HON. HEHERSON T. ALVAREZ v. PICOP RESOURCES, INC.

G.R. No. 162243, December 3, 2009

Chico-Nazario, J.:

Doctrine:
A timber license is not a contract within the purview of the non-impairment clause.

Facts:
PICOP filed with the DENR an application to have its Timber License Agreement (TLA) No. 43 converted into an
IFMA.

PICOP filed before the (RTC) City a Petition for Mandamus against then DENR Sec Alvarez for unlawfully refusing
and/or neglecting 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.

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.

Issue:
Whether the 1969 Document is a contract recognized under the non-impairment clause by which the government
may be bound (for the issuance of the IFMA)

Held:
NO. 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 We declared: Needless to say, all licenses may thus be revoked or rescinded by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.

Since timber licenses are not contracts, the non-impairment clause, which reads: "SEC. 10. No law impairing the
obligation of contracts shall be passed." cannot be invoked.

The Presidential Warranty cannot, in any manner, be construed as a contractual undertaking assuring PICOP of
exclusive possession and enjoyment of its concession areas. Such an interpretation would result in the complete
abdication by the State in favor of PICOP of the sovereign power to control and supervise the exploration,
development and utilization of the natural resources in the area.
 HON. HEHERSON T. ALVAREZ v. PICOP RESOURCES, INC.
G.R. No. 162243, December 3, 2009
Chico-Nazario, J.:

Doctrine:
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.

Facts:
PICOP filed with the DENR an application to have its Timber License Agreement (TLA) No. 43 converted into an
IFMA.

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. PICOP nevertheless submitted to the DENR the purported resolution of the Province of
Surigao del Sur indorsing the approval of PICOPs application for IFMA conversion.

PICOP filed a petition for MANDAMUS against DENR Sec Alvarez for refusing to sign and execute the IFMA
contract.

Issue:
Whether PICOP complied with the LGC requirement of obtaining prior approval of the Sanggunian concerned by
submitting a purported resolution of the Province of Surigao del Sur indorsing the approval of PICOPs application
for IFMA conversion.

Held:
NO. 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. 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.