G.R. No. 162243. December 03, 2009 (Case Brief / Digest)

Title: Department of Environment and Natural Resources (DENR) Secretary vs. PICOP Resources, Inc. (PRI)

The dispute between the DENR Secretary and PICOP Resources, Inc. (PRI) centered around the latter’s application for the conversion of its Timber License Agreement (TLA) No. 43 into an Integrated Forest Management Agreement (IFMA). PICOP’s application aimed to continue its logging operations beyond the expiration of TLA No. 43 on April 26, 2002. The contention arose from PICOP’s claim that a Presidential Warranty given in 1969 by then-President Ferdinand Marcos guaranteed its exclusive rights to cut, collect, and remove timber within a specified area until 2027, subject to compliance with legal and constitutional requirements. PICOP asserted that this warranty constituted a contract protected under the non-impairment clause of the Constitution, obligating the government to grant the IFMA.

PICOP initially cooperated with the DENR’s process for converting its TLA into an IFMA. However, communications between PICOP and the DENR broke down, leading PICOP to file a Petition for Mandamus with the Regional Trial Court (RTC) of Quezon City in September 2002, seeking to compel the DENR Secretary to sign and execute the IFMA contract.

The RTC ruled in favor of PICOP, ordering the DENR Secretary to execute the IFMA. The DENR Secretary’s Motion for Reconsideration was denied, leading to an appeal with the Court of Appeals, which affirmed the RTC’s decision but deleted the award of damages to PICOP. Separate petitions were filed with the Supreme Court, which consolidated the cases for resolution.

1. Is the 1969 Document a contract enforceable under the Non-Impairment Clause of the Constitution, obligating the signing of the IFMA as a ministerial duty?
2. Did PICOP comply with all legal and constitutional requirements for the issuance of an IFMA?

Court’s Decision:
The Supreme Court reversed the Court of Appeals’ decision, holding that:
1. The 1969 Document was not a contract recognized under the non-impairment clause of the Constitution. It was a mere executive warranty that could not override constitutional and statutory mandates, including the non-alienation of natural resources and the authority of the State to alter or amend timber licenses in accordance with public interest.

2. PICOP did not comply with all the legal and constitutional requirements for the issuance of an IFMA, notably the prior certification from the National Commission on Indigenous Peoples (NCIP) that the area covered by the proposed IFMA does not overlap with any ancestral domain and the requirement for consultation and approval by all Sanggunians concerned.

The case reiterated the doctrine that a Timber License Agreement (TLA) is not a contract protected by the non-impairment clause of the Constitution. It is a privilege that can be amended, modified, or rescinded by the State when public interest so requires. The decision also emphasized the State’s full control and supervision over the exploration, development, and utilization of natural resources, limiting the participation of private entities to agreements not exceeding 25 years, renewable for another 25 years.

Class Notes:
– Timber License Agreements (TLAs) are not contracts under the non-impairment clause but privileges subject to State regulation.
– The State has full control and supervision over natural resources, with private entity participation limited to specific agreement terms.
– Legal requirements for the issuance of an Integrated Forest Management Agreement (IFMA) include NCIP certification and Sanggunian consultation and approval.
– The principle of non-retroactivity of laws, as stipulated in Article 4 of the Civil Code, does not apply to projects applying for privileges or agreements that commence operations after the enactment of relevant laws.

Historical Background:
This case illustrates the complex interplay between the Philippine government’s efforts to regulate the exploitation of natural resources and the rights claimed by corporations based on agreements and warranties issued by past administrations. It underscores the primacy of constitutional and statutory mandates over any alleged contractual obligations of the government, particularly concerning natural resource management in the face of legal, environmental, and indigenous peoples’ rights.


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