ARTICLE XII

NATIONAL ECONOMY AND PATRIMONY

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.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC
G.R. No. 98332 January 16, 1995

MINERS ASSOCIATION OF THE PHILIPPINES, INC., petitioner,

vs.
HON. FULGENCIO S. FACTORAN, JR., Secretary of Environment and Natural Resources, and JOEL D. MUYCO,
Director of Mines and Geosciences Bureau, respondents.

ROMERO, J.:

The instant petition seeks a ruling from this Court on the validity of two Administrative Orders issued by the Secretary
of the Department of Environment and Natural Resources to carry out the provisions of certain Executive Orders
promulgated by the President in the lawful exercise of legislative powers.

Herein controversy was precipitated by the change introduced by Article XII, Section 2 of the 1987 Constitution on the
system of exploration, development and utilization of the country's natural resources. No longer is the utilization of
inalienable lands of public domain through "license, concession or lease" under the 1935 and 1973 Constitutions1
allowed under the 1987 Constitution.

The adoption of the concept of jura regalia2 that all natural resources are owned by the State embodied in the 1935,
1973 and 1987 Constitutions, as well as the recognition of the importance of the country's natural resources, not only
for national economic development, but also for its security and national

defense,3 ushered in the adoption of the constitutional policy of "full control and supervision by the State" in the
exploration, development and utilization of the country's natural resources. The options open to the State are through
direct undertaking or by entering into co-production, joint venture; or production-sharing agreements, or by entering
into agreement with foreign-owned corporations for large-scale exploration, development and utilization.

Article XII, Section 2 of the 1987 Constitution provides:

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 product-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.

xxx xxx xxx

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. (Emphasis supplied)

Pursuant to the mandate of the above-quoted provision, legislative acts4 were successively issued by the President in
the exercise of her legislative

power.5

To implement said legislative acts, the Secretary of the Department of Environment and Natural Resources (DENR) in
turn promulgated Administrative Order Nos. 57 and 82, the validity and constitutionality of which are being challenged
in this petition.

On July 10, 1987, President Corazon C. Aquino, in the exercise of her then legislative powers under Article II, Section
1 of the Provisional Constitution and Article XIII, Section 6 of the 1987 Constitution, promulgated Executive Order
No. 211 prescribing the interim procedures in the processing and approval of applications for the exploration,
development and utilization of minerals pursuant to the 1987 Constitution in order to ensure the continuity of mining
operations and activities and to hasten the development of mineral resources. The pertinent provisions read as follows:

Sec. 1. Existing mining permits, licenses, leases and other mining grants issued by the Department of Environment and
Natural Resources and Bureau of Mines and Geo-Sciences, including existing operating agreements and mining service
contracts, shall continue and remain in full force and effect, subject to the same terms and conditions as originally
granted and/or approved.

Sec. 2. Applications for the exploration, development and utilization of mineral resources, including renewal
applications for approval of operating agreements and mining service contracts, shall be accepted and processed and
may be approved; concomitantly thereto, declarations of locations and all other kinds of mining applications shall be
accepted and registered by the Bureau of Mines and Geo-Sciences.

Sec. 3. The processing, evaluation and approval of all mining applications, declarations of locations, operating
agreements and service contracts as provided for in Section 2 above, shall be governed by Presidential Decree No. 463,
as amended, other existing mining laws and their implementing rules and regulations: Provided, however, that the
privileges granted, as well as the terms and conditions thereof shall be subject to any and all modifications or
alterations which Congress may adopt pursuant to Section 2, Article XII of the 1987 Constitution.

On July 25, 1987, President Aquino likewise promulgated Executive Order No. 279 authorizing the DENR Secretary to
negotiate and conclude joint venture, co-production, or production-sharing agreements for the exploration,
development and utilization of mineral resources, and prescribing the guidelines for such agreements and those
agreements involving technical or financial assistance by foreign-owned corporations for large-scale exploration,
development, and utilization of minerals. The pertinent provisions relevant to this petition are as follows:

Sec. 1. The Secretary of the Department of Environment and Natural Resources (hereinafter referred to as "the
Secretary") is hereby authorized 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 citizens, or corporation or association at least sixty percent (60%) of whose capital is owned by
Filipino citizens. Such joint venture, co-production, or production-sharing agreements may be for a period not
exceeding twenty-five years, renewable for not more than twenty-five years, and shall include the minimum terms and
conditions prescribed in Section 2 hereof. In the execution of a joint venture, co-production or production agreements,
the contracting parties, including the Government, may consolidate two or more contiguous or geologically — related
mining claims or leases and consider them as one contract area for purposes of determining the subject of the joint
venture, co-production, or production-sharing agreement.

xxx xxx xxx

Sec. 6. The Secretary shall promulgate such supplementary rules and regulations as may be necessary to effectively
implement the provisions of this Executive Order.

Sec. 7.All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their implementing
rules and regulations, or parts thereof, which are not inconsistent with the provisions of this Executive Order, shall
continue in force and effect.

Pursuant to Section 6 of Executive Order No. 279, the DENR Secretary issued on June 23, 1989 DENR Administrative
Order No. 57, series of 1989, captioned "Guidelines of Mineral Production Sharing Agreement under Executive Order
No. 279."6 Under the transitory provision of said DENR Administrative Order No. 57, embodied in its Article 9, all
existing mining leases or agreements which were granted after the effectivity of the 1987 Constitution pursuant to
Executive Order No. 211, except small scale mining leases and those pertaining to sand and gravel and quarry
resources covering an area of twenty (20) hectares or less, shall be converted into production-sharing agreements
within one (1) year from the effectivity of these guidelines.

On November 20, 1980, the Secretary of the DENR Administrative Order No. 82, series of 1990, laying down the
"Procedural Guidelines on the Award of Mineral Production Sharing Agreement (MPSA) through Negotiation."7

Section 3 of the aforementioned DENR Administrative Order No. 82 enumerates the persons or entities required to
submit Letter of Intent (LOIs) and Mineral Production Sharing Agreement (MPSAs) within two (2) years from the
effectivity of DENR Administrative Order No. 57 or until July 17, 1991. Failure to do so within the prescribed period
shall cause the abandonment of mining, quarry and sand and gravel claims. Section 3 of DENR Administrative Order
No. 82 provides:

Sec. 3.Submission of Letter of Intent (LOIs) and MPSAs). The following shall submit their LOIs and MPSAs within
two (2) years from the effectivity of DENR A.O. 57 or until July 17, 1991.

i. Declaration of Location (DOL) holders, mining lease applicants, exploration permitees, quarry applicants and other
mining applicants whose mining/quarry applications have not been perfected prior to the effectivity of DENR
Administrative Order No. 57.

ii. All holders of DOL acquired after the effectivity of DENR A.O. No. 57.

iii. Holders of mining leases or similar agreements which were granted after (the) effectivity of 1987 Constitution.

Failure to submit letters of intent and MPSA applications/proposals within the prescribed period shall cause the
abandonment of mining, quarry and sand and gravel claims.

The issuance and the impeding implementation by the DENR of Administrative Order Nos. 57 and 82 after their
respective effectivity dates compelled the Miners Association of the Philippines, Inc.8 to file the instant petition
assailing their validity and constitutionality before this Court.

In this petition for certiorari, petitioner Miners Association of the Philippines, Inc. mainly contends that respondent
Secretary of DENR issued both Administrative Order Nos. 57 and 82 in excess of his rule-making power under Section
6 of Executive Order No. 279. On the assumption that the questioned administrative orders do not conform with
Executive Order Nos. 211 and 279, petitioner contends that both orders violate the
non-impairment of contract provision under Article III, Section 10 of the 1987 Constitution on the ground that
Administrative Order No. 57 unduly pre-terminates existing mining agreements and automatically converts them into
production-sharing agreements within one (1) year from its effectivity date. On the other hand, Administrative Order
No. 82 declares that failure to submit Letters of Intent and Mineral Production-Sharing Agreements within two (2)
years from the date of effectivity of said guideline or on July 17, 1991 shall cause the abandonment of their mining,
quarry and sand gravel permits.

On July 2, 1991, the Court, acting on petitioner's urgent ex-parte petition for issuance of a restraining order/preliminary
injunction, issued a Temporary Restraining Order, upon posting of a P500,000.00 bond, enjoining the enforcement and
implementation of DENR Administrative Order Nos. 57 and 82, as amended, Series of 1989 and 1990, respectively.9

On November 13, 1991, Continental Marble Corporation, 10 thru its President, Felipe A. David, sought to intervene 11
in this case alleging that because of the temporary order issued by the Court , the DENR, Regional Office No. 3 in San
Fernando, Pampanga refused to renew its Mines Temporary Permit after it expired on July 31, 1991. Claiming that its
rights and interests are prejudicially affected by the implementation of DENR Administrative Order Nos. 57 and 82, it
joined petitioner herein in seeking to annul Administrative Order Nos. 57 and 82 and prayed that the DENR, Regional
Office No. 3 be ordered to issue a Mines Temporary Permit in its favor to enable it to operate during the pendency of
the suit.

Public respondents were acquired to comment on the Continental Marble Corporation's petition for intervention in the
resolution of November 28, 1991.12

Now to the main petition. If its argued that Administrative Order Nos. 57 and 82 have the effect of repealing or
abrogating existing mining laws 13 which are not inconsistent with the provisions of Executive Order No. 279.
Invoking Section 7 of said Executive Order No. 279, 14 petitioner maintains that respondent DENR Secretary cannot
provide guidelines such as Administrative Order Nos. 57 and 82 which are inconsistent with the provisions of
Executive Order No. 279 because both Executive Order Nos. 211 and 279 merely reiterated the acceptance and
registration of declarations of location and all other kinds of mining applications by the Bureau of Mines and Geo-
Sciences under the provisions of Presidential Decree No. 463, as amended, until Congress opts to modify or alter the
same.

In other words, petitioner would have us rule that DENR Administrative Order Nos. 57 and 82 issued by the DENR
Secretary in the exercise of his rule-making power are tainted with invalidity inasmuch as both contravene or subvert
the provisions of Executive Order Nos. 211 and 279 or embrace matters not covered, nor intended to be covered, by the
aforesaid laws.

We disagree.

We reiterate the principle that the power of administrative officials to promulgate rules and regulations in the
implementation of a statute is necessarily limited only to carrying into effect what is provided in the legislative
enactment. The principle was enunciated as early as 1908 in the case of United States v. Barrias. 15 The scope of the
exercise of such rule-making power was clearly expressed in the case of United States v. Tupasi Molina, 16 decided in
1914, thus: "Of course, the regulations adopted under legislative authority by a particular department must be in
harmony with the provisions of the law, and for the sole purpose of carrying into effect its general provisions. By such
regulations, of course, the law itself can not be extended. So long, however, as the regulations relate solely to carrying
into effect its general provisions. By such regulations, of course, the law itself can not be extended. So long, however,
as the regulations relate solely to carrying into effect the provision of the law, they are valid."
Recently, the case of People v. Maceren 17 gave a brief delienation of the scope of said power of administrative
officials:

Administrative regulations adopted under legislative authority by a particular department must be in harmony with the
provisions of the law, and should be for the sole purpose of carrying into effect its general provision. By such
regulations, of course, the law itself cannot be extended (U.S. v. Tupasi Molina, supra). An administrative agency
cannot amend an act of Congress (Santos vs. Estenzo, 109 Phil. 419, 422; Teoxon vs. Members of the Board of
Administrators, L-25619, June 30, 1970, 33 SCRA 585; Manuel vs. General Auditing Office, L-28952, December 29,
1971, 42 SCRA 660; Deluao v. Casteel, L-21906, August 29, 1969, 29 SCRA 350).

The rule-making power must be confined to details for regulating the mode or proceeding to carry into effect the law as
it has been enacted. The power cannot be extended to amending or expanding the statutory requirements or to embrace
matters not covered by the statute. Rules that subvert the statute cannot be sanctioned (University of Santo Tomas v.
Board of Tax Appeals, 93 Phil. 376, 382, citing 12 C.J. 845-46. As to invalid regulations, see Collector of Internal
Revenue v. Villaflor, 69 Phil. 319; Wise & Co. v. Meer, 78 Phil. 655, 676; Del Mar v. Phil. Veterans Administration,
L-27299, June 27, 1973, 51 SCRA 340, 349).

xxx xxx xxx

. . . The rule or regulation should be within the scope of the statutory authority granted by the legislature to the
administrative agency (Davis, Administrative Law, p. 194, 197, cited in Victorias Milling Co., Inc. v. Social Security
Commission, 114 Phil. 555, 558).

In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic prevails
because said rule or regulations cannot go beyond the terms and provisions of the basic law (People v. Lim, 108 Phil.
1091).

Considering that administrative rules draw life from the statute which they seek to implement, it is obvious that the
spring cannot rise higher than its source. We now examine petitioner's argument that DENR Administrative Order Nos.
57 and 82 contravene Executive Order Nos. 211 and 279 as both operate to repeal or abrogate Presidential Decree No.
463, as amended, and other mining laws allegedly acknowledged as the principal law under Executive Order Nos. 211
and 279.

Petitioner's insistence on the application of Presidential Decree No. 463, as amended, as the governing law on the
acceptance and approval of declarations of location and all other kinds of applications for the exploration,
development, and utilization of mineral resources pursuant to Executive Order No. 211, is erroneous. 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. Section 7 of Executive Order No. 279 provides, thus:

Sec. 7.All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their implementing
rules and regulations, or parts thereof, which are not inconsistent with the provisions of this Executive Order, shall
continue in force and effect.
Specifically, the provisions of Presidential Decree No. 463, as amended, on lease of mining claims under Chapter VIII,
quarry permits on privately-owned lands of quarry license on public lands under Chapter XIII and other related
provisions on lease, license and permits are not only inconsistent with the raison d'etre for which Executive Order No.
279 was passed, but contravene the express mandate of Article XII, Section 2 of the 1987 Constitution. It force and
effectivity is thus foreclosed.

Upon the effectivity of the 1987 Constitution on February 2, 1987, 18 the State assumed a more dynamic role in the
exploration, development and utilization of the natural resources of the country. Article XII, Section 2 of the said
Charter explicitly ordains that the exploration, development and utilization of natural resources shall be under the full
control and supervision of the State. Consonant therewith, the exploration, development and utilization of natural
resources may be undertaken by means of direct act of the State, or it may opt to enter into co-production, joint
venture, or production-sharing agreements, or it 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.

Given these considerations, there is no clear showing that respondent DENR Secretary has transcended the bounds
demarcated by Executive Order No. 279 for the exercise of his rule-making power tantamount to a grave abuse of
discretion. Section 6 of Executive Order No. 279 specifically authorizes said official to promulgate such supplementary
rules and regulations as may be necessary to effectively implement the provisions thereof. Moreover, the subject
sought to be governed and regulated by the questioned orders is germane to the objects and purposes of Executive
Order No. 279 specifically issued to carry out the mandate of Article XII, Section 2 of the 1987 Constitution.

Petitioner likewise maintains that Administrative Order No. 57, in relation to Administrative Order No. 82, impairs
vested rights as to violate the non-impairment of contract doctrine guaranteed under Article III, Section 10 of the 1987
Constitution because Article 9 of Administrative Order No. 57 unduly pre-terminates and automatically converts
mining leases and other mining agreements into production-sharing agreements within one (1) year from effectivity of
said guideline, while Section 3 of Administrative Order No. 82, declares that failure to submit Letters of Intent (LOIs)
and MPSAs within two (2) years from the effectivity of Administrative Order No. 57 or until July 17, 1991 shall cause
the abandonment of mining, quarry, and sand gravel permits.

In Support of the above contention, it is argued by petitioner that Executive Order No. 279 does not contemplate
automatic conversion of mining lease agreements into mining production-sharing agreement as provided under Article
9, Administrative Order No. 57 and/or the consequent abandonment of mining claims for failure to submit LOIs and
MPSAs under Section 3, Administrative Order No. 82 because Section 1 of said Executive Order No. 279 empowers
the DENR Secretary to negotiate and enter into voluntary agreements which must set forth the minimum terms and
conditions provided under Section 2 thereof. Moreover, petitioner contends that the power to regulate and enter into
mining agreements does not include the power to preterminate existing mining lease agreements.

To begin with, we dispel the impression created by petitioner's argument that the questioned administrative orders
unduly preterminate existing mining leases in general. A distinction which spells a real difference must be drawn.
Article XII, Section 2 of the 1987 Constitution does not apply retroactively to "license, concession or lease" granted by
the government under the 1973 Constitution or before the effectivity of the 1987 Constitution on February 2, 1987. The
intent to apply prospectively said constitutional provision was stressed during the deliberations in the Constitutional
Commission, 19 thus:

MR. DAVIDE: Under the proposal, I notice that except for the [inalienable] lands of the public domain, all other
natural resources cannot be alienated and in respect to [alienable] lands of the public domain, private corporations with
the required ownership by Filipino citizens can only lease the same. Necessarily, insofar as other natural resources are
concerned, it would only be the State which can exploit, develop, explore and utilize the same. However, the State may
enter into a joint venture, co-production or production-sharing. Is that not correct?

MR. VILLEGAS: Yes.

MR. DAVIDE: Consequently, henceforth upon, the approval of this Constitution, no timber or forest concession,
permits or authorization can be exclusively granted to any citizen of the Philippines nor to any corporation qualified to
acquire lands of the public domain?

MR. VILLEGAS: Would Commissioner Monsod like to comment on that? I think his answer is "yes."

MR. DAVIDE: So, what will happen now license or concessions earlier granted by the Philippine government to
private corporations or to Filipino citizens? Would they be deemed repealed?

MR. VILLEGAS: This is not applied retroactively. They will be respected.

MR. DAVIDE: In effect, they will be deemed repealed?

MR. VILLEGAS: No. (Emphasis supplied)

During the transition period or after the effectivity of the 1987 Constitution on February 2, 1987 until the first Congress
under said Constitution was convened on July 27, 1987, two (2) successive laws, Executive Order Nos. 211 and 279,
were promulgated to govern the processing and approval of applications for the exploration, development and
utilization of minerals. To carry out the purposes of said laws, the questioned Administrative Order Nos. 57 and 82,
now being assailed, were issued by the DENR Secretary.

Article 9 of Administrative Order No. 57 provides:

ARTICLE 9
TRANSITORY PROVISION
9.1. All existing mining leases or agreements which were granted after the effectivity of the 1987 Constitution pursuant
to Executive Order No. 211, except small scale mining leases and those pertaining to sand and gravel and quarry
resources covering an area of twenty (20) hectares or less shall be subject to these guidelines. All such leases or
agreements shall be converted into production sharing agreement within one (1) year from the effectivity of these
guidelines. However, any minimum firm which has established mining rights under Presidential Decree 463 or other
laws may avail of the provisions of EO 279 by following the procedures set down in this document.

It is clear from the aforestated provision that Administrative Order No. 57 applies only to all existing mining leases or
agreements which were granted after the effectivity of the 1987 Constitution pursuant to Executive Order No. 211. It
bears mention that under the text of Executive Order No. 211, there is a reservation clause which provides that the
privileges as well as the terms and conditions of all existing mining leases or agreements granted after the effectivity of
the 1987 Constitution pursuant to Executive Order No. 211, shall be subject to any and all modifications or alterations
which Congress may adopt pursuant to Article XII, Section 2 of the 1987 Constitution. Hence, the strictures of the

non-impairment of contract clause under Article III, Section 10 of the 1987 Constitution 20 do not apply to the
aforesaid leases or agreements granted after the effectivity of the 1987 Constitution, pursuant to Executive Order No.
211. They can be amended, modified or altered by a statute passed by Congress to achieve the purposes of Article XII,
Section 2 of the 1987 Constitution.

Clearly, Executive Order No. 279 issued on July 25, 1987 by President Corazon C. Aquino in the exercise of her
legislative power has the force and effect of a statute or law passed by Congress. As such, it validly modified or altered
the privileges granted, as well as the terms and conditions of mining leases and agreements under Executive Order No.
211 after the effectivity of the 1987 Constitution by authorizing the DENR Secretary to negotiate and conclude joint
venture, co-production, or production-sharing agreements for the exploration, development and utilization of mineral
resources and prescribing the guidelines for such agreements and those agreements involving technical or financial
assistance by foreign-owned corporations for large-scale exploration, development, and utilization of minerals.

Well -settled is the rule, however, that regardless of the reservation clause, mining leases or agreements granted by the
State, such as those granted pursuant to Executive Order No. 211 referred to this petition, are subject to alterations
through a reasonable exercise of the police power of the State. In the 1950 case of Ongsiako v. Gamboa, 21 where the
constitutionality of Republic Act No. 34 changing the 50-50 sharecropping system in existing agricultural tenancy
contracts to 55-45 in favor of tenants was challenged, the Court, upholding the constitutionality of the law, emphasized
the superiority of the police power of the State over the sanctity of this contract:

The prohibition contained in constitutional provisions against: impairing the obligation of contracts is not an absolute
one and it is not to be read with literal exactness like a mathematical formula. Such provisions are restricted to
contracts which respect property, or some object or value, and confer rights which may be asserted in a court of justice,
and have no application to statute relating to public subjects within the domain of the general legislative powers of the
State, and involving the public rights and public welfare of the entire community affected by it. They do not prevent a
proper exercise by the State of its police powers. By enacting regulations reasonably necessary to secure the health,
safety, morals, comfort, or general welfare of the community, even the contracts may thereby be affected; for such
matter can not be placed by contract beyond the power of the State shall regulates and control them. 22

In Ramas v. CAR and Ramos 23 where the constitutionality of Section 14 of Republic Act No. 1199 authorizing the
tenants to charge from share to leasehold tenancy was challenged on the ground that it impairs the obligation of
contracts, the Court ruled that obligations of contracts must yield to a proper exercise of the police power when such
power is exercised to preserve the security of the State and the means adopted are reasonably adapted to the
accomplishment of that end and are, therefore, not arbitrary or oppressive.

The economic policy on the exploration, development and utilization of the country's natural resources under Article
XII, Section 2 of the 1987 Constitution could not be any clearer. As enunciated in Article XII, Section 1 of the 1987
Constitution, the exploration, development and utilization of natural resources under the new system mandated in
Section 2, is geared towards a more equitable distribution of opportunities, income, and wealth; a sustained increase in
the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity
as the key to raising the quality of life for all, especially the underprivileged.

The exploration, development and utilization of the country's natural resources are matters vital to the public interest
and the general welfare of the people. The recognition of the importance of the country's natural resources was
expressed as early as the 1984 Constitutional Convention. In connection therewith, the 1986 U.P. Constitution Project
observed: "The 1984 Constitutional Convention recognized the importance of our natural resources not only for its
security and national defense. Our natural resources which constitute the exclusive heritage of the Filipino nation,
should be preserved for those under the sovereign authority of that nation and for their prosperity. This will ensure the
country's survival as a viable and sovereign republic."

Accordingly, the State, in the exercise of its police power in this regard, may not be precluded by the constitutional
restriction on non-impairment of contract from altering, modifying and amending the mining leases or agreements
granted under Presidential Decree No. 463, as amended, pursuant to Executive Order No. 211. Police Power, being co-
extensive with the necessities of the case and the demands of public interest; extends to all the vital public needs. The
passage of Executive Order No. 279 which superseded Executive Order No. 211 provided legal basis for the DENR
Secretary to carry into effect the mandate of Article XII, Section 2 of the 1987 Constitution.
Nowhere in Administrative Order No. 57 is there any provision which would lead us to conclude that the questioned
order authorizes the automatic conversion of mining leases and agreements granted after the effectivity of the 1987
Constitution, pursuant to Executive Order No. 211, to production-sharing agreements. The provision in Article 9 of
Administrative Order No. 57 that "all such leases or agreements shall be converted into production sharing agreements
within one (1) year from the effectivity of these guidelines" could not possibility contemplate a unilateral declaration
on the part of the Government that all existing mining leases and agreements are automatically converted into

production-sharing agreements. On the contrary, the use of the term "production-sharing agreement" if they are so
minded. Negotiation negates compulsion or automatic conversion as suggested by petitioner in the instant petition. A
mineral production-sharing agreement (MPSA) requires a meeting of the minds of the parties after negotiations arrived
at in good faith and in accordance with the procedure laid down in the subsequent Administrative Order No. 82.

We, therefore, rule that the questioned administrative orders are reasonably directed to the accomplishment of the
purposes of the law under which they were issued and were intended to secure the paramount interest of the public,
their economic growth and welfare. The validity and constitutionality of Administrative Order Nos. 57 and 82 must be
sustained, and their force and effect upheld.

We now, proceed to the petition-in-intervention. Under Section 2, Rule 12 of the Revised Rules of Court, an
intervention in a case is proper when the intervenor has a "legal interest in the matter in litigation, or in the success of
either of the parties, or an interest against both, or when he is so situated as to be adversely affected by a distribution or
other disposition of property in the custody of the court or of an officer thereof. "Continental Marble Corporation has
not sufficiently shown that it falls under any of the categories mentioned above. The refusal of the DENR, Regional
Office No. 3, San Fernando, Pampanga to renew its Mines Temporary Permit does not justify such an intervention by
Continental Marble Corporation for the purpose of obtaining a directive from this Court for the issuance of said permit.
Whether or not Continental Marble matter best addressed to the appropriate government body but certainly, not
through this Court. Intervention is hereby DENIED.

WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order issued on July 2, 1991
is hereby LIFTED.

SO ORDERED.

Narvasa, C.J., Feliciano, Padilla, Bidin, Regalado, Davide, Jr., Bellosillo, Melo, Quiason, Puno, Vitug, Kapunan and
Mendoza, JJ., concur.

Footnotes

1 Article XIII, Section 1 of the 1935 Constitution provides:

Section 1. All agricultural, timber, and mineral lands of the public domain, waters, minerals, coal, petroleum and other
mineral oils, all forces of potential energy, and other natural resources of the Philippines belong to the State, and their
disposition, exploitation, development, or utilization shall be limited to citizens of the Philippines, or to corporation or
associations at least sixty per centum of the capital of which is owned by such citizens, subject to any existing right,
grant, lease or concession at the time of the inauguration of the Government established under this Constitution.
Natural resources, with the exception of public agricultural land, shall not be alienated, and no license, concession, or
lease for the exploitation, development, or utilization of any of the natural resources shall be granted for a period
exceeding twenty-five years, renewable for another twenty-five years, except as to water rights for irrigation, water
supply, fisheries, or industrial uses other than the development of water power, in which cases beneficial use may be
the measure and the limit of the grant.

xxx xxx xxx

Article XIV, Section 8 of the 1973 Constitution provides:

Section 8. All lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of
potential energy, fisheries, wildlife, and other natural resources of the Philippines belong to the State. With the
exception of agricultural, industrial or commercial, residential, and resettlement lands of the public domain, natural
resources shall not be alienated, and no license, concession, or lease for the exploration, development, exploitation, or
utilization of any of the natural resources shall be granted for a period exceeding twenty-five years, renewable for not
more than twenty-five years, except as to water rights for irrigation, water supply, fisheries, or industrial uses other
than the development of water power, in which cases, beneficial use may be the measure and the limit of the grant.

2 Cariño v. Insular Government, 212 US 449 (1909); Valenton v. Mariano, 3 Phil. 537 (1904); Lee Hung Hok v.
David, G.R. No.L-30389, December 27, 1972, 48 SCRA 372, 377.
3 1986 U.P. Law Constitution Project, Vol. I, pp. 8-11.

4 Executive Order No. 211 (July 10, 1987) and Executive Order No. 279 (July 25, 1987).

5 Article II, Section 1, 1987 Provisional Constitution; Article XIII, Section 6, 1987 Constitution; Tan v. Marquez, G.R.
No. 93288, October 25, 1990, Minute Resolution, En Banc.

6 Published in the July 3, 1989 issue of the Philippine Daily Inquirer, a newspaper of general circulation, and became
effective on July 18, 1989.

7 Published in the December 21, 1990 issue of the Philippine Daily Inquirer, a newspaper of general circulation, and
became effective on January 5, 1991.

8 A non-stock and non-profit organization duly formed and existing under and by virtue of the laws of the Philippines
with principal office at Suite 609 Don Santiago Building whose members include mining prospectors and claimowners
or claimholders.

9 Rollo, pp. 46-48.

10 A domestic corporation engaged in the business of marble mining with factory processing plant at 24 General Luis
St., Novaliches, Quezon City. It has filed a Declaration of Location dated November 13, 1973 for a placer mine known
as "MARGEL" located at Matitic, Norzagaray, Bulacan. It has been operating as a mining entity and exporting its
finished products (marble tiles) by virtue of a Mines Temporary Permit issued by the DENR.

11 Rollo, pp. 99-104.

12 Rollo, p. 114.

13 Presidential Decree No. 463, as amended, otherwise known as "The Mineral Resources Development Decree of
1974" promulgated on May 17, 1974.

14 Section 7, Executive Order No. 279 provides:

All provisions of Presidential Decree No. 463, as amended, other existing mining laws, and their implementing rules
and regulations, or parts thereof, which are not inconsistent with the provisions of this Executive Order, shall continue
in force and effect.

15 11 Phil. 327, 330 (1908).

16 29 Phil. 120, 124 (1914).

17 No. L-32166, October 18, 1977, 79 SCRA 450.

18 De Leon v. Esguerra, G.R. No. 78058, August 31, 187, 153 SCRA 602.

19 Record of the Constitutional Commission, Proceedings and Debate, Vol. III, p. 260.

20 Article III, Section 10 of the 1987 Constitutions provides:

No law impairing the obligation of contracts shall be passed.

21 86 Phil. 50 (1950).

22 86 Phil. at 54-55.

23 120 Phil. 168 (1964).

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;

3. Provisions of PD 7055 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 Memorandum14 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;

(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 as watershed
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 PICOP's obvious misreading of
our decision in Apex Mining Co., Inc. v. Garcia, supra, to the effect that 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.

Quisumbing, J., Chairperson, Carpio, Carpio Morales, and Velasco, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
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 Decision1
of 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 OWNERSHIP
OVER 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 TITLE UNDER
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 190236 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. 106439
issued 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.47 Thus,
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.

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. 926106 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 Authority110 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 facto considered 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 Constitution112 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 legal status 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 Justice126 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.129 Where 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 homestead131 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.