10. HON. HEHERSON ALVAREZ substituted by HON.

ELISEA GOZUN, in her capacity as

Secretary of DENR v. PICOP RESOURCES, INC.
G.R. No. 162243 | Chico-Nazario, J. | 29 November 2006
Article XII (National Economy & Patrimony): Section 1- Exploration of Natural Resources

DOCTRINE: 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purview of the due process clause; it is only a license or privilege, which can be validly withdrawn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.

FACTS:
 3 consolidated petitions arising from RTC of QC decision (11 October 2002) granting the petition for
mandamus filed by Paper Industries Corporation of the Philippines which the CA affirmed.

 On 24 May 1952, PICOP’s predecessor, Bislig Bay Lumber Co., Inc. (BBLCI) was granted TLA
43 and was amended. As amended, TLA No. 43 covers an area of 75,545 hectares in Surigao del
Sur, Agusan del Sur, Compostela Valley, and Davao Oriental.It expired on 26 April 1977 and was
renewed on 7 October 1977 for 25 years to terminate on 25 April 2002

 Sometime in 1969, the late President Ferdinand E. Marcos issued a presidential warranty to BBLCI,
confirming that TLA 43 definitely establishes the boundary lines of [BBLCI’s] concession area."

 23 December 1999- DENR Sec Antonio Cerilles promulgated DAO No. 99-53 "Regulations
Governing the Integrated Forest Management Program (IFMP)."
o PICOP signified its intention to convert TLA 43 into an IFMA (Sec. 9 Chap 3 of DAO 99-53).
o Regional Executive Director Constantin Paye, Jr. forwarded PICOP’s letter of intent to the
DENR Secretary informing the latter that the DENR Caraga Region XIII in Ambago, Butuan
City, had created a team tasked to conduct a performance evaluation on PICOP on the said
TLA pursuant to DAO No. 99-53.
o The Supplemental Report indicated violations by PICOP of existing DENR Rules and
Regulations governing TLA 43, such as the non-submission of its 5-year forest protection
plan and 7-year reforestation plan as required by the DENR rules and regulations.
o In September 2001, the DENR Secretary was furnished a copy of Forest Management
Specialist II (FMS II) Teofila Orlanes’ memo concerning alleged unpaid and overdue forest
charges of respondent on TLA 43.
o FMB Senior Forest Management Specialist (SFMS) Ignacio Evangelista found that PICOP
had not paid its regular forest charges covering the period of 22 September 2001-26 April
2002 with the total of ₱15,056,054.05. Moreso, he discovered that from 1996-30 August
2002, PICOP was late in paying some of its forest charges in 1996, and was consistently
late in paying all its forestry charges from 1997 onwards. The overdue and unpaid forest
charges (including penalties, interests and surcharges) of PICOP total ₱150,169,485.02. Its
silvicultural fees amount to ₱2,366,901.00 from 1996 up to 30 August 2002. In all, PICOP
has an outstanding and overdue total obligation on its forest charges in the amount
of ₱167,592,440.90 as of 30 August 2002.
 In lieu of a transition team, the DENR Secretary constituted a negotiating team to negotiate for such
terms and conditions of the said IFMA including the production sharing arrangement as are
advantageous to the Government.

 On 10 April 2002, the members of the Technical Working Committee met and discussed the
findings of the Performance Evaluation Team. In the same meeting, PICOP agreed to secure and
submit a clearance from the NCIP as required by Section 59 of the IPRA.

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  With the 25 October 2001 letter of the DENR Secretary to PICOP, Atty. Caingat, claimed that the
TLA has been converted. The TWC members of the DENR received a letter from PICOP insisting
that "the conversion of TLA No. 43 into IFMA has already been completed.
 NCIP Chairperson Atty. Evelyn Dunuan informed him that, based on their records, no certification
has been issued to PICOP concerning its application for conversion of its TLA 43 into IFMA.

 Insisting that the conversion of its TLA 43 had been completed, PICOP filed a Petition for
Mandamus against then DENR Secretary Heherson Alvarez before the RTC of QC, presided
by Hon. Jose G. Paneda which the court granted.

 NCIP Chairperson Atty. Dunuan informed the DENR Secretary that after validation by the NCIP, it
was found out that the area of 47,420 hectares covered by PICOP’s TLA 43 conflicts with the
ancestral domains of the Manobos; and reiterated the information that no NCIP certification was
sought by PICOP.

 On 25 November 2002, President GMA issued Proclamation No. 297, "EXCLUDING A CERTAIN
AREA FROM THE OPERATION OF PROCLAMATION NO. 369 DATED FEBRUARY 27, 1931,
AND DECLARING THE SAME AS MINERAL RESERVATION AND AS ENVIRONMENTALLY
CRITICAL AREA." The excluded area consists of 8,100 hectares, more or less, which formed part
of PICOP’s expired TLA No. 43, subject of its application for IFMA conversion.

 On 19 February 2004, the Seventh Division of the CA affirmed the RTC decision.

ISSUE: Whether or not PICOP had acquired a vested right over its forest concession area by virtue of the
Presidential warranty. -NO.

HELD:
PICOP’s ground for issuance of a writ of mandamus is the contract entered into by the government in the
form of a Presidential Warranty issued by President Marcos. The DENR Secretary alleges that the courts
erred in declaring it a valid and subsisting contract under the Constitution’s non-impairment clause.

Such licenses concerning the harvesting of timber in the country’s forests cannot be considered contracts
that would bind the Government regardless of changes in policy and the demands of public interest and
welfare. 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 protected by the due process clause of the constitution

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. Since timber licenses are not contracts, the non-
impairment clause cannot be invoked.

The argument that the Presidential Warranty is a contract on the ground that there were mutual
considerations taken into account consisting in investments on PICOP’s part is preposterous. All licensees
put up investments in pursuing their businesses. To construe these investments as consideration in a
contract would be to stealthily render ineffective the settled jurisprudence 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.” Neither
shall we allow a circumvention of such doctrine by terming such permit as a "warranty."
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WHEREFORE, the petition is GRANTED.

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