5)
other members from each Chamber are to be designated by the Senate President and the Speaker of
the House of Representatives. respectively. The minority shall be entitled to pro rata represent3tion
but shall have at least two (2) representatives from each Chamber.

Section 27. Sunset Review. - Within five (5) years after the effectivity of this Act, or as the need arises,
the Congressional Oversight Committee shall conduct a sunset review. For purposes of this Act, the
term "sunset review" shall mean a systematic evaluation by the Congressional Oversight Committee
of the accomplishments and impact of this Act, as well as the performance and organizational
structure of its implementing agencies, for purposes of determining remedial legislation.

Section 28. Repealing Clause. - Presidential Decree No. 1566 and all other laws, decrees, executive
orders, proclamations and other executive issuance's which are inconsistent with or contrary to the
provisions of this Act are hereby amended or repealed accordingly.

Section 29. Separability Clause. - If any provision of this Act shall be held unconstitutional or invalid,
the other provisions not otherwise affected shall remain m full force and effect.

Section 30. Effectivity Clause. - This Act shall take effect fifteen (15) days following its complete
publication in the Official Gazette or in two (2) national newspapers of general circulation.